The Registrar of the Hong Kong Institute of Certified Public Accountants v. Tang Chung Wah

CACV 60/2020

[2022] HKCA 1421

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 60 OF 2020

(ON APPEAL FROM THE DISCIPINARY COMMITTEE OF

THE HONG KONG INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PROCEEDINGS NO. D-16-1214C)

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Before:  Hon Kwan VP, Chu and Au JJA in Court

Date of Hearing:  9 June 2021

Date of Judgment:  22 September 2022

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JUDGMENT

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Hon Chu JA (giving the Judgment of the Court):

A. Introduction

1.By a decision dated 6 September 2019 (“Decision”), the Disciplinary Committee (“Disciplinary Committee”) of the Hong Kong Institute of Certified Public Accountants (“Institute”) found three complaints submitted by the Complainant proved against the respondent (“Mr Tang”) and another accountant (“Ms Lee”).  

2.By another decision dated 30 December 2019 (“Sanctions Decision”), the Disciplinary Committee imposed the following sanctions and costs order against each of Mr Tang and Ms Lee: 

(1)  A reprimand under section 35(1)(b) of the Professional Accountants Ordinance, Cap. 50 (the “PAO”);

(2)  Penalties of HK$20,000, HK$20,000 and HK$10,000 for the first, second and third complaints respectively under section 35(1)(c) of the PAO; and

(3)  They are to jointly and severally pay the costs and expenses of the disciplinary proceedings in the sum of HK$283,730.

3.This is Mr Tang’s appeal against the Disciplinary Committee’s finding of liability, and the sanction and costs orders it imposed on him[1].

B. Background

4.The disciplinary proceedings arose out of a finding of the Court that Mr Tang and Ms Lee were in contempt for having breached a disclosure order.  The background leading to the disciplinary proceedings was detailed in the judgment of To J given on 18 October 2016 in HCMP 450 of 2016 and the judgment of this Court (Cheung, Kwan and Poon JJA) given on 16 February 2017 in CACV 214 of 2016.  The material facts directly relevant to this appeal are summarised as follows.

5.Mr Tang and Ms Lee were partners of an accounting firm, JBPB & Co (“JBPB”), formerly known as Grant Thornton.  The partnership collapsed in 2011, and the partners were split into two camps, with Mr Tang and Ms Lee in the minority camp.

6.Previously in March 2002, Mr Tang and Ms Lee were appointed the joint and several liquidators of CWT Textile Supplies Company Limited (“CWT”).  A dispute ensued between CWT and its former auditors, which was eventually settled, resulting in a substantial settlement payment to CWT’s joint and several liquidators.  A significant part of the settlement payment was paid to two companies, Topmark Asia Ltd and Sun Ascent International Ltd. 

7.In 2011, Mr Ho Yuk Wah David (“Mr Ho”) was adjudicated bankrupt.  Messrs Arthur Ip Pui Lam and Ip Pui Sum (“Trustees”) were appointed the joint and several trustees-in-bankruptcy.  As a result of their investigations, the Trustees believed that Mr Ho had been operating a complex scheme using nominees and about 30 offshore companies, including Topmark Asia Ltd and Sun Ascent International Ltd, to conceal his assets and divert funds out of the reach of his creditors.  

8.In June 2013, the Trustees sought third party disclosure of documents against CWT and JBPB pursuant to section 29 of the Bankruptcy Ordinance, Cap. 6.  By a consent order made on 5 November 2013, Mr Tang and Ms Lee, in their capacity as CWT’s liquidators, were required to produce certain documents set out in the schedule to the order.  We are not concerned with this order in this appeal.  By another order of the same day made with the consent and upon the instruction of the majority partners of JBPB (“JBPB Order”), JBPB was required to produce certain other documents as set out in the schedule to the order.  

9.Mr Tang and Ms Lee did not accept that they were bound by the JBPB Order.  The majority partners of JBPB produced some documents pursuant to the JBPB Order, and filed an affirmation deposing that they did not have the other documents specified in the order and that these documents, if existed, were in the custody and control of Mr Tang and Ms Lee.

10.In February 2014, the Trustees applied under section 29 of the Bankruptcy Ordinance for a disclosure order against Mr Tang and Ms Lee, in their capacity as partners of JBPB, for production of the documents set out in the schedule to the JBPB Order. 

11.On 18 March 2015, To J granted the disclosure order (“March 2015 Order”).  Paragraph 3 of the order required Mr Tang and Ms Lee, in their capacity as partners of JBPB, to produce documents relating to 11 payments to JBPB from Mr Ho’s nominee companies and one cashier order. The documents comprise four categories, namely (1) agreements, (2) correspondence, (3) minutes of meetings, written resolutions and court orders, and (4) invoices and receipts.

12.Mr Tang and Ms Lee did not produce the documents within the time prescribed by the March 2015 Order (i.e., by 8 April 2015).  Five months later, Mr Tang, on behalf of himself and Ms Lee, filed an affirmation in purported compliance with the March 2015 Order. 

13.On 26 February 2016, the Trustees commenced contempt proceedings against Mr Tang and Ms Lee in HCMP 450 of 2016 for breach of paragraph 3 of the March 2015 Order.  By his judgment handed down on 18 October 2016, To J found Mr Tang and Ms Lee to be in contempt of court and made an order for committal against them.

14.Mr Tang and Ms Lee appealed to the Court of Appeal in CACV 214 of 2016.  By this Court’s judgment handed down on 15 February 2017, the committal order was set aside and the matter was remitted back to To J for sentencing on the basis that the breach and contempt was only in relation to one category of documents.  Mr Tang and Ms Lee were further ordered to pay 80% of the costs of the Trustees on an indemnity basis. 

15.Specifically, the Court of Appeal Judgment held that[2]:

(1)  Mr Tang and Ms Lee had clearly breached paragraph 3 of the March 2015 Order in respect of the 4^th category of documents (i.e., invoices and receipts) in that these accounting documents, even if not in their custody, were within their power as partners of JBPB to disclose.  They had been informed by the majority partners of JBPB that the documents might be found in the 130 boxes which could be inspected at a charge, but they chose not to carry out the inspection because they stubbornly considered that they should not be required to pay for the costs of inspection and that the process of retrieving the documents was too onerous. 

(2)  On the evidence before To J and having regard to the high standard of proof required to establish contempt, it was not proved beyond reasonable doubt that at the time of the committal hearing, the other three categories of documents actually existed and that Mr Tang and Ms Lee had custody of them.  

(3)  However, the documents produced by Mr Tang and Ms Lee subsequent to the committal hearing showed that the documents in the other three categories did exist.  Despite this, the Trustees’ application to adduce new evidence of those newly disclosed documents should not be allowed, bearing in mind the penal consequence of contempt proceedings, such that all the evidence should be adduced at the time of the application in order that the respondent may respond to them.

(4)  While the contempt proceedings were properly brought, the order for committal was too harsh as the contempt related to only one category of the documents.        

16.At the re-sentencing hearing following the appeal on 20 September 2017, To J imposed fines of HK$300,000 and HK$200,000 on Mr Tang and Ms Lee respectively.  In his Reasons for Judgment handed down on 11 October 2017, the judge, while accepting that Mr Tang had subsequently purged the contempt, did not regard it as a reflection of remorse[3]. He described the contempt as “contumacious and intentional”[4], and found that there had been unexplained delay in proceeding with making disclosure and a deliberate intention to stall time.  

C.    The complaints

17.On 2 November 2017, the Complainant submitted three disciplinary complaints against Mr Tang and Ms Lee as follows:

(1)  Section 34(1)(a)(vi) of the PAO applies to Mr Tang and Ms Lee in that they failed to observe, maintain or otherwise apply sections 100.5(e) and 150.1 of the Code of Ethics for Professional Accountants (“COE”) to comply with relevant law and regulations and avoid any action that discredits the profession, when they were found to be in contempt of court by not complying with the March 2015 Order.  (“Complaint 1”)

(2)  Section 34(1)(a)(viii) of the PAO applies to Mr Tang and Ms Lee in that their contempt of court amounted to professional misconduct.  (“Complaint 2”)

(3)  Section 34(1)(a)(x) of the PAO applies to Mr Tang and Ms Lee in that their contempt of court amounted to dishonourable conduct.  (“Complaint 3”)

D.    The Disciplinary Committee’s decisions

D1. Decision on liability

18.Mr Tang denied all three complaints.  His arguments before the Disciplinary Committee were that:

(1)  There was no professional misconduct in that the contempt did not impinge on his capacity as a liquidator or an officer of the court, or any professional capacity, or in connection with professional work[5].

(2)  The disciplinary proceedings amounted to “double punishment” as he had already purged his contempt and paid the penalties imposed by the Court[6].

(3)  The Complainant had no jurisdiction to put forward the Complaints, relying on the fact that the Law Society of Hong Kong did not commence disciplinary proceedings against a solicitor who was held in contempt by the Court[7].

(4)  The findings of To J should be disregarded as he was biased and had made factual errors.

19.M Tang further gave the following explanations for the non-compliance of the March 2015 Order:

(1)  He was at the time heavily involved in litigations with the majority partners of JBPB and the prospect of accessing the documents ordered to be disclosed was slim. 

(2)  He had not seen the invoices of payment which were passed to the administration and finance department of JBPB, and he would thus be under a great administrative burden to produce them since they were not in his possession. 

(3)  There was no necessity for the documents. 

20.The Disciplinary Committee rejected Mr Tang’s arguments and explanations for the following reasons:

(1)  The capacity in which Mr Tang received the orders requiring him to make disclosure is irrelevant.  He is a professional accountant and a member of the Institute, regardless of whether he was acting in the capacity of a liquidator at the time of the contempt, or whether JBPB was a firm registered with the Institute[8].

(2)  Contrary to Mr Tang’s understanding, court proceedings and     disciplinary proceedings serve different purposes.  He was punished by the Court for disobedience of court order, whereas the disciplinary proceedings were primarily concerned with professional conduct and standards expected of members of the Institute[9].  In the same vein, the fact that Mr Tang was considered by the Court to remain fit and proper to be a trustee-in-bankruptcy did not impact on whether the Complaints would be established[10].

(3)  The Disciplinary Committee could not, and would not, speculate on why another professional body did not commence disciplinary proceedings against its members found to be in contempt of court.  The inaction of another professional body has no bearing on the Disciplinary Committee’s decision-making exercise[11].

(4)  The errors of law in To J’s judgment dated 18 October 2016 had been corrected by the Court of Appeal, and those facts or matters not altered or changed by the Court of Appeal remain proper findings[12]. 

(5)  The Disciplinary Committee sympathized with Mr Tang with regard to the difficulties he faced in complying with the March 2015 Order, but did not consider they were legitimate reasons for his delay or non-compliance with the court order.  No other person was better placed than Mr Tang and Ms Lee to produce the documents given that they were CWT’s liquidators.  Further, the documents were clearly within Mr Tang’s power to produce, as shown by the fact that he was ultimately able to produce them.  It is understandable that Mr Tang was reluctant to pay the costs of inspection, but the contempt proceedings could have been avoided had he acted sensibly and made the payment[13]. Whether there was a necessity for the documents to be produced is not a defence to the Complaints.  Once the challenge to production failed and the Court made an order, it had to be complied with.

(6)  Mr Tang’s good character and past contributions to the profession were irrelevant to whether the Complaints were proved.  Likewise, insofar as the Complainant sought to rely on To J’s observations on Mr Tang’s integrity, such comments were only relevant to sentencing[14].

21.The Disciplinary Committee found the contempt committed by Mr Tang and Ms Lee to be serious, and noted there was a lack of remorse on Mr Tang’s part in light of his deliberate stalling of time and delay in the court proceedings. Their reasons are encapsulated in [44.1] to [44.3] of the Decision as follows:

“44.1 In the CA judgment dated 16 February 2017, it was held that the contempt was a ‘wilful defiance’ and a “determined and obstinate refusal to comply”. Although the Respondents later tried to purge their contempt, the Honourable Mr. Justice To, in the CFI judgment dated 11 October 2017, still considered that there was ‘a deliberate intention to stall time’. Tang, in particular, contested the discovery application rigorously ‘by raising every objection, however technical and unmeritorious’. Such conduct fell far below what would have expected of a reasonable CPA.

44.2 The Trustees of Mr. David Ho suffered irremediable prejudice in having to “wait for more than two years for documents which the Respondents could have been easily produced’ and, by the time they had finally received them, (sic) were of no use whatsoever. By resisting the discovery application, the Respondents gave the objective impression they had something to hide, and thus the Trustees were ‘misled, their time and costs [were] wasted, and opportunities [were] lost’. Moreover, there is a public interest element in the case, i.e. the public’s interest in having liquidation investigated swiftly with the least expenses.

44.3 The Official Receiver is highly concerned about the present case and has temporarily removed the Respondents from all Panel A cases.”

22.In respect of the Complaints, the Disciplinary Committee found all three of them proved.

23.On Complaint 1, the Disciplinary Committee’s reasons, which were set out in [49] to [53] of the Decision, are as follows:

“49. While the jurisdictional basis for the contempt of Court order is undisputed, there were no case precedents concerning the proper interpretation of the phrase ‘relevant laws and regulations’ in that context. One may equate ‘laws’ with statutes only, but the word may also bear the meaning of both statutes and the common law. The Committee considers that a purposive approach should be adopted and there is no reason to adopt a restrictive meaning of the word.

50. The COE serves as a guiding document stating basic principles that professional accountants should follow, including certain standards and compliance with the law when practising. The Committee sees no need in dwelling on the subtle differences between the common law and statutory provisions. The Committee should use a fair, wide and liberal construction of the wordings within the COE to ensure that professional accountants maintain a certain ethical standard.

51. It would be absurd if a professional accountant's omission to abide by direct Court orders was not considered to have fallen below the expected standard of the profession.

52. In any event, the Committee finds that [Mr Tang and Ms Lee] had failed to ‘avoid any action that discredits the profession’. [Mr Tang and Ms Lee] could have easily avoided the contempt proceedings. …

53. Considering the capacity of [Mr Tang and Ms Lee] as members of the [Institute] and his intentions behind the contempt, Committee finds [Mr Tang and Ms Lee] to have breached Sections 100.5(e) and 150.1 of the CEO for failure to ‘comply with relevant laws and regulations and avoid any action that discredits the profession’.”  

24.On Complaint 2, the Disciplinary Committee’s reasons were set out in [55] to [57] of the Decision as follows: 

“55. The Committee accepts that the proper test is as suggested by the Complainant and laid down in Law Yiu Wai Ray v Medical Council. Any conduct that has fallen below the standards of conduct of a reasonable accountant amounts to professional misconduct. The test adopted in the medical profession can equally be adopted in other professions for assessing ‘professional misconduct’.

56. The Committee wishes to point out that misconduct alone does not automatically constitute professional misconduct. However, professional misconduct needs not occur in the course of professional practice.

57. The Committee concludes that [Mr Tang and Ms Lee] were acting as professional accountants and as members of [the Institute] the time of the contempt.  [Mr Tang and Ms Lee’s] defiance to the Court order is an attempt to stall for time, as seen in the long-delayed presentation of the required documents. There was a conscious decision made by [Mr Tang and Ms Lee] and unquestionably amounts to professional misconduct.”

25.As for Complaint 3, the Disciplinary Committee’s reasons as set out in [58] and [59] of the Decision are as follows:

“58. Complaint 3 concerns ‘dishonourable conduct’. This is defined as ‘an act or omission… bringing discredit to the certified public accountant himself, the Institute or the accountancy profession’, under Section 34(2) of the PAO, and overlaps with Complaint 1.

59. The Committee considers that [Mr Tang and Ms Lee’s] contempt, which has led to the profession being discredited, fulfils the criteria for ‘dishonourable conduct’, falling under Section 34(1)(a)(x) of the PAO and hence Complaint 3 is also established.”

D2.  Decision on sanctions and costs

26.The Disciplinary Committee ordered that Mr Tang and Ms Lee be reprimanded under section 35(1)(b) of the PAO and each be fined HK$20,000 for Complaint 1, HK$20,000 for Complaint 2 and HK$10,000 for Complaint 3.  The matters taken into account by the Disciplinary Committee in sentencing were set out in [8] and [9] of the Sanctions Decision as follows:

“8. Having considered the submissions of the parties and reviewed the other disciplinary cases, the Disciplinary Committee is of the view that:

a. the subject of the complaints – contempt of Court – had been purged (and [Mr Tang and Ms Lee] had already been fined and were liable to pay costs of the contempt proceedings);

b. there was no dishonesty or fraud involved;

c. there was no suggestion that [Mr Tang and Ms Lee] (particularly Mr Tang who remains a practising accountant) were unfit to remain in practice;

d. the contempt of Court was occasioned by virtue of: i) the stubbornness of [Mr Tang]; and ii) the failure of [Ms Lee] to pay heed to the Court Orders herself but leaving the matter to be dealt with by [Mr Tang] alone; and

e. although [Mr Tang] was primarily responsible for not complying with the relevant court orders, [Ms Lee] had a non-delegable duty owed to Court and it could not be said that her breaches are less serious in respect of the three complaints.

9. In imposing the sanctions, the Disciplinary Committee had also taken into consideration the practice histories, contributions to the society and the positive comments from the professional acquaintances of Mr Tang and Ms Lee.”

27.The Disciplinary Committee also allowed the Complainant’s claim for costs and expenses and taxed them at HK$283,730, and further ordered that they be paid by Mr Tang and Ms Lee jointly and severally.  Its reasons were set out at [14] to [18] of the Sanctions Decision as follows:

“14. Whilst the award of costs is generally a discretionary matter, the Disciplinary Committee sees no reason to depart from the general rule that ‘costs should follow event’ in the present case. All three complaints were proven against [Mr Tang and Ms Lee] and they should bear the costs of and incidental to the proceedings.

16(sic). The claim for ‘costs and expense’ under section 35(1)(iii) of the PAO is subject to reasonableness and the Disciplinary Committee can always tax such costs and expenses and allow only a reasonable sum.

17. The assessment of costs and expenses is not rocket science and the Disciplinary Committee is entitled to take a ’gross sum assessment’ approach. The Disciplinary Committee considers that: i) the hourly rates; ii) the time spent by the staff members of [the Institute] and the Clerk to the Disciplinary Committee; and iii) the photocopying charges to be reasonable.

18. As to the incidence of payment of the costs and expenses of [the Institute], the Disciplinary Committee considered that [Mr Tang and Ms Lee] should be jointly and severally liable for the same in this particular case. The Disciplinary Committee is aware that [Ms Lee] is bankrupt and that effectively means that [Mr Tang] will likely have to pay the entire costs and expenses of the [Institute]. In reaching its decision, the Disciplinary Committee took into account of the conduct of [Mr Tang and Ms Lee] in the proceedings including i) the various unmeritorious applications of [Mr Tang]; ii) non-observance / fouling of the directions of the Disciplinary Committee and the delay caused by his various last-minute time extensions; and iii) the irrelevant issues, unwarranted personal comments and non-points raised by [Mr Tang] in his various submissions in the proceedings.” 

E. This appeal

28.In this appeal, Mr. Tang seeks to appeal both the Decision and the Sanctions Decision.  Ms Tong, for the Complainant, correctly pointed out that the appeal mechanism under section 41 of the PAO only permits appeal against the Sanctions Decision and not the Decision: see section 41(b)(iii).  The Complainant, however, accepts that Mr Tang may challenge the correctness of the Decision as part of his appeal against the Sanctions Decision.

29.The Amended Notice of Appeal raised six grounds of appeal, which may be summarised as follows:

(1)  Complaint 1 was not established in that the contempt that Mr Tang was found guilty of by the Court of Appeal (“the Contempt”) did not constitute relevant laws and regulations or conduct that may discredit the profession for the purpose of sections 100.5(e) and 150.1 of the COE.   (“Ground (1)”)

(2)  Complaint 2 was not established in that the Contempt did not amount to professional misconduct given that it neither involved sufficiently serious misconduct in the exercise of professional practice nor morally culpable or disgraceful conduct that brought disgrace upon Mr Tang as a professional accountant thereby prejudicing the profession’s reputation.  (“Ground (2)”)

(3)  Complaint 3 was not established in that the Contempt did not amount to dishonourable conduct given that it was not an act or omission that would reasonably be regarded as bringing or likely to bring discredit upon Mr Tang, the Institute or the accountancy profession. (“Ground (3)”)

(4)  The Disciplinary Committee failed to give sufficient reasons as to why each of the complaints was established.  (“Ground (4)”)

(5)  The Disciplinary Committee should have only found the most serious of the three complaints to be established to the exclusion of other complaints, and it erred in penalising Mr Tang three times for the same incident (i.e., the Contempt).  (“Ground (5)”)

(6)  The costs order should be set aside or varied in accordance with this Court’s conclusions on the three complaints.  Without prejudice to this, the Disciplinary Committee erred in allowing, and taxing, the Complainant’s costs and expenses in full in that there was no explanation as to why the amount claimed was reasonable, there was no power to award indemnity costs, and the amount allowed was not proportionate to the penalties imposed.   (“Ground (6)”)

F. Applicable legal principles

30.Counsel are in agreement that the Court’s jurisdiction under section 41 of the PAO is appellate and not supervisory.  It is therefore incumbent upon Mr Tang to demonstrate that some error has occurred in the proceedings before the Disciplinary Committee or in its decision: Lie Han Ji v Registrar of HKICPA (unreported), CACV 265/2009, 9 March 2012, at [35].  

31.It is also well settled that the Court will afford an appropriate measure of respect to the decision of disciplinary tribunals, recognising that they consist of members in the profession who are best placed to adjudicate upon the propriety of a fellow professional’s behaviour, whether the behaviour falls short of generally accepted standards within the profession, amounts to professional misconduct and/or would bring the profession into disrepute: see Albert Wou v Medical Council of Hong Kong [1988] 1 HKLR 388 at 391E-F; Fong Yiu v Chinese Medical Council of Hong Kong [2018] 2 HKLRD 439 at [3.3]-[3.5]; Benjamin Mark Herbert (Dr) v Veterinary Surgeons Board of Hong Kong [2018] 2 HKLRD 133 at [24]; Re A Solicitor (Paul Tse: No 1) [2006] 2 HKC 159 at [36].  

32.As to appeal against sanctions imposed by a specialist tribunal whose members consist of members of the same profession, such as the Disciplinary Committee in this case, the Court’s approach was explained by Lam VP (as Lam PJ then was) in Registrar of HKICPA v Leung Kam Man Victor, CACV 37/2016, 17 January 2017, at [11] to [16].  In summary, the disciplinary committee has a margin of discretion in deciding the appropriate sanction for maintaining the standards of the profession, and the court will not intervene so long as the sanction imposed falls within the reasonable range of options and is not plainly wrong.

G.      Our reasons for decision

G1.  Ground (1): Was Complaint 1 established?

33.Ground (1) challenges the Disciplinary Committee’s finding that Complaint 1 was established.  The gist of Complaint 1 is that the Contempt constitutes a failure to comply with relevant laws and regulations and to avoid any action that discredits the profession under sections 100.5(e) and 150.1 of the COE. 

34.Section 100.5(e) provides that:

“A professional accountant shall comply with the fundamental principles:

…

(e)  Professional Behavior – to comply with relevant laws and regulations and avoid any action that discredits the profession.”

35.Section 150.1 elaborates on the principle of “professional behavior” as follows:

“The principle of professional behavior imposes an obligation on all professional accountants to comply with relevant laws and regulations and avoid any action that discredit the profession. This includes actions that a reasonable and informed third party, weighing all the specific facts and circumstances available to the professional accountant at that time, would be likely to conclude adversely affects the good reputation of the profession.”

36.The primary contention of Mr Wong, who appeared for Mr Tang, under Ground (1) is that for the purpose of sections 100.5(e) and 150.1, “laws and regulations” are confined to those which are relevant or linked to the accountancy profession, and “action that discredits the profession” is not concerned with trivial matters and must be related to the profession.  It is argued that the Contempt had nothing to do with the accountancy profession or Mr Tang qua professional accountant, and only concerned him as a minority partner of JBPB, which at the relevant time was not a registered firm of the Institute.  It is also argued that the Contempt was not discreditable to the profession or dishonourable or disgraceful or attracted some kind of opprobrium to bring the accountancy profession into disrepute.

37.In the first place, we note that the argument on the interpretation of “laws and regulations” raised by Mr Wong in this appeal was not advanced before the Disciplinary Committee.   Nevertheless, the Disciplinary Committee had in its deliberation on Complaint 1 taken the view, which we agree, that a purposive approach should be adopted in interpreting the two sections, and that the phrase should be construed to promote the purpose of the COE, which is the setting of standards for and the regulation of conduct of professional accountants.    

38.Evidently, the focus of sections 100.5(e) and 150.1 is the credibility and reputation of the profession.  The purpose of the obligations imposed by the sections is to avoid conduct that would discredit the profession or adversely affect the reputation of the profession.  There is also nothing in sections 100.5(e) and 150.1 limiting “relevant laws and regulations” to those related to the practice of an accountant or the profession per se.  We do not agree with Mr Wong that the terms “professional accountant” and “professional behavior” in the two sections can lead to a construction that “laws and regulations” mean only those that are linked to the profession.  In view of the purpose of the COE and the two sections, there is no warrant to confine the duty to comply with the law to those laws and regulations that are linked or relevant to the accountancy profession. 

39.Such a construction is consistent with the decisions in R (Remedy UK Ltd) v General Medical Council [2010] Med LR 330 at [37], and Roylance v General Medical Council (No 2) [2000] 1 AC 311 at 332E, which were considered and applied in Benjamin Mark Herbert (Dr) v Veterinary Surgeons Board of Hong Kong, supra, at [19] to [24].  In Benjamin Mark Herbert (Dr), this Court (Yuen and Chu JJA and G Lam J) in construing the phrase “misconduct … in any professional respect” in section 17(1)(a) of the Veterinary Surgeons Registration Ordinance, Cap. 529, held that the Inquiry Committee of the Veterinary Surgeons Board had a broad purview with no restriction to conduct occurring within a veterinary surgeon’s practice only, and that professional misconduct included conduct outwith the course of professional practice but which fell short of standards and reflected adversely on the profession.   

40.As to the argument that the Contempt was not committed by Mr Tang qua professional accountant but only as a partner of JBPB, we do not consider such a distinction, or the capacity in which Mr Tang was held to be in contempt, is relevant to whether the COE was breached.  Even though it was not committed in the course of Mr Tang’s professional practice as accountant, the Contempt is nevertheless a deliberate breach and wilful defiance of a court order.  It should also be noted that the documents ordered to be disclosed came into JBPB’s possession in the course of Mr Tang’s work as CWT’s liquidator. 

41.Further, as correctly pointed out by the Disciplinary Committee[15], Mr Tang is a professional accountant and a member of the Institute and is therefore bound by the COE, regardless of whether he was in the capacity as a liquidator or a partner of JBPB at the time of the Contempt.  Given our decision on the construction of sections 100.5(e) and 150.1 of the COE above, there is no room for the argument that a distinction should be drawn between “the man and the office”.  The warning against the danger in regarding any misconduct as particularly affecting the reputation of the office rather than the man in Livingstone v The Adjudication Panel for England [2006] HRLR 45 at [40], relied on by Mr Wong, has to be viewed in the context of the case. The scope of the Code of Conduct in Livingstone was limited by statute and was not intended to affect what a member of public authority did in his private life other than when there was a misuse of his official position: see [25] to [28].  We do not accept that the Disciplinary Committee fell into error in taking the view that a professional accountant’s omission to abide by direct Court orders was conduct falling below the expected standard of the profession[16].

42.Mr Wong also argued that the Contempt was not discreditable to the profession or dishonourable or disgraceful or attracted some kind of opprobrium sufficient to bring the accountancy profession into disrepute because the Contempt was not sufficiently serious, given that it was one single isolated incident, in relation to one narrow category of documents, and Mr Tang’s hitherto unblemished professional practice record.  We do not agree.

43.Firstly, the Disciplinary Committee, comprising members of the profession, is in the best position to judge whether the Contempt falls short of generally accepted standards within the profession and/or would bring the profession into disrepute, and the Court would be slow to interfere: see the authorities mentioned in [31] above.  

44.Secondly, the Disciplinary Committee had in fact found the Contempt to be serious and discreditable to the profession, having regard to the circumstances in which it was committed, the irremediable prejudice suffered by the Trustees and the public interest at stake: see [44] to [45] of the Decision and [21] above.   This is a view open to the Disciplinary Committee in light of this Court’s judgment in CACV 214/2016 and To J’s Reasons for Judgment (on sentencing) given in HCMP 450/2016.

45.Thirdly, we do not accept the submission that the Disciplinary Committee erred in regarding Mr Tang’s good character and past contributions to the profession as irrelevant to whether the Complaints were proved.  In advancing this submission, Mr Wong relied on Walker v Bar Standards Board (unreported) Case No PC 2011/2019, 19 September 2013, Rao v General Medical Council [2003] Lloyd’s Rep Med 62 and Silver v General Medical Council [2003] Lloyd’s Rep Med 333.  However, these cases must be read subject to Campbell v General Medical Council [2005] 1 WLR 3488, in particular the analysis at [34] to [44] which shows that the three decisions were based on a misreading of the earlier Privy Council decision in Preiss v General Dental Council [2001] 1 WLR 1926.  We do not read Walker, Rao and Silver as establishing a general proposition that a previous clean professional record or the misconduct being an isolated incident will preclude a finding of professional misconduct.  As highlighted in Campbell, the issue of culpability and mitigation are distinct; it is important not to treat matters exclusively relevant to mitigation as relevant to the question of whether professional misconduct has been established.  In our view, Mr Tang’s good character, past contributions and his unblemished professional practice are matters relevant to mitigation, and do not preclude the Contempt from constituting a breach of the COE. 

46.Fourthly, we also do not agree that the nature or gravity of the Contempt is not so likely to bring Mr Tang or the profession into disrepute or to undermine public confidence in the profession.  This is not a case of momentary lapse or inadvertent omission.  On the contrary, as found by the Court and the Disciplinary Committee, it was a deliberate defiance of, and an obstinate refusal to comply with, the court order.  The gravity of the matter is not lessened by the fact that Mr Tang was at the time embroiled in litigations with the majority partners of JBPB or the other explanations he proffered in the disciplinary hearing: see [19] above.  The Disciplinary Committee cannot be faulted for taking the view that Mr Tang’s conduct breached the standards imposed by the COE and would bring discredit upon himself and the profession, especially when his conduct is the subject of public censure by the Court.

47.Fifthly, we reject Mr Wong’s argument that the Disciplinary Committee was only entitled to consider the Contempt itself and the facts since 18 October 2016, but not the facts pre-dating and antecedent to the Contempt.  As submitted by Ms Tong, the Complaints are not based solely on the judicial finding of contempt, but extend to the circumstances and manner in which the Contempt was committed[17].  Further and importantly, in determining whether section 100.5(e) was breached, the Disciplinary Committee was required by section 150.1 to consider whether “a reasonable and informed third party, weighing all the specific facts and circumstances available to the professional accountant at that time, would be likely to conclude adversely affects the good reputation of the profession.”  The circumstances in which the Contempt was committed and its likely consequences are thus relevant factors that the Disciplinary Committee should take into account in determining whether Complaint 1 was established. They are also directly relevant to the question of whether Mr Tang could have avoided the Contempt and whether he knew or should have known it may discredit the profession.  

48.For the above reasons, Ground (1) has no merits.

G2.  Ground (2): Was Complaint 2 established?

49.Ground (2) concerns Complaint 2, the gist of which is that the Contempt amounts to professional misconduct.  In contending that Complaint 2 is not made out, Mr Wong’s principal argument is that the Contempt involved neither sufficiently serious misconduct in the exercise of Mr Tang’s professional practice, nor conduct of a morally culpable or otherwise disgraceful kind bringing disgrace upon Mr Tang qua a professional accountant, thereby prejudicing the profession’s reputation.     

50.Professional misconduct is not defined under the PAO.  In R (Remedy UK Ltd) v General Medical Council, supra, at [37], it was held that misconduct consists of two principal kinds.  The first involves sufficiently serious misconduct in the exercise of professional practice such that it can properly be described as misconduct going to fitness to practise.  The second involves conduct of a morally culpable or otherwise disgraceful kind which may, and often will, occur outwith the course of professional practice itself, but which brings disgrace upon the profession and thereby prejudices the reputation of the profession. Conduct that is dishonourable or disgraceful or attracts some kind of opprobrium will be sufficient to bring the profession into disrepute.  It matters not whether such conduct is directly related to the exercise of professional skills, though the conduct must be at least disreputable before it can fall into the second misconduct limb.  

51.The Hong Kong Courts have consistently held that professional misconduct can include misconduct by a professional otherwise than in the pursuit of his professional practice, and the professional disciplinary body is best placed to determine whether a misconduct committed by its member is of such a character and degree of seriousness that it tended to damage the reputation of the profession: Albert Wou v Medical Council of Hong Kong, supra, at 391E-392B; Benjamin Mark Herbert (Dr) Veterinary Surgeons Board of Hong Kong, supra, at [18]-[25]; and Law Yiu Wai, Ray v Medical Council of Hong Kong [2016] 4 HKC 1, at [46]-[50].

52.It is thus clear from the authorities that professional misconduct is wide enough to include personal behaviour otherwise in the pursuit of one’s professional practice which falls short of standards and reflects adversely on the profession.  Whether the Contempt constitutes professional misconduct under section 34(1)(a)(viii) of the PAO is a question for the Disciplinary Committee, who will be the best judge to decide whether Mr Tang’s conduct falls short of standards and reflects adversely on the profession.  

53.We are satisfied that in considering Complaint 2, the Disciplinary Committee had applied the correct test and principle.  There was no challenge by Mr Tang as to the facts and evidence on which the Disciplinary Committee based its decision.  For the reasons we gave in section G1 above, the Disciplinary Committee was entitled to conclude on the evidence that the Contempt and the circumstances in which it was committed were of such a character and degree of seriousness that Mr Tang’s conduct fell short of standards and tended to damage the reputation of the profession as amounting to professional misconduct.

54.We see no basis to interfere with the Disciplinary Committee’s conclusion on Complaint 2.  Ground (2) is not made out.  

G3. Ground (3): Was Complaint 3 established?

55.Ground (3) disputes the Disciplinary Committee’s finding that Complaint 3 was established.  The gist of the complaint is that the Contempt amounts to dishonourable conduct for the purpose of section 34(1)(a)(x) of the PAO.  “Dishonourable conduct” is defined in section 34(2) as:

“an act or omission of a certified public accountant, whether or not in the course of carrying out professional work or as a certified public accountant, which would reasonably be regarded as bringing or likely to bring discredit upon the certified public accountant himself, the Institute or the accountancy profession.”

56.Mr Wong’s submission is that, based on his arguments in support of Ground (1), the Contempt did not constitute dishonourable conduct just in that none of the criteria under section 34(2) was present.  He also complained that the Disciplinary Committee did not properly explain why the complaint was established.

57.It is plain from section 34(2) that misconduct in a private capacity can amount to dishonourable conduct if, objectively viewed, it discredits the accountant himself, the Institute or the profession.  It follows that the capacity in which Mr Tang was held to be in contempt is irrelevant.

58.In considering Complaint 3, the Disciplinary Committee recognised that the element of “bringing discredit upon himself, the Institute or the accountancy profession” overlapped with the criteria under Complaint 1, namely the professional accountant is required under sections 100.5(e) and 150.1 of the COE to avoid any conduct which may discredit the profession.  Having considered the Contempt and the circumstances in which it was committed, the Disciplinary Committee was satisfied that Mr Tang’s conduct has discredited the profession, thus fulfilling the criteria for “dishonourable conduct” under the PAO[18].

59.For the same reasons we have given in relation to Grounds (1) and (2), the question as to whether the Contempt constitutes dishonourable conduct is for the Disciplinary Committee, who is best placed to decide whether Mr Tang’s conduct objectively discredited himself, the Institute or the profession.  Further, in light of the serious nature of the Contempt and the judicial criticisms it attracted, the Disciplinary Committee’s conclusion that the Contempt discredited Mr Tang and the profession is well justified.  So is its finding that the Contempt constituted dishonourable conduct.

60.For the reasons we give under Ground (4) below, we also do not accept the criticism that the Disciplinary Committee did not properly explain its finding that Complaint 3 was proved.  

61.For the above reasons, we find no merits in Ground (3). 

G4. Ground (4): Adequacy of the Disciplinary Committee’s reasons

62.Ground (4) complains that the Disciplinary Committee failed to give adequate reasons for finding each of the three complaints proved.  As pointed out in the hearing, and accepted by Mr Wong, the arguments under Ground (4) are effectively subsumed under Grounds (1) to (3) and do not add anything to Mr Tang’s case in this appeal or give rise to a separate ground of appeal.   As we have for reasons given above rejected Grounds (1) to (3), this ground must also fail. 

63.In any event, the duty to give reasons only requires the tribunal to state its decision in a form sufficient to make clear to the losing party why he has lost, and this duty is discharged if, having regard to the issues and nature of the evidence, the reasons for the decision are plain, whether because they are set out in terms, or because they are implicit: Southhall v General Medical Council [2010] EWCA Civ 407, at [54].  Further, as Mr Wong accepted, the adequacy of the reasons given by a disciplinary tribunal must depend on the nature and circumstances of the case: Fung Yee Leung Wilson v Medical Council of Hong Kong [2019] HKCFA 15 at [11].  

64.In the present case, the Disciplinary Committee has set out all the primary facts underlying the Complaints[19], outlined the relevant professional standards governing Mr Tang’s conduct and explained why such standards were breached by reason of the Contempt[20].  In addition, as submitted by Ms Tong, the question of whether certain conduct is dishonourable or discreditable to the profession is ultimately a value judgment of the Disciplinary Committee, and as such, it is not necessarily susceptible to any detailed explanation or analysis after the tribunal has set out the primary facts which ground its conclusion: see also Meadow v GMC [2007] QB 461 at [122] and [197].

65.The present case is therefore very different from Man Tak Pharmacy v Pharmacy and Poisons Board [2019] 4 HKLRD 416 at [25], [28] to [30], on which Mr Wong relied.  In that case, no primary facts, however briefly or barely, were mentioned or relied upon by the tribunal in arriving at its conclusion, which is no more than a mere statement of opinion, and it was unclear on what basis the tribunal ruled against the respondent.   

66.For the above reasons, Ground (4) cannot stand.

G5. Ground (5): Did the Disciplinary Committee err in finding all the complaints established?  

67.Under Ground (5), Mr Wong argued that the Disciplinary Committee was wrong to find all three complaints proved when they were all based on and related to the same incident, namely the Contempt.  He submitted that the Disciplinary Committee should have only found the most serious of the Complaints to be established to the exclusion of others, and should not have penalised Mr Tang three times for the same incident.  

68.Mr Wong based his arguments on two criminal cases, R v Harris (John) [1969] 1 WLR 745 at 746B-C and R v Lam Kwok-hung [1989] 2 HKLR 182 at 187I-188G.   In Harris, the Court of Appeal in England quashed a conviction of indecent assault when the accused was also convicted of buggery on the same facts.  It was held that the same incident should not be made the subject matter of distinct charges when the conviction of indecent assault merged with the conviction for the graver charge of buggery.  In Lam Kwok-hung, this Court (Yang CJ, Silke VP and Power JA) held that the trial judge, having found the accused guilty on the charge of possession of dangerous drugs for the purpose of unlawful trafficking (“DDUT”), erred in also convicting him on the alternative charge of trafficking in a dangerous drug.  Although Harris was considered by the Court, it was not applied as the Court considered it would be straining the language to say the more serious offence of trafficking was merged with the less serious offence of DDUT.        

69.We do not consider it is apt to apply or draw analogy with the two criminal cases as the nature of the proceedings and the considerations involved are different.  In the case of Lam Kwok-hung, the trafficking conviction was quashed because the charge of trafficking was expressly stated in the indictment to be alternative to the charge of DDUT.  As for Harris, it was considered undesirable for the same incident to be made the subject matter of distinct charges because it may appear to people not familiar with the circumstances that two entirely separate offences were committed.  None of these considerations apply to the present case.     

70.In the context of disciplinary proceedings, where an act of misconduct gives rise to multiple breaches of professional standards or norms, as in the present case, it is not unusual for separate complaint to be raised for each breach: see, for example, Lie Han Ji v Registrar of HKICPA, supra.  Mr Wong accepted that he has not been able to find any precedents where objection to this was taken.  In our view, in disciplinary proceedings, being a means by which professional bodies maintain and enforce professional standards and norms, the use of separate complaints for the same misconduct would drive home the message that one misconduct may engage several aspects of professional and ethical standards. At the same time, it is important that members of the profession should not be led into thinking that the professional body is seeking only to enforce one aspect of professional and ethical standards but not the other.  It follows that there is no reason in principle that a disciplinary body should be compelled to elect between complaints, contrary to Mr Wong’s submissions.        

71.As for the argument that Mr Tang was penalised three times for the same incident, we do not agree this is the case.  It would be apparent from the penalties imposed, especially the level of fine for each of the complaints, that the Disciplinary Committee had borne in mind the fact that the complaints were based on the same underlying misconduct.  The penalties imposed reflect what the Disciplinary Committee perceived to be appropriate sanctions having regard to the totality of the matter.  In short, we find no merits in Ground (5).

G6. Ground (6): Costs order

72.Ground (6) is a challenge to the Disciplinary Committee’s costs order.  At the heart of the complaint is that the amount of the Complainant’s costs and expenses taxed and allowed by the Disciplinary Committee is excessive.  A number of sub-grounds have been raised, namely (i) the Disciplinary Committee has no power to award indemnity costs; (ii) it failed to give proper reasons why the costs and expenses represented “a reasonable sum”; (iii) the amount of costs ordered is disproportionate to the penalties imposed and the maximum fine allowed; (iv) the Complainant should not be allowed to recover fees of its in-house legal staff at their hourly rates; and (v) there is no breakdown or explanation in the Complainant’s Statement of Costs.   

73.Section 35(1)(iii) of the PAO provides that the Disciplinary Committee may make such order as it thinks fit with regard to the payment of costs and expenses of and incidental to the proceedings, whether of the Institute or of any complainant.

74.On sub-ground (i), Mr. Wong’s argument is misplaced.  Firstly, there was no indication in the Decision that the Disciplinary Committee was awarding costs on indemnity basis.  Secondly, the power of the Disciplinary Committee under section 35(1)(iii) of the PAO to award costs is wide as it may make such order as it thinks fit.  It is within its power to award to the Complainant its costs and expenses as claimed in the Statement of Costs.  Contrary to Mr Wong’s submission, it cannot be said that the Disciplinary Committee acted ultra virus in allowing the Complainant’s costs and expenses in full.  

75.Thirdly, as Ms Tong pointed out, paragraph 72 of the Guidelines for the Chairman and the Committee on Administering the Disciplinary Committee Proceedings Rules (“the Guidelines”) states that the starting point in any award of costs should be the costs incurred by the successful party, subject to the Committee being satisfied that the costs were reasonably and necessarily incurred; and the Committee may reduce the amount to the extent it considers the costs to have been incurred unnecessarily or extravagantly.

76.Fourthly, Mr Wong’s reliance on A Solicitor v the Law Society of Hong Kong (unreported) CACV 221/2003, 11 November 2003 is inapt as the context is different.  That is a case concerning the powers of the Solicitors Disciplinary Tribunal to order costs under section 10(2)(e) of the Legal Practitioners Ordinance, Cap.159, which does not provide for the power to order indemnity costs: see [112] and [123].  It has no relevance to the present case, as the power of the Disciplinary Committee under section 35(1)(iii) of the PAO is in wide terms.

77.In respect of sub-ground (ii), it complains that no reasons were given for regarding the amount claimed as a “reasonable sum”.  However, it is clear from the Sanctions Decision (at [17] and [18]) that the Disciplinary Committee had taken into account a wide range of factors, including the conduct of Mr Tang in the proceedings which led to delay and additional costs incurred by the Complainant.  Specifically, the Disciplinary Committee had considered (i) the various unmeritorious applications made by Mr Tang[21]; (ii) Mr Tang’s non-observance/fouling of the directions of the Disciplinary Committee and his various last-minute time extensions which led to delay; and (iii) the irrelevant issues, unwarranted personal comments and non-points raised by Mr Tang in his submissions.

78.Turning to sub-ground (iii), which complains that the costs awarded (i.e., HK$283,730) was disproportionate to (i) the penalties which totalled HK$50,000; and (ii) the maximum fine allowed under section 35(1) of the PAO (i.e., HK$500,000).  This ground is unarguable.  Firstly, as submitted by Ms Tong, the costs order does not even come close to the maximum fine.  Secondly and importantly, the sum awarded is a modest one, and is clearly explicable with reference to Mr Tang’s conduct in the disciplinary proceedings, which, as the Disciplinary Committee pointed out, had resulted in additional costs being incurred by the Complainant.

79.As to sub-ground (iv), it disputes the entitlement of the Complainant to recover the fees of its in-house legal staff on the basis of the “hourly rates” set out in the Statement of Costs.  It also complains there was lack of explanation on the nature of work done by each of the staff of the Institute, and queries whether there is any profit costs element in the amount claimed.  This ground is untenable.

80.Firstly, it is well established that the costs of in-house counsel may be assessed on the same basis as private legal practitioners, by reference to the hourly rates applicable to practitioners of similar seniority, instead of the actual costs of employing them: Ling Yuk Sing v Secretary for Civil Service [2010] HKLRD 722 at [23] to [25]; and Friston on Costs (3^rd ed) at §18.107.  Secondly, it is open to the Disciplinary Committee to conduct a gross sum assessment of the costs and expenses of the Complainant.  It is also entitled to form the view that the hourly rates, the time spend by the staff of the Institute and the clerk of the Disciplinary Committee as well as the photocopying charges are reasonable[22]. As mentioned above, the sum claimed is well within reasonable bounds having regard to the procedural history.  No proper basis has been put forward for challenging the Disciplinary Committee’s decision to allow the costs claims in full.

81.Finally, on sub-ground (v) which asserts that the Statement of Costs has “no meaningful narrative, explanation or breakdown at all”.  This is to be rejected as being without basis.  The Claimant’s Statement of Costs was prepared in accordance with paragraph 74 and Annex 6 of the Guidelines to enable the Disciplinary Committee to conduct a gross sum assessment.  Further, the Statement of Costs has given a breakdown of the time spent on (i) case analysis and preparation of complaint letter; (ii) the directions hearing on 7 March 2019; and (iii) substantive hearing on 22 to 23 July 2019[23]. The Statement of Costs is also accompanied by a further breakdown of the time spent on the case by the legal counsel/general counsel on specific tasks.  Plainly the Disciplinary Committee had been provided with sufficient information to enable it to assess whether the time spent and the costs claimed were reasonable.  

82.For the above reasons, Ground (6) has no merits.

G7. Conclusion and costs

83.In all, we are not satisfied that there is any basis for interfering with the Disciplinary Committee’s finding of liability and its decision on sanctions and costs.  Accordingly, we dismiss the appeal.

84.The Complainant asks that its costs be paid by Mr Tang on indemnity basis given that the grounds of appeal are plainly unmeritorious and the Complainant is defending the appeal in a representative capacity, with funds contributed by members of the Institute, and should not be left out of pocket for the difference between costs on a party-and-party basis and an indemnity basis: Lie Han Ji v Registrar of HKICPA (unreported)CACV 265/2009, 24 April 2012, at [15].

85.We are of the view that costs should follow the event.  We also agree with the Complainant, for the reasons it advanced, that its costs should be awarded on indemnity basis.  We accordingly make an order nisi that Mr Tang pays the costs of the Complainant on indemnity basis to be taxed, if not agreed.

86.Any party who wishes to vary the costs order nisi shall, within 14 days from the handing down of this judgment, apply in writing setting out the grounds in support of the application.  The other party may within 14 days thereafter provide written response to the application.  The Court will then deal with the application on paper without an oral hearing.  The costs order nisi shall become absolute if no application to vary is made within the time stipulated.

Ms Sara Tong, instructed by MinterEllison LLP, for the Complainant.

Mr Thomas W K Wong, instructed by Tang & So, for the Respondent.