Registrar of the Hong Kong Institute of Certified Public Accountants v. Chan Yui Hang

CACV 417/2023

[2026] HKCA 1882

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 417 OF 2023

(ON APPEAL FROM THE DISCIPLINARY COMMITTEE
OF THE HONG KONG INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PROCEEDINGS NO. D-17-1231P)

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BETWEEN

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DECISION ON COSTS

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Hon Chu VP (giving the Decision of the Court):

Introduction

1.On 25 August 2026, this Court handed down our judgment dismissing the appeal of the respondent (“Mr Chan”) against the sanctions and costs order made by the Disciplinary Committee (“Disciplinary Committee”) of the Hong Kong Institute of Certified Public Accounts (“Institute”). We also made a costs order nisi (at §86 of the judgment) that Mr Chan pays the Complainant the costs of the appeal on indemnity basis, to be taxed if not agreed.

2.By a letter dated 4 September 2026, Mr Chan applied to vary the costs order nisi.  He asked that all of the Complainant’s costs, or alternatively some parts of the Complainant’s costs, be taxed and paid on party-and-party basis.

3.The application is opposed by the Complainant.  Both parties had lodged written submissions.  We now give our decision. 

Mr Chan’s arguments

4.The primary contentions of Mr Chan are that he did not act unreasonably in bringing the appeal or in the conduct of the appeal, and there are no special or unusual features in his appeal that warrant an indemnity costs order.  Specifically, Mr Chan argues that:

(1)  The decision of the Disciplinary Committee affects his professional standing and ability to practise, and he is exercising his right to appeal on a matter that affects his livelihood.

(2)  The mere fact that an appeal is weak is not sufficient to warrant an indemnity costs order.

(3)  Our judgment did not find him to have acted dishonestly, put forward a false case, misled the court, brought the appeal for an ulterior purpose, abused the court process, or wasted the court’s time in that the appeal was by consent determined on paper.

(4)  The challenge to part of the finding under the 2nd Complaint (i.e. the opening balances of Client G’s 2014 financial statement) is not a made-up point.

(5)  The application for leave to adduce new evidence was allowed and it was not an unreasonable application.

(6)  On his initiation, the appeal was by consent determined on paper such that the court’s hearing time was not wasted.

(7)  Lie Han Ji v The Registrar of the Hong Kong Institute of the Certified Public Accountants (unreported) CACV 265/2009, 24 April 2012, should not be regarded as establishing an automatic rule. The public character of the Institute should not be a determining factor. It would be blatantly excessive if every appeal against the Institute’s decision would be landed with an indemnity costs order.

The Complainant’s arguments

5.The Complainant’s response, in summary, is that an indemnity costs order is appropriate having regard to the total lack of merits of the appeal, the fact that the Institute is a public body defending this appeal in the general interests of the accountancy profession with funds contributed by its members, and the unreasonableness of Mr Chan’s conduct of the appeal.  The Complainant relies on the following features in the appeal as justifying an indemnity costs order:

(1)  The appeal made a wholesale and unmeritorious challenge across virtually all aspects of the Disciplinary Committee's decision.

(2)  The Notice of Appeal only contained general grounds of appeal with specific grounds of appeal only given in Mr Chan’s skeleton submissions lodged for the appeal. The grounds, however, were unarguable and, in some instances, departed substantially from and were inconsistent with Mr Chan’s previous admissions and position.

(3)  Notwithstanding that this is his second appeal arising from the same set of disciplinary proceedings made by a differently constituted disciplinary committee, Mr Chan persisted in raising a wholesale challenge to the adverse findings against him. Mr Chan’s unreasonable conduct takes the case out of an ordinary unsuccessful litigation.

(4)  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 awarded on a party-and-party basis and an indemnity basis.

6.As to Mr Chan’s arguments, the Complainant submits that:

(1)  While Mr Chan has a statutory right to appeal, he may be visited with an indemnity costs order where the appeal is unmeritorious and hopeless.

(2)  A finding of dishonesty, fabrication of a case, conduct misleading the Court, ulterior purpose, abuse of process or wastage of an oral hearing is not a prerequisite for an indemnity costs order. 

(3)  Notwithstanding that the issue relating to the opening balances of Client G’s 2014 financial statement is not a made-up point, Mr Chan’s challenge to the decision on the 2nd Complaint remains unsuccessful.

(4)  Whether an oral hearing was held to hear the appeal or the appeal is determined on paper is irrelevant.

(5)  There is no basis and it will be contrary to established principles to award a split costs order.

Our reasons for decision

7.The principles on awarding indemnity costs are well established. The Court of Final Appeal held in Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114 at §§12 and 15-19 that: (1) The Court had a broad discretion to determine how costs should be paid and whether indemnity costs should be ordered; (2) A successful party should show that the case had special or unusual features for such an order to be made; (3) The exercise of the discretion was not to be fettered beyond the requirement that indemnity costs must be appropriate; (4) An award of indemnity costs was not confined to cases brought with an ulterior motive, for an improper purpose, or where there was some deception or underhand conduct on the part of the losing party; and (5) The attributes of the parties and the character of the proceedings may be taken into account. The grounds for making such an order must be connected with the case and might extend to any matter relating to the litigation and the parties’ conduct in it, and also to the circumstances leading to the litigation, but no further.

8.Applying these principles, we are satisfied that it is appropriate to order Mr Chan to pay the costs of the appeal on indemnity basis.  Our reasons are as follows.

9.First, as is evident from our judgment, it is an unmeritorious appeal that should not have been brought. Mr Chan has challenged virtually each and every adverse finding made by the Disciplinary Committee.  The grounds and arguments he raised are unarguable, and in several instances, attempts to resile from, and/or put a strained meaning to, admissions or contentions that were made previously.

10.Second, while we accept there is a statutory right under the Professional Accountants Ordinance, Cap. 50 to appeal the outcome of disciplinary proceedings, the right is not to be exercised without due regard to the merits of the appeal.  This is so notwithstanding that the adverse findings and sanctions imposed by a disciplinary committee will invariably impact on a respondent’s professional reputation and may also impact on his ability to practise and in turn his livelihood.  A respondent who pursues an unmeritorious and hopeless appeal and/or otherwise improperly exercise his right of appeal may be visited with an indemnity costs order so as to signal the Court’s disapproval of such conduct.

11.Third, Mr Chan’s conduct of the appeal was undisciplined and unsatisfactory.  In the first place, the grounds of appeal only contain general grounds, giving no particulars or information as to the scope and issues in the appeal.  The specific grounds were only made known to the Complainant and the Court in the skeleton arguments lodged in support of the appeal.  As mentioned above, they turn out to be an indiscriminate, wholesale attack of the adverse findings and sanctions made by the Disciplinary Committee.

12.Further, in respect of his application for admission of new evidence at the appeal, it was granted with no opposition from the Complainant so as to save time and costs.  However, as pointed out by the Complainant, a large part of the documents that Mr Chan sought to adduce were not new evidence as they were among the materials before the Disciplinary Committee.  More importantly, as our judgment shows, the new documents do not advance Mr Chan’s appeal and are of no assistance to the appeal.  We do not accept the submission that the new evidence application was not an unreasonable application or that the costs of it should not be paid by Mr Chan on indemnity basis.

13.Mr Chan also argues that his challenge to part of the Disciplinary Committee’s decision on the 2nd Complaint (i.e. the opening balances of Client G’s 2014 financial statement) is not a made-up point.  Our judgment has pointed out (at §51) that Mr Chan’s argument that the Practice was appointed Client G’s auditor in 2007 was not borne out by the new documents adduced in the appeal.  Furthermore, even if the point were made out, it would have no material bearing on the correctness of the Disciplinary Committee’s decision on the 2nd Complaint and in turn the outcome of the appeal.  It is therefore irrelevant to the basis of the costs to be awarded.

14.Equally irrelevant is Mr Chan’s argument that our judgment did not find him to have acted dishonestly, put forward a false case, misled the court, brought the appeal for an ulterior purpose, or abused the court process, and that there was no wastage of this Court’s hearing time.  Had there been any one or more of these features, an indemnity costs order would follow. The absence of any of these features, however, does not fetter the Court’s discretion to make an indemnity costs order, as they are not prerequisites.

15.Fourth, the Institute is a public body.  This appeal affects the professional interests of the accountancy profession and is defended with funds contributed by members of the Institutes.  As recognised in Society for Protection of the Harbour Ltd (No 2) at §14, an award of indemnity costs, which is a more generous basis, will enable the successful party to recover more of his costs than under a party-and-party award, and in some instances represents a fairer result for the successful party.  This fact, together with the public character of the Institute and the nature of the appeal, are relevant features that the Court can properly take into account in exercising its discretion on whether to award indemnity costs.  This is also the rationale underlying this Court’s decision on costs in Lie Han Ji.  In the present appeal, given our views on the lack of merits and the unsatisfactory conduct of the appeal, it is just and appropriate that the Institute should not be out of pocket for the difference between an award of costs on a party-and-party basis and that on an indemnity basis.

16.Fifth, as to the split costs order sought by Mr Chan as an alternative, it is not entirely clear to us how he proposes to split the costs or what exactly is the form of the order that he is seeking from this Court.  In any event, the court generally does not decide issues of costs according to the outcome of the issues or arguments, but will instead have regard to the overall outcome of the matter before it.  In the present case, there can be no doubt that the Complainant is the successful party in the appeal and is thus entitled to have its costs paid by Mr Chan.  We have, for the reasons explained above, taken the view that the costs should be assessed on an indemnity basis.  We see no legitimate basis to limit the indemnity costs order to only part of the appeal process.

Conclusion on Mr Chan’s application

17.For the above reasons, we refuse Mr Chan’s application to vary the costs order nisi. The order will be made absolute.

18.The Complainant asks that the costs of the appeal be summarily assessed.  We consider this is an appropriate course as it will save time and costs. To facilitate the process, we direct that: (1) The Complainant shall within 14 days from the date of this decision file and serve a statement of costs for summary assessment of the costs of the appeal; and (2) Mr Chan may within 14 days thereafter file and serve a statement of objection, if any.  We will deal with the assessment on paper.

Costs of Mr Chan’s application

19.As to the costs of the application to vary the costs order nisi, they should follow the event.  Mr Chan, having failed, will have to pay the costs of the Complainant on indemnity basis.

20.The Complainant has provided a statement of costs. As Mr Chan has not commented on it, we direct that Mr Chan may, if he so wishes, file and serve a statement of objection to the Complainant’s costs of the application within 14 days from the date of this decision.  We will deal with the assessment on paper.  

MinterEllison LLP, solicitors for the Complainant

The respondent, unrepresented, acted in person