Dr Peter Po Fun Chan v. The Hong Kong Society of Accountants
Read the full judgment text of HCAL 176/2000 on BabelCite. This High Court CFI judgment was delivered on 29 June 2000.
1. The Applicant has sought leave to apply for the judicial review of two decisions of the Respondent, the Hong Kong Society of Accountants ('the Society'). Both decisions relate to the institution of disciplinary proceedings by the Society against the Applicant.
Cited by 3 cases
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HCAL000176/2000 HCAL 176/2000 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO. 176 OF 2000 ____________
____________ Coram: Hon Hartmann J in Court Date of Hearing: 13 June 2000 Date of Handing Down Judgment: 29 June 2000 ______________ J U D G M E N T ______________ 1. The Applicant has sought leave to apply for the judicial review of two decisions of the Respondent, the Hong Kong Society of Accountants ('the Society'). Both decisions relate to the institution of disciplinary proceedings by the Society against the Applicant. 2. Although applications for leave in terms of O. 54, r. 3 of the Rules of the High Court may be considered without a hearing, in this instance the Court directed that there be an oral hearing and that an opportunity be given to the Society to appear and be heard. A brief history 3. On 29 July 1999, the Society received an undated, anonymous letter. Enclosed with the letter was a set of company accounts. These accounts had been prepared by the Applicant's firm for one of its clients. The letter read:
4. If, as professed, the author of the letter was employed by the Inland Revenue Department and if, as alleged, the accounts had been received by that department in support of a tax return, then the author was committing a criminal offence by making the accounts public. In this regard, section 4(1) of Inland Revenue Ordinance, Cap. 112, reads:
5. Section 81 of the same Ordinance provides that any person who acts contrary to the provisions of section 4(1) or who 'aids, abets, or incites any other person' to act contrary to the provisions of that section shall be guilty of an offence. 6. The anonymous letter was given to the Registrar of the Society who, being aware of the secrecy provisions of the Inland Revenue Ordinance, wrote to the Commissioner of Inland Revenue. His letter of 6 October 1999 was couched in the following terms:
7. By letter dated 8 October 1999, the Commissioner replied:
8. In light of this reply, the Society's Director of Professional Conduct wrote to the Applicant (who is a member of the Society) to inform him that the Society had come into possession of the accounts prepared by his firm. The Director then sought the Applicant's comments on a number of observations that had arisen from his review of the accounts. No mention was made in that letter of exactly how the accounts had come into the Society's possession; that remained an open question. 9. Correspondence then ensued between the Applicant and the Society related essentially to the merits of the accounts under review. This culminated in a letter dated 8 March 2000 from the Society advising the Applicant that the Registrar had filed a complaint concerning the manner in which the accounts had been prepared and that a hearing of the Disciplinary Committee of the Society may take place in due course. A copy of the Registrar's complaint was made available to the Applicant. 10. In response to the letter of 8 March 2000, the Applicant sought to learn the manner in which the Society had come into possession of the accounts. His letter of 9 March 2000 read (in part):
11. The Society then supplied a copy of the anonymous letter together with copies of its correspondence with the Commissioner of Inland Revenue. 12. At about that time, it appears that the Applicant himself agreed with the Commissioner that the origins of the anonymous letter could not be known. First, by letter dated 30 October 1999 he had informed the Society that he had been forced to request 2 qualified members of his own staff to seek work elsewhere, one of whom possessed Australian qualifications. The authorship, therefore, may have lain elsewhere than in the Inland Revenue Department. Second, on a general basis, in a letter dated 15 March 2000 the Applicant wrote:
The decisions that the Applicant seeks to quash 13. The Society is a creature of the Professional Accountants Ordinance, Cap. 50. Its statutory objects are set out in section 7 of the Ordinance and broadly encompass powers of regulation of the accountancy profession in Hong Kong. These powers of regulation include the power to discipline members. In this regard, section 34(1)(a) reads:
14. As to the manner in which complaints made under section 34(1) of the Ordinance are to be processed, Rule 3 (1) and (2) of the Disciplinary Committee Proceedings Rules, made pursuant to section 51 of the Ordinance, reads:
15. The Ordinance, however, envisages another means by which reports of misconduct or negligence may be referred to the Society's council. In this regard, section 34(1A) reads:
16. Section 37 of the Ordinance, which governs the matter of legal representation at hearings of the Society's Disciplinary Committee, clearly contemplates these two separate processes of complaint, the one by a complainant and the other by the Registrar. In this regard, subsection (1) reads:
17. The formal complaint submitted by the Registrar to the Council of the Society was dated 28 February 2000. It is a comprehensive document which states at the outset that it is made by the Registrar to the Council in terms of section 34(1A) of the Ordinance, the allegation being that the Applicant has been negligent in the conduct of his profession in terms of section 34(1)(a) of the statute. 18. The two decisions sought to be quashed by the Applicant are, first, the decision of the Registrar to file a complaint and, second, the decision of the Council to refer the complaint to the Society's Disciplinary Panel, both decisions being made pursuant to section 34(1A) of the Ordinance. Grounds upon which the Applicant seeks relief 19. The Applicant's first ground is focused on sections 4(1) and 81 of the Inland Revenue Ordinance. Section 4(1) imposes an obligation of secrecy on persons employed by the Internal Revenue Department. Section 81 makes it a criminal offence to breach section 4(1) or to aid, abet or incite a person to commit such a breach. 20. In light of this, it is the Applicant's contention that, by acting upon material received from a person purporting to be an assessor with the Inland Revenue Department, the Society has aided and abetted the commission of a crime under section 4(1) of the Inland Revenue Ordinance. It is further contended that, as the purported assessor had undertaken to send more sets of accounts, the Society's decision to act on that first set amounted to an incitement to commit further breaches. In case I have done an injustice to the Applicant by incorrectly summarising his first ground, I set out below the relevant portion of his 'amended grounds' for judicial review:
21. In summary, it would appear that the first ground is based upon the principle of 'legality'. However, although it was not argued as such, I have also considered the matter with reference to 'procedural propriety'. 22. The Applicant's second ground, as I understand it, alleges that the Registrar, having received a complaint, albeit anonymous, was under a statutory obligation in terms of section 34(1)(a) of the Professional Accountants Ordinance as read with Rule 3(1) and (2) of the Disciplinary Committee Proceedings Rules to ensure that the complainant was identified, that the grounds of complaint were stated and that he or she signed the written complaint. By proceeding under section 34(1A), the Registrar had either acted ultra vires the statute or had committed an act of procedural unfairness warranting judicial review. In this regard, the Applicant's amended grounds read:
The test to be applied in deciding whether to grant leave 23. Litton JA (as he then was) in R. v. Director of Immigration, ex parte Ho Ming-sai, Civ. App. No. 162 of 1992, said that plainly it is not intended that, in dealing with an application for leave under O. 53, r. 3, the court should anticipate the outcome as if all the relevant evidence was already before the court. It is not intended that the court should, at this threshold stage, entertain elaborate arguments on the facts and the law. In this regard, he cited Lord Diplock in Inland Revenue Commissioners v. National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617 at 643H-644B where he said:
24. The test laid down in R. v. Director of Immigration, ex parte Ho Ming-sai supra directs that I must, at this threshold stage, ask myself only whether the material before me has disclosed matters which, on further consideration, might demonstrate an arguable case for the grant of the relief claimed. A consideration of the Applicant's first ground 25. The Applicant's first ground is propounded on the basis that, in acting on materials accompanying the anonymous letter, the Society 'could only believe' that the materials had been communicated to it 'illegally'; that is, in contravention of the secrecy provisions of the Inland Revenue Ordinance. 26. I disagree. By the time the Registrar acted on the materials accompanying the letter, he had taken positive steps to discover whether or not the author was an employee of the Inland Revenue Department. Officers of that department had conducted an investigation into the matter and had reported that there was no evidence that the author was a tax assessor or that the materials had emanated from the department. 27. A bald assertion in an anonymous letter is not evidence of the truth especially when the author has compelling reasons to disguise his or her true identity. Even the Applicant has accepted that to be the case. If there was, therefore, no evidence that the author of the letter had been bound by the provisions of section 4(1) of the Inland Revenue Ordinance there could be no evidence that there had, in fact, been a breach of that section. Quite properly, in my judgment, the Society did no more than treat the anonymous letter as the neutral vehicle by which the set of accounts was delivered to it. 28. But in any event, even if it was shown that the author of the anonymous letter was an assessor, that would not indicate that the Society had aided and abetted in the commission of an offence under section 4(1). The actus reus of the offence would have been committed at the time that the assessor sent the materials to the Society. When the Society - in ignorance of its contents - opened the anonymous letter and studied those contents, the offence would already have been committed. For a statement of the basic principle, see, for example, Blackstone's Criminal Practice 2000, page 69, where it is said that 'aid' and 'abet' are generally considered to cover, respectively, assistance and encouragement given at the time of the offence, whereas 'counsel' and 'procure' are more apt to describe advice and assistance, given at any earlier stage. 29. In my judgment, it is not tenable to suggest that the officers of the Society - with the requisite mens rea - acted in any way as accessories to the commission of an offence under section 4(1). Nor is it tenable to suggest that, by studying the materials; seeking representations from the Applicant and then deciding on disciplinary proceedings, the officers of the Society were in any way knowingly inciting further breaches of section 4(1). Other than an allegation of dubious authenticity, there was no evidence that the author of the anonymous letter was in a position to breach section 4(1). In my opinion, it is plain that the Society intended to do no more than fulfil its statutory obligations under the Professional Accountants Ordinance. The Society was not reckless as to whether or not the author of the letter was bound by section 4(1) of the Inland Revenue Ordinance. It had already taken rational and positive steps to assure itself that there was no evidence linking the author of the letter to the Inland Revenue Department. 30. What then of the question of procedural propriety? May it be argued that, in accepting the set of accounts for consideration when they had been delivered by such dubious means, the Society had offended contemporary standards of fairness by undermining the Applicant's legitimate expectation that any complaint made against him would emanate from an identifiable source whose motives could (and should) be the subject of scrutiny? 31. I accept there may be cases where arguments of procedural impropriety (or a breach of natural justice) may be founded on such arguments. But here, an I have said, it is plain that the Society's officers placed no reliance on the contents of the anonymous letter other than to adhere to its request to study the set of accounts. It was instead the set of accounts itself which was the focus of their attention. They sought comments on it from the Applicant and in light of those comments, and their own observations, the Registrar exercised his discretion to refer the matter to the Council. 32. The Society has a statutory obligation to ensure that professional standards are adhered to by its members. A failure to do so could result in the profession falling into disrepute. In order to discharge its responsibility to ensure the preservation of standards, the Society - acting through the Registrar - is empowered to consider any matter coming to its attention other than by means of a formal, identifiable complaint. That power comes from section 34(1A) of the Ordinance which enables the Registrar to refer any matter that he 'has reason to believe' reveals professional misconduct or negligence on the part of a member. If he was not so entitled, there would be no need to define his powers in section 34(1A); section 34(1)(a) alone would suffice. 33. The fact that in the present case, in terms of section 34(1A), the Registrar has used his powers to peruse materials coming to his attention, has then expressed his concerns to the Applicant and has given the Applicant a full opportunity to reply cannot, in my opinion, begin to approach anything smacking of procedural impropriety or a breach of contemporary standards of natural justice. A consideration of the Applicant's second ground 34. I trust I have not adopted too simplistic an approach when I say that the Applicant's second ground is founded on the contention that the Registrar only has an unfettered discretion to refer matters himself to the Society's Council when such matters come to his notice other than by way of complaint. If, however, they have come to his attention by way of complaint - whatever the form of that complaint - he is obliged, in terms of Rule 3(1) and (2) of the Disciplinary Committee Proceedings Rules, to ensure that the complainant is identified and not only signs a formal complaint but proceeds to prosecute the matter before the Disciplinary Committee. With respect, I consider that to be an artificial reading of the Ordinance and the applicable Rules. 35. If Rule 3(1) and (2) is to be read as reasonably giving effect to section 34(1), it must mean that it is only complaints made by persons who are prepared to prosecute such complaints that are to be reduced to writing and signed with the grounds of complaint being detailed. Why? Because, as the prosecutors of their own cause, fairness demands that the complainants identify themselves and state their complaint. 36. But if a complainant is not prepared to be identified or is not prepared to proceed further with the matter then, in my judgment, in terms of section 34(1A), if the Registrar believes that the complaint has substance, he may take the matter over and become the prosecutor of the cause. The Registrar must then - his identity being known - state the details of his complaint. I say that because by then it has become 'his' complaint. Section 34(1A) is expressed in broad language. Such language is necessary to encompass the wide range of circumstances in which matters may lawfully be brought to the Registrar's attention. If that was not the case, it would undermine the clear intent of the legislation. A simple analogy will illustrate the point: 37. An articled clerk in a firm of accountants presents the Registrar with evidence that members of his firm have been guilty of serious misconduct. However, the articled clerk does not wish to prosecute the matter himself. He has fears concerning his career and the reaction of his peers. He asks the Registrar to consider the evidence and, if he deems fit, to take it further ... 38. Now, if the Applicant's contention is right, in these circumstances the Registrar would have no power in terms of section 39(1A) to take the matter over and prosecute it himself, no matter how disastrous the possible consequences to the profession. Either the articled clerk must prosecute the matter himself, including the prosecution before the Disciplinary Committee, or the complaint goes by default and cannot be investigated further. That, in my judgment, cannot be the meaning and intent of the legislation. Nor, frankly, does it even begin to accord with an ordinary reading of it. Conclusion 39. I am satisfied that the material placed before me by the Applicant has not demonstrated that, upon further consideration, he might have an arguable case for the grant of the relief claimed. The application for leave must therefore be refused. 40. I have not heard the parties on the question of costs. Even though the Court asked for an oral hearing with the Respondent present, such requests are not uncommon in judicial review matters. I can see no reason, therefore, why costs should not follow the event and be awarded to the Society. I will, however, make that a nisi order, liberty granted to the Applicant to apply within 14 days for the matter of costs to be argued. If no such application is made, the order will then be final, costs to be taxed if not agreed.
Representation: Mr Neil Thomson, instructed by Messrs Massie & Clement, for the Applicant Mr Jonathan Harris, instructed by Messrs Johnson Stokes & Master, for the Respondent |
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