Messrs Hlb Hodgson Impey Cheng (A Firm) and Others v. The Hong Kong Institute of Certified Public Accountants

CACV 192/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 192 OF 2010

(ON APPEAL FROM HCAL NO. 5 OF 2010)

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BETWEEN

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Before: Hon Tang VP, Chu JA and Lam J in Court

Date of Hearing: 15 July 2011

Date of Judgment: 1 August 2011

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JUDGMENT

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Hon Tang VP:

Introduction

1.The 2^nd Applicant ("Cheng") and the 3^rd Applicant ("Lai") are partners of the 1^st Applicant (Messrs HLB Hodgson Impey Cheng), a firm of Certified Public Accountants.  I will refer to the Applicants collectively as HLB.

2.HLB were the auditors of Tiffit Securities (Hong Kong) Ltd. ("Tiffit"), a corporation licensed under the Securities and Futures Ordinance (Cap. 571) ("SFCO") to carry on business of dealing with securities.

3.As such, HLB had issued clean audit reports for the years ended 31 March 2004 and 2005; and had completed the 2006 audit, the audited accounts, having been signed by the directors of Tiffit (who were husband and wife).

4.The Hong Kong Institute of Certified Public Accountants ("the Institute") is a body corporate with a membership comprising all registered certified public accountants.  As at February 2010, the Institute comprised 29,933 members, and supervised 1,507 registered firms and corporate practices, and 14,004 registered students.

5.The Institute was established by the Professional Accountants Ordinance (Cap. 50) ("PAO"), as the profession's principal regulator. 

6.The objectives of the Institute included preserving the reputation, integrity and status of the profession; discouraging dishonourable conduct; and practices of certified public accountants: see sections 7(g) and 7(h) of PAO.  PAO also established the Council of the Hong Kong Institute of Certified Public Accountants ("the Council"), which comprises elected and appointed members, including 14 certified public accountants elected at an Annual General Meeting ("AGM") of the Institute, as well as 4 lay persons appointed by the Chief Executive.  The Council is assisted by the Registrar (also the secretary to the Institute and to the Council), who was appointed by the Council under section 21 of the PAO.  The Institute further maintains a permanent staff who were employed to manage the day-to-day operations of the Institute under delegated authority, which included a Compliance Department, which is responsible for making enquiries into complaints about the conduct of certified public accountants, firms, corporate practices and registered students of the Institute, and assisting in investigations and disciplinary proceedings commenced under Parts V and VA of PAO respectively. 

7.Where the Council believes that a CPA has breached professional standards, it may constitute an Investigation Committee ("IC") to consider the matter and "to inform the Council as to whether in its opinion ... the certified public accountant … would have a case to answer": section 42C(2)(a).  An IC consists of 5 members, 3 of whom are lay persons and 2 of whom are professional accountants: sections 42B(1) & 42C(2)(b).  Where an IC informs the Council that "in its opinion there is a prima facie case against the certified public accountant", the Council may constitute a Disciplinary Committee ("DC") to deal with it: section 42C(1).

8.Where a DC is constituted, the Registrar or a member of the IC shall present the case against the accountant concerned in a public hearing: sections 36(1A) & 37(1).  If the DC is satisfied that the complaint is proved, it may impose various sanctions including, inter alia, an order for the removal of the accountant from the register: section 35(1).

SFC reference

9.In July 2006, the SFC discovered that there was a material shortfall in the securities held by Tiffit on behalf of its client as at 31 March 2006.  This raised suspicions that Tiffit had misappropriated the shares of its clients. On 18 July 2006, the SFC issued a restriction notice on Tiffit and, on 24 July 2006, administrators were appointed to administer the properties of Tiffit and properties it held for its clients.  Tiffit was eventually wound up in May 2007.  In September 2006, the SFC referred its concernsover the standard of the HLB's work as Tiffit's auditors to the Institute. 

10.By a Preliminary Review Report ("PRR") dated 26 October 2006 (B1/8/241), based on the information provided by the SFC, the Compliance Department recommended to the Council that "an Investigation Committee be constituted to investigate into the matter".

Investigation Committee

11.Following the PRR, the Council on 24 October 2006 resolved to constitute an IC under section 42C(2)(a).

12.In accordance with the provisions of PAO, the IC was appointed on 2 April 2007.  Its chairperson is Mr Dieter Yih (of the law firm Mallesons Stephen Jaques).  Its lay members are Dr Bill Kwok (of Wing On (Holdings) Ltd.) and Dr Au King Lun (formerly of HSBC Investment (HK) Ltd.).  Its professional members are Mr Joseph Lo (of Deloitte Touche Tohmatsu) and Mr Kenneth Morrison (formerly of Moores Rowland Mazars).  Upon appointment, each IC member signed an undertaking to exercise their best endeavours to avoid any conflict of interest with their work on the IC.  In November 2007 the Council appointed Ms Karen Lee of Elite International Consulting Ltd. to assist the IC, replacing Ms Kong who was appointed in June 2007 but had become unavailable.  A/54.

13.Reyes J described the progress of the IC's work in these words:

"13. The IC requested and eventually obtained copies of HLB’s working papers prepared in connection with the audit of Tiffit.

14. At a meeting in November 2007 the IC agreed that Ms Lee would review those audit papers and report to the IC with preliminary observations. The IC met in February 2008 to consider the results of Ms Lee’s review, including her proposed findings. The IC thought that further issues needed to be investigated. These issues were raised with HLB in March 2008. HLB responded substantively to the IC’s inquiries in June 2008.

15. At a meeting in July 2008 the IC re-considered Ms Lee’s proposed findings in light of HLB’s response. It concluded that there was a case for HLB to answer. It directed that a draft report be prepared based on Ms Lee’s proposed findings. But as Ms Lee could not continue her involvement for personal reasons, the IC directed that the Compliance Department prepare the draft report in Ms Lee’s stead.

16. In November 2008 the IC examined the Compliance Department’s draft report. It also looked at a draft complaint against HLB prepared by the Compliance Department. After discussion, the IC directed that a number of amendments be made to the report and complaint. The revised documents were then sent to HLB for comment.

17. HLB requested extensions of the time in which to comment. Extensions were granted. Nonetheless, HLB having failed to submit anything by the end of July 2009, the IC finalised the report and complaint in August 2009. Copies of the report and complaint as finalised were provided to HLB.

18. In its August 2009 report the IC took the view that HLB’s working papers did not adequately support HLB’s opinion regarding the adequacy of Tiffit’s systems and statutory compliance. The IC identified the following in its report as the professional standards which HLB was likely to have breached: SAS 110 (auditor’s responsibility to consider fraud and error), SAS 230 (documentation), SAS 300 (audit risk amendments and accounting and internal control systems), SAS 400 (audit evidence), SAS 402 (external confirmations) and SAS 430 (audit sampling). The IC report also considered that PN 820 (audit of licensed corporations and associated entities of intermediaries) was relevant.

19. In September 2009 HLB sent written submissions to the Institute in response to the August 2009 report. Among other complaints, HLB alleged that the IC had applied the wrong professional standards. It also accused Mr Yih, Dr Au and Dr Kwok of apparent bias. Mr Yih (it was said) was a close friend of Mr Cheng’s family, while Dr Au and Dr Kwok were said to be associated with the SFC and with Hong Kong Exchanges and Clearing Ltd.

20. Upon receipt of HLB’s submissions, the Registrar considered that the same should be routed through the Compliance Department and IC before submission to the Council. This was in accordance with the Institute’s standard procedure. The Council only meets monthly. To ensure that meetings are conducted efficiently, the Registrar ensures that the Council has adequate information from relevant departments or committees beforehand to assist the Council in making an informed decision at a meeting.

21. Having reviewed the August 2009 report, the Compliance Department decided that the August 2009 report had applied the wrong professional standards. The report should have applied the relevant Standard on Assurance Engagements in effect in 2003, 2004 and 2005 respectively.

22. But the Compliance Department did not believe that this necessarily meant that the conclusions in the August 2009 report were wrong. The Accounting Standards and Practice Note relied upon in the August 2009 report provided guidance on the minimum level of good practice expected in relation to the applicable Assurance Engagement Standards. Accordingly, departures from the Accounting Standards and Practice Note cited in the August 2009 report might still be regarded as evidence that the applicable Assurance Engagement Standards had themselves been breached.

23. The Compliance Department reasoned that, despite the error, the IC might well decide that its earlier conclusion remained valid in substance. The Compliance Department consequently prepared a draft revised report containing amended references to the correct professional standards for the IC’s consideration.

24. In October 2009 the IC considered HLB’s submissions. The IC accepted that it had applied the wrong standards. But it did not think that such error vitiated the conclusions reached in the August 2009 report. The IC still took the view that HLB had a case to answer. It accepted the Compliance Department’s revised report.

25. The IC directed that a further amended report and complaint be prepared by the Compliance Department. This was done on 19 October 2009. On the following day, copies of the latter report and complaint were sent to HLB.

26. HLB’s lawyers alleged that the process which had led to the revision of the August 2009 report was improper for various reasons. HLB’s allegations of bias against Dr Kwok and Dr Au were maintained in relation to the amended report. Nevertheless, the IC did not receive any comments from HLB on the substantive contents of the amended report.

27. In November 2009 the members of the IC signed a final version of the amended report. The final version had a pre-printed date of 12 November 2009 on the assumption that the same would be signed on that date. But, due to the absence of some IC members from Hong Kong, the final version was not actually signed by the latter members until 16 November 2009.

28. On 12 December 2009 the Institute’s solicitors rejected HLB’s procedural and bias complaints in relation to the November 2009 report.

29. On 8 January 2010 the Institutes’ solicitors refused to give an undertaking (as requested by HLB) that the Council would not refer the matter to the Disciplinary Panels. As a result of this judicial review, the Council has been temporarily enjoined from deciding whether or not to refer the matter of HLB’s audit to the Disciplinary Panels."

14.HLB sought judicial review of the Institute's decision (evidenced by a letter dated 12 December 2009), rejecting HLB's complaints about the conduct of the IC, including objections to the membership of the IC.  HLB also sought judicial review of the Institute's decision (evidenced by a letter dated 8 January 2010), refusing to reconstitute a different IC.

15.On 10 August 2010, Reyes J dismissed HLB's application for judicial review.  This is HLB's appeal.

The Appeal

16.Mr Johnny Mok, SC, together with Mr Johnny K C Ma, for the HLB, have helpfully encapsulated HLB's complaint on appeal in their skeleton submissions as follows:

"2. In a nutshell, the Appellants' case is that, having regard to all the relevant facts and circumstances in the present case, a fair-minded and informed observer would conclude that there was a real possibility that the IC members were not acting independently and impartially. The learned Judge erred in holding otherwise, paying mere lip-service to fundamental principle safeguarding both actual substance and appearance of independence and impartiality."

17.Mr Johnny Mok submitted, and, it is not disputed, that an IC has a statutory duty and function to perform, i.e., to examine the evidence and decide whether in its own opinion such evidence discloses a prima facie case of a disciplinary offence against the accountant in question.  It is accepted that IC must be independent and impartial, and the learned judge has so held at para. 43 of his judgment.  Nor is there any dispute that the IC must not only be actually independent and impartial, but must also appear (or be seen) to be independent or impartial. 

18.Mr Mok further submitted that an IC's opinion of there being a prima facie case would no doubt have a substantial influence or effect on the Council's decision to constitute a DC, and on the DC's determination of the matter with potentially serious consequence that puts the accountant's right to practise his profession directly at stake. 

19.That is so, but as Mr Paul Shieh, SC, for the Institute, pointed out, the Council has a discretion whether or not to:

"… refer the matter to the Disciplinary Panels and constitute a Disciplinary Committee …". section 42C(1).

20.Mr Mok submitted that, on the facts of this case, a fair-minded and informed observer would conclude that there was a real possibility, that the findings in the 1^st and 2^nd reports of there being a prima facie case against the Appellants (in relation to the 2004 and 2005 audits) might not represent the independent and impartial opinion of the IC, given the active and significant roles taken by non-members (i.e. the Compliant Department, and Ms Karen Lee, the consultant) in the preparation of the reports.  Hence, there is legitimate and objectively justified doubt that the appearance of independence and impartiality had been seriously compromised. The 1^st and 2^nd reports are those referred to in paras. 18 and 27 respectively in Reyes J's judgment quoted in para. 13 above. There was in fact an earlier report, however, I do not believe it is necessary to deal with it separately.

21.The lynchpin of Mr Mok's submission is the decision of the Court of Final Appeal in Medical Council of Hong Kong v Helen Chan (2010) 13 HKCFAR 248. 

22.Helen Chan was concerned with the Medical Council of Hong Kong, which is responsible for the discipline of doctors in Hong Kong under Medical Registration Ordinance (Cap. 161). Helen Chan was found guilty of professional misconduct.  In doing so, the Council utilized its legal advisor by having him present at the deliberations of the Council, as well as producing a draft of the decision of the Council.  The issue relevant to the present appeal relates to the proper role of the legal adviser in such enquiry.

23.In the judgment of Bokhary PJ which had the concurrence of the other members, Bokhary PJ said:

"58. Ultimately it comes, I think, to this. Under our constitution, it is the right of anyone and everyone who is dealt with by a tribunal that the tribunal be – and be seen to be – competent, independent and impartial. There is a very good reason for these matching requirements. Competence, independence and impartiality are qualities which the process of courts and tribunals must have in order for justice to be done. And it is in the very nature of justice as administered in courts and tribunals that justice must be not only existent but also, as far as circumstances permit, visible to reasonable and informed observers. Otherwise the administration of justice would not enjoy the public confidence that it needs in order to be fully effective. All of this is fundamental. And it necessarily follows that none of it can ever be subordinated to considerations of mere convenience whether it be the convenience of the tribunal or of anyone else.

……

62. It may be difficult to draft for another without letting in at least some of your own ideas. But I do not consider it impossible. What must be insisted upon when a legal adviser drafts for a tribunal is as follows. The tribunal must deliberate without any participation by the legal adviser apart from giving it legal advice. No drafting by the legal adviser may commence until after the tribunal – having so deliberated – has arrived at its decision and has made its decision, findings and reasoning known to the legal adviser. What the legal adviser drafts must embody the tribunal’s findings and reasoning. The tribunal must scrutinise the draft. If necessary, the tribunal must modify the draft to ensure that it is the tribunal’s product, not the legal adviser’s, and that it says what the tribunal means. The practice under which the Legal Adviser produces draft decisions for the Medical Council includes all of those safeguards. Indeed it includes a further safeguard, namely that the drafting is done in the Medical Council’s presence. This further safeguard is at least desirable. I leave open whether it is always essential for other tribunals. In my view, the decision drafting in question does not compromise, or appear to compromise, the Medical Council’s independence."

24.Here, although Mr Mok accepted that the IC would require assistance from, for example, Ms Karen Lee (for the purpose of this argument he did not distinguish between Ms Karen Lee and the Compliance Department), he submitted the IC must show the requisite degree of independence.  The line which cannot be crossed is that the ultimate question must be answered by the IC.  He further submitted that Helen Chan shows quite clearly that one should not inform the decision maker of what it should or should not be finding. 

25.It is important to examine the evidence.  For that purpose I refer to what Mr Kenneth Morrison, a member of the IC, said in his affirmation dated 13 May 2010:

"2. I am informed that, amongst other things, the Applicants allege that the Investigation Committee did not exercise any independent judgment in respect of the investigation at issue but simply rubber-stamped the draft reports produced by the Compliance Department of the Institute. In particular, I am informed that paragraph 55 of the Notice of Application for Leave to Apply for Judicial Review dated 15th January 2010 states in part:

'… the Investigation Committee was simply rubber-stamping a draft report which was wholly or substantially drafted by the staff of the Respondent's Secretariat ...'

3. I attended all meetings of the Investigation Committee in connection with the investigation. Contrary to the assertions made by the Applicants, the reports which were issued by the Investigation Committee on 27th August 2009 and 16th November 2009 reflected the independent judgment of the Investigation Committee, reached after careful consideration of the evidence by the Committee.

4. To summarise the manner in which the two reports were prepared, on 26th November 2007, the Investigation Committee directed Ms. Karen Lee (the independent consultant appointed to assist the Committee under section 42E of the Professional Accountants Ordinance) to review the working papers obtained from the 1st Applicant ('HLB') and to prepare a report of her findings for the Committee's consideration.

5. On 22nd February 2008, the Committee met to consider the results of Ms. Lee's review. The Committee considered the results and some proposed findings suggested by Ms. Lee, and identified a number of issues which required further enquiry. The Committee directed that a list of specific questions for HLB should be prepared for the Committee's review. The questions were finalised and sent to HLB on 7th March 2008.

6. On 8th July 2008, the Committee met to consider the response received from HLB in reply to the Committee's questions, and some proposed findings suggested by Ms. Lee. The Committee considered the issues and, after discussion, concluded that, were a disciplinary complaint to be made against the Applicants, the Applicants would have a case to answer. The Committee then directed that a draft report and complaint be prepared by the Compliance Department based on the findings suggested by Ms. Lee, for the Committee's consideration.

7. On 28th November 2008, the Committee met to consider the draft report and complaint prepared by the Compliance Department. The draft report and complaint were scrutinised in detail and the Committee directed a number of amendments to be made thereto. The Committee then directed that the draft report and complaint (amended as directed by it) be reviewed by the Institute's legal advisor and then sent to the Applicants for comment. On 27th August 2009, after the Applicants failed to provide any comments, the report was finalised.

8. On 12th October 2009, following receipt of the Applicants' submission dated 2nd September 2009, the Investigation Committee met again to consider the matter. The Committee considered the Applicants' contention that the Committee had applied the incorrect professional standards in its report of 27th August 2009 and that, instead of applying the Institute's Statements of Auditing Standards and Practice Notes, the Committee should have applied the Standards on Assurance Engagements. After discussion, the Committee concluded that the Applicants' contention was correct. However, the Statements of Auditing Standards and Practice Notes referred to in the report of 27th August 2009 nonetheless provided guidance as to the minimum levels of good practice required under the relevant Standards on Assurance Engagements. The Committee further concluded that the Applicants' failure to meet the requirements of the Statements of Auditing Standards and Practice Notes referred to in the report of 27th August 2009 evidenced a failure on the part of the Applicants to comply with the applicable Standards on Assurance Engagements, and therefore the Committee's overall conclusion remained unchanged, namely that were a disciplinary complaint to be made against the Applicant, the Applicants would have a case to answer.

9. The Committee then considered a draft revised report prepared by the Compliance Department which amended the analysis of the applicable professional standards but otherwise retained the Committee's findings and conclusions. After discussion, the Committee directed amendments to the draft revised report prepared by the Compliance Department. The Committee then went through each of the other submissions made in the Applicants' submissions of 2nd September 2009 and considered whether, in light of those submissions, changes to the Committee's findings or conclusions were appropriate. The Committee ultimately agreed on the final form of the revised report and directed that it be provided in draft to the Applicants for comment within 21 days.

10. Following the meeting of 12th October 2009, on 16th October 2009 the Compliance Department circulated a revised draft report and complaint to all the Committee members by email for comment. I reviewed the draft report and complaint and concluded that I had no further comment on the drafts. On 20th October 2009, the Chairman of the Committee sent the draft report and complaint to the Applicants and requested that they provide any comments they had within 21 days. No substantive comments were received from the Applicants. Accordingly, the revised report was finalised and signed by the Committee on 16th November 2009.

11. The findings and conclusions set out in the reports of 27th August 2009 and 16th November 2009 reflected the independent findings and conclusions of the Committee, reached after careful consideration. It is incorrect to assert that the Committee simply 'rubber-stamped' draft reports produced by the Compliance Department."

26.There is also a chronological account of the steps taken in respect of the work of the IC in the 1^st affirmation dated 14 May 2010 of Mr Nip Ting Ming, Peter ("Mr Nip"), who is a Deputy Director, Compliance, of the Institute.  The gist of his evidence can be found in Reyes J's judgment.

27.On the basis of such evidence, I have no doubt that it was the IC which answered the ultimate question. 

28.Mr Mok submitted that the IC had fallen short of the requirement sated in para. 62 of Bokhary PJ's judgment in Helen Chan.  In particular, he relied on the fact that the Compliance Department had prepared a draft of what subsequently became the 2^nd Report on its own initiative: see para. 23 of the judgment quoted in para. 13 above.  I should add however that Mr Mok also complained about the 1^st report.  In relation to the 1st report, the evidence was that the Compliance Department was directed by the IC to prepare a draft based on the proposed findings suggested by Ms Lee: see para. 6 of Mr Morrison's affirmation quoted in para. 25 above.

29.But as Reyes J said and I respectfully agree:

"44. The real question is what the 'requisite degree' of independence and impartiality is which the IC must show.

45. There is a whole spectrum of independence and impartiality. The more formal the nature of the decision-maker and the more significant the consequences of its decision, the more rigorous the degree of independence and impartiality that such entity must show."

30.That was also the view of Collins J (as he then was) in R v Wokingham District Council Ex parte J [1999] 2 FLR 1136 at 1144, when he said:

"… It seems to me that all decisions which are susceptible to judicial review have to be made fairly. The question is, what is required by fairness in relation to any individual decision. …"

31.Collins J went on to say:

"… a decision which decides final questions affecting parties' rights and duties …"

may require more than one

"where a body has to consider whether proceedings, for example disciplinary proceedings, of one sort or another ought to be preferred."

32.With respect, I agree. 

33.In para. 62 of his judgment Bokhary PJ was concerned with the drafting of a decision on the adjudication of the conduct of a doctor by a medical disciplinary tribunal, in other words, "a decision which decides final questions affecting parties' rights and duties".

34.As I have said it is clear from the evidence that the IC had not acted as a rubber stamp.  It decided that there was a prima facie case.  That decision may or may not lead to DC.  Even if, as is likely, that it did, whether HLB was indeed guilty will be decided by the DC. 

35.Important though the IC's decision is, I do not believe the conduct of the IC could be described as unfair, lacking in independence or impartiality in any way.

36.Mr Mok, SC also relied on the fact that in the 1^st report, the IC had relied on certain of the Statements on Auditing Standards ("SAS"), and that as a result of HLB's submissions, the IC had accepted that the relevant standards were e.g. the Standard on Assurance Engagements 200 for 2003 and 2004, and Hong Kong Standard on Assurance Engagements 3000 for 2005.  We have not been taken to these different standards by counsel.  They can be found in the draft report prepared by the Compliance Department dated 8 October 2009.  See B57.  When one compares them one can see that there is little difference in substance between them.  Nor has counsel suggested that they are different in substance.  Mr Mok submitted that the two standards were dealing with different matters: one set deals with figures and the other set deals with procedures.  He also took us to B3 pages 733 to 740 to support his case that the criteria were different.  The two standards can be found in the draft report prepared by the Compliance Department dated 8 October 2009.  Even though there were changes in the references to the relevant standards and the precise formulation of the findings (by reference to the correct standard), there is little difference in the underlying allegations supporting the findings as set out at paras. 3.3 to 3.6 of the draft revised report tabled for the consideration of the IC, see B3 pages 754 to 773.

Amendment

37.In the late afternoon of 14 July 2011, the Appellants sought to introduce a new point challenging the role played by the Compliance Department.  It is said that the Compliance Department wore two hats:  Firstly, as advisor to the Council by way of a PRR dated 22 October 2006, advising the Council that "there is reasonable suspicion" of misconduct and recommending that an IC be constituted under section 42C(2)(a) of PAO, resulting in the Council constituting the IC in this case.  Secondly, then as an advisor to the IC itself, in performing various tasks including preparing various draft reports.  It is said that the two hats worn by the Compliance Department, on the facts of this case, are fundamentally in conflict with one another. 

38.Mr Mok accepted that this was not a point which had been made before Reyes J.  Naturally, it was not dealt with by the learned judge in his judgment.

39.Nor was the point taken in the Form 86A. 

40.Mr Mok decided, on his feet, to apply to amend the Form 86A by inserting para. 35 of the Applicants' skeleton submissions in the court below between paras. 5 and 6 of the Form 86A as follows:

"5. By letter dated 20 September 2006, the SFC 'expressed concerns over the apparent standard of work performed by HLB' and referred the case to the Respondent for review 'as there is a reasonable suspicion that one or more of subparagraphs (iv) to (x) of section 34(1)(a) of the Professional Accountants Ordinance applies to HLB in respect of their annual audits of Tiffit Securities (Hong Kong) Limited'. The SFC was therefore the complainant which i1J.itiated the investigation into the Applicants in this matter."

"35(sic)… that the Compliance Department had, even before the formation of the IC, conducted a preliminary review of the matter with a recommendation that an IC be constituted on the basis that there was a reasonable suspicion of misconduct (Nip §46; 'Preliminary Review Report' (as a result of which the Council did resolve to constitute the IC in question). Having already come to the said view, the Compliance Department then (at a later stage) prepared the 1^st draft of the report and complaints (based on the findings suggested by Ms Lee) which applied the wrong professional standards."

"6. On 24 October 2006, the Council of the Respondent resolved that an Investigation Committee be constituted to investigate this complaint referred by the SFC. The Investigation Committee was subsequently constituted."

41.Mr Shieh, for the Institute, opposed leave.  He submitted that had the point been made in the Form 86A, it was conceivable that the evidence adduced on behalf of the Institute would have been different.

42.I do not believe the two hats point, if I may so describe it, has been clearly made in the proposed amendment.  Be that as it may, we have refused leave to amend, nor permitted Mr Mok to take the new point.  The judgment of this court in Cathy Pacific Airways Flight Attendants Union v Director-General of Civil Aviation [2007] 2 HKLRD 668 at paras. 45-47 shows quite clearly that leave to amend should not be lightly granted.

Hon Chu JA:

43.I agree.

Hon Lam J:

44.I agree.

Mr Johnny Mok, SC and Mr Johnny K C Ma, instructed by Messrs Lo & Lo, for the Applicant

Mr Paul Shieh, SC, instructed by Messrs Richards Butler, for the Respondent

Please refer to FACV8/2012 for the relevant appeal(s) to the Court of Final Appeal.