Lie Han Ji v. The Registrar of the Hong Kong Institute of the Certifed Public Accountants

CACV 265/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 265 OF 2009

(ON APPEAL FROM THE DECISIONS OF THE

DISCIPLINARY COMMITTEE OF THE HONG KONG INSTITUTE

OF CERTIFIED PUBLIC ACCOUNTANTS DATED 20 OCTOBER 2009 AND 13 MARCH 2010)

BETWEEN

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Before: Hon Cheung CJHC, Cheung and Chu JJA in Chambers

Date of Decision: 24 April 2012

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DECISION (ON COSTS)

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Hon Cheung CJHC:

1.I agree with the judgment of Chu JA.

Hon Cheung JA:

2.I agree with the judgment of Chu JA.

Hon Chu JA:

3.By our Judgment handed down on 9 March 2012 (“the Judgment”), we dismissed the appellant’s appeal and made an order nisi that he pays the respondent the costs of the appeal to be taxed if not agreed.

4.By letter dated 14 March 2012, the respondent through her solicitors applies under Order 42, rule 5B(6) of the Rules of the High Court, Cap.4A to vary the costs order nisi to provide for the costs to be paid on indemnity basis.

5.Pursuant to the directions of the Chief Judge given on 15 March 2012, the application is to be dealt with by written submissions and the parties have since provided their submissions.  

6.The respondent relies on the following grounds to seek costs to be paid on indemnity basis:

(1)  The appellant brought and pursued an entirely unmeritorious and hopeless appeal.

(2)  The appellant acted unreasonably in the pursuit of his appeal.

(3)  The respondent is a public body and defended the appeal which affected the professional interests of the accountancy profession.

7.The appellant objects the application. The bulk of his submissions is devoted to complaints about the conduct of the disciplinary proceedings against him, personal criticisms of the respondent and re-ventilating arguments raised in the appeal (see paragraphs 1, 2, 4, 6, 8 and 9), which have no bearing on the present application.  As to the rest of his submissions, it raises the following points:

(1)  He has a right to appeal. This is particularly so when the disciplinary proceedings will affect his reputation and livelihood.

(2)  The disciplinary hearing was full of serious irregularities and there was no fair hearing. There are a number of arguable grounds of appeal, but this Court had not fully considered them.

(3)  In the course of preparing the appeal bundles, the in-house General Counsel of the Institute was not helpful whereas the respondent had refused to make discovery of documents and interfered with the respondent’s right to prepare the appeal bundles.

(4)  The Institute, the Council and the Registrar are different persons. Hence, when counsel submits that the respondent is a public body, this means that the appeal was defended not by the Registrar but by the Council acting for the Institute. If solicitors and counsel act for the Institute, they cannot represent the Registrar at the same time. Their costs are therefore not properly incurred and they should not be allowed to be recovered from the appellant.

(5)  Further, the submission in support of this application is made on behalf of a party who is not a party to this appeal. The application should therefore be dismissed. 

8.The Court has a broad discretion to determine how costs shall be paid and whether indemnity costs should be ordered; the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be appropriate: Town Planning Board v. Society for the Protection of the Harbour Ltd (2004) 7 HKCFAR 114, at paras.12 and 17.

9.In the present case, I am of the view that it is appropriate to order costs to be paid on indemnity basis. My reasons are as follows.

10.Firstly, as the Judgment shows, the appellant’s appeal has no merits and should not have been brought. The appellant had put forward a wide range of grounds, many of which fall outside the proper ambit of an appeal under section 41(1)(b)(iii) of the Professional Accountants Ordinance, Cap.50, while others are unarguable.  The appellant had also made some extraordinary submissions, which, far from advancing his case, have put him in very dim light professionally: see, for example, paragraph 38 of the Judgment.

11.The appellant argues that he has a statutory right of appeal and that because his professional reputation and livelihood is at stake, he is entitled to exercise his right. I accept that the PAO has provided for a right to appeal against the outcome of disciplinary proceedings, but the right is not to be exercised capriciously and without regard to the merits of the case. Where an appellant brings an unmeritorious and hopeless appeal, it is an improper exercise of his right to appeal, which the Court may signal its disapproval by awarding costs on indemnity basis.

12.Secondly, the appellant has acted unreasonably in the pursuit of the appeal. In this appeal, it had taken nearly one year before leave to set down was granted by the Registrar of Civil Appeals.  During the period, there had been extensive correspondence between the appellant and the respondent as well as the court relating to the compilation of the appeal bundles, primarily due to the appellant’s desire to seek discovery and to include documents that were not in the disciplinary proceedings. Apart from direction hearings, no less than eight written directions had been issued by Registrar Au Yeung, who found the situation and delay so unsatisfactory that she eventually directed the respondent to prepare a draft index for the appeal bundles.  Even after leave to set down was given, further correspondence was generated as a result of the appellant’s insistence to vary the Registrar of court’s direction on the time to be reserved for the hearing. 

13.The process of appeal is not the occasion for seeking discovery of documents.  The appellant’s argument that the delay was caused by the respondent’s refusal to make discovery is therefore misplaced. Further, an appellant is not entitled to adduce new evidence at the appeal without first obtaining the leave of the Court of Appeal. The appeal bundle should only contain documents that were before the Disciplinary Committee and that are relevant to the issues in the appeal. Moreover, as this is the appellant’s appeal, he had no basis to expect the Institute’s in-house counsel to assist him in the compilation of the appeal bundles. Although the appellant acts in person, and courts are in general prepared to make allowance for unrepresented litigants because they are unfamiliar with the legal requirements, this does not mean that he can act unreasonably or in disregard of the court rules and procedures.

14.The conduct of a party in the proceedings is a relevant consideration in exercising the discretion whether to award indemnity. Where, as in here, a party has acted unreasonably resulting in escalation of costs and undue delay, he may be visited with a more stringent costs order. 

15.Thirdly, although the Registrar of the Institute is named as the respondent to this appeal, she does not defend the appeal in her personal capacity for she has no personal interest in the outcome of the appeal. I accept the respondent’s submission that the Registrar acts in a representative capacity and defends this appeal with funds contributed by members of the Institute.  Having regard to the unmeritorious nature of this appeal, I agree there is no reason that the respondent should be out of pocket for the difference between the costs on a party-and-party basis and the costs on an indemnity basis.

16.The appellant takes issue with paragraph 10 of Mr Fung’s submission, which states that the respondent is a public body and defended the appeal which affected the professional interests of the accountancy profession. I do not accept the appellant’s argument that this indicates that the appeal was not defended by the respondent, but by the Council. The Registrar is the complainant in the disciplinary proceedings and has been named by the appellant as the respondent to the appeal. Importantly, she acted throughout in a representative capacity, namely, on behalf of the Institute.  The thrust of Mr Fung’s submission is simply that the Registrar acts on behalf of the Institute, which is a public body with funds from its members.

17.For the above reasons, I will grant the respondent’s application and vary the costs order nisi to provide that: “The appellant pays the respondent the costs of the appeal to be taxed on indemnity basis if not agreed”. I will further order that the appellant pays the respondent the costs of this application to vary the costs order nisi to be taxed if not agreed on indemnity basis.

The appellant, unrepresented, acted in person

Mr Eugene Fung, instructed by Mayer Brown JSM, for the respondent