Re A Solicitor

CACV000150/1988

BETWEEN

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Coram: Hon. Yang, CJ, Kempster & Power, JJ.A.

Dates of hearing: 14 - 15 March 1989

Date of judgment: 15 March 1989

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J U D G M E N T

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Kempster, J.A. :

1. This is an appeal by a solicitor from findings of and orders made by a Disciplinary Committee, appointed pursuant to section 9 of the Legal Practitioners Ordinance, (Can 159) on 4 November 1988.

2. The solicitor appeared to face a variety of charges classified under the headings :

(a) The immigration cases;

(b) The Winkler case;

(c) The breaches of the accounts rules.

3. As regards the immigration cases, the solicitor was found guilty of seeking to be remunerated and/or being remunerated in a total sum that was grossly in excess of that properly chargeable, in misrepresenting in his bill of costs the work actually done and/or the actual time spent on the work claimed to be done and hen act acting in such regard, in taking advantage of the clients' inexperience and lack of knowledge and/or understanding of the matters in relation to which he was retained to act. He was so found guilty in relation to the affairs of Madames Lam Yuk Yin and Lamyong Pinsawat and of Mr Chang Chih Tien.

4. As regards Madam Lam Yuk Yin the solicitor was also found guilty of petitioning the Governor in circumstances where he should have known that the relief could or would not be granted.

5. In each instance the solcitor was retained to take such steps as he could to secure leave for illegal immigrants to remain, temporarily or permanently, in the Territory. For his services he not only made inordinate charges quite unrelated to the amount of work involved but, relation to Madam Lam Yuk Yin, submitted separate bills to different members of her family covering the same work; thereby charging for the same item six times. The Committee commented :

"It would almost be safe to assume that the time spent in preparing the bills would have taken more time than the actual work purportedly done".

6. The petitions were short and devoid of substance. The appeals in relation to these matters go only to penalty.

7. As regards the Winkler Case the solicitor had been retained in October 1985 by a wife to conduct proceedings for divorce and, more significantly, to secure ancillary financial relief. The husband's resources were considerable and derived in some part from family and overseas trusts. A proportionate degree of reading and research was required. The solicitor was found guilty again of seeking to be remunerated in a total sum that was grossly in excess of that properly chargeable and also of having prepared and filed at court a bill of costs for taxation which he knew or ought to have known was grossly excessive and/or could not be justified and of having misrepresented to this bill the work actually done and/or the actual time spent on the work claimed to be done. The appeals go to the findings as well as to the penalties.

8. On 14 November 1945 Mrs Winkler subscribed to a document which read:

"I, NORDA R. SERRANO WINKLER hereby acknowledge that in consideration for the legal services rendered to me by Messrs Philip S.W. Wong & Co., I have agreed to pay them an agreed fee of $300,000 and I wish to obtain a sum of $2 million Hong Kong as settlement for financial relief from my husband Peter Philip Winkler.

If more work is required in further (sic) in pursance to obtaining $5 million, I have agreed to pay an agreed sum $800,000.

As soon as payments are made in the form of maintainance by Peter Philip Winkler, I shall pay part of the agreed fees to Messrs Philip S.W. Wong as part settlement of their fees".

9. In due course Mrs Winkler became dissatisfied with the services which the solicitor was rendering and, more particularly, with his repeated and insistent demands for money. She consulted other solicitors. On 9 January 1986 they wrote to the solicitor in question saying that they had been instructed and enclosing an authority signed by Mrs Winkler authorising the solicitor to hand over the case documents to them. To this the solicitor replied that he would be happy to release all relevant papers and documents upon the receipt of an undertaking to send the outstanding Costs and counsels' fees. None the less following, I think a telephone conversation he released those documents the following day.

10. On 16 January the solicitors whom Mrs Winkler had freshly instructed wrote a long letter to the solicitor setting out in detail the moneys which she had told them, she had Paid over on account of costs and referring to the document of 14 November 1985. The terms of that letter included the following :

"It also appears that you are tactically agreeing that the alleged agreement as to costs dated 14th November 1985 is no longer (if it ever was) a valid and subsisting one, but we shall be glad to have your confirmation in writing of this. We would point out that if you are claiming that the alleged agreement of 14th November 1985 is still in existence, this must be an agreement within Section 58 of the Legal Practitioners Ordinance. This being the case our client is entitled to rely on the provisions of Section 60 and 61 and we hereby give you notice on her behalf that we shall apply to the Court for an order to tax your, costs on a solicitor and own client basis. If you confirm that you no longer claim the alleged agreement for costs to be valid and subsisting, we mould be grateful if you would kindly prepare your bill of costs as if for taxation for our consideration as soon as possible".

The solicitor appeared to have been amenable to this suggestion. He wrote on 18 January 1986 saying that he agreed that a provisional bill which he had rendered

"may not reflect satisfactorily the accurate picture of the correct charge on the amount of work done. I respect your sound advice to your client not to accept this and demand that this bill be rejected.

In short, I relied on the said agreement under section 53 of the Legal Practitioners Ordinance and your client wishes to rely on section 60 and 61 of the same Ordinance. I respect her right and I hereby write to confirm that I do not intend to oppose her wish and I shall act upon your request to draw up a fresh bill for taxation purposes for your consideration and treat the outline and temporary bill of costs as being rejected null and void. I shall not rely on the said agreement on drawing up this fresh bill and I hereby put this in writing as requested".

11. On behalf of the solicitor Mr Eddis contends that this was not the conclusive abandonment of any reliance on the written agreement that Mrs Winkler's new solicitors had requested. On the contrary, he submits the solicitor was reserving a right to rely on that agreement as and when it should suit him. Having regard, however, to the fact that the solicitor had a bill of costs prepared, brought it in for taxation at the instance of Mrs Winkler's solicitors and retained or received the amount of his taxed bill I cannot accent that he was thereafter entitled to rely on the 14 November 1985 document for any purpose. Certainly he has never sought any relief from the Court pursuant to section 60 of the Legal Practitioners ordinance nor was argument addressed to the Committee with regard to it. Further, there is no substance in the argument that the Committee should have taken it into account because of the terms of a letter before them written by Lo & Lo on the solicitor's behalf dated July 1986 In which it was alleged that

^"The fixed sum agreed upon was arrived at on the basis of between 120 and 160 working hours estimated to be spent by our client or of an hourly charge rate of between $2,500 and $1,875".

12. Nor, in my view, should the Committee have accepted, as alleged by Lo & Lo in the same letter, that the solicitor had his bill of costs drawn up on a time basis using an hourly charge rate which had formed the basis of the original agreement. That agreement shows no hourly charge rate while the relevant part of the agreed statement of the solicitor's costs draftsman reads:

"I did discuss with the solicitor what hourly rate he should charge he did not have much idea and said he would rely on my experience. Considering the following factors his seniority, the personal attendance required of him, the complexity of the value of the subject matter, I advise him that he should be entitled to between $1,500 to $2,000 per hour. After our discussion it was settled between me and the solicitor that I would draw up a bill on basis of an hourly rate of $2,000 if having drawn up the bill the solicitor thought it too high or too little he could, afford to adjust it".

Mrs Winkler's statement admitted in evidence before the Committee pursuant to the Evidence Ordinance, was to the effect that the solicitor had asked that

"He should have 15% of any lump sum and he prepared the letter of 14 November 1985. He told me percentage fee taking was illegal Hong Kong, but would he confidential between us. I would have paid him $800,000, but he began to want more".

13. In the event, as the Committee remarked :

"Of a total sum of $531,066.00 claimed for profit costs a sum of $450,696.00 was taxed of leaving a net amount of $80,370 which together with disbursements allowed in the sum of $42,585.50 amounted to a sum of $122,955.50.

Following the taxation, Master Betts wrote to the Law Society on the 24th May 1986 drawing their attention to the fact that more than 85% had been taxed off the profit costs".

In drawing his bill for taxation the solicitor must have" been well aware, for example, of provisions as to warning the client in relation to exceptional Items and for my part I can seen no reason why the Committee should not accept the implications of the letter written by Master Betts to the Law Society.

14. So much for the bill in its general sense.

There was a particular feature of the taxation to which, it would appear, the Committee properly attached importance. I turn to the bill submitted for taxation and to items 22 to 26 inclusive :

20th October, 1985

Mr Eddis contends, showing us a copy of the bill in very similiar form to our own, that the Master had second thoughts and taxed nothing off item 25. If Mr Eddis is right it means that the solicitor obtained the full $1,000 claimed for attending receipt of a petition settled by Miss Jacqueline Leong. Then item 26 :

That has as a line throught it; having been disallowed in toto.

15. The circumstances in which these entries came to be made are also referred to in the agreed statement of Mr Law. He says :

"I drew up various draft bills for the solicitor. The first draft bill was approved by him save that counsel's fees and some court fees had been omitted".

On the first draft bill, prepared by Mr Law we see that he had to write in "counsel's fee for settling petition.. Jacqueline Leong $3,000" as a disbursement. There was no provision at that stage for an item "attending receipt of petition settled by Miss Jacqueline of counsel".

16. Miss Leong testified before the Committee that she had neither settled the petition, submitted a fee note nor been paid as if she had. It is hardly surprising that this item was disallowed. It is the inferences to, be drawn from its inclusion that are disturbing. It is suggested that there might have been a breach of undertaking to pay those fees or, and this is the principal submission made on behalf of the solicitor in this regard, that the entry was put in by mistake. That hardly seems consistent with the statement, admitted, in evidence by consent, of the cost draftsman. The solicitor himself elected not to give evidence about this item or at all. In the circumstances I cannot fault the Committee if they took a serious view. What they said was :

"We find as a fact that the solicitor purported to grossly overcharge the client; that he caused to be prepared and filed a bill which was grossly excessive and could not he justified; misrepresented the work actually done and the actual time spent on such work as was claimed to be done; never explained to, Mrs Winkler that time reasonable or unusual items might not be allowed on a party and party taxation. Of perhaps greater concern is that the bill in one respect at least - namely insofar as it relates to the settlement of the petition by Miss J Leong - is untrue".

17. I now turn to the accounts charges. Again there is no substantial appeal on the findings; based on the report by Messrs Peat Marwick & Mitchell dated 28 January 1987. These were that

"(1)    Notwithstanding the provisions of rules 2 and 3 of the Solicitors Accounts Rules, the solicitor failed to have or maintain a client account with the word "client" appearing.

(2) Notwithstanding the provisions of rule 3 he had failed to pay into a client's account the client's money.

(3) Notwithstanding the provisions of rule 8, he had drawn out of his client's account money other than that permitted by rule 7".

He was also found guilty on an amended charge that :

"He failed to make payment of costs of an inspection under rule 11(4) of the said rules required by the Council of the Law Society which costs the Council of the Law Society had on 19 February 1987 ordered the respondent to pay within 14 days of 2 April 1987 and further failed to make payment of the costs of an inspection under rule 11(4) of the said rules required by the Council of the Law Society which costs the Council of the Law Society had on the 14th of April 1988 ordered the respondent to pay forthwith".

18. An additional charge was introducd at the hearing in relation to which certain procedural considerations arise. That charge, again found proved, was that the solicitor bad acted in a manner unbecoming and brought his profession into disrepute in that he had obstructed the accountant appointed by the Council of the Law Society contrary to section 11(1)(a) of the Solicitors' Accounts Rules. This Court inquired whether or not there had been strict compliance with rules 11 and 13 of the Solicitors' Accounts Bules which read :

"11(l) In order to ascertain whether, the provisions of these rules have been complied with, the Council acting either -

(a) on its own motion; or

(b) on a written complaint lodged with it by a third party,

may require any solicitor to produce at such time and place as may be fixed by the Council, his books of account, bank pass books, loose-leaf bank statements, and so on.

13. Every requirement to be made by the Council of a solicitor under these rules shall be made in writing under the hand of the Secretary and sent by registered post to the last address of the solicitor notified to the Soceity and, when so made and sent, shall he deemed to have been received by the solicitor within 48 hours of the time of posting".

19. Now the requirement that the solicitor produce his books was contained in a letter written by Messrs Wilkinson & Grist on 12 February 1987 in these terms :

"Dear Sir,

Our Client: the Law Society of Hong Kong

As You aware we are instructed by the Law Society to investigate various matters handled by your firm with a view to advising whether or not there was a prima facie case as to whether disciplinary proceedings should be brought. We are now instructed by the Law Society following the report of Peat Marwick, accountants, to request that you let us have no later than Tuesday of next week all files and documents including, if any, fee notes, receipts payments and payment in vouchers etc relating to … ".

A number of files are then specified. The questionsarise as to whether this requirement can be regarded as that of the Council and deemed to be have made under the hand of the Secretary. Mr Bleach, for the Law Society, at rather short notice has referred us to In re Diptford Parish Lands. In re the Charitable Trusts Act, 1853 to 1925 [1934] 1 Ch 151 where, at pp 158 and 161, the Courts was concerned with section 11 of the Charitable Trust Act, 1869 which provides :

"A petition shall not be presented to the Court of Chancery by any person under section 8 of the Charitable Trusts Act, 1860, before the expiration of twenty-one days after written notice under the hand of the appellant of his intention to present such petition has been served on the Attorney-General by delivering the same to the solicitor who acts for him in ex officio proceedings relating to charities".

Luxmoore J said about this section :

"It was said that the petition was not properly presented, because the notice, which is a condition precedent to the presentation of the petition, was not under the hands of the appellants. I do not think that it would be correct to read section 11 of the Act of 1869 as requiring actual physical signature by an appellant. I think it is quite sufficient if an appellant signs the notice by his duly authorised agent".

20. By analogy with that situation I am prepared to find that the letter of 12 February 1987 can be deemed to have been written by the Council of the Law Society and under the hand of its Secretary.

21. A further technical point arises under rule 8 of the Disciplinary Committee Proceedings Rules which reads :

"(1) Where an application is made pursuant to rule 3 and in the opinion of the Disciplinary Committee, a prima facie case is shown against the respondent, the Disciplinary Committee shall fix a day for the hearing and the clerk shall serve notice thereof on each party to the proceedings and shall in every case serve on the respondent a copy of the affidavit and a copy of the application.

(2) There shall he such period of not less than 21 days between the service of any such notice and the day fixed therein for the hearing as the Disciplinary Committee may direct".

Although a copy of the fresh charge had been served on the solicitor it was not formally raised until the first day of the hearing before the Disciplinary Committee and no period of 21 days elapsed before it was proceeded with. Mr Bleach was asked by the Court whether it could be said that impliedly the Disciplinary Committee had dispensed with such requirement or extended or abridged time pursuant to Disciplinary Committee Proceedings Rules 32 and 33. He felt he could not go that far but relied upon the terms of RSC 0O 59 r 10(3) which are imported into the procedure for an appeal from a Disciplinary Committee by section 13 of the Legal Practitioners Ordinance. That rule reads :

"The Court of Appeal shall have power to draw inferences of fact and to give any judgment and make any order which ought to have bean given or made and to make such further or other order as the case may require".

I am satisfied that this gives us power to invoke rules 32 and 33 of the Disciplinary Committee Proceedings Rules and I would do so.

22. In the circumstances all that remains for us is consideration of the propriety of the penalties imposed on the solicitor as set out in the order dated 4 November 1988. I do not think it necessary to set them out in detail because nearly all pale into insignificance having regard to the penalty imposed in relation to the Winkler case. It was ordered that the solicitor be struck off the role. Naturally such a penalty gives rise to concern and has caused us to give the most favourable consideration we can to the arguments advanced on the solicitor's behalf. In the event, however, I find no reason to interfere with the way the Disciplinary Committee exercised its discretion and would dismiss the appeal of the solicitor accordingly.

Yang, CJ :

23. I too would dismiss the appeal for the reason stated by my lord Kempster.

Power, JA :

24. I too would dismiss the appeal and wish to refer only to one matter, as it was a matter which gave me particular concern. This was the submission that the Committee had misled itself by failing to give proper or any weight to the fact that much of the amount that was take off the bill presented was disallowed because the appellant had failed to warn Mrs Winkler that unusual items might not have been allowed upon taxation in circumstances where he could not, it, was suggested, have been expected to have given any such, warning, because he was relying at that time upon an agreement for a fixed fee. Mrs Winkler in her statement which the Committee accepted and acted upon said "he asked me that he should have 15% of any lump sum and he prepared the letter of 14 November 1985. He told me percentage fee taking was illegal in Hong Kong, but it would be confidential between us. I would have paid him $800,000, but he began to want more. A few days before 16 December Mr Wong began to mention that he wanted 15% of all sums which I might receive including maintenance. Before it was only intended that it should be 15% of any lump sum". On November 1985 the appellant was then as this evidence demonstrates charging Mrs Winkler on a contingency basis and not upon a price founded anon an assessment of work involved which would have been included as a figure for hourly charges. On 18 January 1986, when he came to write a letter to Messrs Hampton, Winter & Glynn, his temporary hill having been rejected, he said

"I respect her right and I hereby write to confirm that I do not intend to oppose her wish and I shall act upon your request to draw up a fresh bill for taxation purposes for your consideration and treat the outline and temporary bill of costs as being rejected null and void. I shall not rely on the said agreement upon drawing up this fresh bill and I hereby nut this in writing as requested".

25. While there was no concession here that the agreement was for a contingency fee I am satisfied that the appellant must, by words used be taken to have been abandoning any reliance anon the agreement. He of course makes no suggestion that the amount in the agreement was calculated in part or at all on the basis of any specific hourly fee. The first suggestion of this kind comes in a letter from Lo & Lo in July 1986. They said there, as my lord Kempster has already indicated :

"it was only subsequently and at the invitation of Mrs Winkler's new solicitors that our client has his bill of cost drawn up on a time basis for taxation using an hourly charge rate which had formed the basis of the original agreement".

I have no hesitation in finding that the Committee was quite right to have given no weight to the suggestion. Not only did it come at a very late stage but it was wholly undermined both by the statement of Mrs Winkler, which the Committee accepted, and by the letter of the applicant himself. For that reason and for the reasons that have already been fully outlined by my Lord Kempster, I too would dismiss this appeal.

Representation:

Francis Eddis QC & Kenneth Chan (Chung & Kwan) for Appellant

John Bleach (Wilkinson & Crist) for Respondent