Roderick Miller v. The Law Society of Hong Kong
Read the full judgment text of HCMP 3269/2013 on BabelCite. This High Court CFI judgment was delivered on 14 April 2014.
1. This is an appeal brought by Mr Miller, a solicitor, against the Law Society’s refusal to issue a practising certificate to him. Under Section 6(9) of the Legal Practitioners Ordinance [“LPO”], a solicitor may appeal against such decision to the Chief Judge. Pursuant to Section 36 of the High Court Ordinance, the power of the Chief Judge can be exercised by any judge of the High Court. The appeal was listed before me and I heard the appeal as a judge of the High Court.
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HCMP 3269/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MISCELLANEOUS PROCEEDINGS NO 3269OF 2013 ______________________
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_________________________ REASONS FOR JUDGMENT _________________________ Hon Lam VP (giving the Reasons for Judgment of the Court): 1.This is an appeal brought by Mr Miller, a solicitor, against the Law Society’s refusal to issue a practising certificate to him. Under Section 6(9) of the Legal Practitioners Ordinance [“LPO”], a solicitor may appeal against such decision to the Chief Judge. Pursuant to Section 36 of the High Court Ordinance, the power of the Chief Judge can be exercised by any judge of the High Court. The appeal was listed before me and I heard the appeal as a judge of the High Court. 2.After hearing submissions, I directed the Law Society to issue a practising certificate to Mr Miller subject to the following conditions,
3.I now give reasons for my decision. Background 4.The background facts can be briefly summarized. In one of the routine searches regularly carried out by the Law Society, it came to its attention that a writ had been issued against Mr Miller in June 2011. It was an action by a bank in respect of a credit card debt in the sum of $92,263.23. The Law Society sought explanation from Mr Miller. In November 2011, Mr Miller informed the Law Society that he had orally agreed with the bank to settle the debt at $110,000 and there would be repayment at the rate of $10,000 per month. Upon further pressing, it transpired that there was still negotiation though Mr Miller said an oral settlement had previously been reached. The Law Society sought more information and documentary evidence about the financial position of Mr Miller. He responded by informing the Law Society that he had a tax liability of about $669,000 which was being paid off at $8,000 per month. On 19 December 2011, Mr Miller sent to the Law Society a letter dated 16 December from him to the bank’s solicitors accepting settlement in the sum of $112,000 to be repaid by 14 equal monthly instalments of $8,000. In light of that, the Law Society issued a 2012 practising certificate to Mr Miller. 5.The Law Society took up the matter with Mr Miller again in August 2012. On 27 August 2012, Mr Miller replied that a cheque in the sum of $9,000 was issued to the bank and there was still an outstanding amount of approximately $100,000. The Law Society was concerned and required Mr Miller to show cause why a practising certificate should be issued to him for 2013. On 14 November 2012, Mr Miller replied stating that the outstanding debt due to the bank was around $110,000 and he had agreed to pay $9,000 per month. He also stated that he was repaying $8,000 per month in respect of his tax liability and he had another outstanding loan which he repaid at $5,000 to $10,000 per month. Despite that, he said his financial situation was healthy as he had outstanding bills of over $200,000 with some work in progress with billable time of around $1 million. On 22 November 2012, Mr Miller wrote to the Law Society again giving some details of the major cases his firm was handling and invited the latter to take those into account in assessing the financial position of his firm. The Law Society subsequently decided to issue a 2013 practising certificate to him. 6.In September 2013, the Law Society followed up with Mr Miller about his financial position and he told them that the debt owed to the bank was still outstanding at $100,000. On 22 October 2013, the Law Society gave notice to Mr Miller that consideration was being given to refusal to issue a practising certificate to him for 2014 on the ground that by reason of his financial position, he was considered unfit to practise, “specifically, your financial position and, in particular, the claim against you in District Court Civil Action …” Mr Miller was invited to make representations. The letter specified the types of information which the Council was looking for:
7.Mr Miller replied on 5 November 2013 as follows:
8.On 5 November 2013, after considering the representations of Mr Miller in his letter of 5 November 2013, the Council of the Law Society resolved to refuse to issue a practising certificate to him for 2014. This is the subject decision in the present appeal. 9.There were subsequent correspondence and meeting between the solicitor for Mr Miller and the Law Society. In the course of such correspondence and meeting, further information regarding Mr Miller’s financial situation was provided. He settled the District Court Action by paying $65,000 to the bank. He had a loan from a finance company with an outstanding sum of $261,481 for which he repaid $5,000 to $8,000 per month. As regards his tax liability of $637,688.99, the IRD gave an interim reply asking him to continue with $8,000 monthly payment pending a final decision on repayment schedule. He also produced a schedule of Assets and Liabilities showing outstanding bills from his client in the sum of $5.6 million odd. He also indicated he had an expected inheritance from his 90 year old father of $5 million. 10.The Law Society did consider such information but maintained its decision. 11.Mr Miller therefore had to cease to practise and his firm (in which he practised as sole proprietor) had ceased business as from 31 December 2013. The statutory framework 12.Section 6(5) of the LPO gives the Law Society the power to refuse to issue a practising certificate to a solicitor. It reads:
13.For present purposes, sub-paragraphs (a) and (b) are relevant. The grounds prescribed by the Council under sub-paragraph (a) are set out in the Practising Certificate (Solicitors) (Grounds for refusal) Rules Cap. 159N Rule 2 is relevant:
14.In the present case, the Law Society relied on the financial position limb in Rule 2(b) to refuse to issue a practising certificate to Mr Miller. There are two aspects in this particular ground: (a) by reason of a solicitor’s financial position; (b) he is unfit to practise as a solicitor, see Yau Chung Wo, Jeremiah v The Law Society of Hong Kong HCMP 425 of 1999, 30 June 1999 para 19. It is noteworthy that the rule itself does not set out any criteria for determining whether the financial position of a solicitor would render him unfit. This is understandable given the wide range of circumstances in which a solicitor’s financial position may impact upon his professional practice. Still, “financial position” and “fitness to practice” are general expressions and the Law Society has to exercise its discretion over a wide spectrum of cases. 15.The conditions prescribed by the Council under Section 6(5)(b) are set out in Rule 3 of the Practising Certificate (Special Conditions) Rules Cap 159Y:
16.Ms Cruden appearing for Mr Miller invited this court to have regard to this rule in assessing whether the case of Mr Miller warranted a refusal. In particular, she drew attention to the situations under sub-paragraphs (f) and (g) and submitted that Mr Miller was in a better position than those who would be issued practising certificate subject to conditions since no judgment had been entered against him and he was not subject to any bankruptcy proceedings. I shall come back to this contention later. 17.In the course of submissions, Mr Nip on behalf of the Law Society submitted that the Society has no power to impose any conditions in the present case because the case does not come within any one of the sub-paragraphs in Rule 3. In other words, Rule 3 exhaustively set out the situations where conditions could be imposed for the purposes of section 6(5)(b) of the LPO. This was also the stance taken by the Law Society in a letter dated 7 March 2014. 18.For the purpose of this appeal, it is not necessary for me to decide whether this submission is correct though the opening part of Rule 3 does support such construction. However, this strikes me as a lacuna and anomaly. It is accepted by Mr Nip that the Chief Judge (and a judge of the High Court hearing an appeal under Section 6(9) pursuant to Section 36 of the High Court Ordinance) can set such conditions as he thinks fit in the practising certificate to be issued (see Section 6(11)(b) of LPO). Mr Nip is also constrained by the wording of Rule 3 to accept that the restrictions in Rule 3 do not apply directly to the issue of practising certificate under Section 6(4) by the Law Society. Under that sub-section, the Law Society may impose such conditions as it thinks fit. It is also Mr Nip’s submission that Mr Miller can apply for a practising certificate under Section 6(4) in the present circumstances. As presently advised, I do not see any justification for withholding the power to grant practising certificate subject to conditions from the Law Society in a case like the present one. 19.It must be borne in mind that the refusal of a practising certificate is a draconian measure. Without a practising certificate, a solicitor cannot act as a solicitor, see Section 7 of the LPO. Given the wide spectrum over which the discretion under Section 6(5) and Rule 2 of the Refusal Rules may be exercised, in my view it would be more in line with the concept of proportionality if an option of issuing a practising certificate with conditions is also given to the Law Society in circumstances similar to the present case. 20.The inevitable consequence flowing from the present state of affairs is that a solicitor is driven either to appeal to the Chief Judge or to make a fresh application under Section 6(4) in order to get his practising certificate with conditions. In the pursuit of these courses, there would be delay and disruption to the practice of a solicitor and possibly inconvenience to his clients. An appeal can also be costly. Needless to say, this is unsatisfactory. 21.I would urge the Law Society to consider whether Rule 3 should be amended to facilitate conditions to be imposed in a case like this. The nature of the appeal 22.I now turn to the nature of an appeal under Section 6(9). As observed by the then Chief Justice in Yau Chung Wo, Jeremiah v The Law Society of Hong Kong HCMP 425 of 1999, 30 June 1999, unlike a judicial review, this is a statutory appeal and the correct approach is not the test of irrationality. The judge hearing the appeal has to put himself into the position of the Law Society to decide whether a practising certificate should be issued to this solicitor with or without conditions. In so doing, the judge can and should accord proper weight to the decision of the Law Society (as in the case of appeal against a decision of a professional disciplinary tribunal). 23.In Yau Chung Wo, Jeremiah, Chief Justice Li said the question is whether the Society erred in its decision. In the present context, this requires some elaboration. As mentioned above, Mr Miller supplied further materials and information to the Law Society after the resolution of 5 November 2013. Moreover, in the evidence filed in these proceedings, there are materials which were not considered by the Law Society in November 2013. There is an issue between the parties whether a judge hearing an appeal under Section 6(9) should have regard to these post-resolution materials and information. 24.Mr Nip, referring to the test postulated by the Chief Justice, contended that the sole question before me is whether the Law Society came to the right decision on the materials before the Council on 5 November 2013. It follows that subsequent materials and information are irrelevant for the purpose of the appeal. If Mr Miller wishes to have such new materials to be considered, according to counsel, he should make a fresh application under Section 6(4). 25.On the other hand, Ms Cruden submitted that I should have regard to all the materials placed before me and exercise the statutory discretion under Section 6(11) after taking into account the current situation. 26.In my judgment, Mr Nip’s approach is too narrow. Unlike an appeal in ordinary adversarial civil proceedings in which the rule of Ladd v Marshall governs the admission of fresh evidence on appeal, there is no such restriction in this kind of statutory appeal. There was no oral hearing before the Law Society made the decision on 5 November 2013. Though representations were invited from Mr Miller and he did make some representations by letter, the process leading up to that decision was very much an administrative one. The timeframe for the whole process is very short: the show cause letter was dated 22 October; Mr Miller’s representations were made on 5 November and the decision was also made on 5 November. In contrast, the statutory appeal takes the form of a judicial process with more time being given to both Mr Miller and the Law Society to prepare and file substantive evidence before an oral hearing in court. In my view, fairness demands that Mr Miller should be given the opportunity to put before the court all relevant evidence in support of his case for the purpose of the appeal. 27.This is a statutory appeal in respect of the issue of practising certificate to a solicitor. In determining the appeal, the court must strike a fair balance between the protection of public interest (in the solicitor’s handling the affairs and property of his client) and the interest of a solicitor to pursue his practice. Though the context for issuing a practising certificate and the admission of a person to a profession is not the same, what I said in Re Youh Alan Chuen Po [2013] 2 HKLRD 485 at paras 57 and 58 are equally apposite in the present context. Having regard to the purpose of the public duty that the Law Society and the judge are performing in the determination of the issue or refusal of practising certificate, I cannot see any good reason for the court rigidly closing its eyes to relevant materials placed before it only because that such materials were not available to the Law Society when the decision was made. 28.As pointed out by Ms Cruden, Chief Justice Li also referred to the updated information regarding the solicitor in Yau Chung Wo, Jeremiah at para 21 of his judgment. 29.But this does not mean that an appeal should be conducted as if it is a fresh application before the judge. There are limits to the extent to which a judge hearing such a statutory appeal should have regard to new evidence and new issues. In an appeal, even in the context of a statutory appeal under Section 6(9) of the LPO, the judge is entitled to place weight on the first instance decision. To permit entirely new and unrelated issues to be canvassed in an appeal will deprive the judge of the advantage of such first instance decision and it should rarely be appropriate. There are good reasons why the legislature entrusted the task of making primary decision on the issue or refusal of practising certificate to the Law Society as opposed to the court. A judge does not have the same experience and understanding on the operation of a legal practice of a solicitor as those members sitting at the Council. In respect of the dealings between a solicitor and his client and how the general finance of a solicitor may impact upon the well-being of his clients, I readily acknowledge that those in the profession are in a better position to assess the situation than me. 30.If a judge is faced with completely new issues and new evidence which he considers to be relevant but have been inadequately (or have not been) considered by the Law Society when making the first instance decision, he has the option of remitting the matter to the Law Society under Section 6(11)(c) of the LPO. 31.I do not think what I said above is in any way inconsistent with the judgment of Chief Justice Li in Yau Chung Wo, Jeremiah. In respect of the question identified at para 17 of that judgment, my understanding is that if on some further materials shown to the court but not to the Council at the time of the first instance decision, the court comes to the conclusion that the right balance has not been struck, the first instance decision can still be characterised as a wrong decision, though it is an error arising not from the fault of the Council. Decision on the facts of the present case 32.Bearing in mind the principles stated above, I came to the conclusion that I should have regard to the new materials placed before me. Though they have not been tendered before the Council when the decision of 5 November 2013 was made, they were materials on the financial position of Mr Miller and they did not raise any completely new issues. In view of the decision which I was able to come to, I did not find it necessary on the facts of this case to remit the matter to the Law Society for consideration. 33.To an extent, I was assisted by Ms Cruden’s wise intimation on behalf of Mr Miller at the hearing that Mr Miller was willing to be subject to conditions along the line I eventually imposed. In light of that, I shall not go into the details at length and instead I shall only focus on my reasons for granting a practising certificate with conditions. 34.On the materials before the Law Society as at October 2013, I am of the view that there was a justifiable concern on the part of the Law Society. Notwithstanding that no judgment had been entered against Mr Miller, given what had transpired in 2011 and 2012, the Law Society was perfectly justified in issuing the letter to show cause to Mr Miller on 22 October 2013. 35.Unfortunately, the reply by Mr Miller on 5 November 2013 did not allay the concern of the Law Society. If I were in the position of the Law Society, I would have come to the same conclusion. I do not find the reply of 5 November 2013 reassuring in terms of the financial position of Mr Miller and the bills of costs attached to the letter were not of much assistance. As Mr Nip submitted, a large portion of the bills is in respect of counsel fees and disbursements and the bills were yet to be taxed and paid. There was simply no concrete evidence from Mr Miller as to his financial health. In this connection, I do not accept the submission of Ms Cruden that the position was the same as the two previous years when practising certificates were issued to Mr Miller. The delay in settling the debt despite the previous representations by Mr Miller to the Law Society was a relevant matter that the Council should and did take into account. Nor do I accept the contention that Mr Miller was lulled into a false sense of security by reason of what had happened in 2011 and 2012. It should have been clear to him that the Law Society was still having a concern despite indulgences were granted in those previous years. 36.In my view, Mr Miller should have been more forthcoming and proactive in his response on 5 November 2013. Again, what I said in Re Youh Alan Chuen Po [2013] 2 HKLRD 485 at para 58 (last sentence in particular) is equally applicable in the present context. It must be emphasized that the Law Society (like the Bar in that case) plays an important public role safeguarding the public interest in its decisions on the issue and refusal of practising certificates. Though it may be said that a practising solicitor applying for practising certificate is not the same as an aspirant seeking to be admitted as a barrister, when there is legitimate concern raised by the Law Society (as in the present case) a solicitor should respond co-operatively and engage in a full and frank manner with the Law Society in addressing the concern. It is not in the interest of anyone to respond as if one were conducting litigation with an adversary or drafting a defence. 37.Mr Miller practised as a sole practitioner and the Law Society felt hamstrung by the terms of Rule 3 of the Practising Certificate (Special Conditions) Rules Cap 159Y from issuing a practising certificate with conditions. Though it was a drastic decision, I would not fault the Law Society for coming to the conclusion on 5 November 2013 that an unconditional practising certificate for 2014 should not be issued to Mr Miller. 38.To be fair to Mr Miller, after the decision of 5 November 2013, he was much more proactive in terms of his engagement with the Law Society. More information and materials were provided with regards to his financial position and there was a meeting between his solicitor and the Law Society on 15 November 2013. After that, there was further correspondence. 39.Whilst the settlement of the debt due to the bank on 26 November 2013 might address the concern in that regard, considering the history of the matter as a whole it should have been plain to Mr Miller that the concern of the Law Society is in respect of his overall financial position. The debt due to the bank was only a manifestation of problem in that regard. Ms Cruden placed some emphasis on the focus of the show cause letter. I accept that the wordings of the letter can be better in terms of expressing such overall concern of the Law Society, on the facts of the present case I do not think Mr Miller had been prejudiced. The history of the dealings between him and the Law Society speaks for itself. At the meeting on 15 November 2013, the discussion covered the tax liability and other debts of Mr Miller (as outlined in the Points to Note provided by his solicitor and the letter dated 26 November 2013). 40.As I said I would not delve into the details in this judgment. Suffice to say that I agree with Mr Nip’s submissions that even taking into account of the latest information placed before me, the Law Society was correct in deciding that it should maintain its refusal to issue an unconditional practising certificate to Mr Miller. Even up to now, there is insufficient evidence to counter the general impression of Mr Miller’s financial instability arising from the history of the debt due to the bank, his indebtedness to the IRD and a finance company. I am unable to accept that the IRD is contented with receiving $8,000 per month. From the letter of 13 January 2014 issued by the IRD and the schedule attached to it, the $8,000 per month arrangement only lasted up to October 2014 in respect of a total amount of $72,000. The remaining balance of $527,688.99 has yet to be settled. The letter also stated clearly that the payment arrangement would be subject to review upon the last instalment and it is without prejudice to any legal proceedings to be taken. Coupled with his indebtedness to the finance company, the level of total indebtedness is clearly a matter justifying concern bearing in mind Mr Miller’s level of income and the lack of concrete evidence regarding his means. Also, in view of the history of the matter, his financial difficulties cannot be brushed aside as a short-term cash flow issue. 41.Ms Cruden submitted that Mr Miller is not subject to any judgment debt or bankruptcy proceedings. With respect, I do not think those are the only situations which can justify the Law Society in refusing to grant a practising certificate under the financial position limb of Rule 2. In my view, there is a pre-emptive element in that rule and the Law Society would not be discharging its public duty if it does not act in the wake of knowledge as to the precarious financial situation of a solicitor simply because no judgment has been entered or no bankruptcy proceedings have been commenced. 42.Ms Cruden also submitted that the poor management of personal finance would not render a solicitor unfit to practise. Again I beg to differ. Whilst I accept a short term cash flow problem may not always be a problem in the practice of a solicitor, long term unresolved financial difficulties would obviously be a problem if the solicitor is entrusted with the monies of his client. A sole proprietor will inevitably have dealings with the funds of his client. Even putting aside conveyancing practice, a litigation solicitor would have monies on account from his clients for disbursements and counsel fees. The unfitness to practise may stem from circumstances other than those pertaining to the integrity or competence of a solicitor. As Rule 2 itself suggests, it may stem from the financial position of a solicitor. 43.On the facts of the present case, having considered the submissions of counsel in light of all the materials before me, I am of the view that it is not appropriate to issue an unconditional practising certificate to Mr Miller for 2014. 44.On the other hand, there is no reason to doubt the integrity and competence of Mr Miller. Putting aside his financial difficulties, I do not think he is not fit to practise. Provided that his clients are adequately protected, I do not think he should be prevented from having a practising certificate. Mr Nip has not been able to persuade me that the conditions I suggested would not give adequate protection to the clients of Mr Miller. With those conditions in place, Mr Miller will not be able to handle funds of his clients. Since there will not be any risk in that regard, I do not think the issue of a conditional practising certificate to Mr Miller should be subject to the further vetting of his financial position by an affidavit of means. I have therefore rejected Mr Nip’s request for such a requirement. 45.For the above reasons, I have decided the appeal accordingly. 46.Parties have not addressed me on costs. In the circumstances, I will make a costs order nisi that each party shall pay his or its own costs.
Ms Liza Jane Cruden, instructed by Oldham, Li & Nie, for the Appellant Mr Norman Nip, instructed by Deacons, for the Respondent |
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