HONG v NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL [2021] NZCA 611

HONG v NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL [2021] NZCA611 [18 November 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA546/2020[2021] NZCA 611BETWEEN BOON GUNN HONGAppellantAND NEW ZEALAND LAWYERS ANDCONVEYANCERS DISCIPLINARYTRIBUNALFirst RespondentAUCKLAND STANDARDS COMMITTEENO 5 AND THE NEW ZEALAND LAWSOCIETYSecond RespondentsATTORNEY-GENERAL FOR AND ONBEHALF OF THE MINISTRY OFJUSTICEThird RespondentHearing: 21 September 2021Court: French, Miller and Gilbert JJCounsel: Appellant in personP N Collins for Second RespondentsJudgment: 18 November 2021 at 3 pmJUDGMENT OF THE COURTA The appeal against the strike out judgment of 27 August 2020 is dismissed.B Order directing Mr Hong to file and serve a fully particularised amendedstatement of claim in the High Court re-pleading cause of action 3(2) withinone month of the date of delivery of this judgment if he wishes to proceedwith that claim. In the event of default, that cause of action is to be struckout.C The appeal against the costs judgment of 22 September 2020 is dismissed.D The appellant is to pay one set of costs to the second respondents fora standard appeal on a band A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)[1] Mr Hong, a former lawyer who has been struck off, appeals against a judgmentof Muir J delivered on 27 August 2020 striking out three causes of action inproceedings he commenced against the first and second respondents and directing himto re-plead a fourth cause of action against them.1 The Judge struck out the threecauses of action (described as causes of action 1, 2 and 3(1)) on the basis they involveda collateral attack on a final court judgment that determined the same issues.Accordingly, these causes of action were held to be an abuse of process and/orvexatious.2 The Judge considered it was appropriate to give Mr Hong an opportunityto re-plead his fourth cause of action (described as cause of action 3(2)) because itmight be salvageable by amendment.3 There was no application to strike out a furthercause of action pleaded solely against the third respondent (cause of action 4).[2] Mr Hong also appeals against the Judge's subsequent costs judgment deliveredon 22 September 2020 ordering him to pay costs calculated on a category 2, band Bbasis in the sum of $10,994 plus disbursements of $660.4Background[3] We commence by briefly setting out the background and the prior decisions inthese proceedings, including the final judgment of Gault J on appeal that was reliedon by Muir J to justify the abuse of process finding based on collateral attack.1 Hong v New Zealand Lawyers and Conveyancers Disciplinary Tribunal [2020] NZHC 2205[Strike out judgment].2 At [76].3 At [83].4 Hong v New Zealand Lawyers and Conveyancers Disciplinary Tribunal [2020] NZHC 2483[Costs judgment].Misconduct — obstruction of trust account inspector[4] On 11 October 2019, the New Zealand Lawyers and ConveyancersDisciplinary Tribunal (the Tribunal) found Mr Hong guilty of misconduct byobstructing an inspector appointed by the New Zealand Law Society from conductinga review of his trust account records (the obstruction decision).5 The Tribunalsubsequently suspended Mr Hong from practising for a period of three months andmade an order that he not practise on his own account until approved by the Tribunal(the first penalty decision).6 Costs of $35,850 were also awarded.7[5] Mr Hong appealed to the High Court against both these decisions. In ajudgment delivered on 16 April 2020, Gault J dismissed the appeal againstthe Tribunal's obstruction decision.8 The appeal against the penalty decision was alsodismissed.9 However, the Judge reduced the costs award to $30,850.10[6] On 3 July 2020, Gault J declined Mr Hong's application for leave to appeal tothe Court of Appeal on a question of law under s 254(1) of the Lawyers andConveyancers Act 2006.11[7] Mr Hong then applied to this Court for leave to appeal. The application wasdeclined by this Court in a judgment delivered on 12 November 2020.12 All appealrights in respect of these decisions were then exhausted.Misconduct — conflict of interest[8] On 10 February 2020, the Tribunal found three charges of misconduct provedagainst Mr Hong.13 These charges were brought on the basis Mr Hong had failed tomeet his obligations when he continued to act for a client despite having a personal5 Auckland Standards Committee No 5 v Hong [2019] NZLCDT 28 [Tribunal's obstructiondecision].6 Auckland Standards Committee 5 v Hong [2019] NZLCDT 40 [Tribunal's first penalty decision].7 At [20].8 Hong v Auckland Standards Committee No 5 [2020] NZHC 744 [Gault J judgment] at [96].9 At [97].10 At [97].11 Hong v Auckland Standards Committee No 5 [2020] NZHC 1572.12 Hong v Auckland Standards Committee No 5 [2020] NZCA 561.13 Auckland Standards Committee No 5 v Hong [2020] NZLCDT 5 [Tribunal's conflict decision].conflict of interest. In a subsequent penalty decision issued on 29 April 2020,the Tribunal made an order striking Mr Hong off the roll of Barristers and Solicitorsof New Zealand and ordered him to pay $8,000 in compensation to the former client.14Mr Hong was also ordered to pay further costs of $29,450.15[9] Mr Hong appealed to the High Court against these decisions. The appeals weredismissed by Gordon J in a judgment delivered on 7 July 2020.16 In a costs judgmentdelivered on 6 August 2020, Gordon J ordered Mr Hong to pay costs of $14,031.50 onthe appeal.17[10] Mr Hong applied to the High Court for leave to appeal to the Court of Appeal,but his application was declined by Gordon J on 7 October 2020.18[11] Mr Hong then applied to this Court for leave to appeal. This application wasalso dismissed, on 22 March 2021.19 All appeal rights in respect of these decisionswere then exhausted.High Court proceeding[12] Two months after Gault J dismissed Mr Hong's appeal, he filed a proceedingin the High Court in June 2020 styled as an application for judicial review ofthe Tribunal's two decisions in connection with the obstruction charge (the first set ofproceedings referred to above at [4]). In an amended statement of claim dated15 July 2020, Mr Hong pleaded three causes of action against the first and secondrespondents (all of which, excluding cause 3(2), were struck out by Muir J) assummarised below. All causes of action were preceded by a summary ofthe background facts and events. In this preliminary section of the pleading, Mr Hongstated that the proceeding was necessary to secure a right of appeal to the Court ofAppeal. He set out his concern that the High Court would "rubber-stamp"the Tribunal's decisions and then decline leave to appeal to the Court of Appeal:14 Auckland Standards Committee No 5 v Hong [2020] NZLCDT 12 [Tribunal's second penaltydecision].15 At [41].16 Hong v Auckland Standards Committee No 5 [2020] NZHC 1599.17 Hong v Auckland Standards Committee No 5 [2020] NZHC 1954.18 Hong v Auckland Standards Committee No 5 [2020] NZHC 2613.19 Hong v Auckland Standards Committee No 5 [2021] NZCA 85.26. On 18 May 2020, I filed an application seeking leave of this Court torefer and appeal on Questions of Law to our Court of Appeal (CA), asopposed to by [the Auckland Standards Committee No 5], in whichI seek to challenge this Court's jurisprudence. As I have informed andcomplained to the Court, I have to file this [judicial review]application to ensure I get to the CA as of right and as this is the secondtime that without this [judicial review] application, this Court seemedto me, would just rubber-stamp the Tribunal's finding.Cause of action 1[13] In his first cause of action, Mr Hong alleged that the Tribunal acted with bias,contrary to law and in bad faith in making the obstruction decision and subsequentpenalty and costs determinations. He described these determinations as "perverse" asdefined in cause of action 2. Particulars were provided under six specific grounds ofreview:(a) Error of law in the interpretation of the relevant statutory provisionsand regulations.(b) Error of law and fact in making a finding of misconduct.(c) Failure to apply applicable legal principles when making the penaltydetermination.(d) Failure to apply applicable legal principles when making the costsdetermination.(e) Invalid order prohibiting Mr Hong from practising on his own accountunless authorised by the Tribunal to do so as the order did not serve anyrelevant objective and was imposed as a further sanction to extendthe suspension period.(f) Breach of Mr Hong's legitimate expectation that the Tribunal possessedthe requisite skills and knowledge to inquire into the matter, applythe relevant law and make proper determinations.[14] Mr Hong alleged that the second respondents were "jointly culpable" withthe Tribunal in respect of these errors of law because they had brought the charge,the Tribunal accepted their submissions and "they had countenanced for and arethe proponents of the grievances caused".[15] Mr Hong sought orders setting aside the Tribunal's determinations in respectof the obstruction charge, both as to liability and penalties/costs, and associateddeclaratory orders including that the second respondent's decision to pursue the chargebefore the Tribunal was null and void.Cause of action 2[16] In his second cause of action, Mr Hong alleged that the Tribunal's decisionswere "perverse determinations" consequent upon the first respondent's "resolution topersecute" him. He defined a "perverse judgment" as "one that is arrived at pursuantto a predetermined result intended" — facts seen as justifying the intended result willbe "discriminatively" selected and any unhelpful facts will be ignored. The sameapproach will be adopted in relation to the law and that "[a]s discriminatory and biasany further legal research undertaken by the Judge on his/her own volition, only thosethat served the intended end result will be reproduced in the [j]udgment". Mr Hongdescribed this process as "NOT an adjudication", but rather "a perversion of justice".[17] According to Mr Hong, in making these allegedly perverse determinationsthe Tribunal breached its statutory obligations to uphold the rule of law and not to actin bad faith. Alternatively, he alleged the first and second respondents were negligentin the discharge of their statutory obligations.[18] Mr Hong sought the same relief in respect of this cause of action and, inaddition, damages against the second respondents for financial loss, humiliation anddistress.Cause of action 3(1)[19] In his third cause of action, Mr Hong alleged that in making the perversedeterminations the Tribunal breached his rights under the New Zealand Bill of RightsAct 1990 (BORA) and the Magna Carta. This was said to be because the Tribunalmisapplied the law to "the indisputable facts and circumstances" in making a findingof misconduct and discriminated against him in making the order for suspension,thereby subjecting him to "disproportionately severe treatment". He describedthe costs order as "hefty" and in breach of his rights under the Magna Carta.[20] The second respondents were alleged to have "similarly acted in bad faith andin discrimination" against him.[21] The same relief was sought as for the second cause of action together witha further declaration that Mr Hong's rights under BORA and the Magna Carta hadbeen breached.[22] We note that although Mr Hong's first three causes of action were focused onthe obstruction charge, he signalled his intention to commence further proceedingsrelating to the conflict of interest charges and asked that the assessment of damagesbe deferred until both matters could be dealt with:157. I seek for Damages and my claim for Costs to be reserved as I haveanother Court proceeding to file against the Second RespondentDefendants in regards to the Proceedings in this CourtCIV-2019-404-0441 (appeal against Misconduct Liability) andCIV-2020-404-000011 (appeal against Penalty & Costs) [LCDT16/19].These were the appeals subsequently dealt with by Gordon J.20Cause of action 3(2)[23] We now briefly describe the further cause of action that was not struck out, butwhich Mr Hong was directed to replead. This cause of action was pursued solelyagainst the second respondents and alleged a breach of statutory duty, negligence andbreaches of his rights protected under BORA in respect of complaints, inquiries anddeterminations against him dating back to 1997. This cause of action is difficult tofollow but some context for it is set out in the preliminary paragraphs where Mr Hongalleges he "refused to kow tow" to the second respondents' demands in connection20 See [9] above.with an audit of his trust account in 2014. As a result, he claims that "there is badblood between us" and the second respondents have "ever since been fishing foranything they can use against me". This is said to have led to his "persecution" ina "systemic discriminatory campaign by Dark Forces" within the New Zealand LawSociety. Each inquiry by the second respondents was alleged to have been"intentionally bloated up in terms of the seriousness and by the hefty penalties levied".He alleges this was done in bad faith and with the ultimate intention of striking himoff the roll.[24] Mr Hong assembles his complaints under two grounds of review headed asfollows:First Ground for Review : NZLS and its [Lawyers Standards Committee] hadacted in bad faith, been biased and discriminatory in their inquiry intoComplaints against me or its own motion inquiry contrary to its statutoryobligation thereby committing the tort of breach of statutory duty against meor in the alternate it breached the duty of care owed to me, the tort ofnegligenceSecond Ground for Review : NZLS and its Inspectorate had breachedthe [Law and Regulations] and my rights under BORA when its[Practice Approval Committee], had breached my right to natural justice whenit disapprove of my Practice Attorney to act for me without allowing andaffording us an opportunity to be heard[25] In his prayer for relief in respect of this cause of action, Mr Hong seeksdeclarations that the New Zealand Law Society and its inspector acted ultra vires andin breach of the trust account regulations in resolving to prosecute him and thatthe Tribunal's decisions were invalid and should be set aside. In respect of hisdisciplinary history, he seeks declarations as to whether the obstruction, penalty andcosts determinations were disproportionate and discriminatory and, if so,a determination as to the proper liability and penalty. He also seeks damages and anorder for censure against the New Zealand Law Society for breach of natural justicetogether with damages.High Court strike out judgment[26] Muir J noted Mr Hong's candid acknowledgment that the first three causes ofaction were attempts to persuade the Court to revisit the Tribunal's finding that he hadacted in breach of the regulations, despite Gault J's conclusion on appeal thatthe Tribunal had made no error in reaching its decision.21 Muir J recorded Mr Hong'ssubmission that, notwithstanding the judgment of Gault J, it remained open to him tochallenge these findings in the present proceeding:[63] [Mr Hong] says simply that Gault J's decision is wrong, indeed thatit is a "Perverse Judgment" as he defines that phrase. He says in whatapproaches a "boot strap" argument that, because it is wrong, he can nowrevisit the whole underlying argument about proper interpretation ofthe Regulations by way of judicial review. And because he thinks thatthe High Court simply "rubber stamps" decisions of the Tribunal and that, ifgiven the opportunity, it will simply "rubber stamp" Gault J's decision again,he chooses the vehicle of judicial review, to give him an alleged "as of right"opportunity to re-argue his interpretation of the [Lawyers and ConveyancersAct (Trust Account) Regulations 2008] before the Court of Appeal. Indeed hepleads precisely that, almost celebrating the notion of collateral attack.(Footnotes omitted.)[27] The Judge was satisfied that causes of action 1, 2 and 3(1), whether nominallyclaims under BORA, the Magna Carta, in tort or for breach of statutory duty, were allultimately founded on the same proposition, namely that the Tribunal incorrectlyinterpreted the regulations, incorrectly found him guilty of misconduct, and incorrectlysuspended him from practice.22 The Judge considered it to be an "almost irresistible"conclusion that any allegation of bad faith (based on alleged bias and discrimination)against the Tribunal in cause of action 2 had been cured by the appeal to the High Courtand the corresponding decision of Gault J.23[28] The Judge concluded that the allegations of bias, discrimination and bad faithin causes of action 1 and 2 could not save those causes of action from being struck out.The bad faith alleged in these causes of action was based on the premise that nounbiased tribunal could come to the decision it did. The Judge considered these claims21 Strike out judgment, above n 1, at [63].22 At [64].23 At [67].therefore amounted to a collateral attack on the judgment of Gault J upholdingthe Tribunal's determinations.24[29] For these reasons, Muir J was satisfied that causes of action 1, 2 and 3(1) shouldbe struck out against the first and second respondents as an abuse of process and/orvexatious. He struck these causes of action out against all the respondents.25[30] The Judge considered cause of action 3(2) was in a different category becauseit alleged, amongst other things, a "systemic discriminatory campaign by Dark Forces"and concerned other behaviour towards Mr Hong during his period of practice,including other disciplinary matters.26 These matters extended well beyond those thatwere the subject of Gault J's judgment. However, the Judge accepted the secondrespondents' submission that the pleading was seriously deficient.27 In particular,the claim was directed at decisions made by entities not party to the proceeding, oneof which was no longer in existence, the particulars of bad faith were inadequate, therewas no attempt to quantify the damages and the prayer for relief seeking orders thatthe Tribunal's decisions be set aside offended against the principle precludingcollateral attack.28 The Judge cautioned Mr Hong to reflect carefully before pursuingthis claim:[80] I agree that there is a necessity for sober reflection on Mr Hong's partabout the course he seems currently determined to pursue. The allegation thatfor over 20 years and by multiple members of the profession Mr Hong hasbeen the subject of systemic racism is one in respect of which considerablecare is necessary.[31] Nevertheless, the Judge considered the appropriate course was to allowMr Hong an opportunity to re-plead this cause of action, addressing the deficienciesidentified.29 Mr Hong was accordingly directed to file and serve a compliant statementof claim by 28 September 2020. The Judge urged Mr Hong to take independent advicebefore doing so and to assist in the formulation of any amended claim.30 The Judge24 At [71].25 At [76].26 At [77].27 At [81].28 At [78].29 At [83].30 At [86].reserved leave to the second respondents to bring a second application to strike outthe amended pleading if appropriate.31High Court costs judgment[32] In the strike out judgment, the Judge reserved costs but gave a provisionalindication that they should be awarded to the second respondents on a category 2, bandB basis.32 Costs were subsequently agreed by the parties on that basis subject totwo minor issues. In his costs judgment, the Judge resolved one of these issues infavour of Mr Hong and the other in favour of the second respondents.33Appeal[33] Mr Hong appeals against the order striking out three of his causes of actioncontending the Judge erred in law in finding that these claims "were a re-litigation oflegal issues that had been fully and finally adjudicated in the [a]ppeal judgment" andtherefore a collateral attack and an abuse of process. He states that the claims are "newclaims" brought on the grounds the Tribunal's determinations were "[p]erverse,non-adjudication as biased and discriminatory".[34] We acknowledge it does not appear from Gault J's judgment that Mr Hongargued on appeal that the Tribunal's decisions were perverse, made in bad faith andthe Tribunal was biased. We also acknowledge these claims are conceptually differentfrom an appeal based on error of fact or law. However, as we will demonstrate,the first three causes of action are founded on the proposition that the errors of factsand law were so numerous and gross that the resulting decisions were "perverse" andexplicable only on the basis they were the product of bad faith, discrimination andbias.[35] Mr Hong's primary contention that the Tribunal's decisions were "perverse"underpins all three of the struck-out causes of action. However, this claim duplicatesthe very same grounds he advanced in support of his appeal to the High Court.31 At [87].32 At [90].33 Costs judgment, above n 4.On analysis, the "new" claim amounts to nothing more than an assembly of exactlythe same alleged errors of law and fact he advanced in support of his appeal anda re-labelling of the Tribunal's decisions as "perverse" rather than simply wrong.This central foundation of Mr Hong's claims cannot succeed without overcomingGault J's determination that the Tribunal's decisions were correct in fact and law (savefor the minor costs reduction). Mr Hong's attempt to relitigate these same issues inthe judicial review proceeding is therefore an impermissible duplication of the appealproceeding and amounts to a collateral attack on Gault J's final judgment.[36] For the reasons that follow, the allegations of bad faith, bias and discriminationsimilarly amount to a collateral attack on Gault J's final judgment. Serious allegationssuch as these cannot be pleaded without there being an adequate evidential foundation.Full particulars of the facts relied on to support the pleaded allegations must beprovided. In this case, Mr Hong has made it clear in his pleading that he bases hisallegations of bad faith, bias and discrimination on his contention that it is not plausiblefor the respondents as experts to have made so many genuine errors of law or fact.He claims that bad faith, bias and discrimination can therefore be inferred as there isno other explanation for the Tribunal having reached such perverse determinations.[37] Mr Hong's pleading of bad faith was contained in a single paragraph in causeof action 1 in the first amended statement of claim and he repeats this paragraph ineach of the subsequent causes of action:Bad Faith122. The First and Second Respondent Defendants are experts in ourComplaints Framework. As experts, it is not plausible for them tomake so many errors. They have acted with BIAS, inDISCRIMINATION and in BAD FAITH against me.(Footnote omitted.)[38] As can be seen, the bad faith allegation is entirely built on the same foundationsas the "perverse" claim and cannot stand independently of it. It follows that theseclaims also duplicate the grounds raised on appeal before Gault J and amount toa collateral attack on that final judgment.[39] For these reasons, we consider Muir J was correct to strike out causes of action1, 2 and 3(1).[40] The pleading of cause of action 3(2) is plainly defective for the reasonsthe Judge gave. We doubt this cause of action can be saved by amendment but thereis no cross-appeal seeking an order that it be struck out as well. Although Mr Hongalso appealed to this Court against the order requiring him to replead (on the groundcause 3(2) does not require amendment), he informed us at the hearing that he intendsto file an amended pleading in the High Court and seeks a further period of one monthwithin which to do so. We will make a direction accordingly.[41] As to Muir J's costs judgment, Mr Hong submits that costs ought to have beenreserved given he was seeking leave to appeal to this Court from Gault J's judgmentat that time. However, it was entirely appropriate for the Judge to determine costs atthat stage and, in any event, leave was declined by this Court in November 2020.The costs judgment involved a routine application of the rules in accordance withsettled principles. No basis for us to interfere with it on appeal has been put forward.The appeal against the costs judgment must accordingly be dismissed.Result[42] The appeal against the strike out judgment of 27 August 2020 is dismissed.[43] We make an order directing Mr Hong to file and serve a fully particularisedamended statement of claim in the High Court re-pleading cause of action 3(2) withinone month of the date of delivery of this judgment if he wishes to proceed with thatclaim. In the event of default, that cause of action is to be struck out.[44] The appeal against the costs judgment of 22 September 2020 is dismissed.[45] The appellant is to pay one set of costs to the second respondents for a standardappeal on a band A basis and usual disbursements.Solicitors:New Zealand Law Society, Wellington for Second Respondents