HONG v AUCKLAND STANDARDS COMMITTEE NO. 3 [2014] NZHC 2871

HONG v AUCKLAND STANDARDS COMMITTEE NO. 3 [2014] NZHC 2871 [18 November 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2014-404-001962[2014] NZHC 2871UNDER the Lawyers and Conveyancers Act 2006IN THE MATTER of an appeal against a decision of theLawyers and Conveyancers DisciplinaryTribunalBETWEEN BOON GUNN HONGAppellantAND AUCKLAND STANDARDSCOMMITTEE NO. 3RespondentHearing: 11 November 2014Appearances: Appellant in personP Collins for the RespondentJudgment: 18 November 2014JUDGMENT OF GILBERT JThis judgment is delivered by me on 18 November 2014 at 4.30 pmpursuant to r 11.5 of the High Court Rules......................................................Registrar / Deputy RegistrarIntroduction[1] Mr Hong appeals against an order of the New Zealand Lawyers and Conveyancers Disciplinary Tribunal suspending him from practice for 10 months for failing to comply with an order of a Standards Committee requiring him to pay a fine of $1,000, costs of $1,000 and attend a continuing legal education seminar.1Mr Hong contends that 10 months' suspension was manifestly excessive for not complying with the Committee's orders, particularly given that by the time of thepenalty hearing he had paid the fine and the costs and had viewed two Auckland District Law Society webinars.Background[2] Mr Hong has been in practice for over 24 years. He was admitted to the bar in July 1990 and has been practising on his own account since 1992. Apart from the events leading to the current penalty, Mr Hong has been disciplined on three occasions in relation to his professional conduct.[3] The first of these related to a letter Mr Hong wrote to a member of the public on behalf of his clients in November 1996 which did not meet the standards of courtesy and fairness expected of a practitioner. Mr Hong admitted a charge of misconduct in relation to this letter in November 1997. He was censured, fined $500 and ordered to pay costs. Mr Hong was also directed to take advice from another practitioner regarding the management of his practice.[4] The second disciplinary matter concerned Mr Hong's failure to honour anundertaking he gave in April 2003 to pay outstanding water rates of $55.00. Mr Hong was found guilty of conduct unbecoming a barrister or solicitor in relation to this in November 2004. He was censured and ordered to pay costs.[5] The third matter concerned two certificates Mr Hong provided to clients'financiers during 2010 certifying that he held professional indemnity insurance when he did not. Instead, he had devised a scheme of self-insurance. Mr Hong was found1 Auckland Standards Committee No.3 v Hong [2014] NZLCDT 41.guilty of unsatisfactory conduct in relation to this. He was fined $1,500 and ordered to pay costs.[6] The present appeal has its genesis in advice Mr Hong gave to a client facing eviction from commercial premises for non-payment of rent in May 2009. Mr Hongwrote to the landlord's solicitors and the police asserting that a court order would berequired for them to obtain lawful re-entry to the premises.[7] Criminal proceedings were subsequently brought against Mr Hong's clientarising out of his conduct at the time of re-entry to the premises. Judge L H Moore,who dealt with the matter, considered that Mr Hong's advice was incorrect and hedirected that a copy of his judgment be forwarded to the New Zealand Law Society so that it could consider whether any action should be taken against Mr Hong.[8] In its decision dated 14 February 2013, the Standards Committee concluded that Mr Hong's conduct was unsatisfactory for the following reasons:The Committee considered Mr Hong's submissions about the law of forcibleentry in his letter to the police. The Committee considered that his advicewas robust in that he warned the landlord's solicitor regarding re-entry anddisputed the landlord's solicitor's right to re-enter. The Committee howevernoted the comments of the learned Judge and considered that Mr Hong'sconduct with his own client was imprudent and incited or could have the potential to incite his clients into criminal actions (which eventuated). TheCommittee considered that Mr Hong's conduct in the matter wasunsatisfactory.[9] Mr Hong was reprimanded, fined $1,000 and ordered to pay costs. He was also ordered to attend a continuing legal education seminar, Equitable Remedies, on 19 April 2013.[10] This decision was sent to Mr Hong by DX but he claims that he did not receive it until it was emailed to him on 2 May 2013, after the Equitable Remediesseminar had been presented. The New Zealand Law Society suggested that he attend an alternative seminar on 12 June 2013, entitled Tricky Issues in the Life of a Lawyer. Mr Hong declined this invitation and said that he intended to apply to theLegal Complaints Review Officer (LCRO) for a review of the Committee's decision.He maintains that the advice he gave his client, which was described by the Committee as "robust", was correct.[11] On 13 June 2013, Mr Hong applied to the LCRO for a review. The LCRO declined jurisdiction on 5 August 2013 because the application was brought more than 30 working days after the date the determination was made. In the meantime, on 2 August 2013, the Committee resolved that Mr Hong's failure to comply with itsorders should be considered by the Lawyers and Conveyancers Disciplinary Tribunal.[12] Mr Hong was charged with misconduct or, alternatively, unsatisfactoryconduct in failing to comply with the Committee's orders. After reciting thebackground, the offence was detailed in the charge as follows:A lawyer has fundamental obligations to uphold the rule of law and facilitate the administration of justice (s 4 of the Act and r 2 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care Rules 2008)). The practitioner has acted contrary to his obligations as a lawyer by failing to comply with the orders of the Committee without good cause.[13] Following a hearing on 2 April 2014, the Tribunal rejected Mr Hong'sevidence that he did not receive the determination until 2 May 2013. The Tribunal considered that it was disgraceful and dishonourable for Mr Hong not to complywith the Committee's order without taking proper steps to challenge it. The Tribunalfound that this went beyond unsatisfactory conduct and amounted to misconduct.2[14] Mr Hong was not expecting this outcome. As soon as he became aware that the Committee intended to seek an order suspending him from practice, he attempted to recover his position by paying the fine and the costs and viewing two other educational webinars.2 Auckland Standards Committee No.3 v Hong [2014] NZLCDT 16.The decision under appeal[15] The Tribunal considered that Mr Hong's breach of the Committee's orderswas flagrant and that a significant period of suspension was required to ensure thatthe profession's disciplinary processes are not undermined:[26] Both counsel are agreed that the misconduct is serious. TheTribunal's concern is that this type of offending needs to be marked with a firm response in order that the institutions of professional discipline are not undermined....[33] In this type of offending there must be an element of deterrence in the penalty ...[16] The Tribunal took into account that Mr Hong showed a lack of contrition:[27] While we accept that the practitioner has finally complied with the orders, the proximity to the penalty hearing is such that it seriously undermines his plea of proper contrition or understanding of his professional obligations.[17] The Tribunal was particularly concerned that Mr Hong had been disciplined on earlier occasions:[29] Mr Hong has been given a number of opportunities to reflect on his professional standards and behaviour over the course of 17 years of disciplinary findings. He has been given the opportunity of censure and fine and further education. He does not appear to have learned from these opportunities and we consider that a further opportunity cannot be justified.[30] It is the Tribunal's view that anything less than a significant period of suspension would be an insufficient response to a flagrant breach of orders as against the history of disciplinary offending over a 17 year period (albeit at the lower end).[18] The Tribunal considered that Mr Hong had misled it by claiming that he didnot receive the Committee's decision when it was sent to him by DX and byclaiming that no client had ever complained about him. The Tribunal also considered that Mr Hong had misled a differently constituted Tribunal in February 2013 by claiming that he had not previously faced disciplinary charges:[31] The practitioner has not assisted himself in the misleading statements made to this Tribunal and the Tribunal chaired by Mr Mackenzie in February 2013....[35] We accept that Mr Hong's manner of conduct of his defencecannot be regarded as an aggravating feature, however his lack of judgment and insight into his behaviour are certainly matters which can be taken into account in assessing overall fitness to practice [sic] ...[19] Against this background, the Tribunal considered that a lengthy period ofsuspension was required to promote Mr Hong's rehabilitation:[33] we are of the strong view that rehabilitation is much more likely to be fostered by a period outside practice in order to reflect on his behaviourand future actions rather than being permitted to continue with "business as usual".Grounds of appeal[20] Mr Hong raises the following grounds of appeal:(a) The penalty was manifestly excessive in all of the circumstances and not consistent with the penalties imposed in comparable cases.(b) The Tribunal was wrong to conclude that his conduct was wilful and flagrant and to take this into account as an aggravating factor.(c) The Tribunal failed to give adequate weight to the fact that he had complied with the order by the time of the penalty hearing.(d) The Tribunal overstated the seriousness of his disciplinary history.(e) The Tribunal was wrong to conclude that he misled it about his complaints history and to take this into account.(f) The Tribunal was wrong to conclude that he had misled the Tribunal chaired by Mr Mackenzie in 2013 concerning his disciplinary history.Approach to the appeal[21] The appeal is brought pursuant to s 253 of the Lawyers and Conveyancers Act 2006. Such appeals are by way rehearing. The Court may confirm, reverse, or modify the order or decision appealed against. The correct approach is as directed by the Supreme Court in Austin, Nichols & Co v Stichting Lodestar.3 Mr Hong is entitled to the opinion of this Court as to the appropriate penalty, even though this involves an evaluative judgment on matters of fact and degree about which reasonable minds might differ.Was the penalty manifestly excessive having regard to the penalties imposed in comparable cases?[22] Mr Hong was only able to find two other cases where practitioners have been disciplined for failing to comply with disciplinary orders. In both of these, the practitioner was censured and fined $5,000.[23] In the first case, the Disciplinary Tribunal had made an order prohibiting a practitioner from acting in any court proceeding against various named individuals.The practitioner later acted against these individuals in breach of the Tribunal'sorder. This was found to be unsatisfactory conduct. The practitioner was censured, fined $5,000 and ordered to pay $1,500 in costs.[24] In the second case, a practitioner had wrongly paid out a deposit that he was required to hold as stakeholder. The Standards Committee ordered the practitioner to pay the money back into his trust account within 30 days. The practitioner failed to do so resulting in a complaint being made. Almost a year after he had been orderedto repay the money, the practitioner paid an amount into the complainant's lawyer'strust account on conditions that it could only be accepted in full and final settlement and the complaint against him had to be withdrawn. The Standards Committee heldthat the practitioner's failure to follow its order was unsatisfactory conduct. He wascensured, fined $5,000 and ordered to pay costs of $3,954.3 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103; [2008] 2 NZLR 14.[25] Mr Hong also drew attention to a case in 2013 in which a practitioner was censured, fined $5,000 and ordered to pay costs of $1,500 for knowingly breaching a court order by arranging the removal of client's furniture from the former family home.[26] Mr Hong argues that his conduct was much less serious than the conduct of the practitioners in these three cases and yet his penalty was much more severe.[27] Mr Hong was unable to find any case in which a practitioner had been suspended for failing to comply with an order of a Standards Committee or the Tribunal. Mr Collins was also unaware of any previous case where suspension has been ordered for non compliance with an order of a Standards Committee or the Tribunal.[28] The recent cases referred to by Mr Collins where practitioners had been suspended involved significantly more serious misconduct:(a) Theft – suspension for three years.4(b) Multiple drink drive convictions and resisting police – suspension for two years.5(c) Improperly taking fee payments from clients directly for personal use– suspension for 18 months.6(d) Swearing a false affidavit – suspension for 12 months.7(e) Repeat negligence and incompetence – suspension for 12 months.8(f) Offences under the Securities Act 1978 (Bridgecorp director) –suspension of nine months.94 National Standards Committee v Toner [2013] NZLCDT 38.5 Hawkes Bay Standards Committee v Beacham [2012] NZLCDT 29.6 Canterbury-Westland Standards Committee No.3 v Hemi [2013] NZLCDT 23.7 Auckland Standards Committee No.1 v Garrett [2011] NZLCDT 29.8 Southland Standards Committee v W [2013] NZLCDT 28.(g) Drink driving and evasion of drink drive processes – suspension for three months.10[29] Practitioners and members of the public must be able to have confidence that disciplinary sanctions are applied in an even-handed manner. The lengthy suspension imposed on Mr Hong is significantly out of line with the penalties imposed in other comparable cases. In the light of earlier penalty decisions, Mr Hong would not have appreciated that he risked being suspended from practice if he did not pay the fine and the costs and attend the seminar as directed, irrespective of whether he disagreed with the decision and intended to challenge it.[30] I note that while the consequences of non-compliance with a disciplinary sanction in New Zealand have been limited to censure and fine, such conduct appears to be treated more seriously in other jurisdictions. For example, the sentencing guidelines promulgated by the Bar Tribunals and Adjudication Service in England and Wales anticipate short periods of conditional suspension for failure to comply with any part of a disciplinary order. This is an approach that would have been available in this case.Was the Tribunal wrong to conclude that Mr Hong's conduct was wilful andflagrant and take this into account as an aggravating factor?[31] Mr Hong resisted the misconduct charge on the basis that he did not receivethe Committee's determination until it was emailed to him on 2 May 2013. Becausehe did not agree with the determination, he then applied to the LCRO for a review.The Committee did not accept Mr Hong's evidence concerning receipt of the Committee's determination and, on that basis, found that he had knowingly and wilfully not complied with it. The Tribunal was correct to treat this as an aggravating feature.9 Davidson v Auckland Standards Committee No.3 [2013] NZAR 1519 (HC).10 Canterbury-Westland Standards Committee v Taffs [2013] NZLCDT 13.Did the Tribunal take adequate account of the fact that Mr Hong had complied with the orders by the time he was sentenced?[32] The Tribunal was aware that Mr Hong had complied with the Committee'sorders by the time of the penalty hearing and took this into account. However, the Tribunal was entitled to conclude that Mr Hong only took these steps in response to the advice he received that the Committee was going to seek an order suspending him from practice for failing to comply with its orders.Did the Tribunal overstate the significance of Mr Hong's disciplinary history?[33] The Tribunal stated that Mr Hong's "disciplinary history is not comfortable reading for the Tribunal" and "display[s] an ongoing pattern of professional failings". Apart from his advice in May 2009 which the Committee found to be robust but deficient, Mr Hong had been disciplined on only three occasions in the course of his 23 years of practice. None of these incidents was particularly serious; he received fines of $500 and $1,500 for the first and third of these incidents and no fine at all for the second. It is not accurate to describe these three incidents as"17 years of disciplinary findings" displaying "an ongoing pattern of professional failings". The Tribunal overstated the extent and seriousness of Mr Hong'sdisciplinary history. Mr Hong had not previously failed to comply with an order of a Standards Committee or the Tribunal.Was the Tribunal wrong to conclude that Mr Hong had misled it about his complaints history and to take this into account?[34] At the liability hearing in April 2013, Mr Hong said that he had "never been complained about by any client". The Tribunal was satisfied that this statement wasincorrect in that a client had complained in 2005. Mr Hong says that he was unaware of this complaint, which related to the purchase of a property that was settled without issue in April 2004. Mr Hong says that his wife, who is a legal executive, dealt with this conveyance. No disciplinary action was taken as a result of this complaint and Mr Hong says that he has no recollection of it.[35] Mr Hong appears to have made an honest mistake in stating that no client had ever complained about him. The Tribunal should not have taken this into accountwhen fixing the penalty, especially given that Mr Hong did not have a full opportunity to respond to this allegation.Was the Tribunal entitled to conclude that Mr Hong had misled the Tribunal in 2013 about his disciplinary history?[36] The Tribunal took into account that Mr Hong misled the Tribunal chaired by Mr Mackenzie in relation to an unrelated charge, concerning an exchange with another practitioner. The Tribunal dismissed this charge in 2013.11 In the course of its decision, the Tribunal stated:12We do not consider that there is a public risk issue in Mr Hong practising. Our view is reinforced by the fact that Mr Hong has clearly learnt his lesson in this unfortunate episode. He made it clear to the Tribunal in questioning that he accepted that he had lost his way when he personalised matters and he would be vigilant to ensure that he did not expose himself again to such proceedings. His evidence also noted that in his many years of practice this was his sole indiscretion resulting in disciplinary charges.[37] Mr Hong did not say that he had never been the subject of disciplinary action. It appears from the transcript of the hearing that the Tribunal misinterpreted what Mr Hong said:I have never ever had a client complain in 20 odd years, because my clients always come first.13...See so okay, I get a little lesson okay and I will be really careful and I say there will not be any more such repetition. Besides as I say, in 20 or more years I have never ever been sued before.14[38] I consider that the Tribunal should not have taken this matter into account. Mr Hong was not faced with an allegation that he had misled another Tribunal on an earlier occasion and was not given an adequate opportunity to respond to this. To the extent that this matter was taken into account, Mr Hong was effectively being penalised for alleged conduct that he had not been charged with or convicted of. This is wrong in principle.11 LCRO v Hong [2013] NZLCDT 9.12 At [65].13 At p 69 of the transcript.14 At p 77.Should the penalty be modified?[39] I agree with the Tribunal that practitioners must respect disciplinary orders. The disciplinary processes and the authority of the Standards Committee and the Tribunal must not be undermined. Mr Hong accepts this.[40] With the benefit of hindsight, Mr Hong regrets that he did not complypromptly with the Committee's orders even though he intended to challenge them. He says that he would have done so had he realised that there was a prospect that he would be suspended if he did not. He argues that he could not reasonably have anticipated this in view of the way other practitioners have been dealt with in similar circumstances. There is force in this submission.[41] While I hesitate to interfere with a decision made by the Tribunal given its considerable experience and specialist expertise in this area, I have come to the conclusion that the penalty imposed on Mr Hong was excessive in all of the circumstances and cannot stand. Although Mr Hong should have complied with theCommittee's orders, his failure to do so is partly explained by the fact that he did not agree with the Committee's determination and wished to challenge it. He did not act sufficiently promptly and as a result his review rights were lost. By the time of the penalty hearing, Mr Hong had paid the fine and the costs and had viewed the webinars. Taking into account the penalties imposed in other cases where orderswere not complied with, Mr Hong's penalty of 10 months' suspension from practiceis disproportionately severe. The disparity cannot be justified by Mr Hong'sdisciplinary history.[42] Mr Hong has served almost four months of the ten month suspension imposed.15 I consider that this is a sufficient penalty in all of the circumstances.Costs[43] The Tribunal ordered Mr Hong to pay costs totalling $26,121. Mr Hong submits that these costs are high in comparison to other cases. Mr Collins submits15 The period of suspension commenced on 24 July 2014.that the costs are higher than would normally be expected because of the voluminous material submitted by Mr Hong. I accept the validity of that response.[44] In any event, the Tribunal was exercising its discretion in awarding costs. Mr Hong has not demonstrated any error, let alone any error of the kind that would justify the Court interfering with the discretionary costs award.Result[45] The appeal is allowed.[46] The Tribunal's decision to suspend Mr Hong from practice for 10 months isset aside and replaced with an order suspending him from practice for a period offour months from the date of the Tribunal's decision. This period expires today.[47] The Tribunal's orders for censure and costs are confirmed.________________________M A Gilbert J