HONG v AUCKLAND STANDARDS COMMITTEE NO. 5 [2020] NZHC 2613

HONG v AUCKLAND STANDARDS COMMITTEE NO. 5 [2020] NZHC 2613 [7 October 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-441CIV-2020-404-639[2020] NZHC 2613UNDER the Lawyers and Conveyancers Act 2006IN THE MATTER of an appeal against a decision of theLawyers and conveyancers DisciplinaryTribunalBETWEEN BOON GUNN HONGAppellantAND AUCKLAND STANDARDS COMMITTEENO. 5RespondentHearing: On the papersAppearances: Appellant on own behalfP Collins for the RespondentJudgment: 7 October 2020JUDGMENT OF GORDON J[Leave to Appeal]This judgment was delivered by meon 7 October 2020 at 11 am, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors: B G Hong Law Firm, AucklandNew Zealand Law Society, AucklandCounsel: P Collins, AucklandIntroduction[1] Mr Hong applies for leave to appeal against my judgment of 17 June 20201dismissing his appeal against two decisions of the New Zealand Lawyers andConveyancers Disciplinary Tribunal (the Tribunal). One was the Tribunal's decisionfinding him guilty of professional misconduct on three charges and the other was theTribunal's decision striking him off the roll of barristers and solicitors. Mr Hong alsoapplies for leave to produce his affidavit in other proceedings on the appeal.[2] At Mr Hong's request, and with the consent of the respondent, AucklandStandards Committee No 5 (Standards Committee), this application for leave isdetermined on the papers.Leave to appeal[3] Leave to appeal to the Court of Appeal is required under s 254 of the Lawyersand Conveyancers Act 2006 (the Act). Section 254 provides:254 Appeal to Court of Appeal on question of law(1) Any party to an appeal under section 253(1) who isdissatisfied with any determination of the High Court in theproceedings as being erroneous in point of law may, with theleave of that court, or, if the High Court refuses leave, withthe leave of the Court of Appeal, appeal to the Court of Appealagainst the determination; and section 56 of the Senior CourtsAct 2016 applies to any such appeal.(2) In determining whether to grant leave to appeal under thissection, the Court of Appeal must have regard to whether thequestion of law involved in the appeal is one that, by reasonof its general or public importance or for any other reason,ought to be submitted to the Court of Appeal for its decision.[4] Although s 254(2) refers to the Court of Appeal, this Court follows the sameapproach.2[5] The principles which apply on an application for leave to bring a second appealare well established. Leave may only be granted where:31 Hong v Auckland Standards Committee No 5 [2020] NZHC 1599.2 Morahan v Wellington Standards Committee 2 [2018] NZHC 1583 at [3]-[4].3 Waller v Hider [1998] 1 NZLR 412 (CA) at 413; Snee v Snee (1999) 13 PRNZ 609 (CA) at [22].(a) the appeal raises some question of law or fact capable of bona fide andserious argument; and(b) the case involves some interest, public or private, of sufficientimportance to outweigh the cost and delay of the further appeal.[6] The "threshold for leave to bring a second appeal is high" and there must be aquestion "sufficiently important to justify a court going into the matter for the thirdtime, with the delays and further expense that inevitably result".4[7] Ultimately the question is whether a second appeal is in the interests of justice.5Questions of law[8] Mr Hong identifies eight questions of law. I address each in turn.Question 1: Is the High Court and the Tribunal required to assess then deliberate andproviding [sic] their reasons as to why they have found me not to be [a] fit and properperson to practise as a barrister or solicitor as required by s 113 of the LawPractitioners Act 1982?[9] Mr Hong faced three charges.6 Charge 1 related to conduct that occurredbefore 1 August 2008. It was brought under s 351(1), the transitional provision, in theAct. The assessment of misconduct in relation to charge 1 was made under s 112(1)(a)of the Law Practitioners Act 1982.7 My finding in relation to charge 1 was thatMr Hong's conduct involved such serious negligence as to portray indifference and anabuse of the privileges which accompany registration as a law practitioner. It wasdishonourable conduct in that his acts were disgraceful, unprincipled and wrongful,comprising blatant breaches of duties owed by him as a lawyer to his clients.84 S v W [2014] NZCA 199 at [6].5 Deliu v National Standards Committee [2015] NZHC 67 at [18]; Deliu v National StandardsCommittee of the New Zealand Law Society [2015] NZCA 399 at [18](c); and Morahan vWellington Standards Committee 2 [2018] NZHC 1583 at [10].6 Hong v Auckland Standards Committee No 5, above n 1, at [20].7 At [140].8 At [157].[10] The test for striking off under s 113 of the Law Practitioners Act 1982 is notmaterially different from the test under s 244 of the Act. Both require an assessmentof the lawyer's conduct and whether, by reason of that conduct, the lawyer is not a fitand proper person to be a lawyer. That assessment was made in relation to the threecharges overall by the Tribunal and on appeal.9[11] This proposed question suggests that the Tribunal and the High Court wererequired to assess the penalty of striking off by reference to the former legislation ins 113 of the Law Practitioners Act 1982 (presumably only in relation to charge 1). Ido not consider this is a genuinely arguable point for a second appeal. As noted, thetest for striking off in the former and current legislation is materially the same. Boththe Tribunal and this Court provided reasons as to why Mr Hong is not a fit and properperson to practise as a barrister and solicitor.[12] Accordingly the threshold required for the granting of leave is not met.Question 2: Is the misconduct finding against me valid when the factual particularssupporting each of the charges that there was the alleged JV [joint venture] asproposed by me with the [clients] had been false, both the Tribunal and the High Courthad not determined that there had been such?Is the misconduct finding against me valid as being dishonourable and disgracefulunder LCA, s 7(1)(a)(i) and can be supported by mere insinuations that I had an eyeto profit going against the evidence and without the evidence thereon to support itsconviction against me or that the property was to be assigned to me as agreed so Icould control the sale by auction and recover my funds if the [clients] failed to eithersell it or redeem the property by raising a mortgage?[13] This question raises the factual issues of whether Mr Hong's loan to his clientswas in the context of a joint venture (they say it was; he says it was not) and whetherMr Hong sought to profit from the lending to his clients (he says he did not).[14] In my judgment I said:[72] he persisted in his view that the rules did not apply to him. Thatargument cannot be sustained as a matter of principle. He was acting for aclient on a transaction that involved the purchase of a property. Mr Hongprovided funds to enable the purchase to be completed. He acted for both9 At [162]-[175] and [183]-[199].himself and the client. There can be no doubt that the rules applied. And theyapplied regardless of whether there was to be joint ownership or an absenceof any profit motive on the part of Mr Hong. [73] The Tribunal made only a limited number of factual findings. Itconsidered that it was not necessary to address in detail all the particulars ofthe charges given the facts that Mr Hong did admit and "the resolute stand hehas taken to these proceedings". In my view that was an appropriate approach.[74] The limited factual findings that were made in the liability decisionwere not inconsistent with Mr Hong's evidence. The Tribunal did not make afinding on whether the arrangement was a "joint venture" or a loan. It simplynoted the respective positions of Mr K and Mr Hong. And it was not necessaryfor the Tribunal to make a finding on this issue for the purpose of consideringwhether or not the charges were proven.[75] Similarly, in the liability decision the Tribunal did not make a findingas to whether Mr Hong entered into the arrangement with a profit motive inmind. Again it was not necessary to determine that issue in order to decide ifthe charges were proven. (citations omitted)[15] It should be made clear that I did go on to consider these two factual issues:joint venture and profit motive in the context of penalty.10[16] But to return to the issue of misconduct, the charges turned on Mr Hong'sparticipation in a transaction involving his clients by lending money to them. Mr Hongaccepted that he had made the loan.[17] The proposed question(s) are not questions of law. They raise questions as tofindings of fact for which there was available evidence. But in any event those factualfindings were not necessary for the finding of misconduct.[18] The threshold for leave is not met for question 2.Question 3: In the deliberation and finding on facts, should the test as enunciated inZ v Complaints Committee be applied when the penalty being sought against me is the10 At [72], [75]-[93].most restrictive, such that deprives me of making a living, such humiliating andstressful?Question 4: If the test in Z v Complaints Committee is to be applied and had beenapplied to the undisputed facts and circumstances, would I still be found guilty ofmisconduct?[19] It is convenient to consider these two proposed questions together.[20] Mr Hong submits that this Court erred in law when "it failed to consider andapplied [sic] a higher threshold to the determination and finding of the said crucialfactual particulars when the penalty was as serious as striking off ".[21] In Z v Dental Complaints Assessment Committee, which involved disciplinaryproceedings against a dentist, the Supreme Court considered the standard of proofapplicable under the Dental Act. The point on appeal was whether a standard of proofhigher than the balance of probabilities is necessary in cases of professional standardsunder the Act in order to reflect the seriousness of disciplinary enforcement forprofessionals such as dentists, medical practitioners and lawyers. The majorityconsidered the civil standard of proof applied to professional disciplinaryproceedings,11 and that there were no grounds to make "an exception to the flexibleapplication of the civil standard to cover disciplinary proceedings, such as those underthe Act".12 That flexibility goes to the nature and quality of the evidence required tomeet the standard, which depends on the seriousness of the facts which must be provedin a particular case and the consequences of proving them.13 There was, however, asingle standard which applied to civil proceedings.[22] In finding misconduct, both the Tribunal and this Court relied on Mr Hong'sacknowledged conduct. In determining there was a profit motive (and relatedly a jointventure) this Court stated:[78] In the absence of any documentation at the time the arrangement wasentered into, the best evidence is in communications by Mr Hong prior to anyissues about his conduct arising.11 Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1 at [112].12 At [116], [118]. Anderson J, in a separate judgment, agreed with the majority on this point, at[146]; Elias CJ considered where disciplinary charges are serious the standard of proof should bebeyond reasonable doubt, at [55].13 At [101], [105], [112].[23] I concluded that those emails indicated there was to be joint ownership of theproperty as between the client and Mr Hong and that Mr Hong was seeking to profitfrom the arrangement.14 The Court relied on Mr Hong's own statements. Theapproach was consistent with the principles in Z.[24] Accordingly, I do not consider questions 3 and 4 meet the threshold for thegranting of leave.Question 5: Is it proper for statements of facts in the BOTCF Proceedings to be merelyused as proper findings of facts without an inquiry in the manner as I have illustratedabove, in breach of s 50 of the Evidence Act 2006?[25] This question is a reference to Mr Hong's tax litigation which was concernedwith his unsuccessful attempt to claim unpaid loans as tax deductible losses for hislegal practice. Aspects of the findings in that litigation were put to Mr Hong in cross-examination by Mr Collins, for the Standards Committee, before the Tribunal.Mr Hong admitted under cross-examination that the loan to his clients – the subject ofthe charges – was in the same category as his BOTCF fund (Benevolence on theConscience Fund) which included being paid "not just interest but also a bonus". Thelitigation, and Mr Hong's evidence before the Tribunal, in this case were properlyreferred to in this context in my judgment.15[26] This does not raise any question of law warranting a second appeal.Question 6: Had the misconduct finding against me been properly determined inaccordance with the law, legal principles and precedents as I have noted as errors oflaw above when (a) I had not breached our fundamental [obligations]; (b) the [clients]had not and could not have suffered any financial harm of loss as at all times when Idealt with the property the appraised sale value would not realise enough to haverepaid my advances to the [clients]; (c) I had not gained anything; (d) none of theadverse perverse finding [sic] of facts as relied upon could be relied upon sinceincorrect?[27] This question in substance asserts that Mr Hong had not breached hisobligations as a lawyer, the clients had not suffered any financial harm or loss and hehad not gained anything from the transaction. This is an argument about the facts; it14 Hong v Auckland Standards Committee No. 5, above n 1 at [79]-[82].15 At [68], [83]-[84].does not raise a question of law. It does not meet the threshold required for the grantingof leave.Question 7: Had the misconduct finding against me been properly determined inaccordance with the Keene's case when on my interpretation of the applicability of theRules that such did not apply under the indisputable facts and circumstances once (a)the fact that there had not been the alleged JV against me (b) the [clients] did notsuffer any financial harm (c) I had nothing to gain, did not gain anything from the[clients] and could not have had an eye to profit when the property would be sold at aloss (d) even interest if the [clients] could not pay rather than could but refused to Iwould not have an issue and (e) my loan as with anyone's must be re-paid and if the[clients] could do so they would have been able to redeem the property from me, weretaken into consideration, at worse, (sic) that I should only be found to have erred inmy judgment [sic], lack of hind-sight, such should not be taken against me to the extentof striking me off or even suspending me?[28] The reference to "Keene's case" appears to be a reference to Keene v LegalComplaints Review Officer.16 Mr Hong made the same submission in a recent leaveapplication which was dismissed by Gault J on 3 July 2020, where the Court said:17[11] Subsequent to his submission in reply, Mr Hong filed a furthersubmission relying on Keene v Legal Complaints Review Officer. Hesubmitted Keene supported his submission that a lawyer should not be foundguilty of misconduct or unsatisfactory conduct where he or she has interpretedrules or regulations and the interpretation is arguable or not wholly untenable.However, in Keene the Court of Appeal was dealing with a High Courtjudgment that had set aside an LCRO decision and restored a StandardsCommittee finding of unsatisfactory conduct in circumstances where it wasopen to the LCRO to reach the view that a disciplinary response was notwarranted. Moreover, the Court considered that Mr Keene's view wasreasonably open to him. I do not understand Keene to decide that adisciplinary response is not warranted whenever a lawyer's conduct is basedon an arguable view. In any event, as indicated, here the finding was one ofreckless contravention based on Mr Hong's persistent obstruction of theinspector's review and failure to acquaint himself with his legal obligation.(citations omitted)[29] In this case it appears Mr Hong is asserting that his belief in the correctness ofhis dealings with his client should have exonerated him from any professionalconsequences. On the evidence that is not an arguable point. The threshold for thegranting of leave is not met in relation to this question.16 Keene v Legal Complaints Review Officer [2019] NZCA 559.17 Hong v Auckland Standards Committee No 5 [2020] NZHC 1572 at [11].Question 8: Had the struck-off penalty as levied against me been determined in [sic]with the law, legal principles and precedents as I have noted as errors of law above;(a) on the grounds as I have noted in respect of the misconduct finding (b) that therehad not been any of my eyes on profit as I had been more concerned over the fullrecovery of my advance (c) there had been nothing in my disciplinary history thatcould have supported this strike-off penalty, the seriousness of the offences and fineslevied had been enlarged against me in discrimination (by reference to precedents)and bad faith, such as initiated by our Lawyers Complaints Service personnel when Ihad stepped on their toes that I have in my judicial review proceeding inCIV-2020-404-854 taken action on such discrimination and for and inquiry on suchand (d) I have never repeated any of such offences against me?[30] This question is again concerned with arguments as to facts relevant to thepenalty of striking off. Mr Hong asserts the Tribunal and this Court were in error infinding that his conduct was a serious breach of his professional obligations. Hecharacterises the findings as discriminatory. Both the Tribunal and this Courtconsidered matters relevant to penalty: the seriousness of the conduct; disciplinaryhistory; the need for deterrence and lack of insight.[31] It does not raise a question of law.[32] In summary, none of Mr Hong's proposed questions are questions of lawcapable of bona fide and serious argument.[33] As to any important public or private interest, Mr Hong submits theinterpretation of the law raised by the questions are of interest to his clients as membersof the public and to legal practitioners. He submits that as a consequence of thedecision striking him off the roll, he is not able to assist his clients on a conscience toconscience basis. He says he has clients who have approached him for assistance andhave been most upset when advised he cannot act for them.[34] This does not constitute the kind of public interest that is of sufficientimportance to outweigh the cost and delay of a further appeal.Application to adduce fresh evidence[35] Mr Hong also seeks leave to adduce his brief of evidence of 20 October 2017in Taxation Review Authority proceedings. He says this evidence sets out his intentionin establishing his "Benevolence on the Conscience Loan Fund" and the manner inwhich the fund was operated by him. Mr Hong submits it is necessary to adduce thisevidence because I referred to certain statements of fact from that proceeding whichare not correct. The specific error of fact Mr Hong identifies is that he required hisclients to pay him a "bonus" in addition to interest.[36] Section 254 of the Act does not give this Court jurisdiction to consider anapplication to adduce fresh evidence in an appeal to the Court of Appeal. That is amatter for the Court of Appeal, under r 45 of the Court of Appeal (Civil) Rules 2005.[37] I have found that none of Mr Hong's proposed questions of law meets thethreshold required for the granting of leave. However, it is open to Mr Hong to applyto the Court of Appeal for leave under s 254(1) of the Act. At the same time he maymake application to the Court of Appeal for leave to adduce further evidence.Result[38] The applications by Mr Hong for leave to appeal to the Court of Appeal andfor leave to adduce fresh evidence on appeal are refused.Costs[39] My preliminary view is that costs should follow the event in the normal way.If the parties are able to agree costs, a joint memorandum should be filed within15 working days from the date of this judgment. If the parties are not able to agreecosts, the respondent may file and serve a memorandum within five working days ofthe date for the joint memorandum, with Mr Hong to file and serve his memorandumwithin a further five working days. Memoranda should not exceed four pages,excluding any attachments. I will determine costs on the papers.___________________________________Gordon J