HONG v AUCKLAND STANDARDS COMMITTEE NO 5 [2021] NZCA 85

HONG v AUCKLAND STANDARDS COMMITTEE NO 5 [2021] NZCA 85 [22 March 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA627/2020[2021] NZCA 85BETWEEN BOON GUNN HONGApplicantAND AUCKLAND STANDARDS COMMITTEENO 5RespondentCourt: French and Goddard JJCounsel: Applicant in personP N Collins for RespondentJudgment:(On the papers)22 March 2021 at 10 amJUDGMENT OF THE COURTA The application for leave to adduce further evidence is declined.B The application for leave to appeal is declined.C The applicant must pay the respondent costs for a standard applicationfor leave on a band A basis together with usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by French J)[1] Mr Hong was at all material times a legal practitioner. The New ZealandLawyers and Conveyancers Disciplinary Tribunal (the Tribunal) found him guilty ofprofessional misconduct1 and ordered that he be struck off the roll of barristers and1 Auckland Standards Committee 5 v Hong [2020] NZLCDT 5 [Liability judgment].solicitors and pay costs and compensation.2 The findings of misconduct related toMr Hong's personal involvement in transactions and financial dealings with clients.[2] Mr Hong appealed the Tribunal's decisions to the High Court. His appeal wasdismissed by Gordon J.3[3] Dissatisfied with that outcome, Mr Hong applied for leave to appeal to thisCourt under s 254 of the Lawyers and Conveyancers Act 2006. The application forleave was, as is required, made in the first instance to the High Court but was declinedby Gordon J.4 Mr Hong now seeks leave to appeal from this Court.Background[4] The charges arose out of Mr Hong's dealings with clients identified inthe decisions as D, K, J D and the CL Trust (the Trust). The Tribunal madethe following key findings of fact which formed the basis of its conclusion thatMr Hong had breached numerous rules of conduct and client care for lawyerscontained in the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care)Rules 2008:5(a) The Trust entered into an agreement to purchase a property in September 2005which it was unable to complete because of an adverse caveat and issues withthe vendors. Subsequently, in mid-2006, Mr Hong proposed a solution whichentailed his personal involvement with a substantial financial input. Mr K andMs D described the proposal as a joint venture.(b) The Trust paid a deposit of $40,000 on the property in 2005, and later a furthersum of $5,000 to be held by Mr Hong if needed for an increased deposit.Mr Hong paid the balance of $590,000 to complete settlement on 1 August2006. Transfer of the title did not take place until 31 July 2008.2 Auckland Standards Committee 5 v Hong [2020] NZLCDT 12 [Penalty judgment].3 Hong v Auckland Standards Committee No 5 [2020] NZHC 1599 [High Court substantivejudgment].4 Hong v Auckland Standards Committee No 5 [2020] NZHC 2613 [High Court leave judgment].5 See the summary in the Penalty judgment, above n 2, at [2].(c) Mr Hong transferred title to the property into the joint names of a trustee,Ms D, and himself at a time when he had ceased to be a trustee of the Trust.A week later he transferred the title into the sole ownership of a company underhis exclusive control (BGH Trusteeship Ltd).(d) Between 4 August 2011 and 12 December 2012, Mr Hong registered furthertransfers of the title, first to Nominees and Trustees Ltd, another companyunder his sole control, and then to himself personally. He then registered amortgage to the ASB bank which was intended to secure lending to meet hisown financial obligations.(e) Mr Hong's actions described in (c) and (d) were done without advice orexplanation to his clients.(f) Mr Hong remains the sole legal owner of the property which is subject toa caveat by Mr K.(g) Mr Hong has treated Mr K as a tenant whom he unsuccessfully sought to haveevicted in 2014. Mr Hong denies any responsibility to Mr K and Ms D.Their dispute with him is entrenched and unresolved to this day.[5] These findings were upheld by the High Court.6[6] The High Court also upheld the Tribunal's decision to strike Mr Hong offthe roll, having regard to the seriousness of the breaches, his poor disciplinary history,the need for deterrence and his lack of insight.7The application for leave to appeal[7] Under s 254, the right of appeal to this Court is limited to appeals on a questionof law and, as mentioned, is subject to a leave requirement.6 High Court substantive judgment, above n 3, at [138].7 At [199].[8] Section 254(2) provides that in determining whether to grant leave, this Courtmust have regard to whether the question of law involved in the appeal is one that byreason of its general or public importance or for any other reason ought to be submittedto this Court for determination. As the case law recognises, the threshold is a highone. The question of law sought to be raised must be a question that is capable of bonafide and serious argument and sufficiently important to justify the attendant delay andcost of a second appeal.8[9] Mr Hong advances nine proposed questions of law. Before we turn to addresseach of the proposed questions, it is necessary for us first to consider an applicationmade by Mr Hong to adduce further evidence.The application for leave to adduce further evidence[10] The application relates to a fund established by Mr Hong called "Benevolenceon the Conscience Loan Fund" (the BOTCLF). The fund was at the centre of anunsuccessful attempt by Mr Hong to claim unpaid loans as tax deductible losses forhis legal practice and had been the subject of decisions in the Tax Review Authority, 9the High Court10 and this Court.11 Mr Hong said the conscience fund was an adjunctto his legal practice to help longstanding clients who would benefit from his assistance.[11] The BOTCLF featured in the current proceedings because in evidenceMr Hong told the Tribunal that the payment of $590,000 that he made to complete thepurchase of the property was another example of the kind of loan at issue in the taxlitigation.[12] The further evidence which Mr Hong wants to adduce is evidence of hisintentions regarding his BOTCLF and his modus operandi as shown by:(a) the statement of position he submitted in response to Inland Revenue's Noticeof Assessment;8 Deliu v National Standards Committee [2015] NZHC 67 at [17]; aff'd [2015] NZCA 399 at [18];and Morahan v Wellington Standards Committee 2 [2018] NZHC 1583 at [9].9 XXX v The Commissioner of Inland Revenue [2018] NZTRA 3.10 Hong v Commissioner of Inland Revenue [2018] NZHC 2539, (2018) 28 NZTC 23-073.11 Hong v Commissioner of Inland Revenue [2019] NZCA 336, (2019) 29 NZTC 24-015.(b) the brief of evidence he filed in the Tax Review Authority proceeding; and(c) the notes of evidence in the Tax Review Authority proceeding.[13] Mr Hong says this further evidence is necessary in order to rectify errors madein the Tax Review Authority and "perverse material findings of fact" carried over intothe Court of Appeal decision and in turn to Gordon J's decision in this proceeding.The specific error identified is the finding that he required clients to pay him a bonusin addition to paying him interest.[14] The application is fundamentally misconceived. An appeal limited toa question of law is not an opportunity for re-litigating factual findings, let alonefindings from another proceeding. That is quite apart from the objection that thisevidence is not fresh.[15] The application for leave to adduce the further evidence is accordinglydeclined.[16] We turn then to the proposed questions of law.Application for leave to appeal — AnalysisQuestion 1Is 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 fit andproper person to practise as a barrister or solicitor as required by s 113 ofthe Law Practitioners Act 1982?[17] Mr Hong faced three charges. The first of these concerned conduct alleged tohave occurred while the Law Practitioners Act 1982 was still in force. As a result, theHigh Court assessed the impugned conduct by reference to the definition ofmisconduct under that Act.12 The other two charges were alleged to have occurred12 Section 112(1)(a). The Judge also considered the definition of "misconduct" in relevantauthorities: High Court substantive judgment, above n 3, at [145]–[148], citing ComplaintsCommittee No 1 of the Auckland District Law Society v C [2008] 3 NZLR 105 (HC) at [30]–[31];and Shahadat v Westland District Law Society [2009] NZAR 661 (HC) at [31].after the Law Practitioners Act had been repealed and replaced by the Lawyers andConveyancers Act.[18] The section of the 1982 legislation that is mentioned in the proposed questionis s 113. In deciding whether to strike a practitioner off, that section requiresan assessment of the lawyer's conduct and whether by reason of that conductthe lawyer is not a fit and proper person to be a lawyer. The equivalent position in theLawyers and Conveyancers Act is s 244. It is to the same effect as s 113.[19] As we understand it, the point sought to be raised by the proposed question isthat the Tribunal and the High Court failed to consider by reference to s 113 whetherMr Hong should be struck off for the conduct alleged. It is correct that neitherthe Tribunal nor the High Court expressly mentioned s 113 in their respective penaltydeliberations but both did apply the test mandated by ss 113 and 244 and both gavereasons why Mr Hong was not considered to be a fit and proper person to be a legalpractitioner.[20] We conclude the question does not raise any contestable legal issue.Question 2Is the Misconduct Finding against me valid, when the factual particularssupporting each of the Charges that there was the alleged [joint venture (JV)]as proposed by me with [Mr K and Ms D (the Ks)] had been false, both theTribunal and the [High Court] had [sic] not determined that there had beensuch a JV?Is the Misconduct Finding against me valid as being dishonourable anddisgraceful under [the Lawyers and Conveyancers Act], s.7(1)(a)(i) and cansuch be supported by mere insinuations that I had an eye to profit, such goingagainst the evidence and without the evidence thereon to support its convictionagainst me or that the property was to be assigned to me as agreed so I couldcontrol the sale by auction and recover my funds if the Ks failed to either sellit or redeem the property by raising a mortgage?[21] As will be readily apparent, the question raises issues of fact and iscase-specific. It therefore does not meet the threshold of a question of law let alonea question of general or public importance. For completeness we add that in so far asthe question may import an argument about the existence of the requisite evidentialfoundation for the findings, it is not seriously arguable.Questions 3 and 4[22] Mr Hong groups these questions together:In the deliberation and finding on facts, should the test as enunciated inZ v Complaints Committee be applied when the penalty being sought againstme is the most restrictive, such that deprives me of making a living, suchhumiliating and stressful? 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 guiltyof misconduct?[23] The case mentioned in the questions is a decision of this Court whichconcerned the standard of proof to be applied in professional disciplinaryproceedings.13 This Court held the standard of proof was the ordinary civil standardof the balance of probabilities. It also stated in a passage relied on by Mr Hong:14The balance of probability standard means that a court is satisfiedan event occurred if the court considers that, on the evidence,the occurrence of the event was more likely than not. When assessingthe probabilities the court will have in mind as a factor, to whateverextent is appropriate in the particular case, that the more seriousthe allegation the less likely it is that the event occurred and, hence,the stronger should be the evidence before the court concludes thatthe allegation is established on the balance of probability. Builtinto the preponderance of probability standard is a generous degree offlexibility in respect of the seriousness of the allegation.[24] In our view, there is no basis for asserting that the Tribunal and High Courthave misdirected themselves on the standard of proof. We note too that in findingmisconduct, both relied on Mr Hong's admitted conduct and his own statements.15Question 5Is it proper for Statements of Facts in the [BOTCLF] Proceedings to be merelyused as proper findings of facts without an inquiry in the manner as I haveillustrated above, in breach of s. 50 of the Evidence Act 2006?13 Z v Complaints Assessment Committee [2007] NZCA 91, [2008] 1 NZLR 65.14 At [26], quoting Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 (HL) at 586.See also the Supreme Court on the appeal of the decision which Mr Hong did not cite: Z v DentalComplaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1.15 See for example Liability judgment, above n 1, at [20] and [39]; and High Court substantivejudgment, above n 3, at [73] and [160].[25] Section 50 of the Evidence Act 2006 prohibits a judgment or a finding of factin a civil proceeding being used in another proceeding to prove the existence of a factthat was in issue in the earlier proceeding.[26] Mr Hong contends Gordon J breached s 50 by quoting in her judgmentan extract from his evidence in the Tax Authority which had been reproduced inthe decision of this Court in the tax litigation. This relates to the BOTCLF and thefinding that he had required clients to pay him a bonus in addition to interest on theloans.[27] However, the contention there was a breach of s 50 in this case is not seriouslyarguable. The quoted evidence from the Tax Review Authority hearing was put toMr Hong in cross-examination at the disciplinary hearing before the Tribunal.Mr Hong agreed that the clients had to pay a bonus at the end of the arrangements aswell as interest and significantly also agreed that the same terms applied to the Ks.There was thus evidence of the loan terms adduced independently of the taxjudgments.[28] It follows that Question 5 also fails to meet the threshold for granting leave.Question 6Had the Misconduct Finding against me been properly determined inaccordance with the Law, Legal principles and precedents as I have noted aserrors of Law above when [a] I had not breached our Fundamental [sic][b] the Ks had not and could not have suffered any financial harm of [sic] lossas at all times when I dealt with the Property the appraised sale value wouldnot realize enough to have repaid my advances to the Ks [c] I had not gainedanything [d] none of the adverse perverse finding [sic] of facts as relied uponcould be relied upon since [they are] incorrect ?[29] As will be readily apparent, this question is an attempt to relitigate factualfindings for which there was available evidence. It does not qualify as an error of law.Question 7Had the Misconduct Finding against me been properly determined inaccordance with the Keene's case when on my interpretation ofthe applicability of the Rules that such did not apply under the indisputablefacts and circumstances once [a] the fact that there had not been the allegedJV against me [b] the Ks did not suffer any financial harm [c] I had nothing togain, did not gain anything from the Ks and could not have had an eye to profitwhen the Property would be sold at a loss [d] even interest [sic] if the Ks couldnot pay rather than could but refused to I would not have an issue and [e] myloan as with anyone's must be re-paid and if the Ks could do so they wouldhave been able to redeem the Property from me, were taken into consideration,at worse, that I should only be found to have erred in my judgment, lack ofhind-sight, such should not be taken against me to the extent of striking meoff or even suspending me?[30] In the decision of Keene v Legal Complaints Review Office, this Court heldthat correctly interpreted the rule which Mr Keene had been charged with breachinghad not been breached.16 This Court went on to say that even if it was wrong aboutthat, and the rule had been breached, a disciplinary response would not have beenwarranted. That was in part because the practitioner's interpretation was reasonablyopen to him as evidenced by the fact it had been adopted by the District Court and alsoof course by the Court of Appeal itself.17[31] Keene is not authority for the proposition that just because the practitionerbelieves they are not breaching the rules, that in itself is enough to exonerate them.The belief must be based on an interpretation that is reasonably open. And onthe evidence in this case, that is not an arguable point.Question 8Had the Struck-Off Penalty as levied against me been determined in[accordance] with the Law, Legal principles and precedents as I have noted aserrors of Law above [a] on the grounds as I have noted in respect of theMisconduct Finding [b] that there had not been any of my eyes on profit asI had been more concerned over the full recovery of my advance [c] there hadbeen nothing in my Disciplinary History that could have supported thisstrike-off penalty, the seriousness of the offences and fines levied had beenenlarged against me in discrimination (by reference to precedents) and badfaith, such as initiated by our Lawyers Complaints Service personnel whenI had stepped on their toes that I have in my judicial review proceeding in CIV2020-404-854 taken action on such discrimination and for an inquiry on suchand [d] I have never repeated any of such offences against me?[32] This question also seeks to relitigate factual assessments and therefore does notqualify as an error of law.16 Keene v Legal Complaints Review Officer [2019] NZCA 559.17 At [84]–[89].Question 9Is the order requiring me to compensate Mr. K for stress and anxietypermissible and validly exercised under [the Lawyers and Conveyancers Act]s. 156 and when [a] other than his oral testimony of such there are [sic] noevidence in support of such and when such against the Evidence, the Propertywas to be sold to have repaid my advance, the Ks had said and were aware bythe sales appraisal that the Property if sold at the time we tried to sell it wouldbe insufficient to clear my advance even?[33] Mr Hong did not seek leave in the High Court to appeal this question to thisCourt. Whether compensation for emotional harm is "loss" for the purposes ofcompensation payable under s 156(1)(d) of the Lawyers and Conveyancers Act is aquestion of law. The High Court was not made aware of any authority on the issue,meaning it may be a question of general or public importance.18[34] However we consider the Judge's reasoning in finding that emotional harm canconstitute loss for the purposes of compensation to be compelling. The Judgeconsidered the plain meaning of "loss" includes the emotional harm caused to a clientwhose trust and confidence is breached by his or her lawyer.19 This meaning isconsistent with s 156(1)(d) and the general purpose of the Act which is to maintainpublic confidence in the legal profession and to ensure clients are properly protectedas well as general law.20[35] Accordingly no reasonably arguable question of law arises.Outcome[36] The application for leave to adduce fresh evidence is declined.[37] We conclude that none of the proposed questions meets the threshold requiredunder s 254 before leave to appeal may be granted and accordingly the application isdeclined.18 High Court substantive judgment, above n 3, at [204].19 At [205]–[206].20 At [207]; and Lawyers and Conveyancers Act 2006, s 3.[38] The application having failed, the applicant must pay the respondent costs fora standard application for leave on a band A basis with usual disbursements.Solicitors:New Zealand Law Society, Auckland for Respondent