Hong v New Zealand Lawyers and Conveyancers Disciplinary Tribunal
[2021] NZCA 611
•18 November 2021 at 3 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA546/2020 [2021] NZCA 611 |
| BETWEEN | BOON GUNN HONG |
| AND | NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL |
| Hearing: | 21 September 2021 |
Court: | French, Miller and Gilbert JJ |
Counsel: | Appellant in person |
Judgment: | 18 November 2021 at 3 pm |
JUDGMENT OF THE COURT
AThe appeal against the strike out judgment of 27 August 2020 is dismissed.
BOrder directing Mr Hong to file and serve a fully particularised amended statement of claim in the High Court re-pleading cause of action 3(2) within one month of the date of delivery of this judgment if he wishes to proceed with that claim. In the event of default, that cause of action is to be struck out.
CThe appeal against the costs judgment of 22 September 2020 is dismissed.
DThe appellant is to pay one set of costs to the second respondents for a standard appeal on a band A basis and usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Gilbert J)
Mr Hong, a former lawyer who has been struck off, appeals against a judgment of Muir J delivered on 27 August 2020 striking out three causes of action in proceedings he commenced against the first and second respondents and directing him to re-plead a fourth cause of action against them.[1] The Judge struck out the three causes of action (described as causes of action 1, 2 and 3(1)) on the basis they involved a 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/or vexatious.[2] The Judge considered it was appropriate to give Mr Hong an opportunity to re-plead his fourth cause of action (described as cause of action 3(2)) because it might be salvageable by amendment.[3] There was no application to strike out a further cause of action pleaded solely against the third respondent (cause of action 4).
[1]Hong v New Zealand Lawyers and Conveyancers Disciplinary Tribunal [2020] NZHC 2205 [Strike out judgment].
[2]At [76].
[3]At [83].
Mr Hong also appeals against the Judge’s subsequent costs judgment delivered on 22 September 2020 ordering him to pay costs calculated on a category 2, band B basis in the sum of $10,994 plus disbursements of $660.[4]
Background
[4]Hong v New Zealand Lawyers and Conveyancers Disciplinary Tribunal [2020] NZHC 2483 [Costs judgment].
We commence by briefly setting out the background and the prior decisions in these proceedings, including the final judgment of Gault J on appeal that was relied on by Muir J to justify the abuse of process finding based on collateral attack.
Misconduct — obstruction of trust account inspector
On 11 October 2019, the New Zealand Lawyers and Conveyancers Disciplinary Tribunal (the Tribunal) found Mr Hong guilty of misconduct by obstructing an inspector appointed by the New Zealand Law Society from conducting a review of his trust account records (the obstruction decision).[5] The Tribunal subsequently suspended Mr Hong from practising for a period of three months and made 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]Auckland Standards Committee No 5 v Hong [2019] NZLCDT 28 [Tribunal’s obstruction decision].
[6]Auckland Standards Committee 5 v Hong [2019] NZLCDT 40 [Tribunal’s first penalty decision].
[7]At [20].
Mr Hong appealed to the High Court against both these decisions. In a judgment delivered on 16 April 2020, Gault J dismissed the appeal against the Tribunal’s obstruction decision.[8] The appeal against the penalty decision was also dismissed.[9] However, the Judge reduced the costs award to $30,850.[10]
[8]Hong v Auckland Standards Committee No 5 [2020] NZHC 744 [Gault J judgment] at [96].
[9]At [97].
[10]At [97].
On 3 July 2020, Gault J declined Mr Hong’s application for leave to appeal to the Court of Appeal on a question of law under s 254(1) of the Lawyers and Conveyancers Act 2006.[11]
[11]Hong v Auckland Standards Committee No 5 [2020] NZHC 1572.
Mr Hong then applied to this Court for leave to appeal. The application was declined by this Court in a judgment delivered on 12 November 2020.[12] All appeal rights in respect of these decisions were then exhausted.
Misconduct — conflict of interest
[12]Hong v Auckland Standards Committee No 5 [2020] NZCA 561.
On 10 February 2020, the Tribunal found three charges of misconduct proved against Mr Hong.[13] These charges were brought on the basis Mr Hong had failed to meet his obligations when he continued to act for a client despite having a personal 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 Solicitors of New Zealand and ordered him to pay $8,000 in compensation to the former client.[14] Mr Hong was also ordered to pay further costs of $29,450.[15]
[13]Auckland Standards Committee No 5 v Hong [2020] NZLCDT 5 [Tribunal’s conflict decision].
[14]Auckland Standards Committee No 5 v Hong [2020] NZLCDT 12 [Tribunal’s second penalty decision].
[15]At [41].
Mr Hong appealed to the High Court against these decisions. The appeals were dismissed by Gordon J in a judgment delivered on 7 July 2020.[16] In a costs judgment delivered on 6 August 2020, Gordon J ordered Mr Hong to pay costs of $14,031.50 on the appeal.[17]
[16]Hong v Auckland Standards Committee No 5 [2020] NZHC 1599.
[17]Hong v Auckland Standards Committee No 5 [2020] NZHC 1954.
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]
[18]Hong v Auckland Standards Committee No 5 [2020] NZHC 2613.
Mr Hong then applied to this Court for leave to appeal. This application was also dismissed, on 22 March 2021.[19] All appeal rights in respect of these decisions were then exhausted.
High Court proceeding
[19]Hong v Auckland Standards Committee No 5 [2021] NZCA 85.
Two months after Gault J dismissed Mr Hong’s appeal, he filed a proceeding in the High Court in June 2020 styled as an application for judicial review of the Tribunal’s two decisions in connection with the obstruction charge (the first set of proceedings referred to above at [4]). In an amended statement of claim dated 15 July 2020, Mr Hong pleaded three causes of action against the first and second respondents (all of which, excluding cause 3(2), were struck out by Muir J) as summarised below. All causes of action were preceded by a summary of the background facts and events. In this preliminary section of the pleading, Mr Hong stated that the proceeding was necessary to secure a right of appeal to the Court of Appeal. 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:
26.On 18 May 2020, I filed an application seeking leave of this Court to refer and appeal on Questions of Law to our Court of Appeal (CA), as opposed to by [the Auckland Standards Committee No 5], in which I seek to challenge this Court’s jurisprudence. As I have informed and complained 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 second time that without this [judicial review] application, this Court seemed to me, would just rubber-stamp the Tribunal’s finding.
Cause of action 1
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 subsequent penalty and costs determinations. He described these determinations as “perverse” as defined in cause of action 2. Particulars were provided under six specific grounds of review:
(a)Error of law in the interpretation of the relevant statutory provisions and regulations.
(b)Error of law and fact in making a finding of misconduct.
(c)Failure to apply applicable legal principles when making the penalty determination.
(d)Failure to apply applicable legal principles when making the costs determination.
(e)Invalid order prohibiting Mr Hong from practising on his own account unless authorised by the Tribunal to do so as the order did not serve any relevant objective and was imposed as a further sanction to extend the suspension period.
(f)Breach of Mr Hong’s legitimate expectation that the Tribunal possessed the requisite skills and knowledge to inquire into the matter, apply the relevant law and make proper determinations.
Mr Hong alleged that the second respondents were “jointly culpable” with the 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 are the proponents of the grievances caused”.
Mr Hong sought orders setting aside the Tribunal’s determinations in respect of the obstruction charge, both as to liability and penalties/costs, and associated declaratory orders including that the second respondent’s decision to pursue the charge before the Tribunal was null and void.
Cause of action 2
In his second cause of action, Mr Hong alleged that the Tribunal’s decisions were “perverse determinations” consequent upon the first respondent’s “resolution to persecute” him. He defined a “perverse judgment” as “one that is arrived at pursuant to a predetermined result intended” — facts seen as justifying the intended result will be “discriminatively” selected and any unhelpful facts will be ignored. The same approach will be adopted in relation to the law and that “[a]s discriminatory and bias any further legal research undertaken by the Judge on his/her own volition, only those that served the intended end result will be reproduced in the [j]udgment”. Mr Hong described this process as “NOT an adjudication”, but rather “a perversion of justice”.
According to Mr Hong, in making these allegedly perverse determinations the Tribunal breached its statutory obligations to uphold the rule of law and not to act in bad faith. Alternatively, he alleged the first and second respondents were negligent in the discharge of their statutory obligations.
Mr Hong sought the same relief in respect of this cause of action and, in addition, damages against the second respondents for financial loss, humiliation and distress.
Cause of action 3(1)
In his third cause of action, Mr Hong alleged that in making the perverse determinations the Tribunal breached his rights under the New Zealand Bill of Rights Act 1990 (BORA) and the Magna Carta. This was said to be because the Tribunal misapplied the law to “the indisputable facts and circumstances” in making a finding of misconduct and discriminated against him in making the order for suspension, thereby subjecting him to “disproportionately severe treatment”. He described the costs order as “hefty” and in breach of his rights under the Magna Carta.
The second respondents were alleged to have “similarly acted in bad faith and in discrimination” against him.
The same relief was sought as for the second cause of action together with a further declaration that Mr Hong’s rights under BORA and the Magna Carta had been breached.
We note that although Mr Hong’s first three causes of action were focused on the obstruction charge, he signalled his intention to commence further proceedings relating to the conflict of interest charges and asked that the assessment of damages be deferred until both matters could be dealt with:
157.I seek for Damages and my claim for Costs to be reserved as I have another Court proceeding to file against the Second Respondent Defendants in regards to the Proceedings in this Court CIV‑2019‑404‑0441 (appeal against Misconduct Liability) and CIV‑2020-404-000011 (appeal against Penalty & Costs) [LCDT 16/19].
These were the appeals subsequently dealt with by Gordon J.[20]
Cause of action 3(2)
[20]See [9] above.
We now briefly describe the further cause of action that was not struck out, but which Mr Hong was directed to replead. This cause of action was pursued solely against the second respondents and alleged a breach of statutory duty, negligence and breaches of his rights protected under BORA in respect of complaints, inquiries and determinations against him dating back to 1997. This cause of action is difficult to follow but some context for it is set out in the preliminary paragraphs where Mr Hong alleges he “refused to kow tow” to the second respondents’ demands in connection with an audit of his trust account in 2014. As a result, he claims that “there is bad blood between us” and the second respondents have “ever since been … fishing for anything they can use against me”. This is said to have led to his “persecution” in a “systemic discriminatory campaign by Dark Forces” within the New Zealand Law Society. 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 him off the roll.
Mr Hong assembles his complaints under two grounds of review headed as follows:
First Ground for Review : NZLS and its [Lawyers Standards Committee] had acted in bad faith, been biased and discriminatory in their inquiry into Complaints against me or its own motion inquiry contrary to its statutory obligation thereby committing the tort of breach of statutory duty against me or in the alternate it breached the duty of care owed to me, the tort of negligence
…
Second Ground for Review : NZLS and its Inspectorate had breached the [Law and Regulations] and my rights under BORA when its [Practice Approval Committee], had breached my right to natural justice when it disapprove of my Practice Attorney to act for me without allowing and affording us an opportunity to be heard
In his prayer for relief in respect of this cause of action, Mr Hong seeks declarations that the New Zealand Law Society and its inspector acted ultra vires and in breach of the trust account regulations in resolving to prosecute him and that the Tribunal’s decisions were invalid and should be set aside. In respect of his disciplinary history, he seeks declarations as to whether the obstruction, penalty and costs determinations were disproportionate and discriminatory and, if so, a determination as to the proper liability and penalty. He also seeks damages and an order for censure against the New Zealand Law Society for breach of natural justice together with damages.
High Court strike out judgment
Muir J noted Mr Hong’s candid acknowledgment that the first three causes of action were attempts to persuade the Court to revisit the Tribunal’s finding that he had acted in breach of the regulations, despite Gault J’s conclusion on appeal that the Tribunal had made no error in reaching its decision.[21] Muir J recorded Mr Hong’s submission that, notwithstanding the judgment of Gault J, it remained open to him to challenge these findings in the present proceeding:
[63] … [Mr Hong] says simply that Gault J’s decision is wrong, indeed that it is a “Perverse Judgment” as he defines that phrase. He says in what approaches a “boot strap” argument that, because it is wrong, he can now revisit the whole underlying argument about proper interpretation of the Regulations by way of judicial review. And because he thinks that the High Court simply “rubber stamps” decisions of the Tribunal and that, if given 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 Conveyancers Act (Trust Account) Regulations 2008] before the Court of Appeal. Indeed he pleads precisely that, almost celebrating the notion of collateral attack.
(Footnotes omitted.)
[21]Strike out judgment, above n 1, at [63].
The Judge was satisfied that causes of action 1, 2 and 3(1), whether nominally claims under BORA, the Magna Carta, in tort or for breach of statutory duty, were all ultimately founded on the same proposition, namely that the Tribunal incorrectly interpreted the regulations, incorrectly found him guilty of misconduct, and incorrectly suspended 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 Court and the corresponding decision of Gault J.[23]
[22]At [64].
[23]At [67].
The Judge concluded that the allegations of bias, discrimination and bad faith in 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 no unbiased tribunal could come to the decision it did. The Judge considered these claims therefore amounted to a collateral attack on the judgment of Gault J upholding the Tribunal’s determinations.[24]
[24]At [71].
For these reasons, Muir J was satisfied that causes of action 1, 2 and 3(1) should be struck out against the first and second respondents as an abuse of process and/or vexatious. He struck these causes of action out against all the respondents.[25]
[25]At [76].
The Judge considered cause of action 3(2) was in a different category because it 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 that were the subject of Gault J’s judgment. However, the Judge accepted the second respondents’ submission that the pleading was seriously deficient.[27] In particular, the claim was directed at decisions made by entities not party to the proceeding, one of which was no longer in existence, the particulars of bad faith were inadequate, there was no attempt to quantify the damages and the prayer for relief seeking orders that the Tribunal’s decisions be set aside offended against the principle precluding collateral attack.[28] The Judge cautioned Mr Hong to reflect carefully before pursuing this claim:
[80] I agree that there is a necessity for sober reflection on Mr Hong’s part about the course he seems currently determined to pursue. The allegation that for over 20 years and by multiple members of the profession Mr Hong has been the subject of systemic racism is one in respect of which considerable care is necessary.
[26]At [77].
[27]At [81].
[28]At [78].
Nevertheless, the Judge considered the appropriate course was to allow Mr Hong an opportunity to re-plead this cause of action, addressing the deficiencies identified.[29] Mr Hong was accordingly directed to file and serve a compliant statement of claim by 28 September 2020. The Judge urged Mr Hong to take independent advice before doing so and to assist in the formulation of any amended claim.[30] The Judge reserved leave to the second respondents to bring a second application to strike out the amended pleading if appropriate.[31]
High Court costs judgment
[29]At [83].
[30]At [86].
[31]At [87].
In the strike out judgment, the Judge reserved costs but gave a provisional indication that they should be awarded to the second respondents on a category 2, band B basis.[32] Costs were subsequently agreed by the parties on that basis subject to two minor issues. In his costs judgment, the Judge resolved one of these issues in favour of Mr Hong and the other in favour of the second respondents.[33]
Appeal
[32]At [90].
[33]Costs judgment, above n 4.
Mr Hong appeals against the order striking out three of his causes of action contending the Judge erred in law in finding that these claims “were a re-litigation of legal issues that had been fully and finally adjudicated in the [a]ppeal judgment” and therefore a collateral attack and an abuse of process. He states that the claims are “new claims” brought on the grounds the Tribunal’s determinations were “[p]erverse, non‑adjudication as biased and discriminatory”.
We acknowledge it does not appear from Gault J’s judgment that Mr Hong argued on appeal that the Tribunal’s decisions were perverse, made in bad faith and the Tribunal was biased. We also acknowledge these claims are conceptually different from 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 facts and law were so numerous and gross that the resulting decisions were “perverse” and explicable only on the basis they were the product of bad faith, discrimination and bias.
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 duplicates the very same grounds he advanced in support of his appeal to the High Court. On analysis, the “new” claim amounts to nothing more than an assembly of exactly the same alleged errors of law and fact he advanced in support of his appeal and a re‑labelling of the Tribunal’s decisions as “perverse” rather than simply wrong. This central foundation of Mr Hong’s claims cannot succeed without overcoming Gault J’s determination that the Tribunal’s decisions were correct in fact and law (save for the minor costs reduction). Mr Hong’s attempt to relitigate these same issues in the judicial review proceeding is therefore an impermissible duplication of the appeal proceeding and amounts to a collateral attack on Gault J’s final judgment.
For the reasons that follow, the allegations of bad faith, bias and discrimination similarly amount to a collateral attack on Gault J’s final judgment. Serious allegations such 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 be provided. In this case, Mr Hong has made it clear in his pleading that he bases his allegations of bad faith, bias and discrimination on his contention that it is not plausible for 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 is no other explanation for the Tribunal having reached such perverse determinations.
Mr Hong’s pleading of bad faith was contained in a single paragraph in cause of action 1 in the first amended statement of claim and he repeats this paragraph in each of the subsequent causes of action:
Bad Faith
122.The First and Second Respondent Defendants are experts in our Complaints Framework. As experts, it is not plausible for them to make so many errors. They have acted with BIAS, in DISCRIMINATION and in BAD FAITH against me.
(Footnote omitted.)
As can be seen, the bad faith allegation is entirely built on the same foundations as the “perverse” claim and cannot stand independently of it. It follows that these claims also duplicate the grounds raised on appeal before Gault J and amount to a collateral attack on that final judgment.
For these reasons, we consider Muir J was correct to strike out causes of action 1, 2 and 3(1).
The pleading of cause of action 3(2) is plainly defective for the reasons the Judge gave. We doubt this cause of action can be saved by amendment but there is no cross-appeal seeking an order that it be struck out as well. Although Mr Hong also appealed to this Court against the order requiring him to replead (on the ground cause 3(2) does not require amendment), he informed us at the hearing that he intends to file an amended pleading in the High Court and seeks a further period of one month within which to do so. We will make a direction accordingly.
As to Muir J’s costs judgment, Mr Hong submits that costs ought to have been reserved given he was seeking leave to appeal to this Court from Gault J’s judgment at that time. However, it was entirely appropriate for the Judge to determine costs at that 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 with settled 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
The appeal against the strike out judgment of 27 August 2020 is dismissed.
We make an order directing Mr Hong to file and serve a fully particularised amended statement of claim in the High Court re-pleading cause of action 3(2) within one month of the date of delivery of this judgment if he wishes to proceed with that claim. In the event of default, that cause of action is to be struck out.
The appeal against the costs judgment of 22 September 2020 is dismissed.
The appellant is to pay one set of costs to the second respondents for a standard appeal on a band A basis and usual disbursements.
Solicitors:
New Zealand Law Society, Wellington for Second Respondents
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