Hong v New Zealand Lawyers and Conveyancers Disciplinary Tribunal
[2020] NZHC 2205
•27 August 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-854
[2020] NZHC 2205
IN THE MATTER of an application for judicial review and declaratory orders BETWEEN
BOON GUNN HONG
Plaintiff/Applicant
AND
NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL
First Defendant/First Respondent
AUCKLAND STANDARDS COMMITTEE
No 5 and the NEW ZEALAND LAW SOCIETY
Second Defendant/Second Respondent
ATTORNEY-GENERAL
Third Defendant/Respondent
Hearing: 5 August 2020
Teleconference 11 August 2020
Appearances:
B Hong, self-represented
P Collins for Second Defendant/Respondent
Judgment:
27 August 2020
JUDGMENT OF MUIR J
This judgment was delivered by me on Thursday 27 August 2020 at 3.00 pm pursuant to Rule 11.5 of
the High Court Rules.
Registrar/Deputy Registrar Date:…………………………
Counsel: P Collins, Auckland
Solicitors: Crown Law, Wellington.
New Zealand Law Society, Auckland.
Copy to: Applicant
BOON GUNN HONG v NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL [2020] NZHC 2205 [27 August 2020]
Introduction
[1] The New Zealand Law Society (the Society) and the Auckland Standards Committee No 5 (the Standards Committee)1 apply for orders striking out the first, second and two causes of action identified as third, in proceedings brought by Mr Hong. I will refer to the last of these as causes of action 3(1) and 3(2).
[2] Although counsel for the applicants does not act for the first respondent (the Tribunal), which has indicated an intention to abide the decision of the Court, the Tribunal takes the position that,2 because each of causes of action 1, 2, 3(1) and 3(2) are “closely linked”, the Court might likewise consider whether the claims against it3 are likewise appropriately struck out. It relies on the decision of the Court of Appeal in Siemer v Stiassny,4 in which it held that the power of the High Court under r 15.1 to strike out a proceeding does not depend upon an application having been made, and that the Court may exercise its powers in respect of all defendants, even though one or more may not have brought such application. I intend to proceed accordingly.
[3] The Society and Standards Committee’s applications proceed on the basis that each of the causes of action identified amount to a collateral attack on the decision of Gault J in Hong v Auckland Standards Committee No 5,5 and as such are either an abuse of process, untenable or vexatious within the terms of r 15.1.
[4] Mr Hong’s unapologetic position is that the decision of Gault J is wrong and does not stand as an impediment to any of his claims.
[5] Having initially filed his proceedings against the first and second respondents only, Mr Hong purported to file (without an application under High Court Rule 4.56) an amended statement of claim with a cause of action against the Attorney-General. This decision does not address that claim.
1 Both are named as second respondents. Each should be separately identified as such.
2 Memorandum dated 2 July 2020, at [3].
3 Made in causes of action 1, 2 and 3(1).
4 Siemer v Stiassny [2011] NZCA 1.
5 Hong v Auckland Standards Committee No 5 [2020] NZHC 744.
Background
[6] Mr Hong is a former Auckland solicitor. Subsequent to the disciplinary processes which ultimately came before Gault J on appeal (and which resulted in his suspension from practice for three months, an order prohibiting him from practising on his own account and a costs award), he was subject to further disciplinary proceedings before the Tribunal which resulted in him being struck off. Such result was in turn confirmed on appeal before Gordon J.6
[7] The current proceedings seek, among other things, to challenge the suspension and prohibition decisions made by the Tribunal and upheld by Gault J. In turn Mr Hong has signalled an intention to bring separate claims challenging the striking off decision which went on appeal to Gordon J.
[8] The background to the present matter is a refusal on Mr Hong’s part to provide to the Society’s Trust Account Inspector, Mr Strang, documents beyond those which Mr Hong considered could be properly called for under the Lawyers and Conveyancers Act (Trust Account) Regulations 2008 (the Regulations).7 In particular Mr Hong declined to provide specific client files which were requested of him. He said that his obligations of confidentiality and in relation to client privilege compelled him to adopt this course.
[9] The Standards Committee then made an “own motion” complaint to the Tribunal, which held that Mr Hong had a duty to make the client files available as requested. It said that a practitioner’s duty to co-operate was both expressly and impliedly recognised in the Lawyers and Conveyancers Act 2006 (the Act) and the Regulations. It referred to a passage in Duncan Webb’s text Ethics Professional
6 Hong v Auckland Standards Committee No 5 [2020] NZHC 1599.
7 Regulation 3 provides:
Trust Account records, in relation to a practitioner, means –
(a)all records (including all books, papers, files, accounts, statements, invoices or copies of invoices, documents, receipts and evidence of authority for payments, cheques, securities and trust receipt forms used and unused) relating to the practitioner’s trust accounts or to trust money received by the practitioner, whether kept in writing or on computer or machine or in any other manner; and
(b)if any of those records are kept on computer, includes the relevant computer equipment and software.
Responsibility and the Lawyer,8 recognising that a practitioner’s disclosure obligations displaced the duty of confidence usually owed by a lawyer. The Tribunal found Mr Hong’s refusal to provide the relevant files constituted misconduct as a result of which he was, in light of prior disciplinary history, suspended from practice and made subject to the other orders previously identified.
[10] Mr Hong was dissatisfied with the decision. He exercised his right to appeal to the High Court.9 The matter came on for hearing before Gault J on 2 April 2020. It was given priority despite Covid-19 restrictions.
[11] In his reserved judgment dated 16 April 2020 his Honour summarised Mr Hong’s argument in the following terms:
[35] Mr Hong maintained that all trust account records were provided. His approach in respect of documents or files requested that are not trust account records and contain sensitive, private and confidential or commercially or legally privileged documents is to seek client consent given his strict duty of confidence to clients.
…
[38] Mr Hong submitted that the Tribunal was in error when it found that his refusal to give to the inspectorate client files that are not trust account records, when the clients have refused to grant consent, constituted misconduct.
[12] The Court rejected that argument. It undertook a thorough review of the relevant legislation and authorities, concluding:
[49] However, focus on a narrow meaning of “trust account records” loses sight of the purpose of the regime. The relevant purposes of the Act are to maintain public confidence in the provision of legal services and to protect the consumers of legal services. Handling of client funds is a critical component. The Regulations are promulgated to regulate the use and audit of trust accounts. Under the Regulations the relevant statutory functions of the inspectors are to review trust accounts and ensure compliance with the trust account obligations in the Act and the Regulations. This supervision by inspectors is an important aspect of maintaining public confidence. The powers of inspectors under the Regulations are those reasonably necessary or expedient to enable them to carry out their statutory functions. While these relevant statutory functions do not extend to reviewing the conduct of practitioners in other unrelated respects, within the scope of these functions
8 Duncan Webb Ethics Professional Responsibility and the Lawyer (2nd ed, LexisNexis, Wellington, 2006) at 8.83.
9 Lawyers and Conveyancers Act 2006, s 253.
the powers of inspectors are those reasonably necessary or expedient to enable them to carry out these functions.
[50] I therefore accept Mr Collins’ submission that, where the requested files have trust account transactions, the integrity of the regime indicates that it should be the inspector’s judgement rather than the lawyer’s as to the scope of the records required….
(footnotes omitted)
[13] Relying on the passage from Ethics Professional Responsibility and the Lawyer (previously cited) and the decision in Parry-Jones v The Law Society,10 Gault J further held that the functions and powers of inspectors under the Act and Regulations expressly or by necessary implication override the practitioner’s obligation to his or her client to maintain confidentiality.
[14] His Honour then considered whether Mr Hong’s response constituted misconduct within the terms of s 7 of the Act. He held11 that although Mr Hong had not acted wilfully (in the sense of acting with knowledge that his actions represented a contravention of the Regulations), he had nevertheless acted recklessly in that:12
He was persistent in his obstruction of the inspector’s trust account review and failed to acquaint himself with his legal obligation to permit the inspector to carry out the review notwithstanding client confidentiality and his obstruction had the effect of compromising the inspector’s trust account review.
[15] His Honour then went on to consider penalty. He concluded that Mr Hong’s conduct during the Inspector’s review was “obdurate”,13 and that his continued adherence to his position indicated a lack of insight and remorse.14 He referred to Mr Hong’s long disciplinary history, and in particular an increase in frequency of disciplinary findings over more recent years, suggesting a decline in his capacity to maintain professional standards.15 Although his Honour indicated that, in the absence of such history, he would not have considered suspension appropriate, the lack of insight or any other mitigating factors coupled with the number and nature of previous disciplinary findings justified the suspension “having regard to the protective and
10 Parry-Jones v The Law Society [1969] 1 Ch1 (CA) at 7 per Lord Denning MR and at 9 per Diplock LJ.
11 Hong v Auckland Standards Committee No 5 [2020] NZHC 744 at [55] - [64].
12 At [64].
13 At [76].
14 At [76].
15 At [83].
deterrent aspects of the public interest”.16 He also upheld the order that Mr Hong was not to practice on his own account until he was approved to do so. An adjustment was, however, made to the costs order against him.17
[16] Mr Hong then sought leave from the High Court to appeal the decision of Gault J to the Court of Appeal.18 He identified what he considered to be five errors or questions of law arising out of the judgment:
(a)Whether in the course of a general trust account audit the inspectorate is empowered to require production of non-trust account records when the clients had refused to grant consent accordingly.
(b)Whether it was “lawfully correct for the lawyer who had relied on the literal meaning of the regulations in his decision to abide by his client’s instructions not to release the files” and who had “undertaken a thorough search of judicial decisions affecting the interpretation of the regulations and found none that is relevant”, could be held to have misconducted himself pursuant to s 7 of the Act by not releasing the files.
(c)Whether it was proper and satisfactory for a lawyer who had come to the view that the Inspectorate was not empowered to require production of client’s non-trust account records to go against his client’s instructions, notwithstanding the requirement that the Inspectorate keep all such information confidential.
(d)Whether the three-month suspension was fair and reasonable in accordance with the objectives and purposes of the Act and judicial principles and precedents.
(e)Whether the costs award was erroneous when “by the literal interpretation of the Act and Regulations, the inspectorate is only
16 Hong v Auckland Standards Committee No 5 [2020] NZHC 744 at [85].
17 The order to pay $35,850 was quashed and a sum of $30,850 substituted.
18 Lawyers and Conveyancers Act 2006, s 254.
entitled to trust account records and as such this challenge by the appellant is a test case”.
[17] In his decision dated 3 July 2020 Gault J dismissed the application for leave. In respect of question (a) he said that although it did raise an issue of law, he did not consider it was one capable of bona fide and serious argument. He said that for the reasons his substantive judgment set out, he considered that “a narrow interpretation of the meaning of “trust accounts records” lost sight of the purposes of the statutory regime.19
[18] In respect of question (b) he said that this represented a challenge to his finding of reckless (but not wilful) contravention and as such did not raise a point of law or, if it did, one capable of bona fide and serious argument.
[19] He described question (c) as a corollary of question (b) and amenable to the same answer. He distinguished the decision of the Court of Appeal in Keene v Legal Complaints Review Officer20 which Mr Hong referred him to in a supplementary submission, on the grounds that the approach adopted by the practitioner in that case was one reasonably open to him and not simply “arguable” as Mr Hong had contended in the present case. He held, in any event, that his finding of reckless contravention was based in Mr Hong’s persistent obstruction of the Inspector’s review and failure adequately to acquaint himself with his legal obligation.21
[20] In respect of questions (d) and (e) he said that they did not raise questions of law and otherwise doubled back on the primary issue.
[21]In the final paragraph of the judgment his Honour noted that:22
Mr Hong’s submission also raised allegations of discrimination against the Lawyers Complaints Service. He filed yet another submission referring to a judicial review application and raising issues of corruption. These new factual allegations cannot be raised by way of leave to appeal.
19 Hong v Auckland Standards Committee No 5 [2020] NZHC 1572 at [8].
20 Keene v Legal Complaints Review Officer [2019] NZCA 559.
21 Hong v Auckland Standards Committee No 5 [2020] NZHC 1572 at [11].
22 At [14].
[22] This observation was, however, prescient in terms of the statement of claim that I am required to consider.
[23] Mr Hong has now made a second application for leave direct to the Court of Appeal.23 At the time of preparation of this judgment that application is unresolved.
What Mr Hong claims in his new proceedings
[24] Mr Hong’s first amended statement of claim is 50 pages and 274 paragraphs long. It is intituled; In the Matter of the Senior Courts Act 2016, the Judicial Review Procedure Act 2016, the Lawyers and Conveyancers Act 2006 and the New Zealand Bill of Rights Act 1990. It is said to be an application for judicial review and declaratory orders. I endeavour to summarise its component parts as follows:
Paragraphs [1] – [28]
[25] These include introductory paragraphs identifying the parties followed by what is described as a “summary of background facts and events concerning the Tribunal and this Court’s decisions”. I accept Mr Collins’ submission that the paragraphs contain a combination of factual allegations and argument about the merits of the relevant disciplinary proceeding against Mr Hong and, in particular, whether he erred in his assessment of his obligations under the Regulations.
[26] Mr Hong describes the substantive judgment of Gault J as having confined itself to a finding of reckless contravention of the Regulations but having otherwise “rubber stamped the rest of the Tribunal’s findings in both its determinations”. Significantly at paragraph [26] Mr Hong pleads:
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 ASC5 [the Standards Committee], in which I seek to challenge this Court’s jurisprudence. As I have informed and complained to the Court, I have to file this JR [judicial review] application to ensure I get to the CA as of right and as this is the second time that without this JR [judicial review] application, this Court seemed to me, would just rubber stamp the Tribunal’s finding.
(emphasis added)
23 Lawyers and Conveyancers Act 2006, s 254(i).
[27] The pleaded position is therefore that Gault J did not bring his independent judgment to the issues which exercised the Tribunal and that Mr Hong could not expect this Court to adjudicate appropriately on his judicial review proceedings, but that by bringing such proceedings he would have an appeal, as of right, to the Court of Appeal.
Cause of action 1
[28] The first cause of action is against both the first and second defendants. The preamble identifies it as seeking:
Judicial review of the Tribunal’s Misconduct Liability and Penalty and Costs Determinations against the Applicant, the Tribunal had been bias (sic), had acted contrary to the Law and Legal Principles and had acted in BAD FAITH.
[29] At [42] he pleads that the finding of misconduct against him “under the indisputable facts and circumstances is wrong at Law” and, at [61], that if his interpretation of the Regulations is not “wholly untenable” it should be resolved in his favour.
[30] At paragraphs [62] – [72] he states that the Tribunal erred in law and on the facts when it took into account irrelevant considerations and disregarded relevant ones. The essence of his complaint is that the Tribunal failed in its duty to interpret the Act and Regulations and abdicated proper interpretation to its Inspector.
[31] At paragraphs [73] – [74] he pleads that there was no misconduct or even unsatisfactory conduct as “The Misconduct Liability Determination by the Tribunal against me as such is wrong at Law” and that he had been “guided strictly by the said L&R [Law and Regulations] by the literal interpretation thereof”. He then pleads that the suspension penalty imposed on him did not apply relevant legal principles, was manifestly excessive, incorrectly assessed the nature and quality of the misconduct, incorrectly relied on previous disciplinary history, incorrectly invoked the deterrent principle and failed to impose the least restrictive outcome.
[32] At paragraphs [101] to [104] he pleads that the imposition of a suspension penalty was ultra vires and that “at worse (sic) a fine and censure would be the appropriate penalty”.
[33] At paragraphs [105] – [111] he pleads that the Tribunal was unreasonable in its imposition of its costs award and failed to take into account the fact that his was a “test case”.
[34] At paragraphs [112] – [115] he pleads that the order prohibiting him from practising on his own account was invalid, is not serving any relevant objective and is punitive in nature.
[35] At paragraphs [116] – [122] he pleads that he had a legitimate expectation that a specialist Tribunal “constituted with lawyer members of Good Standing and a chair who is a retired Judge” would discharge their statutory obligations in accordance with the law and legal principle and, contrary to such expectation, it had issued a “Perverse Determination”.
[36] At paragraph [121] the Standards Committee and the Law Society are said to be “jointly culpable with the Tribunal”.
[37] And at paragraph [122] he makes a bare allegation that “it is not plausible” for each of the first and second respondents “to make so many errors” and that they have “acted with BIAS, in DISCRIMINATION and in BAD FAITH against me”.
[38] The relief sought is, inter alia, an order setting aside or quashing the Tribunal’s determination and declaratory orders that the second respondents acted ultra vires in requiring production of the relevant materials.
Cause of action 2
[39] This cause of action is also against both the first and second respondents. It is purportedly based on a breach of statutory duty evidenced by delivery of “Perverse Determinations” reflecting discrimination, bias and bad faith with the result that:24
Such is NOT an adjudication such is a perversion of justice. If and when there is such a perverse judgment we the Public will be concerned of there being (sic) CORRUPTION, that is why we have the legal maxim of Justice must not only be done BUT MUST be seen to be done.
24 First Amended Statement of Claim, dated 15 July 2020, at [132].
[40] At paragraph [141] he pleads that neither the Society, the Standards Committee nor its personnel are protected by statutory immunity because they have acted in bad faith. Again the pleading is focused on the matter which ultimately came before Gault J.
[41] At paragraphs [148] – [158] Mr Hong pleads that he has suffered financial loss in an amount to be quantified as a result of “the Respondent’s actions against me” and in particular his inability to work during his suspension. He pleads also that he has been demeaned by the requirement to seek leave to again practice on his own account and that he has suffered humiliation and distress in consequence. He again seeks orders setting aside or quashing the Tribunal’s determinations as to liability and penalty together with declarations that the respondents have acted ultra vires, and for unspecified damages.
Cause of action 3(1)
[42] This cause of action, which is also against both first and second defendants, pleads a breach of the plaintiff’s rights under the “New Zealand Bill of Rights Act 1990 (BORA) and Magna Carta 1927 (sic)”. The focus is again the decision made by the Tribunal which was subsequently appealed to this Court. Again, the Tribunal’s findings are described as “Perverse Determinations”. The remedies duplicate those previously sought.
Cause of action 3(2)
[43] This is a more generalised pleading. It is against the second defendant only. It ranges well outside the matters which came before Gault J to include allegations of a “systemic discriminatory campaign by Dark Forces”25 evidenced by (seemingly) every disciplinary decision made against Mr Hong since 1997 and, in the case of the Society, its decision to “disapprove of my Practice Attorney to act for me without allowing and affording us an opportunity to be heard”.26 Mr Hong pleads that as a result of this systemic discrimination and bad faith the second defendants have breached their statutory duty against him or in the alternative have “committed the tort
25 First Amended Statement of Claim, dated 15 July 2020, at [183].
26 At [206].
of negligence, by their lack of care in their deliberations of each of the complaints and inquiries and requiring me to wind up my practice”.
[44] The prayer for relief seeks, among other things, declarations that the findings of liability, penalty and costs against him have been disproportionate and discriminatory and are in breach of his NZBORA and Magna Carta rights. He pleads also specific relief in respect of the matter appealed to Gault J by way of a finding that “NZLS and its inspectorate had acted ultra vires in breach of TAR [Trust Account Regulations] reg 32” and that “the ASC5’s [Standards Committee’s] resolution to have me prosecuted before the Tribunal is invalid … null and void” when executed in breach of the [Law and Regulations].
Cause of action 4
[45] As indicated, review of this cause of action is beyond the scope of the present application but for completeness I record that it pleads the infiltration of “Dark Forces” in the administration of law and justice, that the decision of Gault J dismissing the appeal was “perverse”, “predetermined” and intended to “rubber stamp the Tribunal’s Determinations against [Mr Hong]”27 and that the decision to decline leave to appeal was “biased and discriminatory against [Mr Hong]”. 28
[46] Mr Hong pleads that the international reputation of New Zealand will be damaged if the Attorney-General does not intervene and seeks a declaratory order, that he has a “statutory duty to step in”, together with orders setting aside Gault J’s judgments on the appeal and application for leave.
The strike-out jurisdiction
[47] The second respondents apply to strike-out causes of action 1, 2, 3(1) and 3(2) under r 15.1 of the High Court Rules. This provides:
27 First Amended Statement of Claim, dated 15 July 2020, at [238] - [239].
28 At [249].
15.1 Dismissing or staying all or part of proceeding
(1)The court may strike out all or part of a pleading if it—
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
(2)If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.
(3)Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.
(4)This rule does not affect the court's inherent jurisdiction.
[48]They rely specifically on rr 15.1(1)(a), (c) and (d).
[49] In respect of an application to strike-out for want of a reasonably arguable cause of action, the principles are well settled, being those identified by the Court of Appeal in Attorney-General v Prince29 and the Supreme Court in Couch v Attorney-
General.30
(a)pleaded facts, whether or not they are admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation;
(b)the cause of action must be clearly untenable and the Court should not strike-out a proceeding unless it is certain it cannot succeed;
(c)the strike-out jurisdiction is to be exercised sparingly and only in clear cases;
29 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 267.
30 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
(d)the jurisdiction is not excluded by the need to decide difficult questions of law; and
(e)the Court should be slow to strike-out a claim in any developing area of the law.
[50] The second respondents also submit that the proceedings are an abuse of process, or frivolous and vexatious. The identified abuse of process is an alleged attempt by Mr Hong to relitigate matters already determined by judgment of the High Court. Such attempts have been held to “strike at the public confidence in the Court’s processes and so diminish the Court’s ability to fulfil its function as a Court of law”.31 In Siemer v Heron the Court considered:32
[attempts to relitigate] damage the Court system. They place continued expenses and stress on the parties. They place work with the Court system which will displace other causes which are brought for proper purposes. They are an abuse of procedure.
[51] Often the attempt to relitigate will be by way of what is termed a “collateral attack”. Lord Diplock described the process in Hunter v Chief Constable of West Midlands Police:33
The abuse of process which the instant case exemplifies is the initiation of proceedings in a court of justice for the purpose of mounting a collateral attack upon a final decision against the intending plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the intending plaintiff had a full opportunity of contesting the decision in the Court by which it was made.
[52] In another House of Lords judgment, Ampthill Peerage Case,34 Lord Wilberforce stated:
English law, and it is safe to say, all comparable legal systems, place high in the category of essential principles that which requires that limits be placed on the right of citizens to open or to re-open disputes. The principle which we find in the Act of 1858 is the same principle as that which requires judgments in the courts to be binding, and that which prohibits litigation after the expiry of limitation periods. Any determination of disputable fact may, the law recognises, be imperfect; the law aims at providing the best and safest solution
31 Moevao v Department of Labour [1980] 1 NZLR 464 (CA) at 482.
32 Siemer v Heron [2014] NZHC 1639 at [23].
33 Hunter v Chief Constable of West Midlands Police [1981] UKHL 13 at 541.
34 Ampthill Peerage Case [1977] AC 547 at 569.
compatible with human fallibility and having reached that conclusion it closes the book.
[53] A recent New Zealand example of an attempt to use judicial review to subvert a final judgment of this Court and which was struck out as an abuse of process on the grounds of collateral attack is Jin v District Court at North Shore.35 In that case Gilbert J stated:36
There is no escape from the fact that Ms Jin is simply attempting through these proceedings to achieve a better outcome on costs than she obtained from Woodhouse J on her costs appeal. The present proceeding is nothing more than an impermissible attempt to collaterally attack the final judgment of this Court on the costs issue. It is therefore an abuse of process and must be struck out. The public interest requires that there be finality in litigation.
[54] In respect of frivolousness or vexatiousness, the concepts are disjunctive.37 Frivolousness imports a claim of little or no value or importance while proceedings are vexatious if they have a tendency to vex the party obliged to defend them. It is vexatious to bring proceedings in a different form (or in a different forum) to obtain a result which the plaintiff failed to achieve in earlier legitimate proceedings.38
[55] In the present case the second respondents allege that the claim is frivolous because it attempts to avoid the consequences of a final determination through means other than those legitimately available to Mr Hong at law39 and it is vexatious because it requires the first and second respondents to defend matters already finally determined by the High Court.
The parties’ position
[56] Although the second respondents point to multiple bases on which the causes of action might be struck out, ultimately their submissions return to the point that the plaintiff’s claims seek to relitigate, by way of judicial review, a matter already determined by this Court on appeal, and such action constitutes an abuse of process.
35 Jin v District Court at North Shore & Another [2017] NZHC 759.
36 At [14].
37 Deliu v Hong [2011] NZAR 681 at [21].
38 Registered Securities Ltd (in liq) v Yates (1991) 5 PRNZ 68.
39 Namely by leave to appeal from this Court or the Court of Appeal.
[57] In response Mr Hong submits that there is no abuse of process in relation to any of his claims. He says that because he has an outstanding leave application to the Court of Appeal there is no final judgment of this Court and that in any event his fourth cause of action against the Attorney-General applies to set aside the substantive judgment of Gault J as perverse.
[58] He submits that there is no statutory prohibition on him running what are effectively parallel judicial review proceedings, and that this Court’s appellate jurisdiction differs from its judicial review jurisdiction in that, in the latter, the Court fulfils the constitutional role of ensuring public powers are exercised in accordance with the law.
[59] He submits that this “requires a detailed examination in interpretation of the [Law and Regulations] which is the intent of [his judicial review application]”. To that end he contends that in its judicial review capacity this Court is entitled to and should revisit, the interpretation of the Act and Regulations which it has already undertaken in the context of the appeal. Paragraph [6] of his supplementary synopsis puts the position succinctly from his perspective:
… [Mr Hong’s] [judicial review application] will require the Court to have focused and determined whether the Respondents had properly determined the interpretation of the [Law and Regulations] and the effects thereof as to whether Inspectorate is empowered to require the production of [non-trust account records] when the Clients have refused to grant their consent.
[60] He further submits that the judicial review proceedings raise new issues in terms of bad faith and discrimination. He says this is evidenced by the Tribunal decision which was appealed to Gault J because “our Complaints Regime must know what the law and legal principles were, [but] had chosen to ignore and not apply such”.40 He says further that the second defendants acted with “BAD FAITH AND IN DISCRIMINATION … when they embarked on the campaign to first defile my complaints history then use all of such to have me struck-off”.41
40 Synopsis of submission, dated 4 August 2020, at [6].
41 At [6].
[61] Finally, he submits that there is no proscription on judicial review applications filed subsequent to an appeal process and indeed, that such is the most appropriate time for them. He emphasises the fact that the right to judicial review is enshrined in the Bill of Rights Act and that in circumstances which have been so “grave and humiliating”42 this Court should allow all his arguments to be ventilated in a full hearing with evidence.
Discussion
[62] In my view Mr Collins is correct in identifying at least causes of action 1, 2 and 3(1) as collateral attacks on the judgment of Gault J on appeal. That judgment proceeded (as Mr Hong acknowledged in argument) against a factual background which was not in dispute. It did so against a statutory mandate that it be by way of re- hearing,43 and against the principles enunciated in Austin, Nichols & Co Inc v Stichting Lodestar44 and Kacem v Bashir,45 whereby the appellate court has the responsibility of considering the merits of the case afresh. Its focus was on whether, as a matter of statutory interpretation, Mr Hong was in breach of the Regulations by non-provision of the requested information (a pure issue of law), whether his actions constituted misconduct and whether the Tribunal’s penalty was appropriate.
[63] Mr Hong candidly acknowledges that the essential thrust of each of these causes of action is to revisit the Tribunal’s conclusion that his actions were in breach of the Regulations, albeit that such was confirmed on appeal by Gault J. He says simply that Gault J’s decision is wrong, indeed that it is a “Perverse Judgment” as he defines that phrase.46 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
42 Synopsis of Submission dated 4 August 2020 at [8].
43 Lawyers and Conveyancers Act 2006, s 253(3)(a).
44 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [73].
45 Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [31] - [32].
46 First Amended Statement of Claim, dated 15 July 2020 at [132].
his interpretation of the Regulations before the Court of Appeal. Indeed he pleads precisely that,47 almost celebrating the notion of collateral attack.
[64] Mr Hong had a right of appeal to this Court from the Tribunal’s decision. He chose to exercise it. He did so on the same grounds that underpin all his judicial review arguments except those based in alleged bias. Each of the causes of action 1, 2 and 3(1), whether nominally claims under NZBORA, the Magna Carta, in tort or breach of statutory duty are all ultimately based on the same proposition, namely that the Tribunal incorrectly interpreted the relevant Regulations, incorrectly found him guilty of misconduct and incorrectly suspended him from practice – the very issues which he bought to this Court on Appeal. In that respect he has a final judgment without any right of appeal. One application for leave has already been declined.
[65] As Cooke J noted in Norrie v Senate of the University of Auckland,48 in most cases where an applicant has had resort to a domestic remedy courts should be unwilling to grant discretionary remedies. The same point was made by Baragwanath J in Ding v Minister of Immigration,49 where he said relief by way of judicial review was “likely to be withheld where the party seeking review has had available statutory rights of appeal against the challenged decision which …. have failed”.
[66] Although neither case is expressed in absolute terms, both emphasise this Court’s strong reluctance to entertain judicial review arguments following the exercise of appeal rights. Such resistance has to be even greater when:
(a)Stripped of all unnecessary gloss and incantation the judicial review arguments on causes of action 1, 2, and 3(1) are a rerun of the argument on appeal or, insofar as 1 and 2, introduce the new concepts of “bias”, “discrimination” or “bad faith,” are premised on the assumption that the Tribunal decision was so legally flawed (despite being upheld on appeal), that it ex hypothesi evidences the bad faith alleged.
47 First Amended Statement of Claim, dated 15 July 2020 at [26].
48 Norrie v Senate of the University of Auckland [1984] 1 NZLR 129 (CA) at 141.
49 Ding v Minister of Immigration (2006) 25 FRNZ 568 (HC) at [15].
(b)The appeal was one to the High Court.
(c)The appeal proceeded as a rehearing with the merits considered afresh.
(d)There is no right of further appeal.
(e)The decision of the High Court comprehensively addresses all issues before it.
[67] Of this list item (a) represents a stand-alone basis to strike-out the causes of action, invoking as it does the concept of collateral attack. But items (b), (c), (d) and
(e) are also relevant because, insofar as Mr Hong alleges bad faith against the Tribunal in cause of action 2, I consider the conclusion almost irresistible that such has been “cured” on appeal to this Court. Indeed, there is the prospect of a double “cure” because the original reference by the Standards Committee was itself subject to Tribunal review. For present purposes, however, I concentrate on the position of the High Court only.
[68] Although the concept of bad faith is reasonably elastic and may extend beyond any imputation of the decision maker’s motive to include the concepts of unreasonable, arbitrary or irrational decision making,50 at least where there is knowledge a reviewable error is being committed, the bad faith alleged in causes of action 1 and 2 is based on alleged bias and discrimination (allegations which Mr Hong further develops in his causes of action 3(2) and (4)). It therefore goes directly to motive or honesty.
[69] It is well established that irregularities (including allegations of bias) in a hearing process can be cured by virtue of a further process of appeal or review in the nature of a rehearing.51 For example in NR v MR the Court of Appeal held that any bias exhibited on the part of the District Court Judge was cured by a subsequent appeal to the High Court which had considered the matter afresh.52 Similarly in Russell v
50 Ririnui v Landcorp Farming Ltd [2016] NZSC 62, [2016] 1 NZLR 1056 at [102]. Taylor v Social Security Appeal authority [2019] NZHC 1718 at [65]. See also Graham Taylor Judicial Review: A New Zealand Perspective (4th ed, LexisNexis, Wellington, 20188) at [15.82].
51 Secretary for Justice v Simes [2012] NZCA 459, [2012] NZAR 1044 at [102].
52 NR v MR [2015] NZCA 81 at [29].
Taxation Review Authority, the Court of Appeal held that any apparent bias in the first instance decision was “cured by the High Court’s judgment on appeal, where “upon undisputed facts [the Judge] decided the issues with a fresh mind, unaffected by any suggestion of apparent bias or predetermination”.53
[70] I accept that there is no absolute rule that an appeal will satisfactorily remedy an error of process or substance at first instance.54 Matthew Smith notes in The New Zealand Judicial Review Handbook55 that “curing only goes to remedial discretion” and as Tipping J observed in Nicholls v Registrar of the Court of Appeal,56 the question of whether an appeal has remedied the alleged error involves a two-stage assessment:57
The Court should first identify the error, or errors, which are said to vitiate the first instance decision. The second step is to examine what effect the appeal has had on the error, or errors, found at the first stage. If the appeal has in substance removed the prejudice which would otherwise have resulted to the complaining party, the Court should exercise its discretion against relief, because overall no continuing prejudice from what went wrong at first instance can be shown. Where, as here, there has been review by way of a rehearing, which is said to have cured any earlier problems, I would put the onus on the applicant for judicial review to demonstrate continuing prejudice. It is only if there is continuing prejudice that the first instance error, or errors, have continuing relevance.
[71] However, focusing for present purposes on the “bias”, “discrimination” and “bad faith” allegations in causes of action 1 and 2,58 I consider the case for the exercise of remedial discretion against Mr Hong to be so overwhelming as one I may legitimately take into account in my assessment of whether his proceedings should be struck-out now on either abuse of process or vexatious grounds. That is because the bad faith alleged in these causes of action (unlike the more comprehensive attack in cause of action 3(2)) is based on the premise no unbiased Tribunal could come to the decision it did – a conclusion belied by the High Court’s findings. As such the bias issue is in reality simply another facet of the collateral attack issue.
53 Russel v Taxation Review Authority [2011] NZCA 158, [2011] NZAR 310 at [45].
54 CLM v Chief Executive of the Ministry of Social Development [2011] NZFLR 11 and Nicholls v Registrar of the Court of Appeal [1998] 2 NZLR 385 (CA).
55 The New Zealand Judicial Review Handbook (2nd ed, Thompson Reuters, Wellington, 2016) at [79.1.2].
56 Nicholls v Registrar of the Court of Appeal [1998] 2 NZLR 385 (CA).
57 At 437.
58 Or what Mr Hong compendiously refers to in his submission as “discrimination” directed towards him.
[72] Moreover, the “curative” decision is that of the High Court which in the absence of some cogent particularisation of bias on the part of the individual judge involved, must be assumed to act with a fresh, independent and judicial mind. A mere allegation that it “rubber stamps” decisions of the Tribunal59 cannot be sufficient, being so demonstrably at odds not only with the judicial oath but this Court’s history of independence in exercise of its appellate function from the Tribunal – evidenced in the present case by Gault J’s modification of the Tribunal’s costs order.
[73] Accordingly, even insofar as causes of action 1 and/or 2 raise an ostensibly new issue – bias, discrimination and/or bad faith on what I have called an “ex hypothesi” basis – I consider them appropriately struck-out as an abuse of process.
[74] I note for completeness Mr Collins’ submission that cause of action 2 (breach of statutory duty or in the alternative negligence) faces the further potential problem that it presupposes a private law remedy (damages) in respect of the actions of a judicial tribunal where the statute provides alternative method of redress, namely on appeal.60 However, that in turn needs to be considered in light of ss 185 and 272 of the Act which recognise the potential for civil liability in the event of bad faith action.
[75] Mr Collins primary argument in respect of cause of action 2 is, however, that it is likewise a collateral attack on the decision of Gault J. I agree that is the case – the essence of the alleged breach of statutory duty is that the Tribunal delivered a perverse judgment – a proposition which simply cannot stand in light of the judgment of Gault J. Necessarily the claim collaterally attacks the High Court’s decision.
[76] For these reasons I consider causes of action 1, 2 and 3(1) appropriately struck out against the second defendants as abuses of process and/or vexatious. Nor do I see the position of the first respondent as any different. Relying on the jurisdiction
59 As asserted in Cause of Action 3(2).
60 See Feary v Commissioner of Crown Lands [2001] 1 NZLR 704 (HC).
recognised in Siemer v Stiassny,61 I therefore strike out these causes of action against all defendants.62
[77] I come then to cause of action 3(2) alleging among other things a “systemic discriminatory campaign by Dark Forces” and based on the disciplinary and other responses against Mr Hong during his period of practice.
[78] In argument Mr Collins acknowledged that, although in his view completely untenable as a matter of fact, Mr Hong could theoretically bring a claim which might survive strike-out, alleging systemic racism and therefore bad faith by those (whether Committees, Tribunals or individual Legal Complaints Review Officers (LCEO’s)) who had made decisions adverse to him. However, he submitted that the current pleading fell well short of what was required in that respect, in that:
(a)it did not include the relevant parties to the decisions, some of which were made by the Auckland District Law Practitioners Disciplinary Tribunal (a Tribunal no longer in existence with the result that Mr Hong would have to consider the transitional provisions of the Law Practitioners Act 2006) and three of which were made by LCROs who are not named as parties;
(b)the particulars of bad faith are inadequately pleaded, detailed particulars being necessary;63
61 Siemer v Stiassny [2011] NZCA 1 at [14].
62 I have in that context considered but rejected Mr Hong’s argument that I should delay judgment until the outcome of his application for leave to appeal to the Court of Appeal is known. That may be sometime distant. The second defendants are entitled, in my view, to have their application determined promptly and on the basis of the existing position. Moreover, in the event leave was granted and a subsequent appeal succeeded, causes of action 1, 2 and 3(1) are likely, in my view, to fall away in any event.
63 Rule 5.17(2) provides that if a party alleges a state of mind of a person the party pleading must give particulars of the facts relied on in alleging that state of mind. See generally the authorities collected in McGechan on Procedure High Court Rule 5.26.08(1). In Schmidt v Pepper New Zealand (Cutodians) Ltd [2012] NZAR 434, (2019) 24 PRNZ 645 at [15] the Court of Appeal emphasised that allegations of fraud should not be made in any pleading drafted by counsel unless they have reasonably credible material establishing a prima facie case and that “[g]eneral allegations, however strong the words may appear to be, are insufficient to amount to a proper allegation of fraud”. Although the test relates to fraud and not bad faith, similar principles apply, at least where the decision maker’s motives or honesty are in issue.
(c)there is no attempt to quantify Mr Hong’s alleged claim in damages;
(d)the cause of action offends the proscription on collateral attack by virtue of its prayer for relief (b)(i) seeking an order that the Tribunal decision which was appealed to Gault J be “set aside or squashed (sic)”; and
(e)the claim fails to recognise the “curative principle” in respect of all decisions elevated to this Court.
[79] Mr Collins further submitted that the deficiencies in the pleading were so substantial that I should strike it out as being, at a minimum, vexatious. He said that this would give Mr Hong an opportunity to “soberly reflect” on whether to bring a new and properly pleaded 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 senior members of the profession Mr Hong has been the subject of systemic racism is one in respect of which considerable care is necessary.
[81] I agree also that the current pleading is deficient in all the respects Mr Collins identifies and is generally prolix. However, the question I must answer is whether, having regard to the Court’s traditional reluctance to strike out claims which are capable of being cured by amendment (and associated access to justice considerations), I should give Mr Hong an opportunity to make such improvement (or alternatively discontinue) before the sword of Damacles potentially descends on this aspect of the claim.
[82] The relevant test has been colourfully described in terms of whether the pleading is one “which is a total write-off [or] which is deficient but is capable of effective repair”.64 Typically, the Court will have been provided with proposed amendments in advance. That is not the case here. However, nor can I say the pleading
64 Marshall Fixtures Ltd v Marshall [1992] 1 NZLR 316 (HC).
is a “total write-off”. In its reference to a refusal to “Kow Tow,”65 to a “systemic discriminatory campaign” to impose greater penalties on him than on other comparable transgressors66 and to a failure (borne of bias) to impose the least restrictive outcome,67 the pleading contains at least the beginnings of the framework of a claim, however difficult it may ultimately be to establish. Mr Hong pleads that he will provide “full particulars of such discrimination against me in my Submissions”.68 That is not the appropriate time for particularisation of a claim of bad faith. The defendants are entitled to a Rule compliant pleading now. And where serious claims are made, tantamount to misfeasance, what is required are prima facie grounds, particularised accordingly.69
[83] I consider the appropriate course is to allow Mr Hong an opportunity to replead cause of action 3(2) on a basis which addresses the identified deficiencies70 and to reserve to the second respondents the ability to apply further to strike out the amended pleading if considered appropriate. I do so with an element of resignation that Mr Hong cannot, at this point at least, seemingly be dissuaded from the view that his disciplinary troubles stem not from any inadequacies in his own practice or interrelationships with clients, practitioners and others, but from systemic racism directed towards him as a Malaysian Chinese practitioner. As a result, any order striking out cause of action 3(2) is in my view no more likely to engender the “sober reflection” Mr Collins seeks than the alternative I have identified as appropriate. I repeat, however, the desirability of such reflection.
Result
[84] I strike out causes of action 1, 2 and 3 (being the first cause of action identified as such in the plaintiff’s first statement of claim dated 15 July 2020 and referred by me in this judgment as cause of action 3(1)).
65 First Amended Statement of Claim dated 15 July 2020 at [181].
66 At [183] and [189].
67 At [181(c)].
68 At [189].
69 Refer fn 63 above. See also Deep v Auckland Goldline Co-operative Taxi Society [2018] NZHC 2362 at [11].
70 Mr Hong should also give active consideration to any limitation issues if his reference to historic disciplinary procedures is intended to be anything more than evidence of alleged systemic discrimination in respect of decisions which are not time limited (if any are).
[85] In respect of the second cause of action identified by me as 3(2), I direct Mr Hong to file and serve by 28 September 2020 a second amended statement of claim together with such applications as may be necessary under r 4.56,71 addressing the matters identified in [78] above and any relevant limitation constraints.
[86] I urge Mr Hong to take independent advice before doing so and in the formulation of any amended claim.
[87] I reserve leave to the second defendants to bring a second application to strike out if the amended pleading is amenable to the jurisdiction in r 15.1.
[88] I set the matter down for a case management conference on the first available date after 12 October 2020.
Costs
[89] The second respondents have been substantially successful and in my view are entitled to costs. They seek these on an indemnity basis.
[90] My provisional view is that they should be awarded on a 2B basis having regard to the fact that, although the plaintiff’s pursuit of causes of action constituting an abuse of process may otherwise have attracted an indemnity or uplifted award, not all causes of action against the second defendants have been struck out, at least at this stage.
[91] In the absence of agreement as to costs, memoranda (with a strict maximum of three pages)72 may be served and filed on the following timetable:
(a)By second defendants in support by 11 September 2020.
(b)By Mr Hong in opposition by 25 September 2020.
71 Mr Hong is directed to the commentary in McGechan on Procedure HCR 4.56.02.
72 I emphasise the point because of Mr Hong’s failure, in the context of this application, to adhere to the page limitation in r 7.39 (his submissions were 35 pages in length and only read after an ex post grant of leave). A further eight page submission was filed on 10 August 2020.
(c)By the second respondent in reply by 2 October 2020.
My expectation is that costs should be capable of agreement.
Muir J
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