Hong v Auckland Standards Committee no.3 [2015] NZHC 667 (2 April 2015)

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UNDER	the Declaratory Judgments Act 1908, Judicature Amendment Act 1972, and the Lawyers and Conveyancers Act 2006
IN THE MATTER	of an application for judicial review and declaratory judgment orders
BETWEEN	BOON GUNN HONG Plaintiff
AND	AUCKLAND STANDARDS COMMITTEE NO.3 First Defendant LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL _{Second Defendant}

Hearing:	13 March 2015
Appearances:	Plaintiff in person P Collins for First Defendant
_Judgment:	_{2 April 2015}

This judgment was delivered by me on Thursday, 2 April 2015 at 4.00 pm pursuant to r 11.5 of the High Court Rules.

BOON GUNN HONG v AUCKLAND STANDARDS COMMITTEE NO.3 [2015] NZHC 667 [2 April 2015]

[1] The plaintiff, Boon Gunn Hong, is a lawyer. He seeks judicial review of the decisions of the Auckland Standards Committee No. 3 (Standards Committee or Committee), which was established by the New Zealand Law Society (Law Society) as part of its complaints service and the Lawyers and Conveyancers Disciplinary Tribunal (Tribunal). He also seeks to prove the tort of misfeasance in public office against the Standards Committee.

[2] The Standards Committee applies to strike out the claims against it. The Tribunal abides the decision of the Court. If the Standards Committee is successful in its strike-out application, the claims against the Tribunal would still remain.

[3] The facts relating to Mr Hong’s claims are as follows. In May 2009, Mr Hong gave advice to a commercial client on his responsibilities in relation to his eviction from commercial premises. He also wrote to the Police, advising them of the law that he considered governed the eviction, as the landlord had asked the Police to accompany him in evicting the client. Mr Hong’s client was subsequently charged with assault of two security guards employed by the landlord.

[4] In determining the outcome of that case in the District Court, Judge Moore stated that he considered the advice given by Mr Hong to be incorrect, and that it was doubtful that “legal advice to breach the law, and with it the peace of the community, can be within the scope of proper professional conduct.”¹He ordered that a copy of the judgment be sent to the Law Society.

[5] The Law Society chose to investigate the matter on its own motion without any complaint from Mr Hong’s client, the landlord or the Police. Mr Hong responded to the Law Society’s request for an explanation of his actions. There is some dispute as to the content of the Law Society’s request for information, and what specific aspect of Mr Hong’s behaviour was being investigated.

[6] There was no oral hearing and the Standards Committee determined the matter on the papers. On 14 February 2013, the Standards Committee found that Mr Hong’s conduct had been unsatisfactory. Its complete findings are:

13 The Committee considered Mr Hong’s submissions about the law of forcible entry and his letter to the police. The Committee considered that his advice was robust in that he warned the landlord’s solicitor regarding re-entry and disputed the landlord’s solicitor’s right to re- enter. The Committee however noted the comments of the learned Judge and considered that Mr Hong’s conduct with his own client was imprudent and incited or could have the potential to incite his clients into criminal actions (which eventuated). The Committee considered that a prudent and responsible practitioner would have acted differently by questioning the client and calming the situation in more moderate terms.

[7] There are some further disputed facts regarding the date on which Mr Hong received the Standards Committee’s decision. However, it is clear that, even after acknowledging receipt of its decision, Mr Hong did not comply with the penalty order imposed by the Standards Committee, which was to pay a fine of $1000, costs of $1000 and attend a Law Society seminar.

[8] Mr Hong attempted to review the decision by applying to the Legal Complaints Review Officer (Review Officer), which is the appropriate statutory mechanism for reviewing a decision of the Standards Committee. However, the Review Officer declined to review the decision as the application made by Mr Hong was outside the 30 working days statutory period within which such applications had to be made.

[9] The Standards Committee subsequently reconvened and resolved that the non-compliance with its penalty order should be considered by the Tribunal. The Tribunal subsequently found that Mr Hong’s failure to comply with the Standards Committee’s penalty order went beyond unsatisfactory conduct, and constituted

[10] Mr Hong subsequently appealed the penalty to the High Court. On appeal, Gilbert J found that the penalty of 10 months suspension was disproportionately severe. He reduced it to the equivalent of “time served” or the four months he had already been suspended from practice.³

[11] In his statement of claim, dated 11 November 2014, Mr Hong seeks to judicially review the Standards Committee’s decision. He advances a number of grounds for judicial review, including errors of law, acting ultra vires, breaches of natural justice, no probative evidence to support finding, procedural irregularities, failing to give proper notice, irrationality, unreasonableness and bias, factual errors, as well as failing to take into account relevant considerations and taking into account irrelevant considerations.

[12] Mr Hong also alleges that the Standards Committee committed the tort of misfeasance in a public office through bad faith, in knowingly and intentionally acting to cause harm and damage to him.

[13] Finally, he seeks to judicially review the Tribunal’s findings that his disobedient conduct warranted a finding of misconduct. Mr Hong alleges that the Tribunal made a number of errors of law, including disallowing a defence that he genuinely believed that the decision of the Standards Committee was ultra vires and therefore void.

[15] The Standards Committee submits that Mr Hong’s claim is an attempt to relitigate its decision and goes so far as to reargue the judgment of Judge Moore in the District Court, which was the foundation of its decision.

[16] It further submits that its decision was subject to scrutiny both by the Tribunal and the High Court in the appeal against penalty. The allegations of misfeasance in a public office are also baseless and speculative allegations without any evidential foundation and are a further attempt to relitigate its decision.

[17] The Standards Committee relies on the judgment of Gilbert J in the High Court and says that although his decision was specifically concerned with penalty, he “could reasonably have been expected to identify any serious errors or miscarriages of justice of the sort relied on by the plaintiff in his pleadings”.

[18] It submits that it is also an abuse of the Court’s process for Mr Hong to have made concessions in the appeal which are at variance with the allegations on which he relies in his statement of claim. The Standards Committee concludes that there is an important public interest in the Court ensuring finality of cases of the sort which underlie Mr Hong’s first and second causes of action where a right of review or appeal have either not been pursued or have been pursued to their conclusion.

[19] Mr Hong submits that the issues relating to the Standards Committee’s decision raised in his application for the judicial review have never been scrutinised by the Review Officer, the Tribunal or the High Court. He submits that any deficiencies in his pleadings can be remedied, and that the statement of claim filed is merely his first attempt at framing the issues involved. Mr Hong suggests he may either expand the statement of claim to consider alternative causes of action, or sever the application for judicial review from the tortious claim of misfeasance in public office.

[20] Mr Hong further submits that his concession that breaching the Standard Committee’s penalty order was misconduct is unrelated to the current proceeding, as he is not appealing against that finding, and has already appealed the associated penalty. He also submits that his claims cannot be struck out without further consideration of all the facts involved, making it inappropriate for a strike out action.

[21] Finally, Mr Hong raises various other issues relating to procedural fairness, including a submission that striking out his claim would be a breach of his rights under s 27 of the New Zealand Bill of Rights Act 1990.

[22] Under r 15.1 High Court Rules, the Court has the power to strike out all or part of a proceeding. The Standards Committee relies on r 15.1(1)(a), (c) and (d).

[23] The principles for the exercise of the power under r 15.1(1)(a), that the pleadings disclose no reasonably arguable cause of action, are settled: ⁴

(a) pleaded facts, whether or not admitted, are assumed to be true, though this does not extend to pleaded allegations which are entirely speculative and without foundation;

(b) the cause of action must be clearly untenable. The Court must be certain that it cannot succeed;

(c) the jurisdiction is to be exercised sparingly and only in clear cases; (d) the strike-out threshold is deliberately set high.

[24] The Court will not usually strike out pleadings which appear hopeless, if they

[25] Under r 15.1(1)(c), a claim is frivolous if it trifles with Court processes, and vexatious if it comprises a second or subsequent attempt to bring proceedings on the same issue where those allegations have previously been unsuccessful.⁶

Commissioner of Inland Revenue v Chesterfields Preschools Ltd identifies a vexatious proceeding as involving an element of impropriety.⁷

[26] The final ground relied upon is that, under r 15.1(1)(d), the claims are an abuse of process by collateral attack. This is commonly described using the words of Lord Diplock:⁸

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.

[27] In Siemer v Heron, the Court described the policy concerns underlying the rule.⁹

“The concern is with conduct on the part of a litigant in relation to the case which unchecked would 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. ...”

[28] This ground includes the principle that there should be finality to litigation, because there is a public interest in having an end to litigation and a private interest

_{in parties to court processes not being subject to vexatious
relitigation.}¹²

⁷Commissioner of Inland Revenue v Chesterfields Preschools [2013] NZCA 53, [2013] 2 NZLR

⁸_{Hunter v Chief Constable of West Midlands Police
[1981] UKHL 13; [1982] AC 529 (HL) at 541}

¹⁰Hunter v Chief Constable of the West Midlands Police, above n 29, at 541; Barber v Green Cabs

¹²Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013] 1

[29] The Standards Committee’s major argument is that Mr Hong’s application for judicial review is substantively a claim to re-litigate its decision, which constitutes a collateral attack on the finality of litigation. That is an abuse of the court’s processes, and forms both a frivolous and vexatious claim. In this, its argument is essentially the same under r 15.1(1) (a), (c), and (d).

[30] Evidently, Mr Hong does substantively seek, through a number of different mechanisms, to obtain reconsideration and review of the decision-making process and the decision which found his actions in relation to his client were “unsatisfactory conduct”. In my view, doing so is not re-litigation of any question of law that has already been considered.

[31] The Standards Committee primarily relies on the fact that the question of the penalty for breaching the unsatisfactory conduct finding was considered by both the Tribunal and the High Court. It submits that factual inferences can be made from Gilbert J’s judgment in relation to the misconduct penalty, and the admissions of Mr Hong within that proceeding.

[32] However, it cannot be correct that, by considering the appropriateness of the penalty, Gilbert J also implicitly upheld the substantive unsatisfactory conduct finding. Gilbert J clearly did not consider, and was not invited to consider, the correctness of either the original unsatisfactory conduct finding or the subsequent misconduct finding. He heard no submissions on either issue, meaning that determining the appropriateness of the Standards Committee’s finding would have been beyond the scope of the appeal with which he was dealing.

(a) the Standards Committee was precluded from determining the claim against Mr Hong for jurisdictional reasons; or

[34] The current application for judicial review is unrelated to the findings made by Gilbert J, which were confined to a much narrower legal issue. The Tribunal’s decision was similarly directed toward the question of whether Mr Hong had, in fact, breached the penalty orders made by the Standards Committee and not whether the Standards Committee had been correct to determine Mr Hong’s conduct was unsatisfactory, or that it had followed the correct processes to do so.

[35] Similarly, any admissions made by Mr Hong in that context are also not relevant to considering the validity of the finding of unsatisfactory conduct. Mr Hong’s prayers of relief are all specifically directed toward the decision and the penalty orders of the Standards Committee, not the subsequent finding that it was misconduct to not comply with the penalty order and the additional sanctions which followed. No evidence so far has been put before the Court to indicate that, when Mr Hong acknowledged that he was obliged to comply with the penalty orders imposed by the Standards Committee, he acknowledged anything to do with his culpability for the original finding.

[36] Likewise, although Mr Hong applied to review the Standards Committee’s decision through the Review Officer, he was out of time to do so and was thus unsuccessful in achieving any substantive review. There can be no collateral attack on a decision which has not occurred. The purpose behind the rule, as established by Lord Diplock in the passage noted above, is to prevent reconsideration of the same areas of law where an intending plaintiff had already obtained a full opportunity of contesting the decision. The purpose is not to stop initial consideration of a decision’s validity.

Standards Committee’s decision through the Review Officer or the Tribunal, this

would not preclude judicial review. It is not a challenge to the finality of litigation to apply for judicial review in the High Court of decisions made by specialist tribunals and bodies. Judicial review is an accepted means of assessing the decisions of Standards Committees and the Review Officer, and has been used in a number of cases.¹³Judicial review is a separate legal process, focused primarily on whether a decision has been made within the scope of the law and not necessarily the eventual correctness of their decisions.¹⁴Contrary to the submissions of the Standards Committee, precluding the use of judicial review to assess the legitimacy of decisions and processes of those specialist bodies, leaving the Standards Committee isolated from review, would be more likely to strike at public confidence in the Court and lawyers’ disciplinary processes than it would by allowing challenge.

[38] The question of the effect of substantive review on the legitimacy of the later misconduct charge and associated penalties has not been considered before, and there may be an argument that successful review could have implications for the legitimacy of the later misconduct charge and associated penalties. The possible effect on associated judgments cannot preclude the legitimacy of seeking review of a judicial process which has not been considered before, and has had considerable impacts on individuals.

[39] The claims brought by Mr Hong canvass fresh legal issues. The application for judicial review is not an abuse of process through collateral attack, nor is it a vexatious attempt to disrupt settled litigation. There is nothing frivolous in a claim which seeks to establish whether statutory bodies with significant public responsibilities in regulating lawyers have followed procedure and processes which adequately respect natural justice and due process.

¹³There are many examples of judicial review of the LCRO and Standards Committee decisions.

See Q v Legal Complaints Review Officer [2013] NZCA 570; A v Legal Complaints Review Officer [2013] NZHC 2712; Dorbu v New Zealand Law Society [2012] NZHC 564 and the expansive interpretation adopted by the Supreme Court of its judicial review powers in Orlov v National Standards Committee [2014] NZSC 133 at [5].

[41] The Standards Committee also submits that the statement of claim discloses no reasonable cause of action. The Standards Committee argues that the judicial review action is based on speculative and groundless allegations of bad faith in a variety of forms. However, the Standards Committee has not articulated any specific reasons why the causes of action are not reasonable, or pointed to any specific claims which should be considered completely without foundation.

[42] The test set out above establishes that the standard for striking out a claim as not reasonably arguable is a very high one. The jurisdiction must be exercised only sparingly, and only if the Court is convinced that the action cannot succeed. As long as the facts are not completely speculative, they must be assumed to be true. The Court of Appeal in Attorney-General v McVeagh refined that statement, saying:¹⁵

...there may be a case where an essential factual allegation is so demonstrably contrary to indisputable fact that the matter ought not to be allowed to proceed further.

[43] In this case, although some of the grounds that have been put forward may ultimately fail, the application for judicial review is not so untenable that it cannot succeed. While Mr Hong has raised a number of issues of varying types and with varying bases, there is nothing to the assorted claims to suggest that the allegations are completely contrary to indisputable fact at the level suggested by McVeagh.

[44] The timeline of events leading up to this strike-out application appears to be agreed between the parties, with the exception of when the initial decision of the Standards Committee was received by Mr Hong. The allegations of bad faith and not following proper processes therefore derive from actions which actually took place, leaving only the question of motivation and processes that followed. This can be directly contrasted to allegations which have been found to be factually baseless in other cases, in which the actual facts underpinning the review application were

¹⁶Siemer v Chief Justice of New Zealand HC Auckland CIV-2010-404-001909, 11 February 2011.

[45] While some allegations may require further evidence, such as the allegation that the initial decision of the Standards Committee breached Mr Hong’s right to natural justice because the Law Society did not sufficiently detail the nature of the allegations against him, this is a factor which points to allowing a full trial to explore those issues.

[46] The Standards Committee’s general claim that the causes of action are based on baseless allegations of bad faith is also, in my view, insufficient to satisfy the very high standard necessary to show that the Court should strike out the claim. The application for judicial review is not so plainly untenable that it must be struck out.

[47] The Standards Committee has not advanced any substantive reasons requiring this cause of action to be struck out, except to repeat that the tort claim is an attempt to re-litigate decided matters and involves baseless and speculative allegations without any evidential foundation.

[48] For the reasons given above, neither of these arguments is sufficient to justify striking out this cause of action. No judicial decisions have considered the question of the appropriateness of the Standards Committee’s action concerning Mr Hong. There is no collateral attack on the courts’ processes.

[49] Although, given the high standard for proving misfeasance in public office, the action may ultimately be unsuccessful, the blanket statement that the allegations are baseless and speculative is insufficient to meet the high standard for striking out a cause of action. As with the first cause of action, further evidence may be available or the argued grounds may be further refined. However, at this stage in the absence of any detailed analysis, this cause of action is not so untenable as to require being struck out.

[50] No grounds for strike out are therefore made out in relation to the tort of misfeasance in public office.

[51] The Tribunal was not represented in this hearing. It filed a document abiding the decision of the Court. Counsel for the Standards Committee did not attempt to represent the Tribunal, and argued only that the claims against the Standards Committee should be struck out. The action against the Tribunal has, therefore, not been subject to challenge in this strike-out application. Accordingly, there is no justification for striking out this cause of action, as any potential deficiencies have not been addressed in the arguments before me.

[53] Mr Hong is entitled to costs. If the parties are unable to agree, memoranda should be filed with the Court.

High Court of New Zealand Decisions

Hong v Auckland Standards Committee no.3 [2015] NZHC 667 (2 April 2015)