Hong v Auckland Standards Committee No. 5

JurisdictionNew Zealand
CourtHigh Court
JudgeGault J
Judgment Date16 April 2020
Neutral Citation[2020] NZHC 744
Docket NumberCIV-2019-404-2236, CIV-2020-404-11
Date16 April 2020

[2020] NZHC 744

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Gault J

CIV-2019-404-2236, CIV-2020-404-11

UNDER the Lawyers and Conveyancers Act 2006

IN THE MATTER of an appeal against a Misconduct Liability decision of the Lawyers and Conveyancers Disciplinary Tribunal

Between
Boon Gunn Hong
Appellant
and
Auckland Standards Committee No. 5
Respondent
Appearances:

Appellant in person

P Collins for the Respondent

Law Practitioners — appeal against a decision of New Zealand Lawyers and Conveyancers Disciplinary Tribunal which found the appellant had engaged in misconduct for obstructing a trust account inspector's request for access to his client files — appeal against the penalty decision suspending the appellant from practice for three months — definition of “trust account records” — Lawyers and Conveyancers Act 2006 — Lawyers and Conveyancers Act (Trust Account) Regulations 2008

The issues were: what was the scope of “trust account records” in relation to the content of client files; whether non-disclosure to the inspectorate of client confidential or privileged documents was justified where the client refused to consent and whether H's conduct amounted to misconduct.

The Court held that trust account records included all records relating to the practitioner's trust accounts or to trust money received by the practitioner, the definition did not extend to wholly unrelated material on client files. Some trust account records that must be produced may be confidential and privileged and need the protection of reg 33.

Where the requested files had trust account transactions, the integrity of the regime indicated that it should be the inspector's judgement rather than the lawyer's as to the scope of the records required. Practices must permit the inspectorate to perform a review of the trust accounts under reg 29. The practitioner's obligation to permit inspection, and of cooperation that went with it, required the practitioner to permit an on-site review unless other arrangements were agreed.

Obligations to maintain client confidentiality and legal privilege were subject to disclosure required by law. Regulation 33 ensured that the disclosure was limited and so there was no wider loss of confidentiality and therefore no loss of legal privilege. Lack of client consent did not excuse H's non-compliance with the inspector's requests.

H had failed to permit the inspectorate to perform a review of his trust account and therefore contravened reg 29(a) but had done so mistakenly believing that client confidentiality prohibited him from disclosing client files. A wilful, as opposed to reckless, contravention required some actual knowledge that the act was a contravention. H's conduct was not a “wilful” contravention. However, misconduct under s7(1)(a)(ii) LCA (wilful or reckless contravention) may also consist of a “reckless” contravention, that was wilful blindness. His contravention of reg 29 may more appropriately have been characterised as unsatisfactory conduct in terms of s12(c) LCA. In the circumstances, H's actions amounted to misconduct in terms of s7(1)(a)(ii) LCA.

H's persistent obstruction of the trust account inspector's review, the increase in frequency of the disciplinary findings against him over more recent years suggesting a decline in his capacity to maintain professional standards and his lack of insight warranted the order prohibiting him from practising on his own account until approved to do so by the Tribunal. The appeal against the Tribunal's decision suspending H was dismissed except that the order that H pay the costs of the Standards Committee of $35,850 was quashed and an order that H pay the costs of the Standards Committee of $30,850 was substituted due to financial hardship.

JUDGMENT OF Gault J

This judgment was delivered by me on 16 April 2020 at 12:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

1

Mr B G Hong appeals against two decisions of the New Zealand Lawyers and Conveyancers Disciplinary Tribunal (the Tribunal). First, the Tribunal's decision dated 11 October 2019 finding Mr Hong guilty of wilful misconduct for obstructing a trust account inspector's request for access to his client files in breach of trust account regulations. 1 Secondly, the Tribunal's penalty decision dated 23 December 2019 suspending Mr Hong from practice for three months, prohibiting him from practising on his own account until approved to do so by the Tribunal and ordering him to pay costs. 2

2

The appeals were allocated a fixture on Thursday, 2 April 2020. It transpired that was during alert level 4 for COVID-19. The Court treated these appeals as priority matters and retained the fixture which, by consent, was conducted by telephone. At the hearing, difficulty with audio quality led the parties to consent to the Court dealing with the appeal on the papers. It was possible for them to answer the Court's questions.

Factual background
3

The audit inspectorate of the New Zealand Law Society conducted a general trust account review of Mr Hong's solicitor's trust account from October 2017 to February 2018.

4

On 30 October 2017 the inspector, Mr Strang, notified Mr Hong of his intention to visit Mr Hong's office on 7 November 2017 at around 11:30 am/noon. Mr Strang followed up the next day regarding the materials he wished Mr Hong to prepare.

5

On 6 November 2017, Ms Chan, Mr Hong's trust account administrator, replied to Mr Strang saying she would have the material to him the next morning. Mr Strang replied indicating he would need to come later the next day around 2:00 pm, so he could review the material.

6

Mr Hong then emailed Mr Strang saying:

Please do not come to my office as I am in the midst of shifting offices, this office in a total mess. Any other request for further information will also be provided to you by email.

7

Mr Strang replied saying he would reserve judgement on whether he could dispense with physically attending Mr Hong's office. He noted he had concluded “very very few reviews without attendance” and asked if there were extenuating circumstances.

8

Mr Hong replied on the morning of 7 November 2017 attaching the completed questionnaire and referring to his lack of time, stress and allergies. Mr Strang decided to abandon the meeting and try again later.

9

On 19 December 2017 Mr Strang emailed Mr Hong advising that he had largely completed his trust account review and, noting that Mr Hong had said he was in the process of shifting offices, had postponed his file review. Mr Strang advised that he planned to complete that work in the week of 21 January 2018, likely on 24 January 2018. He asked Mr Hong to advise with reasons if that was not convenient, and advise his new office address.

10

After not receiving a reply, Mr Strang telephoned on 15 January 2018, spoke with Ms Chan and followed up by email recording that she had advised that Mr Hong remained at the same offices, but they were disorganised pending a shift to an apartment. Mr Strang advised he was not comfortable further deferring and would arrive on 25 January 2018 at 9:00 am.

11

Mr Hong replied the same day saying he was using his office as a work shop to fabricate what he needed to renovate an apartment, most files had been stored and Mr Strang would not be granted entry. He referred to it as a construction site and attached photos.

12

Mr Strang replied on 18 January 2018 stating that this was not at all ideal and was compromising the review. He reminded Mr Hong of his duty under reg 11 of the Lawyers and Conveyancers Act (Trust Account) Regulations 2008 (the Regulations). Mr Strang said Mr Hong would recall he signalled he could extend some pragmatism:

If necessary and you agree I could take file/s with me to the Law Society's Auckland office and return those back to you later.

So what I will do (if you agree) is:

  • 1) Receive the reconciliations…

  • 2) Select some files for my review (they will be recent matters)

13

Mr Hong replied on 23 January 2018:

Sorry I am not in the office all the time as taking time off … as I have said I do not wish to meet, anything U need U email over and such will be provided to you as soon …

any of clients' files or documents that U need that are not trust records sorry if requested such will need to be directed to clients for their specific consent?

14

Mr Strang replied the same day stating that he awaited the reconciliations Mr Hong had said he would email and asking Mr Hong to expedite sending those. Mr Strang referred again to reg 11, saying:

… it is my understanding that the client file forms part of those trust account records. It is aspects such as payment authorities, A & I, reporting statements and client care materials that I wish to scrutinise… If you have retained your client file you must make such available to the Inspectorate, on reasonable request. You do not need client authority for such production, the Inspectorate's supervision of lawyers and their files is conducted pursuant to statutory authority.

15

Mr Strang set out the definition of trust account records, underlining the reference to files: 3

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

16

Mr Strang also said:

I had suggested what I thought was a pragmatic and accommodating compromise between my need to review your...

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