Ling Uk Choon and Another v Public Accountants Board

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 28 June 2004
• Neutral Citation: [2004] SGHC 127
• Docket Number: Originating Motion No 32 of 2003
• Date: 28 June 2004
• Published date: 30 June 2004
• Year: 2004
• Plaintiff Counsel: Quek Mong Hua and Mervyn Foo (Lee and Lee)
• Citation: [2004] SGHC 127
• Defendant Counsel: Devinder K Rai (Acies Law Corporation)
• Court: High Court (Singapore)
• Subject Matter: Certified public accountants censured and fined for improper conduct,Whether High Court limited to considering whether rules of natural justice observed and whether decision of Board honestly reached,Professional conduct,Whether separate requirement in disciplinary proceedings to show alleged improper conduct would bring profession into disrepute,Refusal to return client's documents under mistaken but genuine belief that they were under duty of disclosure,Whether amounting to improper conduct,Administrative Law,Accountants,Professions,Appeal in High Court against decision of Public Accountants Board,Section 34(1)(c) Accountants Act (Cap 2, 2001 Rev Ed),Disciplinary board

28 June 2004 Judgment reserved.

Woo Bih Li J:

Introduction

1 The appellants, Ling Uk Choon and Ling Ing Hea Grace, are a father and a daughter. They are certified public accountants and were and are practising under the name of Ling Uk Choon & Co (“the Firm”). Mr Ling served for not less than 29 and a half years with the then Singapore Income Tax Department (now known as the Inland Revenue Authority of Singapore or IRAS). He retired as a Senior Assessment Officer I in December 1983 and practised as a public accountant from December 1988. Ms Ling says that she has been a qualified practitioner for not less than seven and a half years (presumably from the date of their first joint affidavit of 22 December 2003). Arising from what was perceived to be a complaint by their client Ryoma Steel Enterprise (S) Pte Ltd (“Ryoma”) to the Public Accountants Board (“the Board”) about the appellants’ refusal to return Ryoma’s documents to Ryoma, an inquiry committee (“the IC”) was constituted. Eventually, the IC concluded that the appellants were guilty of improper conduct which brought the profession of public accountancy into disrepute under s 34(1)(c) of the Accountants Act (Cap 2, 2001 Rev Ed) (“the Act”), and the IC reported accordingly to the Board. The Board accepted this conclusion and subsequently censured each of the appellants and ordered each of them to pay to the Board a sum of $6,281 being the costs and expenses incidental to the hearing held by the IC.

2 The appellants, being dissatisfied with the Board’s decision, have appealed to the High Court pursuant to s 36 of the Act.

Background

3 On 22 December 1997, Ryoma appointed the Firm as its auditors and Singapore tax agents.

4 However, it was only on 28 May 1999 that Ryoma furnished its set of accounts and related documents (collectively referred to as “the documents”) for the period 31 October 1997 to 31 December 1998.

5 On 25 June 1999, after the appellants had started work, Ryoma requested the return of the documents for a goods and services tax inspection. This was done and the documents were collected by Ryoma in early July 1999.

6 Subsequently Ryoma returned a set of documents to the Firm. In the process of carrying out their work, the appellants were surprised to note that the returned set of accounts were very different from the initial set received. The appellants asked Ryoma to clarify the differences. The appellants also listed out irregularities for Ryoma’s explanation. It is not clear from the appellants’ first joint affidavit whether the irregularities were the same as the differences they had mentioned or in addition to them, and it is also not clear to me as to when the list was provided to Ryoma. I will assume that the differences and irregularities referred to are the same. As for the list of irregularities, it was probably provided to Ryoma in 1999 or early 2000.

7 The appellants say that on or about 5 April 2000, one Grace Chong, an employee of Ryoma, called them to discuss the irregularities. In the course of the discussion, she requested the appellants to close their eyes to the irregularities but they did not agree.

8 On or about 19 May 2000, Ryoma requested the appellants to assist it in making voluntary disclosures to the relevant authorities in view of the irregularities. At the same time, Ryoma also engaged Luck Management Services (“Luck Management”) to help to reconstruct its accounts. Luck Management shares the same office address as the Firm.

9 The appellants say that even after they were asked to help in making the voluntary disclosures and the services of Luck Management had been engaged, Ryoma was still not forthcoming in its explanation. The appellants also say that they repeatedly stressed to Ryoma that if it persisted in not explaining the irregularities, they would have no choice but to disclose the same to the relevant authorities. The result was that Ryoma’s accounts could not be constructed and the appellants could not complete their work.

10 By a letter dated 9 March 2001, Ryoma’s solicitors, M/s Moey & Yuen, wrote to the Firm. The letter stated:

1. We act for Ryoma Steel Enterprise (S) Pte Ltd.

2. We are instructed that you were instructed by our clients to prepare their audited accounts from 31 October 1997 but you have yet to produce the same inspite of the many reminders from our clients.

3. Your delay has caused our clients to be charged in Court for failure to submit their income tax returns.

4. TAKE NOTICE that our clients demand the return of all their documents from you and will be collecting the same at your office on Tuesday, 13 March 2001 at 3.00pm.

5. We reserve our clients’ rights in any event.

11 While it may be that this letter was unfair to the appellants because they were waiting for Ryoma’s explanation on the irregularities, there could be no denying that Ryoma wanted all their documents to be returned on 13 March 2001. I would add that a letter, also dated 9 March 2001 and in the same vein, was sent by Moey & Yuen to Luck Management.

12 However, the appellants refused to release the documents on 13 March 2001 as a result of which Moey & Yuen wrote another letter on that day addressed to both the Firm and Luck Management stating, inter alia:

1. We refer to the meeting at your office on 13 March 2001 where your Mr Ling and Grace Ling and our Michael Moey together with our clients, Ken Liew and Iris were present.

2. …

3. We further note that you have refused to release our clients’ documents to us or to our clients without giving us any reasons. Your explanation that “Your clients know why I cannot release the documents” is totally unacceptable.

4. Our clients had said that they have no knowledge of the reasons and yet you repeated that our clients knew.

5. In the circumstances, our clients have no alternative but to commence proceedings to recover the documents from you. Please let us know which firm of solicitors you are instructing to act for you within the next 3 days, that is, by close of business, Friday, 16 March 2001 failing which we will be serving the documents on you directly.

6. Our clients reserve all their rights against you.

13 Notwithstanding this letter of 13 March 2001, the appellants still refused to release the documents to Ryoma.

14 On 16 May 2001, Moey & Yuen apparently sent a letter to the Firm to terminate the Firm as Ryoma’s auditors. It appears that another letter dated 28 May 2001 was sent to the Firm to terminate the Firm’s appointment as Ryoma’s tax agent with immediate effect. A similar letter dated 28 May 2001 was also sent to terminate the services of Luck Management with immediate effect. According to the appellants, the two letters dated 28 May 2001 were found in an envelope addressed to the Firm bearing the postmark of 22 June 2001.

15 On 13 July 2001, Moey & Yuen sent yet another letter to the Firm noting that their services had been terminated with effect from 16 May 2001 and requiring the release of Ryoma’s documents on 16 July 2001. A similar letter was sent to Luck Management.

16 However, the appellants still refused to release the documents as a result of which Moey & Yuen wrote to the Board on 20 July 2001. In that letter, Moey & Yuen listed their correspondence to the Firm and said that Ryoma was facing summonses from the Registry of Companies and the IRAS for failing to file its annual and tax returns. They sought the assistance of the Board but the heading of their letter was “Complaint against Ling Uk Choon & Co/Luck Management Services”. The Board appears to have treated this letter as a complaint.

17 The Registrar of the Board then wrote to the appellants about the complaint and the appellants replied on 24 August 2001 with a long discourse setting out, inter alia, the irregularities in the accounts they had been faced with and mentioning their suspicion that Ryoma wanted a computer back to remove, destroy or alter evidence. The last few paragraphs of the reply stated that because of time constraints, the appellants were not in a position to give more information and emphasised that Ryoma’s complaints were not true.

18 The appellants say in their first joint affidavit before me that when they sent the reply dated 24 August 2001 to the Board, they had sought the Board’s guidance. Before that, the avenues available to them to seek guidance in their dilemma was sorely limited. The appellants also alleged that the Board did not see fit to offer any solution, and could have but did not tell the appellants to return all the documents to Ryoma. The Board was quite content to let them handle the dilemma themselves and, when it came to the crunch, the Board found the appellants’ conduct improper.

19 I am of the view that it is not open to the appellants to say that the avenues available to them to seek guidance were sorely limited. They could have and should have sought legal advice immediately, especially when Ryoma was using the services of Moey & Yuen to deal with the appellants’ refusal to release the documents. It is no excuse to suggest that they could not afford or wanted to save the cost of seeking such advice,[1] especially since they had apparently not attempted to find out how much such advice would cost at that time on that particular issue, which was not a complex issue.

20 Moreover, the terms of the appellants’ reply dated 24 August 2001 did not seek the Board’s guidance. I also doubt if it is the role of the Board to give such guidance in the face of a complaint. The appellants should have sought advice from solicitors immediately, as I have mentioned. Accordingly, the appellants’ remarks about the Board’s omission to give guidance and being content to let the appellants handle the dilemma themselves are unwarranted.

21 On 13 November 2001, Ryoma filed a writ of summons against the appellants in District Court Suit No 4465 of 2001 seeking, inter alia, the return of its documents. The appellants say they had no alternative...