(2004) 5 SAL Ann Rev
Legal Profession
409
18. LEGAL PROFESSION
TAN Yock Lin
BSc (London), Dip Econ Devt, BA, BCL (Oxford);
Professor, Faculty of Law, National University of Singapore.
Introduction
18.1
Professional misconduct occupied the foreground in the year under
review, with three reported cases. Two of them were underscored by a similar
concern: how to sentence an advocate and solicitor who is guilty of dishonest
conduct. The third raised a more difficult and intricate point: how to
sentence an advocate and solicitor whose conduct is not dishonest but who,
by allowing his duties to conflict, falls short of the required standards of
integrity and probity demanded of an advocate and solicitor. This case, like
another related and probably the most interesting of the cases reviewed here,
has highlighted the problems of common or multiple representation. These
are not new; time and again judges have warned advocates and solicitors of
the dangers of common or multiple representation and the profession has
also not been slow to promulgate ethical rules dealing in some detail with
them. Evidently, there is nevertheless no room for complacency. Another
group of cases drew attention to the way the business of legal practice is
organised and advanced. Readers will recall the reforms in 2000 which
introduced the law corporation as an alternative to the sole proprietorship
and the partnership: see Legal Profession Act (Cap 161, 2001 Rev Ed)
Part VIA. This liberalising move would appear to have been fairly smooth
and the conversion from an existing partnership to a law corporation fairly
straightforward. One case, however, is an illustration of an unfortunate
oversight in a conversion from partnership to law corporation. The liability
of a partner for the default of another was clarified in a second case and the
judgment may be seen as providing further incentive for converting to a law
corporation with limited liability or a limited liability partnership under the
Limited Liability Partnerships Act 2005 (No 5 of 2005). The decision here is
bound to be of wider interest since the reliance on the latest House of Lords
pronouncement on the vicarious liability of partners alters significantly the
way we had hitherto thought about these matters. Last but not least, only one
case on ad hoc admission was reported; it controversially pronounces a wider
scope for the doctrine of res judicata.
410
SAL Annual Review
(2004)
Ad hoc admission
18.2
To begin with, there has not been any doubt since Chan Sek Keong J
(as he then was) said so in Re Oliver David Keightley Rideal QC [1992] 2 SLR
400 at 402 that the tension between the nurture and development of the local
Bar on the one hand and a litigant’s freedom to choose his legal
representative on the other is what underlies the provisions on ad hoc
admissions (see also Re Flint Charles John Raffles QC [2001] 2 SLR 276). The
right to legal representation is a true right only in relation to local
representation; the litigant who wishes to be represented by foreign counsel
depends on a privilege accorded in the court’s discretion. The exercise of this
discretion is sometimes delicate as some cases reviewed in earlier years have
shown. But though not explicitly brought out in the cases hitherto, one
would have thought that for three reasons a decision made in the exercise of
the discretion under s 21 of the Legal Profession Act should be incapable of
producing res judicata. First, it is critically dependent on an examination of
the entire circumstances of the case and as the very exercise of the discretion
predicates that circumstances may change, the courts should be free to
appraise each case as it arises. This reason admittedly is not conclusive since
there may be an equal need for finality of judgment even where the
determination is discretionary in nature and not a determination of right.
However, and this is the second reason, the need for finality of judgment in
the case of applications for ad hoc admission is not compelling and may be
inappropriate. The applicant for ad hoc admission is not pitted against the
opposite party but against neutral parties such as the Law Society and the
Attorney-General. If the applicant succeeds in his application, res judicata is
irrelevant because the neutral parties have only standing to oppose an
application. There cannot and will not be a new application to void the order
of ad hoc admission. The question of res judicata is only potentially relevant
if the applicant fails in his application and seeks to repeat his application.
However, in that event, the application of the doctrine of res judicata is not
compelling because the applicant has only a limited period of time before the
trial begins in which to repeat his application. This constraint, apart from
abuse of process, acts as a curb on inordinate repeated applications on more
or less the same grounds. Third, the conditions of ad hoc admission
prescribed by s 21 are not framed and erected as a bar to be surmounted
before ad hoc admission is possible: see Re Lee Chu Ming Martin [2002]
4 SLR 929. Rather, repeated applications are apparently inherent in the
system of ad hoc admission which s 21 establishes because the provisions
recognise that although the first applicant has failed on the merits to be
admitted, another applicant may be meritorious where the first was not.
5 SAL Ann Rev 409
Legal Profession
411
18.3
In Re Lasry Lex QC [2004] 1 SLR 68, the only reported ad hoc
admission case last year, Choo Han Teck J, however, found an occasion to
apply the doctrine of res judicata. Nguyen was an Australian who had been
charged with drug trafficking which was and is punishable by a mandatory
death penalty upon conviction. An application had been made and rejected
by Tay Yong Kwong J for ad hoc admission in Originating Motion No 7 of
2003. Ad hoc admission for the purposes of representation in criminal
proceedings is specially circumscribed by s 21 which prescribes an additional
requirement that there must be special reason for the representation, without
any exception in the case of capital offences. But Tay J was apparently not
persuaded that the common requirements were met, let alone that there was
any special reason for granting the application: see Re Lasry Lex QC where
Choo J said at [1]:
There were no written grounds in respect of that decision, but Mr Lasry QC
deposed in his affidavit supporting this present application that the court
(Tay J) was of the view that what was to be done by him (Mr Lasry QC) “as
a member of the Australian team could be done in Australia and relayed to
[his Singapore counsel] to conduct the trial”.
To this may be added the comment that, in any case, the mere fact that the
client seeking foreign representation is a foreigner can hardly count as a
special reason for ad hoc representation. Perhaps conscious that the earlier
failed application could impede a second attempt at securing ad hoc
representation, the second application was cast in distinctly different terms. It
sought representation for a pre-trial argument that the mandatory death
penalty for drug trafficking in excess of prescribed quantities was void as
being a violation of international law. It was argued that the internationalist
nature of the arguments to be relied on was a special reason for ad hoc
admission. Choo J was quick to remark on the legitimacy and bona fides of
all concerned as he commended Lasry QC on his willingness to take up the
defence of Nguyen gratis. The learned judge also appreciated that Lasry QC
possessed the qualifications and experience for this task, but, applying the
doctrine of res judicata, denied or refused the application.
18.4
As authority for the proposition that the doctrine of res judicata
applies to an exercise of judicial discretion under s 21, Choo J’s judgment is
with respect not fully convincing (see the reasons mentioned in para 18.2
above). A closer reading, however, reveals that Choo J was primarily
addressing a point, known as the Henderson v Henderson estoppel (see (1843)
3 Hare 100; 67 ER 313), which had loosely and somewhat inaccurately in the
past been referred to as part of the doctrine of res judicata: see at [3] where
he said:
412
SAL Annual Review
(2004)
[R]es judicata, based on the principle of abuse of the court’s process, is a
doctrine of broader scope and application. It applies to matters that
properly belong to the earlier proceedings and could reasonably have been
raised there but were not.
Subsequent cases have convincingly demonstrated that the eponymous
estoppel, as Lord Millett explained in Johnson v Gore Wood & Co [2002]
2 AC 1 at 59, is “primarily an ancillary and salutary principle necessary to
protect the integrity” of the defences of res judicata and prevents them from
“being deliberately or inadvertently circumvented”. It is separate and distinct
from cause of action estoppel and issue estoppel, though seeking to protect
the same underlying public interest. It defies exact definition but “it can be
seen in conduct which involves unjust harassment of another party and
manifest unfairness to him or in conduct which, if allowed would bring the
process of the administration of justice into disrepute in the eyes of right
thinking members of society”: per Cooke J in Bim Kemi AB v Blackburn
Chemcials Ltd [2004] EWHC 166 (Comm) at [29]. Consistently with the
law’s refusal to make it rigid and doctrinal, a determination of abuse of
process is seen by Lord Bingham of Cornhill in Johnson v Gore Wood & Co (at
31) as “a broad, merits-based judgment which takes account of the public
and private interests involved and also takes account of all the facts of the
case”.
18.5
Re Lasry Lex QC, properly understood, was a case of abuse of
process because Choo J was essentially deciding that the justification for ad
hoc admission in the second application could and should have been raised at
the first application. According to the broad, merits-based approach, one
should not suppose that because a matter could have been raised in earlier
proceedings it should have been, so as to render the raising of it in later
proceedings necessarily abusive. See also Good Challenger Navegante SA v
Metalexportimport SA (The Good Challenger) [2004] 1 Lloyd’s Rep 67. Why
then was the second application an abuse of process? There were probably
three decisive factors in his Honour’s mind; namely, that Mr Lasry QC was
the applicant in relation to the first application for ad hoc admission and
therefore could have relied then on the constitutional arguments, and that
the arguments impugning the constitutionality of the mandatory death
penalty could in any case be raised at trial, and could then be made through
written submissions. With respect, these factors only have the effect that the
second application judged on its merits should fail but there must surely be
something more, either an adverse effect on the administration of justice or
harassment of some party, usually the defendant, before the second
application can properly be castigated as abusive. In the present view,
5 SAL Ann Rev 409
Legal Profession
413
without an investigation as to whether the applicant had a reasonable excuse
for not raising the constitutional issues in the first application, it is hard to
see how a court could reach any convincing judgment as to whether the
second application constituted harassment of the defendant and therefore
was an abuse of process. For the sake of completeness, we should note that
on the question of whether the merits-based judgment should be approached
in one step or two steps, there are two schools of thought. The first is more
precise about particular types of conduct which it stigmatises as abusive.
However, it allows that there is an “exception to the principle in ‘special
circumstances’ or ‘special cases’, both of which are to be distinguished from
matters which could have been brought forward but were not, whether from
negligence, inadvertence or accident”. The second asks “whether in all the
circumstances a party’s conduct is an abuse” rather than asking “whether the
conduct is an abuse and then, if it is, to ask whether the abuse is excused or
justified by special circumstances”.
Conflict of interests
18.6
In last year’s review, tangential reference was made to the “conflict of
interests” which arises when a solicitor acts as a common solicitor for a
lender and surety and the borrower and surety are husband and wife. The
case of Standard Chartered Bank v Uniden Systems (S) Pte Ltd [2003] 2 SLR
385 (“Standard Chartered Bank”) was being reviewed and the question of the
enforceability of the lender’s rights against the surety, which was raised,
called for the application of the principles laid down in Royal Bank of
Scotland Plc v Etridge (No 2) [2002] 2 AC 773 (“Royal Bank of Scotland”).
Readers will recall that the English House of Lords case held that it was not
sufficient in a case of this kind for a bank to know that a solicitor had been
retained to act for the surety. Such bank was put on inquiry as to the
possibility that the surety had been unduly influenced and “must take further
steps to satisfy [itself] that the solicitor has been instructed to give
independent advice on the transaction to the wife”: see at [54]–[56], [80] per
Lord Nicholls of Birkenhead. Lord Scott of Foscote (at [171]) also made it
clear that the lender must require “confirmation that the solicitor’s
instructions do extend to advising her about the nature and effect of the
transaction”. Subject to that confirmation the lender was entitled to believe
that the solicitor would have advised adequately. The importance of
confirmation was not less when the solicitor was acting for the lender and the
surety was unrepresented; without that confirmation, the lender was likewise
not justified in assuming that the solicitor had complied with its instructions
to advise the wife about the nature and effect of the transaction.
414
SAL Annual Review
(2004)
18.7
The tangential reference was made in connection with the remarks
of Lai Siu Chiu J in Standard Chartered Bank at [65], namely that:
Given the remarks by Lord Nicholls in the Royal Bank of Scotland case (at
[59] supra), there can be little doubt that a solicitor who acts for both
mortgagor and mortgagee in such loan transactions [is] in a conflict of
interest situation, despite [the solicitor’s] disagreement to the contrary ...
and, notwithstanding that it is a common (albeit not commendable)
practice in Singapore.
These findings have a clear implication. If a bank is fixed with constructive
notice of undue influence when it fails to instruct its own solicitor and
obtain confirmation from him that the surety understands the consequences
of possibly signing away her property rights, this must be even more true
where there is a common representation of bank and surety with the
possibility of conflict of interests between them “to impel him to one side or
the other”. In such circumstances, the bank can assume even less that the
solicitor has done his duty. However, if the bank has clearly required and
obtains a confirmation from the common solicitor that he has done his duty
to the surety by advising her on the terms and conditions of the security she
is furnishing, it will be entitled to enforce it, notwithstanding that the
solicitor has given it an inaccurate confirmation. The only certain
proposition is of course that the lender must have done what is reasonable in
all the circumstances (see also National Westminster Bank plc v Amin [2002]
1 FLR 735). This is really saying that where the bank has instructed its
solicitor to perform his duty to the other side, it would have done all that was
reasonable in all the circumstances. In such cases, the surety must seek
redress entirely from the solicitor who in fact fails to discharge his duty to the
surety (see Hilton v Barker Booth & Eastwood [2005] 1 All ER 651). An
equally important point worth highlighting is that actual conflict of duty and
duty is not inevitable unless the bank has instructed the common solicitor to
prefer its interest or the common solicitor chooses in fact to do so, in
defiance of instructions to the contrary.
18.8
Apparently, the common, albeit not commendable, practice of
common representation persists and in the year under review, two cases
came before the courts in more problematic circumstances where
irreconcilable duties seemed inevitable. They require some preliminary
observations. First, the terminology of conflict of interests is still employed to
refer indiscriminately to conflict of duty and personal interest and conflict of
duty and duty. The difficulty then is that one does not know certainly
whether one or both categories is or are contemplated in the usage. Another
way of putting the point is there are in reality two distinct questions, tested in
5 SAL Ann Rev 409
Legal Profession
415
different ways, which do not always appear to have been well distinguished.
The duty to avoid conflict of duty and duty (sometimes referred to as the
duty of undivided loyalty) arises on an actual clash of duties to two clients.
What produces the clash is no doubt the diversity of interests of the clients to
whom duties are owed. But the juridical basis of liability is not the diversity
of interests but the fact that when a solicitor has conflicting duties to two
clients, he, as Lord Walker of Gestingthorpe said in Hilton v Barker Booth &
Eastwood at [44]: “may not prefer one to another … [but] must perform
both as best he can ... [even though this] may involve performing one duty to
the letter of the obligation, and paying compensation for his failure to
perform the other” (see also Prince Jefri Bolkiah v KPMG [1999] 2 AC 222).
However, the duty to avoid conflict of personal interest and duty (sometimes
referred to as the no conflict duty) arises as soon as there is a real and
sensible conflict, and not only when there is an actual conflict: see Dayco
Products Singapore Pte Ltd v Ong Cheng Aik [2004] 4 SLR 318 and also
Queensland Mines v Hudson (1978) 3 ACLR 176. The rule evidently is stricter
for the simple reason that for protective and prophylactic reasons, duty must
always be preferred above personal interest, even when personal interest and
duty are only potentially in conflict; as Lord Walker also alluded to in Hilton
v Barker Booth & Eastwood when he said at [44]:
[This fact that the solicitor with irreconcilable duties cannot prefer either]
distinguishes the case of two irreconcilable duties from a conflict of duty
and personal interest (where the solicitor is bound to prefer his duty to his
own interest).
18.9
Considered generally, the determination of conflict of duty and duty
does not lend itself to easy solutions. The reason is that there are several
complications. First is the fact that speaking generally, the duty may be
modified or excluded, expressly or impliedly. In some trades where by
custom the fiduciary necessarily acts for several principals, there is an
implied term that any so-called duty of undivided loyalty is necessarily
qualified: see Kelly v Cooper [1933] AC 205. As implication of this kind is
impossible in the case of multiple legal representation (see Hilton v Barker
Booth & Eastwood), it will be necessary to scrutinise the circumstances
carefully to ascertain the precise nature of the duty which is undertaken,
bearing in mind the possibility of express modification or exclusion of the
duty of undivided loyalty. Second, it does not follow that an express
modification or exclusion must invariably be upheld. If there is actual
conflict of duties at the onset of the multiple representation, the solicitor will
owe a pre-existing fiduciary duty to advise his intended client that he cannot
act for him and that he should seek independent legal advice, if nothing else,
at least concerning the question of whether the intended client should agree
416
SAL Annual Review
(2004)
to any proposed modification or exclusion of duty: see Hilton v Barker Booth
& Eastwood. The extraction of such modification or exclusion of duty
without more would then itself be a breach of fiduciary duty. Third, this
scrutiny must be an ongoing exercise. Even if the solicitor has obtained
express consent to a modification or exclusion of his duty to his clients, the
solicitor cannot expect that his duty of undivided loyalty is modified or
excluded for all time. New actual conflicts, not within the purview of his
client’s consent, may develop as the representation progresses and the
solicitor’s duty of undivided loyalty will arise afresh in relation to these new
conflicts. Fourth, although it may be doubtful whether this is also a legal duty
encompassed within the solicitor’s duty of undivided loyalty, there is
certainly an ethical duty prescribed by r 28 of the Legal Profession
(Professional Conduct) Rules, Legal Profession Act (Cap 161, R 1, 2000 Rev
Ed) in these terms:
When accepting instructions to act for more than one party in any
commercial or conveyancing transaction where a diversity of interests exists
between the parties, an advocate and solicitor shall advise each party of the
potential conflict of interests and of the advocate and solicitor’s duty if such
conflict arises. [emphasis added]
This ethical duty arises in connection with commercial or conveyancing
transactions and requires the solicitor to anticipate irreconcilable duties and
warn his clients about the possible consequences should conflicts materialise.
18.10 The complexities just indicated explain why courts repeatedly warn
against common representation, although they rightly acknowledge there is
no prohibition, save in rare instances, an example of which is the statutory
prohibition against acting for both a developer and purchaser in the same
housing development until a certificate of fitness for occupation has been
issued: see s 79 of the Legal Profession Act.
18.11 Another complication, of a different nature, stems from divisions in
the source of liability. Not infrequently in the local case law, the law of
negligence apparently is invoked rather than the law of fiduciary duties for
the redress of a client who has suffered loss as a result of the common
representation. This is not remarkable in a sense since concurrence of
liability is tolerated in our jurisprudence. The two analyses of tortious and
fiduciary liability, however, will not end up giving much the same result in all
cases. The gravamen of the complaint when the law of negligence is relied on
is that the solicitor has been careless to apprehend that his duties to his
clients are in conflict and therefore has carelessly omitted to decline to act
and advise the seeking of independent legal advice. Where, however, there is
5 SAL Ann Rev 409
Legal Profession
417
conscious and deliberate neglect of a fiduciary duty, negligence is by
definition irrelevant and only a claim based on breach of fiduciary duty can
be entertained. That claim, of course, can be brought regardless of the
manner in which the breach has occurred since the duty of undivided loyalty
is strict and a breach results in liability whether the irreconcilable conflict is
caused by carelessness or is deliberate. To complicate matters, there is a
further possible analysis. So far as common legal representation is concerned,
once a retainer comes into being, the duty to pursue the best interests of both
clients will be both fiduciary and contractual. It follows that a client can also
in the alternative claim damages for breach of contract if the solicitor has
failed to act in the client’s best interests. In Hilton v Barker Booth & Eastwood
(supra para 18.7), the respondents acted for both the plaintiff developer and
a certain B when they knew that B was an undischarged bankrupt and a
convicted person. They should have at the outset declined to act for the
plaintiff but they did not and thus failed in their fiduciary duty to advise him
to seek independent legal advice. After the contract of retainer was made, the
respondents found themselves under two irreconcilable duties. One of these
was the duty to the plaintiff to disclose the fact that B was an undischarged
bankrupt and convicted person. The other was the duty to B to keep the
material information confidential. The respondents failed to do their duty to
the plaintiff and what is interesting and important is that the House of Lords
upheld the plaintiff ’s claim for damages for breach of contract. Why then
invoke the less favourable law of negligence which requires more proof from
the plaintiff when the victim of common representation has recourse to the
law of fiduciary duties as well as the law of contract? This mystery has not
always been revealed in the local case law.
18.12 The first of the two cases reported in the year under review, namely
Lie Hendri Rusli v Wong Tan & Molly Lim [2004] 4 SLR 594 bears testimony
to this.
18.13 The plaintiff was a proven businessman who carried on business
under the auspices of a company which distributed electronic goods,
obtaining a considerable quantity of his supplies from the Alps Group (“the
Group”), including Alps Investment Pte Ltd (“Alps”). On very close terms
with the directors of the Group, he was undoubtedly no stranger to the scale
of its operations. In November 1999, the plaintiff was under strong pressure
to settle the plaintiff ’s company’s debt to the Group as it had exceeded its
credit line by about four-fold. Bowing to pressure, he accepted an unusual
arrangement initiated by an officer of the Group. The arrangement required
the plaintiff to mortgage his apartment to Malayan Banking Berhad (“MB”)
for Alps’ benefit. In return, the plaintiff ’s company would have access to a
418
SAL Annual Review
(2004)
higher credit limit using Alps’ letter of credit arrangements and its debts to
the Group would be dealt with benignly. The facts do not show why the
Group should consider such an indirect security arrangement an advantage
for the Group. But obviously the plaintiff felt the offer too good to miss; he
might have supposed that the risk of Alps or the Group defaulting in its
obligations to the bank was negligible. The plaintiff also agreed with a
suggestion of the Group that he should engage the defendant firm of
solicitors to act for him. In fact, as the arrangement involved a restructured
facility arrangement between Alps and the bank, an agreement between Alps
and the plaintiff ’s company and a mortgage between the plaintiff ’s company
and the bank, it had seemed convenient to Alps that the defendant firm
should act as common solicitor to all parties. In the result, in relation to the
necessary legal documentation, the defendant firm became common solicitor
to all three parties. TYP was the senior conveyancing partner in the
defendant firm who prepared the necessary mortgage documents which
contained an “all moneys clause”, making the plaintiff personally liable for all
facilities extended by MB to Alps. Subsequently, the clause was enforced
when the Alps Group ran into financial difficulties and the plaintiff was
obliged to pay $500,000 to the bank. The plaintiff thereafter commenced
proceedings to recover his loss from the defendant firm.
18.14 Framing his case in negligence, the plaintiff claimed that the
defendant solicitors breached their duty of care in failing to advise him on
the consequences of the “all moneys clause”. He maintained in the alternative
that if TYP did advise him, TYP had not done it with due care as the plaintiff
had not understood his explanation. The judge rejected both contentions,
preferring the testimony of TYP to the contrary, which was corroborated,
and thinking it significant that the plaintiff as a seasoned businessman had
not seen fit to ask any questions or communicate any concerns to TYP prior
to and after signing the documents. One should note that of course, this fact
could not be conclusive of liability in negligence. Although the plaintiff did
not ask any questions nor communicate any concerns to TYP, it was up to
and for TYP to anticipate and to forestall and to clear any misunderstanding
that might arise in the minds of reasonable commercial people in the
plaintiff ’s position. Failure in this respect could equally lead to a finding of
negligence. Fortunately perhaps, the “all moneys clause” was a common
clause in the Singapore banking practice so that there was nothing for TYP to
forestall or clear, beyond explaining the general purport of the clause.
18.15 To be sure, there was little discussion in the judgment about whether
the duty of care had been modified or relaxed. But this was simply because
although the plaintiff knew that TYP was also acting for Alps, he was in the
5 SAL Ann Rev 409
Legal Profession
419
dark about TYP’s representation of the bank. If the plaintiff never knew
about the other representation, he could not have agreed to any modification
or relaxation of the duty of care owed to him on account of the common
representation.
18.16 The point worth highlighting in this review is that the failure to
disclose that the solicitors were also acting for the bank was not made an
argument of breach of fiduciary duty. When he was deprived of his principal
submission in negligence, the plaintiff merely pointed to the failure to
disclose the identity of the lender as “a further indicium of negligence”.
V K Rajah JC (as he then was) was unimpressed by this submission, saying
(at [68]) that TYP “did not allow his representation of MB to affect or inhibit
his conduct of the matter vis-à-vis the plaintiff ”. As his Honour had indicated
earlier (ibid), the failure to disclose the identity of the lender as a client was
not “a material omission”, as the plaintiff “would have forged ahead with the
transaction regardless”. These later remarks appear to be saying that the
plaintiff would have agreed to the common representation in any case and
therefore would have suffered the loss in question even if disclosure had been
made. With respect, the allusion to causation is unfortunate and the judge
should be taken as saying that the non-disclosure did not affect the discharge
of duty because the advice which TYP provided was exactly what a
reasonable solicitor acting exclusively for the plaintiff would have provided.
18.17 However, Rajah JC was not, despite the confinement in the pleadings
to negligence, insensitive to the possibility of an alternative characterisation
of the case in terms of breach of fiduciary duty to disclose that the
defendants were also acting for the bank. The English Court of Appeal in
Item Software (UK) Ltd v Fassihi [2004] EWCA 1244; [2004] IRLR 928 at [41]
now prefers to subsume the duty of disclosure under the duty of good faith
because to hold that “a fiduciary owes a separate and independent duty to
disclose his own misconduct to his principal or more generally information
of relevance and concern to it ... would lead to a proliferation of duties and
arguments about their breadth”. If that were so, could the plaintiff in the case
under review have maintained that the solicitor did not act in what he in
good faith considered to be the best interests of the plaintiff because he did
not disclose the information that he was also acting for MB?
18.18 There was every indication that this question could have been raised
as a serious question on the merits. Thus, Rajah JC, after referring to r 28 of
the Professional Conduct Rules, added this at [59]:
In cases of multiple representations, solicitors ought to candidly disclose at
the outset to all their clients precisely whom they are acting for. There are at
420
SAL Annual Review
(2004)
least a few reasons for this. First, it is implicit in every retainer that there is a
duty to act in the client’s best interests and to disclose all material facts; see
r 28 of the Professional Conduct Rules … The act of multiple
representations is a material fact and should therefore be duly disclosed.
Secondly, the client’s knowledge and agreement to the multiple
representations will amount to implied, if not express, consent to the
arrangement. This could debilitate subsequent claims of conflict of
interests. Thirdly, in instances where issues of confidentiality of information
may be relevant, the solicitor has a concurrent fiduciary duty to place on
the table all material facts.
Even more clearly, at [60] he said:
The omission to disclose the fact of multiple representations could result in
a spectrum of diverse consequences. It could be characterised as a breach of
fiduciary duty and/or negligence or a mere oversight that has no legal
significance. The factual matrix will be decisive. The reason for the
solicitor’s omission will also be relevant in each case. An intentional
omission is hardly ever likely to be viewed charitably.
18.19 In the present view, the remarks at [60], which appear to
contemplate that an omission to disclose the fact of multiple representations
may be a mere oversight that has no legal significance as opposed to a breach
of fiduciary duty, merit serious reconsideration. Such omission on any view
can only be a breach of fiduciary duty and any loss occasioned by it will be
compensable in equity. Moreover, in such cases where the defendant argues
that disclosure would have made no difference, the rule in Brickenden v
London Loan & Savings Co [1934] 3 DLR 465 (“Brickenden”) will be relevant.
It states that where a fiduciary commits a breach of duty by non-disclosure of
material facts which his constituent is entitled to know, the fact that the
performance of the duty of disclosure would have made no difference to the
result is irrelevant. In Brickenden, Biggs and his wife, who had already
mortgaged their property thrice to the solicitor acting for a loan company,
wanted to secure a further advance from the loan company on mortgage. The
solicitor spoke to the loan company on behalf of the Biggs and acted as
common solicitor to the mortgagor and mortgagee. He made disclosure of
only one of his three mortgages. It was held by the Privy Council affirming
the Supreme Court of Canada that when a solicitor breaches his duty to
disclose material facts he cannot be heard to say that it would have made no
difference if he had disclosed. Speculation as to what course would have been
taken by the client (here the mortgagee) had disclosure been made is idle. In
other words, since Rajah JC accepted that the fact of representation of the
bank was material and should have been disclosed, liability would follow
under the Brickenden rule which makes it irrelevant to argue that the plaintiff
5 SAL Ann Rev 409
Legal Profession
421
would still have gone ahead with the representation if disclosure had been
made. But that rule has come under attack: see also Kirby J in Maguire v
MaKaronis (1997) 188 CLR 449 resisting challenges to drop the rule. The
clarification of the remarks at [60] as well as of the status of the Brickenden
rule in Singapore is urgent apart from a consideration by the Law Society, as
advocated by Rajah JC, as to whether “[i]n the interests of the profession and
the public, ... clearer policies and rules ought to be formulated in
approaching issues of conflicts of interests especially in conveyancing and
loan transactions”: at [57].
18.20 If the decision in Lie Hendri Rusli v Wong Tan & Molly Lim kept the
ethical strictures under low profile, the question in Law Society of Singapore v
Subbiah Pillai [2004] 2 SLR 447 (“Subbiah Pillai’s case”), the second case
under review, clearly focused on the ethical perspective of what was
essentially a similar problem of common representation. This ethical
perspective requires a general observation. A profession may choose, rightly,
to impose ethical strictures with respect to acts which are already legally
significant and thereby impress a legal duty with the character of an ethical
duty as well. When this happens the legal duty has not altered but there is
superadded an ethical duty protected by disciplinary laws. The intersection
between law and ethics is commonly defined by exact correspondence
between legal and ethical duties or by supererogation of ethical duties, and
only very rarely by an understatement of ethical duties. Where there is
supererogation of ethical duties, a professional may breach an ethical duty
which is made more exacting and scrupulous than the legal duty without
breaching the legal duty.
18.21 In the case of the duty of undivided loyalty, the Court of Three
Judges in Subbiah Pillai’s case would appear to have pronounced for exact
correspondence between the legal and ethical duties, for it said at [17],
referring to Moody v Cox and Hatt [1917] 2 Ch 71 and Clark Boyce v Mouat
[1994] 1 AC 428, that “[t]hese [legal] principles have since been encapsulated
in rr 25 to 28 of the Legal Profession (Professional Conduct) Rules” (but see
para 18.9 above of this chapter commenting on r 28).
18.22 That being the case, if the respondent was in breach of his legal duty,
he would be in breach of his ethical duty. The respondent was charged with
breach of ethical duty in a series of sale and purchase transactions and thus,
the charges would hold if he was guilty of breach of legal duty. Was the
respondent then in breach of legal duty? The court answered this in the
affirmative. By way of background, he had acted for the buyer (Chainthiran)
and financier in the purchase on mortgage of a certain shophouse but there
422
SAL Annual Review
(2004)
would be nothing wrong about this common representation. As was
recognised in Lie Hendri Rusli v Wong Tan & Molly Lim, mortgagors and
mortgagees are not necessarily opposed in interest and ordinarily, this
common representation is acceptable. However, when the mortgagor
defaulted and was unable to service the mortgage, a sale to the respondent’s
sister, Vasanthi, was proposed. The respondent then acted for both the
mortgagor/seller and the new buyer. This was a breach of the duty of
undivided loyalty since the interests of a seller and a buyer are prima facie in
opposition. In such circumstances, a solicitor is disqualified from acting for
both because of the “inescapable conflict of interest which is inherent in the
situation”: see Lord Millett in Prince Jefri Bolkiah v KPMG (supra para 18.8)
at 235. Third, in connection with the sale of the property to his sister, the
respondent assumed the position of guarantor, guaranteeing payment if his
sister should be unable to pay out the mortgagee. The solicitor thus
compounded his breach of the rule against divided loyalty by adding to it a
breach of the “no conflict” rule. (The disciplinary committee described this
as an unusual, and impliedly an aggravating, feature of the case against the
respondent.)
18.23 In spite of its impeccable reasoning, the judgment is curious in one
respect. Before the Court of Three Judges, the respondent canvassed the
argument that “the complainants had known all along that Vasanthi was his
sister and further, that the respondent’s duty to advance the complainants’
interests was never affected by Vasanthi’s interests”. However, the
respondent’s contention that the respondent had not injured the seller’s
interests was somewhat extravagant. As the court pointed out, certain
provisions of the sale and purchase agreement were decidedly adverse to the
seller and favourable to the buyer. The court also dismissed the argument
based on consent, saying at [20]:
Even if the complainants knew that Vasanthi was the respondent’s sister, the
onus was still on the respondent to point out any potential conflicts which
might arise and to advise them to obtain independent legal advice. He failed
signally in his duty to do so.
The reference to potential conflict in the remarks is curious because there
was at the outset of the common representation an actual conflict and not
just a potential conflict. It was evident that the sale and purchase transactions
with the respondent’s sister came about only because the Chainthirans fell
into financial straits and were unable to service their mortgage loan. In these
circumstances, a common solicitor for the seller and the buyer was bound to
be in conflict of duty and duty and there was a sufficient answer to counter
the respondent’s contention; namely, that the respondent had failed to
5 SAL Ann Rev 409
Legal Profession
423
provide advice with respect to the actual conflict of interests inherent in the
situation, let alone the risks of potential conflicts.
18.24 Subbiah Pillai’s case had the added feature that the respondent also
put himself in a conflict of personal interest and duty when he acted for both
seller and buyer and became a guarantor of the buyer’s obligations. Common
representation brings more fees for the solicitor but this fact can usually be
ignored as proof of personal interest unless there is proof that the solicitor is
chiefly interested in generating more income for himself. The problem was
that the respondent also acted as a guarantor to secure the performance of
obligations on the part of the buyer. He thereby placed himself in a real and
sensible conflict between his duty to protect the seller and his interest in
protecting himself and his sister. There was no “absence of any personal
interest to impel him to one side or the other”: see Spector v Ageda [1973]
Ch 30 at 47. In the present view, this added feature alone would justify the
rejection of the respondent’s contention that the complainants had known all
along about the common representation. See also Ohm Pacific Sdn Bhd v Ng
Hwee Cheng Doreen [1994] 2 SLR 576 where the “no conflict duty” could not
be discharged merely by showing that the principal was aware of the
fiduciary’s interest in a general sort of way.
Professional discipline
18.25 From the ethical perspective, the equiparation of legal and ethical
duty in Subbiah Pillai’s case (supra para 18.20) is a convenient one in
determining whether there is a wrong, but its convenience must not cause us
to lose sight of the basic reality that, so far as breach of fiduciary duty is
concerned, there is a wide gradation of breach between the honest and the
dishonest, careless and reckless. Two implications follow. First, this fact of
gradation must be a prime consideration in determining whether there is
professional misconduct. In Grahame v Attorney-General of Fiji [1936]
2 All ER 992, the solicitor in question had lent money to a third party (who
had an option) to assist him in purchasing property belonging to a trust of
which his firm were the solicitors. The third party exercised the option and
by an agreement with the third party, the solicitor agreed to purchase the
third party’s interest and to employ the third party as his commission agent
for the sub-division and sale of sub-divided portions of the land. The
solicitor had not solicited or initiated the provision of assistance but had
been sought out by the third party. As the land had greatly increased in value,
the solicitor stood to gain handsome profits from sub-dividing it and selling
the sub-divisions but he did not disclose the nature of his personal interest to
the vendors. The Privy Council held that nevertheless he had not been guilty
424
SAL Annual Review
(2004)
of professional misconduct when he assisted the third party to complete the
purchase to which the third party had become entitled by the exercise of the
option, chiefly because he had not solicited or initiated the provision of
assistance but had been sought out by the third party. This was in contrast
with what the solicitor did subsequently when the vendors, as mortgagees,
who had financed in part the purchase of land gave notice that they required
the mortgage to be discharged. In order to discharge the mortgage, the
solicitor used the moneys belonging to the Vollmer trust, of which he was the
managing trustee, and after transfer of the mortgage to himself as managing
trustee he agreed to third party mortgagor terms far less favourable than
those of the original mortgage. The solicitor committed a serious breach of
trust but the Privy Council made it plain that it did not follow that a serious
breach of trust was professional misconduct. The serious breach of trust in
that case amounted to professional misconduct chiefly because the solicitor
preferred his own interests to the detriment of the beneficiaries of the estate
of which he was trustee.
18.26 Second, the difference between dishonest and honest breach is
critical in meting out an appropriate sentence against the solicitor for breach
of fiduciary duty. The courts have on innumerable occasions been guided by
the principles stated in Bolton v Law Society [1994] 1 WLR 512 which
essentially involve asking three questions. The first is whether the advocate
and solicitor’s misconduct has been proved to be dishonest; if so, the public
should be protected from the advocate and solicitor by his removal from the
roll: see Law Society of Singapore v Ravindra Samuel [1999] 1 SLR 696; Law
Society of Singapore v Tham Yu Xian Rick [1999] 4 SLR 168. Second, if the
conduct is not dishonest, the next question is whether the advocate and
solicitor has nevertheless fallen short of the requisite standards of probity,
integrity and trustworthiness. Third, if yes, the next question is whether the
misconduct is such a falling short of the required standards of integrity,
probity and trustworthiness that the advocate and solicitor must be struck
off. Ordinarily, however, the normal course is suspension and only in a very
unusual and venial case would censure be appropriate. See Law Society of
Singapore v Arjan Chotrani Bisham [2001] 1 SLR 684; Law Society of
Singapore v Heng Guan Hong Geoffrey [2000] 1 SLR 361.
18.27 In the year under review, three unreported and three reported cases
involved the distinguishing feature of dishonesty. The unreported cases of
Law Society of Singapore v Yap Shao Sin Philip [2004] SGHC 252, Law Society
of Singapore v Sarjit Singh s/o Mehar Singh [2004] SGHC 51, and Law Society
of Singapore v Caines Colin [2004] SGHC 250 were straightforward. The
respondents pocketed client’s funds for themselves, were convicted of
5 SAL Ann Rev 409
Legal Profession
425
criminal breach of trust under s 406 of the Penal Code (Cap 224, 1985 Rev
Ed) and the Court of Three Judges, simply affirmed that the commission of a
crime of dishonesty in one’s capacity as advocate and solicitor was in itself
sufficient to constitute due cause and to warrant striking off the roll. These
were just some of “several cases last year involving solicitors in sole
proprietorships who had misappropriated their clients’ moneys” out of
desperation: per Yong Pung How CJ in Law Society of Singapore v Loh Wai
Mun Daniel [2004] 2 SLR 261 at [9].
18.28 The same could not be said of Law Society of Singapore v Loh Wai
Mun Daniel, a case reported in the year under review. Here the
misappropriations were fuelled by avarice as well as disregard of, and
possibly contempt for, the professional rules. Although described as “a typical
case of a solicitor who could not be trusted to keep his paws out of the honey
pot” (at [9]), the case was worse as it involved indiscriminate use of clients’
moneys; the respondent “sometimes using one client’s moneys to make
progress payments for other clients, and at other times using the moneys to
pay off his personal credit card debts” (at [3]). The consequence of the
respondent’s dishonesty seemed obvious. If solicitors who misappropriated
clients’ moneys in desperation were nevertheless struck off the roll, the
respondent acting out of avarice could not expect anything less. Although the
Court of Three Judges described the behaviour as “unconscionable”, it
appears that it was not using the term with the connotation that it has
acquired in the context of the law of knowing receipt, where it is
distinguished from and is less serious than dishonest conduct. The court was
making a point of reinforcement, that there was a need to send a strong
signal of deterrence, given the prevalence of such unconscionable behaviour,
“both to deter those who might seek to do the same, as well as to prevent the
good name of the profession from being tarnished by these recalcitrant few”
(at [9]). It was not saying that the respondent was guilty of unconscionable
conduct which fell short of dishonest conduct. If anything, it was suggesting
that the dishonesty of the respondent was more serious. Paradoxically,
however, as striking off is the ultimate punishment, the remarks that the
award of striking off is reinforced add little of practical significance to the
immediate punishment. A solicitor who acts out of avarice will receive
exactly the same sanction as a solicitor who acts out of desperation. In the
present author’s view, however, the significance of the remarks is that the
respondent will find it more difficult to obtain restoration to the roll
compared with a solicitor who has been struck off for dishonest conduct
which is less serious: see Re Nirmal Singh s/o Fauja Singh [2001] 3 SLR 608,
discussed in “Legal Profession” (2001) 2 SAL Ann Rev 338 at para 18.41ff.
426
SAL Annual Review
(2004)
18.29 The second reported case, Law Society of Singapore v Ezekiel Caleb
Charles James [2004] 2 SLR 256, made another valuable contribution. The
respondent negligently settled a suit in excess of the mandate granted to him
by his client and then made unauthorised withdrawals from the firm’s
omnibus clients’ account to cover up his negligence. He was subsequently
charged and convicted under s 406 of the Penal Code. The Court of Three
Judges appreciated that the respondent did not set out at the outset of the
retainer to defraud his clients and that his folly derived mainly from his
negligence in settling a suit without mandate. However, while his act of
negligence alone would not have warranted striking him off the roll, his
subsequent actions in attempting to conceal his mistake smacked of
dishonesty. He subsequently made full restitution of the moneys taken but
though he did not stand to benefit financially from his actions, this to the
court did not alter the fact that he gravely jeopardised the interests of his
clients in his attempt to save his own skin.
18.30 The case indicates that dishonesty does not predicate actual harm to
the client. There was in the end no actual harm to his other clients whose
moneys he had misappropriated because the respondent made full
restitution of all that he had misappropriated. But until full restitution was
made there was loss to his clients, which could also have been irrecoverable if
certain contingencies had materialised. It was therefore sufficient in that case
that the respondent created a real risk of harm to his clients for the sake of
personal interest. Moreover, if this is not already obvious, the case further
indicates that dishonesty does not predicate making false representations.
Any such requirement would miss the point that a solicitor is a fiduciary and
bound to act in his client’s interests, subjugating his own where they are in
conflict. In this connection, the mere fact that the motive was to save his own
skin sufficiently indicated that the respondent subjugated other clients’
interests to his own instead and that he did this conscious that a fiduciary
should not, and an honest fiduciary would not, have done that. (It would of
course be no answer that the respondent did not set out initially to defraud
his clients since the fiduciary duties of a solicitor are of a continuing nature.)
18.31 Law Society of Singapore v Junaini bin Manin [2004] 4 SLR 539 was
the third reported case. The respondent embezzled a huge sum of money
from 12 of his clients over a period of seven years and “squandered most of it
on his extravagant ways” (at [27]). Not only did he not make restitution,
there was also no prospect of him making any restitution to his clients. On
such facts, an award of the ultimate penalty of striking off the roll was an
irresistible conclusion. What is interesting is that there were several
5 SAL Ann Rev 409
Legal Profession
427
suggestions in the judgment of the Court of Three Judges that dishonesty for
purposes of disciplinary proceedings is homogeneous. At [27] the court said:
Therefore, even if we were to draw distinctions between cases of dishonesty
in the discharge of functions as an advocate and solicitor, the respondent’s
case would have qualified for the “worst case scenario” category anyway.
The use of the subjunctive tense indicated that distinctions between cases of
dishonesty would be immaterial. Further, from the cases cited, it did not
appear to the court to matter whether the crimes of dishonesty were the less
serious offence under s 406 of the Penal Code (punishable by a maximum
term of imprisonment of three years or a fine or both) or the more serious
one under s 409 (punishable by imprisonment for life or for a term of up to
ten years, together with a fine). It also, of course, did not matter that the
actual imprisonment sentences meted out in similar cases differed
significantly in length reflecting the respective severity of the offences, the
amounts embezzled and the personal circumstances of the advocates and
solicitors in the cases in question. It is possible that the court’s comment that
“dishonesty committed in the capacity of an advocate and solicitor is
tantamount to professional suicide” (at [24]) could be hinting that
dishonesty in a non-professional capacity may be distinguished from
dishonesty in a professional capacity. But so far as dishonesty in a
professional capacity is concerned, the court will make no further distinction
between degrees of dishonesty in a professional capacity. In the present
author’s view, all this will not, however, preclude a court considering
restoration to the roll from attaching significance to degrees of dishonesty
(see also para 18.28 above of this chapter).
18.32 Where the conduct under scrutiny is not dishonest, although it falls
short of the requisite standards of probity, integrity and trustworthiness,
Subbiah Pillai’s case (supra para 18.20), discussed earlier, added a useful gloss.
According to settled principles, a case of falling short of the requisite
standards does not attract a pre-determined sanction but only such sanction
as is commensurate with or proportionate to the degree and character of the
deficiency. In this case, striking the respondent off the roll was not in order,
but a period of suspension was appropriate. In coming to its decision to
suspend the respondent for a period of three years, the court considered the
following factors. First, the complainant had suffered prejudice from the
respondent’s breach of duty. Second, the standards were well established,
unambiguous and of an elementary nature and yet the respondent had failed
to “adhere to elementary principles of professional conduct” (at [27]). Third,
the respondent had not only allowed a conflict of duties but had also a
conflict of interest and duty “where his loyalties must surely have been
428
SAL Annual Review
(2004)
inclined towards one party, Vasanthi” (ibid). Fourth, “[h]e then worsened this
by failing to document the oral agreements reached between the parties and
by failing to keep proper accounts” (ibid).
18.33 In such cases, the need to deter similar conduct is an important
consideration. It may combine with other relevant factors to produce a
difference between suspension and censure: see Law Society of Singapore v
Singham Dennis Mahendran [2001] 1 SLR 566. In serious cases, it may add to
the gravity of the deficiency in observance of the requisite standards to
produce a striking off. One could possibly explain Re Shan Rajagopal [1994]
3 SLR 524 in these terms. Strangely, however, there was no mention or
consideration of the need for deterrence in Subbiah Pillai’s case (supra
para 18.20). This could signify that there is no need for general deterrence in
cases of breach of fiduciary duty when the misconduct does not result in
personal profit for the respondent.
18.34 The presence of mitigation in such cases is another important
consideration since the breach of fiduciary duty may be serious or venial
depending on the circumstances. On this point, there was little mitigation
that the respondent in Subbiah Pillai’s case could muster in his favour. He
“argued that he did not bring any undue influence or pressure to bear on
either of the complainants or Chainthiran to enter into the transactions or
agree to the dual representation. He further highlighted the fact that there
was no element of self-dealing in the transaction” (at [19]). The court,
however, rightly considered these factors to be irrelevant to the charges. In
logic, there can be no mitigation in saying that other offences were not
committed when those committed are independent and in themselves attract
liability. The respondent also made a feeble attempt to offer his early plea of
guilt in mitigation. Aside from clarifying that early pleas have less
significance in disciplinary proceedings, the court added that it was here
undermined by the respondent’s attempts to qualify guilt during the
proceedings by casting aspersions on the complainants’ credibility and trying
to shift blame to other partners of his firm.
18.35 Incidentally, where a case involves an offender of proven dishonesty,
the weight to be attached to a plea in mitigation is negligible and a striking
off will be the consequence as a matter of course: Law Society of Singapore v
Tham Yu Xian Rick (supra para 18.26); Law Society of Singapore v Loh Wai
Mun Daniel (supra para 18.28). The settled position is that in cases of proven
dishonesty, mitigating factors do not tilt the balance towards the more
lenient sanctions of suspension or of censure except where they are
consistent with the objectives of preserving the good name of the legal
5 SAL Ann Rev 409
Legal Profession
429
profession and of the protection of the public: Law Society of Singapore v
Ezekiel Caleb Charles James (supra para 18.29); Re Knight Glenn Jeyasingam
[1994] 3 SLR 531. Incidentally also, Law Society of Singapore v Junaini bin
Manin (supra para 18.31) indicates that while mitigation is generally
irrelevant in cases of proven dishonesty, the court may reflect the presence of
strong mitigation by reducing the costs of disciplinary proceedings payable
by the respondent. (These costs are in the discretion of the court: see s 103(3)
of the Legal Profession Act.)
18.36 To revert to Subbiah Pillai’s case (supra para 18.20), it shows, in the
end, that an award of suspension can be based simply on a pronounced
degree of falling short of the requisite standards and that if there had been
mitigation, it would merely have altered the length of suspension rather than
the type of sanction meted out. One might speculate that if there had also
been a need to deter the type of misconduct of which the respondent was
guilty, the respondent would have been struck off.
Partner’s liability
18.37 Questions of partnership liability were raised in two cases. In Lim
Kok Koon v Tan Cheng Yew [2004] 3 SLR 111, the plaintiff sought the return
of moneys which he had entrusted to the defendant who was then a partner
in the defendant firm. The plaintiff, who was the managing director of a
company attempting a reverse take-over which had failed to secure approval,
sought legal advice from Tan Cheng Yew (“TCY”) as to how approval might
be achieved. TCY advised that the plaintiff should provide an undertaking of
$1m to satisfy the listing authorities of his bona fides. Acting on this advice,
the plaintiff transferred the sum to TCY who executed trust deeds to the
effect that he held the sum on trust for the plaintiff. Subsequently, although
the plaintiff inquired of TCY several times about a receipt, he was fobbed off
with the trust deed. TCY absconded with the money and the plaintiff
claimed that the defendant firm was vicariously liable for TCY’s breach of
trust.
18.38 The plaintiff ’s claim actually hid two strands of reasoning which
were not always clearly brought out in the judgment of the court. This is
because an entrustment can be made to the firm, the solicitor acting as agent
of the firm and receiving the moneys on behalf of the firm, or it can be made
to a partner as principal or acting on his own account as principal for whose
default in connection with the entrustment the firm is vicariously liable
under s 10 of the Partnership Act (Cap 391, 1994 Rev Ed). (Section 10 applies
to loss caused to a non-partner by “any wrongful act or omission” of a
430
SAL Annual Review
(2004)
partner “acting in the ordinary course” of his firm’s business.) The subtle
connection between these two situations complicates their separation and
identification. The same evidence of entrustment and holding out by the
firm may not infrequently be employed in order to determine whether it is a
case of the client dealing with the firm and looking to the firm directly for
the performance of the retainer or the client looking primarily to the partner
with whom he has contracted.
18.39 This is not just an exercise in technical merits. An entrustment to the
firm involves the agent bringing about a binding contractual relationship
between the client and all partners of the firm: see also Engelin Teh Practice
LLC v Wee Soon Kim Anthony [2004] 1 SLR 605, discussed below at
para 18.45ff. If the agent is also personally liable, the statutory vicarious
liability imposed by s 10 will additionally arise. But no one can stop the
plaintiff choosing to forego his rights under s 10 and insisting on making all
the partners primarily, as opposed to secondarily, liable: see also Meekins v
Henson [1964] 1 QB 472. An entrustment to a partner as principal followed
by a breach for which the firm is vicariously liable, however, involves a twostep demonstration; first, that the partner is personally liable and, second,
that the other partners are secondarily liable under s 10. If the first
requirement cannot be satisfied, the second necessarily fails.
18.40 In the case under review, the court found that the entrustment to
TCY was an entrustment to TCY as principal but would appear to have
conflated the two possibilities outlined earlier between an entrustment to the
firm and a personal entrustment to TCY. This can be seen when the court
used the phrase acting “on a frolic of his own” (at [42]) to describe the act of
TCY in receiving the plaintiff ’s moneys personally, when, as will be seen, the
phrase has in mind a case of personal entrustment for which the firm will
not be held vicariously liable. The real question was, given the finding that
TCY was entrusted as a principal, whether the partners of TCY were
secondarily liable for TCY’s default under s 10. (There may be exceptional
occasions when vicarious liability at common law will also arise but it was
not something that was considered in this case: see Lloyd v Grace, Smith & Co
[1912] AC 716.) On the question of the statutory vicarious liability, the court
adopted the rule laid down by the House of Lords in Dubai Aluminium Co
Ltd v Salaam [2003] 2 AC 407. It was therefore necessary to determine
whether what TCY did was within the ordinary scope of his authority as a
solicitor. The court held that TCY was not so acting, for three reasons. First,
it pointed to, and relied heavily on, the use of the personal pronoun in the
trust documents. Second, there was evidence that two of TCY’s partners were
specialised in the field of law on which advice was sought from TCY whereas
5 SAL Ann Rev 409
Legal Profession
431
TCY did “not do corporate work”. As has been pointed out, these reasons
merely went to show that TCY was entrusted as principal. They have no
relevance to the question whether what was done was within the ordinary
scope of his authority as a partner of the firm. Third, the court cited the
observations of Lord Millett in Dubai Aluminium Co Ltd v Salaam that it is
not ordinarily within the scope of a solicitor’s business to act as express
trustee. Lord Millett had described the nineteenth century as the heyday of
the family solicitor when he could expect to be appointed an executor and
trustee of his client’s will and settlement. However, private client business
now made up “a far smaller part of ” a solicitor’s work while “trusteeship too
[had] become more professional”: at [134]. His Lordship had concluded
(ibid) that: “If it was not part of the ordinary business of a solicitor to act as
an express trustee in 1857, I do not see how it can be part of it today.”
Therefore, indicated the court in the instant case, TCY could not have been
acting in the ordinary course of the firm’s business when he declared himself
an express trustee of the moneys of the plaintiff.
18.41 With respect, there is a vital assumption underlying Lord Millett’s
remarks which, if it had been kept firmly in mind, would have suggested an
immediate distinction in the case to be decided. Lord Millett was referring to
cases where the trust advice sought being the means, and the execution of the
trust being the end in view, are separate events. But the case to be decided
involved the creation of a trust in furtherance of, and for the purposes of,
obtaining approval from the listing authorities. TCY’s acting as an express
trustee was a means to an end, not an end in itself. If the end was within a
solicitor’s ordinary business and some other means not involving a trust had
been employed to achieve the end, it could not be suggested that TCY was
not acting in the ordinary course of business, a fortiori, when a trust was
created as a means to achieving an end within the ordinary business of a
solicitor.
18.42 A clear distinction then must be made between means and end.
Otherwise, it would be impossible to make sense of the distinction applied in
Dubai Aluminium Co Ltd v Salaam. In that case, the claimant company was
induced by fraud to pay a large sum of money under a bogus consultancy
agreement which was drafted by a senior partner of the defendant law firms
(successively). The fraud was perpetrated by the company’s fiduciary with the
assistance of the senior partner’s client. The company contended that the
firm was vicariously liable for the dishonest assistance which the senior
partner had rendered by drafting the bogus agreement as well as giving direct
advice and assistance to wrongdoers who had not been clients of the firms.
After the proceedings were settled, the question of the liability of the client
432
SAL Annual Review
(2004)
and other participants in the breach of fiduciary duty to contribute to the
defendant firms arose. On final appeal, the House of Lords held that
vicarious liability under s 10 would not be imposed unless all the acts or
omissions which were necessary to make the senior partner personally liable
had taken place in the course of the firms’ business or the course of his
employment. In determining whether they had so taken place, everything
depended on the closeness of the connection between the duties which, in
broad terms, the partner or employee was authorised to perform and his
wrongdoing. In the instant case, the drafting of the agreements had been acts
of assistance by the senior partner which, coupled with the alleged
dishonesty, had been sufficient in themselves to give rise to equitable liability
on his part. Those acts were so closely connected with the acts that he was
authorised to do that, for the purposes of the liability of the firms, they could
fairly and properly be regarded as done by him while acting in the ordinary
course of their business. It followed that, on the assumed factual basis, the
firms were vicariously liable for the senior partner’s alleged dishonest
assistance, and were therefore entitled to claim a contribution from the
participants.
18.43 Lord Millett pointed out in that case that the agreements which the
senior partner drafted were “the instrument of carrying out” the fraud. If the
senior partner had drawn the agreement honestly and for a proper purpose
there could not have been any dispute that his acts were done in the ordinary
course of business of the firm. His Lordship said at [130]:
By drawing them dishonestly for an improper purpose and for his own
benefit or the benefit of his confederates, the court might, on an overall
assessment of the evidence at trial, have concluded that [the senior partner]
had sufficiently departed from the ordinary course of the firm’s business to
defeat [the plaintiffs’] claim against [the firm]. He would have been
engaged “on a frolic of his own” and not “acting in his role as a partner in
the firm”. But such a conclusion would not have been inevitable; deliberate
and dishonest conduct committed by a partner for his own sole benefit is
legally capable of being in the ordinary course of the business of his firm.
18.44 Like the senior partner in Dubai Aluminium Co Ltd v Salaam, TCY
could be assumed to have been carrying on the firm’s ordinary business of
providing advice in connection with listing requirements, even though there
were other partners skilled and specialised to provide the advice which the
plaintiff was seeking. This assumption could be falsified by evidence that
TCY was determined at the onset of the consultation to deceive and cheat the
client of his money. However, such evidence was not forthcoming and quite
possibly, the intention to deceive and cheat was formed after the moneys
5 SAL Ann Rev 409
Legal Profession
433
were already held on trust. The conclusion seems inescapable. If the
deliberate and dishonest conduct committed for the senior partner’s own
benefit in Dubai Aluminium Co Ltd v Salaam was legally capable of being in
the ordinary course of business of the firm, a fortiori the deliberate and
dishonest conduct of TCY which developed in the course of his
representation of the plaintiff.
18.45 The second case, Engelin Teh Practice LLC v Wee Soon Kim Anthony
(supra para 18.39), was an illustration of an oversight when a firm of
partners dissolved and the former partners formed a law corporation in its
place. One of the peculiarities of the common law is its lack of a default law
of successorship. This makes it necessary whenever it is sought to continue a
business in another legal form to define with exact precision the transfer of
rights and responsibilities from the former entity to the successor. When the
partnership in the instant case was converted into a law corporation, the
firm’s representation of Mr Wee in his disputes with the UOB was still in
progress. However, the rights arising and duties assumed in connection with
this representation were not assigned or novated to the new law corporation.
As a result, despite the fact that the law corporation provided the legal
services which the old partnership would have been obliged to do had it not
been dissolved, it seemed clear that the new law corporation could not
enforce the rights which the partnership had against Mr Wee under an
agreed costs retainer.
18.46 In order to avoid the foregoing consequence, the plaintiffs had to
show that the contract of retainer had been made with Engelin Teh SC as
principal and not the firm and that they were entitled to enforce that
agreement as her legal representative. The plaintiffs ingeniously contended
that according to the provisions of the Legal Profession Act, an agreement as
to costs could be made only by a partner as a principal and not by a solicitor
as agent binding all partners of the firm. This contention was rejected. The
contention required the court (Judith Prakash J) to construe the provisions
concerned, which employed the word “solicitor” in the singular, strictly and
literally. There was no basis for this as the starting point in construction must
always be to construe the singular expression prima facie as including the
plural. Further, the law partnership was already the pre-eminent legal form
employed in the practice of law when these provisions were first enacted. If
the Legislature had intended to exclude the plural sense, and to make it
impossible for a costs agreement to come into being between a client and all
the partners, it would have stated this expressly. Still further, it was implicit in
the holding in Chamberlain v Boodle & King [1982] 1 WLR 1443, a leading
434
SAL Annual Review
(2004)
English case on the enforceability of an agreed costs retainer, that such an
agreement may indeed be made between all the partners and the client.
18.47 The plaintiffs also relied on certain factual arguments. As a matter of
fact, the plaintiffs contended the defendant had contracted with
Engelin Teh SC and not with the firm of partners as principal. With respect,
this contention was also correctly rejected. Although under an earlier
arrangement, Engelin Teh SC was engaged as principal to be counsel in
Mr Wee’s disputes with the UOB, the earlier arrangement was superseded
when the solicitor on record who was with another firm dropped out and a
solicitor with the firm in which Engelin Teh SC was partner took over as her
assistant.
18.48 Again, the plaintiffs attempted, somewhat feebly, to show that the
common intention of the parties was that upon dissolution of the
partnership, there would be a contract of retainer between Engelin Teh SC
and Mr Wee on the same terms as the earlier retainer. When the partnership
was dissolved, the defendant was informed in the following terms, “that as
part of the transfer of the business of the firm to ETP all his matters, all
documents and any moneys in the account with the firm would be
transferred to ETP upon or shortly after the incorporation of ETP unless
Mr Wee informed the firm of his objections to such transfer within 14 days
of receipt of the letter”. It was hard to suppose that when he accepted those
terms the defendant who was an experienced solicitor could have intended
anything other than he agreed to a retainer with the law corporation. If there
had been a purely personal retainer with Engelin Teh SC, the arrangements
mentioned above would have been superfluous and it would not be probable
that experienced solicitors should have wasted time and effort in addressing
superfluities.
18.49 The fact is that even if the agreement had been between the client
and Ms Teh, it would not have been acceptable for the law corporation to sue
as her representative since the two were separate legal persons and the law
corporation was neither the administrator of Ms Teh’s estate nor her trustee
in bankruptcy. The unfortunate result was that the plaintiffs found
themselves unable to enforce the costs agreement. They would not of course
be completely remediless since, having actually performed beneficial services
for the defendant, they would be entitled to restitution for quantum meruit.
5 SAL Ann Rev 409
Legal Profession
435
Taking attendance notes
18.50 To conclude this review, the decision of V K Rajah JC in Lie Hendri
Rusli v Wong Tan & Molly Lim (supra para 18.12) may be mentioned for his
Honour’s observations on taking attendance notes. These observations, in
the form of an admonition, recall the case of Standard Chartered Bank v
Uniden Systems (S) Pte Ltd (supra para 18.6) which was reviewed last year,
where the testimony of the solicitor in attendance, that she had explained the
nature and consequences of a charge to an intended surety, was rejected as
there were no attendance notes to serve as corroboration. As Rajah JC
indicated, the failure to produce attendance notes through failure to keep
them works against the solicitor; as against a client who denies that a thing
was done, the solicitor’s assertion that it was done may be disbelieved. He
said at [63]:
The solicitor will have to satisfy the court that his recollection of events is
case specific and not a convenient reconstruction of events. Given the
constant stream of matters that solicitors handle, the solicitor will have to
convincingly persuade the court that he is rendering an accurate
recollection of a particular discussion in a particular transaction, as
opposed to giving testimony reiterating his general practice.
This explanation is of course hard to square with the admissibility of proof
of habit elsewhere in the law of evidence as well as the provisions of s 116 of
the Evidence Act (Cap 97, 1997 Rev Ed). In the present author’s view, the
solicitor is denied proof that it was done from the fact that it was routinely
done because he is a fiduciary. It would in policy be inconsistent with his
character as a fiduciary to permit him to rely on anything less than specific
proof that an act touching the discharge of his fiduciary obligations was in
fact done. The importance of attendance notes should not be exaggerated.
They are not to be taken as conclusive evidence of what has been said or
unsaid. “Ingenious counsel should not invariably split hairs over the
adequacy of such notes” (at [64]).