H&C S Holdings Pte Ltd v Gabriel Law Corp

• Jurisdiction: Singapore
• Judge: George Wei J
• Judgment Date: 26 July 2018
• Neutral Citation: [2018] SGHC 168
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 931 of 2016
• Year: 2018
• Published date: 04 July 2019
• Hearing Date: 08 February 2018,04 April 2018
• Plaintiff Counsel: Vellayappan Balasubramaniyam and Davis Tan (Rajah & Tann Singapore LLP)
• Defendant Counsel: Peter Gabriel, Manoj Nandwani Prakash, Charmaine Jin Jing Xian and Lee Mei Zhen (Gabriel Law Corporation)
• Subject Matter: Legal profession,Remuneration,Bill of costs
• Citation: [2018] SGHC 168

George Wei J:

The applicant (“the Client”) seeks a declaration that six invoices issued to it by the respondent solicitors, Gabriel Law Corporation (“the Firm”), between 15 January 2014 and 28 September 2015 are not proper bills within the meaning of s 122 of the Legal Profession Act (Cap 161, 2009 Rev Ed) (“the LPA”), and that it is thus under no liability to pay them. Alternatively, the Client seeks an order that the six invoices issued by the Firm be referred to the Registrar for taxation.

The six invoices in dispute (collectively, “the Disputed Invoices”) are set out below:¹ An invoice, evidenced by an email from the Firm to the Client on 15 January 2014, for S$50,000 (“the 15 January Invoice”) and paid on 16 January 2014;² Invoice number 15, dated 8 May 2014, for S$54,113.20 (“Invoice 15”) and paid on 19 June 2014;³ Invoice number 39, dated 28 October 2014, for S$107,809.47 (“Invoice 39”) and paid on 24 November 2014;⁴ Invoice number 46, dated 5 January 2015, for S$100,000.00 (“Invoice 46) and paid on 13 February 2015;⁵ Invoice number 54, dated 19 March 2015, for S$107,535.00 (“Invoice 54”) and satisfied by deduction against deposit monies and by a cheque;⁶ and Invoice number 86, dated 28 September 2015, for S$321,000.00 (“Invoice 86”) and satisfied (i) by retention of S$300,000 from the proceeds of an arbitral award obtained by the Firm for the Client; and (ii) by set-off of S$21,000 against Client monies held by the Firm.⁷

Preliminarily, I note that there is a dispute over whether the 15 January Invoice is an invoice or a bill of costs that is capable of being taxed as such.⁸ The document that parties refer to is actually an email dated 15 January 2014 from the Firm to the Client. I will subsequently consider whether this email itself is in fact a bill of costs that is capable of being taxed. I only refer to this email as the 15 January “Invoice” for the sake of convenience.

It is also noted that of the Disputed Invoices, the first four were directly paid by cheques issued by the Client. The bulk of Invoice 54 and the whole of Invoice 86 was satisfied by the Firm making deductions from deposits held by the Firm and from judgment monies received on behalf of the Client. The details of the Disputed Invoices will be set out and examined later. For convenience, the remainder of this judgment is organised under the following headings: Background to the dispute. The relief sought. The applicable law: meaning of a proper bill. The applicable law: special circumstances. The Disputed Invoices. Conclusion.

Background to the dispute Genesis of the dispute

The Client is a Singapore-incorporated company dealing with, amongst other things, the trading and sale of iron ore to buyers in the People’s Republic of China.⁹

This dispute arose in the aftermath of various SIAC arbitrations in which the Client was involved. The Disputed Invoices were issued by the Firm to the Client solely in respect of the work it did for the Client in SIAC arbitration number 123 of 2010 (“SIAC 123”). The Client had commenced SIAC 123 on 25 June 2010 against Metalloyd Ltd (“Metalloyd”). The details of the dispute in SIAC 123 are irrelevant for the present purposes. Suffice to say that the award for SIAC 123 (“the 123 Award”) was eventually rendered on 2 January 2014 in favour of the Client.¹⁰

Thereafter, the Client engaged the Firm on or about 15 January 2014 to enforce the 123 Award in Singapore and in the United Kingdom (“the 123 Award Enforcement Proceedings”). The 123 Award Enforcement Proceedings were effectively completed in September/October 2015 when the Firm received the sum of US$2.459 million from Metalloyd on behalf of the Client in full satisfaction of the 123 Award. The Disputed Invoices were rendered in connection with the 123 Award Enforcement Proceedings.

The Client also engaged the Firm as its solicitors for SIAC arbitration number 200 of 2013 (“SIAC 200”) and SIAC arbitration number 223 of 2013 (“SIAC 223”). Both SIAC 200 and SIAC 223 were matters in relation to a dispute between the Client and Mount Eastern Holdings Resources Co. Limited (“the Mount Eastern Matter”).¹¹ The Mount Eastern Matter is unrelated to SIAC 123. It is noted that there was a period when the Firm was handling and doing work on the Mount Eastern Matter and SIAC 123 (including the 123 Award Enforcement Proceedings) at the same time.

On 8 January 2016, slightly over two years after the 123 Award was handed down, the Firm issued Invoice number 97 (“Invoice 97”) for work done in relation to the Mount Eastern Matter.¹² Invoice 97 is not one of the Disputed Invoices. As Invoice 97 remained unpaid, the Firm took out OS 216/2016 on 4 March 2016 for Invoice number 97 to be taxed.¹³

It was around this period that the Client realised that it was not able to account for a balance sum of US$172,670.56 held by the Firm.¹⁴ According to the Client’s records, this balance sum ought to have been held by the Firm for the Mount Eastern Matter.¹⁵ The Client then engaged its present solicitors, Rajah and Tann (“R&T”), on or about 15 March 2016, to begin looking into its past financial transactions with the Firm, including transactions relating to the Firm’s work in SIAC 123.¹⁶

Eventually, by way of an email dated 5 May 2016, R&T sought the return of the balance sum of US$172,670.56. This was still in relation to the Mount Eastern Matter; there was no mention of SIAC 123. The next day, the Firm replied with an email containing a breakdown of the funds used for the Mount Eastern Matter. The Firm’s breakdown suggested that the balance sum ought to be S$71,364.58 instead of US$172,670.56.¹⁷

Thereafter, on 9 May 2016, R&T emailed the Firm seeking an itemised breakdown of the Firm’s charges for the Disputed Invoices and the 123 Award Enforcement Proceedings. This led to a series of correspondences culminating in the bringing of this application, OS 931/2016, on 14 September 2016.

I pause to make the observation that since the Firm was handling a number of files or matters for the Client, it is apparent that invoices and requests for deposits were made for all the different files and matters (SIAC 123, SIAC 200 and SIAC 223). Whilst it is unclear whether a separate client account was opened in respect of each file or matter, it stands to reason (barring some contrary agreement) that sums provided as deposit for a particular file should only be used for the costs and disbursements for that very file. Further, work done for one particular file should be charged (accounted) to the client in respect of that file. If the position was otherwise, it is not difficult to imagine the confusion that may arise. In making this comment by way of general observation, I say nothing about any right of set-off that a law firm may possess. I note also that this point was not addressed or raised by the parties.

Whilst the present dispute before this court concerns invoices rendered for the 123 Award Enforcement Proceedings, I note that the Client’s current solicitors, R&T, were not engaged to conduct an “audit” of the invoices that were rendered by the Firm. Instead, R&T was engaged to represent the Client in respect of the Invoice 97 taxation application brought by the Firm (see [9] above). It was during the collation of the records on the various payments to the Firm that the Client started to have concerns over the invoices and sums paid for the 123 Award Enforcement Proceedings.

Dramatis personae

The key individuals in this dispute are the following: Mr Zhu Xiao Dong (“Mr Zhu”), who is from the People’s Republic of China, is the Client’s Deputy General Manager. Mr Zhu is the Client’s main representative in charge of the conduct of SIAC 123, including liaising with the Firm and dealing with the invoices raised by the Firm.¹⁸ Mr Zhu joined the Client in 2009 and was based in the Singapore office from 2009 to 2014. Mr Zhu relocated to the Client’s Shanghai Office in July 2014 but still works out of the Singapore office for about a week every two months or so. The evidence is that Mr Zhu was responsible for the trade(s) that were the subject-matter of the SIAC 123 arbitration. Although Mr Zhu was experienced in his line of work,¹⁹ he was unfamiliar with the Singapore legal system and the practices of international arbitration. Indeed, SIAC 123 was his first experience with litigation and the legal system in Singapore, and the Firm was the first law firm in Singapore that he had worked closely with. Due to his inexperience, Mr Zhu asserts that he left the running of SIAC 123 to the Firm and would stand guided by the Firm’s recommendations. Mr Zhu also takes the position that he was never informed of the Client’s right to send the bills for taxation.²⁰ Mr Gabriel Wang Kaiyang (“Mr Wang”) is a former private banker who joined the Client in April 2011 as the special assistant to the Client’s Chairman. Mr Wang was also a director of the Client at the relevant time. Mr Wang was one of the Client’s bank signatories and signed the cheques that were issued in respect of the Disputed Invoices. Mr Wang conducted internal investigations of the Disputed Invoices between March and April 2016. That said, it is apparent that unlike Mr Zhu, Mr Wang did not personally handle SIAC 123 or the 123 Award Enforcement Proceedings. Ms Jessica Cao Ye (“Ms Cao”), the Client’s assistant finance manager from December 2014 to April 2016.²¹ Ms Cao provided two affidavits but was not cross-examined before me (see below at [16]). Mr Peter Gabriel (“Mr Gabriel”), the Managing Director of the Firm.²² Mr Gabriel acted for the Client in SIAC 123 and its related proceedings before the Singapore courts. Mr Nandwani Manoj Prakash, a director with the Firm.²³

Whilst this application was commenced by originating summons, leave was granted to the parties to cross-examine Mr Zhu (for the Client) and Mr Wang (for the Client), as well as Mr...