Harsha Rajkumar Mirpuri (Mrs) née Subita Shewakram Samtani v Shanti Shewakram Samtani Mrs Shanti Haresh Chugani

• Jurisdiction: Singapore
• Judge: Valerie Thean J
• Judgment Date: 05 July 2018
• Neutral Citation: [2018] SGHC 155
• Plaintiff Counsel: Gregory Vijayendran Ganesamoorthy, Cheng Jin Edwin and Chua Zhi Huei (Rajah & Tann Singapore LLP)
• Docket Number: Suit No 849 of 2017 (Summons No 5377 of 2017)
• Date: 05 July 2018
• Hearing Date: 13 March 2018,12 March 2018
• Subject Matter: Conflict of interest,Former prospective client,Equity,Inherent jurisdiction to supervise conduct of solicitors,Confidence,Injunctions,Civil Procedure,Legal Profession,Jurisdiction
• Year: 2018
• Defendant Counsel: Ms X (The Firm)
• Court: High Court (Singapore)
• Citation: [2018] SGHC 155
• Published date: 13 July 2018

Valerie Thean J: Introduction

This was an application by the plaintiff for an injunction to restrain the law firm representing the defendant from continuing to act for the defendant in a pending action brought by the plaintiff. The firm have requested, and the plaintiff has consented, that they remain anonymous in these grounds of decision, so I shall refer to them as “the Firm”. The plaintiff contended that the Firm were in possession of information pertaining to the action that was confidential to the plaintiff which the plaintiff had conveyed to them when she was considering instructing them to act for her. Because the plaintiff did not eventually retain their services, hers was not the typical allegation that there is for the law firm in question a conflict between their duty of loyalty to a current client and their duty of confidentiality to a former client. The plaintiff was not a former client, but a former prospective client. The question was whether the Firm ought in such circumstances to be restrained from acting for the defendant.

This was a question that raised fundamental issues of principle regarding the court’s jurisdiction to restrain a law firm or a lawyer from acting against a former client or a former prospective client for the purpose of protecting confidential information belonging to that client. Those issues included the basis for that jurisdiction, its relationship with the court’s inherent jurisdiction to supervise the conduct of its officers, and the relationship between the applicable common law principles and the ethical rules contained in the Legal Profession (Professional Conduct) Rules 2015 (S 706/2015) (“the PCR”). After hearing the parties, I dismissed the application. I now give the full reasons for my decision.

Background

In August 2016, the plaintiff contacted the Firm with the intention of appointing them to act for her in the action that she has since brought against the defendant, who is her sister. The plaintiff had come to the view that the defendant had made unauthorised withdrawals from bank accounts which were in their joint names, and wanted to recover her claimed beneficial share in half the moneys withdrawn, which she estimates to be worth approximately $14.7m. She was also considering recourse against the defendant for her mismanagement of their late parents’ estates. Through her trusted friend, Mr Attlee Hue, the plaintiff sent a lawyer of the Firm her identification details and those of the defendant and their late father, and also their late parents’ respective wills.

In due course, the Firm confirmed that they were in a position to act for the plaintiff through two lawyers whom I shall call Mr A and Mr B. On 19 October 2016, Mr Hue corresponded with Mr A and Mr B through email to explain briefly that the plaintiff’s claim was that the defendant had wrongfully transferred moneys from their joint account to a discretionary trust that the defendant operated, and also that the plaintiff had sought an opinion from another lawyer, who had suggested obtaining an injunction. Mr A replied to ask whether it was a Mareva injunction that had been suggested, and Mr Hue responded by suggesting that the plaintiff be allowed to set out the facts before a course of action was decided upon.

The plaintiff, her daughter and Mr Hue met Mr A and Mr B the next day, on 20 October 2016. What was communicated at this meeting was a matter of dispute in this case. The plaintiff claimed that the meeting lasted “a few hours”. By contrast, Mr A claimed that the meeting took one and a half hours. It is sufficient to state here that the plaintiff’s case was that confidential information and documents which are material to her pending action were presented to Mr A and Mr B, and that their continued possession of this information presented a risk that it would be disclosed to the lawyers from the Firm who are now acting for the defendant, to the prejudice of the plaintiff’s claim.

After the meeting, Mr B on 21 October 2016 sent the plaintiff an email inviting her to sign an appointment letter and a warrant to act, and asking for payment of an initial amount of $10,000 so that he and Mr A could begin work on the plaintiff’s matter. Mr B also asked the plaintiff to provide him information and documents relevant to her potential claims, including details of the bank accounts that the plaintiff held jointly with the defendant and a chronology of the plaintiff’s dealings with the defendant from 2006 to the present day. The plaintiff did not respond to this email, and eventually did not appoint the Firm to act for her. Instead, in early November 2016 she retained the services of Rajah & Tann Singapore LLP (“R&T”).

Some nine months later, in August 2017, R&T on behalf of the plaintiff issued the defendant a letter of demand. The defendant did not respond. Thus, on 14 September 2017, the plaintiff commenced the present underlying action against the defendant, and on the same day, applied ex parte for a Mareva injunction with worldwide effect against the defendant. I heard the application that day and granted the injunction.

On 29 September 2017, the defendant appointed lawyers. On 3 October 2017, she filed an application to discharge the Mareva injunction that I had granted, and in November 2017, the plaintiff filed three affidavits in reply. Those lawyers were later discharged. On 15 November 2017, the Firm informed the plaintiff that they had been appointed the defendant’s lawyers. The next day, the defendant through the Firm filed a reply affidavit in her application to discharge the Mareva injunction, and also a new application to amend the application to discharge. It was common ground that between October 2016 and November 2017, the Firm did not inform the plaintiff about or seek her consent for their acceptance of the defendant’s appointing them as her lawyers.

R&T wrote to the Firm to say that the Firm would be in breach of r 21 of the PCR if they continued to act for the defendant, and that they ought to cease doing so. Rule 21 sets out the circumstances in which a lawyer is not to act against his “former client”. The Firm replied to say that they were not in possession of any confidential information belonging to the plaintiff and that in any event, they had established a “Chinese wall”, or information barrier, to prevent the flow of any information that may have been communicated by the plaintiff to Mr A and Mr B in October 2016. The Firm therefore considered themselves not to be in breach of r 21, and decided to continue acting for the defendant. On 22 November 2017, the plaintiff filed the present application for an injunction to restrain the Firm from acting.

Parties’ positions

The plaintiff’s case was based on a direct application of r 21 of the PCR to the question whether the court ought to grant an injunction to restrain the Firm from acting for the defendant. As the plaintiff was not a “former client” of the Firm in the ordinary sense of that expression, but a former prospective client, she relied on the definition of “client” under s 2 of the Legal Profession Act (Cap 161, 2009 Rev Ed), which includes “any person who … is about to retain or employ, a solicitor …”, in order to bring herself within the ambit of r 21. The Firm did not disagree with the application of this definition to the PCR.

The plaintiff’s position was that the Firm should be restrained from acting because they satisfied the three requirements under r 21(2) of the PCR, which are that (a) the law practice must hold confidential information relating to a former client; (b) the law practice’s current client must have an adverse interest to the former client; and (c) the information must reasonably be expected to be material to the representation of the current client. The plaintiff also argued that if the Firm had adequately advised the plaintiff to obtain independent legal advice and also obtained the plaintiff’s consent in writing for the Firm to act for the defendant within the meaning of r 21(3) of the PCR, then the Firm would nevertheless be entitled so to act, but they did not do those things.

Having not done so, the Firm could justify their acting for the defendant only by showing that they took reasonable efforts to comply with r 21(3), as well as erected adequate safeguards to protect the plaintiff’s confidential information and notified the plaintiff of those safeguards, within the meaning of r 21(4) of the PCR. These the Firm also failed to do, according to the plaintiff, and therefore an injunction ought to be granted to restrain the Firm from acting for the defendant. In this regard, the plaintiff attempted to show that the information barrier that the Firm had established was insufficient to protect the confidentiality of information that the plaintiff had left with Mr A and Mr B.

The Firm were represented in the present application by one of their own lawyers, whom I shall call Ms X. She did not dispute that r 21 of the PCR applied directly to the question whether the court ought to grant an injunction restraining the Firm from acting for the defendant. Thus, she made opposing arguments on each of the sub-provisions under r 21 that the plaintiff had submitted on. In particular, she argued that none of the information that Mr A and Mr B learned from their meeting with the plaintiff on 20 October 2016 was confidential or material to the plaintiff’s pending action, and that they were not in fact shown the allegedly confidential documents that the plaintiff claimed to have shown them at the meeting. Ms X also invited me to consider the right of a party to be represented by counsel of his choice, and to decide whether there was a reasonable risk of mischief to be avoided only by granting the injunction sought. She was guided in this submission by the High Court’s decision in Alrich Development Pte Ltd v Rafiq Jumabhoy [1994] 3 SLR(R) 38 (“Alrich”)....