JUDICIAL DEVELOPMENTS IN ETHICAL LAWYERING IN SINGAPORE

• Date: 01 December 2013
• Author: Alvin CHEN LLB (Hons) (National University of Singapore), LLM (New York University), LLM (National University of Singapore); Advocate and Solicitor (Singapore); Head, Professional Services Support, RHTLaw Taylor Wessing LLP.
• Published date: 01 December 2013

Over the past nine years, the Singapore courts have issued a number of significant decisions relating to the ethics of lawyering in areas such as conflicts of interest, remuneration and the administration of justice. This article discusses and evaluates the significant themes underlying recent judicial developments in professional ethics, in particular judicial expectations of how solicitors should interpret ethical rules, personal and professional conflicts of interest, the duty to the administration of justice and redressing imbalances in fee arrangements.

I. Introduction

1 Beginning with the landmark conflicts of interest decision of Lie Hendri Rusli v Wong Tan & Molly Lim (“Lie Hendri Rusli”)1 in September 2004, the Singapore courts have over the last nine years issued a number of significant decisions relating to the ethics of lawyering. These cases have dealt with a wide variety of ethical issues, including conflicts of interest, remuneration, administration of justice, referral fees and management of clients' monies.

2 This article discusses several important themes underlying judicial developments in ethical lawyering between September 2004 and April 2013 (“review period”), in particular judicial expectations of how solicitors should interpret ethical rules (Part II), personal and professional conflicts of interest (Part III), the duty of the Singapore solicitor to the administration of justice (Part IV) and redressing imbalances in fee arrangements (Part V). Each Part begins with a summary of the key judicial developments in the particular area of

professional ethics followed by an evaluation of the critical themes arising from these developments.

II. Judicial expectations for interpreting ethical rules

A. Summary of key developments

3 The ethical obligations which Singapore solicitors must observe are found not only in the code of conduct known as the Legal Profession (Professional Conduct) Rules (“LP(PC)R”)2 which were enacted as subsidiary legislation in 1998, but also in practice directions issued by the Law Society of Singapore and in judicial decisions. In this regard, the High Court had observed in Public Trustee v By Products Traders Pte Ltd (“By Products Traders”)3 that the statutory obligations in the LP(PC)R are not exhaustive and that:4

[a] solicitor's duty to act in his client's interests must therefore take into account prevailing standards of conduct prescribed by the [LP(PC)R], ethical rules and practices prescribed by the Law Society as well as general professional and ethical conventions and practices established through the effluxion of time.

4 During the review period, the Singapore courts have, in a series of cases, provided guidance and clarification on the scope of the ethical rules and duties relating to a solicitor's professional conduct, especially the basic principles underlying the interpretation of the LP(PC)R.

5 The first case to highlight the Singapore courts' approach was Law Society of Singapore v Ahmad Khalis bin Abdul Ghani.5 In that case, the respondent solicitor had acted for a sole administrator of the estate (its sole asset being a private property) to file a petition for letters of administration on his behalf. The respondent solicitor subsequently met a number of the surviving beneficiaries together with his client. At that meeting, the beneficiaries had asked the respondent solicitor whether they could appoint a co-administrator and also expressed certain misgivings about the respondent solicitor's client being the sole administrator. The respondent solicitor informed the beneficiaries that additional costs and time would be incurred and that they did not have to sign a document renouncing their claim to be co-administrators. However, as it turned out, the beneficiaries did sign this document as well as a document consenting to dispense with sureties to the administration bond after the respondent solicitor's client became the

sole administrator of the estate. The latter document was apparently explained by the respondent solicitor's clerk to the beneficiaries, but it was unclear whether this was properly done.

6 The respondent, as solicitor for the estate, was charged, inter alia, with failing to discharge his duties (“first limb”) and/or failing to safeguard the interests of the beneficiaries, in that he subordinated the beneficiaries' interests to his client's interests (“second limb”). An issue arose whether the charge was premised on an existing retainer between the respondent and the beneficiaries. The High Court held that although the first limb of the charge did seem to presuppose an existing retainer, the second limb of the charge “ought to be read as encompassing a broader, ethical approach towards clients and non-clients alike” [emphasis in original].6

7 The High Court held that r 2 of the LP(PC)R “suggests clearly that one should not adopt a mean-spirited or cramped view of professional conduct rules”.7 Instead, ethical rules must be interpreted in light of the “four major aims of the [LP(PC)R], which are:8

(a) to maintain the Rule of Law and assist in the administration of justice;

(b) to maintain the independence and integrity of the profession;

(c) to act in the best interests of his client and to charge fairly for work done; and

(d) to facilitate access to justice by members of the public.

8 The High Court observed that the respondent solicitor could have been held liable for breaching his duty to the beneficiaries to safeguard their interests under an implied retainer even though he had not entered into an express retainer with the beneficiaries. This was because the respondent solicitor did not make a “casual or ‘one-off‘” statement to the beneficiaries but they were “led by [him] to believe that he was looking after their interests as well”.9 However, the High Court did not pursue this argument further as the Law Society did not seek to premise the charge on conduct that went beyond a retainer.

9 The contextual approach to interpreting ethical rules was further developed a year later in Law Society of Singapore v Tan Phuay Khiang

(“Tan Phuay Khiang”).10 In that case, the respondent solicitor had acted for both his clients (husband and wife), who had a basic primary education, in the sale of a flat. The clients also engaged a housing agent, who arranged for them to take a loan from a moneylender in order to make a cash payment to purchase a new flat. The respondent solicitor's role in the loan arrangement was to prepare a power of attorney appointing an attorney (who was unknown to the clients) in the proposed sale and subletting of the flat.

10 The flat was eventually sold and the clients received a cheque for the sale proceeds in the sum of $86,461 not from the respondent solicitor, but from the housing agent. The respondent solicitor also requested his clients to execute a statutory declaration authorising his law firm to make payments to, inter alia, various persons including another property agent and the moneylender. Unknown to the clients, an “intricate web of relationships” existed amongst the persons named in the statutory declaration, as well as between them and the respondent solicitor.11 Subsequently, the cheque was dishonoured and the clients realised that they might have been defrauded and lodged a complaint with the Law Society.

11 The High Court held that although the respondent solicitor did not breach any of the conflict of interest rules under the LP(PC)R, he had failed to “adequately highlight the grave risks that [his clients] took in executing the power of attorney”.12 The High Court held that because his clients were unsophisticated and vulnerable, the respondent solicitor had a positive duty to explain to his clients the purpose of executing a power of attorney which was not merely ministerial in nature.13 Similarly, the respondent solicitor was obliged to advise his clients on the intent and purport of the statutory declaration.

12 In this regard, the High Court observed that “[i]t is also axiomatic that it is the spirit and intent, rather than just the plain letter, of the professional ethical rules that breathe life and legitimacy into the standards that are relevant in assessing whether a lawyer has discharged his professional obligations.”14 While “[e]thical codes, practices and standards must be religiously observed and adhered to”, “a rigid and formalistic adherence to the codes of practice without a proper appreciation of their spirit, purport and intent may from time to time lead to ethical blindness”.15 Hence, a solicitor may be held liable for

breach of his professional duties if he only took “cursory steps to explain the nature of the documents” to his client.16

13 Five years later, the High Court's observations in Tan Phuay Khiang were emphatically endorsed by the High Court in Then Khek Khoon v Arjun Permanand Samtani (“Then Khek Khoon”),17 a case concerned with r 64 of the LP(PC)R, which prohibited a solicitor from acting for a client in a situation where he was likely to be a witness on a material question of fact. In that case, the High Court considered it “incontrovertible that the [LP(PC)R] should be interpreted with proper appreciation of the mischief to be averted rather than in a strict textual fashion.”18 Accordingly, in considering the proper ambit of r 64, the High Court suggested that it was necessary to “go back to basics and ask: what is the real mischief targeted?”19

14 The final case decided during the review period concerned solicitors accepting significant gifts from clients. In Law Society of Singapore v Wan Hui Hong James (“Wan Hui Hong James”),20 the High Court observed that “[i]t is only through close adherence to both the letter and spirit of the stipulated ethical constraints that legitimate concerns relating to the receipt of significant gifts may be dissolved”.21

B. Evaluation of critical themes

15 Two critical questions emerge from...