Kao Chai-Chau Linda v Fong Wai Lyn Carolyn and others
|Steven Chong J
|14 October 2015
| SGHC 260
|14 October 2015
|Summons No 4976 of 2014 in Suit No 428 of 2010
|20 October 2015
|Jimmy Yim SC, Erroll Ian Joseph, Soo Ziyang Daniel, Mahesh Rai s/o Vedprakash Rai, and Lee Yicheng Andrew (Drew & Napier LLC)
|15 September 2015,12 January 2015,12 March 2015,09 March 2015,02 April 2015
|Tan Chuan Thye SC, Fu Qui Jun, and Jonathan Lee Zhongwei (Rajah & Tann Singapore LLP),Lee Eng Beng SC, Loh Chin Leong Ryan, and Zhu Ming-Ren Wilson (Rajah & Tann Singapore LLP),Chelva Retnam Rajah SC (Tan Rajah & Cheah),Manoj Pillay Sandrasegara, Rajan Menon Smitha, Chng Zi Zhao Joel, and Tan Mei Yen (Wong Partnership LLP)
|High Court (Singapore)
|Companies,Remuneration of,Receiver and manager
Disputes over professional fees regularly come before the courts for adjudication, both as regards liability and quantum. Challenges to lawyers’ fees are not uncommon and have generated a substantial body of case-law. Recently, a dispute over a surgeon’s fees hit the news when, in an ironic twist, the husband of the surgeon found liable by the Singapore Medical Council (“SMC”) for overcharging lodged a complaint that the SMC’s lawyers, in seeking excessive party-and-party costs, were themselves guilty of overcharging. Disputes over the fees of insolvency practitioners are not free of controversy either. In one extreme case, it was alleged that the Court of Appeal’s order that the fees sought by an insolvency practitioner be renegotiated constituted a breach of natural justice (though I should add that the application to set aside the decision of the Court of Appeal has since been dismissed).
As the fees of the insolvency practitioner usually require the court’s sanction, applications are brought on a regular basis. However, there is usually no consensus as to what the proper level of fees should be. Insolvency practitioners, having put in the hours, see no reason why they should not be allowed to bill according to the hourly market rate which they would charge their private clients. Creditors invariably oppose the quantum of fees as it has a direct financial bearing on their recovery rate. The insolvent company also has every incentive to seek a reduction of the fees in order not to worsen its already dire financial position.
In this case, the fourth defendant, Airtrust (Singapore) Pte Ltd (“Airtrust”) was placed into voluntary receivership so that it might be granted a reprieve from the numerous legal disputes that beset it. Ironically, it now finds itself mired in satellite litigation over the subject of its receivers and mangers’ (“R&M”) fees. To date, the R&M of Airtrust have filed four separate applications seeking the court’s sanction for their bills of costs. In the present case, perhaps as a reflection of the difficulty of assessing the appropriate level of fees, a discount of 30% was offered. This is consistent with the general practice in such cases where, as a defensive reaction, insolvency practitioners usually offer a discount when seeking the court’s approval of their fees. No explanation was offered as to why a figure of 30% was chosen save that it was a “goodwill” gesture. The R&M still maintained that the level of remuneration sought was reasonable. Unsurprisingly, this did not satisfy the other parties. However, the first, second, and third defendants, as they did at the hearing on the third bill of costs, were merely content to offer qualitative critiques (
Needless to say, this is not a satisfactory state of affairs. This led Lee Kim Shin JC to remark at the hearing over the third bill of costs that the situation was akin to a “fish market”. In a similar vein, Judith Prakash J recently observed (in the context of a dispute over the fees of a liquidator) that, in the absence of legislative intervention prescribing a mathematical formula for the calculation of fees, any adjustment made by the courts can be criticised on the ground that it is arbitrary (see
Legislative intervention is clearly desirable. However that process will inevitably take time. In the meantime, this state of affairs should not be allowed to continue. When the challenges over fees are closely examined, it is apparent that the sources of disagreement typically relate to the same issues: the scope and necessity of the work, allegations of over-manning and duplicity of work, disagreement over the division of the work between the lawyers and the insolvency practitioner, the justifications proffered for the time spent, and the applicable rates. These are issues which should more sensibly be the subject of a negotiated agreement at the time of appointment, rather than the
When I articulated my concerns and broached the idea of implementing a system of “costs scheduling”, I was pleased that all the parties readily welcomed the suggestion. Given the impact of my decision on the insolvency practice, I felt it prudent to adopt two steps. First, I invited submissions from the Insolvency Practitioner’s Association of Singapore (“IPAS”) to whom I would like to record my appreciation for their useful and constructive
Airtrust was set up by the late Mr Peter Fong in 1972. The plaintiff is a shareholder of Airtrust and was its managing director. The first and second defendants, Carolyn Fong Wai Lyn (Mr Peter Fong’s eldest daughter) and Anthony Craig Stiefel, are both directors of Airtrust. The third defendant, Mr Alvin Hong, is a minority shareholder with a 2% stake in Airtrust. For ease of reference, I will refer to them collectively as “the respondents” since they were all united in opposition to the application filed by the R&M.
Following Mr Fong’s passing in 2008, a number of legal actions were commenced against members of the late Mr Fong’s family, against Airtrust, and also by Airtrust against others (see,
On 17 January 2012, the parties to the present action reached an agreement to place Airtrust into receivership pending a negotiated settlement of the outstanding legal suits in which Airtrust was involved. This was achieved by way of a consent order dated the same day. The R&M were to “manage and carry on the business of [Airtrust] in place of its Board of Directors until further order” and their terms of reference included, but were not limited to, the management of Airtrust’s bank account and its existing employment contracts.The previous bills of costs
Since their appointment, the R&M have filed several summonses to seek approval for their bills of costs.
I note that the reductions were applied to the professional fees charged, and not the disbursements (which, in any case, only made up a small fraction of the total bills). This approach is correct. A claim for disbursements is a claim to be reimbursed for expenses reasonably incurred in the performance of a stipulated task. As long as they were reasonably incurred (and there was no suggestion that they were not), there should be no reason that the R&M should not be reimbursed in full.The present application
On 12 August 2014, the R&M’s solicitors wrote...
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