Law Society of Singapore v Thirumurthy Ayernaar Pambayan

• Judgment Date: 06 May 2016
• Date: 06 May 2016
• Docket Number: Originating Summons No 3 of 2015
• Court: High Court (Singapore)

Law Society of Singapore

and

Thirumurthy Ayernaar Pambayan

[2016] SGHC 87

Chao Hick Tin JA, Andrew Phang Boon Leong JA and Judith Prakash J

Originating Summons No 3 of 2015

Court of Three Judges

Legal Profession — Solicitor-client relationship — Transactions with client — Prohibited borrowing transactions — Solicitor borrowing money from client who was not independently advised — Whether appropriate penalty should be suspension — Rule 33(a) Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2010 Rev Ed)

Facts

The Respondent improperly obtained two loans amounting to at least $11,000 from a client in January and June 2012. This came to light after the client (“the Complainant”) lodged a complaint with the Law Society of Singapore (“the Law Society”) in October 2013.

The Law Society thereafter brought two charges under the Legal Profession Act (Cap 161, 2009 Rev Ed) (“the LPA”) against the Respondent for having acted in breach of r 33(a) of the Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2010 Rev Ed) (“the 2010 Rules”), which mandated that a solicitor wasnot to enter into prohibited borrowing transactions withclients. The disciplinary tribunal found that both charges were made out against the Respondent. The Law Society then brought the application in the present proceedings for the Respondent to show cause as to why he should not be disciplined in accordance with the LPA.

Held, making absolute the show cause order and suspending the Respondent from practice for a period of two months:

(1) Although the fact of repayment was relevant neither to liability nor as a mitigating factor, the issue of whether repayment had been made had to still be determined as the lack of repayment served as an aggravating factor: Law Society of Singapore v Yap Bock Heng Christopher [2014] 4 SLR 877 (“Christopher Yap”) at [30]. The Respondent’s account that he had repaid the two loans (ie, a sum of $14,000) save for a sum of $2,000, which should only be seen as the interest component of the second loan, was more credible than the complainant’s account that the Respondent had only repaid $8,500: at [7].

(2) There was no room for doubt, especially after the judgment in ChristopherYap that a breach of r 33 of the 2010 Rules was viewed extremely seriously by the court. Such behaviour had to be sanctioned because, in most cases, a client was vulnerable vis–à–vis his solicitor who enjoyed a position of influence over him. A client, who was approached by his solicitor for a loan, would find it difficult to deny the solicitor’s request because of the trust and confidence that he had

reposed in his solicitor. Further, a solicitor would be in clear breach of his fiduciary duties to the client: at [8].

(3) There was almost no aggravating factor in the present case, which was less egregious than Christopher Yap and Law Society of Singapore v Devadas Naidu [2001] 1 SLR(R) 65 (“Devadas Naidu”), where a term of suspension of two years had been imposed on the errant solicitors. There was no evidence that the Complainant was threatened or unduly influenced into making the loans. The evidence suggested that the Complainant was the one who was in a position of control as evident from the fact that he felt confident enough to demand a usurious interest of $5,000 for the second loan. Moreover, unlike the solicitors in the two precedents, the Respondent had substantially repaid the sums even before the complaint was made: at [9] to [12].

(4) Unlike the solicitorsin Christopher Yap or Devadas Naidu, the Respondent did not avoid the Complainant and continued to act for him after taking the loans. The Complainant continued to engage the Respondent as solicitor for three further matters after the loans had been made, which suggested that the Complainant was satisfied with the way the Respondent was handling his matters: at [12].

(5) A term of suspension was warranted despite the absence of aggravating factors in order to send a consistent and strong message to the profession that a breach of the rule against prohibited borrowing transactions was viewed seriously by the court, and that a...