Law Society of Singapore v Tan Chwee Wan Allan

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 20 September 2007
• Neutral Citation: [2007] SGHC 156
• Docket Number: Originating Summons No 630 of 2007 (Summons No 2207 of 2007)
• Date: 20 September 2007
• Year: 2007
• Published date: 21 September 2007
• Plaintiff Counsel: Pavan Kumar Ratty (P K Ratty & Partners)
• Citation: [2007] SGHC 156
• Defendant Counsel: Chandra Mohan K Nair (Tan Rajah & Cheah)
• Court: High Court (Singapore)
• Subject Matter: Legal Profession,Lawyer's secretary erroneously depositing client's moneys into office account resulting in lawyer wrongfully withdrawing other clients' moneys from client account,Show cause action,Appropriate sentence when lawyer not acting dishonestly and making one-off mistake,Sections 83(2)(b), 83(2)(j) Legal Profession Act (Cap 161, 2001 Rev Ed),Rule 8(1) Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2000 Rev Ed),Supervision of employees and staff,Mistake not corrected until bookkeeper raised matter at directors' meeting,Lawyer delegating files and administrative matters to staff without exercising adequate supervision,Duties,Rules 3(1), 7(1)(a) Legal Profession (Solicitors' Accounts) Rules (Cap 161, R 8, 1999 Rev Ed)

20 September 2007

V K Rajah JA (delivering the grounds of decision of the court):

1 This was an application by the Law Society of Singapore (“the Law Society”) pursuant to s 94(1) read with s 98 of the Legal Profession Act (Cap 161, 2001 Rev Ed) (“LPA”) for Mr Allan Tan Chwee Wan (“the respondent”) to make absolute an order to show cause. After hearing the submissions of the respective parties, we granted the Law Society’s application and ordered that the respondent be censured for breaches of rr 3(1) and 7(1)(a) of the Legal Profession (Solicitors’ Accounts) Rules (Cap 161, R 8, 1999 Rev Ed) (“the SA Rules”). We now give the reasons for our decision.

Factual background

2 The respondent was called to the Singapore Bar on 14 March 1990. He joined JHT Law Corporation (“JHT”) as a director on 2 January 2004. Until he voluntarily ceased practice in March 2005, the respondent was an advocate and solicitor of the Supreme Court of the Republic of Singapore of about 15 years’ standing.

3 JHT comprised of five directors, including the respondent. The firm was in effect a set of sole proprietors running separate accounts under the name and style of JHT. Each director was responsible for the management of his or her accounts and kept separate office and client accounts. The bookkeeper, Mr Teo Cher Ern (“Mr Teo”), was engaged by the firm to assist the directors to operate their separate accounts and he would attend at the office, usually spending two days or more each week to maintain the accounts. Clients’ moneys were deposited into the relevant client account depending on which director handled the file. All bills were paid into a common office account (“the Common Account”) and each of the directors’ respective staff salaries were paid from the Common Account. After taking into account overheads, the directors’ drawings were issued from the Common Account and paid into that respective director’s office account, from which he would then draw his own income.

4 Sometime in early March 2004, the respondent acted for two clients in the purchase and mortgage of a Housing and Development Board (“HDB”) flat at Block 650B Jurong West Street 61, #07-250, Singapore 642650. In addition, the respondent also acted for one of these two clients in the preparation of a power of attorney. On or about 23 March 2004, the respondent received a cheque for $33,190 from the client as client’s moneys for the commitment deposit and the anticipated costs of preparing the power of attorney. However, instead of depositing the moneys into the respondent’s client account (“the Client Account”), the respondent’s secretary, Ms Low Siew Boon (“Ms Moon Low”), erroneously deposited the sum into the respondent’s office account (“the Office Account”). This was contrary to r 3(1) of the SA Rules.

5 On or about 12 April 2004, the respondent caused to be drawn from the Client Account the sum of $30,920, for payment to HDB. This amount represented the commitment deposit required for the purchase and mortgage of the HDB flat in question. However, as this client’s deposit of $33,190 had not been earlier deposited into the Client Account, the respondent had thereby caused a withdrawal from the Client Account of clients’ moneys belonging to other clients. This contravened r 7(1)(a) of the SA Rules.

6 In May 2004, Mr Teo discovered the error in the accounts. He promptly instructed Ms Moon Low to deposit the client’s moneys into the Client Account. Mr Teo ensured that a cheque was prepared (“rectification cheque”) and a payment voucher was raised for the respondent’s signature. Accordingly, a reversal book entry was made on 20 July 2004 to transfer $33,190 from the Office Account to the Client Account. However, the rectification cheque was not presented for payment, and consequently, the client’s moneys were not repaid into the Client Account. Mr Teo eventually decided to bring the matter to the attention of the other directors in the course of a directors’ meeting on 2 December 2004.

7 During the directors’ meeting, the respondent was queried by the other directors about the wrongful deposit and withdrawal of clients’ moneys. They demanded that he resign from JHT immediately. The respondent claimed that the incident was the result of inadvertence and immediately refunded the sum of $33,190 to the Client Account the next day, ie, 3 December 2004. However, on 6 December 2004, the firm sent a letter to the Law Society informing them of the respondent’s breaches of the SA Rules.

8 The respondent was later prosecuted under ss 83(2)(b) and 83(2)(j) of the LPA for breaches of rr 3(1) and 7(1)(a) of the SA Rules, one for the wrongful deposit into the Office Account and the other for the improper withdrawal of moneys from the Client Account.

9 In the interest of completeness, rr 3(1) and 7(1)(a) of the SA Rules are set out as follows:

Client accounts

3.—(1) Subject to rule 9, every solicitor who holds or receives client’s money, or money which under rule 4 he is permitted and elects to pay into a client account, shall without delay pay such money into a client account.

…

Moneys which may be drawn from client account

7.—(1) There may be drawn from a client account —

(a) in the case of client’s money —

(i) money properly required for a payment to or on behalf of the client;

(ii) money properly required in full or partial reimbursement of money expended by the solicitor on behalf of the client;

(iii) money drawn on the client’s authority;

(iv) money properly required for or towards payment of the solicitor’s costs where a bill of costs or other written intimation of the amount of the costs incurred has been delivered to the client and the client has been notified that money held for him will be applied towards or in satisfaction of such costs; and

(v) money to be transferred to another client account;

…

10 We were mindful that the respondent was only charged for breaching rr 3(1) and 7(1)(a) of the SA Rules. He was not charged for failing to properly supervise his employees and other staff contrary to r 8 of the Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2000 Rev Ed) (“the Professional Conduct Rules”). We wish to point out that had the respondent been charged under r 8 of the Professional Conduct Rules, the sentence meted out might have been entirely different.

The proceedings before the disciplinary committee

11 The hearing before the disciplinary committee appointed by the Law Society (“the DC”) lasted five days and a total of six witnesses gave evidence. The main bone of contention between the parties was about the timing as to when the respondent actually came to know of the wrongful deposit. According to the respondent, he did not learn of the wrongful deposit until the directors’ meeting on 2 December 2004. On the other hand, it was the Law Society’s case that the respondent knew about it well before 2 December 2004.

12 The Law Society’s principal witness was JHT’s bookkeeper, Mr Teo, while the respondent’s key witnesses were Ms Moon Low and the respondent himself.

Mr Teo’s evidence

13 Mr Teo testified that sometime in May 2004, he had verbally informed Ms Moon Low and the respondent that a sum of $33,190 had been incorrectly deposited into the Office Account, and that there had been, in turn, a payment out of the Client Account for $30,920 without any prior matching deposit of that sum into the Client Account. Mr Teo also gave evidence that in July 2004, he had informed Ms Moon Low, on a second occasion, that she had wrongly deposited the sum of $33,190 into the Office Account. Ms Moon Low was told to rectify it by preparing a rectification cheque for the moneys to be transferred from the Office Account to the Client Account.

14 However, despite this, between August 2004 and October 2004, the rectification cheque had still not been presented for payment. Mr Teo allegedly reminded the respondent about the discrepancy on at least one further occasion. He also prompted Ms Moon Low to remind the respondent to ensure that the problem was rectified. Only when, notwithstanding all those reminders, the rectification cheque had still not been presented for payment, did Mr Teo bring the matter to the attention of the other directors.

Ms Moon Low’s evidence

15 Ms Moon Low was one of the respondent’s secretaries. According to her, she had erroneously deposited the sum of $33,190 into the Office Account in March 2004.

16 In late July 2004, Mr Teo informed her that she had incorrectly deposited the sum of $33,190 into the Office Account. She attempted to explain the mistake to the respondent when he returned to the office but he seemed to be preoccupied with other urgent matters. Ms Moon Low testified that she informed the respondent only once of the error. However, she had only “whispered” it to him as she was apprehensive about being told off by the respondent. As such, she could not confirm if the respondent had actually understood her. She received no direct response from the respondent as he was busy typing some letters.

17 Ms Moon Low testified that she intended to broach the matter again with the respondent, but neglected to do so as he was very often out of the office, attending to clients. She asserted that it was usually difficult to communicate with the respondent as he spent little time in the office.

18 As a result of her heavy workload, Ms Moon Low omitted to bring the matter up until some two weeks later. She then left a sticky-note reminder on the file and placed it on the respondent’s table, together with other files, while he was out of the office. The note stated that the money had been wrongly deposited and ought to be transferred back to the Client Account. However, she did not personally follow up on the matter as she did not appreciate the urgency of the situation. According to Ms Moon Low, prior to the incident, she had not been briefed on the relevance or applicability of the SA Rules.

The respondent’s evidence

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