Law Society of Singapore v Tan Phuay Khiang

• Jurisdiction: Singapore
• Judgment Date: 26 June 2007
• Date: 26 June 2007
• Docket Number: Originating Summons No 2354 of
• Court: High Court (Singapore)

Law Society of Singapore

Plaintiff

and

Tan Phuay Khiang

Defendant

[2007] SGHC 83

Chan Sek Keong CJ

,

Andrew Phang Boon Leong JA

and

V K Rajah JA

Originating Summons No 2354 of 2006 (Summons No 331 of 2007)

High Court

Legal Profession–Professional conduct–Breach–Lawyer advocate and solicitor acting for homeowners in transaction for sale of flat pursuant to referral for moneylender –Lawyer preparing power of attorney for homeowners for proposed sale of flat–Lawyer preparing statutory declaration for homeowners authorising distribution of sale proceeds to five enumerated parties–Lawyer acting for some enumerated parties previously and receiving referrals from them–Whether lawyer's conduct amounting to misconduct unbefitting advocate and solicitor–Section 83 (2) (h) Legal Profession Act (Cap 161, 2001 Rev Ed)–Legal Profession–Professional conduct–Conflict of interest–Lawyer advocate and solicitor acting for homeowners in transaction for sale of flat pursuant to referral for moneylender–Lawyer preparing statutory declaration for homeowners authorising distribution of sale proceeds to five enumerated parties–Lawyer acting for some enumerated parties previously and receiving referrals from them–Whether lawyer owing overriding duty to homeowners in sale transaction–Legal Profession–Show cause action–Lawyer advocate and solicitor found guilty of misconduct unbefitting advocate and solicitor–Appropriate sentence for misconduct –Mitigation–Whether public service constituting mitigating factor –Section 83 (2) (h)Legal Profession Act (Cap 161, 2001 Rev Ed)

The respondent had represented the complainants in the sale of their flat (“the Flat”), pursuant to a referral made by a moneylender (“DK”). As the complainants were unable to make the immediate cash payment for the new flat, their housing agent (“Ali”) arranged for them to take a loan from DK.

The complainants were directed to proceed to the respondent's office pursuant to the loan arrangement. They did so, accompanied by a property agent, one Poh, from Ecstasy Property Services (“Ecstasy”). There, the respondent prepared, and the complainants signed, a power of attorney appointing one Cheung as the complainants' attorney in the proposed sale and subletting of the Flat. The complainants later signed a warrant to act appointing the respondent's firm to act for them in the sale of the Flat.

The Flat was eventually sold and the HDB handed a cheque for $142,694.11 upon completion of the sale to the respondent's representative. This sum represented the surplus after all the incidental deductions had been made from the sale price.

A meeting took place between the complainants, Ali and the respondent after this. The complainants were initially handed a cheque for $48.11 by the respondent. When queried about the paltry amount stated on the cheque, Ali promptly handed the complainants a cheque for $86,461 made in their favour. The complainants were then requested by the respondent to execute a statutory declaration authorising the respondent's law firm to make various payments to Ecstasy, Poh, DK, ML Mayeh & Co, Saudagar Moneylenders and the respondent's law firm in payment of his professional fees. The statutory declaration confirmed that the complainants had only received a payment of $48.11 which represented the balance of the net proceeds of the sale of the Flat, and that this payment, together with the payments to the five other enumerated parties, constituted full and final settlement of the sale transaction pertaining to the Flat.

Ali's cheque for $86,461 was dishonoured and although he gave repeated assurances that full payment would soon be made, he eventually disappeared after making just a few payments amounting to $20,000.

Convinced that they had been defrauded, the complainants lodged a complaint with the Law Society of Singapore (“the Law Society”).

Three charges were preferred against the respondent before the disciplinary committee of the Law Society (“DC”), although the respondent was eventually only found guilty in relation to the first charge. The DC determined that the first charge - that of failing to advance the complainants' interests wholeheartedly - was made out on three counts. First, the respondent had breached his obligations of confidentiality by wrongfully releasing the power of attorney to Ng Boon Kiat (“NBK”) of Ecstasy without obtaining the complainants' authorisation. Second, the respondent had failed to show proper diligence in safeguarding the complainants' interests, despite knowing of a potential and/or actual conflict of interests between the complainants and the respondent's other clients. Third, the respondent had been guilty of an unpardonable and lengthy ten-month delay in procuring the documents sought by the complainants.

However, the DC dismissed the second and third charges which alleged that the respondent had procured the power of attorney and statutory declaration from the complainants without advising them of their purport and implications.

The DC thus found that there was sufficient gravity under s 83 (2) (h) of the Legal Profession Act (Cap 161, 2001 Rev Ed) for the respondent to show cause as to why he should not be disciplined for misconduct in relation to the first charge.

Held, ordering that the respondent be suspended for two years:

(1) The preparation of the power of attorney and the delay in the release of the documents were irrelevant in so far as the respondent's liability under the first charge was concerned, and the DC should not have relied on these two matters to justify liability in relation to the first charge. While the complainants had alluded to the respondent's tardiness in the production of documents, a contextual examination of the complaint itself showed that the issue of delay was purely incidental to the complaint. The real complaint was not that the respondent had been tardy in the production of documents, but that the respondent had failed to discharge his duty of unflinching loyalty to the complainants. It was also puzzling for the DC to find that the respondent's act of releasing the power of attorney amounted to a breach of the confidentiality rule between solicitor and client, such as to justify liability under the first charge. The focus ought not to have been on the respondent's purported act of disclosure to NBK, but rather, on the nature of information which was disclosed. It would then follow that the respondent would only be in breach of his confidentiality obligation if the information was indeed confidential in nature. Given that the details in a power of attorney lacked the necessary quality of confidence, no breach of the confidentiality rule could arise: at [33], [34], [45] and [46].

(2) However, the respondent had placed himself in a position of an actual or potential conflict of interest by failing to inform the complainants of his prior dealings and existing relationships with Ecstasy and DK, and this was a sufficient basis to found the DC's jurisdiction: at [59] and [60].

(3) The respondent had repeatedly faltered in his indivisible duty to wholeheartedly advance the complainants' interests in two respects. First, the respondent had clearly compromised the complainants' interests, and subordinated the complainants' interests to his personal interests, and perhaps to the other payees, when he foisted the statutory declaration on the complainants. The respondent had previously acted for DK and Ecstasy, who were payees in the statutory declaration. Ecstasy had also referred work to him on earlier occasions. However, the respondent failed to disclose to the complainants the existence of an actual (or potential) conflict of interests between the complainants and these other parties. The respondent also failed to enquire and/or advise the complainants about the basis and/or the reasons why payments of a rather peculiar nature were being made to his other standing clients. In doing so, the respondent appeared to have allowed his personal interest in receiving future referrals from these parties, as well as the immediate interests of DK and Ecstasy, to take precedence over those of the complainants: at [64].

(4) Second, it must have been obvious to the respondent at a very early stage that the power of attorney was completely superfluous. However, the respondent did not bring home to the complainants that they need not engage him. The respondent also failed to highlight that the complainants had another equally secure method of handling the sale transaction with the added advantage of substantial cost savings. In fact, the respondent was indifferent to the complainants' interests and was blind to the real possibility that the transaction could have been tainted with impropriety. The circumstances in which the respondent had prepared the statutory declaration was compelling evidence that the respondent had been actually (or reasonably) aware that the transaction was anomalous, and the respondent had failed to muster any persuasive reasons to explain how his conduct had sought to protect the complainants' interests: at [65], [66] and [70].

(5) While the respondent's conduct had fallen far short of the requisite benchmarks of probity, trustworthiness and conscientiousness, the adduced evidence also fell short of proving dishonesty or that the respondent had been privy to any fraud perpetrated on the complainants. A period of suspension would thus be a more appropriate penalty than a striking-off order: at [106].

(6) While contributions to public service might be taken into account as a mitigating factor in appropriate cases, this was not an inexorable rule of thumb but rather a discretionary consideration. Public service was often a nebulous concept and not every act of purported “public service” might warrant a lesser sentence. One could quite readily take a less charitable view of the respondent's acts of “public service” and...