Law Society of Singapore v Udeh Kumar s/o Sethuraju [Court of Three Judges]

• Jurisdiction: Singapore
• Judgment Date: 28 June 2013
• Date: 28 June 2013
• Docket Number: Originating Summons No 905 of 2012
• Court: High Court (Singapore)

Law Society of Singapore

Plaintiff

and

Udeh Kumar s/o Sethuraju

Defendant

[2013] SGHC 121

Sundaresh Menon CJ

,

Chao Hick Tin JA

and

Andrew Phang Boon Leong JA

Originating Summons No 905 of 2012

Court of Three Judges

Legal Profession—Duties—Client—Conflict of interests—Advocate and solicitor being charged for furthering interests of third parties in absence of concrete evidence that he had standing arrangement with them or had knowledge that their interests were being advanced—Whether factual basis existed for advocate and solicitor to be found guilty of conflict of interests—Whether wilfully blind advocate and solicitor could be guilty of conflict of interests

Legal Profession—Duties—Client—Failure to communicate directly—Advocate and solicitor failing to communicate directly with client referred to him by third party throughout period of retainer—Advocate and solicitor claiming that secretary of law firm communicated with client—Whether advocate and solicitor could delegate duty to communicate directly with client referred by third party to employee who was not advocate and solicitor—Rule 11 A (2) (f)Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2000 Rev Ed) (as amended)

Legal Profession—Duties—Client—Failure to keep client reasonably informed—Advocate and solicitor making no effort at all to communicate with client at all material times—Advocate and solicitor claiming without evidence that secretary of law firm had kept client informed—Whether advocate and solicitor kept client reasonably informed—Rule 17 Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2000 Rev Ed) (as amended)

Legal Profession—Professional conduct—Breach—Advocate and solicitor making no effort at all to communicate with client at all material times—Whether advocate and solicitor's conduct amounting to grossly improper conduct—Section 83 (2) (b) Legal Profession Act (Cap 161, 2009 Rev Ed)

The respondent (‘the Respondent’) was an advocate and solicitor of the Supreme Court of approximately 25 years' standing and was working in a law firm at the HDB Hub in Toa Payoh (‘the Firm’) at the material time. In 2009, he was engaged by a client (‘the Complainant’), who worked as a school cleaner and was in the process of undergoing divorce proceedings, for the sale of a flat owned by both her ex-husband and her (‘the Flat’). The Complainant and her ex-husband had first contacted a housing agent (‘Haron’) to sell their flat. Haron worked in a company (‘Happiness’) which was owned, in the proportion of 49%, by one Mr Desmond Peh (‘Peh’), the latter also being the sole proprietor of a firm of licensed moneylenders (‘Heedmasters’).

Besides seeking Haron's assistance to sell the Flat, the Complainant also made known her need for $10,000 to settle her debts. On 26 September 2009, Haron introduced the Complainant and her ex-husband to Peh in Heedmasters' office, and Peh agreed to extend a loan of $10,000 to the Complainant. The latter signed a number of documents, one of which stated that she had received $10,000 from Heedmasters.

On 8 October 2009, the Complainant and her ex-husband were brought to different offices at the HDB Hub in Toa Payoh to sign documents declaring that the Firm was appointed to sell the Flat. On the very same day, the Complainant - this time without her ex-husband - signed the following documents, inter alia: (a)a Letter of Authority declaring that the Firm was authorised to pay out, from the sale proceeds, the sum of $19,000 plus interest in favour of Heedmasters; and (b)a second loan agreement which stated that Heedmasters had agreed to extend a second loan of $9,000 to the Complainant. The exact circumstances and locations in which these documents were signed were highly disputed. The Complainant contended that she was taken to the Respondent's office more than once and was attended to by an employee of Happiness to sign the aforementioned documents even though she did not read or understand the documents she had signed; and that she had only been paid $10,000 despite having signed documents to the effect that she had incurred a $19,000 loan. The Respondent, however, contended that his secretary (‘Elly’) had explained the documents to the Complainant and the full $19,000 had been transferred to the Complainant. What was not disputed was that the Respondent did not communicate directly with the Complainant throughout the period of the retainer.

When the sale of the Flat was completed on 25 March 2010, the Complainant (on the advice of an independent advocate and solicitor) sent the Respondent a letter to revoke the Firm's authority to deduct and/or disburse the sale proceeds of the Flat to any party. The Respondent did not respond to the Complainant nor communicate with her and, subsequently, the Firm applied to court for the conflicting claims to the sale proceeds to be resolved. Heedmasters also commenced proceedings against the Complainant for the alleged $19,000 loan as well as the respective interest amounts. Subsequently, a settlement agreement was reached where, inter alia, the Complainant would pay Heedmasters the sum of $10,000 while the remaining balance of the sale proceeds was to be paid to the Complainant.

A formal complaint was made by the Complainant to the Law Society against the Respondent. Following the report of the Inquiry Committee, the Law Society formulated three charges against the Respondent, which can be summarised as follows: (a)failing to advance the Complainant's interests unaffected by his own interest or the interests of Heedmasters, Haron and/or Happiness (‘the First Charge’); (b)failing to communicate directly with the Complainant in relation to the sale of the Flat (‘the Second Charge’); and (c)failing to keep the Complainant reasonably informed of the progress of the sale of the Flat (‘the Third Charge’). The Disciplinary Tribunal (‘DT’) found that all three charges were made out against the Respondent beyond a reasonable doubt and that cause of sufficient gravity existed for disciplinary action against him.

Held, allowing the application in part:

(1) In a situation where a conflict of interests involving an advocate and solicitor is alleged, a meticulous and granular analysis by the court or tribunal of all the relevant facts is imperative as sufficient evidence has to be adduced to satisfy the high standard of proof beyond a reasonable doubt. This entails the establishment of, inter alia,the precise relationships which were said to have resulted in a conflict of interests situation involving the advocate and solicitor in question: at [46] and [47].

(2) In so far as the First Charge was concerned, it was paramount to first identify who the third party was whose interests the Respondent was alleged to have advanced. While a possible third party was Heedmasters and/or Peh, the evidence demonstrating that the Respondent did in fact have a relationship with Heedmasters and/or Peh was virtually non-existent. There was also no concrete evidence to convincingly suggest that the Respondent had wilfully chosen not to know about the loan transactions in order to further the interests of Heedmasters: at [49] to [52].

(3) Although the Respondent did admit to having acted for Haron and Happiness on one or two occasions, there was no evidence on record of an unacceptable ‘standing arrangement’ between the Respondent and Haron/Happiness to advance the latter's interests instead of that of the Respondent's clients. In the absence of evidence to the contrary, it could not be assumed that the transactions involving the Respondent and Haron/Happiness were tainted in any way, let alone that they constituted a pattern of misconduct that was relevant in the context of the present proceedings: at [53].

(4) For the Respondent to have a duty to disclose his relationship with Haron to the Complainant, it must first be shown that the Respondent knew of (or was wilfully blind to the following alleged facts accepted by the DT: (a)that Peh owned 49% of Happiness, (b)that it was in Haron's interest to recommend the Complainant to Peh, and (c)that Peh told the Complainant that she had to appoint the Respondent. The key inquiry rested, in the final analysis, on the Respondent's perspective and conduct, but there was no evidence on record demonstrating the Respondent's knowledge of, or acquiescence in, what Haron/Happiness was doing. As the factual basis for a conflict of interests situation against the Respondent was absent, the Respondent was found not guilty of the First Charge: at [54] and [55].

(5) An advocate and solicitor was under a personal responsibility to communicate directly with the client when the client was referredto the advocate and solicitor by a third party pursuant to r 11 A (2) (f)of the Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2000 Rev Ed) (as amended) (‘the Rules’). The requirement was both logical as well as commonsensical because there was a greater danger that such a client might be in a vulnerable position. The advocate and solicitor, with his position as a fiduciary and his standing as a professional, had to personally ensure that the referred client's interests were not in any way undermined by those of the referror. Being an obligation attached to an advocate and solicitor personally, the phrase ‘or law practice, as the case may be’ in r 11 A (2) (f) only permitted other advocates and solicitors in the same law practice to communicate directly with the client concerned in the event that the relevant advocate and solicitor had left the firm or was otherwise temporarily occupied with other matters: at [61] and [62].

(6) However, r 11 A (2) (f) should not be interpreted and applied in a dogmatic or mechanistic fashion. Although it was clear that at the very outset of the relationship, the advocate and solicitor should in fact meet personally with the client and also thereafter whenever it was...