Law Society of Singapore v Wan Hui Hong James

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 22 April 2013
• Neutral Citation: [2013] SGHC 85
• Plaintiff Counsel: S H Almenoar (R Ramason & Almenoar)
• Docket Number: Originating Summons No 952 of 2012
• Date: 22 April 2013
• Hearing Date: 26 February 2013
• Subject Matter: Professional Conduct,Legal Profession,Conflict of interest,breach
• Year: 2013
• Citation: [2013] SGHC 85
• Defendant Counsel: Wong Siew Hong, Poonaam Bai and Wayne Ong (Eldan Law LLP)
• Court: Court of Appeal (Singapore)
• Published date: 04 July 2013

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

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, 2009 Rev Ed) (“the Act”) for Wan Hui Hong James (“the respondent”), an advocate and solicitor of 42 years’ standing, to be punished under s 83 of the Act.

The misconduct to which the respondent admitted consisted of accepting a significant gift from a client without advising the client to seek independent advice in respect of the gift. The respondent further admitted that he had thereby breached r 46 of the Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2010 Rev Ed) (“the Rules”). However, the respondent denied the Law Society’s allegation that he had been dishonest. After hearing parties, we found that the respondent had indeed been dishonest, and accordingly, we ordered that he be struck off the roll. We now set out the reasons for our decision.

The rule on solicitors receiving gifts from clients

Before turning to the facts and issues in this case, we take the opportunity to clarify the rationale and purport of r 46 of the Rules. As there has been no judicial guidance thus far on r 46 – this being the first occasion on which a breach of that rule has come before this Court as far as we can ascertain – we think that it would now be appropriate to provide some such measure of guidance to the profession. Rule 46 reads as follows: Gift by will or inter vivos from client 46. Where a client intends to make a significant gift by will or inter vivos, or in any other manner, to – (a) an advocate and solicitor acting for him; (b) any member of the law firm of the advocate and solicitor; (c) any member, director or employee of the law corporation of the advocate and solicitor; (ca) any partner or employee of the limited liability law partnership of the advocate and solicitor; or (d) any member of the family of the advocate and solicitor,

the advocate and solicitor shall not act for the client and shall advise the client to be independently advised in respect of the gift.

[original emphasis omitted; emphasis added in italics and bold italics]

The rule in other jurisdictions

In England, the professional obligations of solicitors are currently described in the Solicitors Regulation Authority Code of Conduct 2011 (“the English Code of Conduct 2011”). The approach taken there is a novel one called “[o]utcomes-focused regulation”. This approach eschews specific rules of conduct, and instead lays down conduct guidelines at a higher level of generality by defining broad mandatory “Principles” and “outcomes”. “Principles” include “not allow[ing] your independence to be compromised” and “act[ing] in the best interests of each client”, while “outcomes” include “treat[ing] your clients fairly” (O(1.1)) and “provid[ing] services to your clients in a manner which protects their interests in their matter, subject to the proper administration of justice” (O(1.2)). The English Code of Conduct 2011 also includes certain “indicative behaviours” which, while not mandatory, describe conduct which “may tend to show” achievement of the “outcomes” and compliance with the “Principles” - both of which are mandatory. “Indicative behaviour” 1.9 (IB(1.9)) in the English Code of Conduct 2011 is the closest analogue to r 46 of the Rules, and reads as follows:

[R]efusing to act where your client proposes to make a gift of significant value to you or a member of your family, or a member of your firm or their family, unless the client takes independent legal advice ...

IB 1.9 of the English Code of Conduct 2011 is based on r 3.04 of an earlier version of the same code in 2007 (“the English Code of Conduct 2007”). The English Code of Conduct 2007 was not “outcomes-focused” like the English Code of Conduct 2011, but instead prescribed specific rules of conduct. Rule 3.04 of the English Code of Conduct 2007 read:

3.04 Accepting gifts from clients Where a client proposes to make a lifetime gift or a gift on death to, or for the benefit of: (a) you; (b) any principal, owner or employee of your firm; (c) a family member of any of the above,

and the gift is of a significant amount, either in itself or having regard to the size of the client’s estate and the reasonable expectations of the prospective beneficiaries, you must advise the client to take independent advice about the gift, unless the client is a member of the beneficiary’s family. If the client refuses, you must stop acting for the client in relation to the gift.

Another analogue to r 46 of the Rules may be found in r 11.2 of the Australian state of New South Wales’ Professional Conduct and Practice Rules 1995 (“the New South Wales rules”) as follows: 11.2 A practitioner who receives instructions from a person to – 11.2.1 draw a will under which the practitioner or an associate will, or may, receive a substantial benefit other than any proper entitlement to commission ... and the reasonable professional fees of the practitioner or the practitioner’s firm; or 11.2.2 draws any other instrument under which the practitioner or an associate will, or may, receive a substantial benefit in addition to the practitioner’s reasonable remuneration ... must decline to act on those instructions and offer to refer the person, for advice, to another practitioner who is not an associate of the practitioner, unless the person instructing the practitioner is either: 11.2.3 a member of the practitioner’s immediate family; or 11.2.4 a practitioner, or a member of the immediate family of a practitioner, who is a partner, employer, or employee, of the practitioner.

We should say that we refer to these rules in other jurisdictions for the points of divergence, rather than the convergence that exists between them and r 46 of the Rules.

Rationale for the rule

It is often said that the rule on advocates and solicitors receiving gifts from their clients stems from the fact that an advocate and solicitor stands as a fiduciary in relation to his client. The broad idea behind this statement is undoubtedly correct, but it might perhaps benefit from a greater degree of clarity because, in the words of Professor P D Finn (“Finn”) at the beginning of his seminal work Fiduciary Obligations (The Law Book Company Ltd, 1977), the term “fiduciary” is “one of the most ill-defined, if not altogether misleading terms in our law” (at para 1). In Finn’s view, it is preferable to focus not on fiduciary relationships, but on fiduciary obligations (at paras 2–3):

On the modern usage of “fiduciary”, Sealy concluded that it is not definitive of a single class of relationships to which fixed rules and principles apply. Rather its use has generally been descriptive, providing a veil behind which individual rules and principles have been developed. This conclusion—an incontestable one—is the starting point of this work. In the following pages it will be suggested that it is meaningless to talk of fiduciary relationships as such. Once one looks to the rules and principles which actually have been evolved, it quickly becomes apparent that it is pointless to describe a person—or for that matter a power—as being fiduciary unless at the same time it is said for the purposes of which particular rules and principles that description is being used. These rules are everything. The description “fiduciary”, nothing. ...

... It is not because a person is a “fiduciary” or a “confidant” that a rule applies to him. It is because a particular rule applies to him that he is a fiduciary or confidant for its purposes.

[emphasis in orginal in italics; emphasis added in bold]

In the same vein, in the English Court of Appeal case of Bristol and West Building Society v Mothew [[1998] Ch 1, Millett LJ (as he then was) opined at 18C that a fiduciary “is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary”.

Accordingly, we would say that the rule on advocates and solicitors receiving gifts from their clients stems from the fact that the relationship between an advocate and solicitor and his client is of such a nature as to warrant the imposition of fiduciary obligations on him. What then is the nature of their relationship? It is one in which the advocate and solicitor undertakes to act on behalf of his client and to take up his client’s cause as his own, which then gives rise to a duty to act in the client’s interests. In this relationship the advocate and solicitor almost invariably assumes a position of ascendency and influence over his client who then relies on and trusts him. As a consequence, he is subject to two fiduciary obligations, adopting for present purposes Finn’s classification of the various fiduciary obligations as outlined at paras 161–168. The first is not to put himself in a position where his personal interests conflict with his duty to act in the interests of his client. The second is not to exercise undue influence over his client, ie, not to misuse, whether actively or passively, his influence over his client. When his client intends to make a gift to him, or to a person with whom he has close personal or professional ties, these two fiduciary obligations are related in the sense that, even though the apparent interests of both parties seem to be aligned (since both parties seem to desire that the gift be made to him), he is deemed to be in a position of conflict because of the presumption that his client is making the gift under his undue influence. As Vaughan Williams LJ noted in Wright v Carter [1903] 1 Ch 27 (“Wright”) at 50:

[W]henever you have these fiduciary relations (and in the present case we have to deal with the particular fiduciary relation of solicitor and client), the moment the relation is established, there arises a...