Law Society of Singapore v Subbiah Pillai

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 15 April 2004
• Neutral Citation: [2004] SGHC 75
• Docket Number: Originating Summons No 27 of 2004
• Date: 15 April 2004
• Published date: 04 May 2004
• Year: 2004
• Plaintiff Counsel: R Chandra Mohan and Christina Goh (Rajah and Tann)
• Citation: [2004] SGHC 75
• Defendant Counsel: Sarjit Singh Gill SC and Chua Sui Tong (Shook Lin and Bok)
• Court: High Court (Singapore)
• Subject Matter: Rules 25, 26, 27, 28 Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2000 Rev Ed),Appropriate penalty,Solicitor's sister party to transaction,Whether complainants' knowledge satisfied rule of informed consent,Sections 83(1), 83(2)(h) Legal Profession Act (Cap 161, 2001 Rev Ed),Conduct unbefitting an advocate and solicitor,Conflict of interest,Whether absence of elements of self-dealing and undue influence in transaction a mitigating factor,Solicitor acting for both parties in conveyancing transaction,Whether early plea of guilt a mitigating factor,Legal Profession,Whether involvement of sister's interests in transaction worsened conflict of interests situation,Show cause action

15 April 2004

Yong Pung How CJ (delivering the judgment of the court):

1 This was an application by the Law Society of Singapore (the “Law Society”) under s 98(5) of the Legal Profession Act (Cap 161, 2001 Rev Ed) (“LPA”) to make absolute an order to show cause. We granted the application and ordered the respondent, Subbiah Pillai, to be suspended for a period of three years. We now give our reasons.

The facts

2 The proceedings before us stemmed from a series of three sale and purchase transactions involving Nos 19 and 21 Upper Dickson Road (“the property”). We should clarify at the outset that although the Law Society originally brought nine charges against the respondent, it eventually proceeded with only two of these charges – the amended alternative first and fourth charges. The respondent admitted culpability to these two charges based on an agreed statement of facts (“the Agreed Statement”). Hence, we only considered the amended alternative first and fourth charges in the proceedings before us. Further, as a significant portion of the facts surrounding the three sale and purchase transactions was hotly disputed by the complainants and respondent, we only had regard to the circumstances giving rise to the amended alternative first and fourth charges as well as to the facts in the Agreed Statement in reaching our decision.

3 We now set out the facts relevant to our decision.

Circumstances leading up to the first charge

4 The respondent was an advocate and solicitor of 18 years’ standing. He was a partner of the firm M/s Yong Koh & Pillai between 1987 and December 1995, before setting up as partner in the firm of M/s Pillai and Pillai. The complainants were a couple, Saminathan Shanmuganathan (“the first complainant”) and his common law wife. Samynathan Chainthiran (“Chainthiran”) is the brother of the first complainant.

5 The complainants purchased the property around 5 May 1994, intending to use it for their restaurant business. The respondent’s firm at the time, M/s Yong Koh & Pillai, acted for the complainants. To finance the purchase, the complainants mortgaged the property to obtain a housing loan for the sum of $2,100,000 from the Industrial and Commercial Bank (“ICB”). They also took out a further loan from ICB to finance the renovation of the property.

6 As it turned out, the complainants were unable to commence their restaurant business because they failed to obtain the Temporary Occupation Permit and Certificate of Statutory Completion from the relevant authorities. Consequently, they fell behind on their loan repayments to ICB, which commenced two separate suits against them in July 1995 for repayment of the outstanding loans.

The first charge

7 In or around July 1995, the respondent’s sister, Vasanthi Pillai (“Vasanthi”), agreed to purchase the property from the complainants at a price of $4,500,000. The respondent acted for both the complainants and Vasanthi in the transaction. A sale and purchase agreement (“the Second Agreement”) incorporating the Singapore Law Society’s Conditions of Sale 1994 was drawn up by the staff of M/s Yong Koh & Pillai on the basis of information supplied by the respondent, who was still a partner of the firm at that time. Vasanthi applied for and obtained a loan of $3,600,000 from Overseas Union Trust (“OUT”) to finance her purchase of the property. The respondent acted as guarantor for the loan.

8 In the course of this transaction, the respondent never advised the complainants that there was a conflict of interest in his acting for them as well as for his sister Vasanthi in the matter. He failed to advise the complainants to seek independent legal advice or to ensure that they had reasonable opportunity to do so. He admitted that this was misconduct within s 83(2)(h) of the LPA and pleaded guilty to the amended alternative first charge framed against him by the Law Society, which read:

That you, Subbiah Pillai, are guilty of misconduct within the meaning of Section 83(2)(h) of the Legal Profession Act (Cap 161) IN THAT you, between 19 July 1995 to 1 September 1995 (both dates inclusive) whilst acting as solicitor for your sister, Vasanthi Pillai, in the purchase of the property known as 19 and 21 Upper Dickson Road Singapore, acted as solicitor for the vendors of the said property, Saminathan Shanmuganathan and Madam S Sudhendra in the same transaction, and thus allowed a conflict of interest to arise, without first advising the vendors of the same and/or advising that they should seek independent legal advice, and/or ensuring that they had a reasonable opportunity to do so.

The fourth charge

9 On or about 1 July 1996, the complainants entered into another agreement to re-purchase the property from Vasanthi for $4,500,000. Again, the respondent acted for both the complainants and Vasanthi to prepare a sale and purchase agreement dated 1 July 1996. The agreement was not completed and the property was not re-purchased by the complainants.

10 Later in July, the first complainant informed the respondent that he had persuaded his brother, Chainthiran, to purchase the property on behalf of both complainants. Vasanthi and Chainthiran subsequently executed four sale and purchase agreements on four different dates in August 1996 and September 1996. All four agreements were for the sum of $4,850,000, were stated to be subject to the Law Society’s Conditions of Sale 1994 and save for the different dates, contained identical terms and conditions. They were all prepared by the respondent who acted for both Vasanthi and Chainthiran. We will refer to these four agreements collectively as “the Third Agreement”.

11 Although there were certain conditions in the Third Agreement which were not favourable to the purchaser (Chainthiran), the respondent failed to give him the necessary advice. For example, although Condition 4 of the Third Agreement provided that the property was to be sold with vacant possession, there was actually an existing tenancy agreement in force between Vasanthi and one “Pradeep Kummar” in respect of the property. Chainthiran was not appraised of this agreement, nor told that he would not be obtaining vacant possession of the property. Pradeep Kummar subsequently commenced proceedings against Vasanthi and Chainthiran in District Court Suit No 3675 of 1997.

12 Another condition which was unfavourable to the purchaser was Condition 7. Condition 7(a) of the Third Agreement stated that sale of the property was subject to two caveats and Condition 7(b) provided that Chainthiran was deemed to have purchased the property with knowledge of these two caveats and should not be deemed to raise any objections or queries on the title or otherwise in respect thereof, nor should the same operate as a ground for Chainthiran to delay completion of the sale and purchase. Again, the respondent failed to advise Chainthiran or the complainants about the consequences or effect of these conditions. Acknowledging his misconduct, the respondent pleaded guilty to the amended alternative fourth charge, formulated as follows:

That you, Subbiah Pillai, are guilty of misconduct within the meaning of Section 83(2)(h) of the Legal Profession Act (Cap 161) IN THAT you, between the period 6 August 1996 to 6 December 1996 (both dates inclusive) whilst acting as solicitor for your sister, Vasanthi Pillai, in the sale of the property known as 19 and 21 Upper Dickson Road Singapore, acted as solicitor for the purchaser of the said property, Samynathan Chainthiran in the same transaction, and thus allowed a conflict of interest to arise, without first advising the purchaser of the same, and/or advising that he should seek independent legal advice, and/or ensuring that he had a reasonable opportunity to do so.

The Disciplinary Committee’s findings

13 The Disciplinary Committee (“DC”) found that the respondent’s conflict of duties and conduct in the transactions were of a nature serious enough to warrant disciplinary action under s 93(1)(c) of the LPA. In reaching this conclusion, the DC noted that this was not a simple conflict of duties situation. Rather, the DC considered at para 38 of its report that there were “unusual” features to the various...