Law Society of Singapore v Top Ten Entertainment Pte Ltd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 07 April 2011
• Neutral Citation: [2011] SGCA 11
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 20 of 2010
• Year: 2011
• Published date: 09 May 2011
• Hearing Date: 11 February 2011
• Plaintiff Counsel: Thio Shen Yi SC and Wee Yu Ping Nicole (TSMP Law Corporation)
• Defendant Counsel: Bajwa Ragbir Singh (Bajwa & Co)
• Subject Matter: Legal Profession,Disciplinary Procedures
• Citation: [2011] SGCA 11

Chan Sek Keong CJ (delivering the judgment of the court): Introduction

This is an appeal by the Law Society of Singapore (“the Law Society”) against an order of costs made by the judge (“the Review Judge”) in Originating Summons No 1048 of 2008 (“the OS”) against it arising out of disciplinary proceedings against an advocate and solicitor, viz Andre Arul (“Arul”) on the complaint of Top Ten Entertainment Pte Ltd (“Top Ten”) (see Top Ten Entertainment Pte Ltd v Law Society of Singapore [2011] 1 SLR 291 (“the GD”)).

The Law Society was ordered to pay 50% of Top Ten’s costs in the OS brought pursuant to s 96(1) of the Legal Profession Act (Cap 161, 2001 Rev Ed) (“the 2001 LPA”) to review the decision of the Council of the Law Society (“the Council”) not to initiate a formal investigation against Arul. The Council had accepted the recommendation of the Inquiry Committee (“IC”) to dismiss Top Ten’s complaint against Arul. This appeal raises an important costs principle in relation to the role of the Law Society in disciplinary proceedings against advocates and solicitors, as well as the question of whether there is a right of appeal from the decision of a Judge in such a review application.

The Facts

The material facts are as follows. Arul is an advocate and solicitor of the Supreme Court of Singapore, and is a partner in the firm of Messrs Arul Chew & Partners. On 29 January 2007, Top Ten filed a complaint to the Law Society against the conduct of Arul, who had represented Top Ten in litigation. Due to a procedural irregularity, the complaint was re-lodged on 19 April 2007 (“the Complaint”). The Complaint made the following allegations: that Arul had rendered exorbitant bills of costs contrary to agreed costs at $25,000; and that he had acted contrary to strict instructions from Top Ten not to transfer any money from the client’s account by transferring sums of $54,909 and $32,000 from the client’s account to satisfy his bills of costs which were disputed by Top Ten.

The Complaint was inquired into by an IC which recommended to the Council (a) to dismiss the Complaint as having no merit, but (b) to impose a fine of $500 on Arul for breaching the Society’s Practice Directions in relation to Rule 7(1)(a)(iv) of the Legal Profession (Solicitors’ Accounts) Rules (Cap 161, R8, 1999 Rev Ed) (“Solicitors’ Accounts Rules”) in failing to give adequate notice to Top Ten of the transfer of its money from the client’s account. The Council accepted the findings of the IC and decided that a formal investigation by a Disciplinary Committee (“DC”) was unnecessary and dismissed the Complaint.

Top Ten applied for review of the Council’s decision under s 96(1) of the 2001 LPA. In its application, Top Ten alleged, among other things, (a) that Arul had breached his express instructions by transferring the sum of $114,440.97 into his firm’s client’s account rather than to it directly; and (b) that Arul had wrongfully placed the sum of $10,000 in his firm’s office account rather than the client’s account. At the hearing before the Review Judge, Top Ten produced an email dated 7 July 2006 containing express instructions to Arul to transfer party and party costs received after Top Ten’s litigation (ie, the sum of $114,440.97) directly to Top Ten and not to the firm’s client’s account. The Law Society resisted Top Ten’s application mainly on the ground that the email of 7 July 2006 was not produced to the IC and it was not part of the Complaint. However, a later email dated 24 August 2006 making the same allegation was before the IC.

Decision of the Review Judge

At the conclusion of the hearing, the Review Judge held that although there was no fee agreement between Top Ten and Arul, there was sufficient material to justify an investigation into the Complaint. By then, the 2001 LPA had been amended by the Legal Profession (Amendment) Act 2008 (Act 19 of 2008) such that the DC was renamed as the Disciplinary Tribunal (“DT”) – otherwise the provisions relevant to this matter remained the same. The amended version will hereinafter be called the LPA. Accordingly, the Review Judge directed the Law Society to apply to the Chief Justice under s 96(4)(b) of the LPA to appoint a DT to investigate two matters: whether Arul was in breach of his professional duties by paying the sum of $114,440.97 (received as party and party costs) into the client’s account contrary to Top Ten’s instructions as contained in the two emails dated 7 July 2006 and 24 August 2006, and also in transferring money from the client’s account in payment of solicitor’s fees; and whether Arul was in breach of the Solicitors’ Accounts Rules by placing the sum of $10,000 which he received on 11 August 2006 as party and party costs into Messrs Arul Chew & Partners’ office account instead of the client’s account.

On the question of costs of the review, the Review Judge ordered the Law Society to pay 50% of Top Ten’s costs in the proceedings on the following grounds: (a) that the Law Society had partly succeeded as it showed that there was no agreement between Top Ten and Arul on the legal fees; and (b) that Top Ten had contributed to the errors made by the IC and the Council by presenting its Complaint in a “messy way” and in not attending the IC proceedings. She rejected the Law Society’s submission that in principle no costs order should be made against the Law Society when it participated in litigation under a public duty. The Law Society’s case rested primarily on the decision of the English Court of Appeal in Baxendale-Walker v Law Society [2008] 1 WLR 426 (“Baxendale-Walker”) which laid down what we will refer to as the “Baxendale-Walker principle”.

The Review Judge held that the court’s discretion under s 96(4) of the LPA was unfettered, and that Top Ten’s application fell into the usual rule for civil cases, which is that costs will follow the event, subject to the overall aim of fairly allocating costs. In coming to this finding she referred to (inter alia) the cases of Tullio Planeta v Maoro Andrea G [1994] 2 SLR(R) 501 (“Tullio Planeta”) and Lim Teng Ee Joyce v Singapore Medical Council [2005] 3 SLR(R) 709. She found that the Law Society did not raise any legal question of public interest in the application that could justify the making of no order of costs against it.

The Review Judge distinguished Baxendale-Walker on the basis that, unlike in that case where the Law Society of England and Wales (“LSEW”) was prosecuting a solicitor before a disciplinary tribunal, here the Law Society was defending a decision made by its Council. She held that such a defence should be treated as in the Law Society’s private interest only. She found that where the Law Society was made a party to an application under s 96 of the LPA, it had no public duty to resist that application since it had the option of taking a neutral position, following the decision of the High Court in Re Shankar Alan s/o Anant Kulkarni [2007] 2 SLR(R) 95 (“Re Shankar Alan (costs)”). She also found that no legal question of public interest was raised in the case.

Law Society’s appeal on costs

The Law Society’s appeal is only against the costs order. As s 96(4) of the LPA provides that the costs in the review proceedings are what the Judge thinks just, this appeal will fail unless the Review Judge can be shown to have erred in principle and not merely based on our opinion as to the degree of “justness” involved. An appellate court would not interfere with the exercise of discretion unless its exercise was manifestly wrong or it was exercised on wrong principles (see Tullio Planeta at [22]).

In this appeal, the Law Society argued that the Review Judge was wrong in law in not applying the Baxendale-Walker principle as it acts as a regulatory body in disciplinary matters under the LPA. In carrying out this public function, the Law Society has no private interest to advance or protect. The Law Society submitted that the Review Judge erred in principle in applying the “costs follow the event” rule used in civil proceedings, as she should have applied the Baxendale-Walker principle as the starting point to determine whether the Law Society should be ordered to pays costs. The Law Society argued that disciplinary proceedings are not civil proceedings.

Counsel for Top Ten argued in support of the Review Judge’s approach and reasoning and relied on the following authorities: Ang Boon Kong Lawrence v Law Society of Singapore [1990] 2 SLR(R) 783, Law Society of Singapore v Ang Boon Kong Lawrence [1992] 3 SLR(R) 825 (“Ang Boon Kong Lawrence (CA)”), Re Lim Chor Pee [1990] 2 SLR(R) 117, Re Shankar Alan (costs), Chia Shih Ching James v Law Society of Singapore [1985–1986] SLR(R) 209 (“James Chia”) and Jeyaretnam Joshua Benjamin v Law Society of Singapore [1988] 2 SLR(R) 470 (“Jeyaretnam”). Before we address the authorities we will set out and consider the relevant statutory provisions.

Our decision The costs regime in the LPA and the Baxendale-Walker principle

Section 96 of the LPA provides as follows:

96. —(1) Where a person has made a complaint to the Society and the Council has determined — (a) that a formal investigation is not necessary; or (b) that no sufficient cause for a formal investigation exists but that the advocate and solicitor concerned should be ordered to pay a penalty,

that person may, if he is dissatisfied with the determination of the Council, apply to a Judge under this section within 14 days of being notified of the determination.

(2) Such an application shall be made by originating summons and shall be accompanied by an affidavit or affidavits of the facts constituting the basis of the complaint and by a copy of the complaint originally made to the Society together with a copy of the Council’s reasons in writing supplied to the applicant under section 87(4). (3) The application accompanied by a copy of...