Legal Profession

• Author: LAI Yew Fei* LLB (Hons) (National University of Singapore) Advocate and Solicitor (Singapore); Partner, Rajah & Tann Singapore LLP.
• Citation: (2018) 19 SAL Ann Rev 671
• Published date: 01 December 2018
• Date: 01 December 2018
• Publication year: 2018

Introduction

21.1 This review covers 19 cases, comprising four Court of Three Judges decisions, three High Court decisions and 12 disciplinary tribunal (“DT”) decisions. The disciplinary cases involved preferring one client's interests over another's, failing to pay moneys due under a solicitor's undertaking, failing to keep proper accounts, overdrawing on client accounts and grossly improper conduct.

Conviction of an offence involving fraud or dishonesty

21.2 In Law Society of Singapore v Kangatharan s/o Ramoo Kandavellu,1 the respondent was struck off the rolls by the Court of Three Judges for devising a scheme to defraud the Government by abusing the Productivity and Innovation Credit (“PIC”) scheme. The case offered an opportunity for the court to clarify whether an “offence involving fraud or dishonesty” under s 94A(1) of the Legal Profession Act2 (“LPA”) is limited to a situation where fraud or dishonesty is a constituent element of the underlying offence.

21.3 The respondent in this case had pleaded guilty to an offence under s 37J(2) of the Income Tax Act3 (“ITA”). Section 37J(2) of the ITA makes it an offence for a person to give the Comptroller of Income Tax any false information under s 37I(2) (which relates to the PIC scheme) “without reasonable excuse or through negligence”. Together with a PIC promoter and the promoter's wife, the respondent was involved in a scam to defraud the Government through an abuse of the PIC scheme. Among other things, the respondent made various false declarations in a PIC cash payout application form, while being aware that he was not eligible for the PIC scheme. Even after his PIC claim was rejected by the

Inland Revenue Authority of Singapore (“IRAS”), the respondent pursued his claim and assisted in the drafting of an appeal letter.

21.4 The Law Society made an application under s 94A(1) of the LPA, under which the Law Society “shall, without further direction”, make an application to the Court of Three Judges under s 98 of the LPA where “a regulated legal practitioner has been convicted of an offence involving fraud or dishonesty”. The critical question in the present case was whether the s 94A(1) procedure was available, given that fraud or dishonesty is not a constituent element of the offence under which the respondent was convicted. The court answered this question in the affirmative and held that s 94A(1) of the LPA can be engaged as long as the facts surrounding or underlying the commission of the offence disclose fraud or dishonesty, subject to the following qualifications:

(a) the facts in question must have been finally proved or admitted at the time of the conviction, so that the Court of Three Judges would not have to undertake a separate factual inquiry; and

(b) these facts must be closely connected to the charge and the conviction and not be wholly extraneous to it.4

21.5 In the present case, the respondent had admitted to the relevant dishonest conduct without qualification in the statement of facts, and those facts were closely connected with the offence that he was charged with. In the circumstances, s 94(1) of the LPA was properly engaged and the court had jurisdiction to hear the matter.5

21.6 On sentencing, the court held that striking off under s 83(1)(a) of the LPA was the appropriate sanction as the case fell within at least one of the “typical” situations where a striking off order would ordinarily be warranted, namely, that the dishonesty is integral to the circumstances surrounding the commission of the offence of which the solicitor has been convicted. In addition, the respondent's egregious conduct demonstrated a fundamental disregard for the law and a severe lack of integrity. Accordingly, the court struck off the respondent from the roll and fixed costs at S$7,000 to be paid by the respondent.

Taxation of solicitor's bill

Whether a retainer using hourly rate constitutes contentious business agreement

21.7 In Ho Seow Wan v Morgan Lewis Stamford LLC,6 which concerned an application by the plaintiff against his former solicitors (“MLS”) for MLS to refer various bills of costs for work done in relation to two suits for taxation, the High Court had to consider the issue of whether an engagement letter entered into between a solicitor and a client in which the client agreed to pay for legal services based on the solicitor's charge-out rate (as opposed to a lump-sum fee) could constitute a “contentious business agreement” (“CBA”) within the meaning of s 111 of the LPA, such that bills of costs issued pursuant to the engagement letter were precluded under s 112(4) from being sent for taxation.

21.8 In this case, the relevant engagement letters between the plaintiff and MLS provided for the solicitors' charge-out rates and did not set out any lump-sum fee arrangement. The plaintiff argued that (a) an agreement as to charge-out rates of the solicitors could never be considered sufficiently specific to constitute a CBA (“Broad Objection”); and (b) in the alternative, the agreements as to the charge-out rates provided for in the engagement letters in the present case were on the facts not sufficiently specific to constitute CBAs (“Narrow Objection”).

21.9 The court rejected the plaintiff's arguments and held that the CBAs were CBAs within the meaning of s 111 of the LPA. The court considered the following arguments:

(a) Plaintiff's broad objection: Having carefully considered the applicable legal provisions, the terms of the engagement letters, and the relevant foreign and local case precedents, the court took the view that agreements as to the charge-out rates of the solicitors in charge of a matter (as opposed to lump-sum fee agreements) could, as a matter of principle, be considered agreements that are sufficiently specific to constitute CBAs.7

(b) Plaintiff's narrow objection: The court held that whether an agreement as to charge-out rates was sufficiently specific to constitute a CBA depends on whether the agreement was specified in sufficiently clear terms so that the client would

be in a position to make a reasoned calculation based on the agreement as to what his legal fees would eventually be upon completion of the contentious legal matter. What was to be regarded as sufficiently clear for such purposes would naturally be an intensely fact-specific inquiry.8 On the facts of this case, the terms of the engagement letters were sufficiently specific to constitute CBAs. It was sufficient that the engagement letters had specified:

(i) the specific scope of the matters that were covered under the fee agreement;

(ii) the solicitors that were assigned to take charge of the conduct of the suits;

(iii) the specific charge-out rates of each of the solicitors in charge of the matter; and

(iv) the fact that the charge-out rates were to be applied to the actual number of hours utilised by the respective solicitors concerned.9

The court also found that there were sufficient safeguards against overcharging for agreements as to charge-out rates to be applied on the actual number of hours utilised by the solicitor on the scope of work as agreed.10

21.10 In the circumstances, the court found that MLS's engagement letters were CBAs within the meaning of s 111 of the LPA and dismissed the plaintiff's taxation application with costs.

Expiry of 12 months from delivery of bill payment and payment of bill by client

21.11 In H&C S Holdings Pte Ltd v Gabriel Law Corp,11 the applicant sought a declaration that six invoices issued to it by the respondent law firm (“GLC”) between 15 January 2014 and 28 September 2015 were not proper bills within s 122 of the LPA, and that it was thus under no liability to pay them. Alternatively, the applicant sought an order that the six invoices issued by GLC be referred to the Registrar for taxation. The High Court granted leave to the applicant to have two of the six invoices taxed.12

21.12 In this decision, the court considered the application of two “disqualifying events” under s 122 of the LPA for sending bills for taxation, namely (a) the expiration of 12 months from the delivery of a bill of costs (“the time limit disqualification”); and (b) the payment of a bill of costs (“the payment disqualification”).13 Under s 122 of the LPA, if either or both of these disqualifying events have occurred, the court must be satisfied that there are special circumstances justifying an order for taxation before the court can make an order for the bill of costs to be taxed. There is no strict rule as to what constitutes “special circumstances” and it is for the court to decide on the facts of every case whether there are special circumstances which justify referring the solicitor's bill for taxation.14 The court observed, inter alia, that:

(a) Not all disputes between a client and his solicitor regarding deposits and moneys in the client's account are amenable to be “solved” by means of taxation of a bill of costs. Where a client alleges that the solicitor has wrongly retained moneys belonging to a client and the solicitor raises a defence that he is owed costs for fees and disbursements, the existence of a right to deduct or set-off the solicitor's claim against the client's moneys is not a matter that can be properly addressed by taxation per se before the Registrar. In such a situation the proper course of action is to (i) establish the existence of a right of deduction or set-off; and (ii) apply for taxation of the bill of costs to establish what are the appropriate fees which the lawyer can claim.15

(b) Whilst it is rightly said that taxation provides the best way of determining what the solicitor is entitled to claim as fees, overcharging is a matter that is best raised and addressed prior to payment and/or expiration of the 12-month period under s 122. Once a disqualification event has set in, it cannot be assumed that the law should lean in favour of granting leave where...