LVM Law Chambers LLC v Wan Hoe Keet and another and another matter

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 03 April 2020
• Neutral Citation: [2020] SGCA 29
• Defendant Counsel: Wong Soon Peng Adrian, Ng Tee Tze Allen and Timothy Ng Sin Zhan (Rajah & Tann Singapore LLP)
• Date: 03 April 2020
• Docket Number: Civil Appeal No 102 of 2019 and Summons No 119 of 2019
• Hearing Date: 23 January 2020
• Plaintiff Counsel: Lok Vi Ming SC, Lee Sien Liang Joseph, Tang Jin Sheng, Tan Qin Lei and Muk Chen Yeen Jonathan (LVM Law Chambers LLC)
• Published date: 10 April 2020
• Court: Court of Appeal (Singapore)
• Citation: [2020] SGCA 29
• Year: 2020

Andrew Phang Boon Leong JA (delivering the grounds of decision of the court): Introduction

Is a law firm which acted for a party (A) against another party (B) in previous proceedings permitted to act for another party (C) against that same party (B) in subsequent proceedings and, if so, under what circumstances is it permitted to act? This is the central issue in the present appeal. Whilst appearing deceptively simple, this issue is not always a straightforward one. However, it is certainly important from the perspectives of both principle as well as practical application.

In the court below, the High Court judge (“the Judge”) held that the appellant law firm, LVM Law Chambers LLC (“the Appellant”), should not act for the party in the subsequent proceedings (ie, C) and therefore issued an injunction against the Appellant from acting for that party. The Judge’s reasons are to be found in Wan Hoe Keet and another v LVM Law Chambers LLC [2019] SGHC 103 (“the Judgment”). After considering the written as well as oral submissions by the parties, we allowed the appeal (albeit with one specific condition). We now give the detailed grounds for our decision. It would be appropriate to first set out the factual background before proceeding to set out the applicable legal principles and then applying them to the specific facts of the present case in order to explain why we allowed the appeal and also why we found that the imposition of a specific condition was nevertheless necessary in the circumstances. In particular, we held that whilst the Appellant could continue to act for the party concerned (C, in the above example), it could not disclose the terms of the settlement agreement between the respondents in the present proceedings (B, in the above example) and the party in the previous proceedings (A, in the above example) to the party it was acting for in the present proceedings (C, in the above example), or to anyone else, save as required or permitted by law.

Background facts

The present appeal arose out of the proceedings in Originating Summons No 13 of 2019 (“OS 13/2019”), which was an application by Mr Wan Hoe Keet (“Mr Wan”) and Ms Sally Ho (“Ms Ho”), the respondents in this appeal (“the Respondents”), for an injunction to restrain the Appellant law firm from acting in Suit No 806 of 2018 (“Suit 806/2018”).

By way of background, Suit 806/2018 is brought by Ms Chan Pik Sun (“Ms Chan”) against the Respondents in relation to their alleged roles in a Ponzi scheme known as “SureWin4U”. In summary, Ms Chan claims that she was induced by the Respondents to invest in the scheme through a series of fraudulent or negligent misrepresentations. The Appellant is the law firm presently engaged by Ms Chan to act on her behalf in Suit 806/2018.

Suit 806/2018 is not the first instance in which the Appellant has acted against the Respondents in relation to their alleged roles in SureWin4U. Prior to the commencement of Suit 806/2018, the Respondents were the defendants in a similar action in Suit No 315 of 2016 (“Suit 315/2016”) in which the Appellant acted for the plaintiff, Dr Lee Hwee Yeow (“Dr Lee”). The proceedings in Suit 315/2016 were resolved on the first day of trial, 20 October 2017, following negotiations conducted by the parties’ solicitors outside of court, with a settlement agreement being signed later that day (“the Settlement Agreement”). The Settlement Agreement, to which the Appellant was not expressly made a party, included a confidentiality clause which reads as follows:

The circumstances of the Claims, all materials prepared in respect of [Suit 315/2016] (including but not limited to documents which have been filed on E-litigation) and/or disclosed in [Suit 315/2016], and any settlement between parties [ie, Dr Lee, Mr Wan and Ms Ho] (including the terms of settlement)) shall be kept strictly confidential between parties, unless disclosure is (1) required by law, (2) by written consent between parties, (3) sanctioned by the High Court of Singapore, and (4) for enforcement of this Settlement Agreement.

The Respondents did not initially oppose the Appellant representing Ms Chan in Suit 806/2018. After Suit 806/2018 was commenced on 15 August 2018, the Respondents filed Summons No 4524 of 2018 on 1 October 2018 to require Ms Chan to produce certain documents for inspection pursuant to O 24 r 11 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed). This was followed on 2 October 2018 by Summons No 4562 of 2018, an application for security for costs. No objection was taken to the Appellant’s acting in either application, nor was any raised at the hearing of both summonses on 19 November 2018. Indeed, it appeared that the first time the Respondents demonstrated any misgivings was in a letter sent on 29 November 2018 inviting the Appellant to cease its representation of Ms Chan in Suit 806/2018.

Following the Appellant’s refusal to discharge itself, OS 13/2019 was filed on 4 January 2019 by the Respondents for an injunction restraining the Appellant from: (a) acting for Ms Chan in Suit 806/2018; and (b) representing or advising Ms Chan or any other party in connection with matters raised in Suit 806/2018. The Respondents took the position that the Appellant owed them obligations of confidence by virtue of having participated in the Suit 315/2016 settlement negotiations, and that there was a real risk that it would misuse or disclose confidential information if not restrained from acting.

The decision below

The Judge granted the Respondents the sought for injunction. The Judge framed two issues for determination: (a) whether there was a conflict of interests in the Appellant acting for Ms Chan in Suit 806/2018 after having acted for Dr Lee in Suit 315/2016; and (b) if so, whether the Respondents had shown a threat of misuse sufficient to justify an injunction against the Appellant from acting for Ms Chan (see the Judgment at [4]).

In finding for the Respondents on both issues, the Judge found that the facts of the case were similar to the decision of the New South Wales Court of Appeal in Worth Recycling Pty Ltd v Waste Recycling and Processing Pty Ltd [2009] NSWCA 354 (“Worth Recycling (CA)”). The Judge agreed with the submission of the Respondents’ counsel that, apart from the amount and terms of a settlement, the nature and process by which a settlement sum is reached are also important and confidential (see the Judgment at [7]).

On the facts, it did not matter that there was no explicit imposition of an obligation of confidence on the appellant by the Settlement Agreement. The Judge, citing the Singapore High Court decision of Invenpro (M) Sdn Bhd v JCS Automation Pte Ltd and another [2014] 2 SLR 1045 at [129], held that an equitable duty of confidence would be owed to the Respondents if the circumstances were such that a reasonable solicitor would have known that the information in question was given in confidence. Dr Lee had promised the Respondents that he would not disclose any confidential information obtained in the course of settlement negotiations except where contractually provided. Such negotiations were conducted by the Appellant on this understanding, and this imposed an equitable duty of confidence not to divulge or use confidential information obtained except where allowed by the Settlement Agreement (see the Judgment at [9]). The Appellant was thus bound by the Settlement Agreement which its client, Dr Lee, had signed with the Respondents.

The Judge was also satisfied that there was a sufficient threat of misuse to justify the grant of an injunction. The Respondents would be disadvantaged by the knowledge gained by the Appellant from its participation in the Suit 315/2016 settlement negotiations due to the possibility of an accidental or subconscious breach of the obligation of confidence (see the Judgment at [10]–[11]).

The issues before this court

There were two interrelated issues which arose for our consideration: First, what are the applicable legal principles in deciding whether a lawyer or law firm should be restrained from acting for a plaintiff against the same counterparty in a previous set of proceedings resolved by means of a settlement or mediation? Second, applying these legal principles to the facts of the case, should the Appellant be restrained from acting for Ms Chan in Suit 806/2018?

The applicable legal principles

It is clear that if the lawyer has contractually agreed to be bound by a duty of confidentiality, then that agreement will operate accordingly and whether or not he can act for a subsequent party against the same counterparty in a previous set of proceedings will depend on the precise scope of the duty embodied in the contract itself. However, this was not the situation in this appeal as the Appellant never entered into such an agreement, although one did exist between the parties to the previous proceedings (see [5] above). Indeed, this particular point distinguishes this case from that of the New Zealand Court of Appeal in Carter Holt Harvey Forests Ltd v Sunnex Logging Ltd [2001] 3 NZLR 343 (“Carter Holt”), where the lawyers in question had signed confidentiality agreements in their personal capacity prior to taking part in the mediation. We also note that in this last-mentioned case, the confidentiality agreements which the lawyers signed were “sufficiently wide to encompass everything which occurred as part of the mediation process” (see Carter Holt at [23]).

However, even if (as is the situation in this appeal) the lawyer concerned has not entered into a contractual agreement of confidentiality, that is not necessarily an end to the matter. In limited circumstances, an equitable duty of confidence may be imposed by the court, such that it may be inappropriate for the lawyer (or law firm) concerned to act for a party against the same counterparty in a previous set of proceedings. What, then, might...