Public Trustee and Another v by Products Traders Pte Ltd and Others

JurisdictionSingapore
CourtHigh Court (Singapore)
Judgment Date26 May 2005
Date26 May 2005
Docket NumberOriginating Summons No 1030 of 2000 (Summons in Chambers No 600797 of 2004)

[2005] SGHC 103

High Court

V K Rajah J

Originating Summons No 1030 of 2000 (Summons in Chambers No 600797 of 2004)

Public Trustee and another
Plaintiff
and
By Products Traders Pte Ltd and others
Defendant

T P B Menon (Wee Swee Teow & Co) for the Public Trustee

Roland Tong (Wong Tan & Molly Lim LLC) for the first and second respondents (the applicants herein)

Mohan Das Naidu (Mohan Das Naidu & Partners) for the third respondent

Nor'ain Abu bte Bakar and Ruby Tan (Abu Bakar Tan Ibrahim & Partners) for the fourth respondent

Peter Chua (Peter Chua & Partners) for the fifth and sixth respondents

George Lim (Wee Tay & Lim) for the Estate of Shaik Ahmad bin Abdullah Wahdain Basharahil (deceased)

M N Swami (Swami & Partners) for the Estate of Abdul Rahim Awad Wachdin (deceased).

By Products Traders Pte Ltd v JAK Alhadad and Co Pte Ltd [2004] SGHC 265 (refd)

Copeland v Smith [2000] 1 WLR 1371; [2000] 1 All ER 457 (refd)

Econ Corp Ltd, Re [2004] 2 SLR (R) 264; [2004] 2 SLR 264 (refd)

G Mayor Cooke, In re (1889) 5 TLR 407 (folld)

Geveran Trading Co Ltd v Skjevesland [2003] 1 All ER 1 (refd)

McBrearty v HM Advocate2004 JC 122 (refd)

Myers v Elman [1940] AC 282 (refd)

Rondel v Worsley [1969] 1 AC 191 (refd)

Shaik Ahmad bin Abdullah Wahdain Basharahil, Re Will of [2003] 1 SLR (R) 433; [2003] 1 SLR 433 (refd)

Sharratt v London Central Bus Co Ltd [2003] 4 All ER 590 (refd)

Shaw & Shaw Ltd v Lim Hock Kim (No 2) [1958] MLJ 129 (folld)

Tombling v Universal Bulb Company, Limited [1951] 2 TLR 289 (refd)

Legal Profession Act (Cap 161,2001 Rev Ed)ss 82 (1),85 (3)

Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2000 Rev Ed)rr 54, 55, 56,57, 58, 59,60, 61, 62,63

Civil Procedure–Payments into and out of court–Successful application for payment out of court of moneys paid into court in separate earlier proceedings between different parties and on different issues–Whether moneys wrongly paid out of court–Whether to grant application for return of such moneys paid out of court–Legal Profession–Duties–Court–Relationship between solicitor's duty to client and duty to court–Extent of solicitor's duty not to mislead court

The estate of the deceased (“the Estate”) was left with 29 properties (“the properties”) to administer. The properties were vested in the Public Trustee (“PT”) as appointed trustee of the deceased's will.

On 30 July 2002, it was determined that only 14 beneficiaries were entitled to the properties, including six beneficiaries purportedly represented by the fifth and sixth respondents (“Musa” and “Salim” respectively) (“the determination of 30 July 2002”). The PT was also granted the power to sell the properties, but was not to make any payment to any of the beneficiaries without leave of court. The properties were subsequently sold and the sale proceeds paid into court.

On 12 July 2004, the PT sought an order to sanction an interim distribution of the net proceeds of the sale of the properties amongst the 14 beneficiaries. The distributive shares of the six beneficiaries purportedly represented by Musa and Salim, which amounted to $4,595,350.38, were ordered to be paid into court, whilst the remaining distributive shares of the other beneficiaries were directly paid out. This was because the first and second respondents (“BP” and “Broadley” respectively) and others had competing claims to the sum vis-à-vis the six beneficiaries purportedly represented by Musa and Salim.

Some of the competing claims arose from the fact that the fourth respondent (“JAK”) had purportedly entered into sale and purchase agreements with Musa and Salim for their interest in the properties. Pursuant to these agreements, JAK allegedly paid Musa and Salim approximately $4.2m, most of which was provided by BP and Broadley to whom JAK sold the properties in a sub-sale.

Upon the determination of 30 July 2002 that Musa and Salim did not hold 100% of the beneficial interest in the Estate, JAK sued Musa and Salim for the purported breach of an agreement to sell the properties to it (“the JAK Suit”). JAK obtained judgment in default of appearance (“the default judgment”) in the sum of $4,270,096 against Salim on 14 January 2003.

On the basis of the default judgment, JAK applied in October 2003 to garnish part of the sale proceeds received by the PT (“the garnishee application”), pursuant to the determination of 30 July 2002 that the six beneficiaries represented by Musa and Salim were entitled to a proportion of the estate. The PT and the other interested parties objected to this application. The application was dismissed.

On 13 September 2004, solicitors for JAK (“Ms Norain and Ms Tan”) made an application in the JAK Suit for payment out of a sum of $4,270,000 from the moneys earlier paid in the other proceedings involving the PT. This application was made without any notice to the other interested parties. The assistant registrar hearing the application acceded to the payment out of court.

Upon discovering that payment out had been made, the solicitors for BP and Broadley applied for the return of the moneys paid out.

Held, allowing the applications:

(1) The respondents, including JAK, and their solicitors were aware that the payment into court of the sum of $4,595,350.38 was made in order to defer payment to any of the competing claimants pending a proper determination of rights to these moneys: at [37].

(2) All interested parties, including JAK, Musa and Salim, as well as their solicitors, were clearly signalled that no further payment out of the court-held moneys ought to have been made without proper notice to the other interested parties: at [38].

(3) JAK, in support of its application for payment out of court, was conspicuously economical with the relevant facts. Although both Ms Norain and Ms Tan were aware of the crucial facts and material circumstances, they nevertheless omitted to bring them to the court's attention. The audacity of JAK and its solicitors in making the 13 September 2004 application in the JAK Suit without notice to the other interested parties left one speechless. Had the assistant registrar been notified of the material and relevant facts, she would not have sanctioned the payment out of court: at [40], [41], [43] and [44].

(4) Both JAK and its solicitors, by wilfully suppressing material facts and information, perpetrated a fraud on the court by applying for and obtaining the payment out of court of the sum of $4,270,000 plus interest amounting to $9,827.16. The release of the sum in question should never have been made from moneys paid into court in altogether different proceedings without prior notice being duly given to all the interested parties. It was not only preposterous but inconceivable that an order should have been made in the JAK Suit for the payment out of moneys paid into court in this originating summons, given that the two proceedings involved parties who were distinct and disparate and who were in any event being sued in different capacities: at [45].

[Observation: A solicitor's duty not to mislead the court was crucial. The reputable badge of an officer of the court should never be compromised on the pretext that one was acting in the client's best interests. The solicitor's obligation was to pursue his client's interests only in so far as it did not compromise or interfere with the administration of justice: at [27], [31] and [36].

Ms Norain and Ms Tan willingly subordinated and/or wilfully ignored and relinquished both their obligations of candour to the court and their duty to place all material facts before the court. After conniving with their clients for the release of the subject moneys, they continued to appear in court without disclosing to the court that its subsequent directions in relation to the payment out of the fund would be wholly ineffectual. The conduct of Ms Norain and Ms Tan would be referred to a disciplinary committee pursuant to s 85 (3) of the Legal Profession Act (Cap 161, 2001 Rev Ed), as would the conduct of one Mr Chua, counsel for Musa and Salim: at [47], [49] and [50].]

V K Rajah J

1 Is the solicitor's obligation to exercise his best endeavours in his client's interests invariably paramount and immutable? Can and should the perceived interests of a client ever be allowed to take precedence over a solicitor's obligation of candour to the court qua officer of the court? What precisely does a solicitor's duty of candour to the court entail? Can a solicitor apply for payment out of court of moneys earlier paid into court in separate proceedings which include and involve different parties and issues? These are some of the issues raised in this application which involves the return of moneys paid out of court without proper notice being duly given to all the relevant parties in the original proceedings. I am compelled to state, right at the outset, that these proceedings should serve as a stark reminder of just how inextricably and inescapably dependent the court is on the integrity of solicitors appearing before it and of the critical role solicitors play in the administration of justice.

Background facts

2 Shaik Ahmad bin Abdullah Wahdain Basharahil (“Shaik Ahmad”) passed away in Madura, Indonesia, on 15 July 1953. In his will, he directed that 61 properties in Singapore belonging to him be held on trust for his heirs in accordance with “Mohamedeen Intestate Law”.

3 As the trustee appointed under the will did not reside in Singapore, the Public Trustee (“PT”) was appointed trustee of the will by an order of court on 11 October 1976. All 61 properties were thereupon vested in the PT. Subsequently, 32 of the properties were compulsorily acquired by the State, leaving the estate of Shaik Ahmad (“the Estate”) with just 29 properties to administer.

4 The terms of the will stipulated that the Estate's assets were to be distributed only 21 years after Shaik Ahmad's death...

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