Tan King Hiang v United Engineers (Singapore) Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 04 July 2005
• Neutral Citation: [2005] SGCA 32
• Docket Number: Originating Motion No 8 of
• Date: 04 July 2005
• Published date: 05 July 2005
• Year: 2005
• Plaintiff Counsel: Gopinath Pillai (Tan Peng Chin LLC)
• Citation: [2005] SGCA 32
• Defendant Counsel: Andre Yeap SC and Adrian Wong (Rajah and Tann)
• Court: Court of Appeal (Singapore)
• Subject Matter: Bankruptcy effects,Bankrupt taking further steps in proceedings without obtaining Official Assignee's sanction,Principles,Costs,Civil Procedure,Bankruptcy,Whether bankrupt competent to pursue matter,Orders 59 r 8(1), 59 r 8(2) Rules of Court (Cap 322, R 5, 2004 Rev Ed),Whether applicant's solicitors personally liable for costs,Section 131(1)(a) Bankruptcy Act (Cap 20, 2000 Rev Ed),Solicitors taking further steps in proceedings without obtaining Official Assignee's sanction despite client being adjudged bankrupt,Insolvency Law,Bankrupt failing to satisfy condition by time of hearing,Conditional sanction subsequently granted by Official Assignee,Whether costs wasted due to failure of applicant's solicitors to conduct proceedings with reasonable competence and expedition

4 July 2005

Chao Hick Tin JA (delivering the judgment of the majority):

1 This was an application by Tan King Hiang (“TKH”), made by way of Originating Motion No 8 of 2005 (“OM 8/2005”), seeking an extension of time to file a notice of appeal against the decision given by Judith Prakash J on 30 September 2004 in Suit No 13 of 2004 (“S 13/2004”). We heard the application on 25 April 2005 and dismissed it with costs on the ground that TKH was not competent to proceed with the application. We also fixed costs at $1,500 and ordered that it be paid by the solicitors personally. These grounds are issued to explain why costs were ordered against the solicitors.

The background

2 In S 13/2004, United Engineers (Singapore) Pte Ltd (“UE”) sued three parties, one of which was TKH, the second defendant, for conspiracy to corruptly secure contracts from UE by offering secret commissions to an employee of UE, one Lee Lip Hiong (“LLH”), the first defendant to the action. The third defendant to the action was Sin Yong Contractor Pte Ltd (“Sin Yong Ltd”) which was owned by TKH and two other persons.

3 Criminal charges under s 6(a) of the Prevention of Corruption Act (Cap 241, 1993 Rev Ed) were brought against LLH, who pleaded guilty and was convicted of ten charges, with 95 other charges taken into account. He was sentenced to 18 months’ imprisonment and a fine of $364,758. In S 13/2004, UE sought the return of the secret commissions paid to LLH from the three defendants.

4 Summary judgment in favour of UE was granted by the Senior Assistant Registrar, whose judgment was upheld by Prakash J on 30 September 2004, and the latter decision was the subject of the proposed appeal.

5 TKH should have filed his notice of appeal against the decision of Prakash J within the period of one month from the date thereof: see O 57 r 4 of the Rules of Court (Cap 322, R 5, 2004 Rev Ed). However, it was not done until 25 February 2005, a delay of some 118 days (reckoning from 30 October 2004, the date on which the notice of appeal should have been filed), when TKH applied to this court to grant him an extension of time to file the notice of appeal.

6 Pursuant to the judgment obtained in S 13/2004, UE filed a winding up petition against Sin Yong Ltd and it was granted on 12 November 2004. By a letter dated 9 November 2004, which was faxed to Prakash J on 12 November 2004, Sin Yong Ltd set out certain facts and asked the judge for advice. The letter was signed by TKH and two other directors. Quite naturally, the judge could not give any advice and the Registrar of the Supreme Court, in a reply dated 17 November 2004 and addressed to the three directors of Sin Yong Ltd, told them that they should seek advice from their own lawyers and that if they still wanted to appeal against the decision of 30 September 2004, they should seek an extension of time as the period for filing an appeal had by then expired.

7 Nothing was done by TKH until 19 January 2005 when he applied by way of Summons in Chambers No 336 of 2005 (“SIC 336/2005”) to the High Court, seeking for an extension of time to file a notice of appeal against Prakash J’s decision.

8 In the meantime, on the basis of the judgment, bankruptcy proceedings were instituted by UE against both TKH and LLH. On 20 January 2005, LLH was adjudged a bankrupt. However, the assistant registrar decided to adjourn the making of an order against TKH until after TKH’s application, made in SIC 336/2005 for an extension of time to file a notice of appeal, had been dealt with.

9 On 2 February 2005, SIC 336/2005 came before Andrew Ang JC (as he then was) who made no order as he was of the view that the High Court had no power to grant an extension of time to file a notice of appeal out of time; it should have been made to the Court of Appeal.

10 On 25 February 2005, at about 3.00pm, TKH was adjudged a bankrupt by the assistant registrar. Later, on the same day, TKH filed the present application in OM 8/2005 to the Court of Appeal. The electronic record showed that the motion was filed at 1926 hours, although counsel for TKH said that the motion was, in fact, left with the Registry of the Supreme Court much earlier in the day.

11 However, the solicitors for TKH proceeded to serve the papers on UE’s solicitors without obtaining the sanction of the Official Assignee (“OA”). It was only by 14 April 2005, some ten days before OM 8/2005 came up for hearing before the Court of Appeal, that TKH’s solicitors wrote to the OA for approval to continue with the proceeding. The next day, the OA gave his conditional consent but soon qualified it further to require TKH to deposit a sum of $40,000 as the OA’s security for costs in relation to the motion.

12 Up to the date of the hearing of the motion, TKH was not able to furnish the security required by the OA. The result was that TKH was incompetent to pursue the matter. The motion was accordingly dismissed by this court with costs. As TKH was already a bankrupt, an order for costs in favour of UE would give the latter very little comfort. Thus, UE’s counsel asked that an order on costs be made against the solicitors personally.

13 Order 59 r 8(1)(c) of the Rules of Court provides that:

Subject to this Rule, where it appears to the Court that costs have been incurred unreasonably or improperly in any proceedings or have been wasted by failure to conduct proceedings with reasonable competence and expedition, the Court may make against any solicitor whom it considers to be responsible (whether personally or through an employee or agent) an order directing the solicitor personally to indemnify such other parties against costs payable by them. [emphasis added]

14 For the purposes of the present matter, the issue which we had to address was whether costs had been wasted due to the failure of TKH’s solicitors to conduct proceedings “with reasonable competence and expedition”. This test is different from that prescribed under the earlier rules (pre-1991) which was that the costs were incurred “improperly or without reasonable cause or wasted by undue delay or by any other misconduct or default”. Thus, under the previous rules, some element of fault must be present before costs could be awarded against the solicitor personally. It would appear that under the previous rules a high degree of impropriety was required to be established before the solicitor should be made personally responsible for costs: see Pinsler, Singapore Court Practice 2003 (LexisNexis, 2002) para 59/8/1. Under the present rules there are no references to “misconduct or default”.

15 The rationale for the provision in O 59 r 8(1) seems to us to be based essentially on the considerations that:

(a) the law imposes a duty on solicitors to exercise reasonable care and skill in conducting their clients’ affairs although an advocate enjoys immunity from claims for negligence by his clients in respect of his conduct and management of a case in court and the pre-trial work immediately connected with it; and

(b) a litigant should not be financially prejudiced by the unjustifiable conduct of litigation by his opponent or his opponent’s solicitor.

16 In Ho Kon Kim v Lim Gek Kim Betsy [2001] 4 SLR 340 at [58], this court had reaffirmed the correctness of the three-stage test conceived in In re a Barrister (Wasted Costs Order) (No 1 of 1991) [1993] QB 293 at 301 and enunciated in Ridehalgh v Horsefield [1994] Ch 205 (“Ridehalgh”) at 231 as to how the jurisdiction of the court under O 59 r 8(1) should be exercised:

(1) Has the legal representative of whom complaint is made acted improperly, unreasonably or negligently? (2) If so, did such conduct cause the applicant to incur unnecessary costs? (3) If so, is it in all the circumstances just to order the legal representative to compensate the applicant for the whole or any part of the relevant costs?

17 In England, the applicable rule (O 62 r 11 of the Rules of the Supreme Court) between 1986 and 1991 was in pari materia with our O 59 r 8(1). However, in 1991, the English rule was amended to supplement s 51 of the Supreme Court Act 1981 (c 54). While the wording of the amended O 62 r 11 omits any reference to the words “improper”, “unreasonable” and “negligent” found in its unamended version, it does make reference to s 51 which provides that wasted costs may be ordered against the lawyer responsible for the waste and the term “wasted costs” has been defined to mean, inter alia, costs incurred by a party “as a result of any improper, unreasonable or negligent act or omission” on the part of the lawyer concerned. Hence, despite the recent introduction of the UK Civil Procedure Rules in 2001, English cases that interpret s 51 may still be helpful.

18 In Ridehalgh, the English Court of Appeal had the occasion to consider the meaning and scope of the three terms “improper”, “unreasonable” and “negligent”. While we acknowledge that such terms are, by their very nature, not amenable to precise definition, the court there did provide some very useful guidelines. Sir Thomas Bingham MR, delivering the judgment of the court, said (at 232–233):

The adjective [“improper”] covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code.

… The expression [“unreasonable”] aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be...