The Law Society of Singapore v Devadas Naidu

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 10 January 2001
• Neutral Citation: [2001] SGHC 7
• Docket Number: Originating Summons No 1104 of
• Date: 10 January 2001
• Year: 2001
• Published date: 19 September 2003
• Plaintiff Counsel: Lawrence Quahe and Carolyn Tong (Harry Elias Partnership)
• Citation: [2001] SGHC 7
• Defendant Counsel: Jimmy Yim SC and Suresh Divyanathan (Drew & Napier)
• Court: High Court (Singapore)
• Subject Matter: Client relationship,Legal Profession,Solicitor,s 83(2)(j) Legal Profession Act (Cap 161, 1997 Ed),Legal Profession (Professional Conduct) Rules 1998 r 33(a),Absence of independent legal advice,Nature of solicitor and client relationship,Transactions with client -Prohibited borrowing transaction

(delivering the grounds of judgment of the court): Introduction

The abovenamed, Devadas Naidu (`the respondent`), is an advocate and solicitor of the Supreme Court, and was ordered to show cause before us why he should not be dealt with under s 83 of the Legal Profession Act (Cap 161, 1997 Ed) (`the Act`). These proceedings arose from a determination by the disciplinary committee (`the Committee`), appointed by the Chief Justice under s 90 of the Act, that in relation to a complaint dated 22 December 1998 made by one Mr Hau Tau Khang (`Mr Hau`) to the Law Society of Singapore (`the Law Society`), cause of sufficient gravity for disciplinary action existed under s 83 of the Act. The determination of the Committee was made on the basis of a charge (which we shall set out in a moment) framed by the Law Society, which the respondent admitted before the Committee. At the conclusion of these proceedings, we held that cause had been shown and ordered the respondent be suspended from practice for a period of two years. We now give our reasons.

The facts

The respondent is an advocate and solicitor of 13 years standing and was, at the material time, the sole proprietor of the firm of Naidu & Co. On or about 8 July 1998, Mr Hau met the respondent in the evening at the latter`s office and consulted him about instituting divorce proceedings against Mr Hau`s wife. Upon the respondent`s request, Mr Hau agreed to hand over all the original documents pertaining to his divorce matter to the respondent for his safekeeping. Mr Hau claimed that the respondent also asked him to prepare a list of his assets, but this request was disputed by the respondent. However, nothing turned on this point.

Thereafter, a second meeting took place about a week later, when Mr Hau saw the respondent at the latter`s office and handed the original documents to the respondent and one Mr Nalpon, one of the respondent`s colleagues. After perusing the documents and advising Mr Hau on his options, the respondent expressed the need for them to meet a few more times.

Following that Mr Hau arranged another appointment with the respondent and that was scheduled for the evening of 12 August 1998. They accordingly met at the appointed time and discussed Mr Hau`s divorce matter. Mr Hau alleged that during this meeting the respondent began to confide his personal financial and marital problems in Mr Hau. Without revealing the precise sum involved, the respondent informed Mr Hau that he had lost a lot of money in the stock market and also in the course of a legal battle against his wife. The respondent did not dispute the fact that he told Mr Hau that he had to sell all his properties as a result of his financial and matrimonial problems.

Thereafter, Mr Hau did not meet with the respondent again until 23 September 1998, when the respondent called Mr Hau and asked Mr Hau to see him at his office after 6pm on the same day. They met as scheduled, and it was at this meeting that the respondent orally requested a loan in the sum of $28,000 from Mr Hau. The latter initially hesitated and informed the respondent that he was already relying on overdraft facilities for his own expenses. However, the respondent persisted in his request saying that he only needed the money for six weeks, and that he would compensate Mr Hau for the interest incurred by Mr Hau as a result of taking the loan from his overdraft facilities. Eventually, Mr Hau acceded to the request and agreed to make the loan. Mr Hau drew a cheque for $28,000, which was dated 24 September 1998 and made payable to `Naidu & Company`, and handed it to the respondent. Although this was a personal loan, the respondent orally requested that the cheque be made payable to his firm and not to him.

Mr Hau alleged that he trusted the respondent as an advocate and solicitor, and further, as the respondent was handling his divorce matter, he was afraid that the respondent would not do a good job, if he denied the respondent`s request for financial assistance. This was disputed by the respondent. However, it was not disputed that Mr Hau was not advised by the respondent to seek independent legal advice on the loan and the terms and conditions of the loan. The respondent also did not offer to provide Mr Hau with any security for the loan, nor did Mr Hau ask for it.

Following the loan transaction, the respondent began avoiding Mr Hau`s telephone calls and failed to appear at appointments fixed by Mr Hau to obtain advice regarding his divorce matter. The respondent did not repay the loan to Mr Hau within the time as agreed. After the expiry of the period of six weeks, on 7 November 1998, Mr Hau made an appointment to meet the respondent the following day. However, the respondent cancelled the meeting at the last minute. Subsequently, the respondent cancelled three scheduled meetings. On each of these occasions, it was the respondent`s secretary who informed Mr Hau of these cancellations half an hour or one hour before the appointed time.

MC Suit 31582 /98

As a result, there was no progress in the conduct of Mr Hau`s divorce matter. Consequently, on 12 November 1998, Mr Hau engaged another firm of solicitors to take over the conduct of his divorce matter from the respondent and to commence an action against him, namely, MC Suit 31582/98, to recover the money loaned to the respondent. On 14 January 1999, judgment in default of appearance was entered against the respondent. Only on 3 February 2000, did the respondent make payment to Mr Hau of a sum of $33,003.61 in cash in full satisfaction of the judgment sum, interest and costs.

The proceedings of the Committee

In the meanwhile, on 22 December 1998, Mr Hau made a complaint to the Law Society against the respondent. The complaint was inquired into and eventually was heard before the Committee. The charge against the respondent as framed by the Law Society was as follows:

That Devadas Naidu is guilty of a contravention of r 33(a) of the Legal Profession (Professional Conduct) Rules 1998 within the meaning of s 83(2)(j) of the Legal Profession Act (Cap 161, 1997 Ed) in that he, on 24 September 1998, did enter into a prohibited borrowing transaction by borrowing a sum of S$28,000 from his client, one Hau Tau Khang.

The respondent admitted to the charge. However, he disputed certain allegations in the statement of facts prepared and presented by the Law Society. Accordingly, before the Committee, both counsel for the Law Society and the respondent urged the Committee to conduct a Newton hearing for the purposes of determining how the offence was committed. It was no longer a question of whether the offence was committed, as the respondent stood by his admission. What the respondent sought to show were the relevant circumstances surrounding the request of the...