Then Khek Khoon v Arjun Permanand Samtani

• Jurisdiction: Singapore
• Judgment Date: 14 February 2012
• Date: 14 February 2012
• Docket Number: Suit No 1084 of 2009 (Summons No 5469 of 2011)
• Court: High Court (Singapore)

Then Khek Khoon and another

Plaintiff

and

Arjun Permanand Samtani and another

Defendant

[2012] SGHC 17

Quentin Loh J

Suit No 1084 of 2009 (Summons No 5469 of 2011)

High Court

Civil Procedure—Jurisdiction—Inherent—Second defendant sought to persuade court to exercise its inherent jurisdiction to restrain plaintiff's counsel and firm from continuing to act as solicitors or to give legal advice in all court matters arising from Suit No 1084 of 2009—Whether court had inherent jurisdiction to hear application based on breaches of Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2010 Rev Ed) (‘LPPCR’)—If so, when should it exercise its discretion—Could adverse party make application for court to exercise its inherent jurisdiction—Was court proper forum to determine breach of LPPCR—If so, was evidence in support of allegation of overcharging upon which breach of r 64 was premised, sufficient to trigger court's exercise of its inherent jurisdiction—Rule 64 Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2010 Rev Ed)

Equity—Remedies—Equitable compensation—Whether reasonableness of invoices rendered to plaintiffs by their solicitors was material fact in issue where claim was for equitable compensation for breach of fiduciary claim

Legal Profession—Professional conduct—Breach—Second Defendant alleged plaintiff's counsel in breach of rr 25 and 64 LPPCR—Nature, extent and facts in support of alleged breaches of rr 25 and 64 LPPCR—Whether scope of r 64 extended beyond testifying solicitor to all solicitors from testifying solicitor's firm—Rules 25 and 64 Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2010 Rev Ed)

The second defendant, sought an injunction to restrain the plaintiff's solicitors, Messrs Tan Kok Quan Partnership (‘TKQP’) from acting as solicitors for the plaintiffs and/or giving legal advice in all court matters arising out of Suit No 1084 of 2009 (‘S 1084/2009’), the main action. By way of background, the plaintiffs were part of a group of subsidiary proprietors who had opposed the collective sale of Horizon Towers, succeeding in setting aside the order of the Horizon Board at the Court of Appeal in 2009 (‘the 2009 Judgment’). The plaintiffs were consistently represented by TKQP before the Strata Titles Board (‘STB’), the High Court in relation to orders made by the STB and in the judicial review application in the High Court (‘STB matters’). TKQP did not represent the plaintiffs before the Court of Appeal. Subsequent to the 2009 Judgment, in S 1084/2009, the plaintiffs founded their claim against the defendants for breach of fiduciary duties which the Court of Appeal had found to be owed by the defendants to the plaintiffs in the 2009 Judgment, due to a possible conflict of interest which the defendants should have disclosed to the plaintiffs. The plaintiffs pleaded that they had suffered loss and damage as a result of the defendant's breaches in the form of the solicitor and client costs incurred by the STB matters in the sum of $752,665.15. In his defence, the second defendant challenged the quantum of loss and damage suffered by the plaintiffs, in particular, the above-mentioned sum of $752,665.15. As such, the reasonableness of TKQP's invoices to the plaintiffs (which were paid by the plaintiffs), in connection with the STB matters, was identified by the second defendant as a material fact in issue in S 1084/2009. In the present application, the second defendant argued that TKQP should be restrained from representing the plaintiffs due to their alleged breach of r 25 (a) (ie, conflicts of interest between the advocate and solicitor and client) and r 64 (ie, rule preventing the acting advocate and solicitor from testifying on a material question of fact) of the LLPCR. The second defendant argued that the rr 25 (a) and 64 of the LPPCR were breached because the reasonableness of the impugned invoices was a material fact in issue which created a conflict of interest between TKQP and their clients, the plaintiffs, and also would require TKQP to testify as witnesses.

Held, dismissing the application:

(1) The court's inherent jurisdiction under O 92 r 4 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (‘the Rules’) should only be exercised where there was a clear need and where the justice of the case so demanded. Strong and compelling reasons had to be identified by the party in support of such an application. The present case did not meet the necessary threshold for the court to intervene: at [14] and [15].

(2) The Law Society was the proper forum for determination of breaches of the LPPCR. Where the court was concerned only with breaches of the LPPCR, which did not trigger any concurrent breach of legal obligations owed by the counsel to the court or the client at Common Law, the proper forum for investigation and determination of the breach was the Law Society rather than the court: at [17] and [22].

(3) However, where matters impinged on the proper administration of justice, due process and wider public interest issues, the court should intervene, either on its own initiative or pursuant to a complaint by the other party. The Court had to not allow confidence in the administration of justice to be undermined: at [22].

(4) Where the application was made by an opposing party to restrain lawyers the court would look carefully into the grounds for doing so and if necessary carry out a balancing exercise,a fortiori, if the application was made at a late stage. A court would therefore have to balance the mischief that was to be prevented against the right of a party to be represented by a lawyer of his choice. This involved a balancing of all the facts and circumstances including the alleged breach, the bona fides of the opposing-party-applicant, the time at and circumstances under which the application was made and the mischief the rule was intended to prevent: at [28].

(5) In relation to the alleged breach of r 25 (a) of the LPPCR, it was first crucial to note that the impugned invoices were rendered and paid well before any finding of breaches of fiduciary duty was made by the Court of Appeal. Secondly, TKQP's fees were not in some way contingent upon recovery from the plaintiffs. Thirdly, there were no allegations or even hints of fraud or collusion on the part of TKQP and the plaintiffs, in fabricating invoices with higher amounts in order to enhance recovery from the plaintiffs. There was also no suggestion made that the plaintiffs were ignorant or disadvantaged clients. Thus there was no conflict of interest on the evidence before the court which required intervention at this stage: at [30] to [36].

(6) Whether r 64 (2) of the LPPCR would extend to all other solicitors in the firm depended on the facts and circumstances of each case. No rigid rules or criteria should be laid down. So long as the subconscious shaping of evidence was of genuine concern and the issues identified enveloped the entire firm, r 64 (2) of the LPPCR could be interpreted to extend accordingly. A wider interpretation should be adopted only when the mischief intended had a real possibility of occurring. Two significant guideposts included, first, the mischief that r 64 was meant to avoid and secondly, whether the heart of the client's case touched upon the correctness or otherwise of an act or document generated or soundness of advice given by the advocate's partner or other member of his firm. The degree of his loss of objectivity, the degree to which it impacted or could potentially affect his practice, (be it a traditional partnership, or limited liability partnership or limited liability corporation), and therefore the fulfilment of his duty to the court, was the true question to be answered. On the facts, there was no breach of r 64 of the LPPCR: at [48] and [50].

(7) Firstlink Energy Pte Ltd v Creanovate Pte Ltd [2007] 1 SLR (R) 1050, citing the earlier Court of Appeal decision of Kumagai-Zenecon Construction Pte Ltd v Low Hua Kin [1999] 3 SLR (R) 1049, decided that any loss that was caused by the breach of fiduciary duty alleged was claimable as equitable compensation so long as it would not have been caused but for the alleged breach. But that case did not decide that the principles of causation, foreseeability and remoteness could never be applicable to a restitutionary claim and that the only defence available to the party was to show that the loss would have happened even if there was no breach: at [52].

(8) The very raison d'etre for equity was the need to mitigate the black-and-white rigidity of the law and the need to cater for the many shades of grey thrown up by the myriad diversity of human activity and interaction. Strict rules and rigid criteria were not the inherent nature of equity nor should it be for equitable compensation which was but a part of the whole: at [54].

(9) Cases from Australia, New Zealand, Canada and the United Kingdom suggested that the application and construction of principles of causation in a claim for equitable compensation were by no means uniform or settled as one would think at first blush. There were a significant number of cases on equitable compensation from other common law jurisdictions on the nuances of the application of the test of causation (in relation to recoverable loss) from which valuable guidance could be obtained (see Maguire v Makaronis(1997) 188 CLR 449 and Canson Enterprises Ltd v Boughton & Co(1991) 85 DLR (4 th) 129): at [59] to [67].

Alrich Development Pte Ltd v Rafiq Jumabhoy [1994] 3 SLR (R) 38; [1994] 3 SLR 1 (distd)

Bowen v Stott [2004] WASC 94 (distd)

Brickenden v London Loan & Savings Co [1934] 3 DLR 465 (refd)

Bristol and West Building Society v Mothew [1998] Ch 1; [1996] 4 All ER 698 (refd)

Brogue Tableau Pty Ltd v Tottle Partners (a firm) [2006] WASC 273 (distd)

Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4 th) 129 (refd)

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