Wee Soon Kim Anthony v Lim Chor Pee

• Judge: Chao Hick Tin JA
• Judgment Date: 02 March 2006
• Neutral Citation: [2006] SGCA 8
• Citation: [2006] SGCA 8
• Defendant Counsel: Andre Arul and Ling Leong Hui (Arul Chew and Partners)
• Published date: 03 March 2006
• Plaintiff Counsel: The appellant in person
• Date: 02 March 2006
• Docket Number: Civil Appeal No 62 of 2005,Civil Appeal No 43 of 2005
• Court: Court of Appeal (Singapore)
• Subject Matter: Whether agreement as to costs existing and status of firm as partnership or sole proprietorship amounting to "genuine triable issues",Section 62 Bankruptcy Act (Cap 20, 2000 Rev Ed), r 98(2)(a) Bankruptcy Rules (Cap 20, R 1, 2002 Rev Ed),Whether bills of costs giving rise to valid counterclaim, set-off or cross demand,Statutory demand,Insolvency Law,Bankruptcy,Appeal against solicitors' successful application to set aside statutory demands issued under s 62 Bankruptcy Act

2 March 2006

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

1 This was an appeal against the decision of Lai Kew Chai J (reported at [2005] 4 SLR 367) who dismissed the appellant’s appeal against the decision of the assistant registrar setting aside the statutory demands issued by the appellant to the respondent and the respondent’s son, under s 62 of the Bankruptcy Act (Cap 20, 2000 Rev Ed) (“s 62”). We heard the appeal on 26 January 2006 and dismissed it.

The background

2 The respondent, Lim Chor Pee and his son, Marc Lim, were partners in the law firm of M/s Chor Pee & Partners. However, it would appear that Marc Lim was only a salaried partner, drawing fixed wages, with no equity participation. The firm acted for the appellant in several matters, including the part-heard action in Suit No 834 of 2001 (“S 834/2001”) where the appellant claimed in negligence and misrepresentation against a bank, as well as in the appeal to this court arising from the dismissal of that action by the High Court. The appellant also failed in the appeal.

3 In the meantime, the appellant extended a loan to the firm in the sum of $307,000 and a personal loan of $84,000 to the respondent. The respondent promised to make monthly repayments of the loans but failed to make good the same, save for a solitary repayment of $7,000 in relation to the loan to the firm. As a result, on 3 January 2005, the appellant served two statutory demands under s 62. The first was against the respondent and Marc Lim as partners of the firm for the debt of $300,000. The second was against the respondent for the debt of $84,000.

4 On 13 January 2005, the firm issued four bills to the appellant claiming a total of $610,780 as fees for professional services rendered to the appellant in various matters, namely:

(a) tax invoice no 99001 for $367,915, being the balance for work done in respect of S 834/2001;

(b) tax invoice no 99002 for $183,645, for work done in respect of the appeal from the decision in S 834/2001;

(c) tax invoice no 99003 for $20,160, for work done in respect of the bill of costs of one Thomas Sim;

(d) tax invoice no 99004 for $39,060, being work done in relation to the complaint lodged by the appellant against Gerald Godfrey QC.

5 We should add that the firm had also on 1 February 2005 issued to the appellant a tax invoice for the sum of $24,958.50, for work done in Civil Appeal No 114 of 2002 which was in relation to the proposed admission of Gerald Godfrey QC to represent the appellant in the substantive appeal against the decision of the judge in S 834/2001.

6 On 14 January 2005, three originating summonses in bankruptcy (“OSB”) were filed by the respondent and/or Marc Lim to set aside the two statutory demands issued by the appellant, namely:

(a) OSB No 3 of 2005: filed by the respondent and Marc Lim to set aside the statutory demand for $300,000 (“OSB 3/2005”);

(b) OSB No 4 of 2005: filed by Marc Lim alone to set aside the statutory demand for $300,000 (“OSB 4/2005”); and

(c) OSB No 5 of 2005: filed by the respondent to set aside the statutory demand for $84,000 (“OSB 5/2005”).

7 On 16 February 2005, all three applications by the respondent and Marc Lim were granted by the assistant registrar who set aside the two statutory demands. The appellant filed three appeals to the High Court and they were all dismissed on 31 March 2005 by Lai Kew Chai J. However, the appellant only appealed to this court against the order made by Lai J affirming the decision of the assistant registrar in OSB 3/2005 and even in relation to this he did not cite Marc Lim as a respondent. Neither did he file any appeal against the ruling of the judge affirming the decisions of the assistant registrar made in OSB 4/2005 and OSB 5/2005.

8 In the meantime, the firm applied by way of Petition of Course No 3 of 2005 (“PC 3/2005”), to have the five invoices (see [4] and [5] above) taxed by the Registrar. PC 3/2005 came before another judge, Lai Siu Chiu J, who on 1 April 2005 granted the application. In that proceeding, the main issue was whether the firm had agreed with the appellant to cap the fee payable for handling S 834/2001 in the sum of $275,000. On the appellant’s appeal against Lai Siu Chiu J’s decision, this court had in Civil Appeal No 43 of 2005 (“CA 43/2005”) held, having reviewed the correspondence exchanged and the conduct of the parties, that as far as tax invoice no 99001 was concerned, the firm and the appellant had in fact agreed to fix the fee for the work done in relation to S 834/2001 at the lump sum of $275,000 which sum had already been paid in full by the appellant to the firm (see Wee Soon Kim Anthony v Chor Pee & Partners [2005] SGCA 53). Thus, the firm was not entitled to raise tax invoice no 99001.

9 The other four tax invoices came up for taxation by the assistant registrars in November 2005 and were allowed in the following amounts in respect of part 1 of each bill:

Tax invoice no 99002 - $75,000

Tax invoice no 99003 - $12,000

Tax invoice no 99004 - $18,000

Tax invoice no 99005 - $12,800

Upon the appellant’s application for a review, V K Rajah J on 11 January 2006 reduced the second to fourth invoices to $9,000, $12,000 and $10,000 respectively.

The decision below

10 Lai Kew Chai J upheld the assistant registrar’s decision to set aside the statutory demands on the grounds that there appeared to be a valid counterclaim, set-off or cross-demand under the five tax invoices which exceeded the debts in the statutory demands. While he noted that the question of the five tax invoices raised in PC 3/2005 was under consideration by Lai Siu Chiu J, and it was at that forum that the question should be canvassed and decided upon, he nevertheless also opined that there did not appear to be any agreement to cap the fees for handling S 834/2001 at $275,000, there being no meeting of minds. Lai Kew Chai J held that there was, therefore, a triable issue. He further identified another issue which was triable, namely, whether or not the firm was a sole proprietorship or a partnership. This was because even if the five tax invoices were indisputable, the question that remained was whether the respondent could set off the fees owing to the firm against his personal debt to the appellant. As earlier indicated, there was evidence that Marc Lim was a “salaried partner” which suggested that Marc Lim was not a partner in the true sense of the word.

The issues

11 Before us, the appellant summarised the real issues which this court needed to address to be the following:

(a) whether there was an agreement capping fees at $275,000 for S 834/2001;

(b) whether the respondent in his personal capacity was entitled to use the tax invoices of the firm as a set-off against his personal loan of $84,000;

(c) whether Chor Pee & Partners was a sole proprietorship as claimed by the respondent in his affidavit;

(d) whether the tax invoices gave rise to genuine triable issues.

12 However, the main aspect of the appellant’s contention was that, in view of this court’s ruling in CA 43/2005 that there was, in fact, an agreement between the firm and the appellant to cap the fees for handling S 834/2001 at $275,000, the firm was not entitled to raise the tax invoice no 99001. Accordingly, the assistant registrar, and in turn Lai Kew Chai J, were wrong to have set aside the two statutory demands. All the other invoices, when added together, were well short of $300,000, the amount owed by the firm to the appellant, not counting the $84,000 personal loan owed by the respondent to the appellant.

13 These grounds are issued essentially to explain why, notwithstanding our decision in CA 43/2005, we thought that the assistant registrar and Lai Kew Chai J were not wrong in principle to have set aside the two statutory demands.

Our consideration

14 Rule 97(1) of the Bankruptcy Rules (Cap 20, R 1, 2002 Rev Ed) (“the Rules”) provides that a debtor who has been served with a statutory demand may within 14 days apply to court for an order setting aside the statutory demand. Rule 98(2)(a) of the Rules provide that the court hearing the application shall set aside the statutory demand if “the debtor appears to have a valid counterclaim, set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified...