Lec 5 - Conflict Of Interest

Lecture 5 – Professional Responsibility: Conflict of Interest1 Cl principles Common ethical issue, very impt Law soc tried to codify rules on confict of interest o Interest of client – superior to own personal interest o For lawyers fid duty takes higher role – becaue also officers of court; additional ethical duty of keeping clients info confidential o solicitor client privilege ie added duty as officer of court and to keep client confidences  see manual pg 53-77 – fid relationship explored - law society tried to codify some principles emerging fr cl regarding fid rr bet lawyer and client o not owed to 3rd parties but only bet lawyer and client conflict of interest – conflict can be personal OR can be professional

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Rules 25 to 31 of the Legal Profession (Professional Conduct) Rules 1998 list the rules and the factual situations where conflict of interest may arise. Look also at Rule 31 of the Legal Profession (Professional Conduct) (Amendment) Rules 2001. Area of law governed largely by the Rules but the common law position still stands.

SECTION 8 – THE FIDUCIARY RELATIONSHIP 8.1 Fiduciary Obligations relationship between an advocate and solicitor and his client is fiduciary in nature and as such an advocate and solicitor must not borrow money from a client, save where the client is a lending financial institution whose ordinary business includes the lending of money to members of the public in situations where the relationship between a solicitor and client is a personal one, there is no professional/client relationship existing at the time of the borrowing or lending and such relationship is not contemplated, any borrowing or lending between the solicitor and client would not be deemed improper or unethical • Re Van Laun ex parte Chatterton [1907] 2 KB 23 at p. 29 • Oswald Hickson Collier & Co. v. Carter-Ruck [1982] 126 Consequently in all his dealings with his client the solicitor must act with strict fairness and candour and must exercise the utmost good faith Relationship is one which imposes special obligations on the solicitor: Nocton v. Ashburton [1914] AC 932; Brown v. Inland Revenue Commissioners [1964] 3 All ER 119 Solicitor is bound to give his client disinterested advice Is bound to make full and honest disclosure of all facts within his knowledge If he has any personal interest in a transaction of a client he should disclose that interest to the client It exists in a higher degree because of his position as an officer of the court and the privileges which the law provides to legal professional confidences • A solicitor’s duty of care -

Re Shan Rajagopal [1994] 3 SLR 524:

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The respondent solicitor stood in a fiduciary relationship with the complainant, that he used the complainant’s money for his own purposes and that in doing so he acted in a grossly improper manner in the discharge of his professional duty which amounted to improper conduct as an advocate and solicitor within s. 83(2)(b) Legal Profession Act Power to strike off roll or suspend or censure 83. —(2) Such due cause may be shown by proof that an advocate and solicitor — (b) has been guilty of fraudulent or grossly improper conduct in the discharge of his professional duty or guilty of such a breach of any usage or rule of conduct made by the Council under the provisions of this Act as amounts to improper conduct or practice as an advocate and solicitor; • Rajagopal was ordered to be struck off the roll of advocates and solicitors 1

Much of the content in these notes was cobbled, patched and re-worked from the following sources: (1) PLC Muggers 2001 – Mark Cheng’s Professional Responsibility Notes; (2) PLC Muggers 2002 – Sharon Goh’s Professional Responsibility Notes; and (3) PLC Professional Responsibility Manual 2004.

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Law Society of New South Wales v. Moulton:

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“ a solicitor stands in a fiduciary relationship to his clients. If he is to have business dealings with them on his own account, and in particular if he is to borrow money from them, the requirements of the law are rigorous solicitor is in a position of special influence in respect of his client clients must be able to rely upon the professional advice of their solicitor and to place in him the fullest confidence that he will protect them and handle their affairs in their interest where a solicitor wishes to borrow from a client, the client must be put in a position to make a free and informed decision about the proposed transaction insist that the client have independent and informed advice if this does not happen, a heavy burden indeed lies upon the solicitor to show that he has done everything in his power to protect the interests of his client and to ensure that he client is aware of every circumstances that is or might be relevant to his decision the greater the trust of the client in the solicitor the greater is the need for independent advice where a conflict of interest may arise the fact that the client, in the ultimate event, suffers no loss is of little, if any, relevance if the acts or omissions of a solicitor constitute professional misconduct, they do so at the time when they occur the presence or absence of loss may throw light on the propriety of action taken to ensure the adequacy of a security for a loan”

Law Society of Singapore v. Khushvinder Singh Chopra: • Respondent acted for the complainant, his son and daughter-in-law (‘the vendors’) in several unsuccessful transactions • Chopra then decided to purchases the property, persuaded them to grant him an option to purchase • Option stipulated that Chopra’s firm acted for the vendors and the purchasers • Chopra immediately lodged a caveat against the property claiming an interest under the option • It was not disputed that that Chopra did not at any time advise the son and daughter-in-law to seek independent legal advice • Complainant was adamant that the option should not be granted to Chopra • The son attempted to return the option fee to Chopra, who refused to take it back • Chopra pressed on with the purchase • The complainant lodged a complaint against Chopra • Chopra persuaded the vendors to sigh a supplementary agreement as well as a statutory declaration, upholding the option and the supplementary agreement and absolving him of all allegation of fraud or impropriety • Inquiry Panel and a Disciplinary Committee was convened, alleging that he was guilty of grossly improper conduct by: (a) attempting to bind the respondent in the sale of the property to himself; (b) purporting to act for the vendors and himself as purchaser, this allowing a conflict of interest to arise; and (c) procuring the execution of the statutory declaration by the vendors without allowing the vendors reasonable opportunity to seek legal advice • Disciplinary Committee concluded that charges (b) and (c) merited punishment • Council of the Law Society applied s. 94(3)(b) Legal Profession Act Society to apply to court if cause of sufficient gravity exists 94. —(3) If the determination of the Disciplinary Committee under section 93 is that, while no cause of sufficient gravity for disciplinary action exists under section 83, the advocate and solicitor should be reprimanded or ordered to pay a penalty, the Council shall — (a) if it agrees with the determination, reprimand the advocate and solicitor or order him to pay a penalty of not more than $10,000, as the case may be; or (b) if it disagrees with the determination, without further direction or directions proceed to make an application in accordance with section 98. • Matter came before the High Court, and Chopra was struck off the rolls

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Court held that a solicitor ought not to put himself forward as a prospective principal to deal with his client or to purchase the client’s property • If the solicitor did so, he must ensure that the client received the most disinterested advice possible • Appropriate action was to discharge himself as solicitor for the client and advise the client to appoint new solicitors • Solicitor owed a fiduciary duty to his client, the law would be rigorous on him and any benefit he received must be fair and informed • Each case depended on its own nature and facts • Solicitor must not take any advantage of his influence on the client to obtain the slightest benefit • With respect to charge (b), he was single-mindedly concerned with the purchase of the property, while purporting to act as solicitor for the vendors. In doing so, he precipitated a conflict of interest, and failed to advise the vendors to seek independent legal advice and profited at their expense. Guilty of grossly improper conduct within the meaning of s. 83(2)(h) of the Act Power to strike off roll or suspend or censure 83. —(2) Such due cause may be shown by proof that an advocate and solicitor — (h) has been guilty of such misconduct unbefitting an advocate and solicitor as an officer of the Supreme Court or as a member of an honourable profession; • For charge (a), was held that Council had no authority come to its own conclusion without first having followed the proper procedure • Proper applicable section was s. 97 Procedure for complainant dissatisfied with Disciplinary Committee’s decision 97. —(1) Where a Disciplinary Committee has determined — (a) that no cause of sufficient gravity for disciplinary action exists under section 83; or (b) that while no cause of sufficient gravity for disciplinary action exists under that section the advocate and solicitor should be reprimanded or ordered to pay a penalty, and the person who made the complaint, the advocate and solicitor or the Council is dissatisfied with the determination, that person, advocate and solicitor or the Council may, within 14 days of being notified of the Disciplinary Committee’s decision, apply to a Judge under this section. [30/86;41/93;35/2001] (2) Such an application shall be made by originating summons and shall be served on the Society and the secretary of the Disciplinary Committee who shall thereupon file in court the record and report of the hearing and investigation by the Disciplinary Committee. (3) Upon the hearing of the application, the Judge, after hearing the applicant and the Disciplinary Committee and, if it desires to be heard, the Society, may make an order — (a) confirming the report of the Disciplinary Committee; (b) directing the applicant or the Council to make an application under section 98; or (c) directing the advocate and solicitor concerned under section 98 (1) to show cause, and such order for the payment of costs as may be just. [30/86] (4) If the Judge makes an order under subsection (3) (b) or (c) on the application of a person other than the Council or advocate and solicitor, the applicant shall have the conduct of proceedings under section 98 and any such proceedings shall be brought in the name of the applicant. • If the correct procedure was not followed and the necessary application had not been made, the court could not on its own initiative hear the disciplinary proceedings and punish the solicitor in question • charge (c) was amply made out and evidenced the most blatant misconduct from Chopra, who disregarded his professionalism as a lawyer • his conduct, in procuring the execution of the statutory declaration by the vendors went against the grain of honesty and integrity, and was aggravated by the fact that Chopra knew that at all material times, he was acting against the standard of the profession Law Society of Singapore v. Singham Dennis Mahendran: • Grossly improper conduct in the discharge of his professional duties in that he carried on a sexual relationship with a client (‘the client’) of the firm • Was suspended from practice for 3 years, and Chief Justice Yong Pung How stressed that such personal and sexual relationships between solicitors and their clients were clearly wrong • Have a duty to exhibit the highest standards of professionalism in their relationships with clients

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Unbecoming for solicitors to abuse the relationship of trust and take advantage of vulnerable clients for their own purpose

1.1. Overview - Types of Conflict of Interest Establishment of relationship Because this is rooted in sol client rr, rule 25 starts by saying that during course of retainer – presumes a sol client relationship has been established. - Ahmad Khalis case – retainer not just express but can have retainer rr and develop sol client rr impliedly by conduct – giving them impression that you are there to look after their interests => fid rr developed. Remember tt retainer need not be express contract and can come through course of conduct Held: Secondly, it soon became clear that the nub of the disagreement between the parties centred on the issue as to whether the respondent had acted as solicitor for the other beneficiaries as well as for Rasid or whether he acted for Rasid alone. In particular, the related issue was raised as to whether the respondent had entered into an implied retainer with these other beneficiaries. 37 At this particular juncture, it might be appropriate to comment on the positive aspects that emerged from the otherwise unfortunate disagreement between the parties. We have in mind, in particular, the manner in which both Mr Davinder Singh and counsel for the applicant, Mr Gregory Vijayendran, aided in crystallising the issues before this court – especially those mentioned in the preceding paragraph. 38 When, for example, Mr Davinder Singh was asked whether or not a fiduciary duty could arise on the specific facts of a given case, notwithstanding the absence of a solicitor-client relationship, he promptly pointed to the Supreme Court of New South Wales decision of Global Funds Management (NSW) Ltd v Rooney (1994) 15 ASCR 368, where it was held, inter alia (at 379), that: While it may be possible for the unrepresented party to have some redress against the solicitor on the basis that the solicitor was a fiduciary in the sense that he or she was a person who was held out as acting on behalf of another person and in that person’s interest, the solicitor will not be liable in the same way as if he or she were the unrepresented party’s solicitor. Notwithstanding the caveat contained in this quotation, it was nevertheless clear that a fiduciary duty could possibly arise in an appropriate situation. 39 On the other hand, Mr Vijayendran did not attempt to argue that it was the Law Society’s case that a fiduciary duty had arisen apart from an implied retainer between the respondent and the beneficiaries. He focused solely on the issue of the implied retainer, although, as we shall see, the third charge (in particular, the second limb thereof) was phrased in a manner that did admit of a somewhat broader construction than that adopted by Mr Vijayendran. But this only serves to underscore the meticulous professionalism with which he had conducted his case before us. Our decision 56 As we have already mentioned, the key issue here turns on whether or not there was a retainer between the respondent and the beneficiaries. We do not think – nor has it been seriously contended by Mr Vijayendran – that there has been an express retainer. If at all, there was an implied retainer between the respondent and the beneficiaries. 57 Before proceeding to consider whether there was indeed an implied retainer between the respondent and the beneficiaries, we should first deal with Mr Davinder Singh’s argument that the third charge was itself vague and unclear. It is not merely textbook law but also just and fair that before persons such as the respondent can be asked to meet a charge preferred against them, the charge must itself be clear and unambiguous. As Yong Pung How CJ held in the Singapore High Court decision of Viswanathan Ramachandran v PP [2003] 3 SLR 435 at [24], citing the following words of Norris R in Lim Beh v Opium Farmer (1842) 3 Ky 10 at 12: [I]f there be any one principle of criminal law and justice clearer and more obvious than all others, it is that the offence imputed must be positively and precisely stated, so that the accused may certainly know with what he is charged, and be prepared to answer the charge as he best may. 58 The crux of the third charge is that the respondent had “failed to discharge his duties as solicitor for the Estate to the Beneficiaries and/or failed to safeguard the interests of the Beneficiaries, in that he subordinated the interests of the Beneficiaries to the interests of Rasid”. 59 Mr Davinder Singh argued that this charge against the respondent was bad in law. In particular, he exercised his energies towards showing that the DC had failed to appreciate the distinction between acting for the estate and acting for the beneficiaries. In other words, the third charge, in stating that the respondent had acted as “solicitor for the estate”, meant nothing more than that the respondent was “solicitor for the administrator/trustee”. In the circumstances, therefore, the respondent only owed duties to Rasid, who was the

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administrator/trustee of the estate – and to no one else (including the beneficiaries). Hence, so the argument went, it was not possible for the respondent to subordinate the interests of the beneficiaries to the interests of Rasid as they (the beneficiaries) were not his clients in the first instance. We turn, therefore, to consider whether or not the respondent had in fact acted as solicitor for the beneficiaries pursuant to an implied retainer. 64 On a general level, whether or not a retainer between a lawyer and a client comes into being in the first instance is dependent very much on the precise factual matrix concerned. However, what is clear is that no legal formalities (such as writing) are required in order for such a retainer to exist, although if there is a specific agreement as to the lawyer’s fees, this will have to be in writing (see generally Tan ([1] supra) at p 231 as well as ss 109 and 111 of the Act). 65 What, then, do the facts tell us in so far as the present proceedings are concerned? In our view, there is clear evidence of an implied retainer entered into between the respondent on the one hand and the beneficiaries on the other. Indeed, an excellent summary of the factors leading to such a conclusion can be found in the indicia referred to by Mr Vijayendran above (see generally [42]–[51] above). 66 Mr Davinder Singh referred repeatedly to the respondent’s perspective. Whilst we acknowledge the need to take into account that particular perspective, it is by no means conclusive for a number of reasons. First, the respondent’s perspective must be consistent with the objective facts. A purely subjective perspective is unworkable from a legal point of view. Secondly, and more importantly, one must also take into account the beneficiaries’ perspective – again, adopting an objective approach. In other words, the question is whether it was reasonable for the respondent or the beneficiaries to have arrived at the conclusions that they did in respect of their characterisation of their relationship inter se. The objective stance enables the court to maintain a fair and balanced perspective in order to enable it to arrive at a just and fair result. In fact, this objective test was exactly the standard applied in the textbooks and cases cited by Mr Davinder Singh. As a sampling, in Cordery on Solicitors (Anthony Holland gen ed) (LexisNexis UK, 9th Ed, 1995, 2004 release), the learned author stated at para E 425: A retainer may be implied where, on an objective consideration of all the circumstances, an intention to enter into such a contractual relationship ought fairly and properly to be imputed to all the parties. The implication would have to be so clear that the solicitor ought to have appreciated it. Circumstances to be taken into account might include, where appropriate, who is paying the [solicitor’s] fees, who is providing instructions and whether a contractual relationship has existed between the parties in the past. And in Dean ([54] supra), the English Court of Appeal held (at [22]): [A]n implied retainer could only arise where on an objective consideration of all the circumstances an intention to enter into such a contractual relationship ought fairly and properly to be imputed to the parties. 67 Based on an objective analysis of the facts and evidence before us, it was clear from the indicia Mr Vijayendran referred to that the respondent was acting for the beneficiaries and that it ought to have dawned on the respondent as such (indeed, we find that he was acutely aware that he was entering into a retainer with the beneficiaries). He had given his express advice on the renunciation document and they had taken it. Indeed, his advice was neither perfunctory nor non-committal. He had gone so far as to inform the beneficiaries as to the additional costs as well as the delay in having a co-administrator. He had sought to allay their fears with regard to Rasid. These indicia take the present case outside Dean, where there was a finding that the solicitor in that case did not give any express advice to the alleged client and, indeed, did not intend to communicate with him at all: [54] supra at [23]. The advice given in the present proceedings did not constitute merely preparatory steps to explaining the renunciation document which was ultimately signed by the beneficiaries, as the respondent contends (see [55] above). Nor could it be seriously argued that what the respondent was doing was merely “processing matters” between the beneficiaries and Rasid: see Dean at [24]. He had gone much further than that. Even apart from the meeting on 8 August 2001, the respondent himself claimed that on 6 December 2001, he waited to explain the consent document to the beneficiaries. However, when they arrived later than he had expected (and he was therefore unable to meet them), he instructed Kasmin (his clerk) to explain the document to the beneficiaries. Again, from an objective viewpoint, the respondent must have regarded the beneficiaries as his clients as well. In addition, the conduct of the respondent was in a situation where there was no other solicitor acting for the beneficiaries. Although this is by no means conclusive, it is a relevant factor which we can (and do) take into account (see also Tan ([1] supra) at p 232). All of these indicia are objective. It ought to have been obvious to the respondent that he was entering into an implied retainer with the complainants. In this regard, it is necessary to emphasise that we do not rely simply on the fact that the respondents may have been unschooled in the law; nor do we rely solely or even primarily on the complainants’ subjective perspective. At best, the respondent might have been unclear as to whether or not he was officially their lawyer, although we do not think that even this was the case, having regard to the objective facts before us. In our view, the respondent must have, at the very least, strongly suspected what the situation was but deliberately shut his eyes to what he would have

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clearly and unambiguously discovered had he, for instance, clarified the situation with the beneficiaries themselves. The second implication from these letters is that the respondent must have considered himself responsible to the other beneficiaries in some way. It may be said that these letters are merely gratuitous; but, in the circumstances, they demonstrate that he felt obliged to the beneficiaries and was worried about what Rasid was doing. The fact that, as Mr Davinder Singh points out, a lawyer should not question his client’s instructions (bar certain exceptions) and the fact that the respondent did fully support our view that he knew that the beneficiaries were relying on him as their solicitor and that, in fact, he owed a reciprocal duty as their solicitor. And yet, the respondent went no further to insist on Rasid obtaining their consent, or to inform the beneficiaries that Rasid was mortgaging the property or to discharge himself as Rasid’s solicitor if he felt he was not in a position to do either of the above. Instead, he relied on Rasid’s bald assertion that what he was doing was in the interests of the beneficiaries. Under such circumstances of “Nelsonian blindness”, the respondent can be taken as having had, in law, actual knowledge (see also Law Society of Singapore v Ong Ying Ping ([4] supra at [56]). 68 While it may not be of critical relevance in analysing whether the respondent was in an implied retainership with the beneficiaries, we do note that the beneficiaries were generally unschooled in the law and therefore relied upon the respondent for legal advice. More than that, it is clear to us that they trusted the respondent. A more general – and extremely significant – point arises from this. It is that the public rely upon lawyers for wise and effective counsel. This is especially the case when clients are particularly vulnerable. This could be due to a number or variety of reasons – or, indeed, a combination thereof. These include impecuniousness, a lack of schooling and/or language and (invariably, with the exception of legally-trained persons) a lack of legal knowledge. In this last-mentioned regard, it is not merely an absence of legal knowledge. To many laypersons (even highly educated ones), the law constitutes a morass of technical – even arcane – rules. Many even fear the law when the precise opposite should be the case. The law is meant to achieve justice and fairness for all. It is the objective bulwark against tyranny and oppression, anarchy and disorder. It is supposed to facilitate transactions of all kinds in a reasoned and accessible manner. Laypersons ought therefore to embrace the law, or at least not be uncomfortable with seeking legal advice or redress. Even as there have been laudatory moves in a variety of forms towards making the law more accessible to the layperson, we must guard against anything which retards or hinders this process zealously. The present proceedings illustrate all the dangers that must be assiduously avoided. Lawyers must convey what the precise legal situation is with limpid clarity, taking into consideration the fact that their clients may not always share the same language, intellectual or legal facility as them. The legitimacy of the law in general and of legal personnel in particular depends on this. Still less must laypersons be lulled into a false sense of security and/or into a situation of misinformation. Whenever in doubt, lawyers should clarify. They must begin from the assumption that laypersons are more likely to rely upon them than not – if only because they are professionals schooled in the law and whose calling is therefore to advise on the law in all its various aspects. They must, wherever applicable, advise laypersons to seek independent legal advice if they are unable to assist – for example, because of a possible conflict of interests. In the present proceedings, although the DC found that “Nazihah is a graduate and was more articulate than her eldest brother, Razak, but even then as can be seen from the transcript, their use of English was loose and colloquial” (see the Report at para 29). It was clear that the beneficiaries needed to be advised clearly, and that the respondent had failed to discharge his duty in this particular regard. 73 Whether or not there was an implied retainer between the respondent and the beneficiaries turned, undoubtedly and necessarily, on what in fact transpired between the parties – especially at the meeting of 8 August 2001. Looked at in this light, the credibility of the respective witnesses’ testimony is a very significant factor and, as we have seen, comes down heavily against the respondent’s version of events. If, indeed, the beneficiaries’ version of events is to be believed (as we think they must), it is clear that there was an implied retainer entered into between the respondent and the beneficiaries. -

Recognised by cl, codified in rule 25 PC Rules – basic rule on conflict  25A – 25A(a) – personal conflict  25b and c – professional conflict

2. Rule 25 – Personal Conflict of Interest Conflict of interest 25. During the course of any retainer, an advocate and solicitor shall advance the client’s interest unaffected by – (a) any interest of the advocate and solicitor

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(aa) where the advocate and solicitor is a director or employee of a law corporation, any interest of the law corporation; (b) any interest of any other person; or (c) the advocate and solicitor’s perception of the public interest except where accepting the instructions may make it difficult for him to maintain his professional independence or would make it incompatible with the best interests of the administration of justice. 

in brief, what it means is that [see rule 25 below], when you are in a retainer, you cannot advance your client’s interest, if you find that you have a personal interest to serve

2.1 General  Should not act for a person in a transaction to which you are yourself a party with an adverse interest (see rule 27 for more on adverse interest)  Improper for you to take advantage of your client’s inexperience, age or any infirmity.

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Cannot advise an ignorant client to act to his or her detriment and your own benefit, or conceal from the client that you are personally interested. Improper for you to receive a secret profit in the course of acting for your client. To completely preclude a conflict between a client’s interest and your own interest, should not mix a business relationship with your professional responsibilities to your client. For example, you should not borrow from a client, or arrange a loan from a client to a person or company with which you are associated, unless the client obtains independent advice or is in the business of lending.

personal conflict may mean that e.g. your sister wants you to pursue a maintenance summons… e.g. you do not

get along with the person who comes to see you… ==> a very wide concept o put simply, if you have a family relationship with the client, should not act for that person… because lawyers may get personally involved • see Ohm v Ng Doreen and Law Society v Subbiah Pillai below TYPE A personal interests – if in conflict with client’s interest – personal interest can conflict as such – see rule 26 PC Rules o personal conflict can come because advocate and sol has interest in client’s matter or member of his family or member of firm has interest in matter o someone suing fam member or acting for fam member or acting for comp where you are shr or non exec director o ie personal interest found in rule 26 – whre you have any interest in matter entrustd to you by your client, then you have personal interst o 26a) says- and because like trustee and benef, fid rr, first duty – make full and frank disclosure of interest – o then cient and lawyer to decide – whether lawyer unable to act in client’s best interest which he is bound to do by virtue of fid rr – o if yes, then must decline retainer. Or cease to act if in course of retainer. Disclosure of interest 26. In any case where the advocate and solicitor or any member of his family or any law corporation of which the advocate and solicitor is a director or an employee has an interest in any matter entrusted to him by a client, the advocate and solicitor shall — (a) make a full and frank disclosure of such interest to the client; or (b) if, on the grounds of confidentiality or for any other reason, the advocate and solicitor is unable to make such disclosure, decline to represent or withdraw from representing that client. Associated bodies  should not act for a client who has a dispute against an organization with which you are substantially associated Possibility of former client acting against you

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Where in the course of acting for a client in relation to a matter you become aware that your client may have a cause of action against you in respect of your handling of that matter, you should advise your client to obtain separate legal advice about your conduct and whether you should continue to act in the matter.

Informed consent But lawyer may have personal interest but not of such grave level to put him in conflict – after disclosure, given nature of retainer, don’t think that will be in personal conflict – then may cont to act. But client is put on notice that this is sol with interst in matter. -

See pg 67 manual – ohm pacific v Doreen ng – 1994 decision  Doreen a shr and director of company and asked to prepare shipping docs for which comp having direct interest in transaction  She prepare pprs but did not disclose that she was dir and shr of the company  Then things went sour on agreement and when found out tt sol was dir and shr, ckient sued her for breach of fid duty  Client can sue in court of law – civil liab and not just ethica issue because this is a cl duty  Court found that there was failure to disclose but comp x prove that Doreen acted in way putting her personal interest above coient interest – ie no damage suffered or breach of duty  So action for damages fails – sol had not in any way failed ot act in their best interests  But complaint made to law soc and law soc found her in breach – she had faied to make full and frank disclosure of her interest  Cl rule on fid – on this basis law soc foun her guilty (back in 1994)  NOW – in breach of rule 26

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Client given full info to decide whether she shld consent to lawyer contg to act Client given oppty to form this opinion So give consent to cont to act in matter Because of informed consent required – rule 26 therefor req full and frank disclosure This is principle of cl which has been brought into rule 26 by use of ‘full and frank disclosure’ 26(b) – if unable to give full disclosure because of any grds of confid, then must stop acting or withdraw fr acting  if restricted fr personal issues, then not giving client oppty of informed consent ahmad kaliz judgement – look at (newspaper) level of education of client  law soc prosecuted this case  clients – many uneducated pple – lawyer shld have taken pain to explain confkict issue to them in way they cld understand  basis of charge and one finding was tt he x took any oppty to explain to client  how he did it wld be impt as well, if he did it explain why you can cont to act so that client can come to informed decision

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TYPE B stimes may be personal convictions this is also a personal confict and shld also make this disclosure to client – personal issues or philosophy against his instructions TYPE C: SALES TRANSACTIONS rule 27 – interest adverse to your client ie your personal interest contrary to client’s Adverse interest 27. Where the interest of the advocate and solicitor or any member of his family or where the interest of any law corporation, of which the advocate and solicitor is a director or an employee, or of any of its directors or employees is adverse to the interest of the client, the advocate and solicitor shall decline to represent or withdraw from representing the client, unless the client having been fully informed, and advised that he should seek independent legal advice, consents to the advocate and solicitor acting or continuing to act on his behalf -

eg lawyer acting in person for his own matter and also asked to act for opposite side common cases – where lawyer is purchaser or vendor of property and asked to act for opp party as well

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manual – pg 55 – law soc v kushvindar singh – 1999 case

Undue influence and buying property from client Law Society of Singapore v Khushvinder Singh Chopra [1999] 4 SLR 775 Principle:

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A solicitor ought not to put himself forward as a prospective principal to deal with his client. However, that is not an absolute rule. Have to ensure that client received disinterested legal advice; otherwise the solicitor would be obliged to discharge himself.

Facts:  Procurement of flat although his clients were unwilling to sell the property to the solicitor. Solicitor managed to persuade his client to execute an option in his favour via undue influence. Solicitor then lodged a caveat to protect his interest.  When his clients found a new buyer, the solicitor sought to enforce his caveat. His client lodged complaint to the Law Society.  Not disputed that at all material times, the respondent failed to advise the vendors to seek independent legal advice in relation to the transaction with him.  Not denied that the terms of the option were favourable to the solicitor as a purchaser. Held (Yong Pung How CJ):  Solicitor was struck off the roll, as the solicitor had owned a fiduciary duty to his client, if he entered into any transactions with his client, the law would be rigorous on him and any benefit received by him had to be fair and informed. This applied whether the solicitor was still acting for the client or whether he had discharged himself.

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He should have advised his clients to seek other independent advice, legal or otherwise. The most appropriate action would be to discharge himself as solicitor and advise clients to appoint new solicitors but at the very least, the solicitor ought to ensure that the client has had the benefit of truly independent legal advice.

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Each case depended on its very own nature and facts, solicitor was not to obtain the slightest benefit which he would otherwise not obtained although no rigid rules are prescribed when a solicitor should advise his client to seek independent advice. Laying down such rigid rules ran counter to the general principle that a solicitor should always give his clients independent legal advice especially when a potential conflict of interest arose.

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Since the solicitor’s interests and that of the vendors were on the opposite ends of the scale, the fact that he obtained the property at a lower price ought to have alerted him to tell the vendors to seek other legal advice. Clear that the solicitor while acting for his clients had preferred his own interests to that of the latter.

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He had knowingly placed himself in a position of aggravated conflict of interest and would have gained an advantage at the expense of the vendors but for the intervention of the courts.

See also rule 45: Purchases from client 45. —(1) Subject to the law on fiduciary relationship, an advocate and solicitor may purchase goods and assets from a client only if the purchase is at the prevailing market price or at such price as is reasonable. (2) Where practicable, the advocate and solicitor shall obtain an independent valuation of such goods and assets.

pg 72 – law soc v pillay – 2004 case – both cases, before court of 3 judges – law soc case was that both lawyers acting in personal conflict because interest adverse to that of cient and they had declined to withdraw fr acting for the client –  singh struck off because conflict grave • buying property fr client and therefore purchaser and clients he knew were in grave financia diff and facing bankruptcy, he cld get price of property at favourable rate therefore

9

• • •

o o

o

o

ie lawyer interests adverse to cLient – as purchase wants to get best price never told them to see sep solicitor, did not disclose his interest court hekd that his conduct was gross – signed option at midnight at their house, no oppty to get legal advice • when clkient got legal advice that lwyer interest was adverse, client wanted to reverse transaction, he got caveat on property and he went to a lot of trouble for cient to keep transaction • even got client to admit that they had informed consent to stop complaint inquiry that client started • the way he was acting was found abhorrent by court  pillay suspended for perod of time but cl recog tt with full and frank disclosure to client and client with informed consensus thinks it ok to act for him, lawyer can cont to act rule 27 terfore says that unless client fully informed and advised that he shld seek indep legal advice and consents to advocate contg to act, then you can act but because interest adverse, rule 27 req you to tell client tt your interests are adverse and ot tell client ot take indep legalk advice  => laywr must show: • full and frank disclosure • and has told client ot take indep legal advice, and client declines the offer but best that NOT act – law soc advice  unless clinet is sophisticated, when interests are adverse, diff to prove that he has informed consent  lawyers – officers of court – keep to highest ideals of profession  so be careful when interests are adverse to client TYPE D: BORROWING TRANSACTIONS  

Also in prev chapter Rule 33 Legal Profession (Professional Conduct) Rules, an advocate and solicitor is not permitted to enter into a “prohibited borrowing transaction” which is defined as any transaction under or by virtue of which money or valuable security is borrowed by an advocate and solicitor from his client or by an associated party from that client unless the client is an excepted person Prohibited borrowing transaction 33. Subject to rule 34, an advocate and solicitor shall not — (a) enter into a prohibited borrowing transaction; (b) instruct, procure, secure or arrange for an associated party to enter into a prohibited borrowing transaction; or (c) knowingly allow an associated party to enter into a prohibited borrowing transaction if it is within his power to prevent it.

o

Common case apart fr sale transactions – borrowing fr client  Undue influence – fid rr  When borrow fr client, view is that want to keep legal adviser happy, so will lend most of the time  Presumption of undue influence  Rules 33 and 34 – lawyer SHALL Not borrow fr client and if going to borrow fr client then need to show indep legal advice

o

See case of shan rajagopal – see lecture outline 1994 3 SLR 524  Acted for clinet who wanted to have his permanent residency restored and asked sol to act for him; in course of doing so, lawyer borrowed money fr him and he did not tell cient to get indep legal advice. When borrowed, nth in evid in writing of borrowing bet client and him. He paid back in bits and pices with no documentation to prove how much he paid or how much owing  Court of 3 jduges – this was gross misconduct  Client very ignorant, not educated man. Client taken disadv of by lawyer  Struck off for borrowing because never disclosed to ckient the adverse interest and ased him to get indep legal advice  Pg 53 manual

10

o

Footnote - Law soc v naidoo 2001 2 SLR – lawyer also borrowed fr client but there lawyer suspended and not struck off  Court took view tt way he failed to disclose adverse interest not as gross a manner as rajagopal who took great deal of adv of ignorant client  Davidas did not  => based on how much undue inf lakwyer exerts over client which shan exerted a lot of to borrow large sums of money

o

ie 2 common instance where lawyer put in adverse interests vs client

-

o

o

TYPE E see pg 56 manual – law soc v dennis singam 2001 1 SLR  are lawyers I personal conflict by having sexual rr with client  prior to this no such issue ever adjudicated. Ar layers in personal conflict where hve rr with ckient  because in fid rr, will have some sort of influence over client if pursue sexual rr with them  in this case more so because acting in fam matter and husb wanted to reconcile but because lawyer had sex, held back in attempting reconciliation of marriage => personal conflict this is pure breach of rule 25 – interest in personal conflict with client  fid rr => do not enter sexual or personal rr with client because this wil put you in conflict  so personal rr cannot be cured by informed consent – strictly disallowed compare other cl juris – layers mostly reprimanded, but courts take diff view  personal rr an absol prohibition TYPE F Gifts   

presumption of undue influence Because you do work for your client… the client may give you gifts The rule on gifts is in Rule 46… the key word is “significant gift”

Rule 46 – Gift by will or inter vivos from client 46. Where a client intends to make a significant gift by will or inter vivos, or in any other manner, to — (a) an advocate and solicitor acting for him; (b) any member of the law firm of the advocate and solicitor; (c) any member, director or employee of the law corporation of the advocate and solicitor; or (d) any member of the family of the advocate and solicitor,



the advocate and solicitor shall not act for the client and shall advise the client to be independently advised in respect of the gift.



What is significant is very factual … if it is a client of little means, and has just secured a $10,000 judgment, but giving you a $2,000 gift… the rules say that you should ask them to get independent legal advice… however, it is easier to ask them to keep it etc “Independent legal advice” has to be from another law firm, i.e. different lawyer from same firm doesn’t count as independent legal advice! Another example of gift is where a deceased client leaves you significant gifts in his will

 



For personal conflict of interest: would depend on the facts whether informed consent is sufficient to absolve the lawyer. However in the realm of personal conflict, particularly where family relationships are involved, since the relationships are too close, informed consent would most probably not be enough (mentioned in judgment of Ohm Pacific v. Ng Doreen below). You need full and frank disclosure.

8.4 Interest of Solicitor any solicitor who receives a commission from the other party must account for it to his client unless he has his client’s permission to keep it

11

disclosure to the client is, however, a defence Whitehouse Holdings Private Limited v. Law Society of Singapore [1994] 2 SLR 476 Facts The appellant Whitehouse retained one Tham Kok Leong (‘Tham’), an advocate and solicitor in and about the lease of a property. In about September 1990, Tham entered into a service agreement in respect of his premises at the property whereby Tham took an area of 3,200 sq ft for 36 months from 1 November 1990 at the monthly rent of $2 described as $1 for hire of fittings and fixtures and $1 for maintenance. The service agreement was prepared by Choy, Tham’s legal assistant. On 22 December 1992, Whitehouse lodged a complaint with the Law Society of Singapore alleging, inter alia, that Tham ‘acted fraudulently or had displayed gross improper conduct in the discharge of his professional duty by fraudulently charging $2 for the use and occupation of …’ the premises. In accordance with s 86 of the Legal Profession Act (Cap 161, 1990 Ed) (‘the Act’) the complaint was inquired into by the inquiry committee (IC) and its report was considered by the Council of the Law Society in accordance with s 87. On 6 August 1993 the Council ‘accepted and adopted the IC’s findings. On 10 August 1993 the Council informed Whitehouse that it accepted the IC’s report that the complaint did not merit a formal investigation by a disciplinary committee (DC) and dismissed it. Whitehouse applied under s 96 for an order directing the Law Society to apply to the Chief Justice for the appointment of a DC. The High Court dismissed the application (see [1994] 1 SLR 315) and held that the IC failed to investigate the issue as to whether Tham displayed gross improper conduct with respect to the first part of the complaint. As the Council merely accepted and adopted the IC’s report, there was no relevant determination under s 87. The court below however declined to affirm the Council’s determination as it found that it was open to a disciplinary committee to hold, on the facts of the case, that there was professional misconduct. Whitehouse appealed. Held, allowing the appeal: (1) There was no objection to the Council’s practice in merely accepting and adopting the IC report. The Council need not supplement the reasons given by the IC in its report if it agreed with and accepted the IC’s findings. In this case, the Council had clearly determined that no formal investigation was necessary. (2) The words of s 96(4) did not oblige a judge to either affirm the Council’s determination or direct the application for the appointment of a DC. There was no mandatory obligation to make either of the two stipulated orders, although a judge’s powers are limited to the two orders there. (3) Although the IC made no specific finding on the issue of grossly improper conduct, there was in fact an inquiry into the complaint. The IC fully and thoroughly inquired into the substance of the first complaint and concluded that there was no need for a formal investigation. Tham clearly had notice of the allegation of gross improper conduct and was, in the circumstances, judged by his own peers. (4) A remedy in judicial review to compel the IC or the Council to further investigate the allegation of gross improper conduct was concurrently available to Whitehouse. However, its scope of application also extended to areas outside the ambit of ss 96 and 97. Section 96 was enacted as a specific appeal procedure for complainants dissatisfied with the Council’s determination dismissing a complaint and therefore should be the procedure of first resort. The court’s jurisdiction under s 96 was appellate and supervisory in nature and was not that of an original jurisdiction. The scope of s 96 clearly encompassed the circumstances here and it was not inconsistent with the supervisory powers of the court under s 96 to assume jurisdiction. (5) The IC’s role was merely to investigate the complaint. It did not have to make any conclusions on misconduct or whether an offence was committed but simply to consider whether or not there was a prima facie case for a formal investigation. However, the court should be slow to disturb or interfere with the IC’s findings of fact unless it can be shown that supporting evidence was lacking or there was some misunderstanding of the evidence or there are other exceptional circumstances justifying the court to do so. (6) Whatever the motives of the parties may be, a solicitor must ensure that he must not act whenever his own interests conflicted those of a client. It was clearly professional misconduct where a solicitor obtained an advantage from a client without advising the client to seek independent legal advice. Tham clearly incurred a substantial benefit and the evidence was clear that neither Choy nor Tham advised Koh to seek independent advice. The IC, and consequently the Council, were in error in not finding otherwise. There should be a formal investigation into the first part of the complaint that Tham displayed grossly improper conduct in the discharge of his professional duty. (7) The IC dismissed the second and third parts of the complaint on the basis that they were essentially matters in the nature of commercial disputes. The findings of the IC and, consequently, the Council’s determinations on these, would not be interfered with. 3. Rule 26 – Full and Frank Disclosure

12

To all the clients of potential difficulties or in other words what is the personal conflict that stops the lawyer from giving fullest advice and in appropriate cases to seek independent legal advice. Especially applicable for conflict including interests of family members.

 

Rule 26  Disclosure of Personal conflict and client to make informed decision after full disclosure Disclosure of interest 26. In any case where the advocate and solicitor or any member of his family or any law corporation of which the advocate and solicitor is a director or any employee has interest in any matter entrusted to him by a client, the advocate and solicitor shall – a) make a full and frank disclosure of such interest to the client; or 2) if, on the grounds of confidentiality or for any other reason, the advocate and solicitor is unable to make such disclosure, decline to represent or withdraw from representing that client. Ohm Pacific v Ng Hwee Cheng Doreen [1994] 2 SLR 576 Principle:



Solicitor is obliged to disclose potential conflict of interest and to advise the appellants to take independent legal advice. The mere fact that the appellants had knowledge that the respondent had interest was not sufficient. Full and frank disclosure and informed consent required.



Even if there was informed consent but it was found that the respondent was not able to carry out her duties wholeheartedly to any client because of conflicting duty, the solicitor should discharge herself.

Facts:  Appellants and Pacific Navigation executed management agreement appointing Pacific Navigation as the sole managing agents of a vessel owned by the appellants and a power of attorney appoint the respondent as the attorney of the appellants. 

The respondent was director and shareholder of Pacific Navigation and wife of the Managing Director of Pacific Navigation.



Subsequently, a dispute arose between the appellants and Pacific Navigation and Pacific Navigation instituted an admiralty action in rem against the appellants.



Appellants alleged in this suit that the respondent being their solicitor had failed to inform them of her conflicting duty to and interest in Pacific Navigation and had failed to fulfil properly her obligation as the attorney of the appellants.

Held (LP Thean JA):  2 aspects of the respondent’s obligation in this case: (1) conflict of her duty to the appellants as her clients with her personal interest in Pacific Navigation (2) conflict of her duty to Pacific Navigation who were also her clients 

In such cases, the law expounded in the authorities is quite clear that a solicitor is to inform his client of such conflicts and advise him to seek independent advice.



The relationship between solicitor and client carries with it obligations on the solicitor’s part to act with absolute fairness and openness towards his client. Like any other agent but to a higher degree because of his position as an officer of the court and the privileges, which the law attaches to legal professional confidence, he is bound to observe the utmost good faith towards his client.



Solicitor must not without the informed consent of his client stand to make any profit or receive any benefit other than his professional remuneration from the transaction, which he is retained to carry through.



No evidence that the respondent had disclosed to the appellants (1) her interests in Pacific Navigation and (2) her acting

13

for Pacific Navigation in the relevant transactions and had advised the appellants to seek independent advice.





Even if the respondent had obtained the informed consent of the appellants, she would still be liable to the appellants if she had not discharged her duty to the appellants because of her interest in Pacific Navigation and her conflicting duty to Pacific Navigation. The respondent should not have accepted the appellant’s reposal of trust in her when she knew full well that she was not in a position wholeheartedly to protect the interests of the appellants.



A breach of fiduciary duty is established however; the loss sustained by the appellants was not caused by such a breach, necessary for the appellants to prove a causal connection between the breach of duty and the alleged loss. Therefore the appeal is dismissed.

If it involves family, close friends, cannot be satisfied by informed consent, as the relationship is too close. In Ohm Pacific v Doreen Ng, LP Thean’s judgment mentioned that informed consent would not be a solution if the solicitor were unable to carry out his/her duties wholeheartedly to a particular client if there were conflicting interests. (Look also at the facts of Law Society v. Subbiah Pillai below for an example of such a situation). “Even if the respondent had obtained the informed consent of the appellants, she would still be liable to the appellants if she had not discharged her duty to the appellants because of her interest in Pacific Navigation and her conflicting duty to Pacific Navigation. The respondent should not have accepted the appellants’ reposal of trust in her when she knew full well that she was not in a position wholeheartedly to protect the interests of the appellants.” (at para 22 of judgment) Law Society v. Subbiah Pillai (2004, Singapore)2

2



Solicitor failed to disclose to clients that he had vested interest in matter



Solicitor acted for his sister and a couple in the matter of a transaction over sale and purchase of a shophouse



Solicitor’s sister bought the shophouse from the couple and Solicitor acted for both sides; sister made purchase with the help of a loan for which the solicitor was the guarantor



The couple then arranged for another party (the husband’s brother) to buy back the shophouse a little later. The solicitor acted for both his sister and the third party.



The solicitor failed to disclose his interest as the purchaser’s brother in the first instance. In the second instance, the bank loan was in default and as guarantor it was in the solicitor’s interest to find a buyer. This he did not disclose to the couple, nor did he advise them to seek independent legal advice or to ensure that they had a reasonable opportunity to do so.



The disciplinary committee of the Law Society stated that by placing himself in a situation where there was a conflict of interest, the solicitor had not discharged his duties in a professional manner to both the seller and the buyer, and that such conduct was unbecoming of a solicitor.



Three-year suspension from practice and ordered to pay costs to the Law Society



In JV situations, informed consent would also not protect you from conflict of interest.



If there are personal interests involved, the lawyer has to ask himself whether the conflict of interests between member of family or his own is in conflict or adverse to those of the client’s interests … should ask the client to seek independent legal advice – Rule 27

From Manual.

14

4. Adverse Interest/ Informed Consent – Rule 27  

Note: Common Law position stands but Rules give factual situation where the conflict of interest may arise. Re: Rules 27 – 29: common situation in conflicts 4.1. Adverse interest or withdraw unless informed consent



Should act in good faith, make full disclosure of all relevant circumstances and strongly advise your client to obtain independent legal advice. The following two Australian cases cover extensively the conduct expected for disclosure of interest, adverse interest and conflict of interest. O’Reilly v. Law Society of New South Wales (1988) 24 NSWLR 204 CA, Supreme Court, NSW Three judges sitting Held: 1.

A solicitor has a professional obligation, enforceable in disciplinary proceedings to avoid conflicts between his personal interests and his duty to his clients.

2.

A solicitor who enters a transaction with a client or former client, in circumstances of unacceptable conflict between his interests and duty, may be guilty of professional misconduct.

3.

Where a solicitor (personally or through an associated company) enters a transaction of an advantage (directly or indirectly) to himself, with a client or former client who does, or may, rely upon him for advice, the solicitor bears a heavy burden to establish that the client has given his fully informed consent to the transaction

4.

The above principles apply to a solicitor who lends to a client as well as a solicitor who borrows from a client.

5.

There is no absolute prohibition on a solicitor, for his own advantage, entering a transaction with a client or former client. But where there is an apparent conflict between a solicitor’s interests and duty, if the solicitor’s conduct is to be excused, he must have taken steps, with full candour and disclosure to the client, to ensure that the client has given his fully informed consent to the transaction.

6.

(2 judges) The content of a solicitor’s duty to a client or former client with whom he enters a transaction depends on the nature and extent of his retainer

7.

A solicitor generally owes to his client a duty (i) to tell the client of everything he knows which will be of assistance to the client in relation to matters within his retainer; (ii) within such limits, to do what he can to further the client’s interests

8.

(Full court) Where a solicitor owes a duty not to enter into a transaction with a client or former client without first obtaining the client’s fully informed consent he is generally obliged to: (i) make full disclosure to the client; (ii) to advise the client to obtain independent legal advice, and to facilitate provision of such advice; (iii) [2 judges] where he is retained for such a purpose, to advise upon the different ways in which the client’s objective may be attained and their economic advantages and disadvantages

9.

[2 judges] Whether a solicitor owes to a former client a duty to make full disclosure, and to advise that the former client obtain independent legal advice, before entering a transaction with him is a question of degree depending on all the circumstances, analogous to the question whether a solicitor, having acted for one side in litigation, can properly act for the other.

10.

Whether a solicitor is guilty of professional misconduct (and the seriousness of such misconduct) by reason

15

of having entered a transaction with a client must depend upon the circumstances of the particular transaction

Law Society of New South Wales v. Harvey [1976] 2 NSWLR 154 Facts:     

Solicitor had mixed clients’ affairs with his own Grossly preferred his own interests to that of his clients, resulting in their financial detriment Failed to make proper, and in some cases, any disclosure of his interest or risks involved in the proposed investments Failed to give proper advice or to advise them to seek independent legal advice Invested clients’ money in unauthorised investments

Held: 1.

It is an essential feature of the relationship between solicitor and client that the client is entitled to the full benefit of the best exertions of the solicitor, and that the solicitor shall not be permitted to make a gain for himself at the expense of his client, beyond the amount of the fair and just professional remuneration to which he is entitled

2.

Where there is found to be any conflict between the interest of the solicitor and the client, it is the duty of the solicitor, acting in perfect good faith, to make a complete disclosure of his interest. A less than complete disclosure may positively mislead.

3.

The solicitor should at the very least advise the client to seek independent legal advice and should, except in the most exceptional cases, cease to act for the client.

4.

A solicitor should not expressly propose that his client deal with him, or with a company in which he has an interest, even on the basis that the client will seek independent legal advice. A solicitor should take all reasonable steps to avoid dealing directly or indirectly with his client.

5.

A solicitor should not normally act as a business consultant or loan broker, and if he does he ought to regard himself as being precluded by reason of the solicitor-client relationship, from commending to the client a loan to a company or for a venture, in which the solicitor has an interest

However, the Singapore case of Whitehouse, below, seems to stand for the proposition that in the realm of personal conflict, it appears that informed consent may not suffice to absolve the solicitor from a breach of the Rules. He may have to go further and tell the client to seek independent legal advice. Whitehouse Holdings v The Law Society of Singapore [1994] 2 SLR 476 Principle:



If it is found that a solicitor had derived a substantial benefit other than his proper remuneration and he had not advised his client to obtain independent legal advice on it before the document was executed, it would be open to a disciplinary committee to hold that the solicitor had been guilty of grossly improper conduct in the discharge of his professional duty.

Facts:  Solicitor, Tham, was retained by the complainant (Whitehouse Holdings) in transactions regarding the lease and subleases of the premise of 32 Maxwell Road. 

Tham executed an agreement prepared by an assistant solicitor employed by him whereby he was to take an area of 3,200 sq ft for 36 months from 1/11/90 at the monthly rental of $2. (Whitehouse had taken the lease for the premises and agreed to sub-lease part of it to Tham for the $2 monthly rental)

16



Whitehouse lodged a complaint with the Law Society that the solicitor had displayed gross improper conduct in the discharge of his professional duty.



Koh, the partner of Whitehouse who had signed the sub-lease agreement with Tham, complained that he could not read English could not read English and he claimed that Tham did not draw his attention to the rental figure. Koh said he had assumed that the market rental rate was included in the terms. Koh trusted Tham and signed the agreement. He then claimed that he was not sent a copy of the agreement until sometime later in December 1990



The LA who drew up the sub-lease gave evidence that he had specifically explained to Koh, the partner of Whitehouse Holdings who had signed the sub-lease agreement, that the rent was only $2 per month, and that Koh had understood this before signing the agreement in the LA’s presence. When the agreement was signed, the LA gave a copy of it to Koh.

Held (Lim Teong Qwee JC, affirmed on appeal to the Court of Appeal):  The solicitor had indeed received a very substantial benefit from his client under an agreement prepared by his assistant who attended to the client and he had not advised the client to be independently advised. 



The solicitor has to advise his clients to secure independent advice should the solicitor derive any substantial benefit other than his proper remuneration otherwise it is open to the disciplinary committee that the solicitor had been guilty of grossly improper conduct.

Disclosure to a client is a defence, and subject to such disclosure, there is NO professional objection to a solicitor’s receiving an agency or introductory commission from an insurance company, or sharing a stockbroker’s commission, or profits of overseas solicitors on business introduced by them: Moss v. Moss (No. 2) 21 LR (NSW) Eq 253 and Copp v. Lynch [1882] 26 Sol Jo 3483.

8.6 Transactions with Clients – revocation of transaction - solicitor who enters into a transaction with a client who confers a substantial benefit by disposition inter vivos, will not be able to uphold the transaction or retain the benefits of the transaction if the transaction is called in question by the client, unless the solicitor can prove that he disclosed all material facts and that the transaction was effected by the client in the free exercise of his will, unaffected by any influence which the solicitor either in fact possessed o in law was deemed to possess Haywood v. Roadknight [1927] VLR 512 Robinson v. Abbott [1894] 20 VLR 346: • A solicitor was requested by clients to procure a mortgage as an investment • Solicitor suggested that the client should invest in shares in a land company with which he was connected • Solicitor accepted the purchase money and transferred to them certain of his own shares, and carelessly, omitted to inform them of the fact that he himself was the vendor • Subsequently certain properties owned by the company were sold at a profit • Later, the company went into liquidation • The client brought an action against him, claiming rescission of the contract or an order for a return of the monies paid together with the amount already paid in calls and an indemnity against future calls • The court was satisfied that the plaintiffs did not know of their legal rights to redress until shortly before the commencement of the action • It was held that the plaintiffs were entitled to an order for repayment of the money paid for the shares, and for calls upon them, and to an indemnity against all future calls • “if it appears that in that bargain he has got an advantage by his diligence being surprised, putting fraud and incapacity out of the question, which advantage with the due diligence he would have prevented another person from getting, a contract under such circumstances shall not stand” the rule applies equally to all bargains between solicitor and client, whether the solicitor is the seller or buyer 3

This paragraph was taken from pp 81 of the manual. However, was unable to find either case on LexisNexis or Westlaw. Cases were in closed stacks at law library.

17

-

-

in Gibson v. Jeyes the attorney sold an annuity to his client, which according to the calculation of actuaries was not worth the money he gave for it the foundation of the rule is trust, but there is this distinction between the trustee of an estate and a solicitor dealing with his client in the one case, if the connection does not satisfactorily appear to have been dissolved, it is the choice of the cestuis que trustent whether they will take back the property and whether the trustee has made an advantage out of the transaction or not; whereas in the other the solicitor is only bound to prove that he has performed his duty towards his client Disclosure, Advice and Diligence • Test for whether or not the contract is valid is not whether or not the solicitor has obtained any benefit • Correct test is whether the solicitor has furnished such disclosure, and sound advice, and used such diligence as his duty demands • “benefit” is not limited by the authorities to pecuniary benefits

Summary of position  Where there is a potential or real personal conflict of interest in a matter that the lawyer is dealing with, the Professional Conduct rules (in particular Rules 26 and 27) require the lawyer to make full and frank disclosure of his position so that he is then acting with the client’s informed consent; if the personal conflict is such that it is adverse to the interests of the client’s, then to advice the client to get independent legal advice



However, a lawyer should tread with triple caution now, in the light of Whitehouse above.

5. Professional Conflict  Conflict can be actual or potential.  Conflict when acting for 2 or more clients in a transaction or matter. o E.g.: acting for both buyer and seller of a property  acting against a former client [see rule 31 below] General  

cl still applies. Except for rule 31 – some modif but otherwise rules not inconsistent with common law

8.2 Confidential Information  In acting for client, you are at the risk of disclosing confidential information acquired while acting for another client [see Rule 24, below] a)

Acting for opposing parties in the same case • David Lee & Co (Lincoln) Ltd v. Coward Chance (firm) & Ors [1990] 3 WLR:  Court would only intervene to prevent partners s acting if it was rightly anticipated that mischief would result to one party



To have one firm of solicitors, albeit a large one, acting for both sides gave rise to a prima facie case of mischief rightly anticipated



b)

Not enough evidence to show that sufficient steps had been taken to ensure that there would be no leakage of information between the relevant partners so as to eliminate that prima facie risk of mischief, it would not be lawful for the amalgamated firm to continue to act for the liquidators Acting against a former client • Re A Firm of Solicitors [1992] 1 All ER 353:  Would not be permitted for to act for an existing client against a former client if a reasonable man with knowledge of the facts would reasonably anticipate that there was a danger that information gained while acting for the former client would be used against him  A reasonable man with knowledge of all the facts, would still consider that if the firm was allowed to continue to act for the defendant there would be risk that some of the confidential information

18

c)

d)

provided by the plaintiffs to the firm might inadvertently be revealed to the firm’s team who were to act for the defendant  Appeal was dismissed and the injunction restraining the firm from acting for the defendant continued • Latest authority suggest strongly that it is not consistent with an appearance of justice for a solicitor to purport to represent competing interests simultaneously • Moreover, a solicitor in keeping with his retainer is generally obliged to put all his knowledge at the disposal of his present client • It is impossible for him to act without “unconscious plagiarism” if he has obtained information from a former client International firms • Manville Canada Inc v. Ladner Downs [1992] 2 WWR 323:  As each member was operating as a discrete organization in its home jurisdiction, there was no evidence to indicate that any confidential information had been disclosed or that there was any risk that any such information had been or would be disclosed  The test was the objective assessment of a reasonable member of the public in possession of the facts  Stressed: a) The need to reduce the costs of litigation by preventing frivolous or vexatious complaints about alleged conflict b) The need to prevent the waste of time and money involved in instructing new attorneys if it was found that a conflict existed  Decision was upheld on appeal Solicitor leaving to join new firm acting against former client • Re a Firm of Solicitors [1995] 3 All ER 482:  Burden was on any person who was a partner in a firm which was retained while he occupied that position and which in the course of such retainer became possessed of confidential information to establish that there was no risk of his misusing confidential information before he could thereafter act against that client  Had to show not merely that he was not in possession of any relevant confidential information, but that there was no real risk that he had such information  On the facts, there was no real risk  It was held that there was no absolute bar against a solicitor or a firm acting against a former client  He continues to owe the former client a duty to ensure that information provided to him during the course of the retainer and which is confidential remains so  Injunction can be sought against the solicitor or the firm concerned

The new test and subsequent case law Bolkiah v. KPMG (a firm) [1999] 2 WLR 215, adopted a stricter test: • Incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish: (i) the solicitor is in possession of information; (ii) the information may be relevant to the new matter in which the interest of the other client is or may be adverse to his own • It is for the solicitor to establish that even if he does continue to act, there is no real risk that the information will be disclosed Young v. Robson Rhodes (a firm) [1999] 3 All ER 524 • English High Court considered Bolkiah v. KPMG and held that where considering the proposed establishment of a Chinese wall or information barrier to prevent or minimize the leakage of confidential information, the approach to be adopted by the court is to ensure that even if there are mistakes, no additional risk of damage is inflicted on the former client Re a firm of solicitors [1999] ALL ER 1119:  The firm was involved in 2 concurrent actions

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In one, a club had brought an action against its brokers for their negligence In the other action, the club had brought proceedings for unpaid release calls against some of its members Solicitors in the firm acting in the brokers’ proceedings were wholly different from the solicitors in the firm acting in the members’ proceedings Was accepted by the English High Court that the club’s managers had provided confidential information to the firm as part of the brokers’ proceedings Club argued that this confidential information was relevant to the members’ proceedings because the members could rely on the alleged negligence of the club’s manager in the brokers’ proceedings as part of their defence While court considered this link to be tenuous, it held that it was required to look to the future and, accordingly, further held that some of the information provided in the brokers’ proceedings might in future be relevant to the members’ proceedings However, the court also noted that it was entitled to take into account the weakness of the link in assessing the risk of disclosure Court went on to consider whether there was a real risk of leakage Facts considered relevant were:  The two matters had always been handled separately;  The partner and his assistant involved in the members’ proceedings had their offices on one floor of one building;  The partner involved in the brokers’ proceedings had his office in another building;  The individuals involved had never been into each other’s offices and, indeed, had previously never met. Court held that there was a clear institutionalized departmental and physical separation: there was no cross-pollination between departments, no mixing on a professional basis, social contact was limited, documents were held only in hard copy and stored in the offices of the respective departments concerned Accordingly, it held that there was no real risk of inadvertent disclosure of relevant confidential information

Halewood International v. Addleshaw Booth & Co. (unreported, 5 Nov 1999):  Plaintiff objected to the defendant law firm so acting on the basis that Mr Robinson was in possession of confidential information imparted during the Lamfresco proceedings, which information was relevant to he Lambrusco proccedings  English High Court held that, on balance, the defendant law firm was in possession of relevant confidential information, notwithstanding confidential information only made in the most general terms  Considered the following facts:  Defendant law firm had immediately instructed Mr Robinson to have no involvement whatsoever with the Lambrusco proceedings;  Mr Robinson was instructed, and he agreed, that confidential information relevant to the plaintiff would not be disclosed;  Also instructed not to look at any of the files, correspondence and other documentation relating to the Lambrusco proceedings;  Also not to discuss his prior involvement with the plaintiff  Correspondence were to be kept in a filing cabinet separate from Mr Robinson’s work area;  Each member of the team involved in the Lambrusco proceedings was instructed not to discuss either directly or in the presence of Mr Robinson his prior involvement with the plaintiff  Lambrusco proceedings were never discussed at any department meetings in the presence of Mr Robinson  Court made the following observations:  Court would attach weight to the evidence of a solicitor as to his state of knowledge and whether he has confidential information;

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Even where solicitor currently recalls no information, court should recognize that confidential information acquired by a solicitor will remain in his mind;  The small size of the team was a factor that made it easier to police an information barrier as statistically the risk of someone doing something wrong by accident is greater when more people may be subject to the possibility of accident;  Mr Robinson was just one individual and it would be easier to ensure compliance;  Although Mr Robinson was located in a separate office, there was a small risk that he would accidentally overhear telephone conversations or see documents on desks Accordingly, the court held that, if Mr Robinson continued to work in the same building as any member of the team working on the Lambrusco proceedings, there was a small but existent risk of something happening which would involve him relaying to a member of the team some confidential information which he had 

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Koch Shipping Inc v. Richards Butler [2002] 2 All ER 957:  Solicitor, P, acted for the applicant company, which was the defendant to arbitration proceedings brought by A Ltd  P left her firm and joined the defendant firm  Applicant sought an injunction restraining the defendant from continuing to act for A Ltd

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Before the hearing, the defendant offered undertakings that, inter alia, P would not discuss the case with the solicitors handling A Ltd’s case and that she would work on a different floor Defendant accepted that P was in possession of information confidential to the applicant and it was common ground that the applicant had not consented to such information being disclosed Applicant accepted that it could rely upon P’s integrity and professional standards to ensure that there was no deliberate breach of confidentiality However, the injunction was granted on the ground that there was a real risk of inadvertent disclosure of confidential information relevant to the arbitration by P as P was working in the same group as those working on the arbitration and in the same building Defendant firm appealed Appellate court held that each such case turned on its own facts The question was whether there was any risk of a single solicitor inadvertently disclosing confidential information to others In the circumstances, the suggestion that P might inadvertently let slip some piece of confidential information was fanciful Far-fetched to believe that she might do something which might have that effect Appeal was allowed

Local Cases Ong Jane Rebecca v. Lim Lie Hoa and Others [2002] 2 SLR 493:  Solicitors for the first defendant applied for an order that they cease acting for their client  Firm initially took a “neutral” position as to whether they should continue to act for the first defendant and decided to leave it to the court  However, after the court indicated that the applicant could not take a neutral position, the firm submitted that the could not continue to act without a resolution of the allegations  A solicitor was entitled to caution his counterpart when he believed that a conflict of interest situation loomed in the distance, if it was not already upon the other  If he did not feel that he or his firm could continue under the circumstances, it would only be fair to allow the application, and not compel him or his firm to carry on under the threat of disciplinary or other proceedings against them Foo Ko Hing v. Foo Chee Heng [2002] 2 SLR 361:  Situation of a joint retainer  In the High Court, Tay Yong Kwang JC held that because the parties had employed Rey Foo as their solicitor jointly in respect of the same matter, the solicitor-client privilege conferred by s. 128 EA, which continued even though the employment had ceased, was a joint privilege

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Rey Foo would be prohibited from disclosing any communication made by one or both of them in the course of his employment as their solicitor unless both of them expressly consented

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However, prohibition would be against disclosure to third parties, i.e. anyone not within the solicitor-client relationship

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S. 128 did not seek to regulate disclosure within that relationship

8.3 Conflicting Interests of Clients Acting for opposing parties - no general rule prohibiting a solicitor who is acting in a particular matter for one of the parties from acting subsequently in the same matter for the opposite party • if, however, there is a conflict of interest, or if a conflict of interest subsequently arises, it is the solicitor’s duty to cease to represent any party whose interests conflict with those of his other client • a conflict of interest does not invalidate the authority of the solicitor under his retainer, but he should not act for a party in a transaction in which he himself has an adverse interest: Spector v. Ageda [1973] Ch 30 to determine whether the clients’ interests are likely to conflict, the duties the solicitor owes them have to be considered Re a Solicitor [1987] 131 SJ 1063; Saminadhen v. Khan [1992] 1 All ER 963 CA Law Society reminded that it is incumbent as solicitors to ensure that their clients be advised to seek independent legal advice whenever their interests appears to stand in a position of conflict vis-à-vis the interests of their clients United Overseas Finance Ltd v. Victor Sakayamary [1997] 3 SLR 211: G P Selvam J. observed at p. 263 that “courts have often deprecated the practice of solicitors acting for two or more parties to a transaction, even though there is no rule prohibiting such a practice” Facts The first defendant Victor Sakayamary (Mary) was the daughter of the late Rajamoney who died intestate in 1970. He left 10 beneficiaries including his widow Esther (the third defendant). The principal asset of Rajamoney’s estate was the property in question. The second defendant James was Mary’s brother and Rajamoney’s son. At all material times the three defendants were in occupation of the property. Ester and her brother, Dawson David, were granted letters of administration in April 1972. The plaintiff finance company UOF claimed under a mortgage (of the said property) executed by Mary, seeking: (a) an order against the defendants for vacant possession of the mortgaged property; and (b) judgment against Mary for $117,353.66 and interest at the rate of 10.25% p.a. The property was subject to the Land Titles Act (Cap 157) (LTA). By order of court the defendants brought in lawyer Edwin J D’Souza (D’Souza) and Solomon George (Solomon), D’Souza’s clerk as third parties. The defendants claimed an indemnity or contribution from D’Souza and Solomon on the ground that they fraudulently transferred the property from James and Ester to Mary and mortgaged it in Mary’s name as security for a $120,000 loan from UOF which she neither applied for nor received. The defendants also counterclaimed against UOB and the third parties, seeking: (a) a declaration that the transfer of the property to Mary and the mortgage by the Mary were fraudulent and null and void; and (b) an order to rectify the Land Register by cancelling the registration of the transfer of the property by James and Ester to Mary and the mortgage by Mary to UOF. Held, dismissing the plaintiffs’ claim and granting the declarations sought by the defendants: (1) The $120,000 was not paid to Mary by UOF or their solicitor as alleged by UOF but paid without Mary’s authority Solomon. If the money was not to be released to any one other than Mary, the authority must emanate from her. There was no such authority. The court did not believe that there was written authority from James or Esther because it was not produced. The court concluded that both D’Souza and Solomon lied and that about the ‘agreement’ for the defendants to Solomon $120,000. On the evidence, D’Souza had no instructions to act for the defendants in respect of the transfer or the loan, so they could not have authorized the taking or release of the money. (2) James and Esther did not obtain the court’s sanction for sale of the property as required by s 35(2) of the Conveyancing and Law of Property Act. The provision and breach could not be treated as a mere formality as it was intended to ensure that the administrators discharged their duties honestly, speedily and efficiently according to the administration oath and according to law. They had no right to give the property to one of the beneficiaries or sell it to one of the beneficiaries without receiving proper and valuable consideration for it.

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They could not mortgage it for their own benefit. Such an act, even if it was done within the six-year period, was a fraud on the beneficiaries one of whom was at that time a minor. If the sale was bad the mortgagor was in no better position than the transferors. In this case, even if D’Souza was not fully aware of all the facts of the illegal act, Solomon was and the latter must be treated as UOF’s agent because they directly dealt with him as D’Souza’s clerk. Furthermore, Solomon’s knowledge could be imputed to his immediate principal, D’Souza whose knowledge in turn could be imputed to UOF. The statutory certificates signed by D’Souza on behalf of the transferors and the transferee and the mortgagors and mortgagee were false. The transfer was in breach of James’ and Esther’s fiduciary duties and this was known to Solomon and D’Souza who were UOF’s agents. The court exercising its equitable jurisdiction had power to set aside a deal carried out in breach of fiduciary duty (without fraud) if the proprietor had knowledge of the circumstances giving rise to the breach of fiduciary duty. In this case, the proprietor was not a bona fide purchaser for value without notice. The court would set aside the transaction in the beneficiaries’ interest. Indefeasibility of title by registration did not afford the plaintiffs a defence in this case. (3) The correct construction of s 113 of the LTA was that administrators could pass a clean title or security to bona fide purchasers for value. In such cases, the purchasers would not be affected by the beneficiaries’ interests. It did not, however, excuse administrators from breach of their fiduciary and statutory obligation and any person who participated in an offending dealing did not act in good faith. The provision expressly preserved fiduciary obligations and the beneficiaries’ equitable rights. Registration per se did not give the proprietor an indefeasible title. (4) James and Esther signed the transfer document but they were not aware of what they were signing and they did not execute the transfer knowing it to be a transfer. Further, they did not sign it in the presence of D’Souza. They also signed the application for transmission without knowing what it was and it was not signed before D’Souza. The court accepted their evidence that the sale and mortgage of the property was never in their minds and they would not have signed the transfer if they had known what it was, and that Solomon tricked them into signing the documents. Mary also signed the documents relating to the mortgage not knowing it to be a mortgage. Solomon who acted as UOF’s agent, acted fraudulently in the dealings of the supposed mortgage. D’Souza, also acted as UOF’s agent, and aided and abetted Solomon in the perpetration of the fraud by his reckless and irresponsible acts. Further Solomon’s acts and knowledge must be imputed to his employer/principal D’Souza, which in turn must be imputed to UOF. In Circular No. 2 of 1992, Law Society reminded that where acting for both vendor and purchaser, they may put themselves in a position that they may be liable to one or the other In such cases has a ‘double duty’ to perform in that he must safeguard the adverse interests of each of his clients, and must discharge his duty impartially in the interest of each of his clients This requires the highest standards of integrity and experience Thomas Lund said: • “… solicitor must see that one at least of his clients is separately represented, and if he would be embarrassed in representing even one in litigation by reason of the knowledge which he had acquired of the other one’s case, he should see that both clients are separately represented.” Ohm Pacific Sdn Bhd v. Ng Hwee Cheng Doreen [1994] 2 SLR 576 (no need case?) Facts The appellant company Ohm Pacific was incorporated in Malaysia for a joint venture to purchase and operate a vessel. Bridging finance was provided by Pacific Navigation, a company in which the respondent Ng was director and shareholder. Pacific Navigation was appointed sole managing agent of the vessel and by a power of attorney, Ng was appointed Ohm Pacific’s attorney. The documents were prepared by Ng’s firm, which acted for both Ohm Pacific and Pacific Navigation. Subsequently, differences arose between Ohm Pacific and Pacific Navigation. In the present action, Ohm Pacific alleged that: (a) as their solicitor Ng, failed to inform them of her conflicting duty to and interest in Pacific Navigation; (b) she failed to properly fulfil her obligation as their attorney; and (c) Ohm Pacific thereby incurred losses, namely, expenses in defending the related admiralty suit and loss of earnings as a result of the arrest of the vessel. The action dismissed by the High Court and Ohm Pacific appealed. Held, dismissing the appeal: (1) The trial judge was right in refusing the application for leave to amend the statement of claim as the allegation of fabrication of the management agreement was a material fact which ought to have been pleaded. All material facts were known to Ohm Pacific well before the trial in the court below. (2) It was clear that if the power of attorney was gratuitous, then the attorney was under no duty to act. The donee of a power of attorney was not in the position of a trustee. If no consideration moved from the donor to the donee, the latter was not obliged to exercise the power. In this case, the power of attorney was gratuitous and Ng was therefore under no duty to act.

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(3) As Ohm Pacific’s solicitor, Ng was in a fiduciary position and was obliged to disclose to Ohm Pacific her interest in Pacific Navigation and the fact that she acted for the latter. She was obliged to advise Ohm Pacific to take independent advice. Just because Ohm Pacific knew the facts giving rise to the conflict of interests, that did not amount to their informed consent which was required if Ng was to be absolved from her fiduciary duty. Even if informed consent was obtained, Ng would still be liable if she failed to discharge her duty to Ohm Pacific because of her interest in and conflicting duty to Pacific Navigation. Ng should not have accepted Ohm Pacific’s trust in her when she knew full well that she was not in a position wholeheartedly to protect their interests. (4) However, the loss Ohm Pacific claimed did not flow from Ng’s breach of her fiduciary duty. It was necessary for Ohm Pacific to prove a causal connection between the breach of duty and the alleged loss. There was no principle of law that once a breach of fiduciary duty was established, the burden shifted to the fiduciary to prove that the loss sustained was not occasioned by the breach. In any event, the evidence clearly showed that Ohm Pacific’s loss was not in any way caused or contributed to by Ng. a)

English Cases

Clark Boyce v. Mouat:  A wished to borrow NZ$100,000 but was unable to do so on the security on his house because it was fully mortgaged  His mother B agreed to mortgage her house as security but the son’s usual solicitors declined to act in the transaction  A then approached the appellant firm of solicitors, who agreed to act for both the son and B  B was advised to seek independent advice before entering into the transaction but she declined to do so and signed an authority to act to that effect  After the nature of the transaction had been explained to her and she had been advised that she would be the principal debtor and not merely a guarantor, and that she could lose her house and property if the son failed to keep up the mortgage payments, the respondent signed the mortgage documents  A’s business subsequently failed and he became bankrupt, with the result that B was left with the liability of repaying the mortgage  B brought an action against the appellants alleging that they had acted: i. Negligently and in breach of contract in failing to ensure that she received her own independent advice and in refusing to act for her when they were also acting for the son; and ii. In breach of their fiduciary duty in a) Failing to decline to act for her, b) Failing to disclose that the son’s usual solicitors had refused to act c) Failing adequately to advise B of her need for independent advice  Appellants appealed to the Privy Council  Held that there was no general rule of law that a solicitor should never act for both parties in a transaction where their interests might conflict, provided that he obtained the informed consent of both parties to his so acting  If the parties were content to proceed on that basis the solicitor could properly act for both parties  It was essential to determine precisely what services were required of him by the parties  On the facts, B had required of the appellants no more than that they should carry out the necessary conveyancing on her behalf and explain to her the legal implications of the transaction  In those circumstances the appellants had, by advising her to obtain and offering to arrange independent advice, done all that was reasonably required of them before accepting her instructions and had therefore not acted in breach of contract or of a fiduciary duty  The appeal was accordingly allowed

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the solicitor’s duty to the lender when new material facts become known to them:

Mortgage Express Ltd v. Bowerman and Partners: A certain H applied for a mortgage advance to purchases a flat A valuation of £199,000 was obtained but evidence in court later showed that the true figure was £120,000 The lenders sued the solicitors in negligence on the basis that the facts which the solicitors had learned in the course of the negotiations cast doubt on the valuation and should have been reported to them

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If this had been done, they would have obtained a second valuation an would not have made the loan Arden J. concluded that the fact that H was paying 10% more than the valuation of the flat was not a matter to excite curiosity, but the fact that H was prepared to allow his vendor an immediate profit of £70,000 on what was by no means a unique property “should have raised doubts in G’s mind as to the valuation on which the lenders relied” “when a solicitor who is acting for a purchaser becomes aware of any information which puts him on enquiry as to the accuracy of a valuation … bound to take some action on behalf of both his clients where he acts for both lender and borrower. He owes a duty to each of them to protect their interests when carrying out their instructions”

Halifax Mortgage Services Ltd v. Stepsky and Another [1995] 3 WLR 701:  Defendants, a husband and wife, applied to the plaintiff for a loan of £128,000 to be secured on the property by way of remortgage  Husband’s true intention however, as his solicitors learnt in the course of advising him, was to pay off the previous mortgage and to use the balance to discharge his business debts  Plaintiff’s instructions included a request to report any matter which ought to be brought to its attention as lender and to ensure that all details on the offer of a loan were corrected  Plaintiff appointed the defendants’ solicitors to act on its behalf as lender in the transaction  Solicitors returned the completed documentation without informing the plaintiff that the loan was not for the joint benefit of both husband and wife  The husband defaulted on the loan and the plaintiff obtained an order for possession of the house

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On the wife’s appeal, it was held, dismissing the appeal, that the solicitors, as the plaintiff’s agents, were under a prima facie duty to reveal to the plaintiff the true purpose of the loan Since the duty conflicted with their duty to the defendants not to inform the plaintiff without their consent, in the absence of such consent, the solicitors’ duty to communicate the information to the plaintiff was superseded by a duty to inform the plaintiff that they could no longer act for it because a conflict of interest had arisen Their knowledge of the true purpose of the loan could not be imputed to the plaintiff The plaintiff was therefore entitled to enforce its legal charge

Re Schuppan (a bankrupt) [1996] 2 All ER 664:  Petitioning creditor obtained judgment against the debtor in a contested action  Debtor was later adjudicated bankrupt  Debtor objected to the trustee in bankruptcy being advised by the petitioning creditor’s solicitors on the grounds that a conflict of interest existed  On appeal it was held that: a) Was not unreasonable for the trustee in bankruptcy to retain the petitioning creditor’s solicitors, particularly where the anticipated difficulties related to the identification, tracing and recovery of assets for the bankrupt’s estate. The risk of a conflict of interest would appear to be only a distant possibility. However, if a conflict of interest was identified, but there was no real risk of confidential information miscarrying or being misused, or any identified risk, a balancing exercise might be appropriate to determine whether the conflict was something which the court might countenance b) Although the risk of a conflict of interest was fairly remote, the retainer of a separate firm of solicitors was a sensible course which averted any risk of a conflict of interest. Any improper advantage arising from the solicitors’ access to the debtor’s papers could be appropriately resolved by an undertaking from the solicitors not to use in that action any documents which they saw in their capacity as solicitors to the trustee without leave Marks and Spencer plc v. Freshfields Bruckhaus Deringer (a Firm) [2004] 3 All ER 773:  Marks and Spencer retained a number of firms to advise it in relation to different legal matters  One of those firms was Freshfields  Marks and Spencer learnt that Freshfields were acting on behalf of Mr Green in relation to his possible bid

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It was concerned that by acting for the consortium when Freshfields had an existing and ongoing retainer for Marks and Spencer in respect of certain matters, Freshfields had placed themselves in a position of actual or potential conflict of interest Court held that as to the principle that a fiduciary could not put himself in a position whereby there was an actual or potential conflict between his duty of loyalty to an existing or former client and his duty of loyalty to a new client, the principle was not limited to same matter conflicts Where the conflicting interests concerned 2 different matters, there had to be some reasonable relationship between the 2 In the instant case, there was a real or serious risk of conflict Even allowing for the fact that Freshfields was a very large firm, the Court was nevertheless of the view that it would not be possible to put in place a conflicts procedure that would guarantee that the confidential information would not be disclosed “Chinese walls” would be insufficient

The position in Singapore

Standard Chartered Bank v. Uniden System (S) Pte Ltd [2003] 2 SLR 385: observed that a solicitor who acts for both mortgagor and mortgagee in a loan transaction is in a conflict of interest situation, notwithstanding that this is a common (albeit not necessarily commendable) practice in Singapore Facts The first defendant (“the Company”) was a customer of the plaintiff (“the Bank”). The second defendant (“Tan”) was the managing director of the Company. The third defendant (“Choo”), a degree-holder director of the Company, was the wife of Tan. The Bank claimed against the Company as principal debtor, and against Tan and Choo as guarantors, a total sum of $3,691,164.23 in respect of banking facilities, interest and costs. The Bank obtained judgment in default against the Company, and a summary judgment against Tan. The trial here was confined to the Bank’s claim against Choo. Choo admitted signing the guarantee but alleged that the Bank’s solicitor neither explained to her the nature of the documents nor advised her the consequences of signing the guarantee. Choo also alleged that she was under the undue influence of Tan when she signed the guarantee. Held, allowing the plaintiff’s claim against the third defendant: (1) Choo knew that she was signing a guarantee as the Bank’s solicitor would have mentioned to her the nature of the documents in passing. However, as she was not told, Choo did not appreciate the risks and consequences of signing an unlimited liability guarantee: at [68]. (2) There was no actual undue influence, given that the Bank’s representatives did not perceive any intimidation or overbearing or bullying conduct on Tan’s part whenever they saw him with Choo: at [69]. (3) Choo would still have signed the guarantee even if she had been advised of the risks involved, as she willingly accepted Tan’s dominance of her, trusted Tan and had complete faith in him, and did not think that Tan would put her in a risky position. Her will was not “overborne” when she signed the guarantee : at [70] to [71] and [73]. (4) Tan’s business was the source of the family income, and it was in Choo’s interest to support the business. The signing of the guarantee was not manifestly to her disadvantage: at [72]. (5) Even if Tan did exercise undue influence on Choo when she signed the guarantee, the Bank had neither actual nor constructive notice of his undue influence. There was nothing out of the ordinary in the couple’s relationship to warrant the Bank conducting further investigations before the signing of the guarantee: at [74]. [Observation: A solicitor who acts for both mortgagor and mortgagee in loan transactions is in a conflict of interest situation, notwithstanding that this is a common (albeit not commendable) practice in Singapore: at [65].] Law Society v. Subbiah Pillai [2004] 2 SLR 447:  Respondent was an advocate and solicitor  Complainants were unable to repay the housing loans and the respondent’s sister agreed to purchase the property from the complainants  In order to do so, she took out a bank loan, which the respondent guaranteed  Respondent proceeded to act for the complainants and his sister but failed to advise the complainants that a conflict of interest existed

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First complainant’s brother subsequently entered into another agreement to re-purchase the property from the respondent’s sister  Respondent again acted for both parties  Respondent subsequently admitted to misconduct within the meaning of s. 83(2)(h) Legal Profession Act Power to strike off roll or suspend or censure 83. —(2) Such due cause may be shown by proof that an advocate and solicitor — (h) has been guilty of such misconduct unbefitting an advocate and solicitor as an officer of the Supreme Court or as a member of an honourable profession;  Absence of any element of self-dealing in the transaction, and the fact that the respondent did not bring any undue influence or pressure to bear on either of the complainants or the brother was irrelevant as the respondent had placed himself in situations where his duties to both parties were in conflict  Further held that even if the complainants knew of the relationship between the respondent and his sister, the onus was still on the respondent to point out any potential conflicts which might arise, and to advise them to obtain independent legal advice 

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Section 79 section 79 LPA - cannot act for developer and purchaser in transaction obv proff conflict because interest of developer diff fr purchaser ie absol proff conflict prohibition section 79 defn of developer – where you are a kicensed housing developer – ie huge projects  that is not for small projects eg those who own one terrace house and want to build more => no need to be licensed.  This applies more to those condo proj etc When u act for two or more parties who interests in conflict with one another  Diff conflicting proff duties  Proff conflict comes hwen act for 2 or more parties Codify cl rules on proff conflict Ahmad khalis case – proff conflict of interest  Two types – • 1. potential conflict • 2. actual professional conflict of interest Actual vs potential conflict (a) Actual Conflict  Determine if informed consent would cure the conflict, if it does not, must not act for client. (b) Potential Conflict  To decide of the potential for conflict is so real and not merely remote that you must not act. i) Section 28 o when act for 2 or more clients, interest may not actually be in conflict, but as transaction develops, you see potential of conflict o rule 28 – eg of one such sitn – in commercial and conveyancing transactions  eg in case of Doreen – say she acted for 2 shipping comp; in her case, personal conflict – acting for two shipping comp, where not smooth, one party might ask for advice to tackle prob but then lawyer will be inconfkict of interest  ie in event that prob ensues – confkict may arise  diversity of interest exists – solicitors shkld be aware of this  lawyer then SHALL advise each client that he is in potential of interest o mandatory rule 28 because lawyer to tellclient of his position where p-rofessionally conflkicted – to tell them so and ask whether they want ot take risk or seek another solicitor o or tell client what to do when conflict arises o you may withdraw fr actin fr one or both parties

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o

o o o

can cont to act for one party even though in conflict as long as potential revealed and tel them what you wd do khalis – acting for admninastrotr in estate matter and benef unrepresentd, but view was that by his conduct, gave benef impression that he was also acting for them  conflict was that benef told him that they did not want partr person to be administrator, worried htat he may not administer estate in ther best interest  sol found him in conflict – shld have been alerted – benef and administrator – not in common interests – admisntrator normally there to prxt benef. Disclosures by cklient shkd however but him on notice tt diversity of interest existed  benef had concerns as to whether administrator was best person  adm wld however look to lawyer to facilitate his control voer estate so diversity of client interest – commercial and conveyancing transaction in rule 28  but this may also arise in non com or convy transactions  so long as clients have diversity of interests  also may occur in accident matter\  sol instructed by both parties – this cld be case with potential conflkict  u may have to hold one of parties (client) contrib. guilty of accident – so conflict or act for motorcycle driver AND pillion driver at same time for accident– but if you find the motorcycle driver contrib. negkligent, you may be in conflict so not merely pot conflict in comm or conv but across the board  so key phrase being ‘diversity of interest’ of clients put down advice about potential for conflict in writing – so that when it crystalises, they cannot complain tat they were left high and dry

5.1 Rule 28 Commercial or Conveyancing transaction - potential conflict Potential conflict of interests 28. When accepting instructions to act for more than one party in any one commercial or conveyancing transaction where a diversity of interests exists between the parties, an advocate and solicitor shall advise each party of the potential conflict of interest and of the advocate and solicitor’s duty if such conflict arises. -

distinction between litigious and non-litigious matters

Note Section 79 Legal Profession Act – a lawyer acting for a housing developer cannot act for the purchaser of the property developed under the same housing development, subject to certain conditions. Clark Boyce v Mouat [1993] 4 All ER 268 Principle:  Solicitor may act as long as he had obtained informed consent of both parties to his acting and both parties are aware that their interest might conflict. Facts:  Mother (M) agreed to mortgage her house as security of a loan taken by her son. Son’s usual solicitors declined to act. M then approached the appellants and the appellants agreed to act for both parties.  Appellant advised M to seek independent legal advice before entering into the transaction and she declined to do so.  Son’s business failed and unable to keep up with the mortgage payment and M was left with the liability of repaying the mortgage. M brought an action against the appellants alleging that they had: (a) Negligently and in breach of contract in failing to ensure that she received her own independent advice and in refusing to act for her when they were also acting for her son. (b) Failing to disclose that the son’s usual solicitors had refused to act, that they had no knowledge of the son’s ability to service the mortgage and that it was not in her interests to sign he mortgage (c) Failing to adequately advise her for the need for independent advice. Held:



No general rule of law that solicitor should never act for both parties in a transaction where their interests might

28

conflict (i.e. potential conflict of interest).

 



Solicitor entitled to act for both parties in a transaction even where their interests might conflict provided that he obtained the informed consent of both parties to his acting. Informed consent meant consent given in the knowledge that there was a conflict between the parties and that as a result the solicitor might be disabled from disclosing to each party full knowledge which he possessed as to the transaction or might be disabled from giving advice to one party which conflicted with the interests of the other. Based on the facts, M was fully aware of the inherent conflict and she required of the appellants no more than that they should carry out the necessary conveyance on her behalf.

No general rule that a lawyer must never act for both parties in the same transaction.  Inform buyer of the potential conflict  Have to withdraw if the conflict becomes real and client has to accept that risk Independent legal advice and potential conflict  When conflict is difficult for client to understand, should advise client to see another lawyer to check if the previous lawyer should act for client.  Looking at the services you are providing for the client and whether the client is able to understand the conflict.



Re: Khush

Was argued in Khush that the clients were unable to understand the complexities of the transaction therefore the solicitor was taking advantage of them by exerting undue influence when procuring the option in his favour. ==>for potential conflict of interest, can accept the retainer, but must be conscious as a solicitor that dealing with a matter that may become actual Rule 43 o rule 43 – lawyer can charge for work tt he has donoe up till the time conflict becomes real => must explain to client conseq of conflict becoming real  clients then have no reason to be aggrieved  so potential and conseq of conflict becoming real – must be told to client early on Rule 29 o rule 29 – proff conflict – specific sitn –  when advocate or firm asked to act for more than one party in preparation of doc  not case where there is diversity of client – • eg asked by parties to prepare agreement – lawyers act for landlord and tenant • subseq dispute arises in agreement • oen of aprties comes to lawyer claiming dispute in relation to doc that lwyer prepared – the enforceability; asks lawyer to act for them • this is common proff conflict • actwd for both aprties in preparing doc – now that there are issues of conflkict and pot litigation – then again lawyer needs to be alert – tell client that he prepared agremenet for bothm see that will be in in proff conflict if act in the enfor and he CANNOT accept retainer to act for any party in relation to dispute concerning enfor because then in proff conflict  => canot be cured by consent bet clients  because parties in dispute over documentation that you prepared – you wld be in proff conflict  so do not act in such sitn What happens if the situation turns to become one of actual conflict? Actual conflict of interest: if there is a situation when you see that one does not trust the other, or when you have to

keep things from one to the other o What you should do is either

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(1) get consent to disclose to the other; or (2) to say that e.g. you only do the documentation, and ask the client to go and get independent legal advice on matters that he is not comfortable with in actual conflict of interest – determine if informed consent would cure the conflict of loyalty situation if not must

decide to cease to act for one or both parties o If you know that that there is actual conflict i.e. full disclosure and independent legal advice In the light of Whitehouse, better to err on the side of caution. Full disclosure, independent legal advice, the whole works – discharge yourself if need be (See Rule 29)!

  

5.2 Rule 29 – Conflicting Interests of Clients (Manual p 75) Cannot act if you prepared the agreement for both parties and one of them wants to sue on the agreement Informed consent does not cure When one acts for 2 or more parties - subsequent dispute over enforceability of document created for both parties Not to act for both parties in dispute Rule 29 – (1) When an advocate and solicitor or any member of his firm has acted for more than one party in the preparation of a document creating rights and obligations between them and a dispute in relation to the matter has arisen between them where the enforceability of the document is in dispute, or where the dispute is such that the advocate and solicitor is likely to be in conflict, the advocate and solicitor or any member of his firm shall not act for any party to the transaction in relation to that dispute.

o

No general rule prohibiting a solicitor who is acting for a party in a matter to act subsequently for the opposite party in the same matter

o

Where a solicitor owes a duty to someone other than a particular client, and this conflicts with his duty to that client, he is not thereby relieved of any duty to the client: Moody v. Cox & Hatt [1917] 2 Ch 71

o

If there is a conflict of interest, or if a conflict of interest arises, it is the solicitor’s duty to cease to represent any party whose interest conflicts with those of his other client.

o

The question is whether you can protect confidential information that your former client has given you

o

To determine whether the clients’ interests are likely to conflict, the duties the solicitor owes them have to be considered: Re a Solicitor [1987] 131 SJ 10634 Re a Solicitor [1987] 131 SJ 1063 (transcript form only) DHBW, a legal firm, had acted in personal matters for Mr Saunders and his wife. DHBW later acted for one Mr Roux, who made certain statements which implicated Mr Saunders in an investigation regarding breach of fiduciary duty allegations in Guinness Plc. Mr Saunders therefore made an application to the Court for an opinion on the matter, on the grounds that there was a conflict of interest between himself and Mr Roux. DHBW still owed Mr Saunders a duty out of the retainer that existed between them, as they were still acting for Mr Saunders in respect of the probate of his father’s estate. Held: o Application dismissed.

o

Endorsed Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831 where the English Court of Appeal dealt with the question of whether solicitors who had acted for a client could subsequently, and after the client had gone to another solicitor, act for an opposing party in respect of the same matter. The CA there ruled that the grounds

4

This case should be cited in full, complete with year and where it can be found, since there are hundreds of cases all titled “Re a Solicitor”.

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upon which it would be improper for a solicitor to act must be based upon a real likelihood of abuse and not a merely theoretical conflict. Lord Cozens-Hardy said at p 835: "… we must treat each of these cases, not as a matter of form, but as a matter of substance.” o

o

That approach, is based upon important considerations of public policy. It is not desirable that the right of a client to have the services of the solicitor of his choice should be unnecessarily restricted. It is not desirable that litigation, should be delayed because of a compulsory change of solicitors on grounds which do not involve any real possibility of injustice. It is not desirable that additional costs should be incurred by fresh solicitors having to be instructed when it is not really necessary to do so.

With regard to criminal proceedings, refer to Saminadhen v. Khan [1992] 1 All ER 963 CA below. Saminadhen v. Khan [1992] 1 All ER 963 CA5 Court of Appeal, Civil Division Lord Donaldson MR and Balcombe LJ Solicitor – duty – conflict of interest – termination of retainer – criminal proceedings – Co-defendants – cut-throat defence – solicitor acting for one co-defendant where co-defendants blaming each other – Retainer terminated – Impropriety of solicitor afterwards acting for co-defendants Lord Donaldson of Lymington MR, with whose remarks Balcombe LJ wished to associate himself, said on dismissing a plaintiff’s appeal from an order setting aside an injunction on the defendant giving an undertaking in the terms of the injunction sought: “Since this matter has been ventilated and appears to create a matter of general interest to solicitors, I can conceive of no circumstances in which it would be proper for a solicitor who has acted for a defendant in criminal proceedings, the retainer having been terminated, to then act for a co-defendant where there is a cut-throat defence between the two defendants. I think it is desirable that that should be known.” (emphasis added)

o

There is a distinction between deciding a course of action and advising a client on what is the proper course of action to take: Christie v. Wilson and others [1998] 1 All ER 5456.

o

Question of conflict of interest in non-litigious matters often arises in situations where you act in one transaction for both vendor and purchaser of mortgagee and mortgagor or lessor and lessee.

o

If, despite the undesirability of so doing, you decide to act for both parties to a transaction, it is incumbent upon you to ensure that every possible step is taken to safeguard the interests of each client.

o

To ensure that you give the same care and attention to the interests of each client as you would be bound to give if you were acting for only one.

o

Difficult task because acting for both parties in a transaction may inhibit the professional judgment normally exercised by you when acting only for one of the parties. If you acted for both parties and favoured the interests of one to the detriment of the other, you would be guilty of unprofessional conduct.

o

Consent isn’t everything

o

Even if it were originally proper for you to act for both parties to a transaction once a dispute arises between the parties you must cease acting for one of them. In most cases, you will need to cease acting for both of them.

o

The Law Society of Singapore does not view advice from another lawyer in the same firm as “independent legal advice”.

5 6

Set out in its entirety. Incredibly short case. All you need to know is that principle it stands for.

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In its Circular No. 2 of 1992, the Law Society of Singapore stated that where solicitors act for both Vendor and Purchaser (including sub-purchaser), or Mortgagor and Mortgagee (including surety or guarantor) they have a double duty to perform in that the adverse interest of each must be safeguarded and the solicitor must discharge his duty impartially in the interest of each of his clients. This is similar to the holding in Spector v. Ageda below. CASES Spector v. Ageda [1973] 1 Ch 30, Chancery Division A conflict of interest does not invalidate the authority of the solicitor under his retainer but he should not act for a party in a transaction in which he himself has an adverse interest. (Manual, p 75) Facts: The plaintiff was a solicitor who drew up a memorandum for the defendant and another person to borrow money from one M, who had never been licensed in accordance with the Moneylenders Act 1927 but the plaintiff was not aware of this fact although she was M’s solicitor. After its execution the memorandum had been altered in several material respects by the plaintiff solicitor. The borrowers having failed to repay the loan, proceedings were brought by M to recover the money lent with interest. By this time the plaintiff solicitor was acting for the borrowers. The plaintiff solicitor then agreed to lend to the borrowers the sum alleged to be due to M on condition that the borrowers repaid the money to the plaintiff within two months. At no time did the plaintiff inform the borrowers of the alterations that had been made to the original memorandum of agreement. Nor did she advise them on the question whether that agreement might be unenforceable by virtue of the provisions of the Moneylenders Act 1927, although one of the borrowers had raised with her a variety of questions about the Act in the earlier proceedings by M. The plaintiff solicitor brought an action seeking to recover possession of property charged in respect of the loan and payment of money due under the mortgage. Held, by Megarry J, inter alia (i) A solicitor was bound to put at his client's disposal not only his skill but also his knowledge so far as was relevant. The plaintiff was therefore in breach of her duty: In failing to inform the borrowers of the alterations which she had made to the memorandum subsequent to its execution. In substituting a loan which she had made to them without advising them as to the defects in the loan it replaced. The essential question is not one of failure to investigate, but the quite different question of failure to advise the client of what the solicitor already knows. Accordingly the measure of damages for which the plaintiff would have been liable for her breach of duty would not have been less than the amount of the liability to her that the borrowers had incurred in order to pay off the loan which she had failed to advise them they need not pay (it had been void in view of her alterations). (ii) The courts have often pointed out the undesirability of a solicitor acting for both parties in a conveyancing transaction, as by acting for both vendor and purchaser; yet the practice remains widespread. In such cases, the solicitor has a double duty to perform: he must safeguard the adverse interests of each of his clients. In the absence of any personal interest to impel him to one side or the other, a solicitor can stand indifferent, and, at some risk, discharge his duty of acting impartially in the interests of each of his clients. Where, however, one of the parties is the solicitor himself, then the solicitor must be remarkable indeed if he can feel assured of holding the scales evenly between himself and his client. Not only must his duty be discharged, but it must manifestly and undoubtedly be seen to have been discharged. In all ordinary circumstances a solicitor ought to refuse to act for a person in a transaction to which the solicitor is himself a party with an adverse interest; and even if he is pressed to act after his refusal, he should persist in that refusal.

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(emphasis added)

Goody v. Baring [1956] 1 WLR 448 Although it is common in conveyancing transactions for the solicitor to act for both sides, and it is legitimate and recognised, such practice has been criticised in this case. Facts: The plaintiff instructed the defendant, a solicitor, to act for him on the plaintiff's purchase of a leasehold dwelling-house. At the plaintiff's suggestion the vendor instructed the defendant to act also in the matter on the vendor's, behalf. The defendant noted on information supplied by the vendor, that the two upper floors were each let at 25s. weekly inclusive of rates. As regards the top floor the defendant noted that no increases in rates had been passed on to the tenant. It was further stated that the vendor could give no information of previous lettings. When the plaintiff attended to sign his part of the contract, the defendant went through the inquiries and answers and remarked that as there had been increases in rates it was possible that the plaintiff could increase the rents. About half a year after the sale was completed, the plaintiff proposed an increase of rent to the tenants of the upper floors. In reply a reduction was demanded and in the standard rents and permitted increases were fixed by the county court at rates lower than the original 25s. In consequence the plaintiff had to make repayments of overpaid rents to the tenants. He claimed damages for the defendant's negligence. Held: 

The defendant was liable for negligence because he had accepted the information given by the vendor relating to rents without ascertaining what were the standard and recoverable rents of the property, and because he had failed to advise the plaintiff that the rents which were being paid being could become recoverable rents.



It seems… practically impossible for a solicitor to do his duty to each client properly when he tries to act for both a vendor and a purchaser. The position has been pointed out very plainly by SCRUTTON, L.J., in Moody v. Cox & Hatt (1) [1917] 2 Ch. 71 at p. 91: "It may be that a solicitor who tries to act for both parties puts himself in such a position that he must be liable to one or the other, whatever he does…. It will be his fault for mixing himself up with a transaction in which he has two entirely inconsistent interests, and solicitors who try to act for both vendors and purchasers must appreciate that they run a very serious risk of liability to one or the other owing to the duties and obligations which such curious relation puts upon them."

N.B. United Overseas Finance Ltd v. Victor Sakayamary [1997] 3 SLR 211, where GP Selvam J remarked that “Courts have often deprecated the practice of solicitors acting for two or more parties to a transaction, even though there is no rule prohibiting such a practice.” Gavaghan v. Edwards [1961] 2 QB 220, Court of Appeal, England This case illustrates the problems a client may face in “sharing” solicitors in the same transaction. Facts: The vendor and the purchaser orally agreed to sell and purchase the vendor's dwelling-house. The vendor and the purchaser instructed the same firm of solicitors to act for them, and later the vendor and the purchaser met and orally agreed a date for completion. Later, the solicitors wrote to the purchaser that the vendor had informed them that "the date for completion agreed between you and him under the contract is 'Jan. 31, 1959, or earlier by arrangement'. May we take it please that this is in order?"

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This letter was written by the solicitor attending to the matter and signed with the firm's name. On the question whether the contract was enforceable against the purchaser, Held: The contract was enforceable because the letter of May 15, 1958, was sufficient to complete the memorandum of the contract, notwithstanding that it was signed only by the purchaser's solicitor, the inference from the facts, being that the solicitor had the purchaser's authority to sign a memorandum on his behalf. It is no doubt correct (and there are cases in which it was so held) that the mere fact of the relationship of solicitor and client being constituted in regard to a particular purchase does not by implication give a solicitor any authority to make a contract or to sign a memorandum. But that is not a hard and fast rule which is not capable of alteration. On the facts of the case, from the way in which the instructions are given to the solicitor, he may by implication be entitled to sign a memorandum which will bind his client.

See also Law Society v. Subbiah Pillai (2004, Singapore) above The following are a string of cases where the solicitor acted for parties on both sides: Mortgage Express Ltd. V. Bowerman and Partners (p77, manual)

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   

 

 

Issue: the solicitor’s duty to the lender when material new facts become known to them, where solicitor is acting for both borrower and lender Facts H applied through brokers for a mortgage advance to purchase a flat The valuation was much higher that the actual value later shown in court G, the partner from the defendant solicitors’ firm acting for H, also acted for the plaintiffs who made the mortgage advance The owner of the flat had an agreement to sell the flat to one A, who agreed on the same day to sell it to H so that there was a subsale agreement The price H would pay was 10% higher than the valuation price, but at the same time, the price A would pay was below the valuation price by some £40,000 G was sent a copy of the high valuation and was aware of the subsale and the details. H was told about the facts, but G did not tell the plaintiff lenders H defaulted in his mortgage repayments and the plaintiffs repossessed the flat and sold it for £96,000. Had the plaintiffs been informed of the sale to H's vendor at £150,000 it would have arranged a second valuation and that valuation would have been sufficiently different from the first such that the plaintiffs would have withdrawn the mortgage offer to H. Held:



When a solicitor who is acting for a purchaser becomes aware of any information which puts him on enquiry as to the accuracy of a valuation obtained for the purposes of making a loan for purchase he is... bound to take some action on behalf of both his clients where he acts for both lender and borrower. He owes a duty to each of them to protect their interests when carrying out their instructions On appeal to the High Court of Australia, the High Court affirmed the decision below:



Where a solicitor acts for both purchaser and lender, and learns of information common to both, the question whether he should pass it on to one client or the other or both or neither entirely depends on the relevant interest of each client which the solicitor is engaged to serve.

34

If, in the course of investigating title, a solicitor discovers facts which a reasonably competent solicitor would realise might have a material bearing on the valuation of the lender's security or some other ingredient of the lending decision, then it is his duty to point this out. The fact of the simultaneous sale at a figure £50,000 below the valuation relied on by the respondent might have caused the respondent to doubt the valuation; G should have informed the respondent of this fact.





Solicitors must not withhold information relevant to a transaction from any client and for a lender this includes not only straightforward price reductions but may also include other allowances (eg for repairs, payment of costs, the inclusion of chattels in the price and incentives of the kind offered by builders such as free holidays and partsubsidisation or mortgage payments) which amount to a price reduction and which would affect the lender's decision to make the advance.

Halifax Mortgage Services v. Stepsky and another [1995] 3 WLR 701 This case examines the situation where a solicitor acting for two sides is in possession of facts from one side which conflict with his duty to the other party. Facts: Defendants husband and wife applied to the plaintiff for a loan to be secured by re-mortgage on their house. The defendants’ solicitors were named in the application and the purpose of the re-mortgage was to be to buy family shares in the business. Defendants’ solicitors learned that the true purpose of the loan was to pay off the previous mortgage and to discharge the husband’s business debts. The defendants’ solicitors were hired to act for the plaintiffs as well. They returned the application form without informing the plaintiff that the loan was for the benefit of the husband only, and not for joint benefit of the husband and wife. When the husband defaulted on the loan, the plaintiffs obtained an order to repossess the house. The wife appealed against this. Held, dismissing the appeal: 

The solicitors as the plaintiff’s agents were under a prima facie duty to reveal to the plaintiff the true purpose of the loan, since it was material fact knowledge they obtained in the course of handling the loan transaction



This duty conflicted with their duty to the defendants not to reveal the purpose without the defendants’ consent



In the absence of such consent, the solicitors’ duty to inform the plaintiffs was superseded by a duty to inform the plaintiff that they could no longer act for it because a conflict of interest had arisen



The solicitors were not free to pass on information they had obtained as the defendants’ solicitors, to the plaintiffs; hence the knowledge the solicitors had could not be imputed to the plaintiffs, who therefore had no notice regarding the true purpose of the loan, and were entitled to repossess the property

Re Schuppan (a bankrupt) [1996] 2 All ER 664 Facts: The petitioning creditor had obtained judgment against the debtor over fraud and dishonesty charges. When the debtor was adjudicated a bankrupt, the district judge authorised the trustee in bankruptcy to retain the petitioning creditor’s solicitors to advise and assist him in the administration of the debtor’s estate, subject to condition that another firm of solicitors would handle all other business outside of the administration of the estate. The debtor objected that there was a conflict of interest; among other things, he had taken an action for slander out against the creditor’s solicitors. The application was dismissed and the debtor appealed.

35

Held, dismissing the appeal: 

It was not unreasonable for the trustee in bankruptcy to retain the petitioning creditor's solicitors, under the circumstances. There were difficulties in tracing the debtor’s estate and the retainer of solicitors who were already aware of those difficulties could be advantageous to all the creditors, not just the petitioning creditor.



If a conflict of interest was identified, but there was no real risk of confidential information miscarrying or being misused, or any identified risk could be averted by a division of responsibility, a balancing exercise might be appropriate to determine whether the conflict was something which the court might countenance, i.e. the court would weigh the fact that there was no general rule that a solicitor or a firm of solicitors can never act for and against a client, even in the same matter. However, if there was a real risk of confidential information miscarrying or being misused, the court will treat that as paramount and will not embark on a balancing exercise



Although the risk of a conflict of interest was fairly remote, the retainer of a separate firm of solicitors as a condition was a sensible course which averted any risk of a conflict of interest. Any improper advantage arising from the creditor’s solicitors' access to the debtor's papers could be appropriately resolved by an undertaking from the solicitors not to use documents which they saw in their capacity as solicitors to the trustee without leave.

N.B. Court pointed out with approval Lightman J's judgment in Re a firm of solicitors [1995] 3 All ER 482 at 492: 'Where there has been the previous relationship of solicitors and client and the solicitor at the date of his proposed new retainer possesses relevant confidential information, in the ordinary course the court will in my view grant an injunction restraining the solicitor acting . . . But in the case where without any such previous relationship a party's solicitor illegitimately becomes possessed of confidential information of the other party to the suit or dispute, in the ordinary course the court will merely grant an injunction restraining the solicitor making use of that information; it will not prohibit his continuing to act...”

Standard Chartered Bank v. Uniden System (S) Pte Ltd [2003] 2 SLR 385 [Observation: A solicitor who acts for both mortgagor and mortgagee in loan transactions is in a conflict of interest situation, notwithstanding that this is a common (albeit not commendable) practice in Singapore: at [65].] Rule 31 - acting against former clients o o o

o

o

most common conflict – rule 31 cl has general rule that nth to prevent lawyer fr acting agasint former client – no blanket rule but cl says that when asked to act for former client – need to focus on whether in course of retainer with former client, you have received confid info to sol client retainer tt wld be of benefit now in acting against former client cl – if there was a reasonable forseeability of you using confid info fr sol cient rr agiant former client, then must NOT act against former clinet • duty of confid to client lasts forever • only persn who can waive this is client  cl principle accepted in courts  law soc tried to codify cl principjle in rule 31 – but tightened clprinciple – lawyer SHALL NOT act against forer client in a same or relatd matter – • 1. so fist qn – whether foreseeability (reasonable) • 2. if no such forseeability, then passed cl test but according to rule 31, to see matter that acting for former client against – is it same or related o IF SO, law soc – cannot act even despite no risk of confidentialk info revealed, this is blanket prohibition o Rationale – legal profession in sg very small. If going to act agsint former cient will be extr upset. Grwat public perception of potential confict So law soc gets asked whether matter same or related • Same – unproblematic

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•

o

Related – not interpreted by courts yet, law soc takes factual test – looks to see what is matter – sees whether it is factually related to matter acted on previously. Involves case by case analysis Lawyer can move fr firm to firm – he may have acted for someone and then moved – • Rule 31(4) – nth in 31(1) precludes law firm fr acting against party in matter provided that lawyer who dealt with matter in prev firm is not involved in the matter ie that lwyer must not be involvewd in partr matter • And lawyer must not disclose any confid info that he got while he was lawyer in prev firm to the new firm • =>> ‘China walls’ created bet litig matter so that no risk of confid info being disclosed • ie firm not prevented but lawyer is prohibited fr acting after he has moved firm • how can clients be sure that china wall effective? o See manual – law soc no maj case on china wall issue but litigated before HL in UK – pg 59 – 62 manual o More diff to create china wall in sg than in UK because firms not huge. Diff to say that firm depts work indep, don’t come into contact o So law soc in interpreting rule 31 – the smaller the firm, the more diff to prove china wall separation o HL in bolkier (??) case – will look at physical arramgenemts in firm that sep lawyer fr firm in dealing with matter against former client o Summary in 62 and 63 manual o So structure of firm etc very impt • If one lawyer UNDERTAKES not to disclose – then accepted o Professional undertaking being a serious matter  But note that rule 31 – often. High mobility rate among lawyers- therefore impt tt have grasp of knowledge of files

5. 5 Rule 31 – Acting Against Former Clients Not to act against client 31. –(1) An advocate and solicitor who has acted for a client in a matter shall not thereafter act against the client (or against persons who were involved in or associated with the client in that matter) in the same or any related matter. (2) For the purposes of paragraph (1) – (a) the term “client” includes a client of the law firm or law corporation of which the advocate and solcitor is a partner, an associate or an employee whether or not he handles the client’s work; and (3) Paragraph (1) shall apply even where the advocate and solicitor concerned becomes a member of a different law firm or law corporation. (4) Nothing herein shall preclude a law firm or law corporation from acting against a party in a matter provided that – (a) the law firm or law corporation has not previously acted for the party (or for persons who were involved in or associated with the party in that matter) in the same or any related matter; and (b) any advocate and solicitor of the law firm or law corporation who has previously acted for the party in the same or related matter neither acts nor is involved in that matter or related matter in any way whatsoever and does not otherwise disclose any confidential information relating to the matter or the party to any other member of the law firm or law corporation. o o o o o o o o

E.g. you were previously acting for Pf when you were in Firm A Then you move to Firm B, and the latter firm is acting for the Def What happens? Can you cure this conflict? Recognise that you are acting against a former client principle: whether you can protect the confidential information that you have acquired Should not act contrary to the interests of a prior client. Duty not to disclose confidential information v duty to do your best for your new client

37

o

In the case of a firm: imputed knowledge of partners

Wan v. McDonald [1991] 33 FLR 491/105 ALR 473 Facts:  The plaintiff was from Hong Kong. She decided to purchase house and land in Australia from Dotwell (an Australian company which looked after migration and investments) and made several transfers of money to Dotwell through McDonald Partners Trust Account (trust account of an Australian firm of solicitors, to which defendant solicitor belonged at that time), i.e. McDonald Partners was acting for the plaintiff



Later, Dotwell instructed McDonald Partners to act as solicitor upon the purchase by it of the land it had contracted to sell to the applicant. Hence McDonald, the defendant solicitor, acted for both the plaintiff as well as Dotwell.



Still later the plaintiff lodged a caveat and commenced proceedings against Dotwell, in the Supreme Court of Queensland.



The present action was commenced in January 1990 when the plaintiff decided to seek alternative relief under the Trade Practices Act against the McDonalds in the Federal Court of Australia. Leave to discontinue the Queensland Supreme Court proceedings was therefore sought and granted.



Then Dotwell through the defendant solicitor executed a request to the Registrar of Titles to remove the applicant's caveat on the ground that the Supreme Court proceedings had been discontinued, suppressing mention of the Federal Court proceedings. The caveat was removed.

Held, declaring the contractual relations between Dotwell and the applicant void and dismissing Dotwell's counter-claim: (i) In a case where the one solicitor, having acted for both parties, seeks to act against one of his former clients, and in the interest of a preferred client, in litigation arising out of the very matter in which he himself acted for both. In my opinion, it could only be in a rare and very special case that a solicitor could properly be permitted to act against his former client, whether or not any real question of the use of confidential information could arise. (ii) The effect of a solicitor having confidential information did not depend on the source of that information. (iii) The duty of a solicitor to bring to the attention of his client the existence of any conflict of interest between the client and another client or between the client and himself is not based upon any presumption that the solicitor will, in dereliction of his duty to his client, prefer the interest of the other client or himself. It is based on the clear recognition by the courts that such a conflict of interest or duty should simply not be permitted to exist without the client being fully appraised of it. The solicitor who fails to inform his client of the existence of such a conflict of interest or duty and to explain fully its implications is in breach of his fiduciary duty to his client even if he prefers the interests of that client over the interests of his other client or himself. (iv) The wide acceptance of the rule of public policy, that an attorney who has acted for a client cannot thereafter assume a position hostile to the client concerning the same matter, supports the view that this is not merely a matter of a code of professional ethics. E.g. In England, the Law Society has laid it down, in terms which were summarised in argument in David Lee & Co (at 262): "If a solicitor has already accepted instructions from two clients and a conflict subsequently arises between the interests of those two clients, the solicitor must cease to act for both clients." In Canada, the Law Society of Manitoba and the Law Societies of other provinces have adopted a Code of Professional Conduct which is cited in MacDonald Estate (at 256): "A lawyer who has acted for a client in a matter should not thereafter act against him (or against persons who were involved in or associated with him in that matter) in the same or any related matter. . ." The same obligation applies under the rules of professional conduct of the Law Society of Upper Canada. In the United States, the same rule was laid down in Gesellschaft Fur Drahtlose Telegraphie MBH v Brown (1935) 78 F 2d 410, where the court referred (at 412) to "the well- established rule of public policy that where an attorney has acted for a client he cannot thereafter assume a position hostile to the client concerning the same matter, or [emphasis added] use against the client knowledge or information obtained from him while the relation existed". Melvin Seet v The Law Society of Singapore [1995] 2 SLR 323

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(important case, the judgment itself is important as it explains what is conflict of interest/conflict of duty) Principle:  Issue of conflict of duties would be raised only if by acting for the current client, real mischief and real prejudice would result as the solicitor was privy to confidential information.  Otherwise, there was no conflict of duty. Facts:  Appellant and co-accused initially appointed solicitor Thangaveloo to act for them in drug trafficking case. Later appellant discharged Thangaveloo.  Thangevaloo ran the line of defence for co-accused by impeaching the credibility of the appellant and made had offending submissions against the appellant managing to secure an acquittal for the co-accused.  Appellant lodged complaint to the law society, alleging that Thangaveloo should not have continued to act for the co-accused, as there was clear conflict of duty, as Thangaveloo would have known what the appellant’s proposed line of defence would be. Held (Yong Pung How CJ):  ‘Conflict of interest’ applies to situation where a solicitor has placed his personal interest above that of his client’s.  ‘Conflict of duty’ is when a solicitor find himself in a position whereby his duty to serve the interests of 2 or more clients is in conflict: a conflict of his client’s irreconcilable interests.  Thangaveloo was no longer acting for the appellant at the time the allegedly offending submissions were made. He was not in a position where he was attempting to serve 2 masters such that his duty was inconsistent with his duty to the other.  There is no general prohibition against acting for both parties to the same transaction, although it is said to be undesirable because of the inherent dangers involved.  Test of conflict of duty: if by acting for the co-accused, and making such submissions against his formal client, had real mischief and prejudice resulted? A mere risk or possibility of mischief or prejudice is insufficient.  the main questions that were raised in the appeal were as follows: (d) Did Thangaveloo have access to confidential information relating to the appellant’s proposed line of defence while he was retained by the appellant? (e) Would real mischief and real prejudice to the appellant have resulted from Thangaveloo’s continued representation of the co-accused? (f) Did he in fact breach his duty of confidentiality to the appellant? Had he used or revealed to the court any confidential information obtained during his retainer in the course of his submissions?



 

Since Thangaveloo had been privy to merely general instructions, there was no divulgence of any confidential information ∴ no conflict of duties.

Cannot act if you know you have relevant confidential information if former client that your current client would benefit. Whether or not you have confidential information, if it is pertaining to the same or related matter, you cannot involve yourself in that matter.

Test established in KPMG v Bolkiah7: KPMG v Prince Bolkiah [1999] 2 WLR 215 Stricter test in determining whether an injunction is allowed when there is a threat that duty of confidentiality may be breached if a solicitor continues to act for another. Firstly, it would be incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish: (a) that the solicitor is in possession of information which is confidential to him and to the disclosure which is not consented; and (b) that the information is or may be relevant to the new matter in which the interest of the other client is or may be

 

7

Please read the article “China Walls – A Post-Bolkiah Consideration” p.26 Law Gazette December 2001, attached at the end of this set of notes.

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adverse to his own. Once the client can establish this, it is for the solicitor to establish that there is no real risk for the information to be disclosed even if he were to continue to act. Solicitor should without consent of his former client accept instructions only if viewed objectively would not increase the risk of that information which is confidential coming into possession of a party with adverse interest.

 

5.6 Exception to the test when there is “relevant confidential information” and can still act for the other party - “Chinese walls” cases8 o o o o o o o o o o o o o

A problem for many modern law firms with multiple clients because the rules, in effect, prevent them from acting in many transactions. “Chinese walls”: establishing procedures to prevent information in the possession of one solicitor from being communicated to other solicitors in the same office. Civil cases: restricted use Family law matters: courts’ reluctance Law Society does not think that there are china-walls because everyone talks about their cases and 90% of the firms have less than 3 lawyers. In the smaller firms… because they are practically next to one another… the china wall is nearly not existent The better way is to have the firm go to the former client and ask him whether he is satisfied with the China Wall arrangement If he is not happy, then he can rely on his common law remedy to get an injunction Rule 31 is very important! Case law only relevant in practice when you have 2 very large firms and large firm has decided to act against former client. Even if there is relevant confidential information, China-wall can be created in large firm. However, no such case law in Singapore. But if the law firm can show that confidential information is locked away in another department, China-wall may be allowed. Ethical duties only prosecute against individual lawyer, not corporate entitles. Concept of China-wall does not apply to individual lawyers.

KPMG v Prince Bolkiah   

As long as the members of the two firms involved in the litigation worked alongside or were in regular professional contact, there was a risk of inadvertent leakage of confidential information. Only way of creating a China-wall was to order physical separation between the two teams, ensuring that they work in different premises and do not have any professional contact with each other. Social contact was not proscribed.

P.26, Law Gazette, December 2001 Title: China Walls – A Post-Bolkiah Consideration Author: Lim Wee Teck (Rajah & Tann) A solicitor's duty of confidentiality is the focus of this article. The Singapore courts, in comparison to the English courts, have adopted a narrower definition of this duty, as evidenced by its decision in Alrich Development Pte Ltd v Rafiq Jumabhoy. Also included in this article is a review of the recent case law of both jurisdictions and a clear explanation of the approaches taken by the courts. Introduction There is no absolute bar against a solicitor or a firm acting against a former client. However, even though a solicitor's retainer has been determined, he continues to owe the former client a duty to ensure that information provided to him during the course of the retainer and which is confidential remains so. To ensure that the duty of confidentiality is not breached, an injunction may be sought against the solicitor or the firm concerned. Until recently, the test in England for determining when a court would intervene to restrain the solicitor or a firm from acting was whether there was a reasonable risk of mischief resulting. The locus classicus in a trio of cases 8

Ibid.

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establishing this point is the English Court of Appeal's decision in Rakusen v Ellis Munday & Clarke [1912] 1 Ch 831. Since Rakusen, the test was refined in Supasave Retail v Coward Chance [1991] 1 All ER 668 and Re a firm of solicitors [1992] 1 All ER 353. This test was accepted by the Singapore High Court in Alrich Development Pte Ltd v Rafiq Jumabhoy [1994] 3 SLR 1 where Chao Hick Tin J stated: In my opinion the public interest in the administration of justice is sufficiently safeguarded on the test of 'reasonable anticipation of mischief' or in other words 'reasonable likelihood of mischief'. Prince Jefri Bolkiah v KPMG (a firm): The Adoption of a Stricter Approach However, in December 1998, the position in England underwent a change. In Bolkiah v KPMG (a firm) [1999] 2 WLR 215, the House of Lords adopted a stricter test. It held that in determining whether the court should grant an injunction, a two stage test would be adopted. Firstly, it would be incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish: (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented; and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Once the client can establish this, it is for the solicitor to establish that even if he does continue to act, there is no real risk that the information will be disclosed. Such a risk need not be substantial. The basis for the court to act is the confidentiality of the information imparted, and the House of Lords noted that: ... a fiduciary may not put his own interest or those of another client before those of his principal. In my view no solicitor should, without the consent of his former client, accept instructions unless, viewed objectively, his doing so will not increase the risk that information which is confidential to the former client may come into the possession of a party with an adverse interest. English Cases Since Bolkiah v KPMG (a firm) Since Bolkiah v KPMG (a firm), the issue has come before the English High Court in three cases. Each of these will be examined below to see how they have applied the House of Lords' approach in Bolkiah v KPMG (a firm). Young v Robson Rhodes (a firm) In Young v Robson Rhodes (a firm) [1999] 3 All ER 524, the plaintiff was part of a syndicate of companies that had commenced actions against the syndicate's auditors. The defendant was the accounting firm which assisted in the action by providing forensic accounting services to the syndicate. Some 15 months after the defendant was appointed, it sought to merge with the syndicate's auditors. The plaintiff brought proceedings seeking to impose undertakings that there would be no contact, whether professional or social, between the persons on the defendant's team assisting with the action against the syndicate's auditors and the members of the syndicate's auditors involved with the same or, failing that, to restrain the merger. The English High Court considered the case of Bolkiah v KPMG (a firm). It held that where considering the proposed establishment of a Chinese wall or information barrier to prevent or minimise the leakage of confidential information, the approach to be adopted by the court is to ensure that even if there are mistakes, no additional risk of damage is inflicted on the former client. Furthermore, it noted that damaging mistakes can occur when potential disclosers and disclosees are in regular and working contact with one another. On the other hand, the court rejected the argument the House of Lords in Bolkiah v KPMG (a firm) had indicated, namely, that ad hoc China wall arrangements were unacceptable. The court noted that the crucial question was, 'will the barriers work?' As long as they do, the court would not be concerned with whether they were created before the problem arose or are erected afterwards. However, it further noted that as a question of efficacy, a barrier that was part of the fabric of the institution was more likely to be efficacious than one artificially put in place to meet a one-off problem. Accordingly, the court held that so long as the members of the two firms involved in the litigation worked alongside or were in regular professional contact, there was a risk of inadvertent leakage of confidential information. It therefore ordered physical separation between the two teams ensuring that they work in different premises and do not have any professional contact with each other. However, it declined to proscribe social contact. Re a firm of solicitors Re a firm of solicitors [1999] All ER 1119 was a case where the firm of solicitors ('the Firm') was involved in two concurrent actions. In one, a club had brought an action against its brokers for their negligence in recommending a particular reinsurer ('the broker's proceedings'). The brokers' defence was that the club's managers were themselves negligent in not checking out the reinsurer before entering into a contract with it. Notice was given to the club's managers who served notice on their E&O underwriters, who were represented by the Firm. In the other action, the club had brought proceedings for unpaid release calls against some of its members, who appointed the Firm to act for them ('the members' proceedings'). The solicitors in the Firm acting in the broker's proceedings were wholly different from the solicitors in the Firm acting in the members' proceedings. It was accepted by the English High Court that the club's managers had provided confidential information to the Firm as part of the broker's proceedings. The club argued that this confidential information was relevant to the

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members' proceedings because the members could rely on the alleged negligence of the club's managers in the broker's proceedings as part of their defence. While the court considered this link to be tenuous, it held that it was required to look to the future and, accordingly, further held that some of the information provided in the broker's proceedings might in future be relevant to the members' proceedings. However, the court also noted that it was entitled to take into account the weakness of the link in assessing the risk of disclosure. Having established that relevant confidential information was in the possession of the Firm, the court then went on to consider whether there was a real risk of leakage of that information. The following facts were considered relevant by the court: • the two matters had always been handled separately by two different departments; • the partner and his assistant involved in the members' proceedings had their offices on one floor of one building; • the partner involved in the broker's proceedings had his office in another building, and while his assistant's office was in the same building of the team involved in the members' proceedings, it was on a different floor; and • the individuals involved had never been into each other's offices and, indeed, had previously never met. On these facts, the court held that there was a clear institutionalised departmental and physical separation: there was no cross-pollination between department, no mixing on a work basis, social contact was limited, documents were held only in hard copy and stored in the offices of the respective departments concerned. Accordingly, it held that there was no real risk of inadvertent disclosure of relevant confidential information. Halewood International v Addleshaw Booth & Co In Halewood International v Addleshaw Booth & Co (unreported, 5 November 1999), the plaintiff was the owner of the trade mark 'Lambrini'. The plaintiff had previously commenced proceedings against another party in respect of that party's trade mark, 'Lamfresco' ('the Lamfresco proceedings'), and had instructed a law firm to act for it in that matter. Andrew Robinson had been part of the team of solicitors from that law firm assisting in that matter. Mr Robinson left to join the defendant law firm which was subsequently instructed to act for a consortium that owned the trade mark 'Lambrusco' in proceedings against the plaintiff in respect of its use of the trade mark 'Lambrini' ('the Lambrusco proceedings'). The plaintiff objected to the defendant law firm so acting on the basis that Mr Robinson was in possession of confidential information imparted during the Lamfresco proceedings, which information was relevant to the Lambrusco proceedings. The English High Court held that, on balance, the defendant law firm was in possession of relevant confidential information. It came to this conclusion notwithstanding its observation that the allegations made as to the type and relevance of confidential information imparted to Mr Robinson had only been made in the most general terms. Furthermore, it had come to this conclusion notwithstanding its observation that: [a]ny solicitor who acts for a client can, in my view, be said to have some information of [the strategical and tactical approaches adopted by his client, or detailed financial considerations] in relation to his client: in the absence of specific points being relied on, or in the absence of a very long and close connection between the solicitor and the client, it seems to me that it would impinge too greatly on the freedom of other parties to instruct the solicitor, and on the freedom of the solicitor to act in other proceedings, simply to rely on generalised allegations in this context. In considering the possible leakage of confidential information, the court considered the following facts: • the defendant law firm had immediately instructed Andrew Robinson to have no involvement whatsoever with the Lambrusco proceedings; • Mr Robinson was instructed, and he agreed, that confidential information relevant to the plaintiff would not be disclosed to anyone in the firm; • he was also instructed, and he agreed, not to look at any of the files, correspondence and other documentation relating to the Lambrusco proceedings; • he was also instructed, and he agreed, not to discuss his prior involvement with the plaintiff with any members of the team working on the Lambrusco proceedings; • the files, correspondence and other documentation relating to the Lambrusco proceedings were to be kept in a filing cabinet separate from Mr Robinson's work area; • each member of the team involved in the Lambrusco proceedings was instructed not to discuss either directly or in the presence of Mr Robinson his prior involvement with the plaintiff; • the Lambrusco proceedings were never discussed at any department meetings in the presence of Mr Robinson; and • the defendant law firm's department handling the Lambrusco proceedings was relatively small comprising only five partners and 14 employees (not including secretaries).

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•

In addition, the court also noted that Mr Robinson had not retained any documents from his previous retainer, and could not currently recall any information in relation to the Lamfresco proceedings. Based on these facts, the court made the following observations: • the court would attach weight to the evidence of a solicitor as to his state of knowledge and whether he has confidential information, in particular where there is no challenge to his credibility; • even where the solicitor currently recalls no information, the court should recognise that confidential information acquired by a solicitor will remain in his mind or be susceptible to being triggered as a recollection after a lapse after a period of time; • the small size of the team was a factor that made it easier to police an information barrier as statistically the risk of someone doing something wrong by accident is greater when more people may be subject to the possibility of accident; • Mr Robinson, unlike the case of Bolkiah, was just one individual and it would be easier to ensure compliance as the persons in the team involved in the Lambrusco proceedings would find it easier to recall who they should not speak to than if there was a large group of prohibited persons; • although Mr Robinson was located in a separate office, there was a small risk that he would accidentally overhear telephone conversations or see documents on desks; and • while the wrong to avoid was Mr Robinson passing on confidential information, his seeing or overhearing information might cause his memory to be jogged and result in a subsequent incautious communication. Accordingly, the court held that, if Mr Robinson continued to work in the same building as any member of the team working on the Lambrusco proceedings, there was a small but existent risk of something happening which would involve him relaying to a member of that team some confidential information which he had. Accordingly, the court would require that Mr Robinson not work in the same building as the members of the team working on the Lambrusco proceedings, nor should he normally enter that building during the currency of the proceedings. What Lessons May Be Learnt The test as to possession of confidential information The House of Lords had noted in Bolkiah v KPMG (a firm) that: it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish: (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented; and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious. [emphasis added] In applying this test, the three English decisions have clearly demonstrated just how low the threshold is, in particular in relation to the second limb: whether the information is relevant to the new matter at hand. In Re a firm of solicitors, the court noted that the link between the confidential information imparted and its relevance to the new matter was very weak. However, the court also stated that it should look to the future and, on this basis, held that some of the information imparted might well be relevant. In Halewood International v Addleshaw Booth & Co, the court decried the generality of the allegations of confidential information made, but was nevertheless prepared to find that the issue of possession was made out, stating: Even though I accept that the nature and extent of the consideration of the Lambrusco mark in connection with the Lamfresco litigation is a matter upon which I have not been given any detailed evidence or information, and the extent to which such considerations seem to be relevant to the Lambrusco litigation must be a matter of speculation, it seems to me that there is a real possibility and indeed, albeit it on balance, a probability that something will have been communicated to Mr Robinson which was confidential, which remains confidential, and which might be relevant in the Lamfresco litigation. I accept that such information may not be directly relevant on the question of evidence, but it might be relevant to the Lambrusco litigation in a way which could be prejudicial to the [plaintiff] if it was communicated to the solicitors acting for Lambrusco in the Lambrusco litigation. [emphasis added] These two cases evince a fairly conservative and cautious approach centering on two foci: • that the exigencies of the litigation may cause confidential information to become relevant in the future; and • that the confidential information need not have a direct bearing or relevance to the matter, but may be prejudicial in a more nebulous, holistic way to the litigation proceedings. These two foci working in tandem would have the tendency of setting the threshold very low indeed as the two cases demonstrate. Underlying this approach would seem to be a nod towards the fact that the lawyer is a fiduciary of the former client and continues to be such with regards to the information imparted. Accordingly,

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there should be no opportunity that any advantage can be taken of the information provided in confidence to the extent that it remains so. The test as to the impregnability of the information barrier/China wall While the threshold for proving the possession and relevance of confidential information has been set very low, the standard of showing the impermeability of the information barrier or China wall seems to be set fairly high. While some comfort may be taken from the English High Court's decision (in Young v Robson Rhodes (a firm)) that ad hoc arrangements may prevail, the practical steps required to set up a sufficiently impermeable wall would generate some concern. In Young v Robson Rhodes (a firm), the court required physical separation between the two teams who were to work in different premises and who were not to have any professional contact with each other. A similar order was made in Halewood International v Addleshaw Booth & Co, where the court ordered that Mr Robinson not work in the same building as the members of the team working on the Lambrusco proceedings and that he should not normally enter that building during the currency of the proceedings. A similar mind set can be evinced in Re a firm of solicitors, where the focus of the court there was on the existing and institutionalised physical and professional separation of both personnel and files. It would, therefore, seem that notwithstanding the English court's prima facie faith in the members of the legal profession (insofar as it will not question the veracity and good faith behind undertakings provided by them), such undertakings will not of themselves suffice. The concern expressed is that of inadvertent disclosure - the chance remark that might inadvertently tip off a member of the legal team acting for the other side. Furthermore, the English courts would seem to view such inadvertent disclosure as a real risk and not one that is merely theoretical, as was noted by the High Court in both Young v Robson Rhodes (a firm) and Halewood International v Addleshaw Booth & Co. In other words, when considering whether a risk is real or merely theoretical and fanciful, the court seems to have concerned itself more with the risk of professional contact, going so far as to proscribe any professional contact whatsoever, rather than with the risk of disclosure per se (it seemingly being accepted that where there is contact, there will inevitably arise a risk of disclosure, albeit inadvertent). One further point bears some comment. The number of persons in possession of the confidential information and who could therefore leak the information would also seem to be relevant. In all three cases, the number of persons involved had a bearing on the establishment and acceptance of the proposed China wall/information barrier. In Young v Robson Rhodes (a firm), the number of accountants involved numbered no more than four (one of whom had already left the firm). In Re a firm of solicitors, it comprised two on each side, and in Halewood International v Addleshaw Booth & Co, just one. As noted by the court in Halewood International v Addleshaw Booth & Co, the task of policing the persons in possession of the confidential information and of ensuring that the relevant persons acting for the adverse party knew who were the persons to avoid would be easier where the group of persons in possession of the confidential information was small. Conversely, as in Bolkiah v KPMG (a firm) itself, where the persons involved in the earlier matter were numerous and involved a shifting and rotating group of personalities, it would be practically impossible to both ascertain who the proscribed group would be, much more to police a sufficiently credible and impermeable cone of silence. Conclusion Singapore is in the midst of a reformation of its professional services, from the corporate, banking and financial services to the legal profession. The principles established in Bolkiah v KPMG (a firm) represent a higher professional standard increasingly adopted worldwide. As noted by the House of Lords in Bolkiah v KPMG (a firm), the trend is towards a stricter approach and such is already the case in the United Kingdom, the United States and Canada. The stricter approach exemplified by the Canadian case of Martin v MacDonald Estate (Gray) [1991] WWR 705 and followed in Bolkiah v KPMG (a firm) was considered by the High Court in Alrich Development Pte Ltd v Rafiq Jumabhoy and eschewed. However, it remains to be seen whether the Singapore court will reconsider its position after Bolkiah v KPMG (a firm). While one cannot argue against the need to protect information imparted by a client in confidence, or to prevent its misuse, in considering whether the stricter approach exemplified by Bolkiah v KPMG (a firm) and the troika of post-Bolkiah English cases should also represent the position under Singapore law, perhaps some thought should be given to the local context. The smaller size of the legal community in Singapore and the difficulty of proscribing professional contact in a smaller community working in a commercial environment with a high premium placed on space would result in an extremely high cost in imposing Bolkiah type principles and approaches here. Furthermore, in view of these local considerations, the right of the clients to select the lawyer of his choice would also fall victim to a strict Bolkiah approach. In Alrich Development Pte Ltd v Rafiq Jumabhoy, Chao J observed: Why should it be irrebuttable that lawyers who work together share each other's confidence?

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Chao J's observation strikes to the heart of the linking of professional contact and disclosure evinced by the troika of post-Bolkiah English cases. Why should it be inevitable that there will be inadvertent disclosure even where contact is minimal and discussion of the relevant matters are proscribed? It is suggested that in the Singapore context, the balancing of factors requires either a retention of the approach in Alrich Development Pte Ltd v Rafiq Jumabhoy or an adoption of the Bolkiah approach more tailored to the local context and circumstances. In the meantime, law firms considering the issue should bear in mind a crucial dictum of Neuberger J in Halewood International v Addleshaw Booth & Co which highlights the importance of ensuring proper conflict checks to nip any potential problem in the bud and which hence bears quoting in full: If relevant confidential information has already been imparted ... it would be right to grant the injunction sought by [the plaintiff] as the problem faced if the [defendant law firm] were to continue to act would be effectively incurable. Acting against clients in dispute Not to act for both parties in dispute 29. —(1) When an advocate and solicitor or any member of his firm has acted for more than one party in the preparation of a document creating rights and obligations between them and a dispute in relation to the matter has arisen between them where the enforceability of the document is in dispute, or where the dispute is such that the advocate and solicitor is likely to be in conflict, the advocate and solicitor or any member of his firm shall not act for any party to the transaction in relation to that dispute. (2) Where an advocate and solicitor or any solicitor practising in the same law corporation as the advocate and solicitor has acted for more than one party in the preparation of a document creating rights and obligations between them and a dispute in relation to the matter has arisen between them where the enforceability of the document is in dispute, or where the dispute is such that the advocate and solicitor is likely to be in conflict, the advocate and solicitor or any solicitor practising in the same law corporation shall not act for any party to the transaction in relation to that dispute. Not to act against client’s interests 30. —(1) An advocate and solicitor or any member of his law firm or any director or employee of the law corporation of which the advocate and solicitor is a director or an employee shall decline to advise a person whose interests are opposed to that of a client he is representing on any matter and shall inform such person to obtain independent legal advice. (2) If the person does not obtain such independent legal advice, the advocate and solicitor is under a duty to ensure that the person is not under an impression that his interests are protected by the advocate and solicitor. Not to act against client 31. —(1) An advocate and solicitor who has acted for a client in a matter shall not thereafter act against the client (or against persons who were involved in or associated with the client in that matter) in the same or any related matter. (2) For the purposes of paragraph (1) — (a) the term “client” includes a client of the law firm or law corporation of which the advocate and solicitor is a partner, an associate or an employee whether or not he handles the client’s work; and (b) Deleted by S 410/2001, wef 01/09/2001. (3) Paragraph (1) shall apply even where the advocate and solicitor concerned becomes a member of a different law firm or law corporation. (4) Nothing herein shall preclude a law firm or law corporation from acting against a party in a matter provided that — (a) the law firm or law corporation has not previously acted for the party (or for persons who were involved in or associated with the party in that matter) in the same or any related matter; and (b) any advocate and solicitor of the law firm or law corporation who has previously acted for the party in the same or related matter neither acts nor is involved in that matter or related matter in any way whatsoever and does not otherwise disclose any confidential information relating to the matter or the party to any other member of the law firm or law corporation. Rule 64 o rule 64 – lawyer shall not accept instructions if he knows that he will be a witness on material qn of fact • must not act • codifn of cl • ‘material qn of fact’ – if formal evid and nth material, thenok

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•

but if material, then proff conflict – as lwyer needs to look out for interest on witness stand and unable to look after client – must give truthful testimony as officer of court • therefore accepted in cl and codified in rule 64 • normally called as witness of fact because acted for party see manual when act for two or more clients ie jt retainer sitn (eg commercial transaction) – duty is owned to both clients – • when giving materiak evid of fact for one cient, must still cease to act • rule 64 does not draw distinction bet jt or single retainer so long as giving witness on qn of fact • shld cease acting or not take up retainer



5.3 Rule 64  

R 64 says that if you are going to be a material witness of fact, then you cannot act against a former client and if you are already on the record acting for former client, and there is conflict of interest, then you have to discharge yourself

Solicitor not to act if he is a witness Rule 64 – (1) An advocate and solicitor shall not accept instructions in a case which the advocate and solicitor has reason to believe that he is likely to be a witness on a material question of fact. (2) An advocate and solicitor shall discharge himself from representing a client if it becomes apparent to the advocate and solicitor that he is likely to be a witness on a material question of fact. (3) In discharging himself, the advocate and solicitor shall take all reasonable steps to ensure that his client’s interest is not in any way jeopardised.

Case to note: Chapman v. Rogers [1984] 1 Qd R 542 at 545 per Campbell C.J A driver was taken to a police station after taking a breathalyzer test. The driver telephoned his solicitor who came to the police station soon after. The solicitor formed the opinion that the driver's condition was inconsistent with a blood alcohol level of .29. The solicitor took the driver to a hospital where a sample of blood was given at 10.55 pm for a blood alcohol test. Although it could not be shown who had conducted the test the hospital records showed that the blood alcohol content was .01. Expert evidence was given to show that if the driver had a blood alcohol content of .29 at 6.34 pm he should have had a concentration of about .203 at 10.55 pm. The magistrate acquitted the accused driver for the reason that there must have been some error sufficient to displace the conclusiveness of the breath analysis certificate. The appeal was dismissed. Campbell CJ remarked in passing: o The evidence given by the solicitor was material to the defence case.

o

"Counsel or solicitors who are appearing as advocates in a case should not also act in the same case as witnesses, but if they tender evidence their evidence is not inadmissible": Halsbury's Laws of England 4th ed, vol 17, para 233.

o

The solicitor here was not himself appearing in court so that the terms of the ruling do not seem to be directly applicable to the present circumstances.

o

However, for the reason that it is desirable to avoid any suggestion of real or apparent conflict between the duty to the court and the obligation to the client, I consider that it is generally unwise for a solicitor, who is not himself appearing as advocate or as instructing solicitor in court but who is aware that it is likely that he will

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be called as a material witness (other than in relation to formal or non-contentious issues), to continue, either personally or through his firm, to represent the client if this can be reasonably avoided. It may be unavoidable in some cases such as those involving complex commercial issues.

Rule 30 o rule 30 – act for partr party but opp side does not want legal advice or don’t retain ie unrepresented party o need to be careful in ensing that unrep person not given impression that lawyer also looking after his interest o rule 30 – where kaw firm or adv acts for one person, must deline to advise person who is unrep and rule 30(2) – must tell unrep person to go and get indep legal advice and lawyer is not there to protect his interest – must be specific • impt – some pple take view/impression that lwyer will be there looking after his interest  ahmad kaliz – told benef that he was not acting for them but BY HIS CONDUCT gave them the impression that he was prxtg their interest as well • so case held against him • though no sol cient rr with benef, he gave tt impression tt prxtg their interes and he never did • so failure to comply with rule 30  them ore uneducatewd ur client, the more impt that you stress that only looking after own client interest  take oral and written precautions  landlord and tenancy matters – this may also happen –  franchise agreements – franchisee comes looking to you as well. But nf act x owe him proff duty to look after his interest 5.4 Rule 30 o

Decline to advise unrepresented person whose interest is opposed to that of your client

Not to act against client’s interest 30. –(1) An advocate and solicitor or any member of his firm or any director or employee of the law corporation of which the advocate and solicitor is a director or an employee shall decline to advise a person whose interests are opposed to that of a client he is representing on any matter and shall inform such person to obtain independent legal advice. (2) If the person does not obtain such independent legal advice, the advocate and solicitor is under a duty to ensure that the person is not under an impression that his interests are protected by the advocate and solicitor. o o o o

necessary at the outset to define clearly to all concerned, when dealing with more than one party, who your client is said and for whom you are not acting “non-clients” incorrectly assuming you are protecting their interests. non-clients acting on their own account Avoid being manipulated into a situation in which you believe you are not acting for the non-clients but the non-clients believe you are protecting their interests. That risk can be eliminated by a simple letter clarifying the situation.

6. Rule 43 Fees chargeable in conflict situation 43. Where through conflict of interest, an advocate and solicitor has recommended to a client that the client seek alternative legal representation, the advocate and solicitor may charge only for those items which clearly need not be duplicated by the alternative advocate and solicitor. 7. What happens if you find that you may have to breach your conflict of interest? o

The problem is that you are in fiduciary relationship with your client… cannot simply discharge without giving a good reason

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o

See rule 42, which is a common law rule that if you want to stop acting for your client, you must have a good reason – withdrawal of retainer

Withdrawal 42. —(1) Subject to rule 41, an advocate and solicitor may withdraw from representing a client — (a) at any time and for any reason if the withdrawal will cause no significant harm to the client’s interest and the client is fully informed of the consequences of withdrawal and voluntarily assents to it; (b) if the advocate and solicitor reasonably believes that continued engagement in the case or matter would be likely to have a serious adverse effect upon his health; (c) if a client breaches an agreement with the advocate and solicitor regarding fees or expenses to be paid by the client or regarding the client’s conduct; o when you have put into the agreement that you can discharge yourself because costs are not paid [in the absence of a written agreement to explain that if they don’t pay, you can withdraw, you are stuck with the client] (d) if a client makes material misrepresentations about the facts of the case or matter to the advocate and solicitor; o do not allow client to use you to misrepresent facts (e) if an advocate and solicitor has an interest in any case or matter in which the advocate and solicitor is concerned for the client which is adverse to that of the client; (f) where such action is necessary to avoid a contravention by the advocate and solicitor of the Act or these Rules or any other subsidiary legislation made under the Act; or o situation when the client’s conduct makes it impossible for you to act as his agent and advisor e.g. is lying to you… or where the client has no regard for your legal expertise… (have to put it in writing that because of the list of actions, you are discharging yourself) (g) where any other good cause exists. o “any other good cause”: i.e. for any reason, you are unable to carry out your fiduciary duties (e.g. honesty etc) o o o o o o

For civil litigation matters, require an order of court for withdrawal (done by summons in chambers supported by affidavit) For criminal matters, do it by way of oral application in open court However, unless that you find that the client is lying etc, i.e. unless the exceptions to the privilege rule applies, you have to state in your affidavit that if you continue to act, then you would be breaching your duty to the court etc… the judges usually will not delve too deeply into the matter When you decide to withdraw, the timing to withdraw has to be decided very carefully Under rule 42(2), you cannot withdraw if you are going to cause your client foreseeable harm … must give him sufficient notice, and adequate time to find another solicitor. E.g. you cannot decide to discharge yourself the day before the trial In practice, the lawyer wishing to discharge himself will usually tell another lawyer the brief facts and ask whether they are willing to take the case

Rule 42(2) Where an advocate and solicitor withdraws from representing a client, he shall take reasonable care to avoid foreseeable harm to the client, including — (a) giving due notice to the client; (b) allowing reasonable time for substitution of a new advocate and solicitor; (c) co-operating with the new advocate and solicitor; and (d) subject to the satisfaction of any lien the advocate and solicitor may have, promptly paying to the client any moneys and handing over all papers and property to which the client is entitled. Public interest conflict principle o if you have acted for client, it would be incompatible with administration of public interest and the professional independence of the profession to act for the client in a matter that is contrary to public interests

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o

e.g. you are under a contract with me… you listen to everything that I say… including doing some matter that may be contrary to your duty to uphold the integrity of the profession

o

then you are not under an obligation to act despite being their agents, and acting for them.. you must still exercise a degree of independence in the relationship [see Rule 2 which requires you to have your duty of the court has the paramount consideration]

8.5 Practice Direction issued by Council of the Law Society – Client Confidentiality and Conflict of Interests for Locum Solicitors

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a locum solicitor is defined as “a lawyer engaged on a temporary or freelance basis by one or more law practices” (s. 2 Legal Profession Act - "locum solicitor" means an advocate and solicitor engaged (whether concurrently or otherwise) on a temporary or freelance basis by one or more law firms, law corporations or solicitors practising on their own account;) Practice Direction of 1 April 2005 read in conjunction with the Legal Profession Act and the Legal Profession (Professional Conduct) Rules: Duty of Confidentiality 1. The need for a locum solicitor and the law practice engaging him to ensure that client confidentiality is maintained is essential 2. Rule 24 of the Rules that prescribes that an advocate and solicitor shall not directly or indirectly: (a) Disclose any confidential information which he receives as a result of the retainer; or (b) Disclose the contents of the papers recording such instructions; unless with the consent of the client or as required by law or order of court 3. Rules 25-31 of the Rules apply to a locum solicitor in addition to the common law principles on conflict of interest Practice to be Adopted before Accepting Terms of Engagement as a Locum Solicitor 4. State the names of all law practices that had engaged him 5. Must advise each law practice that engages him of the names of all law practices that he proposes to be engaged as a locum solicitor

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