Koh Kim Teck v Shook Lin & Bok LLP [2020] SGCA 118

The appellant, Mr Koh Kim Teck, appeals against the High Court judge’s dismissal of his application (“the Application”) to set aside a statutory demand dated 30 September 2019 (“the SD”) served on him by the respondent, Shook Lin & Bok LLP. The decision of the High Court judge (“the Judge”) can be found in Koh Kim Teck v Shook Lin & Bok LLP [2020] SGHC 86 (“the GD”) and was made following a similar dismissal of the Application by an Assistant Registrar (“AR”) in HC/OSB 129/2019 (“OSB 129”).

The Application was brought firstly on the basis that the SD was not validly served. There are two potential dates on which the SD might have been validly served: 4 October 2019 and 22 October 2019. In the event we find, as the Judge did below, that the SD was validly served on 4 October 2019, the appellant seeks the requisite extension of time to bring the Application as it was filed only on 31 October 2019, ie, more than 14 days after 4 October 2019. The appellant then contends that the SD should be set aside because the quantum of the debt is disputed; that he has a cross-demand that exceeds the debt under the SD; and that there was an implied term which disentitles the respondent from payment in the present case.

Background facts

The 26 October 2017 invoice

A chronology of the relevant events can be found in Annex A. The respondent acted for the appellant in two suits heard in the High Court (“the Consolidated Suits”) from May 2013 to 22 January 2018. The SD is premised on Invoice No 150722, issued by the respondent on 26 October 2017 (“the 26 October 2017 invoice”). This invoice was for a sum of $269,066.57, billed for the work done by the respondent between 18 February 2017 and 31 July 2017. However, the debt as stated in the SD was $106,133.52 (inclusive of interest) as an aggregate sum of $176,025.30, held on account for the appellant in the respondent’s client account, was set off against the sum originally claimed under the 26 October 2017 invoice at the time it was issued.

The parties spoke about the 26 October 2017 invoice over the phone on 11 December 2017, during which the appellant sought a discount of 50%. Over lunch on 3 January 2018, the respondent informed the appellant that if he disputed any part of the 26 October 2017 invoice, he was entitled to approach the court to have this taxed. The appellant stated that he would have to consider whether to continue to engage the respondent to act for him. The respondent sent a follow-up electronic mail (“email”) on 9 January 2018, and again on 17 January 2018, seeking the appellant’s confirmation as to whether he intended to continue engaging the respondent. On 19 January 2018, the appellant confirmed that he wished to continue doing so but the respondent inquired about payment of the 26 October 2017 invoice. On 22 January 2018, the respondent was informed by Optimus Chambers LLC (“Optimus Chambers”) that it had been instructed to take over the continuing trial of the Consolidated Suits.

On 27 March 2018, the respondent wrote to Optimus Chambers, enclosing the 26 October 2017 invoice and another invoice, ie, Invoice No 152152 dated 13 March 2018 (“the 13 March 2018 invoice”) for work done in the Consolidated Suits between 1 August 2017 to 22 January 2018. The respondent informed Optimus Chambers that it would be setting off the sum of $176,008.04 held on account for the appellant against the unpaid invoices. According to the respondent, Optimus Chambers suggested that the respondent speak to the appellant personally, and the respondent did so on 23 April 2018, informing the appellant that if he disputed any of the unpaid invoices, he was entitled to apply to the court to tax those invoices. On the other hand, the appellant suggested that the respondent communicate with Optimus Chambers. On 7 September 2018, the respondent again wrote to Optimus Chambers to state that the sum of $176,008.04 had been set off against the “total amount owing to [the respondent]”. The respondent reiterated that the appellant was entitled to proceed to taxation if he disputed any part of its professional charges. At that time, no distinction was drawn between the two invoices for the purpose of set-off.

Statutory demands and service

The respondent then issued three statutory demands in relation to the 26 October 2017 invoice. First, the respondent wrote to Optimus Chambers on 29 November 2018 enclosing a statutory demand also dated 29 November 2018 for the full amount claimed under the 26 October 2017 invoice and enquired if Optimus Chambers had instructions to accept service of that statutory demand on the appellant’s behalf (GD at [4]). This was because the set-off previously mentioned by the respondent had been effected against the sum claimed under the 13 March 2018 invoice. At that time, the appellant had not yet pursued taxation of either invoice.

On 15 January 2019, the appellant filed HC/OS 67/2019 (“OS 67/19”) seeking an order for taxation in respect of the 13 March 2018 invoice, as well as leave to seek an order for taxation in respect of the 26 October 2017 invoice given that the application was not made within the 12-month period prescribed by s 122 of the Legal Profession Act (Cap 161, 2009 Rev Ed) (“LPA”). We note that for the 26 October 2017 invoice, the appellant did not require leave for an order for taxation so long as he satisfied the requirement of special circumstances under s 122 of the LPA. In the supporting affidavit filed for OS 67/19, the appellant stated that he had informed the respondent that there was no reason for it to have issued a statutory demand since the invoices were disputed and he was willing to have them taxed. No further steps were taken in respect of the statutory demand dated 29 November 2018.

The SD in the present appeal is dated 30 September 2019. It is for a net sum of $106,133.52 as by then the respondent had set off an aggregate sum of $176,025.30 from the original sum of $269,066.57 in the 26 October 2017 invoice instead of setting it off against the 13 March 2018 invoice. The net sum includes interest under para 5 of the Legal Profession (Solicitors’ Remuneration) Order (Cap 161, O 1, 2010 Rev Ed). The other invoice, ie, the 13 March 2018 invoice, was being taxed at that time. The respondent had asked Cairnhill Law on 18 September 2019 if it had instructions to accept personal service of process on behalf of the appellant, but apparently received no reply. The respondent then attempted to serve the SD on the appellant in the following ways:

(a) On 30 September 2019 and 1 October 2019, the respondent’s clerk attempted personal service at the Bayshore Road property, but on each occasion the door was locked. At the time these attempts were made, the respondent was aware that the appellant no longer owned the Bayshore Road property, which was instead owned by a third party. In contrast, the appellant had been the owner of the Bayshore Road property in March 2019, although a title search then had shown that the third party had already lodged a caveat as a purchaser. An Enhanced Individual Search on the appellant conducted on 29 October 2019 did not reveal any details of the appellant’s residential address. The appellant accepts that two unsuccessful attempts had been made at personal service.

(b) Subsequently, on 4 October 2019, the respondent placed an advertisement (“the Advertisement”) in the Straits Times of a notice of the SD. The notice referred specifically to r 96(4)(d) of the Bankruptcy Rules (Cap 20, R1, 2006 Rev Ed) (“BR”), the 26 October 2017 invoice, and the sum of $106,133.52.

(c) A copy of the notice advertised was also sent to Cairnhill Law by email on 4 October 2019 at 12.03pm (“the 4 October 2019 email”). On 22 October 2019, Mr Ashok Kumar (“Mr Kumar”) from Cairnhill Law replied to the email. He referred to the notice of statutory demand and requested documents such as a breakdown of the time spent by the respondent’s solicitors “which was the subject of all the invoices” issued by the respondent to the appellant. The respondent declined to provide a breakdown and sent Mr Kumar a copy of the SD on the same day. Subsequently, on 23 October 2019, Mr Kumar stated that Cairnhill Law did not, at that time, have instructions to accept service of the SD and that his email of 22 October 2019 should not be construed otherwise. On that same day, he reiterated that Cairnhill Law did not appear on the record for the appellant in any proceeding relating to the SD.

A bankruptcy application (HC/B 2786/2019 (“B 2786”)) was filed by the respondent on 29 October 2019 on the basis of the SD. Copies of the cause papers were sent to Cairnhill Law. The appellant filed OSB 129 on 31 October 2019 to set aside the SD. Before the AR, the respondent argued that the Advertisement was the only way to bring the SD to the appellant’s attention, aside from “the most obvious manner of service on the [appellant’s] solicitors”. The respondent also emphasised that a copy of the Advertisement had been immediately sent to Cairnhill Law on the same day and noted that the Advertisement was again referred to in the email to Cairnhill Law sent on 22 October 2019, which also attached a copy of the entire SD. The AR held that there was good service of the SD and that the Application was unmeritorious, and dismissed it accordingly.

Decision below

Before the Judge, the appellant contended that the SD should be set aside for the reasons mentioned in [2] above (except that the argument on the implied term was only raised on appeal).

Whether there was valid service

The Judge held that the Advertisement and the 4 October 2019 email, whether individually or collectively, constituted valid service (GD at [24] and [52]). The Judge was of the view that r 96(4)(c) of the BR was inapplicable in the present case since the respondent had the appellant’s last known address, ie, the Bayshore Road property. However, this did not prevent the respondent from effecting valid service on the appellant by way of the Advertisement and/or the 4 October email under r 96(4)(d) of the BR (GD at [24]).

The Judge was of the view that the underlying purpose of the service regime under the BR is to provide the practical means for a creditor to effectually bring a statutory demand to a debtor’s attention and that the limbs of r 96(4) of the BR are not mutually exclusive. Where a creditor is unable to meet the requirements under r 96(4)(c) of the BR, the statutory regime enables it to effect substituted service under r 96(4)(d) of the BR. This is consistent with the plain wording of r 96(4)(d) of the BR which does not require that the modes of service under the other limbs be unavailable to the creditor and which allows for service by such other mode as the court would order, including a mode of substituted service by advertisement which does not fall within r 96(4)(c) of the BR (GD at [24]–[26], [28] and [37]). While the Judge agreed with the holding in Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 2 SLR(R) 31 (“Wong Kwei Cheong”) that the statutory demand itself, and not a notice thereof, must be advertised under r 96(4)(c) of the BR, it did not follow that service by way of advertisement is exclusively governed by that provision, and no authority was cited by the appellant in support of such exclusivity (GD at [29] and [30]). Similarly, under O 62 r 5 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”), the court may order that substituted service be effected by advertising a notice that an action has been commenced against the defendant, and the same ought to apply to r 96(4)(d) of the BR (GD at [31]).

In the Judge’s view, the ultimate question was whether the court was satisfied that the mode of substituted service employed by a creditor was sufficient on the facts before it and whether it amounted to a reasonable step to bring notice of the statutory demand to the debtor’s attention effectively. In the present case, the respondent had taken all reasonable steps to bring the SD to the appellant’s attention and utilised a mode of substituted service the court would have ordered in the circumstances. Accordingly, the Advertisement constituted valid service under r 96(4)(d) BR (GD at [31]–[34]).

The Judge further accepted that the 4 October 2019 email to Cairnhill Law constituted valid service whether on its own or taken together with the Advertisement. Sending a notice of the SD by email to the appellant’s solicitors was effectual in bringing the SD to his notice as the solicitors had been acting for the appellant in the ongoing taxation proceedings for the 13 March 2018 invoice. It was entirely reasonable for the respondent to presume that the 4 October 2019 email would be effective in bringing the SD to the appellant’s attention. The appellant’s solicitors in fact confirmed that the appellant had notice of the SD at around the time the 4 October 2019 email was sent (GD at [35]). While the appellant referred to para 33(6) of the Supreme Court Practice Directions (“Supreme Court PD”) (see [46] below), neither this nor O 62 r 5(4) ROC exhaustively set out the requirements of substituted service by way of email (GD at [36]). The requirements for valid service are circumscribed by pragmatism and not by an overtly rigid and technical approach (GD at [37], citing Re Ramaschayana Sulistyo (alias Chang Whe Ming), ex parte The Hongkong and Shanghai Banking Corp Ltd and other appeals [2005] 1 SLR(R) 483 (“Sulistyo”) at [10] and [21]).

Extension of time

Given the Judge’s finding that substituted service was validly effected on 4 October 2019, the Application (to set aside the SD) was made out of time. It ought to have been made within 14 days from the date of service of the SD on 4 October 2019, ie, by 18 October 2019 (r 97(1)(a) of the BR). Instead, it was filed on 31 October 2019. The Judge did not make a clear finding on whether an extension of time should be granted, instead considering that this question was “ultimately rendered moot” by his conclusion that the application to set aside the SD was without merit (GD at [55]) (see [18] below). Nevertheless, the Judge observed that the delay of almost two weeks was not insubstantial and that the appellant did not give any reasons for it. It appeared that the appellant had made a deliberate and tactical decision to wait until B 2786 had been filed before taking any action (GD at [35] and [55]).

Aside from finding that there had been valid service of the SD, the Judge also rejected the other grounds on which the appellant sought to set aside the SD. Specifically, the Judge held that taxation is the exclusive judicial recourse available to any challenge over the quantum of the defendant’s fees (following Kosui Singapore Pte Ltd v Thangavelu [2015] 5 SLR 722 (“Kosui”) at [56]–[57]). The appellant did not file an appeal against the court’s decision in OS 67/19 that he was not entitled to an order for taxation for the 26 October 2017 invoice, and that was the end of the matter in relation to whether the 26 October 2017 invoice could be challenged. The appellant’s arguments were a blatant attempt to circumvent the order of Abdullah J in OS 67/19 (GD at [44]). There was also no valid or genuine cross-demand equivalent to or exceeding the debt arising from the setting-off of deposits held by the respondent against the sum invoiced. While the explanation that there had been a telephone conversation in which Optimus Chambers agreed that the respondent was to utilise the funds held as part payment of the 26 October 2017 invoice had not been given on affidavit, there was no reason to disregard or disbelieve the explanation (GD at [42] and [51]).

Parties’ submissions on appeal

The appellant’s submissions

First, the appellant seeks to set aside the SD pursuant to r 98(2)(e) of the BR, under which the court shall set aside a statutory demand if it is satisfied it ought to be set aside. In this regard, the appellant argues that there has not been valid service of the SD. The appellant argues that the Advertisement was not good service since advertising in the newspapers is only allowed under r 96(4)(c) of the BR when the modes prescribed in r 96(4)(a) and r 96(4)(b) are unavailable due to the creditor’s ignorance of the debtor’s last known address. The Judge erred in considering that the Advertisement was valid service under r 96(4)(d) of the BR since this interpretation rendered r 96(4)(c) otiose, which could not have been the intention of the Rules Committee. Further, as was held in Wong Kwei Cheong ([14] supra), r 96(4)(c) of the BR requires that the SD itself (as opposed to a notice of the SD) must be advertised. The Judge’s analogy from the advertisement of a notice of commencement of a court action (see O 62 r 5 ROC and Form 138(e)) was erroneous since the court would first need to be persuaded that Form 138(e) is the appropriate form of the advertisement and it is conceivable that the court may order the full statement of claim to be reproduced.

The 4 October 2019 email and 22 October 2019 email also would not have been a mode of service that the court would have ordered (see r 96(4)(d) of the BR). Guidance can be taken from para 33(6) of the Supreme Court PD, pursuant to which the email account must belong to the person to be served. Cairnhill Law also made clear on 23 October 2019 that it still did not have instructions to accept service of the SD. It would have been obvious that the emails might not have been brought to the personal attention of the appellant and therefore that it would not have been an acceptable mode of substituted service. Even if the Advertisement and emails were considered collectively, there would still not be valid service.

If the court finds that valid service had been effected on 4 October 2019, the appellant submits that an extension of time should be granted for the Application to be brought because it was only late by 12 working days and the respondent would therefore not be prejudiced by the extension. As the court held in Liew Kai Lung Karl v Ching Chiat Kwong [2015] 3 SLR 1204 (“Liew Kai Lung Karl”) at [6], the threshold to grant an application for an extension of time for a debtor to apply to set aside a statutory demand is “not a particularly high one”. Further, he claims he has strong grounds for setting aside the application. Specifically, aside from the arguments on service, the appellant also contended that:

(a) There are triable issues relating to the quantum of the debt and so the SD should be set aside pursuant to r 98(2)(b) of the BR. In particular, the appellant contends that his failure to seek taxation of the 26 October 2017 invoice within 12 months of that invoice, as required under s 122 of the LPA, does not preclude him from disputing the quantum of that invoice. He relies on the decision in Turner & Co (a firm) v O Paloma SA [2000] 1 WLR 37 (“Turner”).

(b) The appellant has a valid cross-demand of $176,025.30 (the amount set off against the 26 October 2017 invoice) that exceeds the debt claimed under the SD and the SD should be set aside pursuant to r 98(2)(a) of the BR.

(c) The respondent is not entitled to payment due to its failure to comply with an implied term in the Letter of Engagement between the parties to provide a breakdown of time costs for the 26 October 2017 invoice.

The respondent’s submissions

The respondent contends that the Judge was correct to find that there had been valid service. The principle underlying the requirements on service of a statutory demand is that a creditor should take all reasonable steps to bring it to the attention of the debtor (see r 96(1) of the BR), and the “philosophy” is one of “pragmatism and substantial justice” (Sulistyo ([16] supra) at [26]–[27]). The appellant in the present case had not spared any attempt to evade service including unreasonably choosing not to instruct Cairnhill Law, his solicitors in HC/BC 95/2019 (“BC 95”), the taxation proceedings in respect of the 13 March 2018 invoice, to accept service of the SD on his behalf.

The appellant had many opportunities to accept service of the SD: (a) the respondent had enquired with Cairnhill Law as to whether it had instructions to accept service on 18 September 2018; (b) made two attempts at personal service; (c) placed the Advertisement of a notice of the SD and sent a copy of the notice to Cairnhill Law on 4 October 2019, following which Cairnhill Law wrote to the respondent referring to the Advertisement and requesting documents relating to the 26 October 2017 invoice; and (d) provided a copy of the entire SD to Cairnhill Law subsequently on 22 October 2017. The appellant made the tactical decision not to apply to set aside the SD until B 2786 had been filed. A previous statutory demand arising from the same invoice had also been sent to the appellant’s email address as well as by registered post to the last known address (although the letter was returned).

The Judge was correct in holding that advertising a notice of the demand was sufficient. The respondent had been relying on r 96(4)(d) and not r 96(4)(c) of the BR and the requirements set out in the latter provision were inapplicable. However, the respondent also submits that Wong Kwei Cheong ([14] supra) was wrong to conclude that the entire SD had to be advertised under r 96(4)(c) of the BR, and that the publication of a notice of the SD was sufficient to make the SD known publicly. It contends that in practice, creditors have routinely sought to use r 96(4)(d) of the BR to publish notices of statutory demands, which is a sensible and pragmatic approach. Requiring the entire demand to be published under r 96(4)(c) of the BR but not under r 96(4)(d) of the BR would be incongruous and may render r 96(4)(c) otiose. Further, even though Cairnhill Law did not have authority to accept service on the appellant’s behalf, on the facts, sending a notice of the SD in the 4 October 2019 email to Cairnhill Law did bring it to the appellant’s attention.

The respondent submits that an extension of time ought not to be granted because the appellant had been well aware of the SD, and his counsel had conceded that it was a tactical decision not to file the application to set aside the SD until after B 2786, ie, the bankruptcy application, had been filed. This conduct should not be allowed since it would render r 97(1) of the BR entirely otiose.

Issues to be considered

The main questions in this appeal are:

(a) First, whether there had been valid service of the SD. Specifically, the issue is whether the Advertisement (placed by the respondent in the Straits Times on 4 October 2019) and/or the email sent to Cairnhill Law on 4 October 2019 constituted valid service (“Issue 1”).

(b) Second, if it is held that the SD was validly served on 4 October 2019, whether an extension of time ought to be granted to the appellant to bring the Application (“Issue 2”). In determining this issue, we also consider whether there is any ground on which the SD should be set aside.

We turn now to address each of these questions in turn.

Issue 1: Whether there was valid service

Rule 96 of the BR provides that:

As we indicated above, on 4 October 2019, the respondent placed the Advertisement in the Straits Times with a notice of the SD. We note at the outset that the Advertisement stated that notice was being given under r 96(4)(d) of the BR and not r 96(4)(c). The Judge took the view that the latter provision was inapplicable in the present case as the respondent “did have [the appellant’s] last known address” (GD at [24]). This appeared to be the position of both parties as well. The arguments made on r 96(4)(c) of the BR were therefore focused on the question as to whether the respondent can rely on r 96(4)(d) in advertising a notice of the SD. We begin by examining the correct interpretation of r 96(4)(c) of the BR.

Whether the respondent could have relied on r 96(4)(c)

Rule 96(4)(c) of the BR allows for substituted service by “advertisement of the statutory demand in one or more local newspapers”, subject to the creditor being unable to effect substituted service by the means provided in r 96(4)(a) and r 96(4)(b) of the BR by reason that he does not have knowledge of the last known place of residence, business or employment of the debtor (for convenience, “last known address”). Two questions arise: (a) when a creditor should be considered to have no knowledge of the debtor’s last known address; and (b) what an “advertisement of the statutory demand” entails.

Last known address

The first question is what knowledge of the debtor’s last known address entails. In particular, where a creditor once knew of the debtor’s residence, business or place of employment, the question is whether he should be considered as having knowledge of the debtor’s last known address even if he knows, or has good reason to believe, that the debtor no longer lives, carries out business, or works there.

We note that at [13] of Wong Kwei Cheong ([14] supra), S Rajendran J said that “even if [the debtor] was in fact no longer residing at that address, it would not detract from the fact that that was the last known place of residence of [the debtor] in so far as the [creditor] was concerned”. In so holding, Rajendran J also stated that the fact the debtor was not the registered owner of the premises did not indicate in any way that he was not resident at the premises. However, in context, that might have been because the registered owner in that case was a company (see Wong Kwei Cheong at [9]) and the company might have been owned by the debtor or the debtor could have been residing there pursuant to a licence or lease conferred by the company. For completeness, while Wong Kwei Cheong considered an earlier version of the BR, specifically, the Bankruptcy Rules (Cap 20, R1, 1996 Rev Ed), r 96(4) was identical in both versions and we therefore do not distinguish between them in this judgment.

The last known address should be interpreted to mean the last address at which the person is known or believed to be located or residing at. Any other previous address would be knowledge of a fact of historic interest that has nothing to do with the purpose of the provisions on service in the BR, which is to bring the statutory demand to the notice of the debtor, as we explain below.

Further, r 96(4)(c) reflects a legislative choice to prefer the methods of service provided for in rr 96(4)(a) and 96(4)(b) over substituted service by means of advertisement. This preference would be contrary to the purpose of the service requirements and the creditor’s obligation to take all reasonable steps to bring the statutory demand to the debtor’s attention (see r 96(1) of the BR) if the reference to the debtor’s last known address is fulfilled simply by virtue of the fact that he knows of a previous address even though the debtor no longer resides there. Therefore, in our view, the reference to the last known address in r 96 must be to an address which is still believed to be applicable. If that address is known or believed no longer to be applicable, then it ceases to be the last known address for the purpose of r 96.

In the present case, the respondent had learnt from a title search of the Bayshore Road property done on 5 September 2019 that the property had been transferred from the appellant to a third-party purchaser. This transfer was not in dispute. The ordinary inference is that the appellant no longer resides there and there was nothing to rebut that inference. Indeed, the appellant does not say that he continued to reside there. Therefore, the Bayshore Road property had ceased to be the last known address of the appellant and, in the absence of any other known address, the respondent would not have been able to rely on rr 96(4)(a) or 96(4)(b). Hence, contrary to what the respondent and the Judge had thought, the respondent could have relied on r 96(4)(c) to effect service by advertisement in a local newspaper.

Requirement of advertisement

The next question is what “advertisement of the statutory demand” in r 96(4)(c) means. This could mean either that: (a) the statutory demand itself must be advertised or (b) that a notice of the statutory demand may be advertised. In our view, the former is not mandatory and the latter would be in keeping with the purpose of the provisions on service.

In interpreting r 96(4)(c) of the BR, regard must be had to the purpose of the provisions on service. The Judge held that the overarching intention or purpose underlying the service requirements is to provide the practical means for the creditor to bring effective notice of the statutory demand to the debtor (at [25] and [37]). We agree: this is reflected in the provisions of r 96 of the BR. The overarching rules for service are set out in r 96(1) and r 96(3) of the BR. The former states that the creditor shall take all reasonable steps to bring the statutory demand to the debtor’s attention. The latter states that where the creditor is not able to effect personal service, the demand may be served by “such other means as would be most effective in bringing the demand to the notice of the debtor”. The mode of substituted service must also be one that the court would have ordered in the circumstances (r 96(6)(b) of the BR). In this connection, reference may be had to para 33(1) of the Supreme Court PD, which provides that in an application for substituted service, the applicant should persuade the court that the proposed method of substituted service will probably be effectual in bringing the document in question to the notice of the person to be served. Indeed, r 108(3)(b) of the BR expressly requires that a bankruptcy application be accompanied by a supporting affidavit stating the means whereby, if the statutory demand had been served other than by personal service, the creditor sought to bring the demand to the debtor’s attention and explain why such means would have best ensured that the demand would be brought to the debtor’s attention.

These provisions underscore the court’s observation in Sulistyo ([16] supra) at [21] that the essence of the service requirements under the BR is to ensure that the statutory demand, bankruptcy application and other relevant processes are brought to the personal attention of the debtor prior to the hearing of the application. This is particularly so given the serious consequences that a bankruptcy order, if granted, may have for a debtor.

Wong Kwei Cheong ([14] supra), on its face, may be taken as suggesting a restrictive view of the “advertisement” requirement. In that case, Rajendran J held that the creditor bank could not rely on r 96(4)(c) to effect substituted service by advertising the statutory demand in a newspaper since it knew what Rajendran J considered to be the last known address of the debtor. Since the bank knew that a firm of solicitors, M/s Wee Tay & Lim, was acting for the debtor, the bank should have tried to communicate the statutory demand to the debtor through M/s Wee Tay & Lim (at [12]–[14]). However, even if the bank could rely on r 96(4)(c), that provision required the bank to advertise the statutory demand and not a notice of it. In this regard, Rajendran J said that (at [15]):

Rajendran J further held that non-compliance with r 96 should not be treated as an irregularity or a formal defect which can be cured under s 158(1) of the Bankruptcy Act (Cap 20, 2000 Rev Ed) because the peremptory language in the BR was clear indication that the intention was to make compliance with the rules relating to service mandatory (at [18]). As such, the defect in the service of the statutory demand could not be cured under s 158(1) of the Bankruptcy Act and the statutory demand had to be set aside (at [20]).

On its face, the remarks made in Wong Kwei Cheong on r 96(4)(c) are suggestive of a stringent and technical approach towards the requirements set out in that provision. However, in the later case of United Overseas Bank Ltd v Ishak bin Ismail [2003] 3 SLR(R) 302 at [9], Rajendran J stated that Wong Kwei Cheong had been decided on the basis that there had been a more effective and appropriate way to effect service which the creditors had ignored. It was for this reason that the creditors were not entitled to rely on service by advertisement. Rajendran J further clarified that where there are clearly better modes of service other than those enumerated in r 96(4)(a) to (c) BR, the pre-requisite of two attempts at personal service does not absolve creditors from exploring those avenues. This is consistent with the underlying purpose we have identified above.

In the present case, the advertised notice indicated that the SD was issued pursuant to a claim for “S$106,133.52 as at 30 September 2019 being the amount due and owing by [the appellant] pursuant to the [respondent’s 26 October 2017 invoice]”. The notice stated the amount of debt that accrued as at the date of the demand, as would have been done if the statutory demand itself had been advertised. The notice also referred to the possibility of a bankruptcy application being filed if the debt were not paid, secured or compounded within 21 days of the notice and stated that an application to set aside must be made within 14 days from the date of the notice. It further provided the respondent’s address and indicated that the SD could be obtained from the respondent’s office. The material information had been stated in the advertised notice. Indeed, the appellant does not contend that the notice contained inadequate or incorrect information. Instead, he relies on the technical argument that the advertisement must be of the SD and not a notice of that demand.

Whether there was valid service under r 96(4)(d)

The appellant asserts that the email to Cairnhill Law would not have been a mode of service which the court would have ordered in an application for substituted service of an originating summons in the circumstances. The appellant contended that guidance should be taken from para 33(6) of the Supreme Court PD:

In other words, the appellant’s argument was that, by analogy with an originating summons, the court would have ordered that the email from the respondent be sent directly to the email address of the appellant and not to the email address of his solicitors, and hence the respondent’s use of the email of the appellant’s solicitors was not a valid mode of substituted service.

However, in our view, the practice direction is only a guide and is based on the premise that the email address is the address of the person to be served. Just as substituted service may be effected by posting on the main door of an address of, say, the closest relative of a debtor (where, for example, the creditor does not know the debtor’s last known address, as we have defined it above), substituted service may also be effected by sending an email to the address of someone whom it is reasonably believed will bring the email to the attention of the debtor.

In the present case, Cairnhill Law was acting for the appellant in the taxation of the 13 March 2018 invoice. There was every reason to believe that Cairnhill Law would bring the email sent to it on 4 October 2019 to the attention of the appellant even though it was in respect of the 26 October 2017 invoice, on which it did not have instructions.

For the above reasons, the 4 October 2019 email, which attached a copy of the notice of the SD as advertised, considered together with the Advertisement, constituted valid service under r 96(4)(d) of the BR.

Issue 2: Whether an extension of time should be granted

Rule 97(1)(a) of the BR provides that an application to set aside a statutory demand must be made within 14 days of service. We have found that there was valid service of the SD on 4 October 2019. It follows that the application to set aside the SD should have been brought by 18 October 2019. Since the application was only filed on 31 October 2019, we consider the question as to whether the appellant’s application for an extension of time should be granted. The Judge decided OSB 129 on the basis that the application to set aside the SD was without merit, and therefore whether an extension of time should be granted was ultimately a moot question (GD at [55]).

The considerations which the court ought to have regard to are not disputed. These are: (a) the period of the delay; (b) the reasons for the delay; (c) the grounds for setting aside the statutory demand; and (d) the prejudice that might result from an extension of time. The weight to be given to each factor is to be determined on the facts (Rafat Ali Rizvi v Ing Bank NV Hong Kong Branch [2011] SGHC 114 at [32]).

Delay

While the application was brought less than two weeks out of time, this does not mean that an extension of time should necessarily be granted. Despite the holding in Liew Kai Lung Karl ([21] supra) at [6] that the threshold to grant an extension of time for a debtor to apply to set aside a statutory demand was not a particularly high one, the test is, at the same time, not an empty one. Rather, each case must be judged on its specific facts.

The reasons for the delay

As we explained at the hearing of the appeal, this was not a case in which the appellant had failed to apply to set aside the SD on time due to an oversight or for some valid reason. In this regard, whether or not the view taken by Cairnhill Law on the validity of service was reasonable on the authorities then available was, with respect, beside the point. The appellant, on the advice of Cairnhill Law, had made the calculated and tactical decision not to bring the requisite application within time, notwithstanding the fact that the SD had been brought to his notice on or about 4 October 2019. This militates against the granting of an extension of time since the need for this was entirely of the appellant’s own choosing. Having (wrongly) assessed that there had not been proper service, the appellant decided to run the risk of allowing the time for setting aside to lapse. In the circumstances, there was no good reason for the delay. It was a deliberate attempt to make things as difficult as possible for the respondent which the appellant might have achieved to some extent if the SD were to be set aside, or if B 2786, the respondent’s bankruptcy application, filed more than 21 days after 14 October 2017, were to be dismissed on the basis that the SD had not been validly served. This is sufficient to dispose of the second issue, but for completeness we go on to explain why the grounds the appellant relies on to set aside the SD also do not persuade us that the extension of time sought should be granted.

Grounds for setting aside the SD

We turn now to examine the grounds on which the appellant seeks to set aside the SD, which, in our view, similarly suggest that an extension of time should not be granted.

Aside from his arguments on the validity of service, the appellant also contends that the SD should be set aside because (a) the quantum of the debt is disputed; (b) he has a cross-demand that exceeds the debt under the SD; and (c) there was an implied term which disentitles the respondent from payment in the present case. We address these in turn.

The disputed quantum and the taxation scheme under s 122 of the LPA

The question is whether the appellant may challenge the quantum of the 26 October 2017 invoice when he has not obtained an order for taxation under s 122 of the LPA within time.

The Judge agreed with the observation in Kosui ([18] supra) at [56]–[57] that taxation is the only judicial avenue for recourse available to the appellant to challenge the quantum of the respondent’s fees. Pertinently, the appellant sought an order to tax the 26 October 2017 invoice in OS 67/19 and did not appeal against the Abdullah J’s dismissal of his application to obtain an order for taxation out of time. The Judge found that that was the end of the matter in relation to whether the 26 October 2017 invoice could be challenged (GD at [44]).

The appellant argues that there is no reason why he should have only one year to challenge the 26 October 2017 invoice, as opposed to the usual six-year limitation period for contractual claims. In this regard, he seeks to rely on the decision in Turner ([21(a)] supra), in which the English Court of Appeal held that where a solicitor sued a client for unpaid fees, the client was entitled to challenge the reasonableness of the sum claimed under the common law notwithstanding that the period for invoking the taxation procedure under s 70 of the Solicitors Act 1974 (c 47) (UK) (“the 1974 Act”) had expired (at 42 and 48). At the time Turner was decided, s 70 provided that:

The English Court of Appeal held that the 1974 Act introduced a more convenient and advantageous taxation procedure and did not remove the “common law right to defend an action by the solicitor for his fees” (at 42). The court observed that the 1974 Act did not state that its effect was to exclude “the client’s common law right to object to paying more than a reasonable sum for the solicitor’s services, if he does not avail himself of the statutory procedures” (at 46). Further, s 70(2) contemplated that the solicitor would bring an action on the bill in order to enforce payment. The court held that the 1974 Act did not take away the need for the solicitor to prove that his fees are reasonable, if they are challenged, absent any express agreement as to what they should be. This would not disadvantage the solicitor, who may claim an order for taxation without any time limit, and thereafter obtain a form of summary judgment when the taxation certificate is issued. The court also held that the solicitor’s claim is one for a reasonable sum under both statute and the common law, and not for a liquidated sum, and the burden of proving that the sum is reasonable rests upon the solicitor (at 48 and 51–52).

The question before us is whether a client may challenge a solicitor’s bill notwithstanding his omission to seek taxation within the period prescribed in s 122 of the LPA. Put in another way, is the client’s contractual right to defend against a solicitor’s claim for services rendered an available alternative to the taxation mechanism in s 122 of the LPA? In this regard, we acknowledge that ss 118 and 119 of the LPA refer to the commencement of actions by solicitors in relation to the bill:

Such provisions appear to have been a factor in the English Court of Appeal’s decision in Turner (at 46). With respect, in our view, the fact that these provisions envisage the bringing of an action for the recovery of fees does not indicate, one way or another, whether taxation is the only avenue by which a court may review the reasonableness of the solicitor’s bill. Two issues may be distinguished: the method of recovery (whether this is by commencing an action or through bankruptcy proceedings), and the avenues by which the court may assess the reasonableness of the sum charged. It is the latter issue that arises for determination in the present case.

It is true that ss 120 and 122 of the LPA do not specify that failing to seek taxation of a bill within 12 months from its delivery renders the bill conclusive as to the sum claimed by the solicitor. In Kosui ([18] supra), Coomaraswamy J cited with approval Ralph Hume Garry (a firm) v Gwillim [2003] 1 WLR 510 (“Ralph Hume Garry”) where the court said, at [31], that in view of the statutory background, the client’s only protection against overcharging was to seek taxation. Ralph Hume Garry was similarly referred to in Ho Cheng Lay v Low Yong Sen [2009] 3 SLR(R) 206 (“Ho Cheng Lay”) at [16] and JWR Pte Ltd v Syn Kok Kay (trading as Patrick Chin Syn & Co) [2019] SGHC 253 at [23]. In Kosui, Coomaraswamy J further observed that taxation is the only judicial process designed specifically to assess and fix the reasonable fees which a solicitor is entitled to charge a client:

Coomaraswamy J’s remarks aptly reflect the advantages of the taxation process for both the client and the solicitor. They also, to an extent, address the question as to why, unlike bills rendered by other professionals, solicitor’s bills are subject to a separate regime. In Engelin Teh Practice LLC formerly known as Engelin Teh and Partners v Tan Sui Chuan [2006] SGDC 2, it was held that these provisions exist to provide certainty for both the solicitor and client.

We also note that the 12-month time limit provided for in s 122 of the LPA is not cast in stone. An order may be made for taxation outside of the specified period if the court finds that there are “special circumstances” to so order. From the client’s perspective, this provides an additional safeguard. As Coomaraswamy J held in Kosui at [61], there is no rigid rule as to what kind of circumstances are sufficiently special to justify taxation of a solicitor’s bill. Where it is apparent that there has been overcharging, this would be a factor militating in favour of granting an order for taxation, even if the s 122 of the LPA time limit has elapsed (see Ho Cheng Lay at [28(b)]). Similarly, if the bills delivered are so lacking in particulars that the client is unable to make an informed decision as to whether to apply for taxation, or if the solicitor did not inform the client of the right to have the bill taxed, the court may lean in favour of ordering taxation, if this is appropriate in all the circumstances.

We add that for the purpose of s 122 of the LPA, the interest of the client is adequately protected if “special circumstances” is not construed narrowly against the client. After all, the provision is not intended to allow or encourage solicitors to take advantage of ignorant or unsuspecting clients.

The silence of the LPA on the consequences of failing to seek a taxation order within the 12-month period is equivocal. In contrast, an unqualified common law right to defend against a claim brought by solicitors in respect of an untaxed invoice would mean that there is a twin track to challenge a solicitor’s charges, ie, by seeking taxation pursuant to s 122 of the LPA or by the common law right to defend. In our view, this would undermine the statutory 12-month period in s 122 of the LPA.

The appellant’s substantive submissions on the point that the 26 October 2017 invoice is for an excessive sum also meet the same fate. First, the appellant contended that “substantial errors” were discovered in the taxation of the 13 March 2018 invoice and that there may be inaccuracies in relation to the time recorded for the period covered by the 26 October 2017 invoice, which would in turn mean that the amount of professional fees charged under that invoice may be inaccurate. As a general proposition, errors discovered in the 13 March 2018 invoice would not necessarily suggest that similar errors were made in the 26 October 2017 invoice. Furthermore, it is not open to the appellant to resist the SD on such a general argument when he had failed to obtain an order for taxation.

Second, the appellant attempted to estimate the reasonable amount of time the respondent would have expended on each item of work done as set out in the 26 October 2017 invoice and to provide an approximate figure for the professional fees the respondent could have reasonably charged. However, this is not an appropriate exercise to undertake at this stage of the proceedings. In essence, this is a backdoor attempt to tax the bill notwithstanding the decision in OS 67/19, which is impermissible.

Third, the appellant also raised a more specific point. Specifically, the Letter of Engagement signed by the appellant indicated that the respondent’s fees would be based on the actual time spent in connection with the Consolidated Suits, with specified hourly rates for certain solicitors who were identified therein. The hourly rate for Mr Edmund Eng (“Mr Eng”) was stipulated to be $720. However, in the taxation of the 13 March 2018 invoice, the appellant discovered that the respondent had instead used an hourly rate of $790 for Mr Eng. The inference from this was that Mr Eng’s rate of $790 was also used for the 26 October 2017 invoice, which covered the period immediately preceding that of the 23 March 2018 invoice. The respondent appeared to accept that Mr Eng’s time had been charged at $790 per hour in the 26 October 2017 invoice. However, it submitted that under cl 2.1 of the General Terms and Conditions applicable to the Letter of Engagement, it was entitled to adjust the hourly rate from time to time. On the other hand, cl 9 of the Letter of Engagement stated that the respondent would notify the appellant of any changes to the hourly rates. It was undisputed that the respondent did not notify the appellant of the change in the hourly rate for Mr Eng.

Although the respondent suggested that it was entitled to claim the higher rate despite its failure to notify the appellant of the higher rate, we are of the view that this was an arguable point which, in ordinary circumstances, the appellant would have been entitled to contest.

However, the difficulty for the appellant was that he had already questioned the aggregate original amount claimed in the 26 October 2017 invoice soon after it was rendered, even though he was apparently unaware of the higher rate being charged for Mr Eng. As we have elaborated above, he was informed of his right to taxation more than once and he was eventually represented by new solicitors from whom he could have sought advice on the question of taxation if he wanted to. Yet, despite his concerns over the quantum of fees charged, he did nothing to pursue taxation until he filed OS 67/19 on 15 January 2019. Had he pursued his right to taxation on time, it was likely that he would have learned of the higher rate in the ordinary course of taxation. His attempts to persuade Abdullah J that there were special circumstances supporting his application for an order for taxation of the 26 October 2017 invoice were unsuccessful and consequently his application for that relief was dismissed. Abdullah J observed that the fact that the trial of the Consolidated Suits had been underway at that point in time was not sufficient reason not to proceed as required by the law, and that any negotiations or alleged lack of particularisation in the 26 October 2017 invoice similarly did not constitute special circumstances under s 122 of the LPA. He did not file any appeal against that decision. For completeness, we note that at para 6 of his affidavit of 20 March 2019 filed for OS 67/19, the appellant stated that he was under the impression that the respondent would apply for taxation. We are of the view that as the respondent had repeatedly informed him of his right to pursue taxation and he also had access to advice from new solicitors, this was a feeble excuse which he raised for the first time then.

Furthermore, the appellant was not merely seeking a reduction of the amount claimed under the 26 October 2017 invoice by the difference of $70 per hour for Mr Eng multiplied by the number of hours he was engaged in. The appellant was using that difference to dispute the entire invoice. His counsel informed us that he was prepared to proceed with taxation. However, bearing in mind his earlier failure to seek taxation and the dismissal of his application in OS 67/19 for an order of taxation and the absence of an appeal against that dismissal, we are of the view that it was too late for the appellant to now seek taxation. Also, he was not entitled to use the higher rate as a reason to stave off the SD. That said, we leave it to the respondent to consider whether it wishes to waive its claim for the difference in respect of the 26 October 2017 invoice as it did not notify the appellant of the increase.

Cross-demand

We now come to the appellant’s arguments on an alleged cross-demand. The appellant asserts that he has a cross-demand that exceeds the amount claimed in the SD because the respondent was not entitled to set off funds it held in its client account against the sum claimed in the 26 October 2017 invoice. Clause 12 of the Letter of Engagement provided that:

For completeness, we note that apart from cl 12 of the Letter of Engagement, cl 6.2 of the respondent’s General Terms and Conditions provided that:

The appellant contends that as a result of cl 12 of the Letter of Engagement, the monies held on behalf of the appellant by the respondent should only have been set off against the respondent’s final invoice in the matter, which was the 13 March 2018 invoice, and the utilisation of the funds held by the respondent to set off against part of the penultimate invoice, ie, the 26 October 2017 invoice, was therefore a breach of cl 12 of the Letter of Engagement. Since the total amount of the set-off was $176,025.30, his cross-demand exceeded the debt of $106,133.52 under the SD, and the SD should be set aside.

The Judge relied on a statement made from the bar by Mr Goh Keng Huang (“Mr Goh”), who appeared on behalf of the respondent. Mr Goh stated that there had been an agreement reached during a telephone conversation between the respondent and Optimus Chambers for the respondent to utilise the funds in part payment of the 26 October 2017 invoice in order to stop or reduce interest from running on that invoice. Allegedly, it was pursuant to this agreement that the deposit totalling $176,025.30 was set off against the debt arising from the 26 October 2017 invoice (see GD at [42]). The Judge reasoned that while this explanation had not been given on affidavit, he saw no reason to disregard or disbelieve it. He further observed that Mr Goh was from the entity which had issued the SD. The Judge was prepared to accept the explanation given, and rejected the appellant’s contention that he had a valid or genuine cross-demand justifying the setting aside of the SD under r 98(2)(a) BR (GD at [51]). On appeal, the appellant argues that the Judge erred in placing weight on Mr Goh’s unsubstantiated assertion, which was both hearsay evidence and evidence from the bar. The appellant contends that such an agreement had not been reached, and the dispute on this point is a triable issue which requires further evidence or arguments.

In our view, the Judge should not have relied on evidence from the bar on a disputed allegation. While Mr Goh was a member of the respondent, this did not in any way detract from the fact that his statement was a factual assertion that should properly have been made on affidavit, especially since it appears that Mr Goh was not the person on the respondent’s side who was a party to the alleged conversation. Furthermore, no mention was made of this oral conversation in any of the affidavits filed for the respondent in these proceedings or in OS 67/19. For the latter, an affidavit of 1 March 2019 from Mr Sarjit Singh Gill SC (“Mr Gill”) for the respondent alluded to a telephone discussion with Optimus Chambers on 27 March 2018 when the two invoices were sent to Optimus Chambers. However, there was no mention of any oral agreement to set off, whether in that conversation or any subsequent telephone conversation. In fairness, we note that this may be because at the time that affidavit was executed, the set-off had either not been effected or the appellant had not yet complained about it. In any event, the respondent should have asked for leave to file an affidavit on the disputed conversation if it wanted to rely on it.

Nevertheless, we make a few other points.

First, the appellant’s position is inconsistent and self-serving. He is content to take the benefit of the set-off for the 26 October 2017 invoice but yet claims the amount of the set-off separately.

Second, the appellant has suffered no loss and he in fact benefitted from the set-off being applied to the sum claimed under the 26 October 2017 invoice as this meant that the interest that accrued on this invoice was lower.

In the circumstances, we are of the view that he does not have a bona fide cross-demand.

Implied term

Following the decision in Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal [2013] 4 SLR 193 at [101], the court should adopt a three-step process in determining whether a term should be implied:

Furthermore, it is not necessary to imply such a term to ensure business efficacy between the parties. At most, one could say that the respondent is obliged to provide the breakdown upon timely request by the appellant but not in the absence of such a request. Here, the appellant did not ask for the breakdown until recently when his right to seek taxation had long ceased.

Accordingly, the appellant’s argument on the implied term fails.

Prejudice

Finally, we agree that there is no undue prejudice to the respondent if we were to grant the appellant an extension of time to file the Application. However, that is only one factor which is much less important than the reason for the delay and the lack of merit in his arguments to set aside the SD.

Summary on Issue 2

In the circumstances, there was no good reason to allow the appellant an extension of time to file the Application late. The grounds on which he attempts to set aside the SD are in any event unmeritorious. His application for an extension of time is refused.

Conclusion

The BR provides detailed provisions to ensure that a statutory demand is brought to the notice of a debtor. The Application is short on merit and undeserving of sympathy for various reasons.

Secondly, instead of pursuing his right to seek taxation at the appropriate time, he chose to sit on his right. Thereafter, when it was too late for him to do so, he sought an order to tax the 26 October 2017 invoice but failed. He then attempted to challenge the amount claimed with arguments which reflected his lack of bona fides.

For the avoidance of doubt, the respondent may proceed with B 2786 filed on 29 October 2019 and need not file a fresh bankruptcy application.

Annex A: Chronology of Events