Ho Seow Wan v Morgan Lewis Stamford LLC (formerly known as Stamford Law Corporation) [2018] SGHC 31

Introduction

This matter threw into sharp relief the considerations for whether a fee agreement entered into between a solicitor and his or her client, which provided for an agreement as to the solicitor’s charge-out rates (as opposed to a lump-sum fee), could ever in principle constitute a “contentious business agreement” (“CBA”) within the meaning of s 111 of the Legal Profession Act (Cap 161, 2009 Rev Ed) (“the LPA”), and if so, what terms ought to be included for such an agreement to be considered sufficiently specific for the purposes of qualifying as a CBA.

Mr Ho has since filed an appeal against my decision. I now furnish the grounds for my decision.

Background

Mr Ho’s engagement of legal services

I begin with a survey of the lawyers and law firms whose services Mr Ho had engaged in relation to his dispute with his two brothers, Mr Ho Poey Wee and Mr Ho Seow Ban, and Guan Ho Construction Co (Pte) Ltd (“Guan Ho Construction”).

In or around February 2012, Mr Ho engaged Ms Lynette Chew Mei Lin (“Ms Chew”) and Mr Tan Saey Chong, Gadriel (“Mr Gadriel Tan”), who were practising in INCA Law LLC (“INCA Law”) at that time, to advise and represent him.

In June 2013, Ms Chew and Mr Gadriel Tan left INCA Law and joined SLC. Mr Ho then engaged SLC to act on his behalf in the Suits. SLC filed notices of change of solicitor in the Suits on 5 June 2013. Pursuant to the change of solicitors, SLC sent Mr Ho the Engagement Letters, both dated 2 August 2013, which both incorporate SLC’s standard terms and conditions of engagement.

The material portions of the Suit 195 Engagement Letter state thus:

The Suit 108 Engagement Letter is identical to the Suit 195 Engagement Letter in all material aspects except for para 4, which describes the scope of services covered under the agreement. Paragraph 4 reads as follows:

I pause at this juncture to note that while para 4(f) of the Suit 195 Engagement Letter, which concerned advising on and attending to all interlocutory applications arising from Suit 195, was excluded from the Suit 108 Engagement Letter, it was accepted during the hearing before me that both of the Engagement Letters are “[o]peratively … the same” and that their “essential terms are the same”. Therefore, I did not ascribe any weight to that omission, and proceeded on the assumption that the Suit 108 Engagement Letter also contained that particular term.

Finally, SLC’s standard terms and conditions of engagement, which are incorporated within both of the Engagement Letters, further provide as follows:

Mr Ho confirmed his acceptance of the terms and conditions of both of the Engagement Letters by signing and returning each of the enclosed acceptances and warrants to act.

In August 2014, Mr Tan Chuan Thye SC (“Mr Tan SC”), who was the head of SLC’s dispute resolution at that time, took charge of the conduct of the Suits.

On 1 April 2015, SLC underwent a change in name, and has since been known as MLS.

On 6 November 2015, Mr Ho terminated MLS’s services and transferred conduct of the Suits to Rajah & Tann Singapore LLP (“R&T”). Mr Tan SC, who had left MLS and joined R&T by that time, once again took charge of the conduct of the Suits.

The conduct of the Suits

I now turn to provide a brief summary of the key milestones in the conduct of the Suits.

On 9 March 2012, Mr Ho commenced Suit 195 against his brothers and Guan Ho Construction. Suit 195 was a minority oppression claim brought on the basis of acts of oppression by Mr Ho’s brothers during their management of Guan Ho Construction, which included the removal of Mr Ho as an executive director of Guan Ho Construction in February 2012. The relief sought by Mr Ho was for, among other things, an order that Guan Ho Construction be wound up or for his brothers to buy out his shares in Guan Ho Construction.

On 12 March 2012, Mr Ho filed an urgent ex parte application vide Summons No 1228 of 2012 for interim injunctions against his brothers and Guan Ho Construction, pending final judgment of the matter. On 13 March and 1 August 2012, Mr Ho obtained interim prohibitory and reinstatement injunctions against his brothers and Guan Ho Construction in relation to Mr Ho’s role and powers in the management of Guan Ho Construction, and his role and conduct as project director in two of Guan Ho Construction’s construction projects.

Subsequently, Mr Ho’s brothers acted in breach of the interim injunctions previously granted. Therefore, on 18 January 2013, Mr Ho sought leave vide Summons No 413 of 2013 to apply for an order of committal against his brothers.

On 5 February 2013, Guan Ho Construction commenced Suit 108 against Mr Ho on the basis of the alleged breach of his fiduciary, statutory, common law, and/or employment duties owed towards Guan Ho Construction as a director, and/or Mr Ho’s negligence.

On 21 October 2013, having successfully obtained leave to commence committal proceedings, Mr Ho proceeded to apply vide Summons No 5518 of 2013 for orders of committal against his brothers. The committal hearing was fixed to be heard before me in May 2015.

In August 2014, Guan Ho Construction successfully applied for Suit 108 to be tried by the same trial judge as that for Suit 195 and for, subject to the decision of the trial judge presiding over Suit 195, Suit 108 to be heard either together with or after Suit 195, which had been fixed to be heard in July 2015.

On 2 December 2014, Mr Ho commenced Suit 1267 against his brothers and Guan Ho Construction, in respect of further acts of oppression by his brothers’ management of Guan Ho Construction after the commencement of Suit 195.

On 30 January 2015, Mr Ho’s brothers successfully applied to consolidate the committal hearing with the trial of Suit 195. Mr Ho appealed against the assistant registrar’s decision to grant the consolidation. I allowed Mr Ho’s appeal. The committal hearing thus remained fixed to be heard before me in May 2015.

On 17 February 2015, Mr Ho successfully applied to consolidate Suit 1267 with Suit 195.

On 9 December 2015, R&T informed MLS that a settlement had been reached for the Suits.

The bills of costs in relation to the Suits

On 20 October 2016, Advocatus wrote to inform MLS that Mr Ho felt that he had been grossly overcharged in respect of the conduct of the Suits. On 24 October 2016, MLS replied, denying any allegations of gross overcharging.

The taxation application

(a) 21 of the fully paid bills of costs issued by both SLC and MLS from 31 August 2013 to 8 September 2015, which comprised all of the fully paid bills of costs except Bill No B14436 dated 29 November 2013;

(b) The INCA Law bills of costs, ie, the seven bills of costs issued by INCA Law from 21 March 2012 to 15 May 2013;

(c) The Opus 2 bills of costs, ie, the four bills of costs issued by Opus 2 from 11 September 2015 to 21 January 2016; and

(d) The Litigation Edge bills of costs, ie, the two bills of costs issued by Litigation Edge dated 2 December 2015.

The parties’ submissions

In response, counsel for MLS, Mr Tan Gim Hai, Adrian (“Mr Adrian Tan”), made the following arguments in his written submissions that were also dated 23 June 2017:

(a) First, the bills of costs are not subject to taxation because the Engagement Letters are CBAs as defined under s 111 of the LPA, which are generally precluded under s 112(4) from being sent for taxation. The Engagement Letters not only meet the formal requirements of a CBA as stated under s 111, but are also sufficiently specific. Given that the bills of costs were issued pursuant to the Engagement Letters, Mr Ho is now time-barred under s 113(7) from re-opening the bills of costs, which he has already paid.

(b) Secondly, there are in any event no special circumstances that justify, under s 122 of the LPA, sending the bills of costs for taxation even if 12 months have not expired since the delivery of the bills. Mr Ho’s general allegations of overcharging are insufficient in themselves to constitute the “special circumstances” necessary to send the bills for taxation. Mr Ho’s specific allegations of overcharging are also not borne out by the evidence, and in any event have no rational connection to his failure to apply to have the bills of costs taxed within 12 months of their delivery, or before he had made payment.

(c) Finally, Mr Ho’s application to refer the INCA Law bills of costs, Opus 2 bills of costs and Litigation Edge bills of costs to taxation is misconceived. Given that the taxation application is brought by Mr Ho against MLS, the court has no jurisdiction to order taxation of bills of costs for services rendered by entities other than MLS. Also, the court has no power to tax bills of costs drawn up by parties other than solicitors or law corporations.

At the hearing before me, Mr Daniel responded to Mr Adrian Tan’s threshold argument that the Engagement Letters amount to CBAs by orally submitting that the Engagement Letters are not sufficiently specific to qualify as CBAs. However, Mr Daniel did not take me through his arguments in respect of the other matters covered by Mr Adrian Tan’s written submissions.

Issues to be determined

To my mind, the parties’ submissions – both written and oral – presented the following two main issues for my determination:

(a) whether the Engagement Letters qualify as CBAs within the meaning of s 111 of the LPA (“the CBA Issue”); and

(b) even if they do not qualify as CBAs, whether there are special circumstances to refer the bills of costs to taxation pursuant to s 122 of the LPA (“the Special Circumstances Issue”).

Having said that, as I have alluded to in my earlier summary of the parties’ submissions (see [37]–[39] above), Mr Daniel did not in fact address me on both issues during the hearing for this application. Rather, Mr Daniel merely made oral submissions on the CBA Issue before proceeding to make an oral application for my ruling on only the CBA Issue. Mr Daniel explained that this was a preferable course of action because if I were to find that the Engagement Letters are CBAs, Mr Ho would make a subsequent application under s 113(2) read with s 113(4) of the LPA to have the Engagement Letters declared void on the ground that the terms therein are unfair or unreasonable.

I refrained from offering any view in respect of whether, on the facts of this case, it was indeed still open to Mr Ho to make an application pursuant to s 113(2) read with s 113(4) of the LPA to declare the Engagement Letters void. However, in the interest of the efficient resolution of the taxation application, I allowed Mr Daniel’s oral application and limited myself, in disposing of the taxation application, to dealing only with the CBA Issue.

The applicable legal principles

I shall now set out the general legal principles that guided my analysis before turning to consider the specific arguments raised by the parties.

(a) the CBA is declared void by the court under s 113(4) of the LPA on the ground that the terms of the agreement are deemed to be unfair or unreasonable, following which the court may order the bill to be taxed pursuant to s 113(5); or

(b) the amount agreed under the CBA has been paid, but the client applies under s 113(7) of the LPA within 12 months of the payment being made, and special circumstances so require, for the court to reopen the CBA, order the bill to be taxed, and order the relevant amounts to be repaid to the client.

Turning then to consider the requirements that must be met in order for a fee agreement to be a CBA, it is necessary to take guidance from the language of s 111 of the LPA, which reads as follows:

From the foregoing provisions, the requirements for a CBA are that first, the agreement must be put in writing (s 111(1)), and secondly, the agreement must be signed by the client (s 111(2)): see Chancery Law Corp v Management Corporation Strata Title Plan No 1024 [2016] 4 SLR 480 (“Chancery Law”) at [25].

The third (and final) requirement for a CBA is a judge-made one, which is that there must be sufficient certainty or specificity of the terms governing the fees: Chancery Law at [25], citing Shamsudin bin Embun v P T Seah & Co [1985-1986] SLR(R) 1108 (“Shamsudin”) at [22]. The provenance of this requirement lies in the English Court of Appeal decision of Chamberlain v Boodle & King (a firm) [1982] 1 WLR 1443 (“Chamberlain”), which was referred to with approval by both George Wei J in Chancery Law (at [57]–[61]) and Chan Sek Keong JC (as he then was) in Shamsudin (at [18]–[22]).

In Chamberlain, Lord Denning MR (with whom Dunn and O’Connor LJJ agreed), in setting out the requirements that an agreement had to meet in order to constitute a CBA under s 59 of the Solicitors Act 1974 (c 47) (UK) (“the English Solicitors Act”), described the specificity requirement in the following terms (at 1445):

The guidance of Lord Denning MR is highly instructive, given that s 59 of the English Solicitors Act is in pari materia with s 111 of the LPA.

My decision

In the present case, it was common ground that the Engagement Letters were both in writing and had both been signed by Mr Ho. The crux of the disagreement thus resided in whether the terms within the Engagement Letters that govern the solicitor’s fees were sufficiently certain or specific.

Before me, Mr Daniel made, to my mind, two types of objections regarding why the Engagement Letters were not sufficiently specific to qualify as CBAs.

First, Mr Daniel’s primary submission was a blanket objection in principle against any agreement as to charge-out rates being found to be sufficiently specific to constitute CBAs (“the Broad Objection”). In this regard, Mr Daniel argued that an agreement as to charge-out rates of the solicitors handling the matter could never be considered sufficiently specific to constitute a CBA, and that a CBA had to contain an agreement as to a lump-sum fee that was to be charged for the entire matter.

Secondly, Mr Daniel appeared to submit, in the alternative, that the agreements as to the charge-out rates provided for in the Engagement Letters were on the facts not sufficiently specific to constitute CBAs (“the Narrow Objection”). To this end, Mr Daniel suggested that an agreement as to charge-out rates had to also be accompanied by an agreement as to the fixed number of hours (which would essentially make the agreement a lump-sum fee agreement) or the maximum number of hours (which would essentially make the agreement a capped lump-sum fee agreement) that will be committed by the lawyers to the matter in order to be sufficiently specific. In this case, the agreements in the Engagement Letters provided that the charge-out rates of the lawyers assigned to take charge of the conduct of the Suits were to be multiplied by the actual number of hours utilised by the respective lawyers in order to obtain an ascertainable total fee on completion of handling the matter. This, Mr Daniel argued, was insufficiently specific.

I now turn to address the CBA Issue by dealing with both objections raised, beginning first with the Broad Objection.

The Broad Objection

Having carefully considered the applicable legal provisions, the terms of the Engagement Letters, and the relevant foreign and local case precedents, I took the view that agreements as to the charge-out rates of the solicitors in charge of a matter (as opposed to lump-sum fee agreements) could, as a matter of principle, be considered agreements that are sufficiently specific to constitute CBAs. This position on the Broad Objection, to my mind, found support in both the text of s 111(1) of the LPA and some of the case precedents that the parties had brought to my attention.

Beginning first with the text of the provision in question, I agreed with Mr Adrian Tan’s submission that a plain and literal reading of the language of s 111(1) of the LPA strongly suggests that a CBA does not necessarily have to be an agreement as to a lump-sum fee, but could also include an agreement on charge-out rates. To this end, I set out once again for convenient reference the text of s 111(1) of the LPA as follows:

I make two observations about the text of s 111(1) of the LPA. First, the provision’s express reference to an agreement as to the manner of payment, and not only as to the amount of payment, suggests that it is open to solicitors and clients to agree to different modes of payment. Any suggestion that solicitors and clients are only permitted to agree to a single manner of payment, ie, by lump-sum fee, was thus clearly misconceived. Secondly, the provision expressly provides that the mode of payment adopted in the CBA could be “either by a gross sum or otherwise”. To my mind, this particular reference in the provision made it abundantly clear that Parliament had intended for CBAs within the meaning of s 111(1) to include agreements between solicitors and clients as to charge-out rates. Specifically, insofar as an agreement to pay “by a gross sum” clearly corresponds to an agreement for a lump-sum fee, an agreement to pay “by … otherwise” would therefore point towards solicitors and clients being allowed to agree on any other method of payment in a CBA, including charge-out rates.

I was also of the view that the relevant case precedents did not preclude the finding that agreements as to the charge-out rates of solicitors could be sufficiently specific to constitute CBAs. In the Chamberlain decision, Lord Denning MR, in holding that the agreement in question was not a CBA, was careful in refraining from coming to a view in this regard when he made the following remarks (at 1445):

It was thus necessary to look beyond the Chamberlain decision for more instructive guidance on this point.

Mr Daniel put forward the case of Chancery Law as a decision that offered strong support for the Broad Objection. I did not agree. In Chancery Law, the letters of engagement that the solicitors and the clients had entered into were described in the following terms (at [65]):

Wei J held that the letters of engagement were not sufficiently specific or certain to constitute CBAs under s 111 of the LPA because although they identified the charging rates of the lawyers involved, their terms were not sufficient to allow the client to make a “reasoned forecast as to what it was letting itself in for in respect of fees and disbursements; they merely set out the relevant rates of charging” (at [66]). While this particular holding might appear to be construed as a blanket disapproval of agreements as to charge-out rates ever being sufficiently specific to constitute CBAs, I did not think that there was sufficient information regarding the exact contents of the letters of engagement in Chancery Law to draw such an inference. Instead, what seemed to me to be the key principle in Chancery Law was found in the following passage (at [64]):

From this extract, it was clear that Wei J indeed did not hold that agreements as to solicitor charge-out rates could never in principle be sufficiently specific to constitute CBAs. All that was observed was that agreements as to charge-out rates had a greater risk of being found to be insufficiently certain, presumably as compared to lump-sum fee agreements.

I thus concluded from the relevant authorities surveyed that it was not contrary to any longstanding or well-established jurisprudence for me to hold that an agreement as to the solicitor’s charge-out rates could in principle be sufficiently specific to constitute a CBA.

For the sake of completeness, I turn now to address Mr Daniel’s reliance on the Law Society’s Sample Letter of Engagement at Appendix 11C of the Law Society’s Practice Management Manual. Specifically, Mr Daniel brought to my attention the first suggested para 12 of the Sample Letter of Engagement, which reads as follows:

Mr Daniel argued that it was clear that the Engagement Letters in the present case could not constitute CBAs because the relevant portions of the Engagement Letters were highly similar to this paragraph of the Sample Letter of Engagement, and hence this showed that the Engagement Letters were only meant to represent a “normal act of engagement, the fees for that engagement being subject to taxation”.

Accordingly, I concluded that the mere fact that a solicitor’s fee agreement contained an agreement as to the charge-out rates of the solicitors involved in the matter should not preclude a possible finding that the fee agreement was a CBA within the meaning of s 111 of the LPA.

The Narrow Objection

Having said all that, it was also equally clear to me that not all agreements that provided for agreements as to the charge-out rates of the solicitors in charge of the case would necessarily be considered sufficiently specific to constitute a CBA. As alluded to earlier, the key principle in this regard may be distilled from Wei J’s decision in Chancery Law. I set out once again the material passage (at [64]) for convenient reference as follows:

In other words, whether an agreement as to charge-out rates was sufficiently specific to constitute a CBA depended on whether the agreement was specified in sufficiently clear terms so that the client would be in a position to make a reasoned calculation based on the agreement as to what his legal fees would eventually be upon completion of the contentious legal matter. What was to be regarded as sufficiently clear for such purposes would naturally be an intensely fact-specific inquiry.

Applying this principle to the present facts, I found the Narrow Objection to be without merit. Contrary to Mr Daniel’s submissions, I did not think that the terms of the Engagement Letters were insufficiently specific. While it would certainly be helpful for an agreement as to charge-out rates to also specify either a fixed or a maximum number of hours to be utilised by the solicitor for the scope of work as set out in the agreement, I did not think that these terms were necessary in order for an agreement as to charge-out rates to qualify as a CBA. To my mind, it was sufficient that the Engagement Letters had specified: (a) the specific scope of the matters that were covered under the fee agreement, (b) the solicitors that were assigned to take charge of the conduct of the Suits, (c) the specific charge-out rates of each of the solicitors in charge of the matter, and (d) the fact that the charge-out rates were to be applied to the actual number of hours utilised by the respective solicitors concerned. I drew this conclusion from both an evaluation of the relevant precedents that had been brought to my attention, as well as my reading of the appropriate remedies that were available to cover instances of overcharging under agreements as to charge-out rates that were to be applied to the actual number of hours utilised.

Survey of relevant precedents regarding specificity of solicitor fee agreements

Lord Denning MR, in coming to the view that the agreement was not sufficiently specific to constitute a CBA, held thus (at 1445):

The Chamberlain decision was thus a useful example of an agreement as to charge-out rates that was insufficiently specific in two key ways. First, the agreement in Chamberlain merely provided the charge-out rates that generally applied to the partners or associates in the firm that might be assigned to the matter. In contrast, the Engagement Letters in the present case go out of the way to identify the solicitors that are assigned to take charge of the conduct of the Suits and specify the charge-out rates that corresponded to each assigned solicitor in the following manner:

Secondly, the agreement in Chamberlain merely provided the ranges of the charge-out rates that could apply to the matter in question. In contrast, the Engagement Letters in the present case, as seen in the above extract, provide clear and discrete charge-out rates for each individual lawyer, leaving no room for any doubt as to the precise charge-out rates that would apply to the conduct of the Suits. Accordingly, while the agreement in Chamberlain was rightly found to be “simply an indication of the rate of charging on which the solicitors propose to make up their bill” [emphasis added], the agreements as to charge-out rates present in the Engagement Letters were significantly more specific, and thus could constitute CBAs.

In the British Columbia Supreme Court decision of Nash v Swann [1994] BCJ No 1824 (“Nash”), the client had engaged the services of the solicitor pursuant to a letter of agreement dated 29 July 1991, which stated as follows:

There were thus four different modes of remuneration that were specified within the letter of agreement, namely, an hourly rate of C$190 for all matters except court appearances for trial, a per diem (ie, daily) rate of C$2,050 for court appearances for trial, an hourly rate of C$65 for matters handled by the secretary, and an additional lump-sum fee for the event where the solicitor was “unusually successful” (“the Unusual Success Fee”). The issue in this case was whether the letter of agreement was “unfair or unreasonable” within the meaning of s 78(9) of the Legal Profession Act, SBC 1987, c 25 (Can) (“the Canadian LPA”), such that the letter of agreement would be liable to be set aside. Whether the letter of agreement constituted a “contract for remuneration to be paid” within the meaning of s 78(1) (ie, a CBA), such that the fees were beyond taxation unless the contract was set aside as “unfair or unreasonable” under s 78(9), was strictly speaking not in issue because the impugned solicitor did not assert that the letter of agreement was a CBA (see Nash at [59] and [67]). However, Nash remained instructive because Master Brandreth-Gibbs nevertheless proceeded to conduct a general survey of the attendant legal principles in this regard and proffer his opinion as to whether the letter of agreement was a “contract for remuneration” as defined under s 78(1).

Master Brandreth-Gibbs found that the letter of agreement was not a “contract for remuneration” within the meaning of s 78(1) of the Canadian LPA. Whereas the hourly and per diem rates were not objectionable per se, Master Brandreth-Gibbs determined that it was impermissible for the solicitor’s fee agreement to include the Unusual Success Fee because the latter caused the entire fee agreement to amount to no more than “an agreement to render services at a rate to be fixed later” (Nash at [60]–[61], citing Fiddes v Cowan 34 BCLR (2d) 38 at 41 per Spencer J). This resulted in the client having “no way of estimating with any degree of certainty what her exposure in fees would ultimately be, at the time the agreement was made” (Nash at [64], citing DS Moir v Trenciansky [1989] BCJ No 564 per Shaw J).

It was clear to me that the letter of agreement in Nash was found to be insufficiently specific to amount to a CBA, not because it contained hourly or daily charge-out rates, but only because it provided for the Unusual Success Fee. In this respect, not only was the meaning of “unusual success” undefined, but the quantum of the additional fee was also unspecified. The Unusual Success Fee was thus not specified in sufficiently clear terms so that the client would be in a position to make a reasoned calculation based on the agreement as to what her legal fees would eventually be upon completion of her contentious legal matter. Given that the Engagement Letters did not contain such a fee component, they were factually distinguishable from the letter of agreement in Nash, and could be upheld as being sufficiently specific to constitute CBAs.

Next, I was also referred to the case of DM Davidson v Seltzer Vancouver Registry No J820268 (“Seltzer”), which Master Brandreth-Gibbs’ had referred to in Nash (at [64]). In Seltzer, Registrar Turriff held that an agreement whereby the lawyer would be paid a specific hourly rate did not constitute a “contract as to remuneration” because:

Although Seltzer was referred to with approval by Wei J in Chancery Law (at [63]) in the course of his discussion of the Nash decision, I harboured certain reservations about the learned registrar’s observations in Seltzer. In particular, insofar as it was suggested in Selzter, as a matter of principle, that an agreement on the number of hours that would be spent had to be reached in order for an agreement as to charge-out rates to amount to a CBA, I disagreed. In my view, it was sufficient for an agreement as to charge-out rates to contain an agreement that the charge-out rates would be applied to the actual time utilised by the solicitor. I considered such an agreement to be specified in sufficiently clear terms so that the client would be in a position to make a reasoned calculation based on the agreement as to what the legal fees would eventually be upon completion of his or her contentious legal matter. And that was indeed what the Engagement Letters in the present case had provided for (at para 6), when it was stated that the legal fees would ultimately be governed by the:

Addleshaw Goddard thus demonstrated that an agreement as to the charge-out rates of the solicitors to be applied on the actual number of hours used could be regarded as being permissibly specific even if there were clauses that permitted the alteration of the solicitors involved in the matter or of even the charge-out rate of the solicitors, as long as the client had been suitably apprised of those arrangements and there were adequate safeguards in place to protect the interests of the client. But it was unnecessary for me in the present case to endorse unreservedly the conclusion derived from Addleshaw Goddard, given that the terms of the Engagement Letters in the present case did not go quite as far as those of the engagement letters in Addleshaw Goddard. Nevertheless, Addleshaw Goddard was undoubtedly helpful in showing, by way of a more extreme example, that the terms in the Engagement Letters in the present case were certainly not quite as uncertain as Mr Daniel was attempting to make them out to be.

From the foregoing survey of the relevant precedents, it was clear that none of the authorities supported Mr Daniel’s suggestion that an agreement as to charge-out rates had to be accompanied by either the fixed or the maximum number of hours that the solicitors involved would spend on the matter in order to be sufficiently specific. At the end of the day, the only relevant inquiry was whether the fee agreement was specified in sufficiently clear terms so that the client would be in a position to make a reasoned calculation based on the agreement as to what his legal fees would eventually be upon completion of the contentious legal matter. In that regard, I had no doubt that the agreements as to the charge-out rates of SLC’s solicitors in the Engagement Letters that were to be applied to the actual hours spent on the agreed scope of work by the respective solicitors were sufficiently specific to constitute CBAs.

Remedies for overcharging under agreements as to charge-out rates that were to be applied to the actual number of hours utilised

My finding that an agreement as to charge-out rates was sufficiently specific, especially when the agreement also provided that that charge-out rates were to be applied to the actual number of hours utilised by the solicitors, was also fortified by my reading of the appropriate remedies that an aggrieved client could turn to in the event of overcharging carried out under such agreements. Mr Daniel contended that such agreements as to charge-out rates ought not to be precluded from taxation by dint of being considered sufficiently specific to constitute CBAs, because this would deprive clients like Mr Ho of their fundamental right to have their fees taxed, and they would be left with very limited recourse. While there was indeed a veneer of attractiveness to Mr Daniel’s submission, I did not think that it was a principled reason to find that agreements as to charge-out rates cannot be considered CBAs, especially when the agreements also specified that the charge-out rates were to be applied to the actual number of hours utilised.

In the first place, I recognised that it was entirely possible for overcharging to occur even when there had been an agreement as to the solicitor’s charge-out rate. As usefully observed by Chan Sek Keong CJ (delivering the judgment of the Court of Three Judges) in the decision of Law Society of Singapore v Andre Ravindran Saravanapavan Arul [2011] 4 SLR 1184 (“Andre Arul”) at [30]:

I would supplement Chan CJ’s observations in Andre Arul by adding that overcharging by inflation of the number of hours billed for would typically occur when: (a) the solicitor had dishonestly set out to cheat the client by falsifying the actual number of hours used, or (b) the solicitor had not set out to cheat the client, but had failed to keep proper records of the actual number of hours used and subsequently proceeded to specify or estimate a number of hours larger than the actual number of hours utilised. Also, overcharging might also occur when the actual number of hours utilised had in fact been honestly recorded and presented in the bill, but the solicitor had enlarged the size of the total bill by: (a) deliberately engaging in work unnecessary to achieve the purpose of the retainer (as pointed out by Chan CJ), or (b) taking an unnecessarily long time for the work by failing to act with reasonable due diligence in order to slow down and increase the actual time taken for the work. These were but some examples of factual overcharging that could occur if the bills were based on the actual number of hours utilised, but the solicitor had not been diligent or honest.

One might thus argue that agreements as to charge-out rates ought not to be construed as CBAs because taxation would be precluded by virtue of s 112(4) of the LPA, and this would seriously prejudice clients in instances of overcharging. I acknowledged that a client’s right under s 120 of the LPA to refer his solicitor’s bills to taxation is indeed “a powerful right” because it is “the only judicial process designed specifically to assess and fix the reasonable fees which a solicitor is entitled to charge a client”: Kosui Singapore Pte Ltd v Thangavelu [2015] 5 SLR 722 (“Thangavelu”) at [56]. However, I was similarly mindful of the fact that a client’s prima facie right to have his fees taxed under s 120 was never meant to be absolute, and that one clear, statutorily-defined way in which this right may be given up is if the client enters into a CBA under s 111: Thangavelu at [59].

Also, insofar as it was suggested that taxation is “the client’s only protection against overcharging” [emphasis added] (Thangavelu at [56]), I would disagree. It is true that s 113(1) of the LPA precludes any party to the fee agreement from bringing or instituting any action or suit upon the fee agreement. However, the client who is a victim of overcharging is not completely without recourse. Indeed, “[t]he fact that no action may be maintained in respect of a contentious business agreement … essentially means that all such agreements will have to survive the scrutiny of the court and it reflects the particular jealousy with which the court regards work done in court”: Tan Yock Lin, The Law of Advocates and Solicitors in Singapore and West Malaysia (Butterworths Asia, 2nd Ed, 1998) at p 691, cited in Wong Foong Chai v Lin Kuo Hao [2005] 3 SLR(R) 74 at [29] per Andrew Phang Boon Leong JC (as he then was).

It might be contended that where there was an agreement as to charge-out rates that were to be applied to the actual number of hours utilised, it would not be open to the court to declare the fee agreement void under s 113(4) of the LPA when the solicitor has been accused of overcharging (using the methods stated at [81] above) because the “terms” of this fee agreement per se were not in fact unfair or unreasonable. I disagreed for the following two reasons:

(a) First, “reasonableness” in the context of s 113(4) has been defined as being “not excessive in relation to the amount of work done, taking into account the nature of the work, the duration of his [or her] work, the standing of the solicitor concerned, and also the range of fees payable in a High Court action” (Shamsudin at [28] and [33]). From the foregoing definition, it seemed clear to me that the instances of overcharging described earlier (at [81] above) were precisely the type of misconduct that fell squarely within the ambit of s 113(4). Any overcharging by inflating the actual number of hours utilised or engaging in unnecessary work or slowing down the work to increase the actual number of hours utilised would thus fall afoul of the “reasonableness” requirement under s 113(4).

(b) Secondly, “the terms of the agreement” as provided for under s 113(4) of the LPA ought to be read broadly when the fee agreement concerned was an agreement as to charge-out rates, so as to encompass a review of how the solicitor had in fact utilised his time on the agreed scope of work to be done by him. This was because s 113(4) was clearly meant to be read in concert with s 113(2), which provides that the court may examine and determine every “question respecting the validity or effect of the agreement” [emphasis added]. Hence, considerations of the effect of an agreement as to charge-out rates that were to be applied to the actual number of hours utilised should, in turn, naturally encompass considerations of how the actual number of hours utilised were arrived at by the solicitor based on the agreed scope of work.

Having said that, even if the aggrieved client has paid the amount under the fee agreement, he or she would still not be without further recourse. The next option open to the aggrieved client would be for him or her to apply pursuant to s 113(7) of the LPA, within 12 months after making payment under the fee agreement, for the court to reopen the fee agreement, order the fees to be taxed, and order the amount that has been paid to be repaid to the client, provided he or she is able to prove that there are “special circumstances” within the meaning of s 113(7). In respect of what kind of circumstances would be considered sufficiently “special” to justify reopening the fee agreement and sending it for taxation, it is well established that there is no rigid rule, and it is for the court to determine on the facts of each case whether there are special circumstances that make it right to reopen the fee agreement: Wee Harry Lee v Haw Par Brothers International Ltd [1979-1980] SLR(R) 603 at [15], cited in Thangavelu at [61] and Sports Connection Pte Ltd v Asia Law Corp and another [2010] 4 SLR 590 at [31] (in the context of defining what kind of circumstances are sufficiently special to justify taxation of a solicitor’s bill under s 122 of the LPA). I would also note at this point that given that a disciplinary committee’s finding that the solicitor had in fact overcharged has been regarded as one of the circumstances that satisfies the “special circumstances” requirement (Thangavelu at [61(b)], citing Ho Cheng Lay v Low Yong Sen [2009] 3 SLR(R) 206 at [5]), it would to my mind be prudent for the aggrieved client to, alongside the s 113(7) application, lodge a complaint with the Law Society of Singapore regarding alleged overcharging by the solicitor in question in breach of rules 17(7) and 17(8) of the Legal Profession (Professional Conduct Rules) 2015 (S 706/2015).

In the final analysis, I found this contention by Mr Daniel on behalf of Mr Ho – that the risk of overcharging should preclude me from construing an agreement on a charge-out rate to be applied to the actual hours utilised for the agreed scope of work as a CBA within the meaning of s 111 of the LPA – to be a specious one. The various options that an aggrieved client could avail himself or herself of in the face of an incident of overcharging by his or her solicitor showed that there were, in my view, sufficient safeguards against overcharging for agreements as to charge-out rates to be applied on the actual number of hours utilised by the solicitor on the scope of work as agreed. This was thus another ground on which I rejected the Narrow Objection advanced by Mr Daniel.

Conclusion