Arbiters Inc Law Corp v Arokiasamy Steven Joseph (in his personal capacity and in his capacity as administrator of the estate of Salvin Foster Steven, the deceased) and another [2024] SGHC 26

In this application, the applicant, a law corporation, is suing the respondents, Arokiasamy Steven Joseph and his wife, Tan Kin Tee who were the first and second plaintiffs in Suit 833 of 2020 (“the plaintiffs”), for payment of the applicant’s legal fees. Mr Anil Balchandani was engaged by the plaintiffs to sue two doctors and the Institute of Mental Health (“IMH”) (collectively “the defendants”) for damages for an alleged breach of duty and negligence that led to the plaintiffs’ son, “SFS” committing suicide. The action was commenced by Mr Balchandani on 2 September 2020 on behalf of both plaintiffs. Mr Vijay Rai submitted that the applicant was subsequently instructed in November 2020 to assist Mr Balchandani.

The plaintiffs thus signed a letter of engagement on 25 November 2020 for the applicant to represent them in this action. Mr Rai submitted that “Subsequently, due to certain matters which arose that are confidential and which are subject to solicitor and client privilege, the [plaintiffs] decided that it would be prudent for them to be separately represented.” The plaintiffs have not claimed privilege. But Mr Rai submitted that the first plaintiff signed a fresh letter of engagement on 8 April 2021 whereby he would be represented by the applicant, and the second plaintiff remained represented by Mr Balchandani.

The action was fixed for trial to begin on 12 January 2023. On the first day of trial, Mr Rai applied for leave to file the affidavit of his client’s expert witness, Prof Eleni Palizidou (“Prof Eleni”), and for her to testify from London by video link. Mr Jansen Aw and Ms Kuah Boon Theng SC (“Ms Kuah”), counsel for the first and third defendants, Dr Lee Boon Chuan Nelson and the IMH, respectively, objected to Mr Rai’s application. The second defendant, Dr Gomathinayagam Kandasami was no longer involved because the plaintiffs had discontinued their claim against him.

Ms Kuah’s objection was that the trial was commencing that morning, so the plaintiffs ought not be permitted to file an affidavit of expert opinion, not so much at the last minute before the trial, but worse, at the first minute of trial. She reminded Mr Rai that at a pre-trial conference before this court on 10 October 2022, Mr Rai applied to have an expert, Prof Eleni, testify at the trial. Counsel argued that Prof Eleni is an expert psycho-pharmacologist who will testify that the drugs prescribed to SFS were wrong or inappropriate. At that time, the trial date (12 January 2023) had already been fixed, and the list of witnesses and their affidavits of evidence filed. Mr Rai submitted that he was unable to engage Prof Eleni because she was suffering from cancer and undergoing chemotherapy. Ms Kuah objected to Mr Rai’s application, but I had allowed Mr Rai’s application on the condition that he files Prof Eleni’s affidavit by 25 October 2022, and I deferred the question of Prof Eleni testifying by video link.

It transpired that her affidavit was not filed on 25 October 2022 as directed, and on 10 November 2022, Ms Kuah enquired of Mr Rai whether Prof Eleni was still to be giving evidence at trial. There was no indication from Mr Rai until the trial commenced on 12 January 2023 when Mr Rai made a fresh application to file Prof Eleni’s affidavit. Ms Kuah opposed the application on the ground that a material affidavit should not be allowed at the start of the trial when the witness disobeyed the court’s direction to file it months before the trial. Nonetheless, I allowed Mr Rai’s application because from the issues raised in the pleadings, without expert evidence, the plaintiffs were not likely to prove an important part of their case, even assuming that they were able to prove all the crucial facts. I thus adjourned the trial to 11 September 2023.

On 2 August 2023, Mr Rai filed an application “to record a settlement”. But this was not a record of settlement of the usual kind or in the usual course. It transpired that Mr Balchandani and Mr Rai had been discharged by their clients on 26 July 2023. Leave is required from the court for a lawyer to be discharged, especially when nearing the trial. The litigants may not know the procedure, but the lawyers ought to know and apply for leave to be discharged. The plaintiffs then contacted the first and third defendants themselves to explore a settlement and secured a settlement without admission of liability. In such circumstances, the plaintiffs (having discharged their lawyers) would have to attend court with the defendants’ lawyers to record the settlement.

The applicant thus applied by this OA 1008 of 2023 for a declaration that the letter of engagement dated 25 November 2020 signed by the plaintiffs and a further one signed on 8 April 2021 by the first plaintiff were “valid and binding contentious business agreement[s]”. On the strength of the 25 November 2020 letter of engagement, Mr Rai now asks that the two plaintiffs pay the applicant $85,072.28 (less $56,065.60 that had already been paid).

The applicant is claiming a further sum of $341,410.75 from the first plaintiff on the strength of the 8 April 2021 letter of engagement. The applicant is also asking that the plaintiffs pay £12,300 as the fees due to Prof Eleni. Alternatively, Mr Rai says that the applicant prays for the bills to be taxed, and he is happy to leave it to this court to fix the fees payable. Mr Paul Seah who now represents the plaintiffs, pro bono (without charge), asks for both bills to be taxed.

Mr Rai submits that both letters of engagement recorded that he would be the lawyer in charge of the matter and that he would be assisted by a Legal Associate. Their hourly rates were stated as $1,000 an hour for Mr Rai and $250 an hour for the Legal Associate. In both agreements, the plaintiffs were informed by clause 22 (identical in both agreements) that:

By clause 17 (identical in both agreements) it was stipulated that the applicant proposes to “collect $1,500 every month to account” which may vary according to work done and time expended. A total of $56,065.60 had been paid to the applicant, and $10,588.20 to Mr Balchandani. The applicant, by this application, claims a balance of fees and disbursements due from the plaintiffs amounting to $29,006.68 (under the 25 November 2020 letter of engagement), and $341,410.75 from the first plaintiff (under the 8 April 2021 letter of engagement). In relation to the former, professional fees of $36,000 have been paid, and $22,562.50 remain outstanding, with the rest being disbursements. In relation to the latter, $340,437.50 out of the sum of $341,410.75 is based on 224.65(sic) hours for Mr Rai and 463.15 hours for the Legal Associate. The total professional fees claimed by the applicant is $399,000 ($340,437.50 + $22,562.50 + $36,000), not including disbursements and fees to the experts.

I shall deal, first, with Mr Rai’s argument that the two letters of engagements amount to “contentious business agreements” under s 111(1) of the Legal Profession Act 1966 (2020 Rev Ed) (“LPA”), which provides as follows:

Mr Rai therefore argues that the plaintiffs’ agreement to pay him his hourly rate of $1,000 and his Legal Associate’s rate of $250 an hour is not subject to taxation, effectively compelling them to pay the amount claimed by the applicant. I agree with Mr Seah that the two letters of engagement are not contentious business agreements. A lawyer can pad a letter of engagement with many clauses that may be useful and helpful, but the omission of crucial terms or the inclusion of contradictory or vague terms adulterates the agreement. A contentious business agreement must allow the client and his lawyer both to know the precise terms as to how much the legal fees will be at the end of the contentious business. That means that what the end means must be clearly specified. And more importantly, merely agreeing to the lawyer’s hourly rate without more is not enough to prevent the bill from being taxed. Indeed, if that were so, most bills would not be taxed because many lawyers in recent times will have agreed their hourly rates with their clients.

The purpose of s 111 of the LPA is to allow the lawyer and his client in a contentious business matter, whether by litigation or arbitration, or even just negotiation, to find a start and an end to the business in question, and then agree on the fee payable. That fee may be determined outright as, say, $300,000 or be determined by a formula such as a rate of $1,000 an hour.

But in this case, the letters of engagement in the present case both estimated the “total professional fees exclusive of disbursements” to be $150,000. That estimate is way off mark to enable the letter of engagement to be of any use as a contentious business agreement. No advice was given as to what sort of disbursements are needed. At the time, the critical expert was not engaged, let alone the determination of her fees. The way clause 22 was written may give the clients the impression that the trial would only last a day or two. And the statement that “the total professional fees” may or may not be a reference to a two-day trial. There is no provision as to what happens when the trial exceeds two days. In the face of such uncertainty the client must be entitled to have his bill taxed. The applicant is therefore not entitled to the fees it claims without taxation.

Section 113(2) of the LPA provides that the High Court is entitled to examine the validity and effect of such contentious business agreements, and is empowered to enforce or set it aside. The court may order that the fees and disbursements be taxed. For the reasons above, I am of the view that the letters of engagement relied upon by the applicant shall not be enforced as contentious business agreements. It remains as to how the applicant’s fees (and that of Mr Balchandani’s) are to be determined.

Given the unusual circumstances of this case, the fairest way to proceed is to consider what a reasonable lawyer in the positions of Mr Rai and Mr Balchandani would have done, and the fees that a reasonable lawyer would have charged. In this regard, we should start with the cause of action and the defence. Although the merits of the action had not been ventilated at trial, the pleadings are helpful in determining what sort of work a case like this entails.

The main case as pleaded on behalf of the plaintiffs was that the doctors and the IMH prescribed a drug (Concerto) that was inappropriate and not suitable for SFS. The second major claim was based on the allegation that the doctors and the IMH failed to note the acute suicidal tendency of SFS, and consequently, were negligent in failing to prevent his suicide. The plaintiffs had 18 witnesses of fact and one expert witness. The critical one seemed to be the psycho-pharmacologist, who Mr Rai almost did not call; and whose importance was realised when he was at the doorstep of trial. Considering the issues and the reports of the experts, but without pronouncing on the merits of their opinions, I am of the view that the issues are clear and specific. The medical question as to the suitability of the drugs given was important but neither complicated nor complex. The issues of fact as to whether the doctors and the IMH had sufficient knowledge or notice to have done more to prevent the suicide are also straightforward.

Mr Balchandani had written by way of a letter dated 19 January 2024 to explain his absence from the hearing of this application and also why the respondents required separate representation. The relevant passage of his letter reads:

This is not the same reason Mr Rai proffered in chambers on 14 August 2023 in which I had recorded in the court minutes as follows:

There is no question that Mr Rai is entitled to his fees from his client. The issue is whether he is entitled to the full amount that he is claiming. For the reasons in this judgment, I am of the view that his fees as claimed is excessive and am ordering that a sum of $60,000 inclusive of disbursements to be the fees payable. In my view, Mr Balchandani is also entitled to his fees, but given his overall contribution, I will order that his fees as between him and his client be fixed at $25,000 inclusive of disbursements. Any sums previously paid shall be taken as part payment.

The applicant is not claiming disbursements but is claiming £12,300 (or $20,541) as Prof Eleni’s unpaid fees. The professional fees of an expert witness are not part of legal fees; they are part of disbursements. That is why the solicitor in charge has to ensure that her fees are paid. He may do so by negotiating a reasonable and acceptable fee, and then getting the client to secure payment. Disbursements are subject to taxation just as the lawyers’ fees. Otherwise, there may be no redress where an expert demands an exorbitant fee. I do not think that Prof Eleni’s fees would be considered exorbitant, but I do think that her contribution, based on her report, $20,541 is excessive. She did not have to attend court, and her report mainly consisted of answering questions from counsel. I would award her $9,000.