Law Society v Leong Pek Gan: Solicitor Disciplinary Proceedings for Aiding Unlicensed Moneylending

In Law Society of Singapore v. Leong Pek Gan, the Court of Three Judges considered disciplinary proceedings against Leong Pek Gan, a solicitor, for breaches of the Legal Profession Act and Rules. The charges arose from her role in a property transaction suspected to be an unlicensed moneylending scheme. The court found Leong guilty of failing to advise on conflicts of interest, preferring a client's interest, advising to advance an illegal purpose, and failing to report a suspicious transaction. The court concluded that due cause for disciplinary action was established.

1. Case Overview

1.1 Court

Court of Three Judges of the republic of singapore

1.2 Outcome

Due cause for disciplinary action against the Respondent has been shown inasmuch as all the charges preferred against her have been proved beyond reasonable doubt.

1.3 Case Type

Regulatory

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore CTJ: Leong Pek Gan faces disciplinary action for professional misconduct in facilitating an unlicensed moneylending scheme.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
The Law Society of SingaporeApplicantStatutory BoardSuccessfulWon
Invest Ho Properties Pte. Ltd.OtherCorporation
Vimala Devi d/o SelvaduraiOtherIndividual
LEONG PEK GANRespondentIndividualUnsuccessfulLost
Benson Ho Soo FongOtherIndividual

3. Judges

Judge NameTitleDelivered Judgment
Chao Hick TinJudge of AppealNo
Andrew Phang Boon LeongJudge of AppealYes
Judith PrakashJudge of AppealNo

4. Counsels

Counsel NameOrganization
Dhillon Dinesh SinghAllen & Gledhill LLP
Felicia Tan May LianAllen & Gledhill LLP
Josephine LowMichael Khoo & Partners
Chiok Beng Piow AndyMichael Khoo & Partners
Michael Khoo, SCMichael Khoo & Partners

4. Facts

  1. The Respondent acted for both the Vendors and Invest-Ho in a property transaction.
  2. The transaction was structured as a sale and purchase with an option to purchase.
  3. The option fee was $250,000, and the purchase price was $651,000, significantly below market value.
  4. The Vendors granted Invest-Ho a power of attorney with broad powers.
  5. The Respondent lodged a caveat on the property before the Vendors received the option fee.
  6. The Vendors claimed the transaction was a loan, while Invest-Ho claimed it was a genuine sale.
  7. The Disciplinary Tribunal found the Respondent had reasonable grounds to believe the transaction involved unlicensed moneylending.

5. Formal Citations

  1. Law Society of Singapore v Leong Pek Gan, Originating Summons No 4 of 2015, [2016] SGHC 165

6. Timeline

DateEvent
Ho instructed the Respondent to act in the matter via email.
Vendors visited the Respondent’s office and executed the option to purchase and the power of attorney.
Vendors sent Ho a softcopy of the Option.
Respondent informed Ho she would lodge the POA and sought instructions on lodging a caveat.
Respondent lodged a caveat on the Property in favor of Invest-Ho.
Vendors collected a cheque for the option fee from Ho and issued a cheque to Ho.
Ho sent a text message regarding the exercise of the Option to Purchase.
Ho informed the Respondent of his intention to instruct another law firm.
Complainant sent Ho a text message asking about “my loan with you”.
Invest-Ho exercised the Option.
Vendors discharged the Respondent from acting as their solicitor.
A deed revoking the POA was filed in the High Court.
Parties entered into a consent judgment.
Complainant lodged a police report against Ho and the Respondent.
Respondent was informed that police would not take further action.
Vendors' application to set aside the Consent Judgment was dismissed.
Judgment reserved.
Judgment date.

7. Legal Issues

  1. Breach of Professional Conduct
    • Outcome: The court found the Respondent guilty of breaching professional conduct rules.
    • Category: Substantive
    • Sub-Issues:
      • Failure to advise on conflict of interest
      • Preferring interests of one client over another
      • Providing advice to advance an illegal purpose
      • Failure to report suspicious transaction
  2. Conflict of Interest
    • Outcome: The court found that the Respondent failed to advise the Vendors of the potential conflict of interests.
    • Category: Substantive
    • Sub-Issues:
      • Acting for multiple parties with diverse interests
      • Failure to obtain informed consent
  3. Unlicensed Moneylending
    • Outcome: The court found that the Respondent knew or had reasonable grounds to believe that the transaction involved unlicensed moneylending.
    • Category: Substantive
    • Sub-Issues:
      • Transaction disguised as sale and purchase
      • High interest rates
      • Unusual power of attorney terms
  4. Suspicious Transaction Reporting
    • Outcome: The court found that the Respondent failed to report a transaction which she knew or had reasonable grounds to suspect involved unlicensed moneylending.
    • Category: Substantive
    • Sub-Issues:
      • Failure to report suspicious activity
      • Reasonable grounds to suspect criminal conduct

8. Remedies Sought

  1. Disciplinary Action
  2. Sanctions

9. Cause of Actions

  • Breach of Professional Conduct
  • Failure to Advise on Conflict of Interest
  • Facilitating Illegal Moneylending
  • Failure to Report Suspicious Transaction

10. Practice Areas

  • Professional Responsibility
  • Regulatory Law

11. Industries

  • Legal Services
  • Real Estate

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
The Law Society of Singapore v Leong Pek GanDisciplinary TribunalYes[2015] SGDT 4SingaporeReports the Disciplinary Tribunal’s decision that cause of sufficient gravity existed for disciplinary action.
Lie Hendri Rusli v Wong Tan & Molly Lim (a firm)Singapore High CourtYes[2004] 4 SLR(R) 594SingaporeCited for the principle that prudent solicitors do not usually act for both vendor and purchaser.
Wong Keng Leong Rayney v Law Society of SingaporeSingapore High CourtYes[2006] 4 SLR(R) 934SingaporeCited to support that the Law Society’s practice directions set standards of professional conduct.
Law Society of Singapore v Uthayasurian SidambaramCourt of Three JudgesYes[2009] 4 SLR(R) 674SingaporeCited for the principle that a solicitor’s duty is to act in the client's best interests.
Law Society of Singapore v Tan Phuay KhiangCourt of Three JudgesYes[2007] 3 SLR(R) 477SingaporeCited for the principle that a solicitor has a duty to explain the ramifications of legal documentation.
Mahidon Nichiar bte Mohd Ali and others v Dawood Sultan KamaldinSingapore Court of AppealYes[2015] 5 SLR 62SingaporeCited for the importance of a solicitor keeping contemporaneous attendance notes.
Tan Chong Keng v Lim Bak Keng VincentSingapore Court of AppealYes[1985–1986] SLR(R) 496SingaporeCited to distinguish the proposition that a cheque is deemed paid on the date of tender.
Lim Beng Cheng v Lim Ngee SingSingapore High CourtYes[2016] 1 SLR 524SingaporeCited for the principle that a transaction must be a loan to attract the operation of the Moneylenders Act.
Chow Yoong Hong v Choong Fah Rubber ManufactoryPrivy CouncilYes[1962] AC 209Federation of MalayaCited for the principle that a transaction must be a loan to attract the operation of the Moneylenders Act.
Nissho Iwai International (Singapore) Pte Ltd v Kohinoor Impex Pte Ltd and anotherSingapore High CourtYes[1995] 2 SLR(R) 170SingaporeCited for the principle that a transaction must be a loan to attract the operation of the Moneylenders Act.
City Hardware Pte Ltd v Kenrich Electronics Pte LtdSingapore High CourtYes[2005] 1 SLR(R) 733SingaporeCited for the principle that what constitutes lending must remain a question of fact.
Donald McArthy Trading Pte Ltd and others v Pankaj s/o Dhirajlal (trading as TopBottom Impex)Singapore Court of AppealYes[2007] 2 SLR(R) 321SingaporeCited for the principle that without ‘lending’, there could be no ‘moneylending’.
E C Investment Holding Pte Ltd v Ridout Residence Pte LtdSingapore Court of AppealYes[2012] 1 SLR 32SingaporeCited and distinguished from the present case, regarding whether the transaction was a genuine agreement for the sale of property.
Lim Ngee Sing v Lim Beng ChengSingapore Court of AppealYesCivil Appeal No 213 of 2015SingaporeCited for the principle that the transaction was essentially a loan in substance.
Subramaniam Dhanapakiam v GhaanthimathiSingapore High CourtYes[1991] 1 SLR(R) 164SingaporeCited for the principle that what is prohibited by the MLA was not moneylending but the business of moneylending.
Mak Chik Lun and others v Loh Kim Her and others and another actionSingapore High CourtYes[2003] 4 SLR(R) 338SingaporeCited for the principle that to prove that a person is in the business of moneylending, the easiest way is to show that the rebuttable presumption in s 3 of the MLA is applicable.
E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd and another (Orion Oil Ltd and another, interveners)Singapore High CourtYes[2011] 2 SLR 232SingaporeCited for the principle that the MLA prohibits the business of moneylending and not the act of moneylending.
Ng Kum Peng v Public ProsecutorSingapore High CourtYes[1995] 2 SLR(R) 900SingaporeCited for the principle that the transactions concerned need not be entered into by the lender with several persons.
Ang Eng Thong v Lee Kiam HongSingapore High CourtYes[1998] SGHC 64SingaporeCited for the principle that the transactions concerned need not be entered into by the lender with several persons.
Sheagar s/o T M Veloo v Belfield International (Hong Kong) LtdSingapore Court of AppealYes[2014] 3 SLR 524SingaporeCited for the principle that the rebuttable presumption under s 3 of the MLA is a very significant one.
Newton v PykeEnglandYes[1908] 25 TLR 127EnglandCited for the test that centres on whether there is a certain degree of system and continuity in the transactions concerned.
Litchfield v DreyfusEnglandYes[1906] 1 KB 584EnglandCited for the test that centres on whether the lender is one who is willing and ready to lend to all and sundry.
Pankaj s/o Dhirajlal v Donald McArthy Trading Pte Ltd and othersSingapore High CourtYes[2006] 4 SLR(R) 79SingaporeCited for the observations that underscore the extremely important point that the precise facts and context of each case are of the first importance.
Bhagwandas Naraindas v Brooks Exim Pte LtdSingapore High CourtYes[1994] 1 SLR(R) 932SingaporeCited for the principle that a solitary transaction can amount to a moneylending transaction.
Esmail Sahib v NoordinSingapore High CourtYes[1951] MLJ 98SingaporeCited for the principle that the earliest version of what is now s 3 apparently had no counterpart in the corresponding English legislation.
Ding Leng Kong v Mok Kwong YueSingapore High CourtYes[2003] 4 SLR(R) 637SingaporeCited for the principle that the reference to “a larger sum being repaid” in s 3 is not confined to repayment in money only.
Tan Kiam Peng v Public ProsecutorSingapore Court of AppealYes[2008] 1 SLR(R) 1SingaporeCited for the principle that wilful blindness was the legal equivalent of actual knowledge.
Ow Yew Beng v Public ProsecutorSingapore High CourtYes[2003] 1 SLR(R) 536SingaporeCited for the principle that having “reason to believe” involved a lower degree of conviction than certainty.
The Law Society of Singapore v Yoong Tat Choy JosephSingapore Disciplinary CommitteeYes[1993] SGDSC 9SingaporeCited for the principle that the respondent solicitor was found to have facilitated an illegal moneylending transaction.
Law Society of Singapore v Arjan Chotrani BishamCourt of Three JudgesYes[2001] 1 SLR(R) 231SingaporeCited for the principle that the standard of “unbefitting” conduct is less strict than the standard of “fraudulent or grossly improper conduct”.

13. Applicable Rules

Rule Name
Rule 28 of the Legal Profession (Professional Conduct) Rules
Rule 25(b) of the Legal Profession (Professional Conduct) Rules
Rule 22 of the Legal Profession (Professional Conduct) Rules
Rule 11G of the Legal Profession (Professional Conduct) Rules

14. Applicable Statutes

Statute NameJurisdiction
Legal Profession Act (Cap 161)Singapore
Legal Profession (Professional Conduct) Rules (Cap 161, R 1, 2010 Rev Ed)Singapore
Moneylenders Act (Cap 188, 2010 Rev Ed)Singapore
Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (Cap 65A, 2000 Rev Ed)Singapore
Criminal Procedure Code (Cap 68, 2012 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Unlicensed Moneylending
  • Power of Attorney
  • Conflict of Interest
  • Suspicious Transaction
  • Professional Misconduct
  • Conveyancing
  • Option to Purchase
  • Disciplinary Tribunal
  • Legal Profession Act
  • Legal Profession (Professional Conduct) Rules

15.2 Keywords

  • Legal Profession
  • Disciplinary Proceedings
  • Professional Conduct
  • Conflict of Interest
  • Moneylending
  • Singapore

17. Areas of Law

Area NameRelevance Score
Legal Profession Act95
Professional conduct90
Legal Ethics and Professional Responsibility90
Disciplinary Proceedings85
Money and moneylenders80
Criminal Law60
Administrative Law30

16. Subjects

  • Legal Ethics
  • Professional Responsibility
  • Regulatory Compliance
  • Conveyancing
  • Moneylending