078-NLR-NLR-V-37-In-re-TWO-PROCTORS.pdf
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In re two Proctors.
1935Present: Akbar, Poyser, and Maartensz JJ.
In re TWO PROCTORS.
In the Matter of a Rule issued against the Respondentsunder Section 19 of the Courts Ordinance.
Proctor—Settlement of case—Stipulation for payment of exceptional fee—Attempt to keep the payment secret—-Deceit and malpractice—Proctorand client—Jurisdiction of Court to inquire into question of costs—CourtsOrdinance, No. 1 of 1889, s. 19.
Two persons Karuppiah and Kaduravel of Gampola claimed the moneydue on a prize drawn in a sweep conducted by the Galle Gymkhana Club,and, as a result, an interpleader action was instituted in the DistrictCourt of Galle to decide the dispute. The case was settled by a jointmotion filed in the action in the following terms:-—“We move thatdecree be entered declaring each of the defendants entitled to a halfshare of the amount in deposit, each party to bear his own costs.”
The first and second respondents were proctors practising in Gampola,who advised Karuppiah and Kaduravel respectively, throughout theproceedings that culminated in the settlement.
The motion for the settlement contained a certificate that it wasexplained to the defendants by the two respondents, who signed it.
The first respondent stipulated for the payment to him of a fee ofRs. 6,000 and it was part of the settlement that the fee should be paidto him out of the half share of the money allotted to Kaduravel. Thesecond respondent gave an undertaking that the fee would be paid.
Held, that the terms of the settlement had been drawn up to misleadthe Court and to conceal the fact of the payment to the first respondent,and that the conduct of the respondents amounted to deceit andmalpractice within the meaning of section 19 of the Courts Ordinance.
A Court has inherent power to inquire into a question of costs asbetween proctor and client.
Mere belief in the truth of a client’s case does not necessarily implythat a proctor who suggests a settlement on less advantageous termsto his client is guilty of corrupt conduct.
T
HIS was a rule issued by the Supreme Court against the tworespondents who are proctors of the Court on three charges framed
under section 19 of the Courts Ordinance. The first count charged thefirst respondent with being guilty of malpractice, in that he acted forand on behalf of Karuppiah against Kaduravel after an inquiry at whichKaduravel and his witnesses had disclosed to the first respondent evidenceon which Kaduravel relied to prove his claim. The second count chargedboth respondents with corruptly entering into an agreement or arrange-ment for the settlement of the matter in dispute in pursuance of whichthe second respondent agreed to pay Rs. 6,000 to the first respondentfrom the half share which was to be given to Kaduravel. The thirdcount charged the respondents that in submitting to the District Judgeof Galle the motion of settlement they were guilty of deceit andmalpractice, in that the terms of the settlement were not correct whenit stated that each party was to bear his own costs.
J. E. M. Obeyesekere, Acting D. S-G. (with him Crosette Tambiah, C.C.),in support.
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R. L. Pereira, K.C. (with him H. V. Perera and Garvin), for firstrespondent.
de Zoysa, K.C. (with him S. W. Jayasuriya), for second respondent.
Cur. adv. vult.
June 24. 1935. Akbar J.—
This is an inquiry into a rule issued by this Court against the tworespondents, who are proctors of this Court on three charges framedunder section 19 of the Courts Ordinance, 1889.
The facts connected with this inquiry are long and complicated andformed the subject-matter of a District Court case in Galle (D. C. Galle,No. 31,009) and a trial before the Assize Court in Kandy (12 S. C., P. C.Gampola, No. 1,653, 1st Midland Circuit 1934). ,
The whole proceedings originated as the result of a labourer on Barana-galle estate, Dolosbage, winning the first prize in a sweep held by a racing clubcalled the Galle Gymkhana Club on the Viceroy’s Cup race run in Calcuttain December, 1931. The draw took place on December 22, 1931, and thefirst prize was won on Ticket No. F 3743 (P 1) the name being given as
K.Poochi, nom-de-plume Sarny Mariamma, and the address Baranagalleestate, Dolosbage. The sum allotted as the first prize was no less a sumthan Rs. 46,400.25, and there were two claimants to this prize, bothlabourers on the estate; namely, Periatamby Karuppiah the seconddefendant in the interpleader action, D. C. Galle, 31,009 referred to above,and Kaduravel Poochi the first defendant. Periatamby Karuppiah’sclaim was based on the allegation that he had a daughter aged 6, namedPoochi, and that he had bought the ticket in her name at one Samelis’boutique (the second accused in the Assize trial referred to above) situatednear the boundary of Baranagalle estate, about the end of November,1931. Samelis, according to Karuppiah, sold tickets as the agent ofMessrs. D. H. Ango Appu & Co., a company doing a large business atNawalapitiya and a member of the Galle Gymkhana Club to whom alist had been issued for the sale of tickets for the sweep on the Viceroy’sCup. Karuppiah was in this favourable position, namely, that he wasin possession of the sweep ticket P 1 and the registered letter P 2 con-taining a notification that the holder had drawn a horse which eventuallywon the first prize. These two exhibits had, according to Karuppiahand Zavier the tea-maker on the estate who handled the tappal or postbag, been delivered to Karuppiah in the ordinary course. Karuppiah’scase was that Samelis had tried to extort money from him by makinghim give a document marked P 6 dated January 3, 1932, by whichKaruppiah, signing his name as K. Poochi, acknowledged that he hadborrowed Rs. 5,000 from Samelis and promised to refund this sum withinterest as soon as his “ race money ’’ came into his hand. WhenKaruppiah refused to hand over the winning ticket P 2 to Samelis orgo with him to Galle to collect the money the two fell out and Karuppiah’scase was that Samelis then put forward Kaduravel, the first defendantin the civil case, as the winner of the prize, who had bought his ticket atAngo Appu’s boutique at Nawalapitiya’- and not at Samelis’ boutique,There can be no doubt at all that of the two versions Karuppiah’s is thetruth for several reasons. Kaduravel, Samelis, Lewis (partner of Ango
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Appu & Co.), Albert (clerk at Ango Appu’s), and one Dingiri Banda,who had supported Kaduravel’s claim at an inquiry held by thefirst respondent in this inquiry on January 31, 1932, and subsequentlybefore the Galle Gymkhana Club by means of affidavits (P 7, P 8, P 9,P 10, and P 11) stood their trial in April, 1934, on charges of conspiracyand cheating with regard to this very matter and were convicted andsentenced by the Assize Judge with the exception of Kaduravel andDingiri Banda who had died during the trial. These convictions do notof course prove the truth of Karuppiah’s claim, so far as these proceedingsare concerned, but there are certain circumstances which point clearlyto the correctness of the convictions at the trial. It is not necessary togive all these points in detail, but the statement of Lewis, the thirdaccused, to the Police Magistrate, the document D 4, the evidence ofRatnasamy, and the document P 29 (Ango Appu’s Galle Club list) clearlyprove that Samelis Appu’s denial that he had sold any tickets at hisboutique on behalf of Ango Appu & Co., was entirely false. This showsthat the story of Kaduravel that he had bought a ticket (represented byP 1) at Ango Appu’s boutique and had given his name as K. Poochiwas entirely a fabricated one. As a matter of fact this aspect of thisinquiry was not disputed by respondent’s counsel at this inquiry andwas in fact admitted by them at the very beginning of these proceedings.
To pass on now to the events which followed the putting up of thisfalse claim by Samelis on behalf of Kaduravel, Mr. Gascoigne, theSuperintendent of Baranagalle estate, naturally took an interest in thisdispute as it affected two labourers of his estate, and he at the request ofKaruppiah introduced him to the first respondent, who is a proctorwho had practised for nearly 35 years, a J.P., U.P.M., and also thelocal Crown Proctor. Mr. Gascoigne also introduced Kaduravel to thefirst respondent and on January 31, 1932, the first respondent publiclyinquired into the respective merits of the claims of the two labourers in thepresence of their witnesses and Mr. Gascoigne. The inquiry was a longone, but first respondent came to no conclusion ; Mr, Gascoigne’s andhis suggestions that the sum won should be divided between the twocontestants or that the matter should be arbitrated upon by a panchayetof five estate Superintendents were not accepted by Karuppiah, althoughthey were readily accepted by Kaduravel. Kaduravel had his fourwitnesses ready, viz., Samelis, Lewis, Albert, and Dingiri Banda andthere can be no doubt that their statements must have made someimpression on both first respondent and Mr. Gascoigne. Obviouslywhen men of the type of the four Sinhalese witnesses supported thelabourer Kaduravel, especially Lewis who was a partner in a big commer-cial firm at Nawalapitiya, it was bound to affect the opinion of anyone whohad to inquire into the merits of the rival claimants. To add to thisimpression created in the minds of Mr. Gascoigne and of first respondentKaruppiah rather stupidly denied his signature in P 6, probably becausehe thought at first that that was the easiest way of escaping liability,though subsequently he admitted his signature to first respondent.However that may be, first respondent took up Karuppiah’s cause andbeing paid a sum of Rs. 250 by Karuppiah for a trip to Galle went withhim to interview the Club authorities. Letter P 15 of February 8, 1932,
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'written by first respondent to Mr. Gascoigne reporting the result of thetrip shows how strongly first respondent believed in the truth of hisclient’s claim. He also pointed out in the letter that as Karuppiahhad all the credentials in support of his claim, it was for Kaduravel toprove his claim and further that he had persuaded the Gaile Club to callupon Kaduravel to prove his claim within a definite period. It wasowing to this action taken by the Club that Kaduravel and his supporterssent up affidavits P 7, P 8, P 9, P 10, and P 11 and letter P 37 of February 11.As a result the interpleader action D. C. Gaile 31,009, was institutedby the Club on April 8, 1932, the money being deposited in the custodyof the Court and the two claimants being made defendants. Althoughthe minor’s name was disclosed she was not made a party to this action,as a result of a recent decision of this Court (see Fernando v. Fernando1)and nothing hinges on this point.
First respondent took all the necessary steps to fight the case vigorouslyin the interest of his client, Karuppiah. He retained Mr. Kularatne,a proctor at Gaile, to be Karuppiah’s proctor on the record. Firstrespondent sent a draft answer and a cheque to cover the stamp feesand Mr. Kularatne’s retainer. The issues were also sent by him onJune 14, 1932, and the trial was fixed for August 26, 1932. Two listsof witnesses were filed by first respondent giving the names of no lessthan ten witnesses including Mr. Gascoigne and first respondent in thefirst list and four witnesses in the additional list including Samelis toproduce P 6, which second list was filed on August 17 just nine daysbefore the trial. Mr. Kularatne sent first respondent a copy of Kadura-vel’s witnesses, containing eight names including Mr. Gascoigne to producean estate book (in which the girl Poochi’s name was given as Karupayee)and M. D. Amith, conductor on Baranagalle estate. Kaduravel’sproctor on the record was the firm of Abeykoon & Dias Desinghe ofKandy whom Samelis had retained on behalf of Kaduravel. In a caseof this kind where the two protagonists are unsophisticated impecuniouslabourers, the question of finance for the litigation becomes an acute prob-lem and one of paramount importance and, as one would expect, theselabourers had to resort to money-lenders. Samelis cuts a sinister figure inthis case, and the result of the criminal trial and the admission of respond-ents’ counsel referred to by me above leave no room for doubt that it washe who engineered the colossal fraud of putting forward Kaduravel tolay a false claim for the prize money by suborning witnesses from AngoAppu’s firm to support the false claim. It was Samelis who retainedthe firm of Dias Desinghe to be proctors on the record and to conductthe trial, and in addition Samelis had an auxiliary legal adviser in theperson of the second respondent, who had just begun to practise atGampola and who is a distant relative of Samelis and a low-countrySinhalese gentleman from Ambalangoda who had lived in Nawala-pitiya from his boyhood. It was Samelis who got his cousinRatnaweera to finance Kaduravel on the champertous deed P 75,under which Ratnaweera agreed to lend Rs. 3,000 for the litigation,but if Kaduravel won Ratnaweera was to get half the moneyawarded. Similarly Karuppiah, through the influence of his uncle
* SO .V. L. n. S1G.
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Adakan who had a large sum in deposit with one Arumugam Pillai, amoney-lender in addition to his many other activities,’ entered into aworking' arrangement with Arumugam to finance him in the litigation.According to Karuppiah first respondent wanted an inclusive fee ofRs. 1,700 for his defence and Karuppiah arranged with ArumugamPillai that the latter would guarantee this sum. Upon this point thereis a conflict between Arumugam Pillai, Karuppiah, and first respondent,for the former stated in evidence after some hesitation that he onlyguaranteed up to the sum of Rs. 1,000 and no more, the Rs. 1,000 beingmeant to cover travelling expenses, stamp fees, &c., but not the lawyers’fees, which Karuppiah was to find for himself. Arumugam Pillai agreedto guarantee this amount only because Adakan had said he himselfwould be liable for this amount to Arumugam Pillai.
First respondent’s evidence was to the effect that he had asked for afee of Rs. 6,000 for himself for the whole case in addition to other costsfor retaining counsel, stamp fees, batta, &c. First respondent went onto say that Karuppiah agreed to pay him this inclusive fee, and that hementioned this sum to Arumugam Pillai and that he expected ArumugamPillai to guarantee the payment of this Rs. 6,000. First respondentproduced no written guarantee from Arumugam Pillai or Karuppiah,nor is there a note of this promised sum in his file or fee book whichhave not been produced although such file and fee book do exist. Incross-examination he said that Arumugam Pillai had guaranteed thecosts with no limit because Adakan had deposited his money withArumugam Pillai. So that if Arumugam Pillai is to be believed, firstrespondent had only the word of Karuppiah for the fulfilment of thecontract if by any chance Karuppiah lost his case. Both Kaduravel’sparty and Karuppiah’s party never bargained for the costly litigationwhich the lawyers on both sides had in view, as no less a sum thanRs. 46,400.25 was at stake.
The scale on which the case was to be conducted will be realized ifwe look at the counsel already retained by the proctors and those whomthey proposed to retain for the trial. On behalf of Kaduravel Mr.Desinghe had already retained Mr. Cyril Perera, an advocate at Kandy,to advise him on the steps to be taken before trial. Mr. Perera hadhopes of ultimate success, but Mr. Desinghe was despondent of successafter a visit to the estate and an examination of the estate books andafter hearing Mr. Gascoigne’s opinion. In fact he thought his client’scase so weak that he arranged for a consultation at Kandy withMr. Advocate Weerasooria of Colombo on August 18, 1932, at whichMr. Perera, second respondent, Sarnelis, and Kaduravel were present.Mr. Weerasooria shared the doubts of Mr. Desinghe and advised hisclient to settle the case. Mr. Desinghe gave evidence to the effect thathe insisted on Mr. Weerasooria and Mr. Cyril Perera appearing in Galleand conducting the trial. According to Ratnaweera and Sarnelis thefull sum of Rs. 3,000 which the former had agreed to lend for the casewas already exhausted nearly three months before the trial, and Mr. De-singhe had asked for nearly 100 guineas to brief Mr. Weerasooria andMr. Cyril Perera for the trial. It can thus be imagined how anxiousSarnelis was to settle the case so as to get enough money to pay the costs
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already incurred by him. This anxiety must have been intense as wenow know that Kaduravel’s claim was an entirely false one. The samedearth of funds is evident on first respondent’s side if we examine theevidence.
If first respondent is to be believed his fee was Rs. 6,000, exclusiveof counsel’s fees and other costs, such as stamp duty, batta &c. Hefixed this fee as he reckoned that the hearing would take ten days, whichwould have meant his being away from Gampola for three days at eachhearing. Thus the Rs. 6,000 meant about Rs. 200 a day for thirty days.Karuppiah had already paid Rs. 250 to first respondent to interview theclub authorities at Galle when Arumugam Pillai arrived on the scene.
Before the trial, Arumugam Pillai, out of the Rs. 1,000 which he waswilling to advance, had advanced Rs. 759.36 to Karuppiah on accountof stamp duty, batta, Mr Kularatne’s fees, &c., which sum was paidto first respondent or his clerk Samath. For the trial first respondentintended to retain a King’s Counsel and an advocate from Kandy and heasked for Rs. 1,000 from Karuppiah. Arumugam Pillai refused to lendthis sum two or three days before August 19 because Adakan refused toguarantee any further sum. According to the evidence of both ArumugamPillai and first respondent, the former went and told first respondentbefore he left for Bandarawela that Karuppiah found it difficult to getmoney to pay counsel and had suggested to Arumugam Pillai that thecase should be settled, half the prize money to be given to each of theclaimants and first respondent’s fees to be paid by Kaduravel. Tothis first respondent replied that if Karuppiah wished the settlement,“ Somehow or other let us try and settle it. ”
It was no wonder first respondent welcomed such a settlement. Ifthere was no settlement Karuppiah ran a grave risk of losing his case,for he had no further funds to prosecute his claim. Arumugam Pillaihad told first respondent that he was not going to advance any furthersum So that it will be seen how very opportune and fortunate the ideaof the settlement was, when first respondent found that instead of hishaving to sue a penniless labourer for his Rs. 6,000, with no scrap of paperto prove Karuppiah’s agreement to pay this sum, the conditions of thesettlement were to be that his client was to get half and the other sidewas to pay his fee of Rs. 6,000. This Rs. 6,000 was to include firstrespondent’s expenses “until the final decision of the case in Ceylonif the case went to trial ”. First respondent admitted with regard towhat he had done for Karuppiah up to August 19, 1932, that he had notdone Rs. 6,000 worth of work. His very words are as follows:—“Ihad interviews, seeing counsel, but I don’t say I was entitled to Rs. 6,000,no, not certainly that sum. I don’t certainly say that I had doneRs. 6,000 worth of work. But it was a fixed sum that I was gettingand that too from the other side—not against the interests of my client. ”
Q.—The other side knew just as well as you did that the trial was notcoming on ?
A.—I take it so.
Q.—But yet they were willing to pay you far more than you had earnedat that time ?
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A.—Yes
Q.—It should have occurred to you that there was some very 9oodreason why the other side was willing to pay you so ?
A.—There may have been some good reason. But as far as it affectedmy client, it was certainly benefiting him.v
Q.—Do you call" that benefiting ? You were depriving him of a sumof Rs. 23,000 while you get Rs. 6,000 from the other side ?
A.—Well he may have lost the whole thing.
Q.—What about the interests of your client ?
A.—He could not finance his case.
This was the state of affairs when first respondent left for Bandarawelaon August 18, 1932. The case was fixed for August 26, 1932; firstrespondent required nearly Rs. 1,000 to pay his two counsel and asubstantial part of his own fee. In his own words he wanted a sumbetween Rs. 2,000 and Rs. 2,500 to cover the expenses of the first dayof trial and he was told definitely by Arumugam Pillai that there was nohope of Karuppiah being able to pay any further sum. If this was theprospect which faced first respondent before the first day of trial one canimagine what first respondent’s feelings must have been with regard tothe funds which were required for the other nine days the trial wouldhave lasted, and the fees that would have to be paid in the event of anappeal.
As it turned out, however, all first respondent’s troubles were resolvedthe very next day for a settlement was arranged during first respondent’sabsence at Bandarawela whereby his client was to get half the prizemoney and the other claimant Kaduravel was to pay the full Rs. 6,000to first respondent from his half, and what is more there was the secondrespondent, a proctor, who was ready and prepared to guarantee or beresponsible for the payment of this Rs. 6,000 by Kaduravel to firstrespondent. This was how this remarkable settlement was arrived at.It will be remembered that Sarnelis was one of the witnesses In Karup-piah’s second list of witnesses and the summons was served on him bythe fiscal’s peon on August 19 in the presence of Arumugam Pillai. BothSarnelis and Arumugam were longing for a settlement under whichthey could clear their losses, and the two after some consideration readilycame to an agreement in a few minutes which was confirmed almostimmediately afterwards by Sarnelis’ auxiliary legal adviser and distantrelative, second respondent, who happened to be in the Gampola resthousea little distance away. Second respondent agreed to the terms and wishedto have Karuppiah’s confirmation of the terms. This was at about11 a.m. on August 19 and took place in the presence of the fiscal’s peon,who saw the meeting between Sarnelis, Arumugam and second respon-dent, but did not hear what they were talking about. But Karuppiahwho came there about 4 p.m. was more cautious than his friend Arumugam,and Arumugam at Karuppiah’s request wanted second respondent togive a post-dated cheque for the payment of the Rs. 6,000 to firstrespondent. Second respondent assured Karuppiah that he would settlethe question of the payment with first respondent personally.
That same night at 9 p.m. Samath, first respondent’s clerk, got intotouch with his master at Bandarawela and told him that the case was
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settled and his fees had been arranged for. First respondent thoughtthat his fees were going to be paid by his own client Karuppiah and hestipulated that it should be paid before he went down to Galle. Firstrespondent came down to Gampola the next day, i.e., August 20, sawsecond respondent, and was given a guarantee by second respondentthat his fees of Rs. 6,000 would be paid to him. First respondentpromptly went to Kandy to get Mr. Desinghe’s approval to the terms ofthe settlement. According to first respondent he told Mr. Desinghe thathis client was to pay first respondent his fees, but he did not tell himthe amount. Mr. Desinghe’s evidence was that the only thing he wastold was that each side was to get half, whereas second respondent waspositive that he had mentioned the sum to Mr. Desinghe on his firstvisit to Mr. Desinghe, on August 20 when he 'went with Samelis. Mr.Desinghe readily gave his assent and they all arranged to go down toGalle the next day to put the settlement through. First respondentapparently forgot to mention a word about the settlement to Mr. Gascoigne,although it was Mr. Gascoigne who had sent Karuppiah to first respondent,and had always taken a great interest in the case. Mr. Gascoigne hadhelped first respondent to inquire into the claims of the two claimantson January 31, had helped both parties to scrutinize the estate books,had actually been put down as a witness on the lists of the two claimantsand had been summoned to appear at the trial on August 26, and yetfirst respondent omitted to say a word about the proposed settlementeven on the telephone to Mr. Gascoigne. Both Karuppiah and Kadura-vel, with their supporters and the proctors on both sides, includingfirst respondent and Samath, travelled down to Galle, met in Mr. Kula-ratne’s office on August 22, 1932, and Mr. Desinghe wrote out the draftterms of settlement (P 70). In this draft Mr. Desinghe inserted a clausefor the issue of a payment order to himself for Rs. 250 as his costs inaddition to the- payment orders in favour of Karuppiah and Kaduravelbut it was scored off and the actual settlement that was signed is to befound in the record, D. C. Galle, 31,009. The document is datedAugust 22, 1932, and reads as follows:—“The case is settled. Wemove that decree be entered declaring each of the defendants entitledto a half share of the amount in deposit. Each party to bear his owncosts. We also move that the Court be pleased to issue the followingorders of payment—
in favour of the first defendant for the sum of Rs. 23,117.72,
in favour of the second defendant for the sum of Rs. 23,117.72.”
It is signed by the defendants and their proctors Messrs. Desinghe andKularatne. At the bottom there is this certificate—“ We identify thesignatures of the defendants who are known to us. We have explainedthe above motion to the defendants,” and to this certificate are attachedsignatures of first and second respondents.
Whatever may be the truth regarding Mr. Desinghe’s knowledge ofthe payment of Rs. 6,000 to first respondent by Kaduravel which I shalldiscuss later, one fact is clear, namely, that Mr. Kularatne, who wasKaruppiah’s proctor on the record and who had been retained by firstrespondent, did not know a word about the proposed payment of Rs. 6,000or any sum by Kaduravel to first respondent. He understood the
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settlement order in the sense in which it was written, namely, that eachdefendant was to get half of the money in deposit and that each partywas to bear his own costs. It was owing to this interpretation of the orderthat Mr. Kularatne was paid 9 guineas in all, 7 guineas being paid byfirst respondent to Mr. Kularatne after the payment order was issued toKaruppiah on the day of the settlement, 2 guineas having been alreadypaid by first respondent before that date. Mr. Kularatne was quitesatisfied with this remuneration as first respondent did all the proctor’swork, filing lists of witnesses, answer, getting ready for the trial, &c.
Immediately after the payment orders were issued, the whole partyincluding first respondent, second respondent, Mr. Desinghe, andothers followed the two defendants to the Kachcheri for the cheques, andthen to the bank for payment on the cheques, the defendants beingidentified by first and second respondents. At the bank Karuppiah waspaid Rs. 8,000 in cash and for the balance Rs. 15,000 a draft was given infavour of Arumugam Pillai drawn on a Colombo bank. Kaduravel’smoney too was divided, Sarnelis was given a draft for Rs. 10,000 andKaduravel was paid Rs. 15,000 in cash, out of which Rs. 6,000 was paidby Kaduravel to first respondent through second respondent Kaduravelalso paid Mr. Desinghe Rs. 200 for his costs, and a further sum ofRs. 500 (of which according to the evidence Rs. 500 was a loan) to secondrespondent. According to Sarnelis out of the Rs. 10,000 he drew, he paidRs. 5,000 to Ratnaweera on deed P 73, and kept the balance to himself.
His Lordship, after discussing the evidence, proceeds : —
There are three charges against the respondents, the first chargerelating only to the first respondent and it can be easily disposed of. Thefirst count charges the first respondent with being guilty of malpractice inthat he acted for and on behalf of Karuppiah against Kaduravel after theinquiry of January 31, 1932, at which Kaduravel and his witnesses haddisclosed to first respondent the evidence on which Kaduravel relied onto prove his claim. The answer to this charge is that on January 31 firstrespondent inquired into the respective claims of the two claimants attheir request to see whether the matter could not be settled out of Courtor arbitrated upon and he did so openly in the presence of Mr. Gascoigneand a large number of persons, the supporters and witnesses of bothclaimants, and whatever evidence was disclosed by Kaduravel and hiswitnesses was disclosed not confidentially to first respondent but publiclyto all present there. According to Mr. Gascoigne there were abouttwenty to twenty-five people present. Further Kaduravel and hiswitnesses sent affidavits (P 7, P 8, P 9, P 10, and P 11 dated February 10,1932), disclosing their whole case to the Galle Club authorities, and thesedocuments were open to inspection by any person interested. The factthat Sarnelis was summoned to produce document P 6 by Karuppiahcannot be said to depend on any exclusive confidential informationfurnished by Kaduravel and Sarnelis to first respondent. It was openlyproduced by Sarnelis and if Sarnelis had failed to produce P 6 at the trialthe contents could have been proved by the oral testimoney ofMr. Gascoigne or Karuppiah himself, and not necessarily by the evidenceof first respondent whose name also appears in Karuppiah’s list. In
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Rakusen v. Ellis Munday & Clarkethe Court of Appeal emphasized thefact that the information derived must be of a confidential character.In my opinion the first respondent is not guilty on the first charge.
The second count charging both the first and second respondents is themost serious charge, which, if proved, will mean the disenrolment of boththe respondents. It charges them with corruptly entering into anagreement or arrangement on August 20, 1932, with Arumugam Pillai forthe settlement of the matter in dispute, in pursuance of which the secondrespondent agreed to pay Rs. 6,000 to the first respondent from the halfshare which was to be given to Kaduravel. Mr. Obeyesekere, leadingcounsel in support of the rule, put his case on the footing that firstrespondent had, for a consideration of Rs. 6,000 to be paid by Kaduravel,deliberately settled the case, whereby his client Karuppiah instead ofgetting the full sum in deposit got only half. It is not surprising thatcounsel put his case on this footing, for he relied on the several pointsand circumstances which I have indicated in my judgment, namely, thatfirst respondent fully believed in the truth of his client’s case (P 15) andhad taken all steps to get ready for the trial on August 26. He alsorelied on the haste with which the settlement was put through and theRs. 6,000 paid on August 22 without the knowledge of Mr. Gascoigne andthe non-disclosure of the payment of Rs. 6,000 either to Mr. Desinghe,Mr. Kularatne, or to the District Judge. Mr. Obeyesekere also stressedthe abnormal fee charged, viz., Rs. 6,000. There can be no doubt thatthere was a great deal of force in his argument, but in a case of this sortsuch an accusation must be based on evidence. Even if the arrangementwas first entered into without the knowledge of Karuppiah, if Karuppiahdid as a matter of fact give his consent to the settlement before it wassanctioned, the gravamen of the charge fails. As I have already said Icannot believe Karuppiah when he said that he did not consent to theterms of the settlement. All the other evidence is to the effect thatKaruppiah originally proposed the settlement as there was no moneyforthcoming from Arumugam Pillai or Adakan to enable him to retaincounsel and prosecute his claim further. Further the mere belief in thetruth of a client’s case does not necessarily imply that a proctor whosuggests a settlement on less advantageous terms to his client is guilty ofcorrupt conduct, owing to the uncertainty and the prolonged character oflitigation where such a large sum as Rs. 46,400.25 is involved. After allKaduravel had a string of apparently respectable witnesses of anothercommunity than his own to prove the alleged sale of the ticket to him atAngo Appu’s shop at Nawalapitiya, and first respondent may well have feltthe strength of Kaduravel’s case in the same way that Mr. Cyril Perera,advocate, did. First respondent also gave us as one of his reasons theundoubted fact that one of Karuppiah’s witnesses, Appavu Kangany, who,as first respondent understood his client’s case, was a very importantwitness to prove the sale of the ticket to Karuppiah by Sarnelis at thelatter’s boutique, was not forthcoming to give evidence. On the otherhand the omission to notify Mr. Gascoigne of the settlement and thenon-disclosure of the payment of Rs. 6,000 to Mr. Kularatne were certainlystrange. So is the abnormal amount of the sunt charged for costs against
1 (1912) 1 Ch. 831.
362
AKBAR J.—In re two Proctors.
Kaduravel, viz., Rs. 6,000. There can be no doubt of the excessivecharacter of the amount charged, if we keep in mind that Mr. Wickrema-singhe, proctor for the Galle Club, only drew Rs. 87.50 for his fees; thatMr. Kularatne was satisfied with 9 guineas and that Mr. Desinghe waspaid Rs. 200 in addition to the other sums given to him for payingcounsel’s fees, stamp duty, &c., of which there is no evidence; andsecond respondent got Rs. 200. First respondent himself admitted,as I have said before, that he had not done Rs. 6,000 worth of work at thetime of the settlement, and no fee book file or writing has been producedby first respondent to prove that he had asked for Rs. 6,000 as his fee andthat Karuppiah had agreed to pay this sum. Although there is nocomparison between Sierra Leone and Ceylon as regards the standard ofconduct and the education of the inhabitants, yet there are certain partsof the Island where the inhabitants are below the level of the otherinhabitants, especially among the Indian labour population, and one mustalways keep in mind the words of the Privy Council in the case ofMaCauley v. Judges of the Supreme Court of Sierra Leone “ TheirLordships appreciate the necessity in .„a country so described of inducingthe inhabitants to resort to the Courts for the settlement of their disputesrather than to the possibly more familiar means of personal violence.For this purpose it is essential that the people should be brought to feelthe greatest respect not only for the impartiality and independence of thetribunals but for the honesty and fairness of those who practise beforethem.” It is clear from first respondent’s evidence that he hoped torecover the sum of Rs. 6,000 or whatever the sum was he had in mindfrom Karuppiah by asking for a substantial part of this sum on eachoccasion on which he had to go to Galle, and that he would not have gonedown to Galle unless the instalment was paid. His answer on this pointwas to this effect, “ I was not going down to Galle until I was paid asubstantial sum of money and the whole of the Rs. 6,000 paid before theconclusion of the trial. That meant that Karuppiah would have to finda good deal of money and if the money was not found I was not underobligation to go.” Nor does the reason he gave for asking for sucha large sum commend itself to me. “ The nature of the claim alsoinfluence me. It was a big claim and it was a sweeps ticket claimwhich a man had got for Rs. 2. Therefore I felt justified in asking for afee of Rs. 6,000. “’ The reaction of Karuppiah when he was asked for thissum, shows the light in which Karuppiah at any rate regarded the fee.In first respondent’s words, “ When I asked for that fee Karuppiah did notsay it was too much. He made the remark: ‘ If I could pay for nothingRs. 5,000 ’—I do not know whether he said Sarnelis—‘ why cannot I payyou Rs. 6,000. ’ He was quite agreeable to paying me Rs. 6,000. ” Sothat in Karuppiah’s humble mind first respondent and Sarnelis occupiedthe same level.
Mr. Obeyesekere’s argument was that the Rs. 6,000 was in the. natureof a bribe to induce first respondent, who had the whip hand at the time,to agree to the settlement and that the story of the fee of Rs. 6,000 bythe respondents was an after-thought. If we examine the evidence withregard to the agreement of Karuppiah the evidence is contradictory.
i (1928) A. G. 34*.■
AKBAR J.—In re two Proctors.
363
Kmippiah of course denied that he agreed to pay Rs. 6,000 and assertedon the contrary that it was Rs. 1,700. We have the evidence of firstrespondent and Samath, his clerk, to the effect that Karuppiah had agreed,and the evidence of Sarnelis, second respondent, and Arumugam Pillaithat first respondent was to be paid his fee of Rs. 6,000 by Kaduravelas a condition of the settlement. Arumugam Pillai’s evidence regardingthe consent of Karuppiah to pay the Rs. 6,000 is contradictory. He saidbefore us as follows: —
“Karuppiah said first respondents’ fees would be Rs. 6,000. He saidthis on the 16th or 17th.
Q.—How did he know that ?
A.—Because first respondent had told Karuppiah in my presence onmore than one occasion that his fees would come to Rs. 6,000. ”
In the Assize case he said as follows: —
“ First respondent told Karuppiah that he would appear only ifRs. 6,000 was paid. (I did not guarantee this fee.) I was prepared topay only up to Rs. 1,000.
“ First respondent wanted Rs. 6,060 to fight out the case.”
“ First respondent told me that he asked Karuppiah. to pay theRs. 6,000 if the case was to be fought out for Karuppiah. He did nottalk of fees if the case was settled. When I went to first respondent topay the money in connection with this case I heard first respondent saythat Karuppiah had agreed to pay Rs. 6,000 as his fees.”
It will thus be seen that the only positive .evidence to prove thatKaruppiah had agreed to pay the fee of Rs. 6,000 is that of first respond-ent and Samath. Even if I hold that the Rs. 6,000 which was paid tofirst respondent was not the fee which Karuppiah had promised to payhim, as I have said, the evidence does not prove the second chargeif we exclude Karuppiah’s evidence, which I do not accept, for reasonsgiven by me. In the words of Kennedy J. in In re Lydall *, “ Thejurisdiction which we are exercising is punitive and almost penal, and inproceedings of such a nature the accused are, in our judgment, entitledin a high degree to insist upon strictness of proof.”
In the words of Jenkins C.J. in In the Matter of an Attorney *, “ It is astrange story that the attorney tells; still even a strong case of suspicionis not enough to justify disciplinary action on a summary proceeding,especially when there is a positive sworn denial and repudiation of themisconduct imputed. Moreover there is more than a bare denial, thereis an explanation of the transaction by the attorney, and it is an oldrule that where this is so, an adverse order should not be made ona summary proceeding, unless the attorney’s story is highly incredible.”Nor does the argument of Mr. Crosette Tambiah, who ably concludedthe case against the respondents when the counsel leading him fell ill, thatit was first respondent’s duty to have taken time to advise Karuppiahagainst the settlement instead of readily agreeing to it carry the casefurther. Assuming that it was Karuppiah who proposed the settlementowing to his inability to carry on the case any further through lackof funds, first respondent’s acquiescence with the settlement does not
show that he acted corruptly.
* 70 L. J. Q. B. D. 5.
2R. 41 Calcutta 113.
364
AKBAR J.—In re two Proctors.
There is only the third charge left, namely, that the two respondents, incausing to be submitted to the District Judge of Galle in the Galle casethe motion of settlement, were guilty of deceit and malpractice. Thereis no contest on the facts. The motion says on its face that each party isto bear his own costs, whereas in truth and fact Kaduravel was to payRs. 6,000 from his share to first respondent, proctor for Karuppiah, as hisfees which Karuppiah would otherwise have to pay. The motion for thesettlement contains the certificate that it was explained to the defendantsby the two respondents who signed it. The respondents therefore knewthat the settlement was not correct when it said that each party was tobear its own costs. The question that I have to decide is whether thisact was one of deceit and malpractice or whether it was done without anywrong intention in the ordinary course. The expression regarding thecosts is certainly ‘ misleading ’, in the words of Mr. Hale who was calledfor the defence. It is also true that in ordinary cases of settlement whatis material is the consent of the parties, but at the same time each case ofthis kind will depend on the circumstances of that case. Here we havea proctor who, though not the proctor on the record, wished to be paid thesum of Rs. 6,000 on the footing that it was his fee which was due to himfor legal work done by him as the proctor of Karuppiah. I cannotaccede to Mr. H. V. Perera’s argument that the sum was not due as feesto a lawyer, but as expenses incurred respecting a third party and due tosuch third party on a contract. Even if there was a contract betweenKaruppiah and first respondent, this sum was paid to him in his capacityas proctor as fees due to him for work done as proctor. Now the Courthas as a matter of inherent jurisdiction the power to supervise the con-duct of proctors as it appears in cases coming before it, especially in thematter of costs. It is not only a power but it is the duty of theCourt. In such matters our law and practice are the same as thosein England. In the case of In re Whitcombe1, the Master of theRolls said as follows : —“ I must remark on the great danger whichsolicitors incur when they enter into such arrangements with their clients.An agreement like this between a solicitor and client for taking a fixedsum in satisfaction of all demands for costs, is an agreement which may beperfectly good; but the Court, for the protection of parties, looks at everytransaction of this kipd with great suspicion. The matter may turn outto be perfectly fair and right, still it exposes the conduct of the solicitorto suspicion, and naturally awakens the vigilance and jealously of thisCourt, seeing that one party has all the knowledge and the other is inignorance. ” It is true that in that case it was an agreement for costs dueand here we are concerned with an agreement for future costs. It is alsotrue that we have no Statute similar to the Attorneys and Solicitors Act,1870 *, which referred in express terms to agreements as to the payments ofpast and future costs, and provided for such agreements being in writingwith a special provision for the rescission of such agreements by theTaxing Master when made in respect of business done or to be done in anyaction at law or suit in equity, and also if required by the Court. (SeeIn re Russell, Son & Scott *, and In re Stuart *.) Although we have no suchStatute there is the inherent power in the Court to inquire into a question
1 8 Beavan's Reports 140.3 L. R. 30 Ch. D. 114.
a 33 & 34 Viet. C. 4.1 (1893) 2 Q. R. D. 201
AKBAR J.—In re two Proctors.
365
of costs between a proctor and a client (see the procedure indicated insections 214 and 215 of the Civil Procedure Code). The motion, had itstrictly adhered to the true facts, should have asked for payment ordersin favour of Karuppiah and Kaduravel for a half each of the sum indeposit and set out that Kaduravel was to pay Rs. 6,000 to first respondenton account of Karuppiah’s costs. There is no reason why such a settle-ment should not have been submitted to Court, for although no decreecould have been passed with respect to this payment to first respondent whois no party to the case, yet in terms of section 408 of the Civil ProcedureCode the Cpurt could pass a decree “ in accordance therewith so far as itrelates to the action ” “ and the decree will be final ” “ so far as it relatesto so much of the subject-matter of the action as is dealt with by theagreement, compromise or statisfaction.” To my mind, the settlementwas worded deliberately in the terms in which it was finally drawn up tokeep the fact relating to the payment of Rs. 6,000 secret, so as to avoidcriticism from the Judge and public comment. If the settlement hadbeen set forth as stated by me above, or if the payment orders were toissue for Rs. 17,117.72 in favour of Kaduravel and Rs. 29,117.72 infavour of Karuppiah the District Judge was bound to have inquiredinto this matter.
Mr. Weeraratne, the District Judge said, as follows : —
“ Suppose there was a statement in that motion that out of this amountthat the first defendant was to pay first respondent Rs. 6,000, would youhave made that a matter of inquiry ?
A.—It is possible that I might have asked why such a large sum wasgoing to be paid.
Q.—Supposing orders were for Rs. 17,000 odd and Rs. 29,000 would youhave inquired?
A.—I would have inquired why there was a difference. Again Iwould have considered whether the parties very clearly understood that.
Q.—If there was provision in the motion for the payment of Rs. 6,000as fees or costs to the proctor concerned in the case, would the Court allowsuch a payment without taxing hi sbill?
A.—If the parties agreed I would not have objected ordinarily. I donot see any reason why I should have objected ”.
If we keep in mind the fact that the pleadings disclosed fraud either onthe part of Kaduravel or Karuppiah, a District Judge, as he had the powerto inquire into a settlement before sanctioning it for the purpose offinding if it was a lawful agreement under section 408, would haveinquired into it if the motion had been framed in either of the alternativeforms I have indicated. Framed as it was in its misleading form, therewas every prospect of its being passed by the Judge without any comment,as it did pass in this case.
The abnormal nature of the fee charged is bound to strike the'eye ofanyone, especially as the costs which could have been taxed by firstrespondent if he had been the proctor on the record against Karuppiahwould have been no more than Rs. 700 or Rs. 800 at the date of thesettlement. It will be seen that section 214 of the Civil Procedure Codeprovides for the taxation of costs as between proctor and client, and forthe obtaining of the decision of the Court if any person is dissatisfied with37/27
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AKBAR J.—In re two Proctors.
the taxation; and section 215 refers to an action by a proctor against hisclient for the recovery of fees and the section provides for the taxation ofsuch fees. There is no reason why there should be this reference totaxation unless the taxed items are to be used as a test of the fairness orreasonableness of the claim made by the proctor in the same sense as LordEsher indicated in the case of In re Stuart (supra). “ It is impossible tosay that work which according to information given by the Taxing Masterto the Divisional Court would be properly remunerated by a sum of £90can be reasonably charged at nearly £ 100. ”—Per Lord Esher, M.R.
It is very doubtful if Karuppiah really agreed to pay this sum. At anyrate there is nothing in writing signed by him. First respondent mayhave told Karuppiah that he must be paid Rs. 6,000, but this would notamount to an agreement by Karuppiah. According to first respondenthe hoped to recover it by insisting on prepayment of substantial instal-ments on each occasion he had to'go to Galle, and by refusing to go unlessthe instalment asked for was paid. With reference to such conduct it isnot inappropriate to quote here the remarks of Ameer Ali J. in the case ofMookerjee v. Mullick1. “ It appears to me that when he took up theplaintiff’s case it was his duty to assure himself whether the plaintiffwas a person of substance. In my opinion, having once undertaken theconduct of a case, an attorney is bound, whether the client is rich or poor,to proceed with due diligence in prosecuting the claim. The law hasprovided him with means for realizing his costs from his client. Hecannot, to use the language of the learned Judges to whom I havereferred, turn round and say that unless a considerable sum is paidto him he will not do what he is bound to do, viz., to conduct andprosecute his client’s case with diligence and honesty.” The plea putforward by second respondent that the motion was worded as it wasbecause Sarnelis “ was anxious to show the world that he had got exactlyhalf and nothing less ” was not at all convincing especially as Sarnelishimself said that it was done at the request of the labourer Kaduravel “ tosave his face. ” Not only did first respondent get the motion worded in itsmisleading form, but he went to the extent of getting an undertakingfrom second respondent making himself personally liable for the paymentof the Rs. 6,000 by Kaduravel, and the two of them were present at everymaterial stage from Gampola to the bank at Galle till at last the chequewas cashed by Kaduravel and the money paid to first and secondrespondents was also remunerated. It seems to me that their conductamounts to deceit as well as malpractice because they purported to statein the motion what was not true in order to prevent every possibility ofany unpleasant consequences to themselves.
The fact that in actual practice parties sometimes settle their caseswhen the terms of settlement are quite different to those expressed in themotion submitted makes no difference in this matter, when we considerthe special features of this case. Any divergence between the actualterms of settlement and those submitted to Court does not necessarilymean that it would be an act of deceit or malpractice. Ordinarily itwould not,.but each case must be decided on its own facts. In this case
1 1. L. R. 29 Calcutta 62.
AKBAR J.—Samsudeen Bhai v. Gunavoardene.
367
I am of opinion that the respondents are guilty of deceit and malpracticeif one keeps in mind the peculiar facts which have come to light in thisinquiry.
In my opinion the respondents as proctors must have realized theseriousness of their act in misleading the Court in the circumstances ofthis case and they are both guilty on charge No. 3. The sentence whichthis Court imposes on the first respondent will be suspension from practicefor a period of six months, and in the case of the second respondentsuspension from practice for a period of three months. The rule so far asit refers to charges (1) and (2) is discharged.
Poyser J.—I agree.
Maartensz J.—I agree.