Case Update: Nava Bharat (Singapore) Pte Ltd v Straits Law Practice LLC and another and another appeal [2016] SGCA 12 – SGCA dismisses negligence claim against lawyer re advice on cross-border transaction

Significance: Singapore Court of Appeal held that the plaintiff’s solicitors had not been negligent in advising on the legal implications of the plaintiff proceeding with the cross-border transaction to acquire an interest in an Indonesian coal mine based on an oral undertaking given by a 3rd party to obtain a forestry licence.

The Court found that as lead solicitor having overall carriage and charge of a cross-border commercial transaction, the lawyer may have a duty to consider issues such as whether such an oral undertaking is enforceable or not, and how it would be enforced as a practical matter. Even if he was not in a position to personally give advice on Indonesian law, he may well be under a duty to ensure that his client has been properly advised by the foreign counsel working on the transaction: at [6].

The Court held that greater specificity as to what the trial judge found the lead solicitor should have advised on is needed. On the facts, the lead solicitor had taken the step of having the oral undertaking recorded in writing. Therefore, one implication of proceeding on an oral undertaking, namely, that a dispute on its existence or terms might ensue, had been dealt with. The Court held that it is necessary to frame the precise duty that such a lead solicitor was said to be required to discharge before attention could be directed at whether he did or did not discharge such a duty: at [8].

It was plausible that the duty of care on the facts could be framed as specifically as whether the lead solicitor should have obtained advice from the Indonesian lawyers on the question of whether and how it would be possible to take proceedings in Indonesia to enforce the oral undertaking: at [5] and [8].

Comment: this decision is significant from two perspectives. First, lawyers advising on cross-border commercial transactions would do well to be alert to all plausible legal issues which may arise under both the local and foreign law, to highlight such issues to the client and to advise the client to take advice from the foreign counsel on the issue (if necessary). The Court of Appeal’s comments suggest implicitly that it is plausible for a solicitor to be negligent and liable to a client for failing to identify and highlight a foreign law issue and to take advice from the foreign counsel on the same.

Second, from a litigant’s perspective, it’s important to clearly frame the issues, especially the specific duty involved in a claim in the tort of negligence, before a trial. This is so that all the relevant evidence can be marshalled to support the litigant’s case. If the wrong issue was identified or the duty of care in question was not specifically framed, and the wrong evidence was led, it may be plausible that the evidence given at the trial will not support finding of liability.

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