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In Law Society of Singapore v Kurubalan s/o Manickam Rengaraju [2013] SGHC 135 (Kurubalan), the Judges of the Singapore Supreme Court have demonstrated their sensitivity to the need for access to justice by creating an exception to the age-old rule against champerty. The prohibition against champerty states that it is unlawful to support litigation in exchange for a share of the proceeds of the action. The Court in Kurubalan stressed that while the prohibition against champerty remains good law in Singapore, “it would be permissible and even honourable for an Advocate and Solicitor to act for an impecunious client in the knowledge that he would likely only be able to recover his appropriate fees or disbursements if the client were successful in the claim and could pay him out of those proceeds or if there was a costs order obtained against the other side” (emphasis in original in italics). This clarification is to be lauded.

THE ARGUMENTS FOR AND AGAINST THE PROHIBITION

The Judges were cognizant of the arguments that the rule against champerty is out-dated. Singapore inherited the prohibition against champerty from the English law, where, as early as 1275, champerty was declared to be unlawful. The traditional rationale for this prohibition was to prevent the subversion of justice – English law feared that the supporter of litigation might be tempted, for his own personal gain, “to inflame the damages, to suppress evidence, or even to suborn witnesses” (In Re Trepca Mines (No 2) [1962] 3 WLR 955).

However, more modern considerations have since come into play. In other jurisdictions, both the courts and the legislature have acknowledged that champertous arrangements can actually increase the public’s access to justice. In England, champerty was decriminalised in 1967. The UK parliament introduced “conditional fee arrangements”, also known as success fee arrangements, in 1990, and subsequently introduced “damage-based agreements”, arrangements which enable lawyers to share the fruits of litigation with their clients, in 2013. The English courts have also been more open to upholding champertous arrangements which facilitate access to justice (Arkin v Borchard Lines Ltd [2005] 1 WLR 3055). Indeed, it has been said this year by a retired Law Lord that:

“…[A]s long as litigation, access to the courts, remains expensive, then anyone who has a right that stands in need of vindication should be able to obtain funding from anyone willing to offer it and on whatever terms it is offered. The public policy rationale is simple…: access to the courts is a right, and the State should not stand in the way of individuals availing themselves of that right.”( Lord Neuberger, “From Barretry, Maintenance and Champerty to Litigation Funding”, Harbour Litigation Funding First Annual Lecture, 8 May 2013 at [46].)

Similarly in Australia, the states of Victoria, South Australia, New South Wales and Queensland have decriminalised champerty. Queensland has permitted conditional fee agreements since 2007. Australian courts have also noted the policy concern of access to justice, the New South Wales Court of Appeal in particular, noting the judicial change in attitude towards the support of legal proceedings in an era of spiralling costs of litigation, concluding that the law now looks favourably on funding arrangements which offer access to justice as long as any tendency to abuse of process is controlled (Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd [2005] NSWCA 83).

CHANGES IN SINGAPORE LAW ON THE PROHIBITION?

The Judges in Kurubalan considered that it should be left to Parliament to change the rule. This is consistent with the approach taken by other leading common law jurisdictions. The Judges’ view reinforces suggestions in the Report of the Committee to Develop the Singapore Legal Sector (September 2007) to consider allowing conditional and contingency fee arrangements to broaden the public’s access to justice. This is an area in which one probably can expect rapid and important developments in Singapore law in the near future.

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