But when it emerged that Mr Cheh Wang Sut was bankrupt and could not pay up, the winning side went to the courts seeking an order to make Mr Liaw foot the legal cost for his client instead.

Mr Lam Wai Seng, the lawyer acting for Mr Manickam Nagarajan, argued that Mr Liaw should have checked if Mr Cheh was a bankrupt.

But a district judge dismissed the claim, saying it was unfair and unreasonable to expect a lawyer to do so.

'It is not the practice of lawyers to do bankruptcy searches of their own clients,' said Judge Leslie Chew.

If it had been known that Mr Cheh had been declared a bankrupt, the hearing would have ended as he had no money to pay if he lost.

Such costs incurred after the date of bankruptcy cannot be claimed from the proceeds of the bankrupt's estate, unlike costs before the bankruptcy date.

Lawyers said it is rare for a lawyer to be sued when his client defaults on payments to the winning party.

The only reported case of a lawyer being held personally liable for his bankrupt client was in 2005, when a lawyer was held personally liable as he knew his client was a bankrupt and did not get the Official Assignee's consent to act for him as required under the rules of bankruptcy.

The court ordered the lawyer to pay $1,600 in costs for filing an appeal on behalf of a bankrupt without obtaining the Official Assignee's approval.

But in the present case, the bankrupt Mr Cheh wilfully kept the information from his lawyer and he confirmed this in a court document.

Mr Cheh, now a retiree in his 50s, admitted he consciously hid the fact that he was a bankrupt from Mr Liaw when the hearing took place on April 30 last year.

The spat began in May 2006 when Mr Nagarajan, a businessman who deals in foreign labour, wanted to recover a $10,000 loan from Mr Cheh.

At that time, a bankruptcy search was done by Mr Nagarajan's lawyer and Mr Cheh was not bankrupt.

Judge Chew noted the Official Assignee had also said last August that a bankrupt is 'under no duty under the law to inform the court or a plaintiff in a suit in which he is a defendant, that he is an undischarged bankrupt'.

The judge said Mr Cheh's lawyer had not acted negligently and did his job 'innocently' as he was unaware of Mr Cheh's bankruptcy just before the case was to go to trial.

A spokesman for the Official Assignee said yesterday Mr Cheh is being probed for not declaring to its office that he was involved in a lawsuit. If guilty of this, he can be fined up to $10,000 or jailed up to two years, or both.

vijayan@sph.com.sg