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HIGH COURT MALAYA KUALA LUMPUR
ARZIAH MOHAMED APANDI, JC
HASINA MEERA MAIDIN – Appellant
Versus
TETUAN RAJINDER & GOH & ORS – Respondent
[Civil Appeal No: WA-12BNCVC-83-10/2021]
Ratio Decidendi: A written fee-sharing agreement between an investor and a firm of solicitors, whereby the investor advances upfront legal fees to fund litigation in exchange for a percentage share of any judgment proceeds recovered, constitutes a valid and enforceable contract under sections 10 and 26 of the Contracts Act 1950, where there is good consideration in the form of the advance payment, free consent, and a lawful object that promotes access to justice by enabling meritorious claims to proceed despite the client's lack of funds; such an arrangement does not constitute prohibited touting under section 37 of the Legal Profession Act 1976 or rule 52 of the Legal Profession (Practice and Etiquette) Rules 1978 where the investor has a legitimate financial interest in the litigation outcome as a pre-existing stakeholder, actively funds costs beyond mere referral, and the agreement is transparent, documented on the firm's letterhead, signed by a solicitor in a professional capacity, and creates mutual binding obligations rather than a bare promise or unlawful commission for client procurement. (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!)
Introduction
[1] This appeal spotlights a critical intersection between access to justice and legal ethics, examining whether an investor who funds litigation costs can legitimately contract with lawyers to share successful cases' proceeds. At its heart lies a written undertaking by the Respondent law firm to share 15% of judgment proceeds with the Appellant, who had advanced RM80,000.00.00 in legal fees to enable litigation that ultimately succeeded. The Sessions Court struck down this arrangement, finding it void for lack of consideration and contrary to professional conduct rules.
[2] The facts unfold against a backdrop where Indah Sebati Sdn Bhd, (ISSB) facing financial constraints, required funding to pursue legitimate claims against JKR Terengganu. The Appellant, already an investor in ISSB, stepped forward to fund the litigation by paying the Respondents' legal fees. The Respondents subsequently documented their undertaking to share proceeds in a letter dated 29 September 2017. When the litigation succeeded with a judgment of RM5,130,537.60, the Respondents received their fees but declined to honour their undertaking to the Appellant.
Background Of Claim
[3] Sometime in July or August 2009, JKR Terengganu awarded ISSB a contract for the SKTAI Project. In early 2013, ISSB invited the Appellant to invest RM335,000.00 to help complete the project when it faced financial difficulties. The Appellant invested the money, and in March 2014, an Investment Agreement was signed, giving her rights to 50% of ISSB's profits from the project.ISSB had repaid RM100,000.00 of her investment by January 2014.
[4] Unknown to the Appellant then, JKR Terengganu had terminated ISSB's contract in September 2013. When this was discovered, ISSB wanted to sue JKR but lacked funds for legal fees. The Appellant then referred ISSB to the Respondents' law firm and agreed to pay the initial legal fees of RM80,000.00 for two cases - one against JKR Terengganu and another against KUBB Land Sdn Bhd.
[5] The Appellant claims that in 2014, the 2nd Respondent verbally agreed that they would ensure she receives 15% of any judgment sum from the JKR case if she paid the legal fees. This verbal agreement was allegedly later documented in a 29 September 2017 letter signed by the 2nd Respondent ("the Agreement Letter"). In August 2017, ISSB won the case against JKR and was awarded RM5,130,537.60. The Respondents received their legal fees of RM1,097,807.78 from the Insolvency Department in August 2019 but refused to pay the Appellant.
The Defence
[6] The Respondents deny giving any verbal undertaking in 2014 to share their legal fees with the Appellant. They contend that the Appellant willingly paid the initial legal fees to protect her interests as an investor in ISSB, as without the lawsuits being filed, she would have no chance of recovering her investment.
[7] The Respondents argue that the Agreement Letter was signed under duress and coercion from the Appellant's husband, Jaafarul, who allegedly created commotions at their office and damaged property. They claim he brought a draft of the Agreement Letter and forced the 2nd Respondent to sign it by threatening the safety of the firm's staff and family members.
[8] The Respondents further contend that the Agreement Letter is void and unenforceable as it lacks consideration. They argue that the RM80,000.00 paid was purely for legal fees for services rendered and not consideration for fee-sharing. Additionally, they argue that such fee-sharing agreements between lawyers and third parties amount to prohibited "touting" under legal profession rules.
[9] The Respondents also point out that the Appellant had already successfully sued ISSB directly and was awarded RM1,250,000.00 as a return on her investment. They argue that her current claim against them amounts to unjust enrichment as she is attempting to profit twice from the same matter.
[10] In essence, while the Appellant claims enforcement
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