The liability of partners in a law firm extends to obligations incurred during their partnership, regardless of their direct involvement in specific transactions.

Introduction

[1] This is an appeal against the decision of the Sessions Court Judge (hereafter 'SCJ') dated 6 February 2020 allowing the 2nd respondent's application (encl 9 at the Court below) to strike out the appellant's suit against her pursuant to O 18 r 19(1)(d) of the Rules of 2012, ie it is an abuse of the process of the Court.

[2] On 8 December 2020, this Court allowed the appellant's appeal and set aside the SCJ's decision. The reasons for the decision of this Court are set out below. The parties shall be referred to as they were at the Court below.

Brief Background Facts

[3] On 11 October 2017, the plaintiff entered into a sale and purchase agreement with one Teoh Chin Eng. The plaintiff intended to purchase and Teoh Chin Eng intended to sell a piece of land for a sum of RM1,900,000.00.

[4] The plaintiff engaged the firm Messrs Abraham Ooi & Partners as its solicitors to represent the plaintiff in sale and purchase transaction, whereas, Teoh Chin Eng, the vendor, appointed the firm Messrs Rahmah Mohamad & Associates (hereafter the defendants' firm) as his solicitors in the sale transaction.

[5] On 21 September 2017, the plaintiff, through Messrs Abraham Ooi & Partners, deposited a sum of RM400,000.00 to the defendants' firm as stakeholder. The said sum was the deposit sum for the purchase price as stipulated in the sale and purchase agreement. On 20 December 2017, the plaintiff further deposited a sum of RM500,000.00 with the defendant's firm being payment for the differential sum between the balance purchase price and the loan sum of RM1,000,000.00. In total, the plaintiff had deposited RM900,000.00 with the defendants' firm as stakeholder.

[6] The defendants' firm was supposed to deliver all the relevant documents, including the original title deed of the said land, to the plaintiff's loan solicitors Messrs Ch'ng Suhana & Co to effect a transfer of proprietorship of the said land as well as for the creation and registration of a charge over the said land.

[7] The plaintiff's solicitors Messrs Abraham Ooi & Partners had written several letters to the defendants' firm to enquire whether the defendants' firm had forwarded all the relevant documents and the original title deed of the said land to the plaintiff's loan solicitors Messrs Ch'ng Suhana & Co for their further action, but the defendants' firm failed to respond to the enquiry letters.

[8] Subsequently, the plaintiff's solicitors Messrs Abraham Ooi & Partners discovered that a Registrar Caveat had been entered against the said land on 21 December 2017. The Registrar Caveat was entered on the said land because of a police report lodged by someone who claimed to be the actual owner of the said land. The situation was notified to the defendants' firm on 31 March 2018.

[9] On 5 April 2018, the defendants' firm responded and stated that they had verified all the documents and that the purported vendor, or their client, had executed the relevant documents in their presence. In the said letter, the defendants' firm also confirmed that the deposited sum of RM900,000.00 was still in their custody as stakeholder.

[10] Sometime in July 2018, the actual owner went to the office of the plaintiff's solicitors Messrs Abraham Ooi & Partners to inform them that the plaintiff could have been cheated in a fraudulent transaction.

[11] On 20 July 2018, the plaintiff through his solicitors Messrs Abraham Ooi & Partners wrote to the defendants' firm to terminate the sale and purchase agreement and to demand for the refund of RM900,000.00 held by the defendants' firm as stakeholder. On 24 September 2018, plaintiff's solicitors Messrs Abraham Ooi & Partners again wrote to the defendants'