Back
2023 MarsdenLR 930
COURT OF APPEAL PUTRAJAYA
DATO MOHAMAD SHAHUL HAMEED – Appellant
Versus
DATIN MAZITA OSMAN – Respondent
[[Civil Appeal N0: C-02(NCVC)(W)-655-04-2021]]
The court ruled that an oral partnership agreement can exist without formal execution, and the claim was not time-barred as the cause of action arose when payments ceased in 2017.
Headnote:(A) Limitation Act 1953 - Section 6 - Breach of contract - Appellant claimed entitlement to 50% profit share as partner in legal firm - High Court dismissed claim as time-barred, asserting no binding agreement existed between Appellant and Respondent - Court of Appeal found High Court erred in its assessment of evidence, ruling that Appellant's claim was not time-barred as cause of action arose in 2017 when payments ceased. (Paras 18-22, 62-64)
(B) Partnership Act 1961 - Section 4(c) - Existence of oral agreement - Court held that an oral partnership agreement can exist without formal execution; Appellant established entitlement to profit sharing based on documentary evidence and testimony, despite Respondent's denial. (Paras 26-39, 45-48)
(C) Privity of contract - Court emphasized that Respondent, as successor partner, was bound by the original agreement between Appellant and predecessor partner, negating argument of non-privy. (Paras 51-63)
Facts of the case:
Appellant and Respondent were partners in a legal firm; disputes arose over partnership terms leading to Appellant's claim for profit sharing. Respondent ceased payments in 2017, prompting the suit filed in 2018.
Findings of Court:
Court found that Appellant was indeed a partner and entitled to profit sharing based on clear evidence, reversing High Court's dismissal of the claim.
Issues: Whether the claim was time-barred under Section 6 of the Limitation Act and whether an oral partnership agreement existed between Appellant and predecessor partner.
Ratio Decidendi: The court ruled that the Appellant's claim was not time-barred as the cause of action arose in 2017 when payments ceased, and the evidence supported the existence of an oral partnership agreement.
Result: Appeal allowed; judgment entered in favor of the Appellant.
| Table of Content |
|---|
| 1. dispute over partnership agreement. (Para 1 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15) |
| 2. findings of the learned judge. (Para 16 , 17) |
| 3. appellant's dissatisfaction with findings. (Para 18 , 19 , 20 , 21 , 22 , 23 , 24) |
| 4. existence of oral agreement. (Para 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33) |
| 5. principles of partnership agreements. (Para 34 , 35 , 36 , 37 , 38 , 39 , 40) |
| 6. evidence supporting partnership. (Para 41 , 42 , 43 , 44 , 45 , 46) |
| 7. continuity of partnership arrangements. (Para 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54) |
| 8. evaluation of evidence. (Para 55 , 56 , 57 , 58 , 59 , 60 , 61) |
| 9. errors in the learned judge's decision. (Para 62 , 63 , 64) |
| 10. final judgment and orders. (Para 65) |
Introduction
[1] Both the Appellant and Respondent are advocates and solicitors who were at the material time partners in the Kuantan branch of the legal firm, M/s Mohd Mohtar & Co ['MM & Co']. Eventually, disputes arose between the parties concerning a Proposed Partnership Agreement which they could not resolve. It resulted in the present suit being filed by the Appellant for breach of contract.
[2] The appeal before us is against the decision of the Learned Judge of the Kuantan High Court ['LJ'] in dismissing the claim after the conclusion of a full trial after hearing the parties' respective witnesses.
Factual Background
[3] The legal firm of MM & Co was incorporated by the founding partner, Mohd Mohtar around 1998. Thereafter, MM & Co opened up branches in Kuantan, Pahang, Kemaman, Terengganu and Kuala Lumpur.
[4] The Kuantan branch was established and managed by Dato' Suffian ['DS'] who is also the Respondent's husband around the year 2000.
[5] The Respondent, then, joined the Kuantan branch around the year 2001 as a Legal Assistant to facilitate the firm's conveyancing matters.
[6] Thereafter, the Appellant joined the Kuantan branch around the year 2002 after he resigned from MBF Finance Berhad (currently known as Ambank Berhad).
[7] Around the year 2010, DS was offered a position in the Prime Minister's office. He then left the Kuantan branch of MM & Co and was substituted by the Respondent as a partner in the Kuantan branch.
[8] The Appellant was paid monthly drawings from the Kuantan Branch which amounted to RM1,000.00 initially in 2002 and was gradually increased to RM4,500.00 till September 2017.
[9] The Respondent served the Appellant a Memorandum dated 26 September 2017 sent to the Appellant together with a copy of the Profit & Loss Statement for year 2016, stating that the Appellant received payment in excess of RM39,468.93 based on the distribution of the profit and loss from the Kuantan branch for 2016.
[10] The Respondent then sent to the Appellant a letter dated 27 October 2017 informing the Appellant of the cessation of monthly drawings commencing October 2017.
[11] The Appellant responded with a letter dated 2 November 2017 stating that the 70% - 30% stake as agreed in the draft partnership agreement was only effective from 2017 upon its execution and objected to the unilateral cessation of the monthly drawings and insisted on his 50% share of the shareholding. There was no rebuttal from the Respondent to this position as expressly taken by the Appellant.
[12] The Respondent then ceased paying the Appellant drawings in October 2017 and therefore was alleged to have breached the terms of the partnership agreement.
[13] The Appellant filed this suit at the Kuantan High Court on 2 April 2018 and sought, amongst others, these orders:
(a) A declaration that the Appellant is a partner of M/s Mohd Mohtar & Co holding a 50% share of the profit and loss of M/s Mohd Mohtar & Co Kuantan branch.
(b) An order for specific performance for the Respondent to serve on the Appellant the Statement of Accounts of M/s Mohd Mohtar & Co Kuantan branch for the years 2010 to 2017 for auditing.
[14] The Respondent denies that the Appellant was a partner of M/s MM & Co Kuantan branch,
