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2010 MarsdenLR 2111
COURT OF APPEAL , PUTRAJAYA
ALAN MICHAEL ROZARIO – Appellant
Versus
MERBOK MDF SDN BHD – Respondent
[Civil Appeal No: W-02-444-2007]
Partners in a firm are jointly and severally liable for obligations related to the firm's business, regardless of individual involvement in the specific transaction.
Headnote:(A) Partnership Act 1961 - Sections 12, 13, and 14 - Breach of undertaking - A legal firm holding funds as stakeholder failed to return RM1 million upon the execution of an agreement, leading to summary judgment against partners - Partners are jointly and severally liable for acts executed within the firm's business scope. (Paras 3, 4, 9, 21, 24)
(B) Appeal - No bona fide triable issues raised - Appellant's assertion of forgery and non-involvement were dismissed due to lack of merit and evidence. (Paras 7, 25)
Facts of the case:
The legal firm Shuhaiza & Partners retained RM1 million pending an agreement, failing to return it after the transaction’s non-execution, thus breaching their undertaking to the plaintiff, Merbok MDF Sdn Bhd. (Paras 2, 16)
Findings of Court:
There is no merit in the appeal; the 2nd defendant remains liable as a partner for the firm's actions conforming to the agreement. (Paras 8, 20, 25)
Issues: Determining liability for breach of an undertaking by partners in a firm and evaluating the validity of defenses raised by the appellant. (Paras 6, 19)
Ratio Decidendi: The court concluded that the partners of a legal firm are jointly and severally liable for obligations arising from actions undertaken in their professional capacity, dismissing claims of individual non-involvement. (Paras 21, 24)
Result: Appeal dismissed with costs.
| Table of Content |
|---|
| 1. establishing partnership and legal firm's stakeholder duty. (Para 1 , 2 , 3) |
| 2. defendant's appeals and defenses against judgments. (Para 4 , 5 , 6) |
| 3. court's analysis on triable issues and defense. (Para 7 , 8 , 9) |
| 4. context of the consultancy agreement and stakeholder obligations. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16) |
| 5. liability of partners despite knowledge of wrongful acts. (Para 18 , 19 , 20 , 21) |
| 6. legal validity of agreements and partner's actions within firm's business. (Para 22 , 23 , 24) |
| 7. final judgment and dismissal of the appeal. (Para 25) |
[1] Shuhaiza binti Shuib and Alan Michael Rozario were the only two partners of the legal firm known as Shuhaiza & Partners at all material times, carrying on the business of advocates and solicitors.
[2] Merbok MDF Sdn Bhd's claim against the legal firm of Shuhaiza & Partners is for the return of the sum of RM1 million which the firm was holding as stakeholder pending the execution of an agreement.
[3] On 17 May 2007 the High Court granted summary judgment against Shuhaiza binti Shuib (1st defendant) and Alan Michael Rozario (2nd defendant) for the refund of the RM1 million.
[4] The High Court Judge found inter alia ;
By failing to return the money retained by the firm as stakeholder the 1st and 2nd defendants as partners of the firm were in breach of the undertaking to do so. The plaintiff is therefore entitled to its return.
A partner in a firm is jointly and severally liable for the act of the other executed in the course of their vocation that they had undertaken to pursue.
There is no triable issue in the plaintiff's claim that ought to go for trial.
[5] The 1st defendant has not appealed against the summary judgment.
[6] The 2nd defendant (the appellant before us) is however dissatisfied against the summary judgment entered against him and has alleged that the High Court Judge has failed to appreciate:
(a) that the 1st defendant in her letter dated 21 July 2005 had admitted that the 2nd defendant was not involved in the matter;
(b) that the 2nd defendant is protected under s. 12 of the Partnership Act 1961 as the transaction was not carried out in the ordinary course of the business of the firm;
(c) that the Consultancy Agreement is invalid and that the 1st defendant in misappropriating the stakeholders money was in breach of s. 15 of the Partnership Act 1961 ;
(d) that the letter of undertaking is a forgery.
[7] We do not accept that the allegation that the High Court Judge had failed to appreciate that the letter of undertaking was a forgery warrants a trial. In the light of the findings by the judge on the evidence before the Court, it is manifestly clear that the allegation of forgery is nothing but a bare attempt to sculpt and provide a triable issue. The Stakeholders' Money would not have been paid to Shuhaiza & Partners without it first having issued the letter of undertaking. The appellant cannot in one breath seek to rely upon the statutory declaration for his benefit, and in the next breath say that the letter of undertaking, consistent with the receipt of the Stakeholder Money after its issue, is a forgery. In our view the allegation of forgery is not, in the circumstances, a bona fide triable issue.
[8] We have perused through all the affidavits and documentary evidence that were before the High Court Judge. We are unanimous that there are no merits in this appeal before us and that there are no bona fide triable issues or defence on merits to warrant a trial on the assertions made by the appellant (hereinafter referred as the 2nd defendant).
[9] The plaintiff's claim is based on a breach of undertaking, primarily by the 1st defendant and, as against the 2nd defendant, by relying on ss. 12 , 13 , and 14 of the Partnership Act 1961 which reads as follows:
12. Liability of firm for wrongs
Where, by any wrongly act or omission of any partner acting in the course of the business of the firm or with the authority of his co-partners, loss or injury
