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2023 MarsdenLR 174
HIGH COURT MALAYA PENANG
ISMAIL KHOO & ASSOCIATES – Appellant
Versus
YEOH YIH TERK – Respondent
[Originating Summons No: PA-24NCVC-774-08-2022]
Retainer agreements between a law firm and client are enforceable unless proven to be tainted by undue influence or classified as illegal contingency fee arrangements, which was not established in this case.
Headnote:(A) Legal Profession Act 1976 - Sections 116 and 118 - Enforcement of retainer agreements - Plaintiff law firm sought payment from defendant client for services rendered under two retainers totaling RM600K - Defendant claimed undue influence and argued agreements were contingency fees, thus illegal - Court found retainer agreements valid and enforceable, amending total fees to RM450K with interest and costs awarded. (Paras 76-78)
(B) Undue influence - Court held that the defendant failed to prove undue influence, finding no evidence of coercion or manipulation in signing agreements. (Paras 33-44)
(C) Contingency fee argument - Court determined agreements did not constitute a contingency fee arrangement under the Act, as payment was not contingent on success in litigation. (Paras 47-54)
Facts of the case:
The plaintiff law firm entered into two retainer agreements with the defendant, who later sought to withdraw from a lawsuit filed against multiple defendants, claiming he was unduly influenced and asserting the agreements were illegal contingency fees. (Paras 1-5)
Findings of Court:
The court found the agreements valid under the LPA, ruling that the defendant failed to prove undue influence or that the agreements were contingency fees. The total fee was amended to RM450K. (Paras 76-78)
Issues: The main issues addressed were the enforceability of the retainer agreements, allegations of undue influence, and whether the agreements constituted illegal contingency fee arrangements. (Paras 7, 33-34, 47)
Ratio Decidendi: The court emphasized the importance of clear evidence in claims of undue influence and clarified that retainer agreements are enforceable unless proven unfair or unreasonable, which was not established here. (Paras 33-44, 76-78)
Result: Judgment granted for the plaintiff for RM450K, plus interest and costs. (Paras 78-81)
| Table of Content |
|---|
| 1. client-lawyer relationship established. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. court's procedural decisions on evidence. (Para 8 , 9) |
| 3. details of retainers and warrant to act. (Para 10 , 11 , 12) |
| 4. legal provisions on lawyer fees. (Para 13 , 14 , 15 , 16) |
| 5. contradictions in d's assertions. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25) |
| 6. implications of d's failure to refute evidence. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32) |
| 7. arguments regarding undue influence. (Para 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46) |
| 8. arguments against contingency fee claim. (Para 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54) |
| 9. clarification of contractual obligations. (Para 55 , 56 , 57 , 58) |
| 10. arguments on reasonableness of fees. (Para 59 , 60 , 61 , 62 , 63 , 64) |
| 11. factors considered for determining fees. (Para 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74) |
| 12. judgment on enforceability of agreement. (Para 75 , 76 , 77 , 78) |
| 13. final orders including payment and costs. (Para 79 , 80) |
Prelusion
[1] The Plaintiff (P) is a law firm. The Defendant (D) is P's client.
[2] D signed two Retainer letters and a Warrant To Act to retain P's services and to pay P's fees.
[3] P filed Penang High Court Suit PA-22NCVC-198-12/2021 (Suit 198) for D (as the plaintiff in Suit 198) to sue 50 defendants, who included D's elder brother and other members of his family, and a string of companies.
[4] Approximately two weeks after Suit 198 was filed, D asked P to withdraw Suit 198. Another two weeks later, D filed a Notice Of Intention To Act In Person, and discontinued Suit 198 himself.
[5] P demanded payment of the agreed retainer fees. D refused to pay, asserting that-
(1) he was unduly influenced to sign the two Retainers and the Warrant To Act;
(2) the two Retainers were a contingency fee arrangement, which was prohibited by the Legal Profession Act 1976 ( LPA ); and
(3) the fees were "grossly unreasonable and unfair".
[6] P filed this Originating Summons for an Order that D pays P the fees stated in the two Retainers, with interest and costs.
[7] Are the two Retainers enforceable? If yes, how much should D be ordered to pay P?
The Proceedings
[8] I considered the cause papers filed in this matter - the Originating Summons and Affidavits - and found that there are numerous disputes of fact, with diametrically conflicting affidavit evidence. I found that the just, expeditious and economical disposal of this matter is best secured by hearing this matter partly by oral evidence and partly by affidavit evidence, with cross-examination - following O 28 r 4(3) of the Rules Of Court 2012.
[9] I then directed that P's principal Advocate and Solicitor (John Khoo) and D take the witness stand and render viva voce evidence to prove the facts that they respectively deposed to.
The Three Pertinent Documents
[10] The first Retainer is dated 19 November 2021. D signed and thumb- printed this Retainer. The pertinent terms in this Retainer include terms to the following effect-
(1) the subject matter is stated as "Fees for My Matter Against Yeoh Yih Sean (D's elder brother) and other related parties;
(2) D agrees to pay P RM300K (excluding Government service tax and disbursements);
(3) D is bound by the terms of the Retainer and the fees are payable "upon any settlement of the matter" from the engagement of P's services until settlement;
(4) D understands that the matter is "complicated and complex";
(5) D also understands that the matter is "not easy", as he had "gone through many lawyers that can't do anything about it";
(6) the Retainer is binding on D's "heirs, successors-in-title, assigns and personal representatives".
[11] The second Retainer is dated 30 November 2021. D similarly signed and thumb-printed it. Apart from similarly-worded terms as the first Retainer, this second Retainer also has terms to this effect-
(1) the subject matter is stated as "Additional Fees for My Matter Against Yeoh Yih Sean and other related parties;
(2) the ad
