Solicitors must strictly adhere to stakeholding duties outlined in agreements; failure constitutes professional misconduct violative of fiduciary obligations, leading to disciplinary action.

[1] This is an appeal by the partners (appellants) of Blanche Kayveas & Co, a firm of solicitors, against the finding of the Disciplinary Committee (DC) established under Part VII of the Legal Profession Act 1976 (Act) that the appellants had breached their duties as stakeholders of monies held by them and were therefore guilty of misconduct within the meaning of s 94(3)(o) of the Act, for which the appellants were each ordered to pay a penalty of RM5,000.00 to the Disciplinary Fund established under s 103H of the Act. Finding of misconduct and fine were both endorsed by the Disciplinary Board (DB) acting under s 103D of the Act.

[2] Section 103E of the Act provides that "any party aggrieved by any decision or order made by the Disciplinary Board under subsection 100(5), (8) or (9) or s 103D shall have the right to appeal to the High Court within one month of the receipt of the notification of the decision or order complained against; and no appeal shall lie against any other decision or order made by the Disciplinary Board" (in contrast, any appeal against the decision of the High Court in an application to restore to the roll the name of an advocate and solicitor, is made directly to the Federal Court). The appellants appealed, but found no success at the High Court and Court of Appeal. Hence this appeal (see s 103E(5) of the Act).

[3] The following background facts are not in dispute. By agreement dated 3 May 1996 (agreement), one Avacado Corporation Sdn Bhd (vendor) agreed to sell, and one Jordone Corporation Sdn Bhd (purchaser) agreed to purchase land held under Geran Mukim 453 for Lot 1910 Mukim of Cheras, District of Ulu Langat (land) at the sale and purchase price of RM2,048,000.60. Preamble 5 to the agreement specified Blanche Kayveas & Co as the vendors solicitors and Faeizah Kerk Bong & Associates as the purchasers solicitors. The purchaser paid a 10% deposit to the vendor upon execution of the agreement. For the purposes of completion of the purchase, the purchaser had obtained a loan of RM1,222,000.00 from Bank Bumiputra Malaysia Berhad. There was a differential sum of RM621,200.54 between the sale price (after deduction of the 10% deposit of RM204,800.06) and the loan sum. In relation to that differential sum, cl 2 of the agreement provided that:

Clause 2(1)

"The balance of the purchase price amounting to RINGGIT ONE MILLION EIGHT HUNDRED AND FORTY THREE THOUSAND TWO HUNDRED AND SEN FIFTY-FOUR (RM1,843,200.54) only (hereinafter referred to "the balance purchase price") shall be paid or caused to be paid by the purchaser(s) to the vendor(s)s solicitors as stakeholders within NINETY days from the date of this agreement (hereinafter referred to as "the completion date").

Clause 2(4)

The Vendor(s)s Solicitors are hereby authorised to utilise part of the balance purchase price to redeem the said property from the chargee and thereafter to release the balance purchase price less the retained sum referred to in cl 6 below to the vendor(s) fourteen days after presentation of the transfer in favour of the purchaser(s)."

[4] Suffice it to say that the completion date was extended. On 23 August 1996 (see p 137 of the appeal record), Faeizah Kerk Bong & Associates forwarded the differential sum to Blanche Kayveas & Co.

[5] Preamble 4 to the agreement stated that the land had been charged to the Hongkong Bank Malaysia Berhad (Hongkong Bank). To effectuate the intended transfer of the said land to the purchaser, the vendor had to obtain a discharge of the land from the Hongkong Bank. B