An oral agreement for retainer fees contingent on success in litigation violates the written requirement under the Advocates Ordinance and is deemed champertous and unenforceable.

[1] This is an application by the defendant to strike out the suit of the plaintiff under O. 32 r. 1 , O. 18 r. 19 , O. 19 r. 7(1) , O. 92 r. 4 , O. 14A Rules of the High , 1980 .

Brief Facts

[2] The defendant is a partner in the law firm of Messrs. Thomas, Shankar Ram & Co Advocates. The said law firm represented the plaintiff in another case (Suit No. 22-133-2009-I). The plaintiff herein was the 3rd plaintiff in that suit. One Jeffrey Law, a director of the plaintiff and his wife were the 1st and 2nd plaintiffs. They had sued their Chinese partners over some joint venture deal which had gone sour. I shall not go over the details of that suit save to say that the plaintiffs in Suit No. 22-133-2009-I had sought an urgent injunctive order against their erstwhile business associates. The plaintiffs' claim in that suit was for the sum of RM795,903.73. At the initial stage, the plaintiffs were successful in their ex parte application for injunction. Later they also obtained an ad-interim injunction. However when the inter parte injunction application was finally adjudicated, the plaintiffs failed to obtain the interlocutory injunction. According to the defendant, the plaintiffs blamed him for the loss. It is not in dispute that the plaintiffs had paid the defendant retainer fee of RM200,000. This instant suit is by the 3rd plaintiff (Mastika Jaya Timber Sdn Bhd) in Suit No. 22-133-2009-I against their own solicitor for:

1. Refund of the retainer fee of RM200,000.

2. The sum of RM795,903.73 which the plaintiff had claimed in Suit No. 22-133-2009-I against their former business associates.

[3] In addition, the plaintiff is also claiming general, aggravated and exemplary damages, interest and costs. The basis of the plaintiff's claim for a refund of the retainer fee is as follows. The plaintiff pleaded that there was an oral contract that the defendant would refund the retainer fee of RM200,000 if he was unsuccessful in obtaining the interlocutory injunction that they sought. In respect of the other claims, the plaintiff pleaded that the defendant was incompetent and unprofessional in his work in that he had made uncharitable remarks about the judge who dismissed the injunction application, attacked opposing lawyers in affidavits and had also engaged a Singapore lawyer without his consent and in breach of the law relating to legal practice in Sarawak.

Preliminary Issue

[4] Counsel for plaintiff submitted that the striking out application (encl. 7) should not be dismissed outright because of the principle of res judicata . The res judicata argument arose in this way. After the writ was served by the plaintiff, the defendant filed this application to strike out the claim. Before the application was heard, the plaintiff entered default judgment against the defendant for failure to file the statement of defence. The defendant filed an application (encl. 29) to set aside the judgment in default. The defendant repeated the prayers and grounds for striking out the writ of summons and statement of claim in the setting aside application. As the res judicata argument is based on the decision of the learned judicial commissioner, I find it necessary to reproduce the relevant excerpts from her written ruling. The learned judicial commissioner made the following observation at the outset:

It is to be observed that the prayers on the striking out of the pleadings are identical to that found in the earlier application for striking out and I am at loss as to why there is any compelling need or any need at all to file two applications for the same reliefs for it served no purpose other than to confuse and add on to the cost of the proceeding