The court established that all defendants, including incoming partners, are jointly and severally liable for misappropriated client funds, reinforcing fiduciary duties in legal practice.

JUDGMENT

Su Tiang Joo J:

"Of equal importance, the public too must be able to depend on the honesty and integrity of all practitioners in the legal profession which plays an indispensable role in the administration of justice and conduct of matters in law for members of the public"

(As per Vernon Ong JCA (later FCJ) in Majlis Peguam Malaysia v. Lim Yin Yin , [2019] 6 MLJ 571 , para [28])

Introduction

[1] In undertaking a housing project, the plaintiff entrusted the seven defendants, four of whom were advocates and solicitors, two were law firms and one who was alleged to be held out to be a partner of one of the law firms, to handle the conveyancing aspect including collecting the purchase price and loan sums for its benefit. The plaintiff sued for inter alia breach of contract and trust and negligence for the monies which ought to have been received by the defendants and remitted to it, general, aggravated and exemplary damages, interest on the monies and damages together with costs on an indemnity basis. After a trial conducted over 12 days, judgment was pronounced in favour of the plaintiff and these are the grounds for the decision made.

[2] In this judgment, the following issues, which are not free from difficulties, are addressed:

(i) whether an incoming partner should be liable jointly and severally with existing partners to account for monies in a client's or trust account which was opened before the incoming partner joined the law firm but with the client's or trust account continuing to be held under the name of the law firm after the incoming partner has joined the law firm;

(ii) whether a retired partner of a law firm should be liable jointly and severally with the existing partners to account for monies in a client's or trust account opened when he was a partner and which were not accounted to the client when he ceased to be a partner of the law firm; and

(iii) whether a salaried partner as well as another person who is not an advocate and solicitor but held out to be a partner of a law firm should similarly be liable jointly and severally with the other partners; and

(iv) whether a law firm and its partners who are said to have relinquished the firm's files for its client but who continue to receive monies under the name of its law firm ought to be jointly and severally liable to account to the client.

Parties

[3] The plaintiff is a statutory body corporate established under the National Land Rehabilitation and Consolidation Authority (Succession and Dissolution) Act 1997 . One of its objectives is to look after the welfare of the settlers' community and improve their quality of life and the lives of future generations that follow.

[4] The 1st defendant (Adli Sharidan Sahar or "D1"), 2nd defendant (Nurul Adzliana Ainnie Abdullah or "D2"), 3rd defendant (Mohd Irwan Nizam Khorizan or "D3"), 4th defendant (Norazlina Mat Saad or "D4") were at the material time, advocates and solicitors.

[5] Both D1 and D2 are cousins and the 7th defendant (Nor Azlan Md Huri or "D7") is the husband of D2.

[6] The 5th defendant (Sharidan & Co or "D5") and the 6th defendant (Adzliana & Partners or "D6") are law firms.

[7] D7 was the Office and Marketing Manager of D6. He was also the Office and Marketing Manager of D5 and was held out to be a partner of D6 in D6's firm profile even though it is undisputed that he was never an advocate and solicitor.

Legal Representation Of The Defendants

[8] D1 and D5 are represented by Messrs Afiq Aziz & Co. The other defendants, D2, D3, D4, D6 and D7 had initially retained the same set of solicitors, Messrs Skrine. A common defence was put up. However, new solicitors came in to act for them and an amendment to the defences of D2 and D3 as well as that of D4 and D6 was filed. During the trial, the legal representations of seven defendants were as follows:

(i) D1 and D5 by Messrs Afiq Aziz & Co;

(ii) D2 and D3 by Messrs Fadhly Yaacob & Co;

(iii) D4 and D6 by Messrs Skrine; and

(iv) D7 by Messrs Rafiee & Sani.

[9] D7 had been