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2023 MarsdenLR 1444

FEDERAL COURT PUTRAJAYA
MAJLIS PEGUAM MALAYSIA – Appellant
Versus
MICHAEL JOSEPH CARVALHO & ANOR – Respondent
[Civil Appeal No: 02(f)-5-02-2023]



Petitioner Advocates:Gregory Das,Jeremiah Rais,Leah Samuel ,Respondent Advocate: Subashini Gunasegaran,Baljeet Kaur

The Compensation Fund must compensate losses from dishonest acts of any advocate, regardless of whether they practice as sole proprietors or in partnerships, as per the Legal Profession Act 1976.

Headnote:(A) Legal Profession Act 1976 - Section 80 - Advocates and Solicitors' Compensation Fund Rules 1978 - The power of the Malaysian Bar to compensate public members for losses due to dishonesty by advocates in partnerships is affirmed. The Court of Appeal ruled that the Bar Council's Guidelines restricting claims to sole proprietors are ultra vires, as subsections (8) and (9) of Section 80 do not distinguish between sole proprietorships and partnerships. The court emphasized that the Compensation Fund is intended to protect the public from losses caused by any advocate and solicitor, irrespective of their practice structure. (Paras 20, 25, 32, 65)

Facts of the case:
The respondents, beneficiaries of a property, suffered losses due to the dishonest actions of an advocate who was a partner in a firm. The Bar Council denied their claim for restitution from the Compensation Fund based on the Guidelines, which were contested.

Findings of Court:
The Court of Appeal found the Bar Council's refusal to entertain the claim unreasonable and declared the restrictive Guidelines invalid.

Issues: The main issues included the interpretation of the eligibility criteria for claims against the Compensation Fund and the validity of the Bar Council's Guidelines.

Ratio Decidendi: The court held that the Guidelines cannot limit statutory rights under Section 80, as the law provides for grants to mitigate losses from dishonest acts of any advocate, regardless of their practice structure.

Result: Appeal dismissed with costs awarded to the respondents.

Table of Content
1. power of the bar to compensate public losses. (Para 1 , 2)
2. disciplinary actions taken against shan. (Para 3 , 4 , 5 , 6 , 8)
3. appellant's refusal to entertain claims. (Para 7 , 9)
4. high court's dismissal of respondents' summons. (Para 10 , 11)
5. guidelines on compensation fund eligibility. (Para 12 , 13 , 14 , 15)
6. rationale for compensation fund restrictions. (Para 16 , 17 , 18)
7. court's interpretation of subsections on dishonesty. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25)
8. bar council's rule-making authority. (Para 26 , 27 , 28)
9. guidelines cannot restrict statutory rights. (Para 29 , 30 , 31 , 32)
10. legislative intent behind compensation fund. (Para 33 , 34 , 35 , 36)
11. deference to professional bodies' governance. (Para 37 , 38 , 39 , 40 , 41 , 42)
12. limitations on bar council's discretion. (Para 43 , 44 , 45 , 46)
13. compensation fund's purpose and application. (Para 47 , 48 , 49 , 50)
14. alternative remedies for respondents. (Para 51 , 52 , 53 , 54 , 55)
15. no statutory requirement for alternative remedies. (Para 56 , 57 , 58)
16. court of appeal's order on compensation. (Para 59 , 60 , 61 , 62 , 63)
17. final dismissal of appeal with costs. (Para 64)
Abdul Rahman Sebli CJSS:

[1] The issues that arise in this appeal concern the power of the Malaysian Bar (the appellant) to compensate members of the public using money from the Bar Council's Compensation Fund for losses arising from acts of dishonesty by advocates and solicitors practicing in partnerships (as opposed to sole proprietorships).

[2] The facts as narrated by the appellant are undisputed and they are as follows, with the necessary modifications. The respondents lodged a complaint with the Advocates and Solicitors' Disciplinary Board ("the ASDB"). The complaint was as follows:

(1) The respondents were two out of four beneficiaries of a property held under P.N. No. Hakmilik Lot 4091, Mukim Hulu Kinta, Daerah Kinta, Perak Darul Ridzuan ("the property");

(2) The respondents consented to the sale and transfer of the property to Kawan Properties Sdn Bhd ("the purchaser"). The respondents' sister, one Cecelia Bernado Carvalho ("the vendor"), executed a sale and purchase agreement dated 12 July 2011 to sell the property to the purchaser for the sum of RM2,524,410.00;

(3) One Shan Theivanthiran ("Shan") practicing as a partner of Messrs Thevin Chandran & Associates acted as solicitors for the vendor;

(4) The purchaser's solicitors issued a cheque for the sum of RM2,145,748.50 ("the balance purchase price") to the vendor's solicitors Messrs Thevin Chandran & Associates;

(5) The balance purchase price was intended to be divided equally between the respondents being the two other beneficiaries of the property;

(6) Shan then issued two cheques, each for the sum of RM521,427.00 to the respondents;

(7) However, the respondents did not cash the cheques as Shan told them not to do so until further notice;

(8) Shan subsequently issued and banked in a cheque for the sum of RM1,042,854.00. This sum was intended to be divided between the respondents. The cheque was dishonoured;

(9) Shan failed to make payment of the sum of RM1,042,854.00 to the respondents despite making assurances to do so.

[3] After a due inquiry, the ASDB affirmed the Disciplinary Committee's finding of liability and recommendation on punishment against Shan and found him guilty of professional misconduct.

[4] By way of an Order dated 18 July 2020, the ASDB ordered Shan to be struck off the Rolls of Advocates and Solicitors of the High Court of Malaya within 21 days from the date of the ASDB Order ("the ASDB Order"). The ASDB further ordered that:

(1) Shan make a restitution in the sum of RM521,427.00 to the 1st respondent within one month of the ASDB Order; and

(2) Shan make a restitution in the sum of RM521,427.00 to the 2nd respondent within one month of the ASDB Order (collectively "the restitution sum").

[5] By email dated 21 September 2020 addressed to the appellant, the respondents' solicitors wr

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