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2021 MarsdenLR 3349
HIGH COURT MALAYA SHAH ALAM
MEGA MAYANG M & E SDN BHD – Appellant
Versus
DUTAMASA SDN BHD & ANOTHER CASE – Respondent
[Civil Suit Nos: BA-22C-26-07-2020 & BA-22C-27-07-2020]
The court reinforced the principle that solicitors cannot act against former clients if there is a risk of disclosing confidential information, upholding the integrity of legal proceedings.
Headnote:(A) Contracts Act 1950 – Section 71 – Legal Profession (Practice and Etiquette) Rules 1978 – Application to restrain solicitors from acting; conflict of interest; confidentiality; inherent jurisdiction of the court – The court restrains the plaintiffs’ solicitors based on the risk of disclosure of confidential information obtained from the defendants, affirming the need to prevent injustice and protect the integrity of legal proceedings. (Paras 12-18, 23-29)
(B) Inherent Jurisdiction of the Court – The court has the inherent power to disqualify solicitors where public perception necessitates it to uphold justice and professional standards. (Paras 17, 21-22)
(C) Striking Out Applications – Court finds that the two suits disclose reasonable causes of action under Section 71 of the Contracts Act and quantum meruit; thus, the striking out applications are dismissed. (Paras 31-42)
Facts of the case: The plaintiffs sought to enforce claims for work done related to construction projects, while the defendants applied to restrain their solicitors from acting due to concerns over confidential information and conflict of interest arising from prior representations related to the projects.
Findings of Court: The court determined that the solicitors had acquired confidential information while representing the defendants, which justified the restraining order to uphold the integrity of the judicial process.
Issues: The primary issue was whether the plaintiffs’ solicitors should be restrained from acting due to a conflict of interest and the handling of confidential information from former clients. The court also addressed the validity of the claims in regard to the striking out applications.
Ratio Decidendi: The court emphasized that to sustain the integrity of legal representation and the administration of justice, it is pivotal to ensure that solicitors do not act against former clients when there exists a risk of disclosing confidential information. Jusitce must not only be done but must be seen to be done, thus a restraining order was warranted under the inherent powers of the court.
Result: The court allows the applications to restrain the solicitors but dismisses the striking out applications. (Paras 29, 42)
Applications By The Defendant Companies To Restrain Solicitors For Plaintiff Companies And To Strike Out Two Suits
Wong Kian Kheong J:
A. Introduction
[1] These two suits (Two Suits) concern the following parties:
(1) in Civil Suit No BA-22C-26-07-2020 (First Suit), the plaintiff company is Mega Mayang M & E Sdn Bhd [Plaintiff (First Suit)] while the defendant company is Dutamasa Sdn Bhd [Defendant (First Suit)]; and
(2) Mega Dynamic Resources Sdn Bhd [Plaintiff (Second Suit)] has filed Civil Suit No BA-22C-27-07-2020 (Second Suit) against Damansara Uptown Retail Centre Sdn Bhd [Defendant (Second Suit)].
[2] All the parties have agreed for the Two Suits to be heard together.
[3] The Plaintiff (First Suit) and Plaintiff (Second Suit) (referred collectively in this judgment as the "plaintiffs") are represented by Messrs Paul Ong & Associates (POA).
[4] I shall refer hereinafter to the Defendant (First Suit) and Defendant (Second Suit) as the "defendants". The defendants have filed the following four applications in these Two Suits (Four Applications):
(1) the defendants have applied to strike out the Two Suits (Two Striking Out Applications); and
(2) the defendants have filed two applications to, among others, restrain POA from acting for the plaintiffs in the Two Suits (Two Restraining Applications).
[5] All the parties in the Two Suits have agreed for the Two Restraining Applications to be decided before the Two Striking Out Applications.
B. Background
[6] For the First Suit:
(1) the Defendant (First Suit) was a developer of Phase 1 (First Project) of a construction project known as "Damansara Uptown Residences" (Development);
(2) the Defendant (First Suit) appointed Ehsan Bina Sdn Bhd (Ehsan) as the main contractor for the First Project;
(3) Ehsan had appointed the Plaintiff (First Suit) for the following works:
(a) by way of a "Letter of Acceptance" (LA) dated 30 May 2012, the Plaintiff (First Suit) was appointed to provide Cold Water Sanitary Plumbing Services (CWSPS) for the First Project; and
(b) by way of a LA dated 30 January 2013, the Plaintiff (First Suit) was appointed to provide Electrical and Telephone Services (ETS) for the First Project;
(4) the Plaintiff (First Suit) pleaded in the Amended Statement of Claim in the First Suit [ASOC (First Suit)] as follows, among others:
(a) the Plaintiff (First Suit) was invited by the Defendant (First Suit) to tender for CWSPS and ETS;
(b) CWSPS and ETS were for the benefit of the Defendant (First Suit);
(c) the Plaintiff (First Suit) had negotiated with the Defendant (First Suit) regarding CWSPS and ETS;
(d) the Defendant (First Suit) informed the Plaintiff (First Suit) that as a matter of formality [Arrangement (First Project)]:
(i) the Defendant (First Suit) would appoint Ehsan as the main contractor for the First Project; and
(ii) Ehsan would then appoint the Plaintiff (First Suit) to perform CWSPS and ETS;
(e) the Plaintiff (First Suit) had objected to the Arrangement (First Project) but was informed by the Defendant (First Suit) as follows:
(i) the Defendant (First Suit) and consultants appointed by the Defendant (First Suit) would supervise CWSPS and ETS; and
(ii) the Defendant (First Suit) would pay directly to the Plaintiff (First Suit) for CWSPS and ETS;
(f) based on, among others, the matters stated in the above sub-paragraph (e), the Plaintiff (First Suit) agreed to the Arrangement (First Project);
(g) Ehsan had appointed Genesis Spectrum Sdn Bhd (Genesis) to provide Air Conditioning and Mechanical Ventilation Services (ACMVS) for the First Project. By a novation agreement dated 27 March 2014 agreed by the Plaintiff (First Suit), Ehsan and Genesis, ACMVS was taken over from Genesis by the Plaintiff (First Suit);
(h) the Defendant (First Suit) had made direct part payments to the Plaintiff (First Suit) for CWSPS, ETS and ACMVS [which will be referred collectively hereinafter as "Works (First Project)"];
(i) on 29 July 2015, the Plaintiff (First Suit) was prevented by the Defendant (First S
