LIM Kien Seng v Manoharan A/L Kandasamy (02(f)-44-04/2019(W))

1.

PENTADBIR HARTA PUSAKA LIM KIAN PEET, SIMATI … APPELLANT AND MANOHARAN A/L KANDASAMY (No.K/P: 451030-10-5341) (Yang beramal dibawah nama dan gaya Tetuan K. Mano & Associates) … RESPONDENT CORAM ROHANA YUSUF, PCA MOHD ZAWAWI SALLEH, FCJ IDRUS HARUN, FCJ ABDUL RAHMAN SEBLI, FCJ ZABARIAH MOHD YUSOF, FCJ 2 GROUNDS OF JUDGMENT [1] The respondent obtained a High Court Order, inter alia, for the bill of costs between him and the appellants to be taxed on a “solicitor and client” basis. The appellants appealed against the order but was dismissed by the Court of Appeal, hence the present appeal before us. [2] The facts can best be laid down by setting out the chronology of events leading to the present appeal. They are as follows: • In 2005, the respondent was appointed by Patent View Development Sdn Bhd (“Patent View”) and the appellants in their personal capacities to act for them in various legal proceedings. • On 22.3.2011, the appellants terminated the services of the respondent. • On 4.4.2011, the appellants’ solicitors, Messrs Culaz & Associates (“Messrs Culaz”) informed the respondent that they had instructions to represent Patent View and the appellants. 3 Messrs Culaz requested, inter alia, for a list of pending matters, final account of fees paid and the balance payable. • On 5.4.2011, the respondent stated his objection to any matter that was on record being handled by him or any other solicitor until the fees due and owed to him was settled in full. • On 16.3.2012, the respondent delivered proforma invoices amounting to RM4,911,553.00 to Patent View and the appellants. • On 2.4.2012, the appellants through Messrs Culaz disputed both the principal and quantum charged and inquired whether the respondent consented to the taxation of the bills under section 126(3) of the Legal Profession Act 1976 (“the LPA”). • On 22.9.2016, the respondent prepared a detailed bill of costs for taxation and effected service on the appellants. • On 21.11.2016, the respondent filed an Originating Summons, which was later amended, inter alia, for payment of the legal fees and order for taxation. 4 • On 19.6.2017, the High Court allowed the amended Originating Summons. • On 30.5.2018, the Court of Appeal dismissed the appellant’s appeal against the High Court Order. • On 22.4.2019 this court granted the appellants leave to appeal against the Court of Appeal decision on the following questions of law: Question 1 Whether the phrase “a bill of costs delivered by an advocate and solicitor” in section 126(1) of the LPA is to be interpreted as referring to a bill of costs that contain detailed items within the meaning of section 121(1) of the LPA and is thereby ready for taxation? Question 2 Whether the High Court can grant an Order for the Taxation of a Solicitors Bill of Costs under section 126(1) of the LPA after the expiry of the one year from the delivery of the Bill of Costs in the light of section 128(2) of the LPA? 5 Question 3 Whether the phrase “consent to taxation of a solicitor’s bill” in section 126(3) of the LPA is to be interpreted as requiring an agreement between the client and the solicitor that the solicitor’s bill be taxed? Question 4 Whether the High Court has jurisdiction to grant an order for taxation under section 126(3) of the LPA if the parties have consented to the taxation of bill of costs? Question 5 Whether the limitation period of 6 years under section 6(1)(a) of the Limitation Act 1953 (“the LA”) applies to any action by an advocate and solicitor to recover costs due for any business done by him under the LPA? Question 6 If yes, whether the limitation period of 6 years starts from the date the business by the advocate and solicitor is completed? 6 [3] Having heard arguments by both sides, both written and oral, we unanimously allowed the appellants’ appeal on the following broad grounds. The central issue in this appeal was whether or not the letter dated 2.4.2012 amounted to a consent by the appellants as found by both courts below. We found the findings to be unsupported by the evidence as the letter properly construed does not constitute consent as it merely asked whether the other party consented to taxation pursuant to section 126(3) of the LPA. Question 3 therefore assumes a fact that is not borne out by the evidence. [4] The fact that the respondent filed an Originating Summons dated 3.3.2012 for taxation reinforced our view that this was not a case under section 126(3) of the LPA. Given our finding on Question 3, we found it unnecessary to answer the rest of the questions posed. [5] Even if we were to answer all the leave questions instead of just dealing with Question 3, we would still be inclined to agree with the submissions of the appellants, in preference to the 37-page written submissions of the respondent dated 15 August 2019. In this regard we can do no better than to adopt as our own the submissions of learned counsel for the appellants on all those issues, as follows. 7 [6] The LPA provides for a specific framework regulating the legal profession. The then Deputy Minister of Law had the following to say when tabling the bill for the LPA on 18.12.1975: “The central purpose of this Bill, therefore, Sir, is to foster and sustain the high standard of the legal profession and to regulate the conduct of its ever increasing members …….. On the whole, Sir, the Legal Profession Bill has been carefully and comprehensively drafted to ensure a high ethical standard in legal practice and to provide adequate protection to the clients.” [7] The remuneration of an advocate and solicitor is an aspect of the legal profession that is wholly governed by Part VIII and Part IX of the LPA: Contentious business

Fee agreement By virtue of section 116 of the LPA, an advocate and solicitor is entitled to remuneration for services rendered. In respect of contentious business, an advocate and solicitor may enter into a written fee agreement with a client. Such an agreement may provide for the amount and manner of payment. 8

Absence of fee agreement Where a written fee agreement has not been entered into, then an advocate and solicitor may recover his costs through the issuance of either a gross sum or detailed bills of costs as stipulated by section 121 of the LPA. It is imperative for a bill of costs to be so delivered to entitle an advocate and solicitor to sue for the same: Section 124(1) of the LPA. Gross sum bill of costs If gross sum bill of costs is delivered on a party chargeable:

The said party chargeable may within 3 months of delivery of the said gross sum bill of costs require the advocate and solicitor to deliver a detailed bill;

(ii) If an advocate and solicitor sues on a gross sum bill, the court shall, if so requested by the party chargeable within 1 month from the service on that party of the writ or other originating process, order that the bill shall be taxed: Section 121(1)(b) of the LPA. Such taxation is to be conducted in accordance with the Rules of Court 2012: Section 121(c) of the LPA. 9 Detailed bill of costs In relation to a detailed bill of costs, a party chargeable can petition to obtain an order that the said bill of costs be taxed within 6 months from the date of delivery of the said bill of costs. The advocate and solicitor can do the same in the period after 1 month to 1 year from delivery of the bill of costs: Section 126(1) of the LPA. [8] The term used in section 126(1) of the LPA is “bill of costs”. Ex facie, no distinction is made between a gross sum bill and a detailed bill. However, a close reading of the provision would show that it is the bill of costs that is delivered on the party chargeable that is to be taxed. The provision reads: “An order for the taxation of a bill of costs delivered by any advocate and solicitor may be obtained by a petition as a matter of course by the party chargeable therewith, or by any person liable to pay the cost either to the party chargeable or to the advocate and solicitor, at any time within six month from the delivery of the bill, or, by the advocate and solicitor after the expiration of one calendar month, and within a year from, the delivery.” [9] This is reinforced by section 132 of the LPA which reads: 10 “Bills of costs for taxation as between advocate and solicitor and client shall be drawn in the manner provided by the Rules of the High Court, and the taxation shall be governed by the Rules.” [10] “Consent” within the meaning of section 126(3) of the LPA must be taken to mean “to give assent or permission to do something; agree”: Anastase [2001] Lexis citation 4671 citing Collins Concise English Dictionary. In Bell v Alfred Franks and Barlett Co Ltd [1980] 1 All ER 356, the English Court of Appeal extensively discussed the meaning of “consent” in section 23(4) of the English Landlord and Tenant Act 1954.It was held that “consent” required some positive action of an affirmative kind, and that it “must be something more than merely standing by and not objecting.” [11] In Harman & Co Solicitor Nominee Company v Secureland Mortgage Investments Nominees Ltd [1992] 2 NZLR 416, the New Zealand Court of Appeal had to deal with the definition of “consent” in the Land Transfer Act 1952. The court found that “consent” requires “a positive affirmative act such as written or oral acceptance or even an implied acceptance by conduct.” 11 [12] In Dobbs v Brayson (No.2) (2007) 38 Fam LR 95, the Family Court of Australia had to determine if the mother consented to the adoption of a certain procedure in the proceedings. The court in analyzing the definition of “consent” in various contexts found that context for the purposes of equity means a “voluntary agreement or yielding of the will: an accord of mind”. [13] The following emerge from the foregoing:

Whatever the case, the taxation of a bill of costs must be preceded by the delivery of a bill of costs, be it gross or detailed;

(ii) An order of taxation of a bill of costs is not required where both the advocate and solicitor and the client consent to the bill of costs being taxed:

such consent must be mutual and involve a positive demonstrative act;

there “must be something more than merely standing by and not objecting.” 12

(iii) Where a gross sum bill of costs is delivered, a taxation without the delivery of a detailed bill is only permitted under section 121(1)(b) of the LPA. In all other cases, where an order for taxation is applied for, then it must be applied for on the basis of a detailed bill of costs that fulfills the requirements of section 132 of the LPA, such bill of costs having been delivered on the party chargeable. [14] An advocate and solicitor who seeks an order of taxation for a detailed bill of costs must do so within 1 year from the delivery of such a bill. The High Court does not have the inherent jurisdiction to order otherwise given the clear legislative intention underlying section 126(1) and section 128(2) of the LPA. [15] Non-payment of costs within the scheme of the provisions identified above cannot in law amount to a breach of contract. The requirement for taxation is a procedural safeguard pertaining to the quantum of the amount of costs sought to be recovered by the advocate and solicitor. This is in aid of the recovery of costs owed to the advocate and solicitor contractually. The 1-year bar on advocates and solicitors under sections 126(1) and 128(2) of the LPA only applies to a taxation of bills of costs. 13 This safeguard is triggered at the instance of the party chargeable when he disputes the bill of costs. [16] Where an advocate and solicitor delivers a bill of costs, and that bill of costs is not disputed, then the advocate and solicitor is not required to procure an order for taxation. He is free to sue on that bill of costs. In such instance, he has a period of 6 years to do so from the date the contentious business was completed under section 6(1) of the LA. [17] In this regard, the English Court of Appeal decision in Coburn v Colledge [1897] 1 QB 702, which was cited with approval in Abbas v Affin Bank [2010] 1 LNS 1082 is instructive. It was held in that case that the enactment of the Solicitors Act 1843 merely provided for a specific procedure to enforce a solicitors’ right to his payment. The 1843 Act only provided a remedy to enforce that right. Lord Esher MR said at page 706- 707: “The Statute of Limitations itself does not affect the right to payment, but only affects the procedure for enforcing it in the event of dispute or refusal to pay. Similarly, I think s. 37 of the Solicitors Act, 1843, deals, not with the right of the solicitor, but with the procedure to enforce that right. It does not provide that no solicitor shall have any cause of action in respect of his costs or any 14 right to be paid till the expiration of a month from his delivering a signed bill of costs, but merely that he shall not commence or maintain any action for the recovery of fees, charges, or disbursements until then. It assumes that he has a right to be paid the fees, charges, and disbursements until then. It assumes that he has a right to be paid the fees, charges, and disbursements, but provides that he shall not bring an action to enforce that right until certain preliminary requirements have been satisfied. If the solicitor has any other mode of enforcing his right than by action, the section does not seem to interfere with it. …….. Therefore, as soon as the solicitor had done the work, he could have maintained his cause of action for work and labour. The defendant might plead that no bill of costs had been delivered, but that would only be by way of answer to a case which constituted a good cause of action. For these reasons I think that the cause of action in this case, to use the language of the statute of Anne, was “given, accrued, fallen or come” the moment that the work which the plaintiff was retained to do was completed.” [18] Lopes LJ pointed out the inconvenience that could be caused if solicitors were allowed to abstain from delivering their bills for a considerable period of time without any regard to the limitation period. He said at page 709: 15 “That may be so; but on the other hand, if the plaintiff’s contention is correct, the solicitor may abstain from delivering his bill for twenty years, and then at the end of that time he may deliver it and sue after the expiration of a month from its delivery. It seems to me that that would be a very anomalous and inconvenient result.” [19] Chitty LJ took into consideration the objects of the Limitation Act, which is to protect against stale demands. He also observed that the Solicitors Act 1843 does not affect the cause of action but only seeks to postpone the right of action until after one month from the date of delivery of the bill of costs. He said at page 709-710: “The object of the Statute of Limitations (21 Jac. 1, c. 16) was to afford a certain amount of protection against stale demands. I say to afford a certain amount of protection, because the statute does not bar the debt, but only takes away the remedy by action. The statute therefore makes a distinction between the cause of action. There does not appear to me to be any substantial difference for the present purpose between the language of the statute of James I and that of the statute of Anne. The question in this case is when the cause of action arose. It was said that on the one side that it only arose a month after the signed bill was delivered. That argument was based upon s. 37 of 6 & & Vict. C. 73. That enactment, like the Statute of Limitations, appears to me only to establish a limitation with regard to the remedy; it in no way affects the cause of action, which is money payable for work done, but only 16 postpones the right of action upon it for at least one month from the delivery of the bill.” [20] This would mean that an advocate and solicitor must deliver a bill of costs upon the party chargeable within 6 years. Where an advocate and solicitor sues in such circumstances, he bears the burden of proving the reasonableness of the amount claimed: Shamsudin bin Embun v P T Seah & Co [1985-1986] ALR (R) 1108 per Chan Sek Keong JC (as he then was) and Ng Kim Hoong & Anor v Pentadbir Tanah Wilayah Persekutuan [2018] 1 LNS 1552. [21] Applying the legal principles to the facts, we agree with the appellants that the answers to the leave questions should be as follows:

Whether the phrase “a bill of costs delivered by any advocate and solicitor” in section 126(1) of the LPA is to be interpreted as referring to a bill of costs that contains detailed items within the meaning of section 121(1) of the LPA and is thereby ready for taxation? Answer: Yes. 17

Whether the High Court can grant an order for the taxation of a solicitor’s bill under section 126(1) of the LPA after the expiry of one year from the delivery of the bill of costs in the light of section 128(2) of the LPA? Answer: Yes.

Whether the phrase “consent to taxation of a solicitor’s bill” in section 126(3) of the LPA is to be interpreted as requiring an agreement between the client and the solicitor that the solicitor’s bill be taxed? Answer: Yes.

Whether the High Court has the jurisdiction to grant an order for taxation under section 126(3) of the LPA if the parties have consented to the taxation of the bill of costs? Answer: No.

Whether the limitation period of 6 years under section 6(1) of the LA applies to any action by an advocate and solicitor to recover costs due for any business done by him under the LPA? Answer: Yes. 18 If the answer is yes, whether the limitation period of 6 years starts from the date the business done by an advocate and solicitor is completed? Answer: Yes. [22] It is clear to us that the respondent had not fulfilled the requirement of delivering a bill of costs and as such was not entitled to seek an order of taxation. On that basis alone, the Amended Originating Summons ought to have been dismissed. The proforma invoices were not bills of costs within the meaning of section 126(1) of the LPA. No bills of costs were ever delivered to the appellants. The respondent did not provide any reason for his failure to do so. Given that more than 6 years had lapsed since the completion of work, the respondent would no longer be entitled to take any of the foregoing steps. [23] Even if the respondent can be taken to have delivered bills of costs within the meaning of section 126(1) of the LPA, he was not entitled to seek an order of taxation after 1 year from the date of delivery of the bills. The purported bills were delivered on 16.3.2012 and the 1 year period lapsed on 16.3.2013. The Originating Summons was filed on 21.11.2016. [24] The question of consent did not arise. The appellants had merely enquired whether the respondent was open to having the bills taxed. The 19 respondent did not reply. He only filed the Originating Summons 5 years later. [25] It was for all the reasons as submitted by the appellants that we unanimously allowed the appeal with costs of RM50,000.00 including costs for the leave application, subject to payment of the allocator fee. We also made an order that a sum of RM5,026,607.60 be paid to the appellant within 14 days from the date of decision. - Signed - ABDUL RAHMAN SEBLI Judge Federal Court of Malaysia Dated: 18 December 2020 20 For the Appellants: Dato’ Malik Imtiaz Sarwar, Sonia Deva Doss dan Khoo Suk Chyi of Messrs Culaz & Associates. For the Respondent: Datuk Seri Gopal Sri Ram, Dato’ Harpal Singh Grewal, Archana Nair, Pang Wilson, Marcus Lee, Shailender Bhar of Messrs AJ Arrifin Yeo & Harpal.