Majlis Peguam Malaysia v Lim Yin Yin (W-02(A)-1056-06/2017)

This is the Bar Council’s appeal against the part of the decision of the High Court which set aside the Disciplinary Board’s order that the Page 2 of 18 respondent be struck off the Roll of advocates and solicitors of the High Court in Malaya and substituting it with an order that the respondent be suspended from practice as an advocate and solicitor for a period of 3 years.

After hearing of counsel on 13.3.2018, we allowed the appeal. We set aside the order of the High Court and restored the order of the Disciplinary Board. We now set out the reasons for our decision.

For convenience, we will set out the chronology of agreed facts. a) The Disciplinary Board (‘DB’) received a complaint lodged by En. Isnin bin Rahim (‘the Complainant’) dated 30.1.2015 against the respondent relating to the respondent’s failure to remit/release the sum of RM815,120.00 (‘the Monies’) being the balance of the purchase price which the respondent held as stakeholder on behalf of her clients which were the Complainant and Puan Norhayati Binti Mohamed Nasir (jointly referred to as ‘the Clients”) on or before 29.12.2014. b) On 7.5.2015, the DB wrote to the respondent requesting for a written explanation from the respondent about the complaint. c) Meanwhile, the DB received a letter dated 19.5.2015 from the Complainant to withdraw the complaint against the respondent. Page 3 of 18 d) The Bar Council decided to intervene in the complaint although the same was withdrawn by the Complaint. e) On 15.1.2016, the hearing for the respondent to show cause was conducted by the DB with the attendance of the members of the DB. f) The hearing was dealt with summarily after the respondent had confirmed in writing that she agreed for the matter to be dealt with summarily. g) After listening to the respondent’s explanation and after balancing the respondent’s interest as an advocate and solicitor with the interest of the public at large as well as the interest of the legal profession the DB made the decision to strike the respondent off the Roll. h) Dissatisfied with the DB’s decision, the respondent appealed to the High Court.

The key findings of the learned judge may be summarised as follows: i there was no procedural non-compliance or breach of natural justice at the disciplinary hearing before the DB; Page 4 of 18 ii the respondent had used up the Monies from the client account and was unable to release such monies on the specified date; iii it was a conscious breach by the respondent as the undertaking was that the Monies was to be released to the clients on 29.12.2014; iv the respondent tried to excuse her conduct by pointing to her difficult personal circumstances at the material time and that these personal circumstances did not excuse her misconduct; v the breach of the undertaking and stakeholding by the respondent amounted to grave impropriety and the respondent was guilty of misconduct within the meaning of section 94(3) of the Legal Profession Act 1976 (“LPA 1976”); vi the respondent’s misconduct is serious but since there was no dishonesty involved on the respondent’s part her misconduct did not warrant a striking-off and would require a more severe sanction than a mere censure.

In essence the Bar Council’s main argument is that the DB’s decision in striking the respondent off the Roll ought to be reinstated. The sentence ordered by the learned judge was not proportionate with the respondent’s breach of the undertaking and stakeholding in a professional capacity that amounted to a grave impropriety.

First, learned counsel argued that the professional misconduct was intentionally and consciously committed by the respondent in her professional capacity as an advocate and solicitor. As a solicitor holding monies as stakeholder, the respondent held the monies as a trustee; as such, the breach of a stakeholding was not just a breach of undertaking but also a breach of trust. Such misconduct amounted to grave impropriety and misconduct within the meaning of sub-section 94(3) of the LPA 1976 (see Datuk M Kayveas & Anor v Bar Council [2013] 5 MLJ 640 (FC)) and also amounted to professional misconduct of the most serious character (see In re G.H.Conaghan (1961) 27 MLJ 81).

Secondly, learned counsel for the Bar Council argued that the learned judge erred in finding that as there is no finding of dishonesty on the respondent’s part the misconduct did not warrant a striking-off. Learned counsel argued that even if there was no finding of dishonesty on the part of the respondent, the respondent had been shown to have fallen below the required standards of integrity, probity and trustworthiness so that the respondent would also be struck off the Roll as her lapse was such as to indicate that she lacked the qualities of character and trustworthiness which were the necessary attributes of a person entrusted with the responsibilities of a legal practitioner (Law Society of Singapore v Ravindra Samuel [1999] 1 SLR 266). The absence of any finding of dishonesty does not per se make the sentence of being struck off the roll excessive (David Abraham Samson Paul v Syed Shahir Bin Syed Mohamud (didakwa dalam kapasiti beliau sebagai Presiden Kongress Kesatuan Sekerja Malaysia)(Malaysian Trades Union Congress) (MTUC) selaras dengan Seksyen 9(c) Akta Pertubuhan 1966) & Ors [2012] MLJU 350 (CA)).

In reply, learned counsel for the respondent argued that the DB misunderstood the nature of summary proceedings and did not hear the respondent’s mitigation (section 100 of the LPA 1976).

Secondly, learned counsel argued that the DB failed to consider that

there was no dishonest intention on the part of the respondent, (ii) that the clients did not suffer loss, (iii) the respondent had pleaded guilty at the earliest opportunity, and (iv) the respondent was remorseful. [10] Learned counsel added that there was no dishonest intention on the part of the respondent as she had at all times intended to refund the monies to the clients, she had informed the clients that there would be a delay in the release of the monies, such delay agreed upon by the client and that she eventually reimbursed the monies to the clients (Bolton v Law Society 1994] 2 All ER 486; Bryant and another v Law Society [2007] All ER (D) 379); Law Society of Singapore v Tan Sok Ling [2007] 2 SLR(R) 945; Bultitude v The Law Society [2004] EWHC 1370; Marzaini bin Zainuddin v Majlis Peguam Negara [2007] 8 MLJ 697). [11] Lastly, learned counsel argued that the DB in stating that it “has no alternative but to impose the order of striking off” had taken away its own discretion in determining a punishment on a case by case basis but instead decided on a ‘type of offence’ basis. In effect, the DB had made it compulsory that the punishment for any misconduct involving the usage of money from the client’s account is striking off regardless of how compelling the mitigating factors are. Page 7 of 18 THE LEGAL PROFESSION [12] As this appeal relates to the misconduct of an advocate and solicitor, we think it is necessary to set out the following contextual background on the legal profession, advocates and solicitors and the practice of law. [13] First and foremost, it is acknowledged that the legal profession is an honourable profession. The legal profession is also a self-regulating profession with built-in mechanisms to regulate the conduct and affairs of the Malaysian Bar. For instance, the Legal Profession Qualifying Board regulates the admission of advocates and solicitors and the Bar Council is responsible for the management of the Malaysian Bar. In this connection, the Bar Council has made rules pertaining to inter alia practice and etiquette, professional liability insurance, disciplinary proceedings and compensation. [14] Be that as it may, what distinguishes an advocate and solicitor from other professionals? Put simply, an advocate and solicitor is a person who is legally qualified to manage matters in law for others. As such, when a person engages an advocate and solicitor, he places his confidence, good faith, reliance and trust in the advocate and solicitor, whose aid, advice or protection is sought in some matter. Recognising the intricate solicitor-client relationship, for the protection of the client the law enjoins the advocate and solicitor from disclosing any communication made to him by or on behalf of his client unless the client gives his express consent: section 126 of the Evidence Act 1950. [15] The basis of a solicitor-client relationship is also unique in that it is founded on contract, agency and fiduciary principles. Underlying the Page 8 of 18 contractual relationship is the relationship of principal and agent; the solicitor stands as an agent to his client, the principal. Section 171 of the Contracts Act 1950 stipulates that “the agent is bound to pay to his principal all sums received on his account.” It is noteworthy to emphasise that the agent is also bound to act with reasonable skill and diligence in the performance of his duties as an agent: section 165 of the Contracts Act 1950. The duties of an agent are enumerated under the Contracts Act 1950 (see sections 164 – 175 of the Contracts Act 1950). As can be discerned, the emphasis is on the agent’s duty of faithfulness, fidelity and trustworthiness. [16] A solicitor is also an agent with normal fiduciary duties imposed by law and with specific ethical duties imposed as a condition of the privilege to practice law. In our legal system, the solicitor-client relationship has long been recognised as a fiduciary relationship. The term ‘fiduciary’ means, amongst others, trust, so in a fiduciary relationship one person (the client) places his or her confidence, good faith, reliance and trust in another (the solicitor), whose aid, advice or protection is sought in some matter. The fiduciary relationship binds the solicitor to a scrupulous fidelity to the cause of his client which precludes the solicitor from any personal advantage from the abuse of that reposed confidence. As a fiduciary, the solicitor owes his client the greatest degree of loyalty, good faith and faithfulness. [17] It cannot be gainsaid that all advocates and solicitors should strive to attain the highest level of skill, to improve the law and the legal profession, and to exemplify the legal profession's ideals of public service. A lawyer's responsibilities as a representative of clients, an officer of the court and a public citizen are usually harmonious. Page 9 of 18 [18] In this regard, it is pertinent to advert to the Solicitors’ Account Rules 1990 (‘SAR 1990’). The SAR 1990 was promulgated by the Bar Council to provide for the opening and keeping by advocates and solicitors of accounts at banks for clients’ monies. [19] An advocate and solicitor who holds or receives client's money is required to pay such money into a client account without delay: rule 3(1) SAR 1990. A client account is described as a current or deposit account at a bank in the name of the solicitor in the title of which the word “client” appears: rule 2 SAR 1990. [20] In addition, the SAR 1990 contains certain strictures that an advocate and solicitor is required to observe on the manner of drawing money from client account. For instance, rule 7 provides inter alia that only money properly required for a payment to or on behalf of the client or money drawn on the client’s authority may be drawn from the client account. [21] The importance of maintaining the highest standards of honesty, probity and integrity in the legal profession is underscored by further safeguards imposed under the Accountant’s Report Rules 1990. These Rules require an advocate and solicitor to procure an annual accountant’s report of all bank accounts (in particular those relating to money received, held or paid on account of each client and client account) in order to ascertain that they are properly kept and maintained for each accounting period. The accountant’s report is mandatory as it is required to be submitted together with the application for a Sijil Annual to the Bar Council. If there is no accountant’s report or if the accountant’s report Page 10 of 18 states that the accountant is not satisfied that the advocate and solicitor has complied with the SAR 1990, the Bar Council as the gatekeeper will decline to issue the Sijil Annual to the applicant in question. Without the Sijil Annual, the advocate and solicitor will not be able to obtain the practising certificate which is issued by the Registrar of the High Court. And without the practising certificate, the advocate and solicitor will not be able to practise law.

[22] We will deal with the first point raised by the respondent’s counsel about the DB having misunderstood the nature of summary proceedings and did not hear the respondent’s mitigation. With respect, that issue is extraneous as the respondent did not appeal against the decision of the High Court which dismissed her appeal. As it stands, the only issue before us relates to the punishment meted on the respondent. As such the question for determination is this: whether the learned judge was correct to set aside the DB’s striking off order and substituting it with the 3 year suspension order. [23] The fact that the hearing was heard and decided summarily is not disputed. There is nothing in the record to suggest that the respondent did not understand the nature and consequences of the summary procedure. The respondent had agreed that the complaint be dealt with summarily. [24] Learned counsel for the respondent submitted that there are strong mitigating factors so that a punishment of striking off would be too excessive. In particular, learned counsel alluded to the following paragraphs of the respondent’s affidavit in support: Page 11 of 18

7.1 Due to a series of unfortunate events, I was unable to resolve my family financial difficulties causing much depression to my parents. In order to save my family members, myself included, sometime early 2013, we obtained some financial assistance from our distant relative with the family house as collateral. Sometime late June 2014, this relative claimed ownership to the family house and threatened to sell it off to a third party. Despite much discussions and negotiations, this relative insisted on the sale unless we buy back the same on market value.

7.2 Although it was an absurd bargain, but we really have no choice. The family house is my father’s most treasured and memorable possession. Immediately, I applied for mortgage loans and credit facilities and my sister out up her condominium for sale.

7.3 This relative gave an ultimatum to complete the purchase latest by end October 2014 knowing very well that the given time frame was insufficient. To make things worse, my loan and credit facilities applications were rejected due to bad credit rating. My sister however managed to sell off the condominium in August 2014 but due to the haste in so doing, the selling price was relatively low. Looking at the SPA time frame, the sale will complete only by end November 2014. It will be too late then.

7.4 As the October dateline was fast approaching I was at the crossroad again. I cannot imagine what would happen if I were to lose the family house. A big blow indeed to my father and I was very worried that he might not be able to withstand it. As I was stressed and under so much pressure, I could not think objectively. At that point of time I felt that I had no option left. For that, I acted on impulse and used the Client’s Account funds in which I genuinely and honestly believed that I will be able to replace the Page 12 of 18 fund before the date for monies to be released to the Client. We then had submitted applications for mortgage loans.

7.5 When the time arrived to make payment for the balance purchase price to the Client, I informed the Client that there will be a slight delay in disbursing the balance purchase price. As the incident involved my family crisis, I could not bring myself to tell him the truth of what transpired except the fact that the money was used up and I was trying my best to return the funds to him. I even showed him the family house clean title and the sale agreement for the condominium. During the meeting, I refunded a total of RM41,900.00 to them and assured them that I will disburse the rest of the amount I due time. [25] Learned counsel also alluded to paragraph 9 of the Complainant’s affidavit which is as follows:

I must emphasize that, at all material times, I have been duly informed by the Appellant [the respondent in this appeal] of the status of her mortgage loan application. This gave me assurance that the Appellant was being truthful and had no intention to cheat me. It did not take long for me to receive payment from the Appellant. On 12th March 2015, the Appellant’s mortgage loan was finally disbursed and was immediately paid to me. [Parenthesis added] [26] In this case, the respondent was acting for the Clients in a sale and purchase transaction. In the capacity as the Clients’ solicitor the respondent was entrusted with the balance purchase price of RM815,120.00 as a stakeholder. Upon completion of the sale and purchase transaction, the respondent was obliged to immediately release the said sum to the Clients on 29.12.2014. The respondent failed to make payment of the monies to the Clients because the respondent had Page 13 of 18 misappropriated the Client’s monies for her personal use. Put simply, the respondent took out the Clients’ money from the client account for her own personal gain in clear breach of the trust reposed in her qua solicitor and in breach of her undertaking as stakeholder. This was a deliberate and calculated act by the respondent amounting to a breach of trust. [27] In dealing with the discipline of advocates and solicitors, the punishment of the solicitor concerned is not the sole consideration. The Court must also consider the appropriate course the DB should take to protect the public and to register its disapproval of the conduct of the solicitor. We emphasize that the protection of the public is not confined to the protection of the public against further default by the respondent alone. The protection of the public extends against similar defaults by other solicitors through the DB’s public pronouncement of the seriousness of the respondent’s misconduct. Accordingly, the punishment imposed must accord with the seriousness of the misconduct and leave no doubt as to the standards to be observed by other solicitors. In other words, the punishment imposed should not only have a punitive effect, it must also have a deterrent effect. [28] We would also add that there are other interests of the honourable profession to which the respondent is a member of and those of the courts, to consider. The administration of justice can only proceed on the basis that solicitors can place reliance upon the honesty of the solicitors with whom they deal. 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. Page 14 of 18 [29] As such, there is a heavy responsibility on the DB and the Court, a duty to the legal profession and to the community at large, to be careful not to accredit any person as worthy of public confidence and therefore fit to practise as an advocate and solicitor. Ultimately, the question for determination is whether the respondent is a fit and proper person to be an advocate and solicitor of the Court, and the punishment to be meted is to be directed to ensuring that, to the extent that she is not, her practise is restricted. [30] In our considered view, the fact that the respondent was despondent because of her family financial difficulties did not excuse the respondent from dipping into the client account and misappropriating clients’ monies for her own use. This was a conscious, deliberate and calculated act on the part of the respondent. She knew that the monies which she misappropriated were monies belonging to her Clients and that she was obliged to pay the monies to the Clients by a certain date; the fact that she was unable to pay the monies to the Clients on the due date is uncontroverted. [31] Insofar as solicitors are concerned, the requirement of strict adherence to undertakings is a strict rule which is borne out of necessity. Undertakings are a common and essential feature of legal practice such that undertakings must always be honoured regardless of other supervening circumstances. The breach of an undertaking given by a solicitor undermines public confidence in the legal profession and in the system of undertakings upon which conveyancing and other commercial transactions depend. Indeed, there is clear authority for the proposition that a stakeholder is a trustee and that the breach of a stakeholding term Page 15 of 18 is not only a breach of undertaking; it is also a breach of trust (Datuk M Kayeas & Anor v Bar Council (supra)). [32] Whilst we noted the respondent’s plea of remorse, we also noted the fact that the respondent did not rebut the Complainant’s assertion in his complaint to the DB that “[t]he lawyer told me that I should not report to the police or the Bar Council or I will lose all my balance sum amounting to RM815,00.00 (more or less)”. In our considered view, this is nothing short of a threat or warning to the Complainant that if he lodged a complaint he would not receive the monies due to him. This conduct on the part of the respondent is deplorable and unacceptable and is to be deprecated. The respondent’s conduct did not accord with the respondent’s plea of remorse. [33] As for the fact that the respondent eventually made full restitution of the monies to the Clients, that is nothing more than returning to the Clients their due. The act of restitution does not detract from the seriousness of the professional misconduct committed by the respondent qua solicitor in having misappropriated client monies in breach of trust and stakeholding. [34] It must be recognised that the legal profession occupies by law a privileged position. The continued existence of that position can only be justified if every member of the Malaysian Bar conforms to certain standards (In re G. H. Conaghan) (supra). In this case, the respondent has fallen far short of these standards. At any rate, the legal profession being a self-regulating profession, it is primarily for members of the Bar to decide what amounts to conduct unbecoming of an advocate and solicitor in particular circumstances, according to standards established by members of that honourable profession. Courts must necessarily exercise Page 16 of 18 caution when entertaining an appeal in which the central question is whether a particular punishment imposed on a solicitor by the DB is excessive and cases meriting curial interference will be rare. Otherwise it will be the Court and not the profession that will determine the yardstick of professional conduct and discipline. [35] The DB is composed of members of the legal profession. The Chairman of the DB is appointed by the Chief Judge. The other members of the DB include the President of the Malaysian Bar and 15 senior members of the legal profession. One of the hallmarks of a developed profession is that it should lay down and maintain standards of professional conduct for its members based upon the best thinking of those members as to what constitutes proper conduct for a member of that profession. In the case of any advocate and solicitor found guilty of misconduct, the DB is vested with the power to strike the solicitor concerned off the Roll or suspend the concerned from practice for a specified period of time: section 94 of the LPA 1970. [36] It is also illuminating to recall the oft-cited passages of Bingham MR in Bolton v Law Society [1994] 2 All ER 486 at 491 and of King CJ in Re A Practitioner [1984] 36 SASR 591 at 593 from which the following principles may be distilled:

Where a solicitor has acted dishonestly, the court will order that he be struck off the Roll;

(ii) If a solicitor has not been shown to have acted dishonestly, but is shown to have fallen below the required standards of integrity, probity and trustworthiness, he will be struck off the Roll as opposed to being suspended, if his lapse is such as to Page 17 of 18 indicate that he lacks the qualities of character and trustworthiness which are the necessary attributes of a person entrusted with the responsibilities of a legal practitioner. [37] On the uncontroverted facts, we are constrained to hold that the respondent clearly lacks the qualities of character and trustworthiness which are the necessary qualities of a person entrusted with the responsibilities of an advocate and solicitor. In our view, a court will be entitled to intervene only if (i) the punishment imposed by the DB will be considered to be manifestly excessive by the best thinking members of the legal profession, or (ii) manifestly wrong in the sense of being illegal. The present case does not come within the reach of that test and the learned judge ought not to have disturbed the DB’s order. As such, the Bar Council’s appeal was allowed. [38] In passing, we would add that the respondent is not without remedy as the striking off order is not a permanent bar to readmission to the Roll. The respondent is at liberty at any time in the future to petition to the Court for readmission to the Roll. sgd (Vernon Ong) Judge Court Of Appeal Malaysia Dated : 30th July 2018 Page 18 of 18 Counsel: For the Appellant: Robin Lim (Tan Kit Qian with him) Messrs Azhar & Wong For the Respondent: Muhammad Shafee Abdullah (Rahmat Hazlan with him) Messrs Shafee & Co