Newlake Development Sdn Bhd v Zenith Delight Sdn Bhd (393185-d) (W-02(NCVC)(W)-771-04/2018)

1 IN THE COURT OF APPEAL, MALAYSIA (APPELLATE CIVIL JURISDICTION) CIVIL APPEAL NO: W-02(NCVC)(W)–771-04/2018 BETWEEN NEWLAKE DEVELOPMENT SDN BHD (No. Syarikat 262536-M) … APPELLANT

1. AND

2. ZENITH DELIGHT SDN BHD (393185-d) KUMAR JASPAL QUAH & AISHAH (sebuah firma)

3. HOW CHEE HONG (STEVEN) (NO. K/P: 680728-10-6354)

4. THIAN MUNG CHING (680408-10-5597) … RESPONDENTS CORAM ABDUL RAHMAN SEBLI, JCA MARY LIM THIAM SUAN, JCA HASNAH DATO’ MOHAMMED HASHIM, JCA JUDGMENT OF THE COURT [1] This appeal was against the decision of the High Court dismissing the appellant’s second application to disqualify Dato’ Vijay Kumar a/l Muthusamy Natarajan (“Dato’ Vijay Kumar”), an Advocate and Solicitor of the High Court of Malaya, from acting as counsel for the 1st and 4th respondents in the present suit. The 2nd respondent is a legal firm where Dato’ Vijay Kumar is its consultant and the 3rd respondent one of the firm’s partners. 2 [2] For the background facts leading to this appeal, we shall rely on the facts as set out by learned counsel for the appellant in his written submissions. They are as follows. The first application [enclosure 36] to disqualify Dato’ Vijay Kumar, that he resiled and refrained from further representing the 1st and 4th respondents and any other party to the action, was filed on 26.11.2014. [3] The appellant’s claim was that Dato’ Vijay Kumar was “embarrassed and conflicted” by virtue of the following facts. The appellant had engaged the 3rd respondent to draft a sale and purchase agreement for the purposes of purchasing an identified piece of land. The agreement which was drawn up by the 3rd respondent was fraught with fraud and was designed by the 3rd respondent to illegally extract/extrapolate the amount known as “deposit sum” amounting to RM9,056,124.00 as stated in the sale and purchase agreement. [4] The appellant claimed that by virtue of his presence as consultant to the 2nd respondent at the material time, Dato’ Vijay Kumar was privy to strictly private and confidential information belonging to the appellant and that his presence during discussions for the transaction on the purchase of the land made him a potential witness in the action: Dato’ Vijay Kumar cannot absolve himself of sharing confidences between any lawyer in the 2nd respondent and himself, let alone in this case being directly involved; Dato’ Vijay Kumar will find it impossible to maintain his professional independence by continuing to act as solicitors for the 1st and 4th respondents in the action. [5] The appellant’s application was allowed by the High Court but was reversed by this court. We were not provided with the reasons why the 3 decision of the High Court was reversed. It was submitted by the appellant that without having the benefit of the reasons, the learned judge ought not to have concluded that Dato’ Vijay Kumar was not conflicted and can continue acting and conducting the case for the defence in the present suit. [6] On 4.4.2018, the appellant filed a second application [enclosure 228] on the basis of evidence discovered recently during the taking of evidence in the on-going criminal proceedings against the 3rd respondent. The new evidence was that Dato’ Vijay Kumar was a co-signatory to the 2nd respondent’s client account which was opened with CIMB Bank at Solaris Mont Kiara on or around 19.3.2009. [7] The 2nd respondent’s client account required both the 3rd respondent and Dato’ Vijay Kumar as signatories in order to operate the client account. This means that no cheque or money can be released from the said client account without the knowledge and consent of the 3rd respondent and Dato’ Vijay Kumar. This was at a time when Dato’ Vijay Kumar was a consultant at the 2nd respondent. [8] Dato’ Vijay Kumar must therefore be taken to have direct knowledge of the disbursement of the missing deposit sum. The appellant did not know at the material time that Dato’ Vijay Kumar was also a signatory to the 2nd respondent’s office account. [9] It was argued by the appellant that in the circumstances, there existed a conflict of interest if Dato’ Vijay Kumar continues to act as counsel for the respondents, for the following reasons: 4

(ii) he was in possession of confidential information of the 2nd respondent during his tenure as a consultant to the 2nd respondent;

(iii) he may end up as a witness for either the appellant or the 2nd and 3rd respondents during the trial of the present suit;

(iv) he breached Rules 3, 4, 5, 27(a) and 28 of the Legal Profession (Practice and Etiquette) Rules 1978 by acting as counsel for the respondents;

(1) Carl-Zeiss Stiftung v Rayner & Keeler Ltd [1965] 2 All ER 536 where it was held as follows: “I turn, therefore at once to the question of finality. This is understood to mean “final and conclusive on the merits” of the cause (Dicey’s Conflict of Law (1st Edn.) r. 196, p. 1052). The decision on which the issue estoppel arises must itself be final in this sense. In other words, the cause of action must be extinguished by the decision which is said to create the estoppel (see per Lord Herschell in Nouvion v. Freeman (76). “It puts an end to and absolutely concludes that particular action”. The West German judgment was no a judgment on the merits, but on a preliminary point relating to the capacity of the Carl-Zeiss Stifftung to sue …”.

(2) Chua Wee Seng v Faizal Mohamed [1971] 1 MLJ 106 where Sharma J held, inter alia, that the matter directly and substantially in issue in the subsequent suit must have been heard and finally decided by the court in the first suit.

(3) The Australian High Court case of Chamberlain v Deputy Commissioner of Taxation 78 ALR 271 where Dean, Toohey and Gaudron JJ said at page 237: 6 “The rule as to res judicata comes into operation whenever a party attempts in a second proceeding to litigate a cause of action which has merged into judgment in a prior proceeding.” [12] Having heard arguments by both sides, we allowed the appellant’s appeal and set aside the order of the High Court. Enclosure 228 was allowed except that prayer (2) was varied in that Dato’ Vijay Kumar was disqualified from representing the 1st and 4th respondents. [13] We accepted learned counsel for the appellant’s argument that it will be difficult for Dato’ Vijay Kumar to maintain his professional independence and to project a course of conduct that was compatible with the best interests of the administration of justice if he were to continue to act for 1st and 4th respondents in the present suit, given the fact that he was a co-signatory to the 2nd respondent’s client account at all material times when the appellant paid the deposit sum of RM9,056,124.00 to the 2nd respondent. [14] In our view, the new evidence that the appellant obtained from the on-going criminal proceedings against the 3rd respondent was a new circumstance since the decision of this court on 25.6.2015. Res judicata therefore did not bar the appellant from making a fresh application to disqualify Dato’ Vijay Kumar from representing any of the respondents. [15] As for the issue of delay, we were also in agreement with the appellant that the learned judge was in error in finding that there was delay in making the second application. On 27.9.2017, there was an order of stay of proceedings made by this court. The day after, the appellant applied to the Criminal Sessions Court at Kuala Lumpur for the exhibits 7 tendered as evidence in the on-going criminal trial against the 3rd respondent. [16] On 2.10.2017, the Sessions Court furnished the appellant with the requested documents which included banking account details of the 2nd respondent. On 28.2.2018, the appellant’s appeal to this court for discovery of documents was dismissed. The stay was dissolved. The second application was then filed on 30.3.2018. We do not consider the lapse of 3 weeks as inordinate delay, given the circumstances. Signed ABDUL RAHMAN SEBLI Judge Court of Appeal Malaysia Dated: 24 July 2019. For the Appellant: Wong Hin Loong and Kenny Lam Kian Yip of Messrs Azman Davidson & Co. For the Respondents: Krishna Dallumah and N Nathan of Messrs Natarajan.