Rosli Bin Kamaruddin v How Hock Sing @ Low Kim Chwee (J-02(A)-2177-10/2017)

1 IN THE COURT OF APPEAL, MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO: J-02(A)-2177-10/2017 BETWEEN ROSLI BIN KAMARUDDIN … APPELLANT AND HOW HOCK SING @LOW KIM CHWEE MAJLIS PEGUAM MALAYSIA … RESPONDENTS [In the Matter of the High Court of Malaya at Johor Bahru In the State of Johor Bahru Darul Takzim Originating Summons No: JA-17D-1-03/2017 In the matter of order dated 10 February 2017

pursuant to Section 103D of the Legal Profession Act 1976 And In the matter of complaint to the Advocates & Solicitors Disciplinary Board, Complaint No. DC/15/0646 And In the matter of the Legal Profession Act, 1976 And In the matter of the Rules of Court 2012 Between Rosli bin Kamaruddin … Plaintiff 2 And How Hock Sing @Low Kim Chwee … 1st Defendant Majlis Peguam Malaysia … 2nd Defendant] CORAM: HAMID SULTAN BIN ABU BACKER, JCA BADARIAH BINTI SAHAMID, JCA MARY LIM THIAM SUAN, JCA JUDGMENT OF THE COURT [1]

Pursuant to section 103D of the Legal Profession Act 1976, the Disciplinary Board imposed a fine of RM5000.00 on the appellant after it agreed with the findings and recommendations of the Disciplinary Committee that the appellant was “liable” as per the complaints brought by the 1st respondent. The appellant’s appeal to the High Court was dismissed. After careful consideration of the written and oral submissions and the records of appeal, we unanimously allowed the appeal and set aside the respective decisions of the High Court and the Disciplinary Board. 3 The complaint [2] By letter dated 27.8.2015, the 1st respondent lodged a complaint with the Disciplinary Board against the appellant. In Appendix A attached to his letter, the 1st respondent detailed two complaints of misconduct. The 1st respondent also attached relevant supporting documents. The first complaint pertained to the appellant’s failure to carry out the 1st respondent’s instructions to file for certain injunctive relief; while the second was the appellant’s failure to comply with an ‘unless order’ given by the Court resulting in the striking out of the 1st respondent’s civil action. This is how the appellant came to be instructed by the 1st respondent. [3] The 1st respondent was a director in a company known as Reliable Memorial Services Berhad [RMSB]. A dispute arose between the 1st respondent and Lee Say Peng [Lee], the majority shareholder and director of RMSB. On 13.12.2013, the 1st respondent appointed the appellant to represent him in relation to that dispute. The 1st respondent instructed the appellant to file an application for an injunction restraining Lee from abusing company funds and mismanagement of RMSB. The 1st respondent paid the appellant RM30,000.00 for such services. [4] On 19.1.2014, the 1st respondent paid a further sum of RM10,000.00 instructing the appellant to file an injunction to restrain the convening of an EGM on 20.2.2014, to remove the 1st respondent and his daughter as directors in RMSB. On 28.1.2014, the 1st respondent paid a further sum of RM20,000.00 for work in relation to the injunction. 4 [5] By letter dated 27.8.2015, the 1st respondent lodged a complaint against the appellant. The details of his complaints are as follows. According to the 1st respondent, despite receiving this RM20,000.00, no injunction was filed and the 1st respondent and his daughter were removed as directors. The 1st respondent further complained that the appellant failed to comply with an Unless Order which led to his civil suit being struck out. Another legal firm then took over and the civil suit was reinstated. [6] By letter dated 15.10.2015, the Advocates & Solicitors Disciplinary Board [DB] sought a written explanation from the appellant. The appellant provided a written explanation. He also attached a list of 48 documents in support. [7] The Disciplinary Committee [DC] held an inquiry at which the 1st respondent gave evidence through his son-in-law claiming that “saya tak fasih Bahasa Malaysia”. The appellant did not object; he, too, gave evidence in addition to his written explanation on the two complaints. [8] The DC then reported its findings to the Disciplinary Board, stating as follows: [14] The Complainant’s instructions to the respondent from the beginning was to file an injunction against the other director at Reliable Memorial Services Berhad, Lee Say Peng. The respondent had been writing to several parties seeking for documents and clarifications but had not received any positive replies. We also found in the ROC at pages …, 5 a set of signed jurats by the Complainant for the purpose of any interim reliefs to be filed by the respondent. [15] Despite the 19 meetings as stated in evidence by the respondent, we find no where in the Bundles before us any documents from the respondent that he could not file the application for the injunction as to the unavailability of the documents from the Complainant. [16] The SMSs sent by the respondent to the Complainant also portrayed a promise by the respondent to file the injunction at any time but the respondent had failed to do so. The unavailability of the documents needed to file an injunction has never been explained in writing to the Complainant or to any other parties such as the auditor or accountant appointed by the Complainant [17] We could also not find any evidence that there was at least a draft Notice of Application for the injunction or a draft supporting affidavit. As a matter of fact, we did not find any prayer for an injunction in the Statement of Claim as at pages … [18] We don’t find any reason why the respondent had been promising the Complainant that he would be filing the cause papers for an injunction whereby he did not do so at all. [19] However, we also find that the Complainant had not suffered any prejudice due to the following reasons:

(ii) the Court of Appeal has reinstated the struck out case to the High Court and the Complainant could pursue his application for the said injunction if he wishes to 6

(iii) any damage alleged to have incurred to the Complainant could still be very well pursued by the Complainant against the defendants;

(iv) the Complainant on his own volition has appointed his new solicitors and the respondent had given all the necessary documents to the Complainant’s new solicitors. [D] The Committee’s findings on liability There are merits in the complaint. We find the respondent liable for misconduct under section 94(3)(n) of the Legal Profession Act 1976 in that he had gross disregard for the Complainant’s interests. [9] The DC recommended that the appellant be fined RM5000.00. The Disciplinary Board affirmed the findings and accepted the recommendations of the DC, and proceeded to fine the appellant the sum as proposed by the DC. [10] Being dissatisfied, the appellant appealed. Decision of the High Court [11] The learned JC found: i. that the DC had conducted “quite a comprehensive hearing, where evidence on oath had been taken”; 7 ii. that the contents of and meaning conveyed in the SMSes exchanged between the appellant and the 1st respondent “were quite clear”; iii. “whatever reasons that the appellant may have advanced to explain why he did not file for injunction were simply not consistent with what the 1st respondent would have understood from the SMSes”; iv. “at the end of the day, what would be more important and relevant would be the understanding by the 1st respondent as to what the appellant was doing for the case that the 1st respondent had engaged the appellant to handle for him”; v. “if it was the case that the appellant was not able to file the application for injunction for whatever reason, this should have been made known to the 1st respondent and should leave very little doubt from the SMSes sent, which was not seen to be the case here,…”; vi. that the appellant ought to have put in evidence of other contemporaneous communication with the 1st respondent “to qualify these SMSes”; vii. that the DC had found no evidence of a draft Notice of Application for the injunction or draft supporting affidavit; and that there was no prayer for injunction in the Statement of Claim. 8 [12] Following Batu Malay a/l Thandy v Sures a/l Subramaniam & Ors [2015] 6 MLJ 286, and Gana Muthusamy v LM Ong & Co [1998] 3 MLJ 341, that in “the discipline of the legal profession, it is best for the affected advocate and solicitor to be judged by his own peers through the statutory mechanisms mandated by the Act”; and that it is “only in rare and exceptional cases” that the Court will intervene. Since he was “not able to fault the decision arrived at by the Disciplinary Board”, the learned Judicial Commissioner dismissed the appeal. Decision of this Court [13] We are mindful that it is a well-settled principle that as a general rule, there is a policy of non-intervention in matters concerning professional discipline. Parliament has entrusted such matters to the Disciplinary Board to regulate and discipline members of the legal profession. In Majlis Peguam v Dato Seri Dr Muhammad Shafee Abdullah [2016] 8 CLJ 749 citing inter alia Re A Solicitor (No. 2) [1923] 93 LJKB 761, Keith Stellar v Lee Kwang & Tennakoon v Lee Kwang [1980] 1 LNS 36; Gana Muthusamy v Tetuan LM Ong & Co [1998] 4 CLJ 878, the Federal Court once again reaffirmed that principle stating that: “All that is required is that the disciplinary body acts fairly in carrying out its duties, and the hearing is conducted thoroughly with due deliberation and understanding given to the facts of the complaint. Unless the disciplinary committee in exercise of its powers can be shown to have erred in principle, 9 or to have overlooked, misconceived, or disregarded some material matter of fact, or to have failed to act judicially, the Court ought not to interfere, except in the rarest of cases.” [14] Having carefully perused the relevant and material facts, the records of appeal and having considered the submissions, we were convinced that this was a rare and exceptional case which warranted our intervention. [15] First, the complaints. There were two. The second complaint pertaining to the appellant’s failure to comply with the ‘unless order’ and the subsequent striking out of the 1st respondent’s civil action was withdrawn by the 1st respondent during the inquiry. In the Notes of hearing before the DC, it is recorded that the 1st respondent “Tarik balik kerana saya sekarang faham ini bukan kesalahan Responden”. [16] In its report, the DC noted the withdrawal of this second complaint, described here as the “1st complaint”: [3] The Complainant withdrew the 1st complaint against the Respondent after giving evidence that the Johor Bahru case No. 22NCVC-38- 01/2016 which was struck out by the Deputy Registrar was reinstated by the Court of Appeal recently and the case is now before the Johor Bahru High Court. [17] Despite this, the DC referred to and relied on the reinstatement of the case as one of the reasons why it was of the view that the 1st 10 respondent had not suffered any prejudice: “that the Court of Appeal has reinstated the struck out case to the High Court and the Complainant could pursue his application for the said injunction if he wishes to”. We are of the view that once the complaint related to the “unless order” had been withdrawn, there should have been no reference whatsoever to that complaint, even one which, at first sight, appears to be in the appellant’s favour, which it is in fact, not. [18] We are of the view that there should have been no reference to or reliance on that episode. As it is, it was taken into account as one of the reasons for the DC’s ultimate finding of liability against the appellant. It would also be fair to say that the DC took that into account in making its recommendations of a fine of RM5000.00. [19] In our view, it was erroneous of the DC and for the same reason, the DB, to have taken the event relating to the “unless order” and its outcome into consideration when the complaint on the event had already been withdrawn. Once withdrawn, the DC no longer has any jurisdiction to deal with the matter. The power and thereby the jurisdiction of the DC is derived from the Legal Profession Act 1976, in particular sections 94 and 99. It is upon a complaint lodged that the DB and thence a DC will act. The DC will investigate, report its findings and make its recommendations to the DB. The moment a complaint is withdrawn, unless there are cogent and real reasons for the DB to suspect otherwise the reasons for the withdrawal, the DB must disband all inquiry relating to the withdrawn complaint. There is no residual power or anything akin to inherent power or retained jurisdiction on the part of 11 the DB and certainly even less, in respect of the DC, to investigate, unless the DB itself lodges a fresh complaint on the same. [20] In the present appeal, the 1st respondent had withdrawn the complaint on the “unless order” because he now understands that the appellant is not at fault or is not to be blamed for the striking out of his civil action. Under such circumstances, it was wrong for the DC to have relied on this event to make its findings and recommendations to the DB. [21] Further, we did not find the DC or the DB, satisfying for itself that the complaint was proved against the appellant on the requisite burden of proof. Disciplinary proceedings are quasi-criminal in nature and the standard of proving misconduct must be on a standard of beyond reasonable doubt – see Majlis Peguam Malaysia v Cecil Wilbert Mohanaraj Abraham [2018] CLJ 123; Lembaga Tatatertib Peguam-Peguam v Hoo Lin Coln & Anor [2008] 4 MLJ 1; Dinesh Kanavaji a/l Kanawagi & Anor v Ragumaren a/l N Gopal [2018] 2 MLJ 265; Campbell v Hamlet [2005] 3 All ER 1116. [22] It must also not be forgotten that the DB has substantial powers of discipline and as part of the penalties it may impose, it may impose fines, suspend the advocate and Solicitor concerned, or remove the name of such advocate and solicitor from the Roll, penalties which are far reaching in their effect. While the Courts do not interfere easily, it is not blind to the circumstances and is not averse to intervene where there has been a miscarriage of justice for one reason or other. Thus far, we can already see serious breaches which were not addressed and put right by the High Court and which now warrants our intervention. 12 [23] Dealing further with the complaint of the 1st respondent in respect of the injunction which is in respect of two injunctions that the appellant was supposed to file for; the first in relation to the abuse of RMSB’s funds and mismanagement of RMSB; the second to restrain the convening of an EGM for the removal of the 1st respondent and his daughter as directors of RMSB, we find even greater cause for concern. The 1st respondent had paid a total of RM60,000.00. From the letter of complaint, it would appear that it is only in relation to the third payment that the 1st respondent makes his complaint. [24] At paragraphs 5 and 6 of his letter of complaint, the 1st respondent claimed that even though the appellant had received RM20,000.00, he did not file an application for an injunction and it was because of that failure, that the 1st respondent and his daughter were removed as directors of RMSB. [25] At the inquiry, the 1st respondent explained that on 13.12.2013 he had appointed the appellant to represent him in a case against Lee Say Peng in respect of Lee’s abuse of RMSB’s funds. The 1st respondent told the DC that he had instructed the appellant to apply for an injunction in respect of the funds but nothing was forthcoming for more than half a year. When Lee Say Peng issued a letter stating that an EGM will be convened, he paid the appellant more money and instructed him to apply for an injunction restraining the convening of an EGM. [26] Until July 2014, the appellant did not apply for any injunction whether in respect of the abuse of funds or the convening of the EGM. 13 This is despite the 1st respondent paying him. The 1st respondent and his daughter were removed as directors following RMSB’s EGM on 20.2.2014. [27] This was the written explanation of the appellant given pursuant to the 2nd respondent’s request made under section 100(1)(b) of the Act. The explanation covered the following areas: i. Background ii. Objection against M/S Patrick Dass & Co as solicitor for Complainant in this disciplinary proceedings iii. The claim iv. RKC advice v. Instructions on EGM vi. Instructions to file injunctions vii. Fee structure viii. The striking out of the Statement of Claim is no fault of RK & Co [28] As “Background”, the appellant explained that he was approached by the 1st respondent, that they met “few times in December 2013 prior to the official appointment”; that the 1st respondent came with his wife, daughter, son-in-law and advisor/consultant/audit consultant by the name of Tee Beng Yap [Tee]; and that he was “officially appointed on 13/12/2013”. [29] In relation to the 1st respondent’s claim, the appellant identified what he understood was his claim, that the 1st respondent claimed that the majority shareholder [LSP] had misappropriated RMSB’s funds. RMSB being in the business of handling funeral services, managing 14 memorial park and its related services. The appellant understood from the 1st respondent that there were “payments/contribution received by RMSB were not credited into company’s accounts, some cash collection were not recorded and sham transactions and payments were made to unknown and unrelated third parties.” [30] After “various discussions,” the 1st respondent “agreed” with the appellant’s advice and “instructed RK to file Summons and Statement of Claim against LSP”. The suit, JBHC 22NCVC-38-02/2014, was filed “based on derivative action and for the benefit of RMSB.” Aside from LSP, three others were also sued including the company secretary, Ng Bee Siang (NBS). She was brought in as the “4th Defendant due to the instructions that she has conspired with 1st and 2nd Defendant to deny LKC access to the company’s document and account. NBS had arranged for EGM to oust LKC as director of RMSB.” [31] More specifically, the appellant explained what his advice was which was agreed to by the 1st respondent: RKC advice

1. Minority shareholder position 2. Company status quo – running company as usual 3. Injunction

4. Monitor police case 5. Order for account and transaction to be audited Protection

1. 2 million ++ - Losses estimation 2. Company’s business valuation – 20 million ++

3. Low’s share 40% value____ Legal fee

1. Lawyer fee - 1st stage – RM 100K - 2nd stage - >< RM 100K - 3rd stage – appeal to higher court (COA and FC) – to be discussed.

2. Disbursement (RM30,000.00) - Court fee - Agent service - Security service 16 [33] On the 1st respondent’s complaints about his instructions on the EGM and the injunctions, this was the appellant’s written explanation:

5. Instructions on EGM a. I deny complainant’s allegation. b. Legal advice as regard to the right of LKC and his position as shareholder and director of RMSB was given at length and few options were proposed. c. LKC has appointed proxy to attend EGM of RMSB on 20/02/2014 to vote against the resolution to ousted LKC as director. A lawyer namely Amrik Singh was appointed proxy of LKC and has attended the EGM. d. LKC was well aware of his minority position and the legal demand issued by RKC to hold or cancelled the EGM. During this period documentations and proof were still lacking to satisfy RKC to initiate interim remedy.

6. Instructions to File Injunctions a. LKC, family members and Tee were advice the detailed of this aspect including prospect of obtaining the above relief. They are fully aware of the short coming of documentary proof because LSP has took control in full the daily operation of the RMSB. The other directors and company secretary also seems to be siding LSP. 17 b. Tee who was appointed by LKC as his audit consultant agreed that the injunction relief was for beyond successful due to:

(ii) Account records were under LSP controlled;

(iii) Previous audited account and report were signed and approved by LKC;

(iv) LKC failed to show proof how much capital he has invested into RMSB. c. LKC and Tee have agreed and instructed RK to file the Summon and Injunction relief will be filed soon after LKC and Tee can provide more supporting proof to that effect. d. LKC was made aware on the principle of Injunction relief and it is not as of right. It is upon court discretion after considering merit of claim, balance of convenience and the damages or losses caused cannot be compensated. e. After the claim was filed and Defendants filed their Defence and Counter Claim parties have shown keen interest to try mediation process handled by Judge Teo Say Eng and parties have attended three (3) series of mediation. f. At this juncture, the Injunction relief intend to seek by LKC was kept abeyance due to the discussion/negotiation in the mediation process and LKC has full knowledge of this instruction. g. LKC also failed to obtain official RMSB statement of account from bank because he was not the signatory. 18 h. There was also criminal complaint lodged by LKC and LSP was arrested and investigated. The investigation officer also has made investigation as regard to the misappropriation. i. RK has obtained criminal court order that copy of documents related to the interest of complainant to be supplied to RK as watching brief lawyer. These documents mostly related to sham transactions as alleged by complainant. These documents are pending to be supplied by the prosecution. [34] The appellant also explained on the fee structure:

7. Fee Structure a. Legal fee was based on the solicitor’s client agreement. b. LKC was allowed to pay RKC in terms of instalment. c. The complainant’s averment that the payment made for specific purpose or task in the appointment was devoid of merit and totally denied by RKC. d. The payment to RKC should be according to the stages as stated in the brief outline provided by RK to LKC. [35] This is how the DC understood the appellant’s explanation:

(ii) The Respondent also attended the Kluang Sessions Court on 14/4/2014 and had asked for the said documents whereby the Sessions Court Judge had allowed the Respondent’s application but the Respondent did not get the said documents. 20

(iii) The Respondent had written to the Public Bank requesting for the Statement of Account on 28/01/2014.

(iv) The Respondent had also written to the Defendant 1, 2, and 3’s Solicitors, Messrs DJ Louis seeking confirmation in relation to the suspicious transactions of Lee Say Peng.

(vi) The Complainant had told the Respondent that he had owed Lee Say Peng RM 10 million in relation to a Sale and Purchase of Shares agreement between them.

(vii) The Respondent could not proceed with the Injunction as the Complainant’s case did not meet the standard enunciated in the case of American Cynamide and that the Complainant was not willing to give an undertaking as to damages to the Court.

(viii) The matter was subsequently mediated on 23/6/2014, 07/07/2014 and 20/07/2014 before the Learned High Court Judge and the matter was nearly settled and that in that mediations, the Injunction Relief sought by the Respondent was also discussed

(ix) The Respondent later admitted that he had replied to the SMS’s by CW1 and CW2 in relation to the filing of the Injunction but no documents were forthcoming from the Complainant. 21 [36] In the report, the DC had also noted the appellant’s mitigation, which to a large extent, repeats the explanation given:

(3) For the purposes of this Part misconduct" means conduct or omission to act in Malaysia or elsewhere by an advocate and solicitor in a professional capacity or otherwise which amounts to grave impropriety and includes--