Sakthivel Nagalingam of Messrs Amran Joseph Chan & Co. v Kumarappan @ Thannirmalai A/L K. M. Palaniappan (AA-17D-1-07/2024)

High Court of Malaysia3 Jul 2025

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1 IN THE HIGH COURT IN MALAYA AT IPOH 5 IN THE STATE OF PERAK DARUL RIDZUAN ORIGINATING SUMMONS NO: AA-17D-1-07/2024 Dalam perkara di bawah S94 (2), (c), S94 (3) (d), S100, S103, 103B, 103C, S103D dan 103E Akta 10 Professional Undang-undang 1976 (Akta 166) Dan Dalam perkara mengenai Keputusan Jawatankuasa Disiplin berkenaan 15 Aduan No. DC/16/0134 bertarikh 29.2.2024 terhadap Sakthivel Nagalingam dari Tetuan Amran Joseph Chan & Co Dan 20 Dalam perkara mengenai Perintah bertarikh 7.5.2024 oleh Lembaga Displin terhadap Sakthivel Nagalingam dari Tetuan Amran Joseph Chan & Co 25 Dan Dalam perkara mengenai Bahagian VII Akta Profesional Undang-Undang 1976, Keadah-Kaedah Prosedur (Inquiri Tatatertib) Peguambela dan 30 Peguamcara Kaedah-Kaedah (Prosiding Tatatertib) (Tribunal Siasatan dan Jawatankuasa Tatatertib) 1994, Kaedah Profesion Undang-Undang (Lembaga 35 Tatatertib) (Rayuan) 1994, Kaedah-Kaedah Profession Undang-Undang (Lembaga Tatatertib) (Prosedur) 1994 Dan 40 Dalam perkara mengenai Aturan 55A, Kaedah-Kaedah Mahkamah 2012 BETWEEN 45 SAKTHIVEL NAGALINGAM (of Messrs Amran Joseph Chan & Co) ... APPLICANT AND KUMARAPPAN @ THANNIRMALAI A/L K.M. PALANIAPPAN 50 …RESPONDENT MAJLIS PEGUAM ... INTERVENOR GROUNDS OF JUDGMENT 55 Introduction [1]. This is the applicant's application under Sections 94(2)(c), 94(3)(d), 100, 103, 103B, 103C, 103D and 103E of the Legal Profession Act 1976 ("LPA"), inter alia, to set aside the decision of the Disciplinary Board ("DB") dated 7.5.2024, which 60 upheld the findings of the Disciplinary Committee ("DC") in Complaint No. DC/16/0134 that the applicant was found guilty of misconduct for failure to comply with a solicitor's undertaking. Preliminary Objection [2]. The Intervenor (Bar Counsel) raised a preliminary objection that 65 the appeal was incompetent as the applicant is a an undischarged bankrupt and had not obtained leave from the Director General of Insolvency pursuant to Section 38(1)(a) of the Insolvency Act 1967. [3]. The court finds no merit in this objection. The applicant was at 70 all material times practising with the leave of the DGI. This appeal pertains to disciplinary proceedings arising from his legal practice for which leave was already granted. The analogy drawn by the applicant to matrimonial proceedings is apt. The right to defend oneself in disciplinary proceedings is intrinsic to 75 the legal profession and cannot be fettered by procedural technicalities. The court holds in support of the proposition that leave is not required to defend or challenge disciplinary proceedings arising from one’s profession, particularly where no recovery of asset is in issue. 80 [4]. Accordingly, the preliminary objection is dismissed. Substantive Issues Issue 1: Whether the Undertaking Was Conditional and Never Matured [5]. The undertaking in question is a letter dated 18.11.2015 (Exhibit 85 C) issued on the letterhead of Messrs Chew Gibu & Co. It was addressed to the complainant and signed by the applicant, who was at the material time a Legal Assistant (“LA”) in the firm. The letter stated that the firm “irrevocably undertake to pay” the complainant the sum of RM225,000 “once we receive the 90 balance purchase price.” The undertaking was given pursuant to the instructions of Mr. Gabriel Moses, who was acting as attorney for the vendor. [6]. The language of the undertaking clearly makes the receipt of the balance purchase price a condition precedent. The 95 obligation to pay the RM225,000 was expressly tied to the occurrence of that condition. The Court accepts the applicant’s contention that this is a classic conditional undertaking. The obligation did not arise until and unless the firm actually received the cleared balance purchase price. 100 [7]. However, the evidence shows that the firm never received the cleared funds. Although a banker’s cheque for RM550,000 (representing the balance purchase price) was delivered to the firm, it was never banked in or cleared. This is because, before any such step could be taken, the firm received a letter dated 105 22.12.2015 from the vendor (Lavender Lee) terminating the firm’s appointment and instructing that all further dealings be directed to newly appointed solicitors, Messrs R.J. Esar & Co. Upon receipt of this instruction, the firm returned the cheque to the purchaser’s solicitors without banking it in. The firm also 110 informed all parties that they no longer acted in the transaction. [8]. At that stage, the applicant, as a legal assistant, no longer had any authority to act or receive funds. His authority arose only by virtue of the firm’s retainer, which had now been revoked. The condition precedent to the undertaking in respect of receipt of 115 the balance purchase price was never fulfilled. Therefore, the undertaking did not mature into a binding obligation. [9]. The applicable legal principle is found in Arab Malaysian Finance Bhd v Kah Moto Co Sdn Bhd [2010] 5 MLJ 10, where the Court of Appeal held that: 120 “Conditions precedent are terms to the effect that unless a particular event occurs… although a contract may have arisen, its performance, in whole or in part, cannot be enforced.” 125 [10]. This is not a case where the solicitor received client monies and misused them. Rather, this is a case where no receipt occurred, and the solicitor was expressly discharged before the cheque could be processed. The Disciplinary Committee erred in treating the mere delivery of the cheque as equivalent to receipt 130 and clearance, and further erred in attributing personal liability to the applicant for an undertaking that, in both form and substance, was issued on behalf of the firm and within the confines of what is now a terminated retainer. 135 Issue 2: Whether the Duty Could Survive the Termination of Retainer [11]. The Disciplinary Committee held that the applicant should have preserved the right of the complainant either by retaining the cheque or transferring the undertaking to the new solicitor. 140 [12]. This is a misconceived proposition. Once the firm was discharged by the vendor, it had no locus to act. Retaining or depositing funds post-discharge may itself constitute a breach of duty. A discharged solicitor cannot act beyond instructions. [13]. The suggestion to file an interpleader is misplaced. There was 145 no active dispute on entitlement to the money at the time. The firm acted prudently by returning the cheque and informing all parties that they no longer acted. [14]. The Intervenor cited Datuk M Kayveas & Anor v Bar Council [2013] 5 MLJ 640 ; [2013] 5 MLRA 437. The Court finds the 150 reliance on this case misplaced. There, the solicitors had received and misapplied client funds in breach of stakeholder obligations. The breach was admitted. [15]. In contrast to the facts in Kayveas (supra), the applicant in the present case never deposited the banker’s cheque. The cheque 155 was returned, and not processed, because the applicant’s firm had been discharged by the vendor before any action could be taken. At no point did the applicant or the firm receive or control cleared funds. [16]. In Kayveas (supra), the solicitors had actually received funds 160 into their client account and were obliged to hold those funds as stakeholders pending the fulfilment of certain conditions. They breached that duty by releasing the funds prematurely. The Federal Court observed that stakeholder solicitors are duty-bound to “await the outcome of the event” before disbursing 165 funds. A relevant passage from the case is referred to here: “In our view, the factual background attracts the application of the principles of law regulating stakeholders. The breach of duty by the appellants as stakeholders is not a mere breach of contract. The relationship between the appellants 170 (stakeholders) and the vendor and the purchaser is fiduciary in nature, existing between trustees and beneficiaries. Therefore, the appellants’ breach of duty as stakeholders is a breach of duty as trustees. It is a breach of fiduciary duty. …. appellants herein are duty bound to hold the monies as 175 trustees for both the vendor and the purchaser to await the outcome of the event ie, the payment towards the redemption sum and the discharge of charge for the property. Pending the outcome of that event, the appellants as stakeholders may not part with the monies without the 180 consent of both the vendor and the purchaser.” [17]. This principle supports the applicant’s case: the undertaking he signed could only be performed upon actual receipt of cleared funds. Since the funds were never received and the firm was 185 discharged before the cheque was processed, the undertaking never took effect. Issue 3: Whether the Undertaking Can Be Imputed to the applicant Personally [18]. The undertaking was given on firm letterhead by the applicant, 190 but in his capacity as an LA under the instruction and authority of the firm's principal, Mr. Chew Gibu, who has since deceased. It is trite that undertakings given by legal assistants on behalf of the firm are the responsibility of the firm unless the assistant acted beyond authority or fraudulently. 195 [19]. There is no evidence the applicant exceeded his authority or acted negligently. He followed firm protocol and vendor instructions. Personal liability does not attach merely because the LA signed on the firm’s behalf. Issue 4: Whether the Complainant Was Prejudiced 200 [20]. There is no clear evidence that the complainant was deprived of the RM225,000. It is likely that he could have pursued the funds from the newly appointed solicitor or the attorney-in-fact, Mr. Gabriel Moses. The DC noted it had no evidence of actual loss. It is trite that professional misconduct must involve in 205 impropriety or harm. Issue 5: Whether Procedural Irregularities Vitiate the Proceedings [21]. The applicant contended that he was denied a fair hearing before the Disciplinary Committee and subsequently the 210 Disciplinary Board. This denial, he argued, arose from two material procedural failings: (i) the death of the complainant prior to the inquiry and (ii) the denial of the right to cross-examine the complainant on critical aspects of the complaint. [22]. The Bar Council, in response, argued that the current Legal 215 Profession (Disciplinary Proceedings) Rules 2017 no longer include an express provision of right to cross-examination. They relied on Rule 16 of the 2017 Rules, which permits the DC to proceed in the absence of a party, provided notice was given under Rule 14. However, the applicant maintains that this does 220 not abrogate the common law right to a fair hearing. [23]. The Federal Court in Sithradevi Nagalingam v Masdar Rahman & Anor; Majlis Peguam Malaysia (Intervener) [2021] 2 MLJ 399; [2021] 3 CLJ 677; [2021] 2 MLRA 230 is the binding authority on this point. The Court held that 225 disciplinary proceedings carry serious consequences and require strict adherence to natural justice. The Court reiterated that the burden of proof is “beyond reasonable doubt,” and that a solicitor must be afforded a fair opportunity to confront the complaint, especially where credibility and factual disputes 230 arise. The Federal Court noted: “the appellant’s explanation or version of the events appear to have been properly considered by the DC, or even weighed against the available documentary evidence. In a matter as serious as discipline for misconduct which is liable 235 to lead to the suspension or even striking off an advocate and solicitor from the Roll, as it did in this appeal, there is greater reason for the prescribed rules to be observed and the DC as well as the DB, charged with responsibility of discipline, to always properly evaluate all evidence 240 presented before rushing into making findings and meting out punishment.” (at para [83]). [24]. The applicant in the present case was never afforded an opportunity to cross-examine the complainant, who had passed 245 away prior to the inquiry. He was thereby denied the chance to clarify why three separate undertakings had been issued involving differing sums, and whether the complainant had, in fact, been paid through other channels. These are matters which go to the root of the complaint. 250 [25]. Though it is noted that the repealed Rule 23 of Legal Profession (Disciplinary Proceedings) (Investigating Tribunal and Disciplinary Committee) Rules 1994, had clearly provided for cross-examination rights and likewise, Rule 8 of the Advocates and Solicitors (Disciplinary Inquiry) 255 Procedure Rules 1970, which stated that the complainant “shall be liable to be cross-examined.” The Federal Court in Sithradevi (supra) expressly recognised that the denial of such opportunity caused “substantial prejudice” to the solicitor. Append below the provisions mentioned here: 260 “Rule 23 of the Legal Profession (Disciplinary Proceedings) (Investigating Tribunal and Disciplinary Committee) Rules 1994 provides: 23 Right of cross-examination At any hearing before the Disciplinary Committee — 265

(a)the advocate and solicitor concerned may cross-examine the complainant and his witnesses, if any, in relation to the complaint;

(b)the complainant may cross-examine the advocate and solicitor concerned where he gives evidence, and his 270 witnesses, if any. (underlined emphasised.) Rule 8 of the Advocates and Solicitors (Disciplinary Inquiry) Procedure Rules 1970 provides: 8 Right of Solicitor concerned to cross-examine 275 On the date fixed for such hearing and investigation, the Complainant shall be liable to be cross-examined by the Solicitor concerned on his statement of complaint, before he is permitted to call his witnesses, if any, who shall also be liable for cross-examination. 280 (underlined emphasised.) [26]. Additionally, the standard of proof in disciplinary matters is not the balance of probabilities but the criminal standard, as confirmed in Sithradevi (supra) and by the Federal Court in 285

461

Keith Sellar v Lee Kwang [1980] 2 MLJ 191; [1980] MLRA In Keith (supra) although the Federal Court agreed that the Disciplinary Committee had adopted the correct approach and found no basis to conclude that it had applied a lower standard of proof, it nonetheless criticised the Committee for 290 failing to expressly state the standard of proof applied. The Court emphasised the importance of articulating the heightened threshold required in such proceedings. A similar omission is evident in the DC’s report in the present case, where there is no clear statement of the standard of proof that was applied. 295 [27]. The inquiry in this case proceeded solely on the basis of the complainant’s documents and the applicant’s testimony. The complainant was deceased, and the Bar Council did not adduce further witnesses to prove actual prejudice or misconduct. In such circumstances, proceeding without cross-examination 300 severely compromised the fairness of the inquiry and prejudiced the applicant. [28]. Furthermore, the Court notes that no explanation was provided by the Bar Council or the Secretariat as to why proper steps were not taken to notify the complainant’s next-of-kin, as 305 required under Rule 27 of the 2017 Rules. That rule allows the next-of-kin or legal representative to continue the complaint in the event of the complainant’s death. Failing that, the Bar Council may intervene. In this case, the required affidavit proving the death of the complainant and compliance with Rule 310 27 was never tendered in evidence. [29]. The applicant also raised the impropriety of relying on a WhatsApp message to notify him of the DB’s hearing. Section 138 of the Legal Profession Act 1976 prescribes service by post as the default statutory mode, and a written certificate of 315 posting serves as prima facie evidence of proper service. The Court questions whether reliance on a WhatsApp message, particularly when unacknowledged and not followed up by phone or email, constitutes valid notice under the Act. [30]. In Bank Kerjasama Rakyat Malaysia v Zainul Rijal Abu 320 Bakar & Anor; [2020] 5 MLJ 121; [2020] 7 CLJ 438; [2020] 6 MLRA 407, the Court of Appeal held that where the DB departs from the DC’s recommendation, it must record reasons pursuant to Section 103D (1) LPA. Failure to do so amounts to a serious breach of natural justice. In that case, the Court found 325 that the absence of recorded reasons for increasing the penalty rendered the DB’s decision invalid. [31]. The same principle applies here. The DB increased the fine from RM5,000 to RM20,000 without giving any reasons. The Order served on the applicant merely stated that the DB had 330 rejected the DC’s recommendation. There was no explanation as to why, nor was any attempt made to address the applicant’s financial circumstances or proportionality. Applying the ratio in Bank Kerjasama Rakyat Malaysia (supra), this omission is fatal to the validity of the DB’s order. 335 [32]. It is also troubling that the DB’s Order, dated 17 May 2024, was only sent out on or after 23 May 2024, thereby depriving the applicant of several days to comply with the one-month payment deadline stated in the Order. This undermines the procedural fairness of the disciplinary process. 340 [33]. Lastly, in Liaw Chee Huey v Wong Chin Heon [2016] MLRH 694; [2016] 7 MLJ 95; [2015] 5 AMR 418, the High Court held that the DC must identify the specific limb of Section 94(3) LPA under which a solicitor is found guilty of misconduct. Failure to do so was held to be “seriously prejudicial and unfair” and 345 rendered the order bad in law. The DC’s report in the present case suffers from the same omission. It fails to specify which limb of Section 94(3) the applicant was said to have contravened. Issue 6: Proportionality of Sanction 350 [34]. The DC recommended a RM5,000 fine. The DB unilaterally increased it to RM20,000 without reasons. The applicant is a bankrupt, legally permitted to practise under specific leave. The increase in penalty was arbitrary and unexplained, contrary to the principle which requires reasons to be stated when deviating 355 from recommendations. Conclusion [35]. Having carefully considered the facts, evidence, and applicable legal principles, I find that the charge of misconduct against the applicant is unsustainable. The undertaking in question was 360 conditional and never matured. The applicant, as a legal assistant, cannot be personally liable for a firm-issued undertaking, particularly where authority was revoked prior to any receipt of funds. His actions were prudent under the circumstances. The disciplinary proceedings were procedurally 365 flawed and no actual loss was shown. [36]. Accordingly, the decision of the Disciplinary Board dated 7 May 2024 and the Disciplinary Committee's finding are accordingly set aside. The applicant stands acquitted of the charge of misconduct. No order as to costs is made, as the Disciplinary 370 Board is a statutory body established solely to uphold professional discipline among members of the Bar. To saddle such a body with costs may have a chilling effect on its ability to act decisively and fearlessly on complaints brought before it, thereby undermining its regulatory function. 375 Dated : 9 September 2025 [MOSES SUSAYAN] 380 JUDGE HIGH COURT IN MALAYA AT IPOH, PERAK 385 390 For the Applicant : Shivdev Singh Advocates and Solicitors [Messrs Amran Joseph Chan & Co] Ipoh, Perak 395 For the Intervenor : Yung Chirt Kye (together with Yong Li Tzer) Advocates and Solicitors [Messrs Phee, Chen, Ung] 400 George Town, Penang (Notice: This Grounds of Decision is subject to official editorial revision) 405 Headnotes: Legal Profession — Disciplinary proceedings — Solicitor’s undertaking — Conditional undertaking issued by Legal Assistant — Firm discharged before receipt of funds — Cheque returned 410 undeposited — Whether undertaking matured into binding obligation — Whether Legal Assistant personally liable for firm issued undertaking — Whether termination of retainer extinguished authority — Whether disciplinary proceedings flawed — Absence of complainant at inquiry — Denial of cross-examination rights — 415 Standard of proof not stated — Increase of fine by Disciplinary Board without reasons — Whether serious procedural irregularities vitiated proceedings — Whether prejudice caused to solicitor — Whether decision of Disciplinary Board and Disciplinary Committee liable to be set aside — Legal Profession Act 1976 ss 94(2)(c), 94(3)(d), 100, 103, 420 103B, 103C, 103D, 103E, 138 — Legal Profession (Disciplinary Proceedings) Rules 2017 rr 14, 16, 27

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Case metadata

Court: High Court of Malaysia
Decision date: 3 Jul 2025
Case number: AA-17D-1-07/2024
Coram: YA Tuan Moses Susayan
Practice area: Legal Profession — Disciplinary proceedings — Solicitor’s undertaking — Conditional undertaking issued by Legal Assistant — Firm discharged before receipt of funds — Cheque returned undeposited — Whether undertaking matured into binding obligation — Whether Legal Assistant personally liable for firm issued undertaking — Whether termination of retainer extinguished authority — Whether disciplinary proceedings flawed — Absence of complainant at inquiry — Denial of cross-examination rights — Standard of proof not stated — Increase of fine by Disciplinary Board without reasons — Whether serious procedural irregularities vitiated proceedings — Whether prejudice caused to solicitor — Whether decision of Disciplinary Board and Disciplinary Committee liable to be set aside — Legal Profession Act 1976 ss 94(2)(c), 94(3)(d), 100, 103, 103B, 103C, 103D, 103E, 138 — Legal Profession (Disciplinary Proceedings) Rules 2017 rr 14, 16, 27
Version: Alasan Penghakiman 1
Published: 10 Sept 2025
Source ID: fc94db64-0282-4f3b-a2f8-92a8374457b2

Catchwords

Legal Profession — Disciplinary proceedings — Solicitor’s undertaking — Conditional undertaking issued by Legal Assistant — Firm discharged before receipt of funds — Cheque returned undeposited — Whether undertaking matured into binding obligation — Whether Legal Assistant personally liable for firm issued undertaking — Whether termination of retainer extinguished authority — Whether disciplinary proceedings flawed — Absence of complainant at inquiry — Denial of cross-examination rights — Standard of proof not stated — Increase of fine by Disciplinary Board without reasons — Whether serious procedural irregularities vitiated proceedings — Whether prejudice caused to solicitor — Whether decision of Disciplinary Board and Disciplinary Committee liable to be set aside — Legal Profession Act 1976 ss 94(2)(c), 94(3)(d), 100, 103, 103B, 103C, 103D, 103E, 138 — Legal Profession (Disciplinary Proceedings) Rules 2017 rr 14, 16, 27

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SAKTHIVEL NAGALINGAM OF MESSRS AMRAN JOSEPH CHAN & CO. - appellant - ejudgment_parties
KUMARAPPAN @ THANNIRMALAI A/L K. M. PALANIAPPAN - respondent - ejudgment_parties
MAJLIS PEGUAM MALAYSIA - pencelah - ejudgment_parties

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Sakthivel Nagalingam of Messrs Amran Joseph Chan & Co. v Kumarappan @ Thannirmalai A/L K. M. Palaniappan (AA-17D-1-07/2024)

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Sakthivel Nagalingam of Messrs Amran Joseph Chan & Co. v Kumarappan @ Thannirmalai A/L K. M. Palaniappan (AA-17D-1-07/2024)

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