Song Teik Kim v Lina Anak Dimbad (W-02(A)-2533-12/2017)

LINA ANAK DIMBAD [IC NO.: 661006-13-5220]

MAJLIS PEGUAM MALAYSIA … RESPONDENTS (IN THE HIGH COURT IN MALAYA AT KUALA LUMPUR ORIGINATING SUMMONS NO: WA-17D-13-05/2017 In the matter of section 103E (1) of the Legal Profession Act 1976 And In the matter of section 183D (2) of the Legal Profession Act 1976 And In the matter of a complaint to the Disciplinary Board by Lina Anak Dimbad BETWEEN SONG TEIK KIM [IC NO.: 571128-08-6253] … PLAINTIFF

LINA ANAK DIMBAD [IC NO.: 661006-13-5220] … DEFENDANT

MAJLIS PEGUAM MALAYSIA … INTERVENER) Page 2 of 16 CORAM UMI KALTHUM BINTI ABDUL MAJID, JCA YAACOB BIN HAJI MD SAM, JCA STEPHEN CHUNG HIAN GUAN, JCA JUDGMENT OF THE COURT Background Facts: Before the Disciplinary Board [1] The Appellant was previously practising as an advocate and solicitor under the name and style of Messrs Murthy Song & Partners, Kuala Lumpur. [2] The Appellant acted for the 1st Respondent as solicitor in her insurance claim arising from the death of her late husband. The claim was settled and the settlement sum was paid to Universal Trustee (Malaysia) Berhad. On instructions from the Appellant, the Respondent withdrew part of the settlement sum amounting to RM800,000.00 to be deposited into a bank account. [3] The Appellant then borrowed RM600,000.00 from the 1st Respondent with a promise to pay her interest of RM6,400.00 a month commencing April 2005. The Appellant confirmed that he took the loan and had paid interest and refunded a sum of RM100,000.00 when requested but ceased to pay monthly interest from August 2008 as he had financial difficulties. [4] In June 2010 the 1st First Respondent lodged a complaint against the Appellant under the Legal Profession Act 1976 after he Page 3 of 16 stopped paying and still owed the principal sum of RM500,000.00. The Majlis Peguam Malaysia (Bar Council) appointed a Discipline Committee (DC) to hear the complaint. After hearing the parties, the documentary evidence and submissions, the DC furnished a report. [5] In its recommendations in the report, the DC was of the view that at the time the sum of RM600,000 was paid to the Appellant, the 1st Respondent was no longer a client of the Appellant, hence there was no solicitor-client relationship in existence. Nevertheless bearing in mind that the 1st Respondent still relied on the Appellant for advice in handling her monies, the Appellant still had influence over the 1st Respondent and the Appellant should have asked her to obtain legal advice from another solicitor before entering into the Loan Agreement. By failing to ask the 1st Respondent to seek legal advice before signing the Loan Agreement, the Appellant had failed to conduct himself in a professional manner, knowing full well that there was a conflict of interest since he was a borrower and at the same time a former solicitor to the 1st Respondent who had trusted him. Nonetheless, failure to repay the loan was a purely civil matter which the 1st Respondent had to seek recourse through the Court. [6] The DC recommended to the Disciplinary Board (DB) that the Respondent be fined a sum of RM1,000.00 for professional misconduct in failing to advise the 1st Respondent to seek legal advice before signing the Loan Agreement. The DB upheld the finding of misconduct but increased the fine to RM50,000.00. Page 4 of 16 In the High Court [7] Being aggrieved with the decision of the DB, the Appellant filed an originating summons (OS) for the following orders that (i) the decision in order of the Disciplinary Board and/or the Disciplinary Committee against the Plaintiff/Appellant on 15 April 2017 be set aside; and (ii) that the penalty of the fine of RM50,000.00 be set aside. [8] The grounds for the OS application were as follows: (1) The DC and/or DB in deciding that the Appellant ought to have advised the 1st Respondent to seek independent advice was never a complaint to the DB. (2) It was not open to the DB to undertake an enquiry on matters which were not the subject matter of the complaint. (3) The Appellant was not given any opportunity to explain as to why he was not required to proffer unsolicited advice to the 1st Respondent before she signed the Loan Agreement. (4) The DB had acted disproportionately to the nature of the complaints and in all circumstances of the case when imposing a fine of RM50,000.00. (5) There had been a breach of the rules of natural justice. [9] In her decision, after referring to the facts of the case, the learned High Court Judge was of the opinion that the Appellant’s main complaint was that by substituting a fresh act of misconduct from the original charge that the DC had committed a jurisdictional error. Therefore she posed the question whether the DC had made a finding of a misconduct that were within the scope of the Respondent's complaint as they arose from facts based on the complaint which were not disputed by the Appellant. Page 5 of 16 [10] The learned High Court Judge found that on the undisputed fact that when the Appellant prepared the Loan Agreement with the 1st Respondent, he did not advise the 1st Respondent to seek advice from a different lawyer. She said even though the 1st Respondent did not state this clearly in her letter of complaint, she was not expected to do so as she was not a legally qualified person. On the other hand, the Appellant as the legally qualified person, should have known this and that he should have advised her to seek advice from a different lawyer. She went on to say that from his evidence before the DC, the Appellant was equally appraised of this fact, but his excuse was that the 1st Respondent's "son-in-law could understand the transaction". [11] The learned High Court judge was of the considered opinion that since the DC had made a finding of a misconduct that were within the scope of the 1st Respondent's complaint as they arose from facts based on the complaint, which were not disputed by the Appellant, the DC could not be said to have acted beyond its jurisdiction and consequently, in affirming the DC's finding on liability, the DB could not be said to be acting without jurisdiction. [12] The learned High Court judge further stated that from the documents and the notes of evidence before the DC, she found that the Appellant had been informed of all the material ingredients and facts relating to the complaint lodged against him and he had given his explanation to exculpate himself. However, the DC did not accept his explanation and this was affirmed by the DB. [13] The learned High Court Judge said that as to whether the DC and DB had erred in rejecting his explanation was not for the court to Page 6 of 16 consider, as the court should not delve into the merits of the said order made by the DC and the DB, referring to the Court of Appeal’s case of Dinesh Kanavaji & Anor v Ragumeran N Gopal; Bar Council Malaysia (Intervener) [2016] 7 CLJ 667. On the issue of proportionality of the sentence, she said this was within the discretion of the DB which this Court would not interfere. [14] The learned High Court judge then proceeded to find no merit in the Appellant’s appeal and dismissed his appeal with no costs. Hence the appeal before us. The Appeal The Appellant’s submission [15] Counsel for the Appellant submitted that the DC’s recommendation in paragraphs 2 and 3 was that the Appellant had influence over the 1st Respondent and ought to have asked the 1st Respondent to seek independent advice. This recommendation was not the subject matter of the complaint at all. The 1st Respondent had accepted the loan transaction and it was the non-payment which was an issue. There was no challenge by the 1st Respondent to the Appellant's explanation by way of cross-examination and neither did the 1st Respondent registered any protest against the issue of influence or independent advice. There was no cross-examination of the 1st Respondent save and except that she wanted the Appellant to return the money which is still owing plus interests. [16] The Appellant submitted that the Loan Agreement was not challenged before the DC or in any court, and consequently the relationship of the parties was that of a debtor and creditor. It was Page 7 of 16 submitted that the DC recognized that the transaction was a loan and was purely a civil matter and the 1st Respondent has to seek recourse through the court. [17] It was submitted that the DC fell into error when it held that the Appellant was guilty of misconduct for not having asked the 1st Respondent to seek legal advice from another solicitor as it had already come to a finding that there was no solicitor-client relationship in existence and that the failure to repay the loan was purely a civil matter which the 1st Respondent had to seek recourse through the court which meant that effectively the complaint by the 1st Respondent did not amount to misconduct. By substituting a fresh charge of misconduct for the original charge, the DC committed a jurisdictional error. The Appellant cited R Sivabalan a/l A Ramiah v Neoh Lay Cheng (Malaysian Bar Council, intervener) [2017] 7 MLJ 587 and Bar Malaysia v Neasarani T Singara Thevar & Anor [2016] 1 MLRA 120. [18] It was submitted that the case of Majlis Peguam Malaysia v Rajehgopal a/l Velu & Anor [2017] 1 MLJ 596 was not applicable to the facts in the instant case because there was no complaint of any undue influence or breach of confidence reposed in the Appellant by the 1st Respondent and neither was there any evidence led by her to say that she was influenced to sign the Loan Agreement to grant the loan to the Appellant. [19] In respect of the penalty, the DC recommended that a penalty of RM1,000.00 be imposed however the DB increased the said sum to RM50,000.00. It was submitted that the sum of RM50,000.00 was Page 8 of 16 excessive and ought to be set aside given the factual matrix of the case and the conduct of the 1st Respondent as follows:-

(i) the loan transaction was not challenged and it remains a valid contract between the parties;

(v) the complainant was paid interests amounting to RM210,400.00. Submission by the 2nd Respondent [20] The 2nd Respondent submitted that it was not disputed that the Appellant was afforded the opportunity to provide his explanation to both the DC and DB and no procedural unfairness had been alleged by the Appellant. It was not disputed that the Appellant had in fact attended the hearing of the DB and was afforded the opportunity to raise any issues he deemed fit. [21] It was submitted that the question was whether the Appellant had acted in a manner unbecoming of an advocate and solicitor when he obtained the loan from the 1st Respondent without ensuring that she obtained independent legal advice. It was submitted that whenever a solicitor is put in a position in which his own interest conflicts with that of his client, he must advise his client to seek Page 9 of 16 independent legal advice. The failure to advise the 1st Respondent as such was a clear dereliction of duty. [22] It was submitted that the only way the Appellant could have known that the 1st Respondent was in a position to lend him such a vast amount of money was because he was the solicitor acting for the 1st Respondent at the time the 1st Respondent was paid the settlement sum. This information had been procured by the Appellant as solicitor for the 1st Respondent . [23] It was submitted that the DB did not err when it upheld the findings of the DC. Furthermore, the DB had acted well within its jurisdiction and discretion in increasing the fine imposed on the Appellant to RM50,000.00. [24] It was further submitted that the learned High Court Judge was correct in refraining from disturbing the findings of the DC and the DB and in refraining from varying the sanction imposed. Our Decision [25] Under section 103D(1) of LPA, the DB may make an order affirming or rejecting the finding or recommendation of the DC.