Wong Seow Tian v Low Hann Young (A52NCC-326-11/2015)

The plaintiff and the defendant are both advocates and solicitors at the High Court of Malaya.

The defendant is a partner of Messrs. Low & Partners (“the firm”). The plaintiff joined the firm as a partner sometime in June 2010 and partnership agreement dated 1 June 2010 (“the partnership agreement”) was entered between the parties.

On or around June 2013, the plaintiff, vide a letter dated 20 June 2013 gave notice to the defendant as to her withdrawal as partner of the firm.

Pursuant to the partnership agreement, the last date of the plaintiff’s service in the firm was on 20 September 2013. This is admitted by the plaintiff in the aforesaid withdrawal letter. However, upon the request by the plaintiff, the defendant agrees to issue a letter to Bar Council dated 23 August 2013 confirming that the plaintiff is no longer the partner of the firm. This is to enable the plaintiff to set up her new firm without delay.

For the files handled by the plaintiff prior to the withdrawal, the plaintiff and the defendant have discussed, ascertained and divided them into a few categories i.e tail-end files, files under category 1 and files under category 2 & 3.

Disputes then arose as to the parties’ rights, obligations and liabilities under the partnership agreement after the plaintiff withdrew from the partnership The plaintiff’s claim

The plaintiff is claiming against the defendant for the following:

A total sum of RM121,216.24 as her profit sharing, which consists of the following: i. Part of her profit sharing due in October 2013, which amounts to RM53,776.28; ii. Profit sharing due in December 2013 for the sum of RM30,542.01; iii. Profit sharing due in February 2014 for the sum of RM7,940.82; and iv. Profit sharing based on files in Lampiran A of the Statement of Claim for the sum of RM28,956.23

The refund of bonus and allowances advanced by the plaintiff to the defendant / the firm, amounting to about RM11,528.54.

The defendant counterclaims against the plaintiff are for the following:-

A balance sum of RM37,022.91 (after taking into account the sum of RM53,776.28 retained by the defendant from the plaintiff’s profit sharing due in October 2013), for damages related to the Yoong Poh Mun and Beh Siew Aun’s file (“Yoong & Beh File”);

A sum of RM151,250.00 as the defendant’s losses (opportunity costs) for handling the plaintiff’s files in Category 2 & 3 which should be under the care of the plaintiff;

A sum of RM30,395.91 for damages and paid out by the defendant related to files under Category 2 & 3;

Refund of RM155,972.46 as the unaccounted support fees previously paid to the plaintiff by the defendant;

A sum of RM69,600.00 as the liquidated damages pursuant to clause 24 (a) of the partnership agreement, for soliciting the defendant’s employees; and

An injunction that the plaintiff and/or her agents and/or her employees be prohibited from practicing within 2km from the radius of the firm, pursuant to clause 26 of the partnership agreement. Parties agreement for matters after the termination of the partnership agreement

As the partnership agreement is silent on how the various files (and the profits) under the care of the plaintiff shall be handled or distributed after the termination of the partnership agreement, it is important for the court to determine whether there is any agreement between parties pertaining to the same.

Based on the evidence adduced during trial, I am satisfied, on the balance of probabilities, that the following terms and conditions had been agreed by both parties on the parties’ rights, liabilities and obligations after the plaintiff withdrew from the partnership:

That parties have categorized the plaintiff’s files into Category 1, 2 & 3;

That the defendant is agreeable to the plaintiff’s proposal to submit the notice of withdrawal (to the Bar Council) before 8 August 2013 but the plaintiff must be physically present in the firm until 20 September 2013;

That the plaintiff shall cause existing files (tail-end files) (which is not in Category 1, 2 or 3) to be closed by 20.9.2013. Additional man power may be hired at the plaintiff’s costs to cause these files be closed;

That for files under Category 2 & 3, the plaintiff shall continue to perform the lawyer duty and be solely liable for the late payment interest (if any) of these files. Additional man power may be hired at the plaintiff’s costs to cause these files be completed and closed; and

The defendant shall take over all files under Category 1, at profit sharing of 85% (defendant) + 15% (plaintiff). The defendant shall be solely liable for the late payment interest of these files (if any).

The aforesaid terms and conditions were discussed and agreed by both parties during several meetings and the defendant recorded these terms in his emails to the plaintiff, namely email dated 17 July 2013 and email dated 1 August 2013.

The court finds that the plaintiff’s denial as to the existence of the agreed terms and conditions is a bare denial which is inconsistent with the contemporaneous documents as well as the plaintiff’s own conduct at all material times. First of all, I takes note that the plaintiff is not a layman but a practicing lawyer. If those terms set out in the emails have not been agreed by the plaintiff during the meetings as alleged by the defendant in the emails, the plaintiff should have immediately replied to the emails and refuted the same but she did not. In the case of David Wong Hon Leong v Noorazman Bin Adnan [1995] 4 CLJ 155, the Court of Appeal held at page 159 that:. During argument, we registered our surprise at the learned Judge's reluctance to enter judgment for this sum of RM100,000. After all, the appellant had failed to respond to the letter of 17 December. If there had never been an agreement as alleged, it is reasonable to expect a prompt and vigorous denial. But, as we have pointed out, there was no response whatsoever from the appellant. In this context, we recall to mind the following passage in the judgment of Edgar Joseph Jr. J. in Tan Cheng Hock v. Chan Thean Soo [1987] 2 MLJ 479-487: In Wiedemann v. Walpole [1891] 2 Q.B. 534, 537 an action for breach of promise of marriage, it was held, that the mere fact that the defendant did not answer letters written to him by the plaintiff in which she stated that he had promised to marry her, was no evidence corroborating the plaintiff's testimony in support of such promise. Lord Esher M.R., in his judgment, remarked: Here, we have only to see whether the mere fact of not answering the letters, with nothing else for us to consider is any evidence in corroboration of the promise.' (Emphasis added). Earlier, in his judgment, he said, 'Now there are cases - business and mercantile cases in which the Courts have taken notice that, in the ordinary course of business, if one man of business states in a letter to another that he has agreed to do certain things, the person who receives that letter must answer it if he means to dispute the fact that he did so agree. (The emphasis is ours.)

Evidence also shows that parties had by their respective conduct after the termination of the partnership agreement affirmed the existence of the agreed terms and conditions. Some of the examples are as follows:

The defendant proceeded to issue a letter to the Bar Council confirming that he has no objection to the plaintiff’s withdrawal from the firm (before the expiry of the notice of termination);

Parties agreed that the plaintiff’s files were categorized into Category 1, 2 & 3 during trial. The plaintiff’s claim in this action is also based on the profit sharing agreed upon by both parties in respect of each category of files; and

The plaintiff agreed and based part of her claim in this action on the special arrangement for the defendant to take over the files under Category 1 at a profit sharing of 85% (defendant) + 15% (plaintiff).

I agree with the submission of the defendant’s counsel that the plaintiff cannot be allowed to approbate and reprobate on the agreed terms and conditions of the plaintiff’s withdrawal from the partnership. In the case of Fawziah Holdings Sdn Bhd v. Metramac Corporation Sdn Bhd & Another Appeal [2006] 1 CLJ 996, the Court of Appeal held at page 1012 as follows: In the second place, the right to avoid a transaction carries with it some limitations. You cannot affirm so much of a transaction as benefits you and seek to avoid that part of it that imposes a burden. You cannot pick and choose. You must either affirm the whole transaction or avoid the whole of it. There is no half-way house. Take the present instance. There are many clauses in the sale and purchase agreement. Some confer benefits on the defendant. Others may appear burdensome. Also there are several interlocking agreements entered into between the parties. Again, some may be beneficial and others burdensome. What the defendant is seeking to do here is to avoid selected parts of the transaction. It is seeking to approbate and reprobate. It cannot do that.

I do not consider the plaintiff’s submission that the aforesaid terms and conditions should not be accepted by the court as they should be construed as past consideration because this issue of past consideration was never pleaded by the plaintiff nor it was raised during trial. In any event, I do not think such agreed terms and conditions can be said to be past consideration based on the facts and evidence adduced before me.

It is based on the aforesaid agreed terms and conditions between parties vis-a-vis the plaintiff’s withdrawal from the partnership that the court shall examine and decide each and every claim set out by both parties. The plaintiff’s claim of RM121,215.34 as profit sharing

The plaintiff claims for the sum of RM121,215.34 as her profit sharing allegedly due to her under the partnership agreement. The plaintiff’s aforesaid claim is based on the “special arrangement” of 85:15 profit sharing for files in Category 1 as well as Clause 4 & 5 in the partnership agreement for files other than Category 1. I find that Clause 4 & 5 of the partnership agreement must be read together with the agreed terms and conditions for the plaintiff’s withdrawal from the partnership. In fact, the plaintiff’s claim on the ratio of 85 (defendant):15 (plaintiff) for files in Category 1 in this action confirmed the same. Part of her profit sharing due in October 2013 - RM53,776.28

The defendant did not dispute that a sum of RM53,776.28, which was supposed to be due and owing to the plaintiff in October 2013, was not released to the defendant. However, the defendant’s contention is that he has rightly retained the said sum being the plaintiff’s reimbursement towards the defendant’s losses in the Yoong & Beh File.

For reasons that I would set out in later part of my grounds of judgment, I agree with the defendant’s submission that the defendant has rightfully retained the sum of RM53,776.28. As I would take into account of this sum when I make the order pertaining to the amount payable by the plaintiff in respect of Yoong & Beh File, I hold that the plaintiff’s claim for RM53,776.28 is dismissed. Profit sharing due in December 2013 - RM30,542.01

The defendant did not object to the plaintiff’s claim for the sum of RM30,542.01 except to say that it should be set off from the various counterclaims by the defendant. As this claim is in fact profit sharing that the plaintiff is entitled to, I would allow the plaintiff’s claim for RM30,542.01. Profit sharing due in February 2014 - RM7,940.82

The defendant did not object to the plaintiff’s claim for the sum of RM7,940.82 except to say that it should be set off from the various counterclaims by the defendant. As such, I would allow the plaintiff’s claim for RM7,940.82 being the profit sharing that the plaintiff is entitled to. Profit sharing based on files in Lampiran A - RM28,956.23

By consent, the defendant has prepared a statement of account for files in Lampiran A. According to the defendant, the said statement of account is prepared based on all the supporting documents at pages 2 – 65 of Bundle H. This was not challenged or denied by the plaintiff during trial. Based on the statement of account at page 1 of Bundle H, the amount due and payable to the plaintiff for files in Lampiran A is

However, the plaintiff disagreed with the defendant’s calculation and made some handwritten amendments to the said statement of account. The amended statement of account (with the plaintiff’s handwritten notes) is at page 1 of Bundle I. find that the plaintiff did not produce any documents to support her said amendments. Also, there is no calculation whatsoever provided by the plaintiff as to how she has arrived at the various figures put forward by her in the amended statement of account.

Based on the evidence before me, I accepted the statement of account prepared by the defendant and hold that the plaintiff is only entitled to a sum of RM14,359.10 for files under Lampiran A.

Based on all the aforesaid, I allowed the plaintiff’s claim for profit sharing in the sum of RM52,841.93, calculated as follows:- RM30,542.01 + M7,940.82 + RM14,359.10 = RM52,841.93 Plaintiff’s claim for refund of bonuses and allowance advanced by plaintiff - bonuses (RM7,428.54)

According to the plaintiff, she had advanced a sum of RM7,428.54 (RM3,507.23 + RM3,921.31) as the bonuses paid to two clerks working under her at the material time as the defendant told her that “he was short of funds.” On the other hand, the defendant contended that the payment of RM7,428.54 by the plaintiff was actually her share towards the total bonuses paid by the firm to the two clerks.

Based on the evidence before me, I find that the plaintiff has failed to prove on balance of probability that the sum of RM7,428.54 was in fact an advance given by her to the firm. Parties’ conducts as well as contemporaneous documents clearly support the defendant’s contention instead of the plaintiff’s. The defendant produced a copy of the calculation of the bonuses, showing both parties’ shares towards the same and how the figures were arrived. Nothing was written on the said paper that the plaintiff’s contribution was just an advance. It is also lack of evidence to show that the defendant was short of funds at the material time and required an advance of RM RM7,428.54 from the plaintiff.

Therefore, I found that the plaintiff’s allegation that she had advanced the sum of RM7,428.54 at the defendant’s request is inherently improbable. As such, I dismissed the plaintiff’s claim on bonuses (paid in advance by her). Allowances (RM4,100)

The plaintiff claimed for allowances allegedly paid by her to a few temporary staffs to work at the firm for her files. I dismissed the said claim for the following reasons:

Based on the agreed terms and conditions for the plaintiff’s withdrawal from the partnership, the allowances, if incurred, was to be borne by the plaintiff. As such, the plaintiff’s claim is baseless; and

In any event, the plaintiff has failed to prove that such amount had in fact incurred and paid to the various temporary staff. The documents produced by the plaintiff fell short to prove on who were the recipients of the bank transfers and that they did work for the firm or the defendant on the files. The defendant’s counterclaim for the sum of RM90,799.19 related to Yoong & Beh file

The defendant’s counsel has set out the undisputed facts surrounding the issue or dispute of Yoong & Beh File, as follows:

Yoong & Beh’s file is one of the files brought in and handled by the plaintiff solely as defined in the partnership agreement;

Yoong & Beh (as purchasers) has lodged a complaint to the Bar Council against the plaintiff and the defendant (who are partners of the firm at the material time), for the firm’s delay in completing the sale and purchase agreement, which resulted the transaction being terminated by the vendor [see the Record of Complaint (DC/14/9100) filed by Yoong & Beh.

The alleged delay and termination by vendor happened during which the plaintiff was still a partner of the firm pursuant to the partnership agreement;

Yoong & Beh had also issued a letter of demand to the firm, demanding for compensation for losses and damages suffered by them arising from the termination of the sale and purchase agreement.

Both the plaintiff and the defendant had given notifications to the insurance company on the potential claim by Yoong & Beh. As a result thereof, the insurance company stepped in and took over the conduct of the civil claim by Yoong & Beh pursuant to Clause 19 of the Certificate of Insurance 2013.

With the assistance and advice of the solicitors for the insurance company, Messrs Ranjit Ooi & Robert Low, the insurance company has settled Yoong & Beh’s claim amicably by paying a sum of RM114,941.50 to Yoong & Beh

Out of the settlement sum of RM114,941.50, a sum of RM50,000.00 is borne by the firm, being the Base Excess for conveyancing matters pursuant to Clause 9 & 11(b) of the

Apart from the aforesaid RM50,000.00, the defendant / the firm has suffered further damages and incurred additional payments to Yoong & Beh (not covered by the insurance policy).

Based on the details set out in Q&A14(d) and the documents referred to therein, the defendant/firm has incurred a total sum of RM90,799.19 (including the Base Excess sum of RM50,000.00); and

In anticipation of the aforesaid losses, the defendant had retained a sum of RM53,776.28 from the plaintiff’s profit sharing in October 2013.

The only issue before me is whether the plaintiff or the defendant shall bear the aforesaid damages of RM90,799.19. In this regard, one must first look at Clauses 11 & 19 of the partnership agreement.

The Second Party (the Plaintiff) hereby agrees and undertakes with the First party (the Defendant) and the Firm to indemnify and keep the First party and the Firm fully indemnified against all loss, claims, costs, debts, obligations fines or penalties which may be brought, suffered or levied against the First party or the Firm as a result of suit, claims arising against the First Party or the Firm for the negligence and/or caused by the Second party in relation to the files brought in and handled by the Second party

I agree with the defendant’s counsel’s submission that based on the relevant clauses quoted above, the plaintiff shall keep the defendant indemnified against all loss and costs, which are suffered by the defendant as a result of claims arising against the defendant or the firm for files brought in and handled by the plaintiff at all material time. Particularly, in the event there is a claim against the firm or the defendant for negligence over the files brought in and handled by the plaintiff, the plaintiff must keep the defendant indemnified. I find that such interpretation makes sense and is commercially viable as it would be unreasonable and unfair to the defendant if he has to be liable to pay for any claims or losses over files that are handled by the defendant. For the same reason, I find that the plaintiff’s interpretation of the relevant clauses that the plaintiff is liable to indemnity the defendant only if there was negligence caused directly by the defendant on her files. This is more so when the alleged misconduct of the employee was at all time under the sole supervision of the plaintiff.

Despite the rather complicated facts surrounding the issue on how there was a delay in Yoong & Beh File (which involved fraud etc) which resulted losses to be suffered by Yoong & Beh, the ex-clients of the firm, the fact remains that their claim against the firm was based on negligence and this was supported by SD1, who is an independent witness from the insurance company called by the defendant. His relevant testimony is as follows: S2 Okay, so from this report, it appears that, allegedly someone an employee of the firm had committed forgery? : Yes. S3 : Resulting in the delayed in asking for the redemption sum? : Correct. S4 So, you agree to that when my learned friend ask you about this question, but can you tell the court, as far as the potential claim is concern the ex-client of this firm, when they want to claim against the firm, what is the nature of that claim, is it fraudulent, fraud, or actually negligence in delayed? : Is negligence in delayed resulting in financial loss.

Further, it is also my finding that the plaintiff’s denial as to her liabilities towards Yoong & Beh File is an afterthought as she had on various meetings and contemporaneous documents admitted that she would be responsible for the losses suffered by the firm in respect of the claim by Yoong & Beh.

Based on the evidence before me, the plaintiff is liable to pay and indemnify the defendant the sum of RM90,799.19, being the additional loss and damage suffered by the defendant in respect of the claim by Yoong & Beh, which was not covered by the insurance. However, as the defendant has retained the sum of RM53,776.28 from the plaintiff’s profit sharing for October 2013, I order that the amount due and payable by the plaintiff to the defendant for Yoong & Beh case is only RM37,022.91. The defendant’s counterclaim of RM151,250.00 as the defendant’s opportunity costs for handling the plaintiff’s files in Category 2 & 3

The plaintiff did not dispute that she did not complete the remaining works on files in Category 2 & 3. However, it is her contention that she was under no obligations to complete the said files after the termination of the partnership agreement and she did so for a few months out of goodwill.

As discussed earlier, it is my finding that based on the agreed terms and conditions for the plaintiff’s withdrawal from the partnership, the plaintiff was under an obligation to complete all the files under Category 2 & 3 and she would also be entitled to the original division of profits pursuant to the partnership agreement, i.e 60% (plaintiff) : 40% (defendant).

On this issue, I accept the testimony and evidence from SD3, who is an independent witness who has no interest whatsoever in the matter as she is no longer working for the firm. In this regard, in the case of Gan Yook Chin & Anor v. Lee Ing Chin & Ors [2004] 4 CLJ 309 the Federal Court held at page 330 that: Everything considered, we tend to agree with the observations expressed by the Court of Appeal in the following terms: Once the evidence of DW2 and DW3 is carefully scrutinized and tested against the probabilities of the case, it is apparent that they are wholly disinterested witnesses. Their evidence may be safely acted upon and ought to have been acted upon by the learned judicial commissioner. DW2 attended on the deceased, took his instructions, prepared a will in accordance with those instructions and attended to the execution and attestation of that will. DW2 and DW3, testified that the deceased was entirely lucid and mentally alert both at the time of giving instructions and at the time of signing the will. We find no good reason for these two witnesses to have concocted their story as neither of them had anything to gain from doing so.

SD3 gave the following testimonies during trial:

On or around August 2013, SD3 attended a meeting with the plaintiff and the defendant. In the said meeting, parties ascertained and divided the files into various categories and it was decided that the defendant and the firm would only take over files under Category 1. Files that are not under Category 1 would be handled by the plaintiff herself but under the name of the firm.

Due to the aforesaid arrangement, the plaintiff only gave and informed SD3 the status of the files under Category 1 during the meeting, as SD3 would be handling or assiting the defendant to handle those files.

However since January 2014, the plaintiff stopped coming into the firm to handle the files under her care (files not under Category 1). As the plaintiff did not give any status on files under Category 2 & 3 before that, SD3 and the defendant did not know the actual status of those files, did not know what were the outstanding works on those files and did not know when was the dateline etc

A lot of problems arose on those files under Category 2 & 3 when the plaintiff stopped coming into the firm to work on those files. SD3 was facing various enquiries and complaints from clients, estate agents, bank officers, solicitors of other parties etc. The plaintiff’s failure to continue handling those files has increased the work load of SD3 and the clerks, and they faced tremendous stress and frustration as they were constantly scolded by the clients of those files. The defendant and SD3 were then forced to continue with the remaining works on those files without any assistance from the plaintiff ;

That SD3 has expended an average time of approximately 605 hours (2.5 hour for each file) in handling the said 242 files under Category 2 & 3. The time costs of SD3 at that time was RM250 per hour. If the plaintiff had continued to work on those files until they are completed, SD3 would not be required to spend the time on those files and would be able to handle other files / new clients and invoiced for the works

I find no reason to doubt SD3’s aforesaid testimony. As stated above, SD3 is the only witness that has no interest in this matter, as compared to the plaintiff or the defendant. Therefore, it is my finding that due to the plaintiff’s breach of the agreed terms and conditions for her withdrawal from the partnership, ie. to complete the Category 2 & 3 files, the defendant and SD3 were forced to take over and spent time in handling the files, and thereby suffered losses in term of opportunity costs. I also accept that testimony from SD3 that at average, the time spent on each file by the defendant and/or her is approximately 2.5 hours and based on the contemporaneous documents with regards to the time costs of RM250 per hour (the firm’s invoices at pages 852 & 853 of Bundle E]. As such, I hold that the plaintiff is liable to pay the defendant a sum of RM151,250.00 (i.e. RM250 per hour x 242 files x 2.5 hours) for the losses suffered by the defendant or the firm. The defendant’s counterclaim for the sum of RM30,395.91 for damages and paid out by the defendant related to files under category 2 & 3

As held above, the plaintiff shall keep the defendant indemnified against all loss, claims, costs, debts, obligations fines or penalties for the files brought in and handled by the plaintiff, which are suffered by the defendant as a result of claims against the defendant or the firm for negligence or caused by the plaintiff. Further, it is also my finding that based on the agreed terms and conditions of the plaintiff’s withdrawal from the partnership, the plaintiff has confirmed and agreed that she shall be solely liable for late payment interest for files under Category 2 & 3.

As testified by the defendant as well as SD3, the firm had paid various penalties, compensations and legal fees for Category 2 & 3 files arising from the delay/negligence of the plaintiff in handling the files. The payments made by the firm were mainly for penalty imposed by LHDN in late filing of CKHT Form, late payment interest for delayed in completing the transaction within time limited etc. The total amount paid out by the defendant or the firm is RM30,395.91, which are particularized by the defendant and SD3 as follows:

CKHT Suit from Liew Chui Kheng : RM3,050.00 (File Reference No. : LP/SP/2258/1/13/WST/YL)

Pek Lee Yong File RM14,378.00 (File Reference No No.: LP/LN/2483/03/13/WST/SZ)

Chong Yee Wan & Tan Jui How File RM2,355.10 (File Reference No No.: LP/CV/828/05/11/WST/SZ)

Misc Penalties RM10,612.81 TOTAL : RM30,395.91

In support of the claim of RM30,395.91, the defendant has produced various documents showing the firm’s payments for the various penalties, refund of fees, legal costs etc. SD3, who has personal knowledge of this matter and whose evidence is accepted by this court, has also confirmed that these payments were in fact made by the firm for these files under Category 2 & 3.

As evidence (based on the contemporary documents as well as SD3’s testimony which the court accepts) clearly shows that these files were files under Category 2 & 3, which were brought in and handled by the plaintiff at the material time and that most importantly, the delay or problems were occurred during which the plaintiff was still with the firm, the court finds that the plaintiff is liable to pay or reimburse the defendant for the said sum of RM30,395.91. The defendant’s counterclaim for RM155,972.46 as the unaccounted support fees previously paid to the plaintiff by the defendant

It is not disputed that throughout the partnership, the plaintiff had claimed and received various payments termed as “support fees” from the defendant. Both the plaintiff and the defendant explained that these “support fees” are expenses incurred by the plaintiff in securing the files . Further, the plaintiff testified that the payments advanced by her for those expenses would normally be reimbursement to her as “support fees” and the same would be first deducted from the collected legal fees prior to division of profit sharing

It is also not disputed that as at 13 November 2013, a total sum of RM313,941.37 (out of the collected legal fees) was paid to the plaintiff as support fees and that the plaintiff, throughout the partnership, has never produced any details, particulars and/or document for her claim of the said support fees.

The issue before me is therefore whether in the absence of any account or supporting documents for the support fees, the plaintiff is liable to refund the support fees previously paid to her by the defendant.

The plaintiff submitted that the defendant’s claim for the refund of the support fees is an afterthought as throughout the partnership, the defendant has never questioned such claim and that the defendant has also never expected the plaintiff to produce any proof of payment for her claim on support fees.

After perusing all the evidence before me, I rejected the plaintiff’s aforesaid contention for the following reasons:

the defendant did raise the issue of the accuracy of the claim for support fees as early as October 2013 in his email dated 7 October 2013 ; and

the plaintiff too has acknowledged the defendant’s rights to request for details, particulars and full information for the support fees received by her in one of her emails to the defendant

The aforesaid evidence clearly shows that the defendant’s request for particulars as to the support fees is not an afterthought and in any event, the plaintiff did acknowledge the defendant’s right to ask for particulars or proof of the expenses relating to support fees.

Further, I agree with the defendant’s submission that a practice between parties (if at all) cannot in any way override the statutory obligation for a partner to provide or render accounts. In this regard, the plaintiff is under a legal duty to provide an account for the support fees paid to her as provided under Section 30 of the Partnership Act 1961 as follows:

Duty of partners of render accounts, etc. Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or his legal representatives.

The court in the case of Tham Kim Fai v. Ng Kon Seong [2006] 4 CLJ 634 has also held as follows: Indeed s. 30 of the said Act imposes a duty on the defendant (DW1) to render accounts to the plaintiff (PW1). It is a statutory duty and the defendant (DW1) appears to have breached it. Section 30 of the said Act enacts as follows:

Duty of partners to render accounts, etc. Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or his legal representatives. It triggers the principle of uberrimae fidei where each partner must deal with his fellow partners honestly and disclose any relevant fact when dealing with them. It is sufficient to show that there is a failure to disclose and the breach of the duty as set out in s. 30 of the said Act would be put into motion. There is even no necessity to prove fraud or negligence in order to invoke s. 30 of the said Act. This is what has happened here. The defendant (DW1) has failed to render the "true accounts and full information" to the plaintiff (PW1) pertaining to the partnership business. The language employed in s. 30 of the said Act is quite wide. It applies "to all things affecting the partnership.

Based on the aforesaid, it is my decision that there is a duty on the plaintiff to provide details, particulars, full information or render accounts for the support fees. As the plaintiff has failed to do so, the plaintiff is liable to refund 40% of the support fees to the defendant, being the portion of his profit sharing under the partnership agreement. Therefore, I allow the defendant’s counterclaim of RM155,972.46 being 40% of the unaccounted support fees previously paid by the defendant to the plaintiff. The defendant’s counterclaim for RM69,600.00 as the liquidated damages pursuant to clause 24 (A) of the partnership agreement, for soliciting the defendant’s employees

Clause 24(a) and 25 of Partnership Agreement provide as follows:-

The Second Party (Plaintiff) and the First Party (Defendant) (where applicable) shall not, at any time during the subsistence of the partnership, or after the termination of the partnership:

Solicit, canvass or encourage any person or entity which includes the employee, agent, associates, partners of the Firm, or the First Party (Defendant)’s associated company to leave the employment, association or partnership of the Firm, …

The Parties hereby agree that Clause 24(a) is deemed to be breach with the fact that the employee, partners of the Firm or the First Party (Defendant)’s associated companies leaving the employment or partnership of the Firm, and work under the employment or in partnership of the Second Party (Plaintiff) within three (3) years from the termination of the partnership. Upon breach of the clause 24(a), the First Party (Defendant) is entitled to liquidated damages from the Second Party (Plaintiff) amounting to last twelve (12) months’ salary/remuneration of the Employee or Partners leaving the firm. The parties hereby agree that this provision of this Agreement is deemed to be waive if the First Party (Defendant) gives his written consent to the employees, partners of the Firm or the First Party (Defendant)’s associated companies to work or enter into a partnership with the Second Party (Plaintiff). The parties hereby agree that Clause 25 shall not be applicable in the following circumstances :

where the employees, partners of the Firm or the First Party (Defendant)’s associated companies join the Firm through the referral or recommendation of the Second Party;

where the employees, partners of the Firm or the First Party (Defendant)’s associated companies join the Firm after the termination of the partnership;

where the employees, partners of the Firm or the First Party (Defendant)’s associated companies work under the employment or in partnership with the Second Party who has been employed or joined other firm/firms for a continuous period of six (6) months before joining or working for/with the Second Party.

It is clear from the aforesaid clauses that for employees who joined the firm after the termination of the partnership, the plaintiff is not liable to pay the liquidated damages to the defendant in the event the said employees joined the plaintiff thereafter.

The evidence shows that two of the firm’s employees i.e. Lai Yee Lee and Tan Phei Woon, was employed by the firm on 24 September 2013 and 11 September 2013 respectively. They then joined the plaintiff’s new firm on 1 January 2014 and 1 December 2013 respectively.

The plaintiff alleges that since her last day with the firm is 20 August 2013 and that the employees only joined the firm after that, she was not in breach of Clause 24 of the partnership agreement when her new firm took in the two employees. Such contention lacks of merits as evidence clearly shows that based on the notice of termination dated 20 June 2013 issued by the plaintiff herself, the termination of the partnership agreement only took effect on 20.9.2013. The fact that the defendant has issued a letter to the Bar Council on 23.8.2013 stating that he has no objection to the plaintiff’s withdrawal from the firm does not in any way affect the date of the termination of the partnership. In any event, I accept the defendant’s testimony that the letter was issued out of goodwill in order to enable to Plaintiff to set up her new firm but based on the agreed terms and conditions for the plaintiff’s withdrawal from the firm, the plaintiff was in fact with the firm until 20 September 2013.

Therefore, I allow the defendant’s counterclaim on Tan Phei Woon as she joined the firm before the termination of the partnership agreement. As Tan Phei Woon’s last drawn salary is RM2,000.00, the total liquidated damages payable by the plaintiff to the defendant is RM24,000.00 (12 months X RM2,000.00).

As Lai Yee Lee was employed by the firm on 24.9.2013, after the termination of the partnership agreement, the court finds that the plaintiff was not in breach of the partnership agreement based on Clause 25(b) of the partnership agreement. Therefore, the defendant’s counterclaim for liquidated damages on Lai Yee Lee is dismissed. The defendant’s counterclaim for an injunction that the plaintiff prohibited from practicing within 25 km radius of the firm.

Clause 26 of the Partnership Agreement provides the following:

According to the defendant, the plaintiff’s new firm, Messrs ST Wong Chambers, is less that 2km from the firm and as such, the plaintiff is in breach of Clause 26 of the partnership agreement. Based on this reason, the defendant is asking the court to grant an injunction to prevent the plaintiff or her agents or employees from practicing within 2km radius from the firm.

The issue before the court is whether Clause 26 of the partnership agreement is void by virtue of Section 28 of the Contracts Act 1950 which provides as follows: Every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, is to that extent void. Saving of agreement not to carry on business of which goodwill is sold Exception 1 - One who sells the goodwill of a business may agree with the buyer to refrain carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein: Provided that such limits appear to the court reasonable, regard being had to the nature of the business. of agreement between partners prior to dissolution Exception 2 - Partners may, upon or in anticipation of a dissolution of the partnership, agree that some or all of them will not carry on a business similar to that of the partnership within such local limits as are referred to in exception

or during continuance of partnership Exception 3 - Partners may agree that some one or all of them will not carry on any business, other than that of the partnership, during the continuance of the partnership.

The plaintiff’s counsel refers me to the case of Millenium Medicare Services v Nagadevan Mahalingam [2016] 2 CLJ 36 and contended that since the defendant has failed to lead any evidence to show that the partnership agreement was made in anticipation of the dissolution of the partnership then or in the near future, the exception in Section 28 of the Contracts Act is not applicable and therefore, Clause 26 of the partnership agreement remains null and void.

After careful consideration of the facts of this case, I agree with the plaintiff’s submission that Clause 26 of the partnership agreement is a restraint of trade clause and therefore it is null and void. As such, the defendant’s counterclaim for an injunction based on Clause 26 of the Partnership Act is dismissed.

Based on all the evidence presented before me and after reading all written submissions filed and for the reasons stated above, I hereby gives the following orders:

The plaintiff’s claim for profit sharing is allowed in the sum of RM52,841.93 only;

The plaintiff’s claim for RM11,528.54 for the refund of bonuses and allowances is dismissed,

The defendant’s counterclaim for Yoong & Beh File is allowed in the sum of RM37,022.91 only;

The defendant’s counterclaim for damages for loss of opportunity is allowed in the sum of RM151,250.00;

The defendant’s counterclaim for reimbursement towards the penalties etc paid by the firm for files under Category 2 & 3 is allowed in the sum of RM30,395.91;

The defendant’s counterclaim for the refund of the unaccounted support fees is allowed in the sum of RM155,972.46;

The defendant’s counterclaim for liquidated damages for soliciting the firm’s employees is allowed in the sum of RM24,000.00 only;

The defendant’s counterclaim for an injunction against the plaintiff is dismissed;

Interest at the rate of 5% per annum for sums awarded above until full and final settlement; and

Costs of RM5,000.00 to be paid by the plaintiff to the defendant. Dated this 7th of May, 2018 -sgd- (ISHAK BIN BAKRI) Judge Sessions Court Shah Alam Solicitors: Wong Seow Tian (Messrs Wong Seow Tian) for the plaintiff Douglas Yee (Messrs Douglas Yee) for the defendant