Court of Appeal orders law firm partner to pay RM920,612 over Mont Kiara condo sale
The Court of Appeal has ordered a commission-based law firm partner to pay RM920,612.65 in outstanding proceeds from the 2014 sale of a Mont Kiara condominium, overturning two lower court decisions. The unanimous ruling found the partner liable under the Partnership Act 1961 despite his remuneration
PUTRAJAYA (Oct 15): The Court of Appeal has ordered a commission-based law firm partner to pay RM920,612.65 in outstanding proceeds from the sale of a Mont Kiara condominium, overturning two lower court decisions that had absolved him of liability.
The dispute arose from SR Dev Kumar's sale of the condominium for RM1.5 million in 2014, with Messrs Yuen & Co handling the transaction. A three-member bench chaired by Datuk Azhahari Kamal Ramli unanimously ruled that Puung Kok Peing was liable as a partner of the firm under the Partnership Act 1961, notwithstanding his commission-based remuneration, according to The Edge Malaysia.
The bench, which also comprised Datuk Ismail Brahim and Datuk Dean Wayne Daly, set aside the Sessions Court and High Court decisions and ordered Puung to pay the outstanding sum, together with RM30,000 in costs. Dev Kumar had mainly dealt with another partner, Yuen Kwong Yai, and received initial payments in 2014 and early 2015. However, payments stopped in the second half of 2015, leaving RM920,612.65 outstanding.
Free Malaysia Today (FMT) reported that RM900,439 had been transferred into the law firm's client account on Oct 20, 2014, but Dev Kumar claimed he had not received the sale proceeds. According to The Edge Malaysia, Yuen had told Dev Kumar that he had spent the remaining funds. Dev Kumar subsequently initiated legal proceedings against the firm.
The lower courts had dismissed Dev Kumar's claim against Puung on the basis that he was not a partner for the purposes of liability. High Court judge Arziah Apandi had reasoned that Puung held no equity or beneficial interest in the firm and derived his income from legal files he handled.
Dev Kumar, however, relied on the firm's letterhead, which identified Puung as a partner, in pursuing his claim. FMT reported that the appellate bench considered the statutory definition of partnership as a relationship between persons carrying on business in common with a view to profit. The court found that the Partnership Act did not distinguish between salaried, equity and commission-based partners, and that commission-based remuneration did not automatically exclude a lawyer from partnership status.
The bench also considered a Bar Council letter dated Dec 26, 2016, concerning Puung's status, as well as the legal implications of internal partnership arrangements for third parties dealing with the firm, FMT reported. In delivering the decision, Azhahari cited Sections 11, 12 and 13 of the Partnership Act in finding Puung liable, according to The Edge Malaysia.
Section 11 concerns partners' joint liability for a firm's debts and obligations incurred while they are partners, while Sections 12 and 13 address the firm's liability for specified wrongful acts or omissions and misapplication of money or property. Dev Kumar's counsel, Dinesh Nandrajog, who appeared with Wong Shu Min, had argued that Puung fell within the statutory definition of partnership. Dinesh also urged the appellate court to issue a written judgment, citing the wider implications of the ruling for commission-based partners in legal practices.
