[2020] 1 LNS 2381 Legal Network Series

DALAM MAHKAMAH RAYUAN MALAYSIA

(BIDANGKUASA RAYUAN)
[RAYUAN SIVIL NO: W-02-(NCVC/W)-1259-06/2018, W-
02(NCVC)(W)-2580-12/2018 & W-02(NCVC)(W)-2603-12/2018]

ANTARA

NG BEE KEN KENNY

(Peguambela dan Peguamcara yang menjalankan
Amalan di atas nama Azri, Lee Swee Seng & Co.)
… PERAYU

DAN

1. TAN YEE SHEN

2. TAN KHIANG NAM

(yang berniaga di atas nama dan gaya KIENT WIN ENTERPRISE
No. Pendaftaran Perniagaan: 001082771-K)
… RESPONDEN-RESPONDEN

[Dalam Perkara Mengenai Mahkamah Tinggi di Kuala Lumpur

Bahagian Sivil

[Guaman No. 22NCVC-943-08/2012]

Antara

1. TAN YEE SHEN

2. TAN KHIANG NAM

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(yang berniaga di atas nama dan gaya KIENT WIN ENTERPRISE No.
Pendaftaran Perniagaan: 001082771-K)
… PLAINTIF-PLAINTIF

Dan

NG BEE KEN KENNY

(Peguambela dan Peguamcara yang menjalankan
Amalan di atas nama Azri, Lee Swee Seng & Co.)
... DEFENDAN]

Koram:

ABDUL KARIM BIN ABDUL JALIL, HMR

S. NANTHA BALAN, HMR
SUPANG LIAN, HMR

JUDGMENT OF THE COURT

Introduction

[1] The appellant is an advocate and solicitor. He is a partner in the

legal firm of Messrs. Azri, Lee Swee Seng & Co. (“ the firm”).
On 9 August 2012, the respondents filed Kuala Lumpur High
Court Suit No. 22 NCVC-943-08/2012 (“Suit 943”) and naming
the appellant as the sole defendant. According to the
respondents, they intended to purchase a parcel of commercial
property in Kuala Lumpur and had engaged the appellant to
handle the relevant sale and purchase transaction. The
appellant’s position is that the respondents had engaged the firm
and it was the firm which handled the conveyancing transaction

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and was responsible/liable for any purported

shortcomings/negligence.

[2] Leaving aside the question as to whether the respondents had

engaged the appellant or the firm, what is indisputable is that
ultimately the sale and purchase transaction did not go through.
Indeed, it could not go through. For now, it is important to
mention that the intervening events are, first, the winding up of
the vendor and secondly, the enforcement of a legal charge over
the land, and lastly, the sale of the subject land to a third party
at a public auction. The appellant say s that he had no control
over these events. The respondents disagree. We will come back
to this issue in the later part of this judgment. The respondents
tried to salvage the transaction by putting in a bid at the auction.
However, their bid during the auction was unsuccessful and
ultimately they were not able to purchase the land. As such, they
claim that they suffered loss and damage. The respondents
attribute the loss and damage to the appellant ’s alleged
negligence and mishandling of the conveyancing tr ansaction.

[3] During cross-examination, the 1 st respondent said (rather

crudely) in reference to the appellant’s handling of the sale and
purchase transaction that, “He actually screwed up the whole
transaction”. The respondents therefore sued the appellant for
his alleged negligence in respect of the conveyancing
transaction.

Suit 943 – The Outcome

[4] In so far as Suit 943 is concerned, on 31 May 2018 the

respondents’ claim (on liability) was allowed by the learned
Judge of the High Court (“the Judge”) following the conclusion
of a full trial. Thereafter, after undertaking an assessment of

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damages, the Judge granted damages pursuant to an order dated

23 November 2018.

[5] The Judge allowed damages in the sum of RM300,000.00 being

renovation costs and cost of relocation of the respondents’
business to a new location. The Judge also awarded interest on
the damages at the rate of 5% per annum from the date of the
filing of the action until full and final settlement, and costs of
RM30,000.00 (subject to allocator).

The Appeals

[6] The appellant was not happy with the outcome on liability and
quantum. For their part, the respondents were also not happy
with the outcome as the amount that was awarded by the Judge
was far less than what they had sought as damages per the Re
Amended Statement of Claim.

[7] The appellant appealed via Civil Appeal No. W-02(NCVC)(W)-

1259-06/2018 (“Appeal No. 1259”) against the finding of
negligence. The respondents appealed via Civil Appeal No. W -
02(NCVC)(W)-2580-12/2018 (“Appeal No. 2580”) as to the
inadequacy of quantum. The appellant appealed via Civil Appeal
No. W-02(NCVC)(W)-2603-12/2018 (“Appeal No. 2603”)
against the quantum which was awarded.

[8] On 15 December 2020, we allowed Appeal No. 1259 (on

liability). Consequently, Appeal No. 2580 and Appeal No. 2603
were rendered academic and were accordingly dismissed. This
judgment explains why we allowed Appeal No. 1259. For the
sake of convenience and brevity, we shall refer to the parties as
per their titles in the High Court. Hence , we shall refer to the

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appellant as “the defendant” and the respondents as the

“plaintiffs”.

Background facts

[9] The 1 st plaintiff is Mr. Tan Yee Shen. He shall be referred to in

the singular as “P1”. P1 is also known as “Eason”. The
reference to Eason in the documents or notes of evidence is to
be taken as a reference to P1. The 2 nd plaintiff is Mr. Tan
Khiang Nam. He shall be referred to in the singular as “ P2”. P2
is P1’s father. The plaintiffs carried on business as partners of a
partnership known as Kient Win Enterprise (Business
Registration No. 001082771-K) (“KWE”).

[10] During the trial it was established that as at the date of filing of
Suit 943, the business registration of KWE had been
“cancelled”. Counsel for the defendant argued before the High
Court that Suit 943 was a nullity as the plaintiffs lacked the
requisite standing to sue as partners of KWE. The point was not
seriously pressed in the appeal before us.

[11] As such, this judgment shall proceed on the footing that the
plaintiffs had the requisite locus standi to sue. In any event, the
issue of the plaintiffs’ standing to sue is irrelevant as we had
allowed Appeal 1259 on the basis that Suit 943 was time -barred
and that the plaintiffs had not established their case in
negligence against the defendant.

[12] We turn now to the conveyancing transaction. The starting point

is that the plaintiffs entered into a Sales and Purchase
Agreement (“the SPA”) dated 25 October 2000 with Jurumurni
Sdn Bhd (“the vendor”) to purchase a parcel of land with a 1 ½

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storey factory erected thereon with an address at No. 45, Taman

Desa Tasik, Sungei Besi, Kuala Lumpur.

[13] The subject property is more specifically described in the 1 st

Schedule to the SPA, as “All that 1 ½ storey factory known as
Lot 45, Type 4B measuring approximately 2,971.90 square feet
in area bearing postal address 45, Taman Desa Tasik, Sungei
Besi, Kuala Lumpur and held under Master Title(s), Pajakan
Negeri (WP) No. Hakmilik 23485, Lot 36068, Mukim Petaling,
Daerah Kuala Lumpur, Negeri Wilayah Persekutuan KL
(formerly held under H.S.(D) 76917, PT No. 4727, Mukim of
Petaling, Daerah and Negeri Wilayah Persekutuan) ” (“the
property”). Subsequently, an individual title was issued for the
property and it was thereafter held under title PN 31 499 Lot
38698 Mukim Petaling Daerah Kuala Lumpur.

[14] The developer of the property was the Datuk Bandar Kuala
Lumpur (“DBKL”). The vendor purchased the property from
DBKL whilst the property was still under a Master Title.

[15] The vendor was wound up on 24 July 2001. Neither the firm, the
defendant nor the plaintiffs were aware of this fact. They came
to know of the vendor’s wound-up status very much later. All
along the firm dealt with Dato’ Lim Thean Seng (“Dato’ Lim”)
who was a director of the vendor. Dato’ Lim did not alert the
defendant, the firm or the plaintiffs that the vendor had been
wound up.

[16] It is relevant to mention at this juncture that the vendor was

previously a client of the firm in respect of matters which are
not connected to the SPA or the conveyancing transaction. Dato ’
Lim was known to the defendant. And due to the previous
solicitor/client relationship between the firm and the vendor, the
respondents alleged that the defendant was in a conflict of

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interest position. P1 actually made an allegation that the

defendant’s actions were designed to benefit the vendor. But
during cross-examination, P1 recanted and withdrew the
allegation.

[17] In so far as the SPA and the conveyancing transaction are

concerned, the vendor was unrepresented. Indeed, the SPA
specifically states that all reference to vendor ’s solicitors shall
be a reference to the firm. (See: 3 rd Schedule to the SPA)

[18] The SPA was conditional in that the completion of the SPA was
subject to the approvals from DBKL and the Jawatankuasa Kerja
Tanah Wilayah Persekutuan Kuala Lumpur (“ the State
Authority”). In this regard, Clause

7.1 of the SPA reads as follows:

“7.1 …this Agreement is subject to the Consents which

shall be obtained by the vendor within Three (3)
calendar months in the case of the Developer und
SIX (6) Calendar months in the case of the State
Authority (if any) from the date of the Agreement,
falling which the vendor shall be entitled to the
option of extending the waiting period for a
maximum period of Three (3) calendar months from
the expiry of the respective period stipulated herein
for the Consents to be obtained and in the event of
the vendor not exercising the option of the Consents
not being obtained after the extension period
mentioned, this Agreement shall be automatically
terminated and the vendor shall refund to the
Purchaser all sums free of interest paid by the
Purchaser pursuant to Clause 2 herein on or before
the expiry of Fourteen (14) days from the date of the

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rejection letter from the Developer and/or the State

Authority failing which interest at the rate of Ten
percentage (10%) per annum calculated on daily
basis shall be paid by the vendor on such sums
remain outstanding and, in addition, all costs and
expenses incurred by the Purchaser in connection
therewith shall be borne by the vendor on a full
indemnity basis whereupon to Purchaser shall return
any documents belonging to the vendor in exchange
of the refund and forthwith this Agreement shall be
terminated and shall be null und void and of no
further effect and neither of the parties hereto shall
have any claim against the other under or in respect
of this Agreement save and except for any antecedent
breach of this Agreement.”

[19] Further, Clauses 7.2 and 7.3 of the SPA provide as follows: -

“7.2 Upon the vendor obtaining the Consents as aforesaid

and having fully settled with the Developer the
administrative charges and all charges still owing in
the Developer, this Agreement shall become
unconditional.

7.3 The vendor hereby agrees that the vendor shall at

their own cost and expense obtain the approval of the
Developer.”

[20] The vendor had previously taken banking facilities fr om

Southern Finance Berhad (formerly known as United Merchant
Finance Berhad). The vendor created a legal charge over the
property. We shall refer to Southern Finance Berhad as “ the
Chargee Bank”. Thus, in order for the SPA to be completed, the
charge had to be discharged and this could only happen when the

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Chargee Bank provides the redemption statement and the

redemption sum is fully settled.

[21] In this regard, Clause 2.1 of the SPA imposed an obligation on

the vendor or their solicitors to obtain the re demption statement
and/or relevant documents and to deliver them within 14 days of
receipt of request for the redemption sum or relevant documents
which affects the discharge of the property. In the event of any
default in this regard, then the completion date will be extended
as per Clause 2.1 of the SPA.

[22] In so far as consents are concerned, the defendant maintained

that the firm assisted the vendor to obtain the DBKL and the
State Authority consent as the vendor was unrepresented. Thus,
the firm applied on behalf of the vendor for the consent from
DBKL and the State Authority respectively on 27 October 2000
and 18 April 2001.

[23] The consents from DBKL and the State Authority were extended
several times and were finally extended to 24 and 3 April 200 3
respectively. The details in regard to the various applications for
consent etc. may be gathered from the evidence of Chan Chee
Choong (“DW3”) a former legal assistant of the firm who gave
evidence on behalf of the defendant.

[24] However, despite the repeated extensions of the consent by

DBKL and the State Authority, the SPA was not completed as
the redemption sum which stood at RM411,773.76 as at 10 May
2002, had not been paid to the Chargee Bank. The redemption
sum was more than 80% of the plaintiffs’ loan value of
RM354,000.00, which was procured by the plaintiffs from
Public Bank Berhad to enable the plaintiffs to complete the
purchase of the property. The firm acted for the respondents in
respect of the loan from Public Bank Berhad. At any rate, the

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property was not redeemed right up to the date where it was sold
at the public auction on 16 February 2006.

[25] At the beginning stage of the transaction, the firm conducted a

winding-up search on the vendor. This was done on or around 13
November 2000. The search was conducted at the Jabatan
Pemegang Harta. The result was that the vendor had not been
wound-up. However, the vendor was subsequently wound up on
24 July 2001.

[26] As stated earlier, the defendant and the firm were not aware that
the vendor had been wound-up. The Chargee Bank enforced the
charge over the property. The property was initially scheduled to
be sold via public auction on 3 June 2004. That auction was
called off as parties were attempting to settle the redemption
sum. Dato’ Lim was in discussions with the Chargee Bank. He
tried to procure a “hair-cut”. In any event, nothing came out of
the discussions and the property was eventually sold via public
auction on 16 February 2006. The reserve price was
RM530,000.00. It was stated in the Proclamation of Sale that
Bumiputera purchasers will be given priority. The plaintiffs put
in a bid at the auction. Their bid was RM690,000.00. However,
the successful bidder was AEIOU Studio Sdn Bhd (“ AEIOU”).
The property was sold to AEIOU for RM695,000.0 0. The
property was transferred to AEIOU on 29 August 2009 via No.
Perserahan 26734/2009.

[27] In the meanwhile, by around early January 2006, the plaintiffs

appear to have engaged new solicitors, namely, Messrs. Roy
Joseph Loh & Gary Teh (“RJLGT”) to advise on the SPA and
salvage the conveyancing transaction. Thus, the defendant
and/or the firm were no longer in the picture. RJLGT liaised

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with the Chargee Bank’s solicitors and the Official Receiver

(“the OR”).

[28] The OR was in favour of the auction being postponed. RJLGT

tried to get the auction which was scheduled to be held on 16
February 2006, to be called off. RJLGT wrote to the Chargee
Bank’s solicitors and requested for the auction to be postponed
to give the plaintiffs a window of opportunity to tr y and resolve
the problem pertaining to the redemption sum. However, the
Chargee Bank refused to postpone the auction. On 16 February
2006, the property was sold to AEIOU.

[29] On 26 June 2008, the plaintiffs lodged a complaint with the

Advocates and Solicitors Disciplinary Board (“ASDB”) wherein
it was alleged that the defendant had committed misconduct and
that he should be subject to disciplinary action. This was more
than two years after the property had been sold via public
auction. The significance of the date of the plaintiffs’ complaint
to ASDB is relevant to the issue of time-bar which is discussed
in the later part of this judgment. As for the plaintiffs ’
complaint to the ASDB, there was indeed an outcome in that by
an order dated 21 May 2010, the ASDB ordered that the
defendant be reprimanded and that he is to forthwith refund a
sum of RM29,700.00 to P1.

[30] In our view, the ASDB’s order against the defendant is

irrelevant in so far as the issue of liability for negligence in Suit
943 is concerned. The question of negligence has to be
independently determined by the Court and the findings of the
ASDB should not influence the Court’s findings one way or the
other. As mentioned earlier, the reference to the plaintiffs ’
complaint to the ASDB was made solely for purposes of the
issue of time-bar.

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[31] It is also relevant to mention that by 2007, the plaintiffs had

engaged yet another set of solicitors, namely, Messrs David
Gurupatham & Koay (“DGK”) who took over conduct. DGK
issued letters on behalf of the plaintiffs. (See for instance
DGK’s letter dated 14 August 2007 to AEIOU ’s solicitors,
Messrs. Azmi Mustapa & Associates).

[32] At any rate, on 9 August 2012, the plaintiffs (through DGK)

filed Suit 943 against the defendant on the grounds that the
defendant was negligent and had caused the plaintiffs to lose the
opportunity to purchase the property.

[33] It is also relevant and material to mention that although this was
a conveyancing transaction wherein the plaintiffs and the vendor
had entered into the SPA to enable the plaintiff to purchase the
property, they had in fact taken possession of the property,
albeit that the balance of the purchase price had not been paid
and neither had the redemption sum been settled. Indeed, under
Clause 6.1 of the SPA, the plaintiffs are to be given vacant
possession only upon full payment of the purchase price. Clause
6.1 reads as follows:-

6. DELIVERY OF VACANT POSSESSION

6.1 Vacant possession of the Property shall be delivered

by the vendor to the Purchaser together with the
complete set of keys upon full payment of the
Balance Purchase Price together with all the money
due, if any, to the vendor’s Solicitors.

[34] Apparently, the plaintiffs had a prior arrangement with the

vendor and were using the property to store their goods.
However, these are all matters which are outside the four
corners of the SPA. Indeed, prior to the execution of the SPA,

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there was a tenancy in place between the vendor (as landlord)

and an entity known as Macro Neon Manufacturer.

[35] The latter entity was owned by P1. The tenancy was from 1
November 1998 until 31 October 2000. Despite the expiry of the
tenancy, the plaintiffs through KWE, occupied the property,
pending completion of the SPA.

[36] There is no evidence that the plaintiffs p aid any rentals to the
vendor, but the plaintiffs appear to have paid the annual quit
rent and assessment (RM1,640.00 per annum). This was because
the vendor was having financial difficulties and could not meet
these payments. According to P1, all payments that were made
towards quit rent/assessment and rentals to be paid, were to be
calculated and discussed at the conclusion of the conveyancing
transaction, when a set-off and adjustment would be done.
During the proceedings before the ASDB, Dato ’ Lim appears to
have confirmed that there was some sort of arrangement (the
details of which were sketchy) between the vendor and the
plaintiffs.

[37] After AEIOU purchased the property in the auction, they filed a
civil suit to evict the plaintiffs who had continue d to occupy the
property. The plaintiffs had to pay RM100,000.00 to AEIOU to
settle the legal suit. Thereafter plaintiffs sought reimbursement
from the defendant for the sums that were paid to AEIOU. The
plaintiffs’ pleaded case on the issue of payment to AEIOU was
as follows:-

11. Selanjutnya, AEIOU telah memfailkan satu saman

bernombor S1- 13460-07 di Mahkamah Sesyen Kuala
Lumpur bertarikh 14-05-2007 terhadap Plaintif-
plaintif untuk gantirugi sewaan yang tidak dapat
diperoleh oleh AEIOU semasa Plaintif-plaintif

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mendiami Hartanah Tersebut sebagai Penyewa, iaitu

semasa Plaintif masih lagi berusaha untuk terus
membeli Hartanah Tersebut. Pada 12-02-2010
Mahkamah Tinggi Kuala Lumpur telah memasukkan
satu penghakiman terhadap Plaintif sebanyak
RM86,072.84 dan faedah sebanyak 4% atas
RM86,072.84 dari tarikh 21-12-2006 sehingga
penyelesaian penuh.

12. Plaintif telah membayar sejumlah RM100,000.00

kepada AEIOU pada 23-12-2011 sebagai jumlah
penyelesaian bagi jumlah yang dituntut oleh AEIOU.

[38] According to the plaintiffs, as a result of defendant’s negligence

which encompassed various lapses and omissions to do all
things which are necessary to ensure completion of the SPA,
they lost the opportunity to purchase the property and had to
move out and look for another property to store their goods. The
particulars of negligence which were pleaded against the
defendant are as follows:-

BUTIR-BUTIR KECUAIAN

i) Kegagalan dan/atau kecuaian Defendan sebagai

peguamcara bagi Plaintif-plaintif untuk
melaksanakan Perjanjian Jualan dan Pembelian
bertarikh 25.10.2000 yang tepat dan betul, dan telah
mengakibatkan kegagalan untuk memindah Hartanah
Tersebut kepada Plaintif-plaintif.

ii) Kegagalan dan/atau kecuaian Defendan untuk

menjalankan kewajipan peguamcara-pelanggan
(“solicitor-client”) dan kewajipan fidusiari
(seterusnya dirujuk sebagai “Hubungan tersebut”)

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yang wujud setelah Plaintif-plaintif mengarah

(“instruct”) Defendan untuk menyediakan dan
melaksanakan Perjanjian Jualan dan Pembelian
tersebut, dan menerima bil daripada Defendan
bertarikh 1.11.2000.

iii) Kegagalan dan/atau kecuaian Defendan untuk

menjalankan, melaksanakan, menyelia permohonan
dan kemajuan/progress [sic], menyelia peguam -
peguam bantuannya, dan/atau memindah Hartnah
[sic] Tersebut sepertimana yang dihuraikan dalam
retainer dan/atau bil Defendan bertarikh 1.11.2000.

iv) Kegagalan dan/atau kecuaian Defendan sebagai

rakankongsi firma (“partner”) yang lebih
berpengalaman untuk menyelia peguamcara
pembantunya.

v) Kegagalan dan/atau kecuaian Defendan untuk

menjawab kesemua keraguan dan soalan Plaintif -
plaintif, di mana Plaintif-plaintif membuat
pertanyaan yang tertakluk kepada siasatan dan/atau
pertanyaan untuk kemajuan/progress [sic] dalam
permohonan dan keadaan kewangan Penjual dalam
Perjanjian Jualan dan Pembelian tersebut.

vi) Kegagalan dan/atau kecuaian Defendan untuk

memastikan Penjual dalam Perjanjian Jualan dan
Pembeli tersebut boleh menyerahkan pemilikan
kosong (“vacant possession”) dan mempunyai
keadaan kewangan yang stabil dan boleh menebus
kesemua jumlah perbezaan antara jumlah penebusan
dan jumlah pinjaman Plaintif- plaintif.

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vii) Kegagalan dan/atau kecuaian Defendan untuk

memberitahu Plaintif-plaintif bahawa Penjual
mempunyai masalah kewangan dan tidak dapat
menebus kesemua jumlah perbezaan antara jumlah
penebusan dan jumlah pinjaman Plaintif-plaintif.

viii) Kegagalan dan/atau kecuaian Defendan untuk

memberitahu Plaintif-plaintif bahawa jumlah
penebusan yang dikenakan faedah telah bertambah
dengan banyaknya.

ix) Kegagalan dan/atau kecuaian Defendan untuk

membuat dengan sendirinya atau menyelia
peguamcana pembantunya untuk membuat suatu
carian rasmi syarikat dan/atau menyiasat tentang
keadaan kewangan Penjual, atas sebab Defendan
berpengetahuan dan/atau syak yang munasabah
bahawa faedah yang dikenakan atas jumlah
penebusan telah bertambah dengan banyaknya.

x) Kegagalan dan/atau kecuaian Defendan untuk

memastikan hak-hak Plaintif-plaintif sebagai Pembeli
dalam transaksi Perjanjian Jualan dan Pembelian
tersebut dilindung.

xi) Kegagalan dan/atau kecuaian Defendan untuk

menyemak lot hartanah untuk Hananah Tersebut
secara teliti dan juga gagal dan/atau cuai dua kali
untuk memasukkan kaveat lot hartanah yang betul di
Pejabat Tanah dan Galian WP Kuala Lumpur.
Defendan telah gagal dan/atau cuai untuk menyelia
peguam bantuannya dalam semakan lot hartanah
untuk Hartanah Tersebut secara teliti dan juga
kemasukkan kaveat lot hartanah yang betul oleh

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peguam bantuannya di Pejabat Tanah dan Galian WP

Kuala Lumpur.

xii) Kegagalan dan/atau kecuaian Defendan untuk

memastikan tiada wujudnya konflik kepentingan
(conflict of interest”) antara Penjual dan Defendan.
Defendan telah gagal, cuai dan/atau abai untuk
mendedahkan dan/atau menerangkan butir-butir
konflik kepentingan ini kepada Plaintif-plaintif.
Defendan tidak menafikan bahawa beliau pernah
mewakili Penjual dalam perkara dan/atau urusan
yang lain.

xii) Kegagalan dan/atau kecuaian Defendan untuk menolak

perwakilan untuk Plaintif-plaintif, walaupun
Defendan mempunyai dokumen- dokumen dan/atau
maklumat-maklumat sulit mengenai Penjual sebagai
pelanggannya dalam perkara dan/atau urusan yang
lain.

xiv) Kegagalan dan/atau kecuaian Defendan untuk

memberitahu Plaintif- plaintif bahawa Penjual
mempunyai masalah kewangan sejak awal lagi dan
juga bahawa Penjual telah digulungkan pada
24.07.2001 atau selepas itu, tetapi maklumat ini tidak
dilanjutkan kepada Plaintif-plaintif. Defendan telah
gagal, cuai dan/atau abai untuk menjelaskan kepada
Plaintif-plaintif bahawa lelongan awam untuk
3.06.2004 adalah disebabkan oleh penggulung an
syarikat Penjual.

xv) Secara alternatif, Hubungan tersebut juga wujud

secara tersirat dan hubungan peguamcara-pelanggan
adalah suatu perjanjian tersirat kontraktual antara

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Defendan dan Plaintif-plaintif. Oleh itu, Defendan

bertanggungjawab (“liable”) atas kesemua obligasi-
obligasi tersirat, iaitu untuk melindungi hak-hak dan
tidak berprasangka terhadap Plaintif-plaintif semasa
pemindahmilikkan berdasarkan Perjanjian Jualan dan
Belian tersebut.

The plaintiffs’ case against the defendant

[39] In summary, the plaintiffs’ case against the defendant is that:-

39.1 The plaintiffs entered into the SPA to purchase the

property for the consideration sum of RM443,000.00.

39.2 The plaintiffs appointed the defendant to manage and

complete the conveyancing transaction. The defendant
ought to obtain the consent/approval, from DBKL for the
purposes of the transfer. The said consent/approval ought
to be obtained within the period of three (3) months from
the date of the SPA failing which a one (1) month grace
period shall be granted without interest.

39.3 The defendant had failed to obtain the said

consent/approval within the designated period and/or a
reasonable period, thereby causing the said
consent/approval to be obtained from DBKL on 6 May
2002 and the defendant had to apply for extension of time
on two occasions. DBKL had given an extension of time of
a one month on 8 April 2002 and thereafter another
extension of two months on 24 April 2003. The delays
were due to the defendant’s negligence as he did not
understand the procedure and the manner of applying for
the said consent from DBKL.

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39.4 Due to the delay caused by the defendant, they only made
the request to the vendor for the redemption sum via letter
on 25 April 2003. The defendant had further failed to
apply and/or obtain the redemption sum letter within the
designated period and/or a reasonable period, and this had
caused the redemption sum to increase significantly from
RM350,362.76 as at 8 September 2000, to RM411,773.76
as at 7 June 2002. The redemption sum had even become
higher than the balance of the purchase price payable by
the plaintiffs pursuant to the SPA.

39.5 Due to the delay caused by the defendant, the SPA could
not be completed as the vendor was wound-up on 24 July
2001. The defendant had the duty and obligation as the
purchaser’s solicitor to inform the plaintiffs regarding the
winding-up of the vendor. But he failed to do so.

39.6 The defendant had requested the plaintiffs to pay an

additional sum of RM60,000.00 to redeem the property
from Southern Finance Berhad. At that material time, the
plaintiffs had obtained a loan to pay for the purchase price
of the property. However, due to the redemption sum
which had became significantly higher, the property could
not be redeemed.

39.7 The SPA could not be completed and the defendant as the
conveyancing solicitor, had failed to ensure that the SPA
was completed and that the property was transferred to the
plaintiffs.

39.8 The defendant had failed and/or neglected to fulfil his

solicitor-client duties and to act in accordance with the
fiduciary duty owed to the plaintiffs in the preparation and

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execution of the SPA. The defendant had failed to protect

the plaintiffs’ rights in the transaction and/or the SPA.

39.9 The defendant had failed and/or neglected to execute,

carry-out, supervise the application for consent and the
progress of the SPA. The defendant had further failed to
answer queries by the plaintiffs in relation to the
application and progress of the SPA, as well as the
financial status of the vendor. The defendant had failed
and/or neglected to inform the plaintiffs regarding the
financial status of the vendor and/or any progress of the
application.

39.10 The defendant had failed and/or neglected to enter the

caveat over the right property.

39.11 The defendant had failed and/or neglected to disclose the

conflict of interest when it acted for the plaintiffs, as it
had other transactions and/or legal dealings with the
vendor. The defendant had failed and/or neglected to
inform the plaintiffs that the vendor was in financial
difficulties and had failed and/or neglected to do due
diligence to find out whether or not the vendor had been
wound-up.

39.12 Due to the defendant’s negligence, the plaintiffs had lost

the opportunity to purchase the property at the original
price and had suffered significant loss due to the loss of
opportunity. Finally, the property could not be redeemed
from Southern Finance Berhad and the property was
auctioned through a public auction on 16 February 2006
and where AEIOU was the successful bidder.

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39.13 Thereafter, AEIOU had filed a suit against the plaintiffs

for rent which could not be obtained by AEIOU during the
period the plaintiffs were occupying the property. During
this period, the plaintiffs were still attempting to purchase
the property. On 12 February 2010, a judgment was
entered against the plaintiffs for the sum of RM86,072.84
with interest of 4% on RM86,072.84 from the date 21
December 2006 till full settlement. The plaintiffs had paid
a sum of RM100,000.00 to AEIOU on 23 December 2011
as full and final settlement of the sums claimed by AEIOU.

39.14 The plaintiffs filed a complaint to the ASDB on the 26

June 2008. The ASDB reprimanded the defendant and
ordered that a sum of RM29,700.00 with interest (being
the stakeholding sum held by the defendant on behalf of
the plaintiffs) be refunded to the plaintiffs.

39.15 Due to the failure, omission and/or negligence of the

defendant, the plaintiffs had suffered severely and had to
bear monetary losses. P1 claims that he suffered mental
and emotional distress. The plaintiffs had to search for
another premises which was suitable to store their goods.

The Reliefs Sought in Suit 943

[40] In paragraph 15 of Re Amended Statement of Claim, the

plaintiffs prayed for the following reliefs -

i. A sum of RM100,000.00 as payment made by the

plaintiffs to AEIOU Studio Sdn Bhd;

ii. Interest on the above sum at the rate of 8% from 23

December 2011 until full and final settlement;

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iii. RM4,000,000.00 for loss of income due to the

plaintiffs’ failure to purchase the property or such
other amount which the Court deems reasonable;

iv. Interest on the above sum at the rate of 8% from the

date of filing the Writ until full and final settlement;

v. RM400,000.00 as damages for renovation, racking,

fittings and workmanship at the new place of
business or such other amount which the Court deems
reasonable;

vi. Interest on the above sum at the rate of 8% from the

date of filing the Writ until full and final settlement;

vii. RM800,000.00 as damages for the future appreciated

value of the property from 2000 to 2012 or such
other amount which the Court deems reasonable;

viii. Interest on the above sum at the rate of 8%

from the date of filing the Writ until full and final
settlement;

ix. Costs;

x. Further and other reliefs as deemed necessary.

The Defence

[41] At the outset, it is important to note that the defendant had

pleaded per paragraph 8 of the Amended Defence that the
plaintiffs’ claim was time- barred.

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“8. Seterusnya dan/atau secara alternatif Defendan

mengatakan bahawa tuntutan Plaintif-plaintif di sini adalah
dihalang oleh had masa.”

[42] In so far as the issue of limitation is concerned, it was argued

that the plaintiffs’ loss (if any) would have crystallized on 16
February 2006. According to the defendant, that was the earliest
date when the plaintiffs could have filed an action. In the
present case, Suit 943 was only filed on 9 August 2012. As such,
the action was time barred.

[43] It is also the defendant’s position that the plaintiffs had

appointed the firm and not the defendant personally. It is further
the defendant’s case that the plaintiffs had the knowledge that
the defendant did not personally handle the conveyancing file
nor the SPA.

[44] As for the defendant’s purported failure to obtain the DBKL ’s

approval within the stipulated time, the defendant contended
that it was not the defendant’s obligation to obtain the aforesaid
approvals which was beyond the defendant’s control.

[45] The defendant contended that the firm was only required to file
the necessary applications to DBKL and not to obtain the
aforesaid approvals. The SPA was a conditional agreement
subject to the granting of the approvals within the stipulated
time. The defendant contended that the plaintiffs never objected
nor complained of the defendant’s purported delay in obtaining
the approvals at any point in time.

[46] Subsequent to submitting the necessary applications for the

approval, the defendant had written for the redemption letter for
the property. The defendant later discovered that the plaintiffs

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had taken over the responsibility of the vendor to fully redeem

the property from the bank.

[47] However the plaintiffs subsequently failed to redeem the

property from the financier. It is the defendant’s contention that
at all material times the plaintiffs knew of the financial hardship
of the vendor. The defendant’s failure to notify the plaintiffs of
the vendor’s winding up was irrelevant as the SPA could still be
completed by obtaining the relevant sanction from the OR.

[48] As for the plaintiffs’ complaint of conflict of interest between

the defendant and the vendor, there were clearly no particulars
pleaded to that effect in the Re-Amended Statement of Claim as
to the reason for such conflict arising from the defendant ’s
previous solicitors/client relationship with the vendor. At any
rate, there was in fact no conflict as the defendant was not doing
any work for the vendor at the material time. And further, the
plaintiffs or at least P1, was aware through the introduction by
Dato’ Lim, that the defendant had previously done work for the
vendor.

Decision of High Court

[49] In summary, learned Judge found the defendant was negligent

and held that:-

(a) The defence of limitation did not apply, since the

claim was premised on events that occurred prior to
the plaintiffs’ loss of the property which occurred on
16 February 2006;

(b) The defendant had failed to advise the plaintiffs to

either proceed, terminate or transfer an agreement
[sic] in the event that consent from the authorities

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were not obtained or rejected (see: Part A paragraph

[1.7] of the Ground of Judgment);

(c) The defendant had failed to inform the plaintiffs of

the vendor’s liquidation status; and

(d) The defendant had put himself in a position of

conflict of interest.

[50] The Judge’s Grounds of Judgment (on liability) reads as

follows:-

GROUNDS OF JUDGEMENT

1. PART A

1.1 Defendant was engaged by the Plaintiffs to execute

the SPA for the transfer of the subject property into
the plaintiff’s name. For his professional services,
the Defendant and the Defendant’s firm had impose a
fee as supported by the documentary evidence
namely, Defendant’s invoices dated 18 November
2001 and 23rd May 2001.

1.2 The Defendant’s firm issued Plaintiffs a receipt dated

23rd February 2001 which confirmed Plaintiffs’
payment for the professional services rendered by the
Defendant. As such, Plaintiffs’ undisputed payment
to the Defendant for the professional services
constitute a retainer which impose a duty of care on
the part of the services provider, the Defendant.

1.3 Defendant had challenged Plaintiffs’ claim on the

ground that the Plaintiffs had wrongly sued the
Defendant as a party to the suit pursuant on Section

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12 and Section 14 of the Partnership Act 1961.

Section 12 had clearly impose liability of a partner
acting in the cause of the firm’s business, or with the
co-partner’s authority on the firm, to the extent as
the partner who was acting or omitting to act.

1.4 Section 14 further provides for each partner to be

jointly liable with it’s co-partners and, also severally
for other matter in respect of which the firm whilst
he is a partner therein becomes liable under the
aforesaid sections. Plaintiffs’ suit against the
Defendant was thus not wrong as pursuant to these
provisions, there was no requirement to sue the
Defendant’s firm. Further, all correspondences by the
Defendant in respect of Plaintiffs’ SPA and, all files
relating to the SPA bore clear evidence of
Defendant’s initials, (“KN”).

1.5 Defendant’s averment that Plaintiffs file was handled

by a Mr Chan Chee Choong, was mere bare
averment, legally untenable as Defendant was clearly
in control of the plaintiffs’ file on the SPA. Thus, it
is evident to the Court that a duty of care was owed
by Defendant to the plaintiffs’ in respect of the
plaintiffs’ SPA of the subject property.

1.6 As a professional, practicing conveyancing advocate,

Defendant was under a duty of care towards his
client in the discharge of works assigned b y his
client, the plaintiffs. The duty of care expected of the
Defendant was undoubtedly, higher than that of
another ordinary service provider.

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1.7 According to DW2, ex-chair and member of the Bar

Council’s Conveyancing Practice Committee,
conveyancing advocates were required to advise
clients either to proceed, terminate or transfer an
agreement in the event that consent from the relevant
authority were not obtained or, rejected.

1.8 There was no advice from the Defendant or his firm

to the plaintiffs as to the possibility of termination of
the SPA. The expert witness, Dato’ Low Beng Choo
have in her testimony in Court stated that, it is
prudent for conveyancing advocates to maintain
records of client’s request. In this regard, no such
request was found to be recorded by the Defendant or
his firm.

1.9 The Defendant in his evidence in Court confirmed of

the Defendant or Defendant’s firm’s non maintenance
of any record of Plaintiffs’ request for an extension
of time and, vendor’s refusal letter for the
redemption payment. Despite their knowledge it is
clear that, neither the Defendant nor his firm had
informed Plaintiffs of the vendor’s liquidation status.

1.10 Defendant’s failure and, breach of duty towards the

client Plaintiffs were evident in the resulting non
completion of the SPA between Plaintiffs and the
vendor. As a conveyancing advocate appointed by a
client, in a situation where the Defendant ended in a
situation of a “conflict of interest” and, possess the
knowledge that he would be in the aforesaid
situation, the advocate should not proceed to act for
that client.

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1.11 Defendant was thus found by the Court to be a

willing party to act for another conflicting party
namely the Plaintiffs, the vendor and, the vendor’s
financier. The proximity of the Defendant, vendor
and financier was evident in the handling of the
vendor’s matter. Despite Defendant’s apparent close
relationship with the vendor for a period of 20 years
supported Plaintiffs’ averment of Defendant’s
conflicting of interest and, clear breach of duty
towards the plaintiffs.

1.12 The Court found undisputed evidence of Defendant ’s

breach of duty of care in the discharge of his duty as
a conveyancing advocate. The test case in
determining the negligence of a professional, is the
Bolam v. Friern Hospital Management Committee
[1957] 2 All ER 118 which held -

“A situation which involves the use of some

special skill or competence, then the test
whether there has been negligence or is not the
test of the man on the top of a Clapham
omnibus, because he has not got this special
skill. The test is the standard of the ordinary
skilled man exercising and professional to have
that special skill. A man need not possess the
highest expert skill at the risk of being found
negligent. It is well established law that it is
sufficient if he exercises the ordinary skill of
an ordinary competent man exercising that
particular art.”

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1.13 Defendant’s failure and breach of duty was evident in

Defendant’s wrongful lodgment [sic] of two private
caveats on two different properties unrelated to the
subject property in the plaintiffs’ SPA. Defendant’s
further failure to promptly alert the Plaintiffs of the
vendor’s liquidation status, which Defendant had
only made after the SPA, was a clear breach of his
duty of care.

1.14 As the process of winding up of a company require a

period of 1 to 2 years, Defendant ought to be minded
of the need to insert a clause on vendor’s winding up
in the parties SPA. Had that been done, Plaintiffs
would have adequate time to be sufficiently alerted
of the liquidation status of the vendor, which would
assist the Plaintiffs to take the required action. As
such, Plaintiffs’ loss and damages were the direct
cause of the Defendant’s breach in the discharge of
his conveyancing duties towards the Plaintiffs.

1.15 As a professional who professed special skill and

knowledge in conveyancing, the Defendant
undoubtedly owe a duty of care to his client the
plaintiffs who relied and depended wholly on his
special skill. Defendant, as the professional advocate
should have foreseen the financial consequences to
his client consequent to any aborted execution of the
SPA or, it’s non completion.

1.16 In concluding that the Defendant’s negligence was

sufficiently supported by the Court’s foregoing
grounds of judgment, the Court firstly considered the
Defendant’s issues to the plaintiffs’ averment of

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Defendant’s negligence. Defendant had challenged

the plaintiffs’ action on the ground of time barred,
that the action was wrongly filed against the
Defendant, absence of locus on the part of Plaintiffs
to file suit against the Defendant and, absence of
merit in the plaintiffs’ action were after due
deliberation largely found by the Court to be without
merit and, untenable.

1.17 Defendant had stated that Plaintiffs’ claim was time

barred was misconceived, as it was premised on
events that occurred prior to Plaintiffs’ loss of the
subject property which occurred on 16th February
2006. Defendant further stated that Plaintiffs ’
averment of Defendant’s delay in obtaining the
authorities’ consent was misconceived as the consent
was only obtained on 24 th April 2003.

1.18 Defendant further averred that Plaintiffs had filed

action not against the Defendant’s firm but instead
had wrongly sued the Defendant, on the ground that,
the SPA stated that Plaintiffs had engaged the firm
and not the Defendant. Defendant further stated that
at all material time, Defendant’s firm had liased [sic]
with all parties on the authorities’ consent and,
issues arising from the redemption statement.

1.19 Defendant’s further challenge was that Plaintiffs

have no locus standi to institute action against the
Defendant, as Plaintiffs ceased to be a partner of the
Kient Win Enterprise partnership, wound up on 4 th
May 2010. Plaintiffs’ averment of Defendant’s
negligence and, Defendant’s professional misconduct

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was thus challenged by the Defendant to be without

merit and, vexatious as the plaintiffs had failed to
produce any expert, professional witness to support
it’s claim of Defendant’s professional negligence.

2. CONCLUSION (PART A)

2.1 Thus, based on the Court’s foregoing grounds, the

Court concluded that, Defendant failed to
successfully disprove Plaintiffs’ clear case of
Defendant’s negligence and breach of duty of care.
Plaintiffs clearly, have on a balance of probabilities
succeeded to prove it’s case of Defendant’s
negligence in the discharge of Defendant’s duties as
a conveyancing advocate. The Court thus allowed
Plaintiffs’ claim against the Defendant subject to the
Court’s assessment of quantum.

Submissions on Liability

[51] Before us, counsel for the defendant submitted that the Judge
had erred in allowing the plaintiffs’ claim as the claim was time
barred. It was argued that for a cause of action based on a claim
in negligence, time starts to start run when the damage
occurs.

[52] It was argued for the defendant that if time started to run from
16 February 2006 (when the property was auctioned and
purchased by AEIOU), then the claim is time barred because that
is the date when the damage occurred, if at all. (See: Ambank
(M) Bhd v. Abdul Aziz Hassan & Ors [2010] 7 CLJ 663; [2009] 1
LNS 1479; [2010] 3 MLJ 784 CA)

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[53] Hence, it was argued on behalf of the defendant that the

plaintiffs’ action (per Suit 943) was clearly filed out of time as
the Writ was filed on 9 August 2012 whereas the last date for
filing of any action for negligence would be 15 February 2012.
Counsel said that this is fatal and nothing can be done to salva ge
it. According to the defendant, the plaintiffs had ample
opportunity to bring a claim before the action was time -barred,
but they had elected not to do so.

[54] In amplification, it was highlighted that:-

(a) by early January 2006 the plaintiffs had appointed

RJLGT to specifically advise on the SPA and this
was even before the date of the public auction (which
was well within the limitation period), and therefore
they could have sought legal advice and brought an
action within the 6 year limitation perio d; and

(b) the plaintiffs (through P1) had filed a complaint to

the ASDB on 26 June 2008 and raised the issue of
the defendant’s alleged negligence. This was well
within the limitation period, and they could have
easily filed a civil action at that point o f time.

[55] By the time the complaint was made to the ASDB, the plaintiffs
had already formed the view that the defendant was negligent.
The complaint (in verbatim) to the ASDB was as follows: -

i. The above legal firm acted on my behalf in the Sale

and Purchases (S&P) Agreement between
Jurumumurni [sic] Sdn. Bhd. (Seller) And me
(Purchaser). With a reason for helping the seller to
save cost, I had been advised to engage Lee Swee
Seng as the S&P Lawyer for this transaction for both

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of us, and legal fees are born by me. (Because

Jurumurni Sdn. Bhd. (Seller) is a current client &
friend of Ng Bee Ken Kenny- the lawyer from Lee
Swee Seng).

ii. Due to the negligence and miss calculation of

stakeholder amount of the above legal firm, had
cause me a lot of unnecessary trouble, delay, and
they miss the transfer approved period of the said
property, with arrive of lot of unnecessary
circumstances to redeem the said property. The
attach document shown that they had working on the
wrong property with difference title number, they
even twice caveated the wrong property belonging to
others.

iii. I had been treated unfair to make payment for all the
quit rent and assessment fees that due by the seller I
was advised this was to keep the procession of
transfer smoother. They had not noticed that,
Jurumurni Sdn. Bhd. (Seller) had been wound-up on
24/07/2001, until 15/02/2206 the seller’s banker told
me. The above legal firm asking me to pay extra +/ -
RM 60,000.00 to redeem the property from the
(illegible) after the first auction date, and I refused to
do so (As it was not my fault).

iv. To date, the property had been sold in a auctioned by

the Bank. We had been chased out by force by the
new owner with a summons. The above legal firm
had refused to give me back my files and the full
record of this S&P. I had been refused to the
stakeholding amount of RM30,000.00+ due to the

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above legal firm insist me to sign on some documents

with some terms & conditions agreeing to forgo [sic]
any claim against them. By right it is my money and
they should just remit it to me. Till to date I have not
been given a complete breakdown of fees.

v. I suspect a conflict of interest with unfair treatment

had made by the above legal firm. This clearly shows
that, the above legal firm had done things very
unprofessional, unfair and not responsible as an
Advocate & Solicitor for S&P. Due to their
negligence and unethical conduct I had suffered
pecuniary loss, emotional stress, loss of business,
loss of times of cost, cost of relocate all my
belonging goods & products and now also
suffering from loss of the said property despite
our investment.

vi. A further breach of the firm is their refusal to release

my file and documents to me, I had gone to see the
lawyer many times but they refused to give me the
documents. The lawyer Kenny said that if I want the
file I have to sign a letter of case close and releasing
them of any liability. I refuse and so until today they
are withholding the file.

vii. I believe there is a clear cut breach of the legal

Profession Act and the Solicitors Account Rules.
Rules 31, 16 and 55.

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[Emphasis and underlining added]

[56] In any event, it was submitted that there was no proof of breach
of duty of care. Elaborating on the issue of duty of care, counsel
for the defendant said conveyancing is a specialized area of
legal practice and in professional negligence cases involving
specialized areas of legal practice, the plaintiffs are required to
tender expert evidence to determine the standard of care and
whether there has been a breach in the sense of a departure from
the standard of care.

[57] It was submitted that for a claim in professional negligence the

plaintiffs are required to prove the standard of care as expected
from a reasonable practitioner in the area of practice in
conveyancing and that there had been a breach of the standard.
Here, the plaintiffs did not provide any expert evidence to
establish their claim for professional negligence against the
defendant or even to contradict the defendant ’s expert evidence
throughout the entire trial.

[58] Thus, it was submitted that a client who sues their former
solicitors for professional negligence have the burden proving
that the solicitor’s conduct had fallen short of the standard of
care of a reasonably competent solicitor and that this is to be
done by calling an advocate and solicitor to satisfy the element
of breach of the standard of care.

[59] It was contended that in the present case, the plaintiffs failed to
adduce any evidence of the standard of care or that the
defendant failed to act in accordance with that standard (which
was not proven in any event). (See: Tetuan Theselim Mohd Sahal
& Co. & Ors v. Tan Boon Huat & Anor. [2017] 6 CLJ 368 CA
(“Tetuan Theselim”), Shearn Delamore & Co. v.

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Sadacharamani Govindasamy [2017] 2 CLJ 665; [2017] 1 MLJ

486; [2016] 6 AMR 797 CA (“Shearn Delamore”), Ngan Siong
Hing v. RHB Bank Bhd [2014] 3 CLJ 984; [2014] 2 MLJ 449 1
AMCR 829 CA).

[60] According to the defendant, the evidence especially through the

testimony of Dato’ Low Beng Choo (“DW2”) and DW3, showed
that the defendant acted in accordance with normal professional
standards of conveyancing practice. Counsel submitted that in
the absence of any expert evidence by the plaintiffs, the action
should have been dismissed in limine.

[61] Counsel for the defendant also relied heavily on the expert
evidence provided by DW2 who was the defendant ’s expert
witness. DW2 was a senior legal practitioner and was a member
of the Bar Council Conveyancing Practice Committee (“ the
committee”) for about 18 years. DW2 had served as Chair and
Deputy Chair of the Committee. Briefly, DW2 ’s evidence was
that:-

(a) A purchaser’s solicitor has no duty of care nor obligation

to investigate into the vendor’s financial situation as such
investigation is not within a solicitors ’ purview or scope;

(b) The fact that a lawyer had acted for the vendor, in other
previous matters or transactions not related to the SPA is
not by itself and does not give rise to a conflict of interest
situation per se;

(c) In practice, it is not mandatory for a private caveat to be

lodged on behalf of the purchaser in every SPA
transaction; and

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(d) In all cases where the SPA transaction is by way of a deed

of assignment and the private caveat is lodged on the
master title, and the auction sale of the property is by way
of rights and remedies conferred under the deed of
assignment, the private caveat would not be reflected in
the auction sale notice and would not be able to prevent
the auction sale of the property in any event; and

(e) In any event the defendant acted in accordance with

normal professional conveyancing standards and the
problems caused were not due to any failure by the
defendant.

[62] We may turn now to the plaintiffs’ submission. For the

plaintiffs, it was argued that the Judge had applied the law
correctly upon considering the evidence and upon hearing the
testimonies of the witnesses at trial and in deciding that the
defendant was in fact negligent and was in breach of duty of
care towards the plaintiffs.

[63] As for the primary issue of time-bar, it was argued that the
Judge was right in law and fact in deciding that the defendant ’s
challenge on the grounds of ‘time-bar’ was misconceived as it
was premised on events that occurred prior to the plain tiffs’ loss
of the property which occurred on 16 February 2006.

[64] Counsel for the plaintiffs submitted that the issue of limitation
was never specifically pleaded as required by the provisions of
the Rules of Court 2012. Further, it is alleged that the defendant
has failed to provide necessary particulars in raising the defence
of limitation and as such is precluded from doing so now.

[65] Counsel referred to the case of Lim Goh Huat @ G S Lim v. Saw
Keng See [1998] 6 MLJ 600 HC where it was held by Abdul

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Kadir Sulaiman J (as he was then) that the defendant ’s failure to

include and state in clear terms the commencement date for the
accrual of the cause of action precluded the defendant from
pleading the defence of limitation. As such, it was submitted for
the plaintiffs that on the facts, the claim was not time barred.

[66] Counsel referred to paragraph 14(xv) of the Re-Amended

Statement of Claim dated 24 January 2014 and said that, the
defendant’s breach of fiduciary duty includes failing to follow
the plaintiffs’ instructions to release the file to the plaintiffs to
enable them to have access to the documents in order to obtain a
second opinion, to take legal action or to even injunct the
vendor.

[67] As such, the plaintiffs’ claim was within the six (6) year
limitation period imposed by s. 6(1)(a) Limitation Act 1953.

[68] Counsel for the plaintiffs referred to the Court of Appeal

decision in the case of Shearn Delamore where it was stated
that the standard of care expected is that of a reasonable
practitioner in that profession and not merely that of an ordinary
reasonable man. In the present case, it is contended that the
defendant had fallen below the standard of care expected of him
as a conveyancing solicitor.

Our Decision

[69] Essentially, the plaintiffs’ claim is predicated on the allegation

that the defendant was negligent in terms of handling the SPA
transaction. Quite apart from the multitude of allegations that
were levelled against the defendant, it is undeniable that the
plaintiffs could not complete the purchase of the property
because of intervening events, namely, the vendor had defaulted

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on the banking facility in respect of which the property was put

up as “security”, the vendor was wound up, the Chargee Bank
had commenced proceedings to enforce the charge. And finally,
the sale of the property via public auction on 16 February 2006.

[70] P1 was aware that the property was scheduled to be sold via
public auction on 3 June 2004 as the relevant auction papers
were sent to the property. P1 liaised with Dato’ Lim in an effort
to salvage the property from being sold via public auction.
Indeed, DW3 (who was handling the SPA transaction) had the
impression that Dato’ Lim and P1 were in discussions with the
Chargee Bank. The first auction was called off. But there was no
settlement with the Chargee Bank. Thereafter the property was
put up for sale via public auction on 16 February 2006. Prior to
the second public auction, the plaintiffs had engaged RJLGT to
act for them. The defendant and the firm were no longer in the
picture. RJLGT were not able to persuade the Chargee Bank to
postpone the auction. The plaintiffs put in a bid at the auction
(RM690,000.00) but it fell short of the amount for which the
property was eventually sold to AEIOU (RM695,000.00).

[71] In so far as the duties of a solicitor for the purchaser under the
SPA are concerned, we agree that the defendant had a duty of
care towards his client, the plaintiffs. However, we do not
particularly agree with the Judge’s finding that the plaintiffs had
engaged the defendant personally, as opposed to the firm, to
handle the SPA transaction.

[72] Indeed, it is obvious enough from the various contemporaneous

documents that it was the firm that was handling the SPA
transaction. In our view, even if it was the defendant who was
engaged to take charge of the SPA and had bungled or

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mishandled the transaction, ultimately, it is the partnership i.e.

the firm, which will be liable and not the defendant personally.

[73] In this regard, it is pertinent to refer to the case of Buana

Perdana Sdn. Bhd. v. Chan Siew Cheong & Ors [2012] 8 MLJ
367; [2011] MLJU 951; [2012] 1 AMR 560 at [37] where Mary
Lim J (as Her Ladyship then was) discussed the liability of
partnership and held:-

“…The partnership remains an association of

individuals who, by reason of their art and skills
necessarily offer that expertise personally instead of
through the establishment of a corporate sole. And,
that is how a legal practice is operated in this
country, just as much as anywhere else in the world.
Insofar as the client is concerned, his dealings are
with the firm and not a particular partner. He may,
however, request for the services of a particular
partner or counsel due to some peculiar reason or
purpose and be charged the fees appropriate to that
partner or counsel. But that does not alter the
primary principles of partnership. The settlement of
any dues by a client is always to the firm and not to
any individual partner. That is also why the Legal
Profession Act 1976 (Act 166) mandates the cover of
insurance to protect clients, the firm and the
practice.”

[74] However, we do not think that it is necessary to discuss this

point any more than what we have already stated in the earlier
paragraphs. On the issue of liability, the main question is
whether the defendant had breached that duty of care.

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[75] The answer to that question is to be resolved by asking whether

the defendant had failed to exercise due diligence in supervising
the SPA transaction and performed his duties in accordance with
the standard of a reasonably competent and prudent
conveyancing practitioner.

[76] In this regard, we have examined the evidence i.e. the

documents, the witness statements and Notes of Evidence. We
do not think that the defendant had completely blundered or was
hopelessly incompetent in the way the SPA was handled. The
Judge made a finding that the defendant’s assertion that it was
DW3 who handled the file was a bare assertion. In our view, that
finding is plainly unsustainable, particularly in light of DW3 ’s
extensive evidence as to what he did in terms of inter alia, the
consents and the redemption statement.

[77] The Judge’s finding with respect to DW3’s role in the

implementation of the SPA flies in the face of the evide nce. As
such, it is obvious that there was a lack of appreciation of the
evidence in favour of the defendant that was tendered at the
trial. Having read the evidence in totality, it is quite clear that
the defendant was not “hands-on” in respect of the SPA. Rather,
it was DW3 who was really handling the file under the
defendant’s supervision.

[78] It is pertinent in our view to reproduce DW3 ’s evidence to

demonstrate the content of the actions that were taken to
implement the SPA. DW3’s evidence shows that the topic of
termination of the SPA, topping-up of the balance of purchase
price were all discussed with P1. DW3’s evidence so far as they
are material, reads as:-

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Q: During the whole process for approval/consent,

please explain how the vendor, Jurumurni and the
plaintiffs were involved?

A: Both the vendor, Jurumumni and the plaintiffs as

Purchasers were involved and indeed many steps
taken required action on their own part, including
fulfilling conditions of DBKL’s approval/consent
(see above).

Furthermore as it was vendor, Jurumurni’s obligation

to obtain approval/consent, vendor, Jurumurni
themselves had on several occasions attended at
DBKL on their own and in fact followed up on the
submission for approval/consent which we had
assisted them to file: See IDB Bahagian B Jilid 1
page 24. DBKL also wrote direct to Jurumurni : See
IDB Bahagian B Jilid 2 page 31 and IDB Bahagian B
Jilid 1 page 27 to 30 and 38. In fact, we
corresponded only when necessary and the vendor,
Jurumurni knew there problem getting the
approval/consent from the DBKL, Dato’ Lim from
vendor, Jurumurni had informed me that they were
working on it and that vendor, Jurumurni was dealing
directly with the DBKL to resolve the matter and to
secure approval/consent.

Apart from the various forms which both the vendor,

Jurumurni and the Plaintiffs had to fill in, detailed
above, the Plaintiffs also effected payment of Quit
Rent which was essential and without payment which
parties could not proceed: See IDB Bahagian B Jilid
1 page 18, 51, 52 and 53.

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Q: Why did Messrs Lee Swee Seng & Co. write to

vendor, Jurumurni and not to the bank?

A: I wrote to the vendor, Jurumurni was because Dato

Lim had told me earlier that he was trying to
negotiate a haircut from the Bank. He had taken a
copy of the Redemption Statement dated 16.8.2001
from us and informed me that he would obtained a
new/revised redemption statement and give it to us.

Q: Prior and leading up to April 2003 did you have any

communication with the Plaintiffs or Jurumurni?

A: Yes as explained above, apart from both their

continuous involvement in the approvals process,
Dato’ Lim had already mentioned he wanted to get a
haircut for redemption sum.

With regard to the Plaintiffs, Eason would call me

and I would verbally inform him of the status .
Various letters were also copied to the plaintiffs.

Also, both Eason and Dato’ Lim were also in direct

communication in light of redemption sum issue.

Q: What happened to the approval/consent from the

State Authority?

A: It had lapsed in May 2002. We re-applied in March

2003: see IDB Bahagian B Jilid 1 page 54 after
DBKL’s extension of time: See IBD Bahagian B Jilid
1 page 40.

Q: Messrs Lee Swee Seng & Co. had to apply for

several extension and/or “re-apply” for

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approval/consent both from the DBKL and State

Authority. Why was this so?

A: The timing of the issuance of approval/consent from

these respective bodies was an issue and a problem.
We did not receive the approval/consents at the same
time, as one or the other would lapse or was near
expiry by the time we secured the other
approval/consent. Without both approval/consents,
we were not able to proceed. There were various
outstanding issues which vendor, Jurumumi and/or
Plaintiffs had to deal with which also delayed the
process.

For example, by 2003, the Quit Rent for 2003 was

due and we were waiting for payment from Eason
Tan. He had not given to us any payment, so I took
steps to ascertain whether Quit Rent on the Master
Title for year 2003, had been paid or not. I wanted to
use this receipt as an alternative. I received the Quit
Rent Notice on 17.3.2003 but found that it was still
not paid. See IDBT Bahagian B dan C Jilid 1 page
10.

So to support the application to the State Authority

and to avoid further delay, I attached the year 2002
Master Title’s Quit Rent receipt for whatever it is
worth hoping that State Authority in their discretion
will still approve and grant its approval/consent
based on the duly paid Quit Rent of 2002 - IDBT
Bahagian B & C (Jilid 1) page 9. See IDB Bahagian
B Jilid 1 page 54 - I wrote by letter 17.3.2003 for
extension of time and see our letter to DBKL at IDB

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Bahagian B Jilid 1 page 51 for request for the Master

Title’s 2002 Quit Rent receipt. DBKL’s
approval/consent had expired at this time and we also
had to apply for extension of time (see my
explanation above).

Q: Were the approval/consents given?

A: Yes. DBKL gave the extension on 24.4.2003: see

IDB Bahagian B Jilid 1 page 40 for 2 months. State
Authority gave approval/consent on 3.4.2003: see
IDB Bahagian B Jilid 1 page 56 for 12 months.

Q: Did you inform the 1 st Plaintiff of this?

A: I remember I called up Eason to tell him that we had

all the approval/consents; and as noted above, we
wrote to vendor, Jurumurni to ask for the redemption
statement.

Q: During this time did Dato’ Lim ever mention that

Jurumurni was wound up?

A: No he never did. He gave me the impression that

everything was proceeding as normal.

Q: Was Dato’ Lim and the plaintiffs in communication?

A: So far as I know yes, in fact the plaintiffs told me

they were tenants and doing business at the property
in question.

Further the redemption sum was an issue they both

told me they were discussing amongst themselves
and were sorting out with the Bank. We were not
involved in this at all.

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Q: When did you discover that the property was going to

be force sold by Public Auction?

A: It was Eason who told me the property was going to

be auctioned.

He informed me that he had received a letter

informing that the property was being auctioned.

Q: Did he show you the letter?

A: It was not a letter but I was given a copy of a

Proclamation of Sale for the auction of the Property:
see IDB Bahagian B Jilid 3 page 344.

Q: What was the 1 st Plaintiff’s reaction?

A: He asked what was he to do now. I was surprised as I

was always given to understand that Dato’ Lim, and
Eason were in discussion with the Bank.

We were instructed to write to Solicitors for the

Bank to hold on to the auction: see IDB Bahagian B
Jilid 1 page 67-68.

Since they had been discussing amongst themselve s,

I told Eason that he should contact Dato’ Lim on the
matter.

Subsequently I called up Dato’ Lim and he said he

intend to meet with the Bank Officer to reduce
payment of redemption sum and settlement. I then
wrote a letter as per Dato’ Lim’s representation to us
that the auction would be postponed: see IDB
Bahagian B Jilid 1 page 69, letter from the Firm
dated 31.5.2004.

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Q: Was the redemption sum ever discussed?

A: Yes. Several times. Eason had asked before in 2001,

when we received the redemption statement from
Southern Finance: See IDB Bahagian B Jilid 1 page
61, on why he should pay additional sum and I
explained it is to settle the outstanding loan and will
enable him to get property if he still wanted it. This
was particularly so since he was aware th e property
price had gone up. He also was contemplating
whether to just move to other premises.

But he never came back to me on it and his response

was he would talk to Dato’ Lim. At that time, Dato’
Lim was also informed of this and he said he would
negotiate a haircut.

We never received any instructions to terminate the

transactions.

In May 2002, when we received the 3 rd redemption

statement dated 10.5.2002: see IDB Bahagian B Jilid
1 page 65 to 66, again I spoke to Eason. By that time,
the redemption amount was RM411,773.76.
Therefore I told Eason he would have to pay the
additional sum and the difference between his loan
sum of RM354,000.00 and the redemption amount of
RM411,773.76 as of May 2002.

As a ball park figure, give or take, I had indicated

the figure of RM60,000.00 which includes the
difference between the loan sum and the Purchase
Price being RM44,700.00 and the additional sum of
RM 13,073.76 being the difference between balance

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purchase price and the redemption sum. Eason told

me he would discuss with Dato’ Lim.

I therefore left it to them to sort that out. I just wish

to also state that the balance purchase price of the
property was RM398,700.00 and in effect the
additional redemption sum to be paid to redeem at
that time was only RM13,073.76.

In any event, I had gone ahead and secured a further

extension from the State Authority and for the
approval/consent to be valid for another year: see
IDB Bahagian B Jilid 1page 56.

However, in light of the notification by Eason that

there was a notice for auction, everything was kept in
abeyance from then and the firm waited for further
instruction from Eason.

Q: Did the 1 st Plaintiff refuse to proceed with the

transaction in light of the need to top up?

A: The issue of “topping up” was in existence and w ell

known to the Plaintiff since August 2001. The
Plaintiff never said they refuse to proceed.

In May 2002, again, Eason never said they did not

want to proceed and I was under the impression that
Eason and Jurumurni were still talking to each other,
and proceeding with the sale.

Q: What about termination of the Sale and Purchase

Agreement with vendor, Jurumurni?

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A: The options were discussed with Eason. But he never

came back with his decision whether to terminate.

Q: Were you aware that vendor, Jurumurni had been

wound up?

A: No.

We were never put on query and there was no reason

to suspect anything amiss as Dato’ Lim at all
material times, continued to deal with us.

[79] Of course, on hindsight, the handling of the SPA could have

been much better. In this regard, we agree with Dato’ Low Beng
Choo (DW2) (the conveyancing expert who was called by the
defendant) who said that there were things which could have
been done better. But, we do not think that, that in itself
translates into a finding of negligence.

[80] Indeed, the Judge seems to have ignored DW2 ’s evidence who
had specifically exonerated the defendant of the allegation of
conflict of interest. DW2 said that it is normal practice for a
purchaser’s solicitor to act for a vendor to redeem and disc harge
the property where there is no vendor’s solicitors in the SPA.
She said that there is no conflict in this situation because it is a
simple discharge of redemption.

[81] It was also submitted for the plaintiffs that there are no letters or
any advice by the defendant as to whether the SPA should be
terminated or whether the plaintiffs should even proceed with
the transaction.

[82] It was submitted for the plaintiffs that the defendant was
negligent in failing to insert a clause in the SPA such that the
SPA would automatically terminate upon the vendor being

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wound up. As mentioned earlier, DW3 did say that the topic of
termination of the SPA was brought up with P1. In any event,
the question here is whether the termination of the SPA is really
the issue, or whether the plaintiffs in fact wanted to complete
the SPA i.e. to be able to purchase the property and be able to
conduct their business. Clearly, from the evidence, it was the
latter as the plaintiffs were at all times desirous of continuing
with and completing the SPA. That could have been
accomplished by getting the OR’s sanction. The problem here
however was not the OR’s sanction. Rather, the problem had
everything to do with the redemption sum which had to be
settled. That was something that had to be negotiated with the
Chargee Bank. It had nothing to do with the defendant or the
firm.

[83] According to the plaintiffs, the defendant should have also

conducted a winding up search over the several years when he
was handling the conveyancing transaction. But then DW2 said
that there is no such duty to conduct intermittent searches. She
said that a conveyancing solicitor cannot be burdened with such
onerous tasks and keep track of the solvency of the opposite
party. We agree with the opinion of DW2 in that there is no such
duty on the part of the conveyancing solicitor to conduct
intermittent winding-up searches.

[84] As for the suggestion that the defendant would know about the
vendor’s standing or status because the firm had acted for the
vendor in other financial transactions, the evidence shows that at
the time, the firm was not acting for the vendor and there is no
evidence whatsoever that the defendant or DW3 was/were aware
of, or was put on notice of the vendor’s insolvency.

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[85] As for the continuing retainer, we think that once RJLGT took
over from the firm in January 2006, the earlier retainer would
necessarily or by implication have been terminated. We do not
see how it can be said that the defendant or the firm continued
to owe a duty after RJLGT took over. It is obvious that the so-
called loss here is the plaintiffs ’ loss of opportunity (if any) to
complete the sale per the SPA, which became legally impossible
once the property was auctioned off. The auction took place on
16 February 2006. The plaintiffs’ new solicitors (RJLGT) tried
to stop the auction by making a request to the solicitors acting
for Chargee Bank. (See: RJLGT’s letter dated 9 January 2006 to
Messrs. Sidek Teoh Wong & Dennis).

[86] But the Chargee Bank did not entertain the request and went
ahead with the auction. This is hardly surprising because this
was the 2 nd auction date as the 1 st auction was fixed on 3 June
2004 and was called off to enable the vendor/the plaintiffs to
settle redemption sum owing to the Chargee Bank. According to
the defendant, the plaintiffs were trying to get a “hair -cut” from
the Chargee Bank. But that is neither here nor there. As we said
earlier, the issue of the redemption sum was a matter for
negotiation between Dato’ Lim/P1 and the Chargee Bank.

[87] Thus, in so far as the allegation of breach of duty of care is

concerned, looking at the evidence as a whole, we find no basis
for the suggestion that the defendant had breached his duty of
care as a conveyancing solicitor. The plaintiffs had not ev en
called an expert to testify that there was a departure from any
particular standard of conveyancing practice (See: Tetuan
Theselim, Shearn Delamore). Even if we accept the plaintiffs’
assertion that the defendant was negligent, it is clear that the
plaintiffs have not proven that any loss that they had suffered,

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was caused by the defendant’s actions or omissions. Plainly, the

plaintiffs have not satisfied the “but for” test.

[88] In this regard, it is relevant to refer to Harmindar JCA ’s (as he

then was) decision in Tetuan Theselim (supra) where he said:-

[32] In this respect as well, we are compelled to note that

there was no inquiry as to whether it was the first
defendant’s breach of duty which led to the losses
sustained. The law requires a causal connection between
breach of duty and injury suffered before liability is
established in an action for negligence . In other words,
was the defendant’s act the effective cause of the harm
suffered by the plaintiff? In this respect, the courts look
to the test of causation known commonly as the “but
for” test (see Elizabeth Chin Yew Kim & Anor v. Dato ’
Ong Gim Huat & Other Appeals [2017] 2 CLJ 274; [2017]
1 MLJ 328; Chua Seng Sam Realty Sdn Bhd v. Say Chong
Sdn Bhd & Ors & Other Appeals [2012] 7 CLJ 337; [2013]
2 MLJ 29 and Ngan Siong Hing v. RHB Bank Bhd [2014] 3
CLJ 984; [2014] 2 MLJ 449).

[33] The “but for” test simply means that “but for” the
defendant’s negligent act, the harm would not have
occurred. Applying the “but for” test in the present case,
the question is whether the plaintiffs’ damage would have
accrued but for the defendants’ negligence. In our view,
the proximate cause of the plaintiffs’ losses is the failure
of the plaintiffs to obtain the financing and to settle the
balance purchase price within the agreed period. That had
nothing to do with the defendants as solicitors. It was
indeed a matter entirely within the control of the plaintiffs
and the bank. In other words, there was no nexus between

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the exercise of care and skill by the defendan ts as

solicitors to the granting or otherwise of the loan facility.
As such, it must follow that the plaintiffs have failed, in
this respect, to establish liability on the part of the
defendants.

[Emphasis and underlining added]

[89] As we said earlier, various events had intervened. The defendant

had no control over these events which were all due to the
vendor’s financial situation. The plaintiffs lay the blame on the
defendant. In our view, the defendant cannot be held responsible
for the events which had occurred. Thus, taking all of the
complaints of the plaintiffs with respect to the defendant ’s
handling of the SPA transaction, we do not see how any of these
would have made a difference to the situation or predicament
that the plaintiffs found themselves in. It was just rather
unfortunate that the plaintiffs had entered into the SPA with the
vendor who had massive financial problems.

[90] Indeed, despite the vendor’s problem and the threat of a sale by
public auction, there was at all times a window of opportunity to
salvage the transaction and that could have been achieved by
payment of the redemption sum. This would have entailed a top -
up of the balance of the purchase price. In this regard, we have
not lost sight of the fact that P1 did say that the d efendant did
advise the plaintiffs to pay the redemption sum on behalf of the
vendor, so that the sale could be completed. However, because
of a trust deficit, and P1’s anger/annoyance with defendant’s
conduct in (not literally) “kicking” him out of a meet ing, the
plaintiff declined to pay the redemption sum. Again, it is also
important to emphasize that the Chargee Bank ’s attitude or lack

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of cooperation vis-à-vis the redemption statement etc. are all

matters beyond the defendant’s control.

[91] According to the defendant, he had waited for instructions from

P1 on the redemption sum and the redemption of property but
instructions were not forthcoming from P1. He said, based on
the firm’s last record, P1 and Dato’ Lim (representing the
vendor) were negotiating directly with the Chargee Bank on the
redemption sum.

[92] The firm also checked with the Chargee Bank for the redemption
statement sometime in October and on 1 November 2004 but the
Chargee Bank declined to release the redemption statement until
the vendor gave a written confirmation. He said the firm never
received any instructions on redemption from the plaintiffs. The
defendant said that the plaintiffs never reverted to the firm or
the defendant because they undertook negotiations directly with
the Chargee Bank and had in fact appointed other solicitors
(RJLGT) to take over and negotiate the redemption. Perhaps the
outcome may have been different if the plaintiffs had timeously
followed the defendant’s advice.

[93] Next, we turn to the question of limitation. In this regard, if the

defendant was negligent, and this had caused damage to the
plaintiffs, then the damage must have occurred on the date when
the property was no longer available and that event i.e. the
impossibility of completion of the SPA, took place on 16
February 2006. It is necessary to bear in mind that the plaintiffs ’
pleaded case was in negligence. A cause of action in negligence
is predicated on the existence of a duty of care, a breach of the
duty of care and lastly, damages which flow from that breach.
If there is no damage, then the cause of action in negligence
fails.

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[94] The legal position in this regard is made clear from the
following passage from the decision of the Singapore Court of
Appeal (per Wee Chong Jin CJ) in KE Hilborne v. Tan Tiang
Quee; KS Chung v. Tan Tiang Quee [1972] 2 MLJ 94 CA (at
pages 98-99):-

“With regard to the argument on behalf of Mr. Hilborne

that in a negligence action where no loss is proved the
action ought to be dismissed we are of the opinion that
the cause of action in the present case is breach of contract
and not tort. We refer with approval to Cordery on
Solicitors (6th Ed.) where the author said at page 187:

“Negligence has been defined as the absence of such

care as it was the duty of the defendant to take. The
fact that a professional man has been negligent or
that his client has suffered damage does not of itself
give rise to a cause of action, for negligence alone
does not give a cause of action, and damage alone
does not give a cause of action: the two must co-
exist. But if the negligence constitutes a breach of
contract presumably there must be a cause of action
if only for nominal damages.

Actionable negligence may be said to possess three

essential ingredients: the complex concept of duty,
breach of the duty, and damage suffered by the
person to whom the duty was owing. In the case of
a solicitor and his client, such negligence involves:

(a) a legal duty towards the client to exercise

care or skill, or both;

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(b) a breach of that duty by the solicitor, i.e.

a failure to attain the standard of care or
skill prescribed by law; and

(c) actual loss to the client as the direct result

of such breach.

Where there is professional negligence on the part of

a solicitor the client’s cause of action is breach of
contract and not tort.”

[Emphasis and underlining added]

[95] It would be appropriate now to turn to the specific and critical

question - what is a cause of action? For this, we need look no
further than the Court of Appeal decision in Dato’ Ahmad Johari
Tun Abdul Razak v. A Santamil Selvi Alau Malay & Ors And
Other Appeals [2020] 7 CLJ 588 CA, where Suraya Othman
JCA, comprehensively examined the relevant cases on the
definition of cause of action and said:-

Cause of action

[61] In the Court of Appeal case of Lembaga Kumpulan

Wang Simpanan Pekerja v. Ong Lian Chee [2010] 5 CLJ
23; [2010] 4 MLJ 762 at p. 30 (CLJ); p. 769 (MLJ), “cause
of action” has been defined as ‘‘simply a factual situation
the existence of which entitles one person to obtain
from the court a remedy against another person ’’:

[20] It is apposite to define the phrase ‘cause of

action’. It means ‘simply a factual situation the
existence of which entitles one person to obtain from
the court a remedy against another person’: per
Diplock LJ in Letang v. Cooper [1964] 2 All ER 929

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at p 934. See also Lim Kean v. Choo Koon [1970] 1

MLJ 158, Nasri v. Mesah[1971] 1 MLJ 32 (FC), Saw
Gaik Beow v. Cheong Yew Weng & Ors [1989] 3 MLJ
301, Newacres Sdn Bhd v. Sri Alam Sdn Bhd [1991] 3
MLJ 474 (SC), and Credit Corporation (M) Bhd v.
Fong Tak Sin [1991] 1 MLJ 409 (SC), as found in
Malaysian Court Practice 2007 Desk Ed LexisNexis
at p 144. (emphasis added)

[62] In the case of Credit Corp (M) Bhd v. Fong Tak Sin
[1991] 2 CLJ 871; [1991] 1 CLJ (Rep) 69; [1991] 1 MLJ
409 at p. 72 (CLJ); p. 411 (MLJ), which was cited with
approval by the Court of Appeal in Lembaga Kumpulan
Wang Simpanan, Justice Hashim Yeop Sani CJ Malaya,
speaking for the Supreme Court, held that a cause of action
is said to have accrued when there is in existence a person
who can sue and another who can be sued, and when all
the facts have happened which are material to be
proved to entitle the plaintiff to succeed . Section 6(1)(a)
of our Limitation Act 1953 (Revised 1981) provides, inter
alia, that:

Save as hereinafter provided actions founded on a contract

or on tort shall not be brought after the expiration of six
years from the date on which the cause of action accrued.
(Note emphasis.)

That provision invites the question as to what is the date

on which the cause of action accrued . In Cook v. Gill Brett
J defined ‘a cause of action’ to mean ‘every fact which is
material to be proved to entitle the plaintiff to succeed ’.
This definition was subsequently approved by the Court of
Appeal in Read v. Brown [1888] 22 QB 128. After

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reviewing the authorities Yong J in Lim Kean v. Choo

Koon [1969] 1 LNS 94; [1970] 1 MLJ 158 came to the
conclusion that the period of limitation does not begin to
run ‘until there is a complete cause of action ‘. In that
case he held that the plaintiff’s cause of action was not
complete until an order is obtained from the Rent
Assessment Board fixing the amount of the rent legally
recoverable under the Control of Rent Ordinance. He
accordingly held that the period of limitation commenced
to run only from the date of the order of the Board.

From established authorities we can now accept that the

cause of action normally accrues when there is in
existence a person who can sue and another who can be
sued, and when all the facts have happened which are
material to be proved to entitle the plaintiff to succeed .

And at p. 76 (CLJ); pp. 413 and 414 (MLJ) His Lordship,

inter alia, state that the limitation law is promulgated
for the primary object of discouraging plaintiffs from
sleeping on their actions and more importantly, to have
a definite end to litigation and that the rational e of the
limitation law should be appreciated and enforced by
the courts.

The doctrine of limitation is said to be based on two broad

considerations. Firstly there is a presumption that a right
not exercised for a long time is non - existent. The other
consideration is that it is necessary that matters of right in
general should not be left too long in a state of uncertainty
or doubt or suspense.

The limitation law is promulgated for the primary object of

discouraging plaintiffs’ from sleeping on their actions and

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more importantly, to have a definite end to litigation . This

is in accord with the maxim interest reipublicae ut sit finis
litium that in the interest of the state there must be an end
to litigation. The rationale of the limitation law should be
appreciated and enforced by the courts.

(emphasis added)

[63] It is trite that a cause of action arises from the

earliest possible moment in time when an action could
be brought. This must be appreciated by the courts and
parties alike: see our Federal Court decisions in Nasri v.
Mesah [1970] 1 LNS 85; [1971] 1 MLJ 32 and in Tenaga
Nasional Bhd v. Kamarstone Sdn Bhd [2014] 1 CLJ 207;
[2014] 2 MLJ 749.

[12] In Letang v. Cooper [1965] 1 QB 232, 242-3, Lord

Diplock defined a ‘cause of action’ as “a factual situation
the existence of which entitled one person to obtain from
the court a remedy against another”, which definition was
adopted in Hock Hua Bank Bhd v. Leong Yew Chin [1987]
CLJ Rep 126; [1987] 1 MLJ 230, where Abdul Hamid Ag
LP, as he then was, appended that “there must be a cause
of action before a plaintiff can claim a relief in an action”.

In Government of Malaysia v. Lim Kit Siang [1988] 1 CLJ

Rep 63; [1988] 2 MLJ 12, 19, the Supreme Court per
Salleh Abbas CJ, expounded that to make up ‘a cause of
action’, first, the plaintiff has a right at law or by statute
and secondly, the right has been affected by the act of the
defendant:

‘A cause of action’ is a statement of facts alleging that a

plaintiff’s right, either at law or by statute, has, in some

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way or another, been adversely affected or prejudiced by

the act of a defendant in an action. Lord Diplock in Letang
v. Cooper [1965] 1 QB 232 at p 242 defined ‘a cause of
action’ to mean ‘a factual situation, the existence of which
entitles one person to obtain from the court a remedy
against another person’. In my view the factual situation
spoken of by Lord Diplock must consist of a statement
alleging that, first, the respondent/plaintiff has a right
either at law or by statute and that, secondly, such right
has been affected or prejudiced by the
appellant/defendant’s act.

[Emphasis and underlining added]

[96] Next, it is important to state that when limitation is raised, then

the burden shifts to these who contend that the action is not
time-barred. In Mohd Sari Bin Datuk Okk Hj Nuar And Others v.
Asia General Equipment And Supplies Sdn Bhd And Others
[2010] 5 MLJ 766 CA, Abdull Hamid Embong JCA (as he then
was) said:-

“[26] The defendants had raised the defence of limitation.

That being the situation, the burden of proving that the
action was brought within the limitation period shifts to
the plaintiffs as was held in Ong Ah Bee v. Hii Chung
Siong, Robin [1364] MD 2; [1993] 1 CLJ 504 where Steve
Shim Lip Kiong J said:

Now it has been held that when the defence of

limitation is raised, the burden of pleading and
proving that the action was brought within the
limitation period shifts to the plaintiff. In Cartledge
(Widow and Administratrix of The Estate of Fred

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Hector Cartledge (deceased)) and others v. E Jopling

& Sons, Ltd [1963] 1 All ER 341, Lord Pearce said:

… I agree that when a defendant raises the statute

of limitation the initial onus is on the plaintiff to
prove that his cause of action occurred within the
statutory period. When, however, a plaintiff has
proved an accrual of damages within the six years …
the burden passes to the defendants to show that the
apparent accrual of a cause of action is misleading
and that in reality the cause of action accrued at an
earlier date.”

[Emphasis added]

[97] Thus, the answer to the question when does a cause of action
arise is that it may arise on various events; but it has always
been held that the statute of limitation runs from the earliest
time at which an action could be brought . (See: Hemp v.
Garland LR 4 QB 509 511, decided in 1843)

[Emphasis and underlining added]

[98] We may now refer to the Court of Appeal decision in Ambank

(M) Bhd v. Abdul Aziz Hassan & Ors [2010] 7 CLJ 663; [2009] 1
LNS 1479; [2010] 3 MLJ 784 CA (“the Ambank case”). The
question in the Ambank case was in relation to the accrual of a
cause of action in negligence against the solicitors who had
negligently (or incompetently) prepared the assignment which
ultimately could not be enforced. The unenforceability of the
assignment was discovered more than 6 years after the document
had been prepared.

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[99] The Court of Appeal held that the Bank’s cause of action
“accrued” when the damage occurred. And according to the
Court of Appeal, the damage had occurred when the document
was prepared more than 6 years before the document was sought
to be enforced. The cause of action was therefore time- barred.

[100] The brief facts of the Ambank case are as follows. The
defendants in that case were all lawyers practising with a firm
which was acting for the plaintiff/bank in a loan transaction
pursuant to which a facility of RM800,000.00 was given to a
company (the borrower). The loan was to be secured by the
assignment of a sub-divided piece of land (Lot 465) by a third
party (the assignor). Both the loan agreement and the assignment
were executed on 6 April 1999, and the loan was released on the
same day.

[101] The borrower defaulted in its repayments in November 2000,

and in April 2004 the bank sought to enforce the assignment.
The consent of the Ipoh City Council (the Council) (as master
title holder) was then sought for the intended sale of Lot 465 by
private auction. The Council refused and the bank brought an
action to compel the Council to give its consent.

[102] Subsequently, the bank - believing that the assignment itself was
a void instrument for want of a good title on the part of the
assignor - withdrew its action against the Council and, instead,
sued the lawyers for negligence and/or breach of contract on 17
March 2006. The bank’s claim against the lawyers was struck
out by the High Court on a preliminary point of limitation. It
was held that the bank’s claim had been time-barred under s.
6(1)(a) Limitation Act 1953 because time began to run from the
accrual of the cause of action (on 6 April 1999) and not from the

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bank’s discovery of its cause of action (in April 2004). The bank
appealed. The bank’s appeal was dismissed.

[103] The reasoning of the Court of Appeal is to be found in the

following paragraphs of the judgment of Abdul Malik Ishak,
JCA who said:-

[34] It is trite law that a cause of action founded in

tort accrues when the appellant suffers damage
(Goh Kiang Heng v. Mohd Ali Abd Majid (supra)).

[35] According to the case of Forster v. Outred &

Co. [1982] 1 WLR 86, CA, it was necessary to prove
actual damage in order to constitute a cause of action
in negligence and that on the pleaded facts the
plaintiff had suffered actual damage through the
defendant’s negligence by executing a mortgage deed
whereby her property was encumbered with a legal
charge and she was subjected to a liability which
might mature into a financial loss; and that,
therefore, her cause of action accrued in February
1973 notwithstanding that she did not actually
become liable for the repayment of the loan until the
demand was made and, accordingly, the second writ
was issued outside the six years’ limitation period
and the action begun by the first writ was rightly
dismissed.

[36] Nourse J, in Melton v. Walker and Stanger

[1981] 125 Sol Jo 861 applied the case of Forster v.
Outred & Co (supra) and came to the same
conclusion to the effect that a cause of action
founded in tort accrued when the plaintiff suffered

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damage and that the cause of action was completed

on 7 April 1967.

[37] Templeman LJ, writing for the Court of Appeal

in Baker v. Ollard & Bentley (a Firm) & Another
[1982] 162 Sol Jo 593, aptly said that:

The period of limitation under the Limitation

Act 1939 begins to run when the cause of
action accrues. In negligence actions damage
is an essential part of the cause of action and
thus the relevant period of limitation, in this
case six years, runs from the date of the
damage and not from the date of the act
which causes the damage.

[38] The next case would be the case of D.W. Moore

And Co. Ltd. And Others v. Ferrier And Others
[1988] 1 WLR 267, a decision of the Court of
Appeal. Suffice for this exercise that we need only
refer to the headnotes of the case at p. 267 thereof:

In March 1971 F. approached the plaintiffs to

join their business of insurance brokers. The
plaintiffs agreed to take him as a shareholder
and director of the first plaintiff, a company of
which the second and third plaintiffs were
directors. Clause 5 of the written agreement
dated 1 July 1971, prepared by the defendant
solicitors and made between the second and
third plaintiffs and F., provided that if any of
them ceased:

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to be a member of the company such person

shall not engage in any other business
connected with insurance or insurance broking
in any way whatever within a radius of 15 miles
of King’s Lynn for a period of three years from
the date of such person ceasing to be a member
of the company ... .

The plaintiffs asserted that they were advised

that that covenant was valid and binding and
was sufficient in law to prevent F. from
engaging into business as specified. In May
1975, by a further agreement, the second and
third plaintiffs and F. agreed to increase F. ’s
shareholding. That agreement also contained,
on the solicitors’ advice, a restrictive clause in
terms similar to clause 5 of the 1971
agreement. In December 1980 F. decided to
leave the business and to establish an insurance
brokerage at Swaffham, less than 15 miles from
King’s Lynn.

He also wanted to canvass and accept as clients

the plaintiffs’ clients. The then plaintiffs
discovered that the covenant was ineffectual to
prevent F. from establishing his own business.
On 16 April 1985 they issued a writ seeking
damages for negligence. By consent the
question whether section 2 of the Limitation
Act 1980 afforded a defence was tried as a
preliminary issue. The deputy judge held that
the plaintiffs’ action was statute barred.

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On appeal by the plaintiffs:

Held, dismissing the appeals, that there was no

presumption that on a solicitor’s negligent
advice damage occurred when the advice was
acted on; that it was a question of fact in each
case, whether actual damage had been
established and when; and that, accordingly,
since the plaintiffs’ damage occurred at the
time of executing the agreements, when they
received a worthless covenant rather than a
valuable chose in action, their cause of action
arose more than six years before the issue of
the writ and was statute barred.

[39] Applying all these salient authorities to the

appeal at hand, it is our judgment that on the facts as
pleaded the appellant would have suffered damage
when the third party assignment was executed
because the appellant would have, on that date, been
encumbered with the liability of dispensing the loan
to the borrower in exchange for an invalid third party
assignment. It is also our judgment, on the available
evidence, that the appellant’s loss would have
crystallised the moment the loan sum was disbursed
to the borrower in early April 1999 in exchange for
an invalid third party assignment. Time started to
move from 6 April 1999.”

[Emphasis added]

[104] Hence, applying the principle which was enunciated in the

Ambank case to the facts in this case, it is clear that 16 February
2006 is the earliest point in time that the plaintiffs could have

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commenced an action in negligence as the cause of action

commenced on that date. The damage occurred on that date
because thereafter it was legally impossible to complete t he
SPA. The 6 years limitation period for an action in tort per
s.6(1)(a) Limitation Act 1953 would therefore have ended on 15
February 2012. However, the present suit was only filed on 9
August 2012. On that analysis, Suit 943 is plainly time barred.

[105] From the documents, it is not in dispute that P1 had lodged a

complaint with the ASDB and it was predicated on the
defendant’s alleged negligence. The complaint is dated 26 June
2008. The damage occurred about 2 years earlier, when the
property was sold at the auction on 16 February 2006.

[106] Prior to the auction, the plaintiffs had engaged RJLGT to act for
them. it is only reasonable to expect that RJLGT would (or
should) have advised the plaintiffs that time was running and
that any action in negligence against the defendant had to be
filed within 6 years from the date of accrual of the cause of
action.

[107] Indeed, P1 did concede during cross-examination that he told

RJLGT that the defendant did not know what he was doing. But
despite forming the view that the defendant was negligent, the
plaintiffs waited until 9 August 2012 to file Suit 943, which was
beyond the 6 years period of limitation. The action was therefore
time barred.

[108] Lastly, we note that the Judge had made a finding that the action
was not time- barred because the plaintiffs’ claim was premised
on events that occurred prior to the plaintiffs ’ loss of the
property which crystallized on 16 February 2006. If that be the
case, then the issue of time-bar is even more compelling as
anything that happened prior to 16 February 2006 woul d make

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the issue of time-bar even more egregious. The Judge had

therefore erred in her analysis of the issue of limitation.

The Outcome

[109] In the result, for the reasons stated and discussed above, we are
satisfied that the Judge was plainly wrong, inter alia, on the
issue of breach of duty of care and on the limitation issue. Thus,
appellate intervention is warranted.

[110] As such, Appeal 1259 is allowed and the High Court ’s decision
dated 31 May 2018 is set aside. The plaintiffs ’ claim is
dismissed. We allow costs of RM10,000.00 (subject to
allocator). Consequently, Appeals 2603 and 2580 are academic
and are therefore dismissed with no order as to costs.

(S NANTHA BALAN)
Judge,
Court of Appeal,
Putrajaya, Malaysia

Dated: 15 DECEMBER 2020

COUNSEL:

For the appellant / defendant - Lim Kian Leong & Joyce Goh Min Yen; M/s Lim
Kian Leong & Co
Suite 10-8, 10th Floor, Wisma UOA II
No. 21, Jalan Pinang
50450 Kuala Lumpur
Wilayah Persekutuan
Tel: 03-21614199/03-21614157
Fax: 03-21614323
[Ref: 2/MY/11161]

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For the respondents / plaintiffs - David Gurupatham & Venothani Raja Gopal;
M/s David Gurupatham & Koay
3-11, Block F, Pusat Perdagangan Phileo 1
No. 9, Jalan 16/11, Off Jalan Damansara
46350 Petaling Jaya, Selangor
Tel: 03- 79546733
Fax: 03-79585733
[DGK/LIT/4042/20]

Case(s) referred to:

Tetuan Theselim Mohd Sahal & Co. & Ors v. Tan Boon Huat & Anor. [2017] 6
CLJ 368 CA

Shearn Delamore & Co. v. Sadacharamani Govindasamy [2017] 2 CLJ 665;

[2017] 1 MLJ 486; [2016] 6 AMR 797 CA

Ngan Siong Hing v. RHB Bank Bhd [2014] 3 CLJ 984; [2014] 2 MLJ 449 1
AMCR 829 CA

KE Hilborne v. Tan Tiang Quee; KS Chung v. Tan Tiang Quee [1972] 2 MLJ
94 CA (at pages 98-99)
Dato' Ahmad Johari Tun Abdul Razak v. A Santamil Selvi Alau Malay & Ors
And Other Appeals [2020] 7 CLJ 588 CA

Mohd Sari Bin Datuk Okk Hj Nuar And Others v. Asia General Equipment And
Supplies Sdn Bhd And Others [2010] 5 MLJ 766 CA

Hemp v. Garland LR 4 QB 509 511

Ambank (M) Bhd v. Abdul Aziz Hassan & Ors [2010] 7 CLJ 663; [2009] 1 LNS
1479; [2010] 3 MLJ 784 CA
Lim Goh Huat @ G S Lim v. Saw Keng See [1998] 6 MLJ 600; [1996] MLJU
228 HC

Buana Perdana Sdn. Bhd. v. Chan Siew Cheong & Ors [2012] 8 MLJ 367;
[2011] MLJU 951; [2012] 1 AMR 560 at [37]

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Legislation referred to:

Limitation Act 1953, s. 6 (1)(a)

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