794 Malayan Law Journal [2009] 1 MLJ

Selvaratnam a/l Vellupillai v Dr Jayabalan Karrupiah A

FEDERAL COURT (PUTRAJAYA) — CIVIL APPEAL NO 02–1 OF

2006(W)
B
ZAKI AZMI CHIEF JUSTICE, ABDUL AZIZ MOHAMAD AND
HASHIM YUSOFF FCJJ
4 DECEMBER 2008

C
Legal Profession — Professional discipline — Suspension from practice —
Complaint of misuse of client’s money — Whether monies in firm’s client account
could be utilised by appellant to settle outstanding fees from respondent —
Whether appellant received monies as stakeholder
D
Legal Profession — Professional discipline — Suspension from practice — Errors
on face of orders issued by disciplinary board — Whether errors nullified order of
disciplinary board
E

The appellant who had been practising in the name of Messrs V Selva &
Associates (‘the firm’) was the solicitor acting for both the
respondent/purchaser and the vendors in the sale and purchase of a single
storey terrace house (‘the property’) registered in the names of the vendors. F
The vendors who were government servants acquired the property with the
assistance of a government loan for which the property was charged to the
government. For the sale to be effective it was necessary that the charge be
redeemed so that the property would be free to be transferred to the
respondent. The sale price of the property was RM80,000, of which the G
respondent had paid RM40,000 upon execution of the sale and purchase
agreement (‘the SPA’) on 8 December 1997. The balance RM40,000 to be
paid by the respondent was to be utilised by the vendors towards the
redemption of the housing loan. As at 30 March 1998, the statement of
account showed the redemption amount, which was computed by the H
month, to be RM41,896.52. Therefore, less the amount of RM40,000 to be
paid by the respondent, there remained a shortfall of RM1,896.52 which the
vendors had to pay. June was the last month for which the Housing Loans
Division had certified a redemption sum and no redemption sum was
provided for payment at any time after June 1998. On 7 January 1998, the I
respondent paid a further sum of RM21,223.83 but since this sum was not
sufficient to fully redeem the charge, it was not paid to the government but
was paid into and kept in a client account in respect of the respondent. With
the payment of RM21,223.83, the respondent still had to pay RM18,776.17
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah 795

A to settle the outstanding amount of RM40,000 of the purchase price. The

appellant claimed that despite repeated requests for payment of the deficiency
the respondent failed to pay. Thereafter on 25 February 1999 the appellant
wrote to discharge himself from acting for the respondent in this property
matter and all other matters in which he and his firm had been acting for the
B respondent. In fact, the respondent and the vendors had also discharged the
appellant from acting further for them and appointed new solicitors to act for
them in the SPA. The appellant who claimed that the respondent was owing
him a total of RM34,690 in outstanding fees and disbursements wrote to the
respondent’s new solicitors claiming a settlement of the outstanding fees. The
C appellant then received a payment of RM3,263 for the bills in respect of two
files, one of which was the SPA matter. The appellant sought to utilise the
amount of RM21,223.83 in the hands of the appellant towards the
settlement of the outstanding fees and disbursements of RM26,038, due to
him from the respondent. In this regard the appellant wrote to the Bar
D Council seeking advice as to whether he would be in breach of the Legal
Profession Act 1976 (‘the Act’) if he applied the sum of RM21,238.83, which
was still in the client account, towards satisfying the outstanding fees. When
this advice was not forthcoming, the appellant abandoned the idea of
obtaining advice from the Bar Council and instead waited six months from
E the date of the delivery of the bill of costs to the respondent before drawing
the sum of RM21,223.83 and applying it towards satisfaction of the costs due
to him from the respondent. On 20 June 2000, the respondent wrote a
complaint to the complaints secretariat that the appellant had wrongly
misappropriated the RM21,223.83. A disciplinary committee (‘DC’) hearing
F was held on this complaint and the committee concluded that since the
appellant held the RM21,223.83 deposited with the firm as ‘stakeholder’ it
ought to have forwarded the same to the respondent’s newly appointed
solicitors and that the appellant did not have the right to set off the sum held
by the firm on behalf of the respondent towards settlement of monies due to
G the firm from the respondent. The DC therefore found the appellant guilty
of misconduct and recommended that he be suspended from practice for six
months. The disciplinary board ordered the suspension by way of its order
dated 27 June 2003. However, this order contained a mistake and to correct
this error another subsequent amended order was issued, which corrected the
H error but contained another error. Each amended order by the board was then
found to contain not once but repeatedly. The appellant appealed to the High
Court against the decision of the board and submitted that since he was
discharged as a solicitor by both the respondent and the vendors the SAP was
terminated and that he had a lien over the money for settling his bills. The
I High Court held that the SAP had not been terminated and that the
appellant held the money as stakeholder. In the present appeal against the
decision of the High Court the appellant’s stand was that he was not a
stakeholder or trustee in respect of the RM21,223.83 because that sum was
insufficient to redeem the charge and therefore the holding of it did not
796 Malayan Law Journal [2009] 1 MLJ

qualify as stake holding. The issues before this court were whether the errors A
that appeared on the face of the orders by the board in any way prejudiced
the appellant to nullify the order of the disciplinary board and whether in the
circumstances of this case the amount of RM21,223.83 in the firm’s client
account could be utilised by the appellant to settle the outstanding fees from
the respondent. B

Held, dismissing the appeal with no order as to costs and setting aside the six
month order of suspension and substituting it with a suspension of one C
month:
(1) (per Zaki Azmi Chief Justice) The errors committed by the
disciplinary board that appeared on the face of the documents were very
obvious clerical errors that could be corrected. As such these errors
could not make the orders issued by the board void and unenforceable. D
If the errors were committed during the hearing of the DC or the
disciplinary board and had caused prejudice to the appellant, then there
was merit in the appellant’s argument that the order was null and void.
Therefore, although the board being a body for disciplining lawyers
should not have repeatedly committed such negligent acts, the errors E
being clerical errors were not prejudicial to the appellant and could not
nullify the order (see paras 21–23 & 25).
(2) (per Zaki Azmi Chief Justice) The appellant in this case was a
stakeholder and as such, for as long as the SPA remained alive he was F
under a duty to hold the monies paid for the purpose of redemption or
for the benefit of both parties to the SPA and not to utilise it for the
payment of his bills. The appellant’s submission that the SPA had been
terminated could not hold because then there would be no purpose in
the handing over of the SPA file to the new solicitors. The reason why G
the file was transferred to other solicitors was to continue with the deal.
In addition, as the appellant in the present case was acting for both the
vendors and the purchaser he owed a duty to both parties to ensure that
the monies held by him were used for the very purpose for which he was
holding it ie to redeem the property from the government. Since the H
SPA was still alive the money held in the client’s account was still trust
money (see paras 28, 31, 34 & 36).
(3) (per Zaki Azmi Chief Justice) Although the appellant contended that
until he received the full redemption sum he was not deemed a
stakeholder that could not be so. Once a solicitor holds money in trust I
for his client or any other party for a purpose it remains trust money
even if the amount is insufficient to be utilised for that purpose.
Therefore the DC and the board had not erred in finding that the
charges against the appellant were proven (see paras 41 & 43).
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah 797

A (4) (per Abdul Aziz Mohamad FCJ dissenting) This was not a case of
stakeholding. Even if the appellant had received in full whatever sum
necessary to enable the charge to be redeemed at any time he would not
have been a stakeholder for that sum. In a vendor and purchaser cases,
a certain sum of money is held by the stakeholder pending the outcome
B of a future event and the money becomes available to either the
purchaser or the vendor according to the outcome of the future event.
In the present case, there was no future event to await the outcome of
and the money was simply and inevitably to be paid to the government.
Therefore it was not a stake. The most that the appellant could do when
C he received the sum of RM21,223.83 was to keep holding it in the
firm’s client account until it was augmented to become the full
redemption sum and then pay the entire sum to the government to
redeem the charge. However, June was the last month for which the
Housing Loans Division had certified a redemption sum and there was
D
no evidence of the vendors or the respondent’s stand after that as regards
redemption. Therefore, the appellant’s obligation to treat the
RM21,223.38 as meant for the redemption of the charge ceased no
later than the end of June 1998 and the appellant was entitled to draw
E on that sum to settle his bills (see paras 73 & 74).

[Bahasa Malaysia summary

Perayu yang mengamalkan undang-undang di bawah nama Tetuan V Selva &

F Associates (‘firma tersebut’) adalah peguamcara kepada kedua-dua
responden/pembeli dan penjual-penjual dalam jual beli sebuah rumah teres
setingkat (‘hartanah tersebut’) yang didaftarkan di bawah nama
penjual-penjual. Penjual-penjual yang merupakan kakitangan kerajaan telah
memperoleh hartanah tersebut dengan bantuan pinjaman kerajaan yang
G mana hartanah tersebut telah dicagarkan kepada kerajaan. Untuk jualan
tersebut menjadi efektif cagaran tersebut perlu ditebus supaya hartanah
tersebut bebas untuk dipindahmilik kepada responden. Harga jualan
hartanah tersebut adalah RM80,000, yang mana responden telah membayar
RM40,000 setelah pelaksanaan perjanjian jual beli (‘PJB’) pada 8 Disember
H 1997. Baki RM40,000 yang perlu dibayar oleh responden adalah untuk
digunakan oleh penjual-penjual untuk mendapatkan penebusan pinjaman
perumahan tersebut. Sehingga 30 Mac 1998, penyata akaun menunjukkan
jumlah penebusan, yang dikira bulanan, sebanyak RM41,896.52. Oleh itu,
dengan menolak jumlah RM40,000 yang perlu dibayar oleh responden,
I masih terdapat baki sebanyak RM1,896.52 perlu dibayar oleh
penjual-penjual. Jun adalah bulan terakhir untuk Bahagian Pinjaman
Perumahan meluluskan jumlah penebusan dan tiada jumlah penebusan
diberikan untuk bayaran selepas Jun 1987. Pada 7 Januari 1998, responden
telah membayar tambahan sebanyak RM21,223.83 tetapi memandangkan
798 Malayan Law Journal [2009] 1 MLJ

bayaran tersebut tidak mencukupi untuk menebus secara penuh, ia tidak A

dibayar kepada kerajaan tetapi dibayar kepada dan disimpan dalam akaun
pelanggan bagi pihak responden. Dengan pembayaran sebanyak
RM21,223.83, responden masih perlu membayar RM18,776.17 untuk
menyelesaikan jumlah tertunggak sebanyak RM40,000 dari harga belian.
Perayu mendakwa walaupun setelah permintaan berulangkali untuk B
pembayaran bagi kekurangan tersebut responden gagal untuk membayar.
Oleh itu pada 25 Februari 1999 perayu menulis untuk melepaskan dirinya
dari bertindak untuk responden dalam hal hartanah ini dan kesemua hal yang
mana dia dan firmanya telah bertindak bagi pihak responden. Malah,
responden dan penjual-penjual juga telah melepaskan perayu daripada C
bertindak selanjutnya bagi pihak mereka dan melantik peguamcara baru
untuk bertindak bagi pihak mereka di dalam PJB tersebut. Perayu yang
mendakwa bahawa responden berhutang dengan mereka yuran tertunggak
sejumlah RM34,690 dan pembayaran telah menulis kepada peguamcara baru
responden menuntut penyelesaian yuran tertunggak tersebut. Perayu D
kemudian telah menerima bayaran sejumlah RM3,263 untuk bil-bil
berkaitan dua fail, salah satunya perkara PJB tersebut. Perayu memohon
untuk menggunakan sejumlah RM21,223.83 di dalam tangan perayu kepada
penyelesaian yuran tertunggak dan pembayaran RM26,038 yang perlu
dibayar kepadanya oleh responden. Dalam hal ini perayu menulis kepada E
Majlis Peguam memohon nasihat sama ada dia akan melanggar Akta
Profesyen Undang-Undang 1976 (‘Akta tersebut’) jika dia memohon jumlah
RM21,238.83 tersebut, yang masih berada dalam akaun pelanggan, untuk
menyelesaikan yuran tertunggak tersebut. Apabila nasihat ini tidak diberikan,
perayu melupakan cadangan mendapatkan nasihat daripada Majlis Peguam F
dan sebaliknya menunggu enam bulan dari tarikh penyampaian bil kos
kepada responden sebelum mengambil jumlah RM21,238.83 tersebut dan
menggunakannya untuk menyelesaikan kos yang responden berhutang
dengannya. Pada 20 Jun 2000, responden menulis aduan kepada sekretariat
aduan bahawa perayu telah secara salah menggunakan duit RM21,223.83 G
tersebut. Satu perbicaraan jawatankuasa tatatertib (‘JT’) telah diadakan
berkenaan aduan ini dan dan jawatankuasa tersebut memutuskan bahawa
memandangkan perayu memegang duit RM21,223.83 tersebut yang
didepositkan dengan firma tersebut sebagai ‘pemegang amanah’ ia sepatutnya
meneruskan hal yang sama kepada peguamcara responden yang baru dilantik H
dan bahawa responden tidak mempunyai hak untuk menolak jumlah
tersebut yang dipegang oleh firma tersebut bagi pihak responden untuk
penyelesaian duit yang responden berhutang dengan firma tersebut. JT oleh
itu mendapati perayu bersalah kerana salah laku dan mencadangkan dia
digantung daripada amalan undang-undang selama enam bulan. Lembaga I
tatatertib mengarahkan penggantungan tersebut melalui perintahnya yang
bertarikh 27 Jun 2003. Walau bagaimanapun, perintah ini mengandungi
kesilapan dan untuk membetulkan kesilapan ini perintah pindaan yang lain
dikeluarkan, yang membetulkan kesilapan tersebut tetapi mengandungi
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah 799

A kesilapan lain. Setiap perintah pindaan oleh lembaga kemudiannya didapati

mengandungi kesilapan perkeranian bukan sekali tetapi beberapa kali. Perayu
merayu kepada Mahkamah Tinggi terhadap keputusan lembaga dan
mengemukakan bahawa memandangkan dia telah digugurkan sebagai
peguamcara oleh kedua-dua responden dan penjual-penjual PJB tersebut
B telah dibatalkan dan bahawa dia mempunyai lien ke atas duit tersebut untuk
menjelaskan bil-bilnya. Mahkamah Tinggi memutuskan bahawa PJB tersebut
tidak terbatal dan bahawa perayu memegang duit tersebut sebagai pemegang
amanah. Di dalam rayuan ini terhadap keputusan Mahkamah Tinggi
pendirian perayu adalah bahawa dia bukan pemegang saham atau pemegang
C amanah RM21,223.83 tersebut kerana jumlah tersebut tidak mencukupi
untuk menebus cagaran tersebut dan oleh itu pegangan duit tersebut tidak
melayakkan sebagai pemegangan saham. Isu-isu di hadapan mahkamah ini
adalah sama ada kesilapan-kesilapan yang terdapat di dalam
perintah-perintah oleh lembaga dalam apa cara menjejaskan perayu untuk
D
membatalkan perintah lembaga tatatertib dan sama ada dalam keadaan kes
ini jumlah RM21,223.83 dalam akaun pelanggan firma tersebut boleh
digunakan oleh perayu untuk menyelesaikan yuran tertunggak daripada
responden.
E

Diputuskan, menolak rayuan tanpa perintah untuk kos dan menolak

perintah penggantungan enam bulan dan menggantikannya dengan
penggantungan sebulan:
F
(1) (oleh Zaki Azmi Ketua Hakim Negara) Kesilapan-kesilapan yang
dilakukan oleh Lembaga Tatatertib yang terdapat di dokumen-
dokumen tersebut adalah jelas kesilapan perkeranian yang boleh
diperbetulkan. Oleh yang demikian kesilapan-kesilapan ini tidak boleh
G menyebabkan perintah-perintah yang dikeluarkan oleh lembaga
terbatal dan tidak boleh dikuatkuasakan. Jika kesilapan-kesilapan
tersebut dilakukan semasa perbicaraan JT atau Lembaga Tatatertib dan
telah menyebabkan prejudis kepada perayu, maka terdapat merit dalam
hujah perayu bahawa perintah tersebut adalah batal dan tidak sah. Oleh
H itu, walau pun lembaga yang menjadi satu badan untuk mendisiplinkan
peguam-peguam tidak sepatutnya berulangkali melakukan tindakan
cuai sedemikian, kesilapan tersebut yang merupakan kesilapan
perkeranian tidak menjejaskan perayu dan tidak boleh membatalkan
perintah tersebut (lihat perenggan 21–23 & 25).
I (2) (oleh Zaki Azmi Ketua Hakim Negara) Perayu dalam kes ini adalah
pemegang saham dan oleh itu, selagi PJB itu masih berkuatkuasa dia
adalah bertanggungjawab untuk memegang duit tersebut untuk
kegunaan penebusan atau untuk kepentingan kedua-dua pihak kepada
PJB tersebut dan bukan untuk menggunakannya untuk membayar
800 Malayan Law Journal [2009] 1 MLJ

bil-bilnya. Hujah perayu bahawa PJB itu telah dibatalkan tidak boleh A
diambilkira kerana ia tidak akan mempunyai apa-apa tujuan dalam
penyerahan fail PJB tersebut kepada peguamcara baru. Tujuan kenapa
fail tersebut dipindahkan kepada peguamcara lain adalah untuk
meneruskan dengan urusan tersebut. Selanjutnya, memandangkan
perayu di dalam kes ini bertindak untuk kedua-dua penjual dan B
pembeli dia mempunyai tanggungjawab kepada kedua-dua pihak untuk
memastikan duit tersebut yang dipegang olehnya digunakan untuk
tujuan kenapa dia memegang duit tersebut iaitu untuk menebus
hartanah tersebut daripada kerajaan. Memandangkan PJB tersebut
masih berkuat kuasa, duit yang dipegang dalam akaun pelanggan adalah C
masih duit amanah (lihat perenggan 28, 31, 34 & 36).
(3) (oleh Zaki Azmi Ketua Hakim Negara) Walaupun perayu menegaskan
bahawa sehingga dia menerima jumlah penuh dia tidak dianggap
pemegang amanah ia tidak boleh dihujahkan sebegitu. Apabila D
peguamcara memegang duit tersebut sebagai amanah untuk
pelanggannya atau pihak lain untuk sesuatu tujuan ia masih duit
amanah walaupun jumlah tersebut tidak mencukupi untuk digunakan
bagi tujuan tersebut. Oleh itu JT dan lembaga tersebut tidak salah
dalam memutuskan bahawa tuduhan terhadap perayu telah dibuktikan E
(lihat perenggan 41 & 43).
(4) (oleh Abdul Aziz Mohamad HMP menentang) Ini bukan kes
pemegangan amanah. Walaupun perayu telah menerima dengan penuh
apa sahaja jumlah yang perlu untuk membolehkan caj tersebut ditebus
pada bila-bila masa dia tidak akan menjadi pemegang amanah untuk F
jumlah tersebut. Dalam kes-kes penjual dan pembeli, sejumlah duit
dipegang oleh pemegang amanah sementara menunggu keputusan satu
kejadian di masa hadapan dan duit tersebut boleh diperoleh oleh sama
ada pembeli atau penjual menurut keputusan kejadian di masa
hadapan. Dalam kes ini, tidak terdapat kejadian masa hadapan untuk G
menunggu keputusan dan duit tersebut hanya dan pasti akan dibayar
kepada kerajaan. Oleh itu ia bukan satu pertaruhan. Apa yang perayu
boleh lakukan apabila dia menerima duit RM21,223.83 itu adalah,
memegangnya dalam akaun pelanggan firma tersebut sehinggalah ia
diisytiharkan menjadi jumlah penebusan penuh dan kemudiannya H
membayar jumlah keseluruhan tersebut kepada kerajaan untuk
menebus caj tersebut. Walau bagaimanapun, Jun adalah bulan terakhir
untuk Bahagian Pinjaman Perumahan mengesahkan satu jumlah
penebusan dan tidak terdapat keterangan penjual-penjual atau
pendirian responden selepas itu berkenaan dengan penebusan. Oleh itu, I
kewajipan perayu untuk menggunakan duit RM21,223.38 itu sebagai
penebusan caj tersebut terbatal tidak boleh lebih dari akhir bulan Jun
1998 dan perayu berhak untuk mengambil duit tersebut untuk
menyelesaikan bil-bilnya (lihat perenggan 73 & 74).]
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah (Zaki Azmi Chief Justice) 801

A Notes
For cases on suspension from practice, see 9 Mallal’s Digest (4th Ed, 2005
Reissue) paras 1982–1984.

Cases referred to
B Burt v Claude Cousins & Co Ltd [1971] 2 QB 426, CA (refd)
Lee Yoke Chye v Toh Theam Bock & Co [1987] 1 MLJ 122, SC (refd)
Maloney v Hardy (1970) 216 EG 1582 (refd)
Toh Theam Hock v Kemajuan Perwira Management Corporation Sdn Bhd
C
[1988] 1 MLJ 116, SC (refd)
Vije & Co v Co-operative Central Bank Ltd [1991] 3 MLJ 432, HC (refd)

Legislation referred to
Criminal Procedure Code
Legal Profession Act 1976 ss 94(3)(d), 94(3)(n), 94(3)(o), 103C(1)(c), 103D,
D
103E, 126(1)
Legal Profession (Amendment) Act 2006 s 35
Solicitors’ Accounts Rules 1990 rr 2, 7, 7(a), 7(a)(v), 7(b)
Solicitors’ Accounts Rules 1967
E
Appeal from: Civil Appeal No 17–17 of 2003 (High Court, Ipoh)
VS Viswanathan (VS Viswa & Co) for the appellant.
Thiru Mangai Krishnan (Jeyaratnam & Co) for the respondent.
F Balan Nair (Seah Balan Ravi & Co) for the Bar Council.

Zaki Azmi Chief Justice:

G [1] The appellant is an advocate and solicitor of the High Court of Malaya
practising under the name of Messrs V Selva & Associates. There was referred
to the disciplinary board under the Legal Profession Act 1976 (‘the Act’) a
complaint against him of using client’s money wrongfully. He had acted as
solicitor in a sale and purchase agreement entered into between the
H respondent and a pair of husband-and-wife government servants in respect of
a purchase of a single storey terrace house. The money that he was alleged to
have wrongfully used was part of the purchase price which the respondent
had paid him for payment to the vendors as settlement of part of the purchase
price.
I
[2] He was found guilty by the disciplinary board and ordered to be
suspended for six months. He failed in his appeal to the High Court. The
High Court consisted of three judges empanelled pursuant to s 103E of the
Act. He now appeals to this court pursuant to the same section. By virtue of
802 Malayan Law Journal [2009] 1 MLJ

s 35 of the Legal Profession (Amendment) Act 2006, s 103E and all other A
provisions prior to the amendment apply to him.

FACTS LEADING TO DISCIPLINARY ACTION

[3] The price of the property sold was RM80,000. The purchaser, that is B
the respondent, paid an advance of RM40,000 on execution of the sale and
purchase agreement. The balance of RM40,000, when paid, was to be utilised
by the vendors towards redemption of a housing loan from Ministry of
Finance Incorporation Malaysia (‘MOF Inc’). The loan was taken by the
couple from MOF Inc since they were government servants. According to the C
statement of account from MOF Inc, as on 30 March 1998 the redemption
amount would be RM41,896.52. Therefore, less the amount of RM40,000
to be paid by the respondent, there would remain a shortfall of RM1,896.52
which the vendors had to pay.
D
[4] The sale and purchase agreement was entered into on 8 December
1997. On 7 January 1998, about two months later, the respondent paid a
further sum of RM21,223.83. This payment was clearly indicated on the
receipt issued by the appellant as ‘payment of redemption sum for
E
Mr Nadarajah a/l Velu’, one of the vendors. On 26 February 1998 the
appellant requested the vendors to pay a sum of RM1,896.52 to make up the
difference between the redemption sum and the amount of RM40,000 to be
paid by the respondent/purchaser. The vendors failed to do so. the
respondent had paid RM21,223.83 earlier and had to pay, which he did not,
F
a further sum of RM18,776.17 to settle the property’s full price of
RM80,000.

[5] One year later, on 25 February 1999, the appellant wrote to the
respondent to discharge himself from acting for the respondent. At the same G
time, the respondent was owing to the appellant a sum of money for fees and
disbursements relating to other matters in which the appellant had been
acting for the respondent.

[6] The appellant claimed that the sale and purchase agreement was H
terminated for failure of the vendors to pay the shortfall in the redemption
sum. As will be shown later, this does not seem to be so. The vendors also by
letter of 27 September 1999 discharged the appellant from acting for them.
All documents were then forwarded to Messrs Thevin Chandran & Wong,
the new solicitors appointed by the respondent to act for him in the sale and I
purchase agreement.

[7] The appellant sought to utilise the amount of RM21,223.83 in the

hands of the appellant towards settlement of the fees and disbursements due
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah (Zaki Azmi Chief Justice) 803

A from the respondent to the appellant. The appellant claimed that the
respondent was owing to him a total of RM26,038.00. This means that even
setting off the amount of RM21,223.83, which the appellant claimed, the
respondent would still be owing him an amount of RM4,814.17.

B [8] The appellant wrote to the Bar Council seeking advice as to whether he
had the right to set off the sum held by him on behalf of the respondent
towards settlement of monies due to him from the respondent. The Bar
Council however replied that the information provided by him was
insufficient. The appellant provided some more information to the Bar
C Council. The Bar Council remained silent and did not respond to him. So,
on 14 April 2000 The appellant decided to utilise RM21,223.83 which was
in the client’s account to set off the fees and disbursement owed by the
respondent to him.
D DISCIPLINARY ACTION

[9] On 17 April 2000 the respondent lodged a complaint to the Bar

Council alleging that the appellant had misappropriated the funds in the
client’s account and also had not acted in a professional manner. The
E
investigating tribunal dismissed the complaint but the disciplinary committee
set up to hear the complaint found the charges against him proven.

[10] The disciplinary committee found the appellant guilty of misconduct

F under s 94(3)(d), (n) and (o) of the Act and concluded, pursuant to s
103C(1)(c) (cited as ‘103(C)(1)(c)’ by the Disciplinary Committee) that
there was sufficient merit in the complaint. Its report to the disciplinary
board was as follows:
His failure to pay the money to the newly appointed ‘stake-holder’ and his
G unilateral and upper-handed mode of settling his bills raised after he chose to
discharge himself from acting for the complainant amounts to professional
misconduct. Accordingly, the Disciplinary Committee finds him guilty of
misconduct under s 94(3), (d), (n) and (o), and concludes, pursuant to
s 103(c)(1)(c) that there is sufficient merit in the complaint.
H In view of the foregoing, the Disciplinary Committee recommends that the
respondent be suspended from practice for a period of six (6) months.

[11] Section 94(3)(d), (n) and (o) reads:

I For the purpose of this Part, ‘misconduct’ means conduct or omission to act in
Malaysia or elsewhere by an advocate and solicitor in a professional capacity or
otherwise which amounts to grave impropriety and includes —
(d) breach of any rule of practice and etiquette of the profession made by
the Bar Council under this Act or otherwise;
804 Malayan Law Journal [2009] 1 MLJ

(n) gross disregard of his client’s interests; and A

(o) being guilty of any conduct which is unbefitting of an advocate and
solicitor or which brings or is calculated to bring the legal profession
into disrepute.
B
[12] And s 103C(1)(c) provides for the making of the following
recommendation by the disciplinary committee to the disciplinary board:
(c) that there is sufficient merit in the complaint and that the advocate and solicitor
should be subject to one of the following disciplinary actions: C
(i) imposition of a fine upon the advocate and solicitior for such sum as
the Disciplinary Committee deems just;
(ii) suspension of the advocate and solicitor concerned from practice for
such period as the Disciplinary Committee deems appropriate in the D
circumstances; or
(iii) striking off the Roll of the advocate and solicitor concerned.

[13] The disciplinary board, pursuant to powers conferred under s 103D of E

the Legal Profession Act 1976, decided that the appellant be suspended from
practice as an advocate and solicitor of the High Court of Malaya for six
months from the date of the order 27 June 2003.
F
[14] In respect of the report and recommendation of the disciplinary
committee and the order of the disciplinary board, several technical errors
were committed.

[15] The report and recommendation of the disciplinary committee to the G

disciplinary board dated 22 January 2003 was not signed by the chairman of
the committee. This omission was objected to by the appellant. Another
report duly signed by all the members was later sent to the disciplinary board.

[16] Subsequently the order issued by the disciplinary board dated 8 July H
2003 (more than three years after the complaint by the respondent to the Bar
Council) also contained a clerical error. The order stated that the disciplinary
board after considering the report of the disciplinary committee made its
order on 27 July 2003 (July) when it should have been 27 June 2003 (June).
This was subsequently rectified by the disciplinary board by issuing an I
amended order and explaining that it was a typographical error.

[17] Be that as it may, another error appeared in the rectified order. This
time the date of the order was not written in. To correct that mistake another
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah (Zaki Azmi Chief Justice) 805

A order was issued with the error corrected. Yet another error occurred in this
amended order, which by letter dated 29 July 2003 (and received on 31 July
2003) was sent to the appellant. This time the order stated that he was to be
suspended for six months effective 21 days from the date of the order, which
was 8 July 2003. This meant that the 21 days had lapsed by the time he
B received it.

[18] Needless for me to say, this is a most unhappy state of affairs. The
Disciplinary Board being a body for disciplining lawyers should itself not
have committed such negligent acts — occurring not once but repeatedly.
C
[19] At the hearing of this appeal, the appellant contended that the first
order issued by the board was a nullity because, according to the order, the
disciplinary board considered the report of the disciplinary committee on a
wrong date. A corrected order again contained other errors
D
[20] The High Court held that the correction done to the order was in fact
only a correction of a clerical error. What is important is that the board had
properly considered the report and recommendation of the disciplinary
E committee. Suriyadi J (as he then was) said in his judgment:
… There was no prejudice suffered by the appellant, with the contents of the order
being in accordance with the Disciplinary Committee’s report.

F [21] Shorn of all rhetorics the principal issue before this court is whether
the errors committed by the disciplinary board in anyway prejudiced the
appellant. The errors were committed after the hearing was completed by the
disciplinary committee. At the disciplinary committee hearing there was no
complaint by the appellant that he had been prejudiced or that the hearing
G was unfairly conducted against him. It is clear, when reading the report and
recommendation made by the disciplinary committee to the disciplinary
board, that the signature of the chairman of the disciplinary committee did
not appear on the report. But to me this is pure oversight. The errors
appearing on the face of the documents are very obvious and patent. The
H appellant was not misled in any way by those errors. This oversight could be
and was subsequently rectified. This omission could be corrected by getting
the chairman of the disciplinary committee to sign it. It is not as if that
committee could not make that decision. The report was only a
communication from the committee to the board.
I
[22] The errors committed by the disciplinary board also cannot however
make the orders issued by it void and unenforceable. The errors committed
by the board in this present case are also very obvious. Such errors could
therefore be corrected.
806 Malayan Law Journal [2009] 1 MLJ

[23] The other errors appeared in the order by the disciplinary board. A
Again what the disciplinary board committed were also clerical errors, which
were patent on the face of the order. Firstly, the date written in the order as
that on which the disciplinary board considered the appellant’s case was later
than the actual date. This could not be correct. It is so obvious. The second
time, the date of the order did not appear on the order. This must again be B
a clerical omission.

[24] If at all, the last order should be made to read as six months effective
from 21 days after the receipt of the order. The order, according to the C
appellant, was received on 31 July 2003. The six months must then be
calculated from 21 August 2003. These errors in the circumstances of this
case cannot make the order a nullity. Had errors being committed during the
hearing at the disciplinary committee or the hearing of the disciplinary board,
which errors had caused prejudice to the appellant, then this argument that D
the order became null and void may perhaps be supported.

[25] In my opinion, unless the legislation requires it to be signed by the

members, anyone can sign the letter accompanying the report. After all, the
order was only declaring the decision of the board. The decision itself was not E
wrong or even challenged by the appellant — only the way it was conveyed
to the appellant. Even the Criminal Procedure Code provides that ‘... a
clerical error may be rectified any time ...’ It must therefore be concluded that
these errors, being only clerical errors, notwithstanding they are repeatedly
committed, but not prejudicial to the appellant, cannot nullify the order. F

[26] I now come to the second issue. The answer to this second issue
depends on whether the amount of RM21,223.83 belongs to the
respondent/purchaser or does it belong to him for so long as the sale and G
purchase agreement remains alive, to use the words of Suriyadi J (as he then
was).

[27] The question that the court must answer is:

H
Whether in the circumstances of this case, the appellant may utilise the sum of
RM21,223.83 in the client’s account towards settling the amount due to the
appellant from the respondent for services rendered by the appellant to the
respondent not relating to the sale and purchase agreement?
I
[28] The appellant in this case was a stakeholder. He was therefore duty
bound to hold the sum for the purpose of redemption. It was not available
to him for as long as the sale and purchase agreement remained alive. He was
to hold it for the benefit of both parties to the sale and purchase agreement,
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah (Zaki Azmi Chief Justice) 807

A that is the respondent as well as the vendor couple. He had no authority to

utilise the sum for payment of his bills.

[29] The appellant submitted that since he was discharged as a solicitor by

the respondent and the vendors, the sale and purchase agreement became
B terminated. The appellant also admitted at the inquiry that his fees for this
sale and purchase transaction had been paid. The file, including all
documents relating to the transaction, was delivered to the new solicitors.
The basis of the appellant’s argument that he had rights to utilise the deposit
by the respondent for settling his bills with the respondent was that he had
C a lien over the respondent’s money. He denied any misappropriation and in
fact claimed RM4,814.17 still due to him. However, Suriyadi J said (as he
then was):
… So long as the SPA was still alive, the appellant had a duty to hold it for the
D purpose of the required redemption, and not utilise that sum for the payment of
his bills.

[30] I agree that the sale and purchase agreement had not been terminated.
And I do not see any purpose in the handing over of the file to the new
E solicitors if the sale and purchase agreement had been terminated. This is
consistent with the finding of the disciplinary committee:
1[8] In the absence of any written or oral evidence to the contrary, the DC finds
that the agreement between the Vendors and the Purchaser had not been
F terminated at this point in time. This finding is consistent with the fact that both
parties had by then retained Messrs Thevin Chandran & Wong to act for them.

[31] The reason why the file was transferred to other solicitors was to
continue with the deal.
G
[32] In Vije & Co v Co-operative Central Bank Ltd [1991] 3 MLJ 432,
VC George J had this to say in respect of monies paid by the purchasers (who
were government servants) to the plaintiff, a law firm, for onward payment to
H the developer (at pp 438–439):
Accordingly even if the money paid in by the loan division to be paid to the
developer became, on the instructions of the developer, money to be paid to the
defendant and in spite of the metamorphosis continued to be trust money, the
beneficiary of the money now being the defendant, the plaintiffs had the right of
I recourse (in respect of the fees owed by the defendant) by way of, inter alia, set-off
against the money standing to the credit of the defendant. ‘Set-off ’ here is not to be
limited to a set-off pleaded in a statement of defence but has reference to the right
of setting off the amount owed against the amount held. In the context such
808 Malayan Law Journal [2009] 1 MLJ

setting off means the settling of the account between the parties and, in my A
judgment, can be implemented by drawing on the amount due as was done here.
(Emphasis added.)

[33] The facts in that case were however different. In Vije & Co, the monies B
were paid by the government servants who were purchasers of properties from
a developer. In that case, monies were paid to the plaintiff ’s advocate and
solicitor’s firm. He was to forward these monies to the developer. The
developer owed some money to the defendant bank. It was agreed between C
the developer and the defendant bank that the sum be paid directly to the
bank.

[34] How do we compare the facts in Vije & Co against the facts before us?
In the facts before us, the appellant was acting for both the vendors and D
purchaser. He therefore owed a duty to both parties to ensure that the monies
held by him were used for the very purpose for which he was holding them,
that is, that they be utilised towards redeeming the property from MOF Inc.
As such the following authorities are more relevant to the case before us.
E
These authorities were cited by Hashim Yeop A Sani SCJ (as he then was) in
the case of Toh Theam Hock v Kemajuan Perwira Management Corporation
Sdn Bhd [1988] 1 MLJ 116. In that case, what was in dispute was whether
the interest that was earned on the deposit placed by the solicitor in the bank
pending payment to the vendor belonged to the vendor. Hashim Yeop A F
Sani SCJ held that (at p 118):

Where money is placed in medio in the hands of a third party to await an event as
between two other parties the third party receives that property as trustee and that
the property and the investments for the time being representing it represent his G
trust estate. Certainly the money may be paid to the third party as trustee, but
equally it may be paid to him as principal on a contractual or quasi-contractual
obligation to pay the like sum to one or other of the parties according to the event.
It must depend on the intention of the parties, to be derived from all the
circumstances, including any written documents, in which capacity the third party H
receives the money.

[35] Hashim Yeop A Sani SCJ held that the interest on the deposit did not
accrue to the parties because there was nothing in the agreement to indicate I
that it should be paid to either party. And secondly, such entitlement to the
interest was also not consistent with the Solicitors’ Accounts Rules 1967. He
discussed the meaning of ‘stakeholding’. This is relevant to the present case.
He said:
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah (Zaki Azmi Chief Justice) 809

A What is in essence stakeholding? The word ‘stake’ is in common parlance used to

apply to any money to be disposed of in accordance with what may happen in future:
and whoever is in possession of the money is often described as a stakeholder. The
manner in which the money is to be disposed of depends on the terms on which it is
held.
B In sale and purchase agreement cases the position is put clearly by Lord
Edmund-Davies in Sorrell v Finch who repeated what was said in Maloney v Hardy:

The essence of stakeholding in vendor and purchaser cases is that a binding

contract of sale has been entered into and the intending purchaser deposits with
C a third party a sum to be held pending completion; meanwhile the third party
holding that deposit may part with it to neither contracting party without the
consent of the other ...

In any particular case of sale and purchase, whether a person receiving the deposit is
to be considered as an agent for the vendor or for the purchaser or for both as principal
D or as trustee is a question of law depending on the circumstances of the transaction as
a whole. The learned judge concluded that in this case the appellant received the deposit
as agent for the respondents in a fiduciary capacity and therefore on general principles
he would be accountable.
In Burt v Claude Cousins & Co Ltd Lord Denning MR in his dissenting judgment
E explained the liability of an estate agent or solicitor receiving a deposit as a
stakeholder which statement of the law was accepted by the House of Lords in
Sorrel v Finch. He said:

If an estate agent or solicitor, being duly authorised in that behalf, receives a

F deposit ‘as stakeholder’, he is under a duty to hold it in medio pending the outcome
of a future event. He does not hold it as agent for the vendor, nor as agent for the
purchaser. He holds it as trustee for both to await the event: see Skinner v Trustee of
Property of Reed (a bankrupt) [1967] 2 All ER 1286 at p 1289, per Cross J. Until
the event is known, it is his duty to keep it in his own hands; or to put it on
deposit at the bank; in which case he is entitled to keep for himself any interest
G that accrues to it; see Harington v Hoggart (1830) 1 B & Ad 577. If the purchaser
should become entitled to the return of his deposit, he must sue the estate agent
or solicitor for it: see Eltham v Kingsman (1818) 1 B & Ad 683 and Hampden
v Walsh (1876) 1 QBD 189. He cannot sue the vendor, because the vendor has
never received it, or become entitled to receive it.
H
Pennycuick VC in Potters v Loppert at p 661 considered the law in relation to
contract deposits. Where money is placed in medio in the hands of a third party
to await an event as between two other parties the third party receives that property
as trustee and that the property and the investments for the time being representing
it represent his trust estate. Certainly the money may be paid to the third party as
I
trustee, but equally it may be paid to him as principal on a contractual or
quasi-contractual obligation to pay the like sum to one or other of the parties
according to the event. It must depend on the intention of the parties, to be derived
from all the circumstances, including any written documents, in which capacity the
third party receives the money.
810 Malayan Law Journal [2009] 1 MLJ

In the present case no doubt the appellant was retained as solicitor by the A
respondents during the material period. In the absence of any agreement to the
contrary it would be easy to conclude that the appellant would have received the
deposits on behalf of the respondents as their agent or trustee. …
(Emphasis added.)
B

[36] So from these it can be concluded that whether the appellant held the
money as stakeholder (or trustee) or not depends on the terms of the
agreement between him and his clients. We must not forget here that the
appellant was acting as stakeholder for both the vendors and purchaser. Both C
were his clients. It is not as if he was acting only for one party to the
transaction. That sum was held by him not just for the benefit of the
respondent alone but rather for the vendors as well. He was therefore a trustee
for both parties. The money he was holding in the client’s account was meant
to be paid to MOF Inc to redeem the property in question. He was holding D
the monies to await the vendors to pay him the difference and thereafter to
pay MOF Inc to enable the property to be redeemed or if the agreement was
later repudiated, he was to refund the money to the respondent. In this case,
he was discharged from acting for the vendors and he was required to transfer
the file to the new solicitors. He was also terminated by the vendors as their E
solicitors. The fact that the file was to be transferred to the new solicitors and
his appointment to act for the vendors was terminated, does not make the
sale and purchase agreement to come to an end. In fact, I agree with the
conclusion arrived at by Suriyadi J that the sale and purchase agreement was
still alive. It therefore means that the money that was held in the client’s F
account was still trust money. On the other hand, had the sale and purchase
agreement been terminated, it would depend on the terms of the sale and
purchase agreement how such sum held in the client’s account was to be
disposed of. If it was to be refunded to the respondent, and the vendors
ceased to be his clients, then perhaps that money may be utilised pursuant to G
r 7(a) to settle the debt due to him from the respondent.

[37] On the contrary, the appellant drew out the sum of RM21,223.83
from his client’s account towards settlement of debts due to him from only
one of his clients, namely, the respondent. H

[38] The appellant also relied on r 7 of the Solicitors’ Accounts Rules 1990
that monies in client’s account could be used for ‘payment of the solicitor’s
costs where a bill of costs or other written intimation of the amount of the
costs incurred has been delivered to the client and the client has been notified I
that money held for him will be applied towards or in satisfaction of such
costs’.
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah (Zaki Azmi Chief Justice) 811

A [39] The major distinction between just money in the client’s account and
the money held in trust is that the money held in trust, as explained in the
cases above, does not belong to the client. It is to be held by the solicitors for
the benefit of other parties as well.

B [40] In my opinion the more relevant provision is r 7(b) relating to trust

money. Rule 7(a)(v) only provides that the client’s money could be used for
certain purposes mentioned therein. Rule 7(b) is for payment in execution of
the particular trust, in this case payment to the vendor or for the purpose of
redeeming the property from MOF Inc. Rule 7 is also related to use of client’s
C money. What could happen in future to the case before us was that the
vendors would pay the balance to make up the redemption sum for payment
to MOF Inc.

[41] The appellant also contends that until he receives the full amount, he
D is not deemed to be a stakeholder. But that cannot be so. Once a solicitor
holds money in trust for his client or any other party for a purpose, it does
not matter whether the amount is sufficient to be utilised for that purpose.
The money remains to be in trust.
E
[42] There are many instances where money is held in client’s account on
behalf of that client alone. It is in these circumstances that the solicitor is
permitted to utilise that money towards payment of money due to him from
that client.
F
[43] I find that the disciplinary committee and the disciplinary board had
not erred in finding that the charges against the appellant were proven.
I dismiss the appeal.

G [44] For the above reasons, the appeal is dismissed but I would make no
order as to costs.

[45] As regards punishment to be imposed on the appellant, I am

sympathetic with him. After all, he did something to seek the advice of the
H Bar Council. The Bar Council ignored him. He did what he thought was his
right.

[46] As such, I have no alternative but to order a token suspension.

I therefore set aside the order of suspension of six months and substitute it
I with a suspension of one month. He had already served his suspension from
28 October 2005, until the Federal Court stayed the order on 21 February
2006. His suspension shall therefore be considered to have been served.
812 Malayan Law Journal [2009] 1 MLJ

[47] I make no order as to costs. A

[48] My learned brother Hashim Yusoff FCJ, has seen this judgment in
draft and expressed his concurrence.

Abdul Aziz Mohamad FCJ (delivering dissenting judgment): B

[49] The misconduct which the disciplinary committee found the

appellant guilty of and for which the disciplinary board, which affirmed and
accepted the recommendations of the disciplinary committee, suspended him C
from practice for six months, involved the use by him of a sum of
RM21,223.83 paid into a client account in connection with a sale and
purchase agreement (‘SPA’) dated 8 December 1997 between a married
couple, who were government servants, as vendors, and the respondent, as
purchaser. The sale was of a landed property with a single storey terrace house D
erected on it and registered in the names of the vendors. The vendors had
acquired the property with the assistance of government loan for which the
property was charged to the government as security. For the sale to be
effective it was necessary that the charge be redeemed so that the property
would be free to be transferred to the respondent. E

[50] The sale price of the property was RM80,000, of which the
respondent had paid RM40,000 at the date of the SPA. the respondent had
another RM40,000 to pay. As to when he had to pay that balance of the
purchase price, this was set out in section III of the second schedule to the F
SPA, which stipulated that time was of the essence. The date was not a
definite date but depended on certain events which I shall not touch upon
because the question has not arisen in this appeal and has therefore not been
regarded by any party as relevant. Suffice it to say that, according to cl 3(iii)
of the SPA, the completion date was to be the date when the vendors received G
the full purchase price and that, by cl 5, the vendors authorised their solicitors
to utilise the balance of the purchase price for paying the redemption sum
due to the government. Although cl 2(i) designated KC Lai & Co as the
vendors’ solicitors, this case has proceeded on the basis that it was the
appellant, who has been practising in the name of V Selva & Associates, who H
was the solicitor acting for the vendors as well as the purchaser in the sale and
purchase of the property.

[51] On 29 December 1997, the Housing Loans Division of the Treasury,

the appropriate department of the government, in response to the appellant’s I
request, wrote to the appellant to inform him of the amount of the
redemption sum. Each vendor had taken a loan to jointly acquire the
property and separate accounts had been kept by the division, so that there
were two letters, one setting out the redemption sum as regards the husband,
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah (Abdul Aziz Mohamad FCJ) 813

A and another as regards the wife. The redemption sum was computed by the
month. Six months were provided for, January to June 1998. The amount
increased from month to month, on account of interest. For example, for
January 1998, the amount was RM41,622.68 (RM21,223.83 for the
husband plus RM20,398.85 for the wife). For March 1998, the amount was
B RM41,896.52 (RM21,363.47 for the husband plus RM20,533.05 for the
wife). And for June 1998, the amount was RM42,307.28 (RM21,572.93 for
the husband plus RM20,734.35 for the wife). To redeem the charge the full
redemption sum had to be paid, and to redeem the charge by paying the full
amount in respect of a particular month, that amount had to be paid before
C the end of that month. No redemption sum was provided for payment at any
time after June 1998.

[52] On 7 January 1998 the respondent, who had yet to pay the remaining
RM40,000 of the purchase price under the SPA, paid to the appellant a part
D of it. The sum paid was RM21,223.83, which was the amount of the
husband-vendor’s part of the redemption sum for the month of January
1998. The appellant, presumably pursuant to cl 5 of the SPA, treated the
payment as being towards the redemption sum, which for January was
RM41,622.68, and issued to the respondent a receipt stating that the sum
E paid was ‘payment redemption sum for (the husband-vendor)’. But since the
sum was not sufficient to redeem the charge, it was not paid to the
government but was paid into and kept in a client account in respect of the
respondent.
F [53] With the payment of RM21,223.83, the respondent still had to pay
RM18,776.17 to settle the outstanding amount of RM40,000 of the
purchase price. The appellant claimed he made many requests for payment of
the deficiency, but the respondent failed to pay. Even if the respondent had
paid the full RM40,000, that would not have been sufficient to redeem the
G charge because the redemption sum was more than RM40,000. For March
1998 the redemption sum was RM41,896.52, so that if the charge was to be
redeemed in March, a further sum of RM1,896.52 was required, and that
would have to be paid by the vendors. So on 26 February 1998 the appellant
wrote to the vendors requesting for payment of that amount, but it was not
H paid.

[54] So by the end of June 1998 the charge could not be redeemed because
the redemption sum, which for June was RM42,307.28, was not available.
I
There was only the sum of RM21,223.83 in The appellant’s client account,
which was not sufficient for redemption. And there was no further statement
of redemption sum from the Housing Loans Division for any month after
June 1998.
814 Malayan Law Journal [2009] 1 MLJ

[55] Matters stood thus until 25 February 1999, a year after the appellant A
wrote to the vendors requesting for payment on their part of the sum of
RM1,896.52. There is no evidence as to what had happened to the SPA
before that date or as to the desires or stand of the vendors or the respondent
before that date as regards the redemption of the charge. But on 25 February
1999 the appellant wrote to the respondent to say that he no longer wished B
to act as his solicitor.

[56] There is evidence that the respondent retained the services of other
solicitors, namely, Messrs Thevin Chandran & Wong (‘TCW’) but there is
no specific evidence of the matter or matters for which they were retained. C
The respondent was, however, to tell the disciplinary committee that he
retained TCW ‘to take over’.

[57] Besides the SPA, the appellant had acted for the respondent in respect
of other matters. On 3 August 1999, more than five months after he ceased D
to act for the respondent, the appellant wrote to TCW giving particulars of
the outstanding fees and disbursements due from the respondent to him,
which totalled RM34,690, in respect of 14 matters, 13 of which, including
the SPA, bore file references. The appellant said that ‘individual bills for all
of our files’ had been forwarded to the respondent. On 23 September 1999 E
TCW sent to the appellant payment of RM3,263 for the bills in respect of
two files, one of which was the file for the SPA.

[58] On 27 September 1999 the vendors discharged the appellant as their

F
solicitor for the SPA and consented to his forwarding all relevant papers to
TCW.

[59] On 28 September 1999 the appellant sent to TCW all original

documents belonging to the two files in respect of which the appellant had G
been paid RM3,263. Of the files, there remained 11 in in respect of which,
according to the appellant, payment was due from the respondent.
On 29 September 1999 the appellant wrote to TCW to seek their
confirmation whether he could apply the sum of RM21,223.83 that still
remained in the client account in respect of the respondent as a set-off against H
the fees and disbursements owing to the appellant in respect of the 11 files.
TCW replied the same day that the respondent did not agree with what The
appellant proposed to do. TCW also asked the appellant to let them have a
cheque for the sum of RM21,223.83. On 11 October 1999 the appellant
wrote to TCW to forward the bills for work done under the 11 files, saying I
that the total due from the respondent to him was RM26,038 and that he
was going to draw the sum of RM21,223.83 from the client account and
apply it towards settling the amount of RM26,038, after which there would
still be RM4,814.17 due from the respondent to him.
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah (Abdul Aziz Mohamad FCJ) 815

A [60] On 25 October 1999 the appellant wrote to the Bar Council setting
out the facts of the matter and requesting for advice as to whether, in view
of r 7(a)(v) of the Solicitors’ Accounts Rules 1990, he would be in breach of
the Legal Profession Act 1976 if he applied the sum of RM21,223.83, which
was still in the client account, towards satisfying the sum of RM26,038 of the
B 11 bills, and as to whether that rule could be construed as not requiring
taxation of the bills.

[61] That rule provides that there may be drawn from a client account, in
C
the case of client’s money:

(v) money properly required for or towards payment of the solicitor’s costs where
a bill of costs or other written intimation of the amount of the costs incurred has
been delivered to the client and the client has been notified that money held for
him will be applied towards or in satisfaction of such costs.
D
Rule 2 defines ‘client’s money’ as follows:

‘client’s money’ means money held [or] received by a solicitor on account of a

person for whom he is acting in relation to the holding or receipt of such money
E either as a solicitor or in connection with his practice as a solicitor, agent, bailee,
stakeholder or in any other capacity and includes solicitor trust money but does
not include money to which the only person entitled is the solicitor himself or, in
the case of a firm of solicitors, one or more of the partners in the firm.

F
[62] It is apparent from the appellant’s letter to the Bar Council dated
25 October 1999 that he regarded his letter dated 11 October 1999 to TCW,
mentioned earlier, as satisfying the requirements of r 7(a)(v) that the bills be
delivered to the client and that the client be notified of the intention to apply
G the money towards or in satisfaction of the costs.

[63] The Bar Council’s Legal Profession Committee, after requesting for
certain further specific information about the matter from the appellant, and
having been furnished with it, informed the appellant by letter dated
H 23 December 1999 that ‘some information is still lacking’, without specifying
what it was, and requested to be furnished with the ‘full facts’, which, as far
as the appellant was concerned, had already been furnished. So the appellant
abandoned the idea of obtaining the Bar Council’s advice.

I [64] The appellant, however, did not straight away draw the sum of
RM21,223.83 and apply it towards satisfaction of the costs due to him from
the respondent. He waited until six months had elapsed after the delivery of
the bills of costs to TCW on 11 October 1999 before doing so. Then on
14 April 2000 he did so. By s 126(1) of the Legal Profession Act 1976 the
816 Malayan Law Journal [2009] 1 MLJ

respondent had six months from the date of delivery of the bills of costs A
within which to obtain an order for their taxation, but the respondent did not
seek the order.

[65] There is no evidence of whether the respondent succeeded in buying

B
the property. In his letter to the Bar Council dated 25 October 1999,
mentioned earlier, the appellant stated his belief that the property had been
sold by the vendors in early October 1999 to a different purchaser using the
services of ‘another solicitor’, which it is not clear whether it referred to TCW.
The appellant’s counsel, however, informed us from the bar that the purchase C
under the SPA had been completed, but that is not in evidence. the
respondent never stated how his position under the SPA was adversely
affected by what the appellant had done.

[66] On 20 June 2000 the respondent wrote a complaint against the D

appellant to the complaints secretariat about the sum of RM21,223.83.
Essentially the complaint was that the appellant had ‘wrongly
misappropriated’ the sum.

[67] After a hearing by it, in which the respondent and the appellant gave E
evidence, the disciplinary committee made its report to the disciplinary
board, in which it concluded as follows:

… the DC concludes that the money was deposited with the respondent as
‘stake-holder’. Since money received as ‘stake-holder’ falls within the definition of F
‘client’s money’, the money deposited by the complainant is not ‘Trust Money’ as
defined under the Solicitors’ Accounts Rules 1990. He ought to have paid the
money towards redemption of (the husband-vendor’s) charge or when the parties
changed solicitors (the S & P agreement at this point in time not terminated), he
ought to have forwarded the sum to the newly appointed solicitors as ‘stakeholder’. G
His failure to pay the money to the newly appointed ‘stakeholder’ and his
unilateral and upper-handed mode of settling his bills raised after he chose to
discharge himself from acting for the complainant amounts to professional
misconduct. Accordingly, the DC finds him guilty of misconduct under s 94(3),
(d), (n) and (o), … H

The disciplinary committee recommended that the appellant be suspended

from practice for six months. On 8 July 2003 the disciplinary board ordered
the suspension.
I
[68] As to the disciplinary committee’s finding that at the point of time
when the respondent and the vendors changed solicitors the SPA had not
been terminated, it would appear from finding (8) of its findings of fact that
it was an inference drawn from the very fact of the change of solicitors.
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah (Abdul Aziz Mohamad FCJ) 817

A [69] The High Court dismissed the appellant’s appeal, holding as follows:

So long as the SPA was still alive, the appellant had a duty to hold it for the
purpose of the required redemption, and not utilise that sum for the payment of
his bills. … He had held the sum of money as a stakeholder for the purpose of
B redeeming the property and nothing else. Whether the amount of RM21,223.83
was only partial or full was irrelevant. What was relevant was its purpose. It was
thus incumbent upon the appellant to hold on to that sum of money, until there
was an express notice or instruction from the parties of the SPA to terminate the
agreement. … Even if any termination of the SPA had taken place it was still
incumbent upon The appellant to return that redemption sum to the respondent’s
C
new lawyer.

[70] It will be seen that both the disciplinary committee and the High
Court found that the appellant held the sum of RM21,223.83 as stakeholder.
D As to what he should have done with the money, the High Court differed
with the disciplinary committee. In the view of the disciplinary committee,
before the parties changed solicitors the appellant ought to have paid the sum
to the government towards redemption of the husband-vendor’s charge, and
after the change of solicitors he ought to have forwarded the money to TCW
E as ‘stakeholder’, presumably for TCW to redeem the husband-vendor’s
charge. The High Court, however, did not say that the appellant should have
paid the sum to the government to redeem the husband-vendor’s charge. It
would appear that the High Court accepted the appellant’s submission, to
which there appears to have been no reply, that there was no such
F endorsement on the document of title to the property as the
husband-vendor’s charge, by which I understand that there was only one
charge, a joint charge, and not two separate charges, one by the husband and
another by the wife. To the High Court, the appellant was to keep holding
on to the money until the SPA was terminated, in which event he was to
G return it to the respondent.

[71] In the present appeal the stand of the appellant is that the sum of
RM21,223.83 still belonged to the respondent and was not ‘a stakeholder
fund or a trust account’, and the appellant was not a stakeholder or a trustee
H
in respect of that sum, because it was insufficient to redeem the charge. The
appellant’s case is that, because the sum was insufficient, the holding of it by
him did not qualify as stakeholding according to the following meaning of
‘stakeholding’ as expressed by the Supreme Court in Lee Yoke Chye v Toh
Theam Bock & Co [1987] 1 MLJ 122, at p 124, following Edmund-Davies LJ
I
in Maloney v Hardy (1970) 216 EG 1582:

The essence of stakeholding in vendor and purchaser cases is that a binding

contract of sale has been entered into and the intending purchaser deposits with a
third party a sum to be held pending completion; meanwhile the third party
818 Malayan Law Journal [2009] 1 MLJ

holding that deposit may part with it to neither contracting party without the A
consent of the other, and if competing demands arise he can interplead...

[72] The respondent’s stand in the present appeal is that the appellant held
the sum as stakeholder and that the sum was stake money which he was to B
keep holding until notified otherwise by the parties to the SPA. He relies on
the dissenting opinion of Lord Denning MR in Burt v Claude Cousins & Co
Ltd [1971] 2 QB 426, a case where an estate agent misappropriated a deposit
paid to him by a prospective purchaser of a property, and the question was
whether the owner of the property was liable to the prospective purchaser for C
the money. Lord Denning MR held that the owner would only be liable if the
estate agent received the deposit as his agent, being duly authorised to do so,
but if he received it:

‘as stakeholder’, he is under a duty to hold it in medio pending the outcome of a D

future event. He does not hold it as agent for the vendor, nor as agent for the
purchaser. He holds it as trustee for both to await the event … Until the event is
known, it is his duty to keep it in his own hands: or to put on deposit at the bank:
… If the purchaser should become entitled to the return of his deposit, he must
sue the estate agent or solicitor for it … He cannot sue the vendor, because the
vendor has never received it, or become entitled to receive it. E

[73] In my judgment, this was not a case of stakeholding. Even if the

appellant had received in full whatever sum was necessary to enable the
charge to be redeemed at any time within the months of January to June F
1998, he would not have been a stakeholder of that sum. In a stakeholding
in vendor and purchaser cases, the sum in question is a stake held by the
stakeholder pending the outcome of a future event, and, according as to what
the outcome is, the money then becomes available to either the purchaser or
the vendor. Stakeholding is a wager situation. In this case the appellant would G
not have held the redemption sum pending the outcome of a future event.
There was no future event to await the outcome of and the sum would not
be awaiting any outcome of any future event to be paid to either the vendors
or the respondent. The sum was simply and inevitably to be paid to the
government. It was not a stake. H

[74] That the sum actually received by the appellant was only
RM21,223.83 and not sufficient for a redemption sum does not change the
situation. It was not a stake. The most that the appellant could be expected
to do was to keep holding it in the client account until it was augmented to I
become the full redemption sum and then pay the entire sum to the
government to redeem the charge. He could not have paid the sum actually
received to the government to redeem the charge because it was not sufficient
for a redemption sum. Until the end of June 1998 there was in the client
 Selvaratnam a/l Vellupillai v
[2009] 1 MLJ Dr Jayabalan Karrupiah (Abdul Aziz Mohamad FCJ) 819

A account still the sum of RM21,223.83 only, whereas the redemption sum for
June was RM42,307.28. June was the last month for which the Housing
Loans Division had certified a redemption sum. There is no evidence as to the
wishes or stand of the vendors or the respondent after that as regards
redemption. In my judgment, the appellant’s obligation to treat the sum of
B RM21,223.83 as meant for redemption of the charge ceased no later than the
end of June 1998. After that he was entitled to draw that sum from the client
account under r 7(a)(v), the sum being, in my judgment, always client’s
money, that is to say the respondent’s money, and never stake money.

C [75] I would therefore allow the appeal and set aside the order of the
disciplinary board, without having to consider the other grounds of appeal
concerning the failure of the chairman of the disciplinary committee to sign
its report to the disciplinary board and the defects in the orders issued by the
disciplinary board. As regards costs, the respondent has been a nominal
D respondent. His complaint was pursued by the disciplinary board. In the
High Court and in this court the solicitors on record as solicitors for the
respondent were solicitors appointed by the disciplinary board. I would
therefore order that the disciplinary board pay the appellant’s costs here and
in the High Court.
E
Appeal dismissed. Six month suspension order set aside and substituted with
one month suspension order.

F Reported by K Nesan