JOHOR LAND BERHAD v 1. ) AISHATON BINTI ABU BAKAR 2. ) MOHD TALHA BIN MOHAMED ARIFFIN 3. ) RUHAIZAH BINTI ABDUL HAMID 4. ) ZAINUL RIJAL BIN ABU BAKAR

Case Significance

Illustrates that a solicitors' stakeholder appointment may be inferred from the course of dealings, that a firm which fails to remit matured stakeholder sums from its client account is in breach, and that partners are jointly and severally liable absent notice of any branch limitation to the third party.

This High Court decision at Johor Bahru concerns a property developer's claim to recover stakeholder monies from the partners of a firm of solicitors. The plaintiff, Johor Land Berhad, alleged that the firm Zainul Rijal Talha & Amir had been appointed as stakeholder solicitors to receive and hold stakeholder sums for certain residential units in its development projects, and that matured stakeholder sums had not been remitted to it as required. The plaintiff claimed RM1,439,022.89 (after set-off), together with interest and costs, against the first to third defendants, who practised under that firm from different branches; the claim against a fourth defendant had earlier been struck out. The defendants denied liability, one contending that no valid appointment or acceptance as stakeholder or the outstanding sum had been proved, and the others that they had no knowledge of or participation in the dealings, which were outside their control.

The court held that a stakeholder appointment could be inferred from the course of dealings, so that the absence of a formal acceptance was not fatal, and it admitted the subpoenaed bank witnesses' evidence and bank statements, treating the objections as going to weight rather than admissibility. On the merits it found that the firm had received the stakeholder monies into its client account and had failed to remit the matured sums, establishing breach. On partnership liability, it held that branch autonomy was no answer where no notice of any limitation had been given to the third party, so that the partners were jointly and severally liable.

Finding the plaintiff had proved RM1,439,022.89 after set-off, and that no fixed-deposit profit or hibah had been proved, the court entered judgment against the first to third defendants jointly and severally for that sum, with pre- and post-judgment interest at 5% per annum and costs of RM150,000.00. The judgment illustrates the recovery of stakeholder monies and the joint and several liability of partners in a solicitors' firm.