KHOO YIK CHOU v 1. ) KOAY LIANG KHENG 2. ) LEE KAH WEI 3. ) SAW CHIA HUI 4. ) NICHOLAS FUNG WIN JUAN

Case Significance

A clear statement of the limited boundary of solicitor-client privilege under section 126(1) of the Evidence Act 1950 in interrogatories, and of a stakeholder solicitor's position as trustee whose wrongful disbursement of funds may be traced.

This High Court decision at Kuala Lumpur concerns an application for interrogatories under Order 26 rule 1(3) of the Rules of Court 2012, directed at a defendant who had been a partner in a now-dissolved law firm, Messrs Lee, Saw & Co. The underlying dispute arose from a funding arrangement: the plaintiff had agreed to pay a substantial refundable deposit in the course of a scheme said to raise business funding, and that deposit, held by the firm as stakeholder, was later released to third parties. The interrogatories sought factual information about the release of the deposit, including the identity of recipients, payment dates, methods and bank details. The defendant resisted on the grounds that the information was privileged under section 126(1) of the Evidence Act 1950, that the application wrongly presupposed fiduciary duties owed by the firm, that it was a fishing expedition, and that it was unnecessary, oppressive and would not save costs. The court, per Leong Wai Hong J, rejected each objection. It held that legal professional privilege under section 126(1) is of limited character, protecting only communications passing between solicitor and client for legal advice, the contents of documents the solicitor came to know in that employment, and the advice given; it does not protect a solicitor's bank statements, the address to which a letter was sent, or factual information such as the identity of recipients and payment details, which do not become privileged merely because they passed through a firm of solicitors. On the stakeholder point, the court affirmed the settled principle that a solicitor holding funds as stakeholder holds them in medio as trustee for both parties, not as agent, and that any wrongful disbursement gives the beneficial owner the right to trace the monies into the hands of anyone who acquired them. Interrogatories were therefore appropriate to enable that tracing. The court allowed the application with costs of RM8,000. The judgment is a clear statement of the boundary of solicitor-client privilege in interrogatories and of a stakeholder's position as trustee.