PEMIUTANG PENGHAKIMAN KOONG LIN LOONG (Selaku wakil pertubuhan The Associated Chinese Chambers of Commerce and Industry of Malaysia) PENGHUTANG PENGHAKIMAN NUR SYAFEENAZ FARHANAH BINTI ROSMAN

Case Significance

Confirms that a partner is bound by the firm's obligations under the Partnership Act 1961 regardless of internal arrangements or lack of involvement, so that a judgment against a dissolved law firm may be enforced by bankruptcy proceedings against a partner who held that status when the cause of action accrued.

This High Court decision in the Commercial Division at Kuala Lumpur concerns a bankruptcy proceeding and, in particular, an appeal to the Judge in Chambers against a Deputy Registrar's grant of leave to commence bankruptcy proceedings against an alleged partner of a law firm. The judgment creditor, suing as the representative of the Associated Chinese Chambers of Commerce and Industry of Malaysia, had obtained judgment on 19 October 2022 against a firm of solicitors, Affendi Zahari, arising from a breach of a tenancy agreement for failing to pay outstanding rental and to deliver vacant possession. The firm's appeal to the High Court was dismissed and, no further appeal having been taken, the judgment became final. When the firm failed to pay and ceased operations in June 2023, the judgment creditor sought to enforce the judgment against the judgment debtor on the footing that she had been a partner of the firm at the material time. The legal questions included whether the application for leave ought to have been made by summons in chambers or by notice of application under Order 77 rule 5(4) of the Rules of Court 2012 and Rule 17 of the Bankruptcy Rules, whether the judgment debtor was a partner when the cause of action accrued, and whether any internal partnership arrangement could relieve her of liability. Applying the Partnership Act 1961 and the reasoning in Fujifilm Business Innovation Asia Pacific Pte Ltd v Kamaliah bt Muda, the Court held that a partner is bound by agreements entered into on behalf of the firm regardless of her knowledge of, or involvement in, the firm's internal affairs, so that internal arrangements and the doctrine of privity did not shield her. Because the firm had not carried its earlier appeal further, the judgment against it was final and indisputable, leaving the judgment debtor's status as a partner at the material time as the decisive question. The Court dismissed the appeal with costs of RM4,000, subject to allocatur.