PUTRAJAYA (Oct 15): A three-member Court of Appeal bench on Thursday ruled that a commissioned lawyer and partner at a law firm is liable to pay the balance purchase price owed to a house-seller client, despite another partner of the law firm being responsible for the loss.

Judge Datuk Azhahari Kamal Ramli, in the unanimous decision, ruled that the Sessions Court judge and the High Court judge who had upheld the decision were wrong in not finding the commissioned partner to be considered a partner under the Partnership Act 1961, and thus liable to pay for the losses.

Azhahari, who sat with COA judges Datuk Ismail Brahim and Datuk Dean Wayne Daly, said the respondent (the commissioned partner) Puung Kok Peing, is liable and has to pay the sum owed (RM920,612.65).

“Despite being a salary or commission partner, it merely provides relationships on carrying on business in view of a profit. The bench noticed from the house-seller that Puung is a partner of the firm.

“Based on Section 11, 12, 13 of the PA, the respondent (Puung) should be held liable. We are of the view over the liability of the partner. There is a clear appealable error by the Sessions Court judge and the High Court judge who affirmed the decision below. Hence, this bench sets aside the decision of the learned Sessions Court judge and the then judicial commissioner (now High Court judge),” Azhahari said.

The bench also ordered Puung to pay costs of RM30,000 to the house seller SR Dev Kumar.

Sections 11 of the PA stipulates that every partner in a firm is liable with other partners for all debts and obligations of the firm incurred while one is a partner. Section 12 governs liability of the firm for any wrongdoing in the course of a business.

Section 13 mentions for any misappropriation of money or property received or in custody of the firm, the firm is liable to pay for the losses.

Counsel Dinesh Nandrajog, who appeared for Dev Kumar with Wong Shu Min, urged the bench to write a judgment as it is an important decision with regards to law companies, especially lawyers who receive commission-based pay from a firm, who can be held liable and considered a partner under the PA.

Earlier, Dinesh pointed out that Section 3 of the PA defines ‘partner’ as persons carrying on a business; carried out in common; and to make a profit; and that Puung fell within the definition.

The case came about when Dev Kumar sought to sell his Mont Kiara condominium in 2014 for RM1.5 million, and for which he had not been paid the balance of the sum RM920,612.65 owed to him by Yuen Kwong Yai, a partner in Messrs Yuen & Co, where Puung was a commissioned or salaried partner.

Although Dev Kumar mainly dealt with Yuen and subsequently received initial payments for the sale in 2014 and early 2015, the payment stopped sometime in the second half of 2015.

Yuen had told Dev Kumar that he had spent the balance of the fund, including some RM900,439 transferred to the firm’s account by the buyer’s solicitors in October 2014.

Following the non-receipt of the balance, Dev Kumar filed a suit against the law firm.

Yuen was struck off the roll of Advocates and Solicitors and his firm was dissolved in 2016.

He was subsequently charged and found guilty in 2022 of criminal breach of trust in another case where the conviction was held in court in absentia. Yuen still remains at large.

The lower courts, especially High Court judge Arziah Apandi, held that Puung did not fall into the category of a partner despite being delegated as a commissioned partner.

Arziah reasoned that a commissioned partner like Puung does not hold any equity and/or beneficial interest in the firm, and his income is derived from files of the firm he conducted.

Dev Kumar relied on the Messrs Yuen & Co letterhead, where Puung was stated as being a partner, as the basis of his claim against the latter.

In dismissing Dev Kumar’s claim, the Sessions Court judge and High Court judge found that Puung is not a partner and was thus not liable.

However, this was overturned by the three-member appellate bench on Thursday.

During Thursday’s proceedings, Satish Nair and Joshua Sambathan appeared for Puung, while Manmohan Singh held a watching brief for this case for the Malaysian Bar.