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Tuesday, April 30, 2024

Federal Court restores RM1.5mil award against lawyers in property case


Justice Mary Lim said it was evident that property buyers Julian Chong and Asmah Mat only suffered loss when Bank Islam issued a notice to foreclose on their property in September 2014. (Federal Court pic)

PUTRAJAYA: The Federal Court has, in a unanimous decision, reinstated a High Court ruling that ordered a lawyer and his legal firm to pay RM1.5 million in damages for negligence in their handling of a conveyancing transaction undertaken 20 years ago.

Justice Mary Lim said Section 6 of the Limitation Act 1953 only kicked in on the date the property buyers suffered actual damage.

She said on the facts of the case, time began to run only in 2014, when Bank Islam sought to auction off a house belonging to Julian Chong and wife Asmah Mat, not ten years earlier when they executed a sale and purchase agreement (SPA).

“It is evident that the appellants (the couple) did not suffer loss or damage until the bank exercised its right under the charge and a formal notice to foreclose or proceed for an order of sale was issued on Sept 2, 2014.

“The bank’s earlier notice of Nov 14, 2013, sent through its solicitors to foreclose and a demand to pay was still a contingent loss,” she added.

Further, Lim said it would be unjust and unreasonable to require the couple to institute a claim before the contingency. Thus, the suit, initiated in 2016, was not time-barred.

She said defendants, Lee Kim Noor and legal firm KN Lee & Associates, had also breached their duty of care and did not act in keeping with their duties as solicitors.

Lim, who retires this week, said the discoverability principle applies in Malaysia.

She said that based on the peculiar facts of the case, time to sue would only start when Chong and Asmah discovered the negligence, not when it first occurred.

Lim said Parliament has also recognised this position by legislating Section 6A of the Limitation Act which allows for a person to sue within three years from the discovery of negligence.

The judge was part of a three-member panel comprising Chief Judge of Sabah and Sarawak Abdul Rahman Sebli and Justice Hasnah Hashim.

The bench had, in an oral decision handed down previously, allowed the couple’s appeal from a Court of Appeal verdict which had earlier overturned the High Court ruling.

The apex court ruling resolves uncertainty that had arisen from three conflicting Court of Appeal decisions.

Lim’s 38-page judgment was released last week.

The bench also awarded the couple RM100,000 in costs.

The couple had sued the lawyers over a conveyancing transaction that involved the preparation of a sale and purchase agreement.

They had in 2004 purchased a piece of land from a Penang housing developer, Reka Mesra Sdn Bhd, in a scheme known as Krystal Garden.

The master title of the land within which the property was contained had been charged to the bank by Reka Mesra. In effect, the bank was entitled to auction off the entire property comprised in the master title, which included the couple’s house, if Reka Mesra did not pay off their bank loan.

The lawyers had failed to take the charge into account when preparing the SPA.

In 2011, Reka Mesra was wound up by the bank, and three years later, the bank sought to auction off the property to secure repayment of the defaulted loan.

The couple was among those affected.

Between 2011 and 2014, they had on several occasions asked the defendants if their house was safe following Reka Mesra’s winding up. However, the defendants gave various evasive answers and ultimately misled and misrepresented to the plaintiffs that their house was safe.

The couple took out the lawsuit in 2016 alleging that the lawyers had failed to do a proper land title search, and for failing to include the appropriate provisions in the SPA.

The judgment said the defendants covered up their mistakes even though they knew of the error in the SPA.

On top of damages for negligence, the High Court also included an award for the couple’s pain and suffering on account of having been misled by the lawyers.

Lawyers Ong Yu Shin, Ooi Keng Liang, Lim Wooi Ying and Yu Haan Xi appeared for the couple, while Mureli Navaratnam, Vijaya Navaratnam and Felix Lim represented Lee and the legal firm. - FMT

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