“[D]isqualification is not imposed as a punishment for misconduct of the solicitor but rather is a protection for parties and wider interests of justice because the legitimacy of judicial decision depends in large part on the observance of the standards of procedural justice.”
 
In China Construction Yangtze River (M) Sdn Bhd v Gold Mart Sdn Bhd (OS No. WA-24C-166-09/2021), having agreed with the legal principle stated above, the learned Judge, YA Dato’ Lim Chong Fong (“Judge”) found that Messrs Skrine (“the Firm”) had not placed itself in a position of embarassment or conflict of interest by acting for China Construction Yangtze River (M) Sdn Bhd (“Applicant”) in a setting aside application pursuant to section 15(b) of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) on grounds of denial of natural justice (“Setting Aside Application”), notwithstanding that there was a meeting between the Firm and Gold Mart Sdn Bhd (“Respondent”) and certain documents were provided to the Firm for the purpose of providing a fee quote for the adjudication proceedings.
 
Background facts
 
In May 2020, Mr. Z of Messrs Chee Siah Le Kee & Partners (“CSLK”), on behalf of the Respondent, contacted one of the lawyers from the Firm (“Relevant Lawyers”) requesting for a fee quote for the conduct of the adjudication proceedings. Pursuant to this, a meeting was fixed to obtain information and provide a quote for the conduct of the adjudication proceedings. Prior to the meeting, the Respondent forwarded the adjudication papers comprising the payment claim, payment response and notice of adjudication to the Relevant Lawyers.
 
On 22 May 2020, a virtual meeting was held between the Relevant Lawyers, the Respondent’s representative and lawyers from CSLK. During the aforesaid meeting, there were discussions between the Relevant Lawyers, Mr. Z and the Respondent on several aspects of the dispute, the contents of which were recorded by way of handwritten notes by Mr. Z (“Minutes”). After the meeting, the Relevant Lawyers confirmed and summarised the instructions received from the Respondent and requested for additional documents from the Respondent. Subsequently, the Relevant Lawyers were informed by Mr. Z that the Respondent will not be engaging the Firm for the conduct of the adjudication proceedings. The Relevant Lawyers did not receive the additional documents they had requested for. The Firm also did not act for the Applicant in the adjudication proceedings.
 
In 2021, the Applicant engaged the Firm for the Setting Aside Application which was filed on 24 September 2021.
 
The Respondent’s Disqualification Application
 
On 8 November 2021, the Respondent applied to disqualify the Firm from representing the Applicant in the Setting Aside Application (“Disqualification Application”) on grounds, inter alia, that the Firm is: 

In opposing the Disqualification Application, the Applicant submitted, inter alia, that there is no former solicitor-client relationship or fiduciary relationship between the Respondent and the Firm since neither the Firm nor any lawyer from the Firm was engaged and/or retained by the Respondent at all material times.
 
The Applicant also submitted that the Respondent has not demonstrated to the Court that the Firm is in possession of confidential information adverse to the Respondent in the Setting Aside Application as the documents and/or information provided to the Relevant Lawyers are irrelevant and will not prejudice the Respondent in the Setting Aside Application.
 
Decision of the Court
 
The Judge agreed with both parties that the law relating to disqualification and recusal is as set out in the recent Court of Appeal decision of Dato’ Azizan bin Abdul Rahman & Ors v Pinerains Snd Bhd [2022] 1 MLJ 56 (“Dato’ Azizan”), and applied the same, as summarised below: 

First Principle
 
The Judge held that the existence of a solicitor-client relationship will generally arise when there was indeed a retainer of the solicitor with payment of the fees. However, this is not mandatory but is dependent on the nature and purpose of the encounter between the solicitor and client or even potential client. Referring to Darshan Singh Khaira v Majlis Peguam Malaysia [2021] 10 CLJ 497, the Judge noted that even a single or isolated act in carrying out a function as an advocate and solicitor such as giving legal advice and counsel to others as to their rights and obligations under the law consitutes pracitising law in the context of a disciplinary action against advocates and solicitors and hence, is fact-sensitive in each case.
 
Based on the meeting dated 22 May 2020 and the related events which transpired, the Judge concluded that there had been a solicitor-client relationship between the parties notwithstanding there was no consequential appointment of the Firm to act for the Respondent and no payment of fees by the Respondent accordingly.   
 
Second Principle
 
In relation to the possession of confidential information, the Judge noted that it is not only the possession of confidential information per se but also the relevance particularly the prejudice or adverse effect of the knowledge of them would have against the Respondent in the Setting Aside Application that counts.
 
The Judge held that the Respondent failed to satisfy the Second Principle on, inter alia, the following grounds: 

Third Principle
 
Based on the above findings, the Judge found that the Respondent had not made out a strong case to disqualify or recuse the Firm pursuant to the Third Principle prescribed in Dato’ Azizan.
 
Allegation on breach of the Rules
 
The learned Judge also held that the Firm did not contravene the Rules as alleged by the Respondent.
 
Confidentiality of adjudication
 
The Respondent also relied on section 20 of the CIPAA in support of its argument that prior to the filing of the Setting Aside Application, the particulars of the matter were not readily available in the public domain. Section 20 of CIPAA provides for the confidentiality of adjudication i.e. that parties to adjudication shall not disclose any statement, admission or document made or produced for the purposes of adjudication save for the exceptions set out therein. In this regard, the Judge held that section 20 of the CIPAA is not relevant on the facts because the Firm has not disclosed the confidential information in its possession to third parties.
 
For the reasons mentioned above, the Respondent’s Disqualification Application was disallowed.
 
Comment
 
This decision is important as it develops the principles on disqualification of advocates and solicitors in Malaysia. In this regard, whether there exists a solicitor-client relationship is fact-sensitive to each case and such a relationship may arise depending on the nature and purpose of the encounter between the solicitor and client or even potential client, notwithstanding there is no payment of fees by the potential client.
 
As noted by the learned Judge, the test on whether a solicitor-client relationship arises may be onerous on solicitors who in reality, prior to their appointment to act, are often constrained to give some preliminary advice at the introductory meeting with the potential client that may in bad faith be abused by clients to attempt to disqualify the solicitors to act for the adversary party.  
 
However, legal firms and practising lawyers alike will find solace in the fact that the onus is on the party seeking disqualification to place before the Court the purported confidential information and to demonstrate how disclosure of the same to the legal firm sought to be disqualified could adversely affect the interest of the party seeking disqualification in the proceedings in question. This remains a high hurdle.
 
The Applicant, China Construction Yangtze River (M) Sdn Bhd, was represented by our Partner Loshini Ramarmuty and Associate, Jeremiah Ch’ng Khoo Ern.