Wednesday, May 22, 2024
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Lawyer to pay former client over BND3M for breach of duties

The High Court recently delivered a landmark decision on a civil suit involving over BND3 million in awards, in a dispute between a company and a legal counsel.

A local bank provided the company, the first defendant, with financing and one of its directors, Yang Amat Mulia Pengiran Maharaja Setia Laila Diraja Sahibul Irshad Pengiran Anak Dato Laila Utama Pengiran Haji Abdul Rahim bin Pengiran Indera Mahkota Pengiran Anak Kemaludin Al-Haj (YAM), the second defendant, had signed the personal continuing guarantee document presented to him by Ridzlan Haji Ibrahim, a practicing lawyer in Brunei Darussalam, who is the second third party in the action and who was also a close personal friend of YAM.

The company defaulted on the repayment of the financing and the bank claimed against the first and second defendants for the sum of BND3,520,430.28.

YAM, represented by lawyer Haji Muhammad Zainidi bin Haji Abdul Hamid of messrs ZS Legal, settled the claim with the bank in 2022 and commenced the third party action against Ridzlan. The basis of YAM’s claim is that Ridzlan was his trusted friend and legal advisor and he relied on his advice in his business dealings and relied on him to protect his interest and that Ridzlan had breached his duty of care and failed to advise him properly before YAM signed the guarantee documents.

Representing himself, Ridzlan’s defence was that there was no lawyer, client relationship between the parties as there was no formal appointment of him as YAM’s legal counsel and as YAM was a seasoned businessman and therefore knew the legal effect of the documents he signed. Furthermore, YAM had other advisers.

PHOTO: FREEPIK

During the trial, a letter written by Ridzlan to YAM was adduced in evidence and in the letter, Ridzlan stated that he had rendered legal services to YAM for a period of 10 years, showing the existence of a lawyer/client relationship.

Judicial Commissioner Edward Timothy Starbuck Woolley considered a Singaporean judgement, where it was previously held that “the giving of advice is itself part of the duty under an implied retainer.

“If a solicitor gives advice to a third party, there is a strong inference that the solicitor and the third party had regarded themselves as being in some kind of contractual relationship”.

In the landmark judgement, having heard and seen the evidence presented before him by YAM and Ridzlan, the judicial commissioner found that an implied retainer existed between the parties as there was a relationship of trust and found that YAM had relied on Ridzlan’s legal knowledge and advice.

As an implied retainer exist, Ridzlan had to advise YAM on the legal implication of signing the guarantee and the liability that YAM would incur in the event the company defaulted in the re-payment of the financing. The judicial commissioner found that Ridzlan did not advise YAM on this and found that Ridzlan was in breach of his duty of care to YAM.

Further, the judicial commissioner also found that Ridzlan had exercised undue influence over YAM which Ridzlan did not deny and had also found that Ridzlan had mispresented to YAM about the guarantee and gave information to YAM which Ridzlan knew was incorrect and inaccurate and was clearly intended to persuade YAM to sign and because of the signing, YAM had suffered damages by being sued by the bank and paying the settlement.

Ridzlan was ordered to pay a sum of BND3,060,999.79, which was the amount YAM had to pay to the bank as well as the cost of the legal proceedings. – Fadley Faisal

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