12 August 2016, by Shafiq Sobri, Jardine Lloyd Thompson Sdn Bhd
In 2012, Mark appointed John Doolittle of Messrs Doolittle & Associates, the Insured Practice (“IP”) to commence a bankruptcy proceeding against Lisa to enforce the Summary Judgment entered against her in 2006. Nonetheless, after the Receiving Order and Adjudication Order (“ROAO”) were received, Mark instructed the IP to make an application to withdraw the Orders and retract the Creditors Petition with the liberty to file afresh due to some errors in the Bankruptcy Notice.
Subsequently in 2014, Mark instructed the IP to file a fresh Bankruptcy Notice against Lisa. This was the second bankruptcy proceeding based on the same Summary Judgment obtained in 2006. However before the Creditors Petition was heard by the court, Mark instructed the IP to retract the petition for certain reasons. Mark instructed the IP to initiate another proceeding in 2015 against Lisa based on the second Bankruptcy Notice filed in 2014. Nevertheless, the third bankruptcy proceeding was annulled by the Senior Court Registrar since the IP did not obtain the court’s approval to initiate a proceeding to enforce the summary Judgmenet which had already lapsed for more than six months.
To put a stop to the bankruptcy proceedings initiated incessantly against her, Lisa filed a suit for damages and injunction against Mark and the IP from initiating further bankruptcy proceedings against her. Lisa claimed that the bankruptcy proceedings were an abuse of process and she had suffered losses since she had to pay for legal fees to her solicitor to represent her in all previous proceedings.
Of bankruptcy proceedings and the abuse of process
At all material time, leave from court was not required when the first and second bankruptcy proceedings were commenced although 6 years had already lapsed from the date of the judgment as per the Federal Court’s decision in
Perwira Affin Bank Berhad v Lim Ah Hee [2004] 2 CLJ 787.
[1]
However, the decision in
Perwira Affin Bank Berhad v Lim Ah Hee was overturned by the Federal Court in
Dr Shamsul Bahar Abdul Kadir v RHB Bank [2015] 4 CLJ 561. As such, the Creditor Petition filed by the IP in the third bankruptcy proceeding was struck off since leave was not obtained to commence the proceeding after 6 years from the judgment date.
Lawyers as officers of the court have an overarching duty to educate their clients about the court processes in the interest of promoting the public’s confidence in the administration of justice.
[2] This means that lawyers need to ensure that their clients are aware about the limits of the law and lawyer’s professional obligations to courts.
As such, lawyers need to perform a balancing act between honouring their fiduciary duties to their clients and respecting their duty to the court. This may minimise the risk of getting unnecessary claims or disciplinary actions for breaching the duty to the court.
[1] The court held that a bankruptcy proceeding is not a writ of execution within the meaning of O. 46 r 2 of the Rules of the High Court 1980. It is an action upon a judgment within the meaning of S. 6 (3) of the Limitation Act 1953. As such the limitation for bringing the action is 12 years.
[2] Robert Bell and Caroline Abela, A Lawyer's Duty To The Court, The Advocates’ Society<http://www.advocates.ca/assets/files/pdf/bibliography/Duty_to_Court.pdf >
Risk Management Best Practices:
- Lawyers should be mindful of the overarching duty to the court. Although lawyers owe fiduciary duties to their clients, a balancing act needs to be taken to avoid the risk of getting unnecessary claims from unsatisfied clients (or others) or disciplinary action for breaching the duty as a court’s officer.
- During the initial meeting or interview, discuss the strength of the case generally with the client. Advise the client on the potential of the case to manage their expectation.
- Explain the terms of the retainer agreement clearly and discuss about the roles, responsibilities and expectation with clients. This will ensure that clients fully understand about their rights and the limit in exercising those rights according to the law.
- Keep client updated with the progress of the case periodically. Follow up with a letter or email after every phone call on updated to ensure that there are records on the updates.
- Advice the client properly. If there are alternatives to settle the matter, inform the client and get the consent to proceed.
- Implement a “Follow-Up” or “Keep In View” (“KIV”) system to ensure all procedures are complied with. This would also assist lawyers to keep track on the progress of the matter or when the file is transferred to another lawyer.
- Observe limitation periods strictly. A quick glance on limitation periods could be found here.
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