Court stays order over RM1.55mil fee agreement between law firm, 203 investors

Last month, the Kuala Lumpur High Court ruled that the agreement between the law firm and the investors had not been fairly obtained and contained unreasonable terms. KUALA LUMPUR: The High Court has stayed an order setting aside a law firm’s RM1.55 million fee agreement with 203 investors, pending the outcome of the firm’s appeal to the Court of Appeal.

Michelle Wong, who represented Messrs Jerald Gomez & Associates, confirmed the matter.

Jared Tee, who represented the investors, did not object to the stay application, without admitting to the affidavit filed in support.

In seeking a stay, the law firm said its appeal raised substantial legal questions about the validity and enforceability of the terms of engagement signed on Jan 16, 2024.

The investors had engaged the firm to pursue legal action after suffering substantial losses in an investment scheme associated with MYAirline co-founder Goh Hwan Hua.

The firm said the hourly rates and billing arrangements had been disclosed and discussed before the agreement was signed. It said the investors had subsequently acknowledged the arrangement, approved all 18 bills without objection, and settled 16 of them.

The firm questioned whether the High Court was correct in setting aside the agreement and ordering all 18 bills to be taxed, or assessed, including the 16 already approved and paid for, as well as two unpaid bills that it was not pursuing.

It argued that taxation could render the appeal nugatory if the Court of Appeal later ruled that the bills were not open to taxation under the Legal Profession Act 1976.

The firm said RM1,245,825 had been paid towards the bills, and recovering any refund from more than 200 claimants, should the appeal succeed, would be difficult.

It also cited the time and expense involved in reconstructing archived files and locating former personnel and witnesses for the taxation process.

It said a stay would preserve the status quo and avoid unnecessary costs and practical difficulties before the appeal was decided.

On Sept 11, judicial commissioner Nixon Kennedy Kumbong ruled that the agreement between the law firm and the investors had not been fairly obtained and contained unreasonable terms.

He also ordered the firm's 18 legal bills, totalling RM1,549,650, to be taxed, or formally assessed, as if no fee agreement existed.

The firm was directed to refund any excess payment within 30 days of the certificate of taxation being issued.

Nixon had found that the investors had established grounds under Section 118 of the Legal Profession Act 1976 to set aside the agreement. He also ruled that its alternative dispute resolution clause contravened the provision.