Lawyers cannot claim legal fees from frozen funds, rules court

The Court of Appeal has ruled that the government can recover RM398,000 from a legal firm.

PUTRAJAYA: The Court of Appeal today ruled that lawyers who represent clients in anti-money laundering cases are not entitled to claim their legal fees from funds frozen by the authorities.

A three-member bench chaired by Kamaludin Md Said said lawyers and their legal firms were not bona fide claimants to secure payments from funds declared as illegal proceeds.

As a result, the government could recover RM398,722 from legal firm Messrs Wan Shahrizal, Hari & Co within 14 days.

“The money is from unlawful proceeds. Legal firms and lawyers are not bona fide claimants,” Kamaluddin said in allowing the prosecutor’s appeal.

Sitting with him were Nordin Hassan and Hadhariah Syed Ismail.

This ruling runs contrary to another Court of Appeal decision on a similar issue that was decided in late 2017.

This bench need not follow the earlier ruling as the panel is of coordinate jurisdiction.

In this case, Amar Asyraf Zolkepli was arrested by police in June 2016 for alleged criminal activities and was later held under a preventive detention law.

Three months later, police obtained an order under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (AMLA) 2001 to freeze Amar’s assets believed to have been derived through unlawful activities.

The legal firm later applied to court to appear as a bona fide third party to make claims for unpaid legal fees.

The Temerloh High Court in 2018 allowed the claim by the legal firm.

Today, deputy public prosecutor (DPP) Mohd Dusuki Mokhtar submitted that the lawyer or his legal firm had no legal interest in the forfeited property.

“The lawyer can only sue the client to recover the fees for work done,” said Dusuki, who was assisted by DPP Zaki Asyraf Zubir.

Dusuki said if the High Court ruling remained, then professionals such as lawyers and accountants could make claims from such proceeds.

Lawyer Muhammad Rafique Rashid Ali, who represented the legal firm, submitted that Section 61 of AMLA stated that a bona fide third party could have money “returned to them”.

”For the lawyers, a strict interpretation of the provision will mean a violation of their livelihood under Article 5(1) of the Federal Constitution,” he argued.

Rafique said Section 61 must therefore be interpreted harmoniously with Article 5 (1).

He further submitted that the accused persons charged with anti-money laundering offences would also be deprived of a lawyer of their choice, a right enshrined under Article 5 (3).

Rafique told FMT he had obtained instruction to file an appeal in the Federal Court as today’s ruling had a far reaching impact on lawyers who appeared for clients in AMLA cases.