Malaysia: What’s In A Name? Everything!

April 1st, 2013

 

In the case of Tai Foong Lam v Hamdi Abdullah & 3 Ors, the Malaysian Court of Appeal overturned the High Court’s decision of allowing Hamdi Abdullah and others to continue using the name of their dissolved partnership firm and allowed Tai Foong Lam’s appeal without costs.

Tai Foong Lam (hereinafter referred to as “the Appellant”) and Hamdi Abdullah and Vincent Chan Siew Onn (hereinafter collectively referred to as “the Respondents”) formed a partnership firm “Abdullah Chan & Co”. The partnership also comprised of Foo Joon Liang and Gan Khong Aik (hereinafter collectively referred to as “the Interveners”). The parties forming the partnership had not entered into any agreement or deed. After the partnership was dissolved, the Respondents had applied to practice under the name and style of “Abdullah Chan” to which the Appellant had objected in the High Court.

The Respondents had contested that being partners of the dissolved firm, they had the right to practice under the name “Abdullah Chan” which was also their surnames. The High Court had sided with the Respondents stating that since the firm “Abdullah Chan” had been dissolved by the court and that the Appellant and the Interveners had set up their own business under the name “Gan Associates”, no confusion would arise with the new firm “Abdullah Chan” set up by the Respondents. Subsequently, the High Court had allowed the Respondents to practice under the name and style of “Abdullah Chan” subject to the approval of the Bar Council and ordered the Respondents to notify all clients that the new firm of Abdullah Chan had no links with the dissolved firm. The High Court had also ordered for a Dissolution Committee to be formed to carry out the dissolution of partnership of Abdullah Chan.

The Appellants appealed the High Court’s decision in the Court of Appeal on the grounds that any goodwill earned by the now dissolved firm belonged to all five partners of the dissolved firm and in absence of any agreement to the contrary, no partner had the right to use the name. Further the Interveners filed a cross appeal contending that the High Court’s decision ought to be varied to the extent that the Respondents were at liberty to apply to practice under the name “Abdullah Chan” but not in the same style and manner as the name of the dissolved “Abdullah Chan” to ensure that there were sufficient distinguishing features between the two.

The Court of Appeal acknowledged that, upon dissolution, the Appellant and the Interveners had allowed the Respondents to practice under different permutations of “Abdullah Chan”; however, the Respondents had used the name “Abdullah Chan” in its unabridged and unaltered form.
The Court of Appeal conceded that goodwill includes the name of the partnership which normally forms part of its asset; therefore, in absence of an agreement between the partners, the goodwill belonged to all the five partners of the dissolved firm and not to any one individual partner.

The Court of Appeal concluded that the High Court neglected goodwill being a partnership asset and that the High Court’s decision offended the principle of the right of the other partners to have goodwill sold for the common benefit of all.

As a consequence, the Court of Appeal set aside the decision of the High Court and ordered that none of the partners were entitled to use the name of the dissolved partnership until and unless the process of the winding up of the affairs of the partnership was completed.