Aborted Transaction Fees Under SRO 2023: What Malaysian Lawyers Can Charge

The vendor pulls out three weeks before completion. The purchaser’s solicitor has done most of the work — title searches, SPA drafting, stamping, CKHT preparation, the consent application to the state authority. The only things left are the balance payment and registration.

The purchaser, understandably frustrated, tells the solicitor: “I am not paying your full fee. The deal did not go through. Why should I pay for something that did not happen?”

This scenario — and the difficult conversation that follows — is one of the most common points of friction in Malaysian conveyancing practices. The Solicitors Remuneration Order 2023 addresses it directly in Rule 5 of the Sixth Schedule, but the rule is shorter than the complications it creates.

The Rule Itself

Rule 5 of the Sixth Schedule states:

Where a transaction is terminated, not completed or not concluded for any reason whatsoever, the fee shall not exceed 50% of the applicable scale fee, subject to the specified minimum.

The “for any reason whatsoever” language is absolute. It does not matter whether the transaction was aborted by the vendor, the purchaser, the bank, or circumstances beyond anyone’s control. The 50% cap applies regardless of fault.

But the rule continues:

If the work is fully or substantially performed, the solicitor may charge the full scale fee.

This exception is where most of the practical difficulty lies.

What Counts as “Fully or Substantially Performed”?

SRO 2023 does not define “substantially performed.” There is no percentage threshold, no checklist of milestones, and no Bar Council ruling that draws a bright line between “substantially” and “not substantially.”

What practitioners can work with is the nature of conveyancing work itself. A standard sub-sale transaction involves a sequence of identifiable steps:

1. SPA preparation and execution — drafting, negotiation, execution by both parties
2. Stamping — adjudication and payment of stamp duty on the SPA
3. Searches — title search, bankruptcy search, company search (if applicable)
4. Consent applications — state authority consent for transfer or charge (if required)
5. CKHT preparation — filing of Real Property Gains Tax forms
6. Transfer/charge document preparation — Form 14A, memorandum of transfer, or deed of assignment
7. Registration — presentation at the land office or registry
8. Completion — balance payment and release of keys/vacant possession

If a solicitor has completed steps 1 through 6 and the transaction aborts just before registration, that is a strong case for “substantially performed.” The intellectual work, the regulatory filings, and the document preparation are done. What remains is administrative completion.

If a solicitor has completed only step 1 — the SPA is signed but nothing else has started — and the transaction aborts, the 50% cap is the more appropriate measure.

The grey area lies in between. A solicitor who has completed the SPA, stamping, and searches but has not yet started the consent application or transfer documents occupies middle ground. Whether that constitutes “substantial performance” depends on the specific circumstances — which is why documentation matters.

Who Bears the Cost?

This was one of the most-discussed questions at the CPD talk, and the answer is simpler than most people expect.

Generally, each party bears their own solicitor’s fees unless otherwise agreed or stated in the SPA.

The purchaser pays the purchaser’s solicitor. The vendor pays the vendor’s solicitor. The bank pays the bank’s solicitor. If the transaction aborts because the vendor defaults, the purchaser’s solicitor still looks to the purchaser for the fee — not the vendor.

This surprises many clients, and it is the source of the “why should I pay” conversation. The solicitor’s contractual relationship is with their own client, not the other party. The vendor’s default may give the purchaser a cause of action against the vendor (for damages, forfeiture of deposit, etc.), and the purchaser’s legal fees incurred in the aborted transaction might form part of a claim for damages — but the solicitor’s fee is owed by the client, not the defaulting counterparty.

The practical implication for SPA drafting: if you want to allocate aborted-transaction legal costs to the defaulting party, that allocation should be written into the SPA. Without it, each party bears their own costs, and the solicitor must look to their own client.

Common Scenarios

Buyer cannot obtain financing. The bank declines the loan. The SPA’s financing clause triggers, and the transaction is terminated. The purchaser’s solicitor has done SPA work, searches, and possibly started the loan documentation. Fee: up to 50% of the applicable scale fee, unless substantial work was completed.

Vendor defaults. The vendor refuses to complete, or is unable to deliver vacant possession or clear title. The purchaser’s solicitor may have done significant preparatory work. Fee: up to 50%, or full fee if work was substantially performed. The purchaser may have a separate claim against the vendor for damages (including the legal fees incurred).

Bank declines at a late stage. The loan was approved in principle, the solicitor prepared the charge documents, the stamping was done — and then the bank’s credit committee reverses the approval. This is a strong “substantially performed” scenario for the bank’s solicitor.

Purchaser walks away after SPA is signed. The purchaser simply changes their mind. The vendor forfeits the deposit per the SPA terms. The vendor’s solicitor and the purchaser’s solicitor each look to their own client for fees. The purchaser’s solicitor applies Rule 5.

Mutual termination. Both parties agree to call it off. Each solicitor applies Rule 5 to their own client.

Interaction with Order 4 — Special Exertion

Order 4 of SRO 2023 allows a solicitor to charge additional remuneration for special exertion where business is required to be carried through in an exceptionally short space of time.

What happens if the transaction involved special exertion — the solicitor worked over a weekend to meet an urgent deadline — and then the transaction aborts?

The SRO does not address this intersection explicitly. Rule 5 caps fees at 50% of the “applicable scale fee.” The special exertion fee under Order 4 is additional remuneration — it sits on top of the scale fee, not within it.

A reasonable reading: the 50% cap applies to the scale fee portion. The special exertion fee, being a separate head of remuneration, is assessed on its own merits — the solicitor did the urgent work, expended the time and effort, and the value of that exertion does not disappear because the transaction was subsequently aborted. But this is an area without definitive ruling, and firms should document the special exertion agreement separately from the standard fee quotation to preserve the argument.

Interaction with Section 114 LPA Agreements

Section 114 of the Legal Profession Act 1976 allows solicitors to make written agreements on remuneration for non-contentious business, provided the agreed fee is not lower than the SRO prescribed fees.

If a solicitor has a section 114 agreement with the client setting fees at, say, RM15,000 for a transaction where the SRO scale fee would be RM12,000 — and the transaction aborts — does Rule 5’s 50% cap apply to the section 114 agreed fee (RM7,500) or the SRO scale fee (RM6,000)?

Rule 5 refers to “50% of the applicable scale fee.” A section 114 agreement does not change the scale fee — it changes what the solicitor charges, which may be higher. The 50% cap should logically apply to the SRO scale fee, not the section 114 premium.

However, the section 114 agreement itself may contain its own provisions for aborted transactions. A well-drafted section 114 agreement should address what happens on termination — and those terms, provided they do not result in a fee lower than the SRO minimum, should govern.

The takeaway: if your firm uses section 114 agreements, include an aborted-transaction clause. Do not leave it to a dispute about whether Rule 5 overrides the agreement.

Practical Advice for Firms

The best time to handle an aborted transaction fee is before the transaction aborts.

Set expectations in the letter of engagement. Explain to the client upfront that if the transaction does not complete, fees will still be payable under Rule 5 of the Sixth Schedule — up to 50% of the scale fee, or the full fee if work is substantially performed. A client who understands this from day one is far less likely to resist the fee when the situation arises.

Document work milestones. Keep a record of what was completed and when. SPA signed — date. Stamping done — date. Searches completed — date. Consent application filed — date. This contemporaneous record is your evidence of “substantially performed” if the question arises later.

Keep time records even for fixed-fee work. SRO fees are not time-based, but time records serve a different purpose in an aborted transaction: they demonstrate the effort actually expended. A firm that can show 40 hours of documented work on a transaction that aborted at the registration stage has a stronger “substantially performed” argument than one that can only point to the existence of documents in the file.

Use your conveyancing workflow system to track milestones automatically. If your practice management system records task completion dates as matters progress through the conveyancing workflow, you have the audit trail built in — no manual logging required.

Quote the aborted-transaction scenario in the fee quotation. When issuing a quotation using the SRO 2023 fee calculator, consider adding a line that states the Rule 5 fee in the event of non-completion. This removes ambiguity and sets the client’s expectation at the quotation stage, not the dispute stage.

The Rules Referenced in This Article

All of the following are published by the Malaysian Bar. Where your firm’s position turns on a point of compliance, read the rule itself and take your own professional advice — this article is an educational overview based on a CPD talk, not legal advice.

• Solicitors Remuneration Order 2023 — full text (PDF)
• SRO 2023 hub page — Malaysian Bar
• BC Circular 295/2023 — revised guidelines on waiver of fees (PDF)