General Electric International Inc v 1. Mohanjit Lubana (Permohonan Semakan Kehakiman No. WA-25-135-08/2016)

(15)/4-86/14, Awad Mahkamah Perusahaan No. 517 Tahun 2016 yang bertarikh 28 April 2016 yang diterima pada 6 Mei 2016 Dan Dalam Perkara Akta Perhubungan Perusahaan 1967 Dan Dalam Perkara mengenai Aturan 63 Kaedah-Kaedah Mahkamah 2012 Dan Dalam Perkara mengenai Jadual 1, Akta Mahkamah Kehakiman, 1964 ANTARA GENERAL ELECTRIC INTERNATIONAL INC … PEMOHON DAN 2

1.

MAHKAMAH PERUSAHAAN MALAYSIA … RESPONDEN-RESPONDEN Grounds of Decision Azizah Nawawi, J: Application [1] This is the applicant’s application for judicial review, seeking the following orders from the Court;

An order of Certiorari to quash the decision of the 2nd respondent through the Award dated 28.4.2016, which was received by the applicant on 6.5.2016; and

(ii) An order for all further proceeding to enforce or execute the Award dated 28.4.2016 and all proceeding in the Industrial Court’s suit to be stayed pending the final decision by the Court for the substantive application; [2] The grounds of the application are as follows:

That the 2nd respondent (the “Industrial Court”) has erred in law and/or failed to take into account the relevant considerations in its decision making process; 3

(ii) That the Industrial Court has failed to take into account the applicant’s managerial prerogative to reorganize, restructure and redistribute business;

(iii) That the Industrial Court has failed to take into account that when the sole position of “General Manager Industrial Solutions Rest of Asia/Pacific Asia” was created, the original position of the 1st respondent in Malaysia was abolished and no longer existed as the said position was based in Australia;

(iv) The Industrial Court has failed to take into account that there is an accepted principle in law wherein an employer may terminate the services of its employee on the basis that the employees are a surplus if it can be demonstrated that lesser employees are required to do the same amount of work; and

That the Industrial Court has erred when it decided that the dismissal of the 1st respondent was done mala fide without any evidence. [3] Having considered the application and the submission of the parties, this Court has allowed the application with costs. 4 The Salient Facts [4] The 1st respondent is an American citizen who had commenced employment with the applicant as the ASEAN Regional Industrial Leader with GE Solutions in Malaysia with effect from 1.6.2010. [5] Sometime around 21.2.2013, the 1st respondent was informed that due to the global simplification effort, the applicant had decided to combine Australia and South-East Asia to form the Rest of Asia (the “ROA”) business unit, resulting in making the 1st respondent’s role to be redundant. [6] The 1st respondent was also informed that he was eligible to apply for vacant positions within the applicant but any applications made will be subject to a normal selection process. In the event that the 1st respondent fail to secure an alternative role, the 1st respondent’s employment contract will be terminated with effect from 20.3.2013. [7] The 1st respondent subsequently failed to secure an alternative role within the applicant. The applicant paid a sum of RM222,812.03 inclusive of all contractual dues together with a redundancy package to the 1st respondent. [8] The 1st respondent filed a complaint with the Ministry of Human Resources and the Minister then referred the dispute to the 2nd respondent, the Industrial Court for adjudication. 5 [9] The Chairman of the 2nd respondent handed down an Award on 28.4.2016 and the applicant’s solicitors received the Award on 6.5.2016. The Industrial Court ruled that there was no actual redundancy situation to justify the 1st respondent’s dismissal. [10] Through the Award, the 2nd respondent had ordered the applicant to pay the 1st respondent the sum of RM1,031,999.97 less statutory deductions, if any. [11] Hence, the applicant proceeded to file this application for judicial review on 5.8.2016 to challenge the decision of the Industrial Court. The Findings of the Court [12] The Federal Court in Ranjit Kaur S Gopal Singh v. Hotel Excelsior (M) Sdn Bhd [2010] 8 CLJ 629 has set out the function of this Court in an application for Judicial Review and the correct test to be applied in reviewing findings of fact made by the Industrial Court, to be as follows: “[15] …… Historically, judicial review was only concerned with the decision making process where the impugned decision is flawed on the ground of procedural impropriety. However, over the years, our courts have made inroad into this field of administrative law. Rama Chandran is the mother of all those cases. The Federal Court in a landmark 6 decision has held that the decision of inferior tribunal may be reviewed on the grounds of "illegality", "irrationality" and possibly "proportionality" which permits the courts to scrutinize the decision not only for process but also for substance. It allowed the courts to go into the merit of the matter. Thus, the distinction between review and appeal no longer holds. [16] The Rama Chandran decision has been regarded or interpreted as giving the reviewing court a license to review without restrain decisions for substance even when the said decision is based on finding of facts. However, post Rama Chandran cases have applied some brakes to the courts' liberal approach in Rama Chandran. The Federal Court in the case of Kumpulan Peransang Selangor Bhd v. Zaid Mohd Noh [1997] 2 CLJ 11 after affirming the Rama Chandran decision held that there may be cases in which for reason of public policy, national interest, public safety or national security the principle in Rama Chandran may be wholly inappropriate. [17] The Federal Court, in Petroliam Nasional Bhd v. Nik Ramli Nik Hassan [2003] 4 CLJ 625, again held that the reviewing court may scrutinise a decision on its merits but only in the most appropriate of cases and 7 not every case is amenable to the Rama Chandran approach. Further, it was held that a reviewing judge ought not to disturb findings of the Industrial Court unless they were grounded on illegality or plain irrationality, even where the reviewing judge might not have come to the same conclusion. [18] The Court of Appeal has in a number of cases held that where finding of facts by the Industrial Court are based on the credibility of witnesses, those findings should not be reviewed (see William Jacks & Co (M) Sdn BHd v. S Balasingam [1997] 3 CLJ 235, National Union of Plantation Workers v. Kumpulan Jerai Sdn Bhd (Rengam) [2001] 1 CLJ 681, Quah Swee Khoon v. Sime Darby Bhd [2001] 1 CLJ 9, Colgate Palmolive (M) Sdn Bhd v. Yap Kok Foong & Another [2001] 3 CLJ 9. However, there are exceptions to this restrictive principle where:

reliance upon an erroneous factual conclusion may itself offend against the principle of legality and rationality, or

there is no evidence to support the conclusion reached. 8 (See Swedish Motor Assemblies Sdn Bhd v. Hj. Md Ison Baba [1998] 3 CLJ 288 ]. [19] It is clear from the above authorities that the scope and ambit of Rama Chandran had been clearly explained and clarified. Decided cases cited above have also clearly established that where the facts do not support the conclusion arrived at by the Industrial Court, or where the findings of the Industrial Court had been arrived at by taking into consideration irrelevant matters, and had failed to consider relevant matters into consideration, such findings are always amendable to judicial review”. (emphasis added) [13] Bearing the principles enunciated in Ranjit Kaur’s case, I will now deal with the core issue raised by the applicant, that is, whether there is actual redundancy which necessitates the 1st respondent to be retrenched. If the answer is no, then the 1st respondent is dismissed without just cause and should be compensated. [14] The applicant submits that the relevant case on the issue of redundancy is E.R Sutton v. Revlon Overseas Corporation Ltd [1973] 1 RLR 173, where the English National Industrial Relations Court has held as follows: 9 “Under s. 1(2)(b) of the Redundancy Payments Act 1965, the requirements of a business for employees to carry out work of a particular kind can diminish in two ways. The work itself may cease or diminish, alternatively a reorganization or mechanization may enable the same works to be done by fewer employees. This is true of the present case. The reorganization of the Respondent’s business was such that its requirement for a separate and additional employee to carry out the work of a chief accountant had ceased and because the whole of the duties previously performed by the Appellant was absorbed by the remaining staff and not taken over by someone from outside, the Tribunal had rightly held that the employee’s dismissal fell within the definition of redundancy.” (emphasis added) [15] Therefore, the applicant submits that in this case the applicant had made a business decision to combine Australia and South East Asia business to form Rest of Asia (“ROA”) in order to be more efficient and competitive globally. The consolidated role was moved out of Malaysia and resided in Australia. The new consolidated post in Australia was held by George Gerdan in Melbourne, Australia. [16] Therefore, premised on E.R Sutton’s case, which had been applied in various Malaysian cases, namely Lim Yu Chee v. Staedtler Marketing Sdn Bhd [2011] 2 LNS 1638; Senjuang Sdn Bhd v. 10 Munirah Mad Nor [2015] ILR 471; Jupiter Securities Sdn Bhd v. Edmund Chang [2009] 2 LNS 57; Jupiter Securities Sdn Bhd v. Mohammad Mustapha Mohd Ariffin [2008] 2 LNS 849; Tuan Syed Hashim Bin Tuan Long v. Esso Production Malaysia Inc. [1997] 1 LNS 99; the applicant submits that there is redundancy as there had been a consolidation of the Australia and South East Asia business to form the ROA based in Melbourne, Australia. Added to that there is no replacement of the position of the 1st respondent in Malaysia by anyone. [17] However, the 1st respondent relied on the decision of the Federal Court in Dynacraft Industries Sdn Bhd v. Kamaruddin bin Kana Mohd Sharif & Ors [2012] 9 CLJ 21; [2012] 6 MLJ 453, which held that redundancy was not proven where the claimant’s job functions were taken over by other employees: “[41] We cannot accept that submission made on behalf of the appellant. As found by the learned High Court judge, the evidence of Chow Heng Khow and Ch'ng Beng Tatt were not challenged by the appellant. Chow Heng Khow's evidence shows that upon his dismissal, his job was taken over by Ann Lin (Cow2). In respect of Ch'ng Beng Tatt, upon his dismissal his job functions were taken over by Bill Fulton assisted by the engineer YF Yap. Consequently, the Court of Appeal held (and in our view rightly) that with the unchallenged evidence of Chow Heng Khow and Ch'ng Beng Tatt that their respective jobs 11 and workload were taken over by two other employees, and not eliminated or extinguished, redundancy was not proven, as mere reorganisation was insufficient to justify their retrenchment which was correctly held to be without just cause or excuse. In this regard in Bayer (M) Sdn Bhd v. Ng Hong Pau [1999] 4 CLJ 155, Shaik Daud JCA speaking for the Court of Appeal said at p. 160: “On redundancy it cannot be gainsaid that the appellant must come to the court with concrete proof. The burden is on the appellant to prove actual redundancy on which the dismissal was grounded. (See Chapman & Others v. Goonvean & Rostawvack China Clay Co. Ltd. [1983] 2 All ER). It is our view that merely to show evidence of a re-organization in the appellant is certainly not sufficient. There was evidence before the court that although sales were reduced, the workload of the respondent remained the same. After his dismissal his workload was taken over by two of his former colleagues. Faced with these evidence, is it any wonder that the court made a finding of fact that there was no convincing evidence produced by the appellant that the respondent's functions were reduced to such an extent that he was considered redundant.” 12 [18] The 1st respondent then submits that by correctly applying Dynacraft’s case, the Industrial Court has held that the applicant has failed to prove actual redundancy as the duties and responsibilities of the 1st respondent had been taken over by George Gerdan, as can be seen from paragraph 36 of the Award: “The Company failed to prove actual redundancy in this case. From the evidence adduced, the Court finds that there was no actual redundancy situation to justify the Claimant’s dismissal. The evidence adduced by the Respondent merely showed that the duties and responsibilities of the Claimant had been taken over by George Gerdan and the Claimant’s duties and responsibilities had not ceased or diminished. The evidence adduced before the Court shows that the Industrial Solution Department in Malaysia did not close down. The Court is inclined to agree with the Claimant’s submission that the Company’s decision to reorganize and to combine Australia and South East Asia as one unit did not lead to the cessation or elimination of the duties and responsibilities of the Claimant of the ASEAN Regional Industrial Leader of the Industrial Solutions Department. On the contrary, the submissions of the Respondent that a genuine redundancy situation did arose albeit that Claimant’s role was ultimately absorbed into the much larger role of General Manager ROA are without merits. The facts do not show that the 13 kind of work the Claimant was assigned to neither ceased or diminished as the Company had assigned the Claimant’s duties and responsibilities to George Gerdan. In the circumstances, the Respondent failed to prove actual redundancy which necessitated the Claimant’s retrenchment.” (emphasis added) [19] The Industrial Court has made a finding of fact that the duties and responsibilities of the 1st respondent had not ceased or diminished but had been taken over by George Gerdan. But George Gerdan is not based in Malaysia, but in Melbourne, Australia. Therefore, for all intent and purpose, the duties and responsibilities of the 1st respondent no longer exists in Malaysia, but had been consolidated into the ROA, based in Melbourne, Australia. [20] In Dynacraft’s case, the duties and responsibilities of the claimants were taken over by other persons, within Malaysia. There is no issue in that case that the duties and responsibilities of the claimants were consolidated into a bigger role and moved overseas. [21] Therefore, I am of the considered opinion that as far as Malaysia is concern, the duties and responsibilities of the 1st respondent had ceased to exist. What happen is that as part of its global simplification effort, there is now a Rest of Asia (ROA) business unit based in Melbourne, Australia. The ROA unit is a combination of the SEA region and Australia. The evidence of applicant’s witnesses is that nobody in Malaysia had taken the duties and responsibilities of 14 the 1st respondent in Malaysia. Added to that, the job scope of General Manager, ROA is wider as it encompasses not just ASEAN region but includes Australia as well. Further, the ASEAN job focus mainly on commercial, whereas Australia has manufacturing and service workshop. [22] In the premise, I am of the considered opinion that the Industrial Court has failed to take a relevant consideration, namely that the duties and responsibilities of the 1st respondent had ceased to exist in Malaysia, thereby causing redundancy in Malaysia leading to the retrenchment of the 1st respondent and was paid retrenchment benefits. The applicant’s application is allowed with cost and the said Award is hereby quashed. (AZIZAH BINTI HAJI NAWAWI) JUDGE HIGH COURT MALAYA (Appellate and Special Powers Division 2) KUALA LUMPUR Dated: 23 May 2018 For the Applicant : Yong Hon Cheong Messrs Zaid Ibrahim & Co. Kuala Lumpur. For the 1st Respondent: S. Muhendaran / K. Shankar Messrs Shaharudin Sham Sunder & Partners Kuala Lumpur. 15 Cases referred:

Ranjit Kaur S Gopal Singh v. Hotel Excelsior (M) Sdn Bhd [2010] 8

E.R Sutton v. Revlon Overseas Corporation Ltd [1973] 1 RLR 173.

Lim Yu Chee v. Staedtler Marketing Sdn Bhd [2011] 2 LNS 1638.

Senjuang Sdn Bhd v. Munirah Mad Nor [2015] ILR 471.

Jupiter Securities Sdn Bhd v. Edmund Chang [2009] 2 LNS 57.

Jupiter Securities Sdn Bhd v. Mohammad Mustapha Mohd Ariffin [2008] 2 LNS 849.

Tuan Syed Hashim Bin Tuan Long v. Esso Production Malaysia Inc. [1997] 1 LNS 99.

Dynacraft Industries Sdn Bhd v. Kamaruddin bin Kana Mohd Sharif & Ors [2012] 9 CLJ 21; [2012] 6 MLJ 453.