Guocera Tile Industries (Meru) Sdn. Bhd. v Tan Ching Wee (WA-25-337-10/2023)

1.

MAHKAMAH PERUSAHAAN, MALAYSIA …RESPONDEN– RESPONDEN

The 1st Respondent was dismissed on 18.1.2018 by the Applicant on a charge of having been in gross dereliction of duties and grossly negligent in preparing a Capital Expenditure Request for the company’s project. The project cost was found to have been grossly underestimated.

2.

On 13.7.2023, the Industrial Court handed an award in which it held the dismissal of the 1st Respondent to be without just cause or excuse. Consequent thereto, it ordered the Applicant to pay the 1st Respondent the sum of RM698,368.00.

Aggrieved at the decision of the Industrial Court, the Applicant now files the present judicial review proceedings seeking inter alia, an order of certiorari to quash the Industrial Court’s Award No. 1541 of 2023 dated 13.7.2023 and rectified on 28.7.2023. Key background facts

For ease of reference, the Applicant and the 1st Respondent will be referred to as the Company and the Claimant, as they were, in the Industrial Court.

The Claimant commenced employment with the Company in 1989 as a management trainee. Prior to his dismissal in 2015, he held the position of Production Plan Inventory Control, Purchasing and Manager of Energy Management and was drawing a salary of RM 14,080.00.

In his position, he was responsible for the plant at Meru and Kluang. His job functions included the following:

Planning and executing the schedule of tiles production;

(ii) Supervising and ensuring the production of tiles;

(iii) Liasing with marketing department on the quantity of production; and

(iv) Managing procurement.

On 2.10.2017, the Claimant was handed a suspension letter wherein he was suspended with immediate effect pending further notice.

He was subsequently informed by the Head of Human Resources to attend a meeting on 6.10.2017.

He presented himself at the said meeting as scheduled. At the meeting he was asked to explain on the cost for a project which had escalated from the approved budget of RM 2,510,110.00 to

The context of the said meeting is to be understood in the light of these relevant facts as follows:

In March 2014, the Company decided to embark on a modern Heat Recovery System Project (“the Project”) for both the Kluang and Meru plant as a cost savings measure. This was to be done in 3 stages; namely POS A, POS B and POS C. POS A and POS B are to be carried out by one vendor and POS C by a different vendor;

(ii) the Claimant was tasked with submitting the Project’s costing and timeline based on his experience and the information given by the suppliers;

(iii) An Italian company Poppi Clementino SpA (“Poppi”) was known to have expertise and experience in the heat recovery system. The Claimant approached Poppi to assess, measure and provide their data and specification for the Project. Poppi in turn visited both the plants to collect the necessary data. The Claimant attended to Poppi during these visits;

(iv) On 13.7.2015, Poppi submitted its proposal for the Kluang plant and on 7.7.2015 for the Meru plant;

The Claimant initiated the tender process on 7.7.2015. Three vendors were selected to bid for the project including

(vi) After the tenders were opened, the Claimant proceeded to negotiate the pricing with the vendors on 5.12.2015 and 4.2.2016;

(vii) On 25.2.2016, the Claimant prepared a tender review, recommendation and award form that compared and evaluated the tender submission by the 3 vendors. Poppi was recommended to the Tender Committee. On the same day, the Claimant prepared the Capital Expenditure Request (“CER”);

(viii) Poppi was eventually selected by the Company to undertake POS A and POS B for a contract sum of RM 1,768,610.00;

(ix) As for POS C, the Claimant had estimated the cost at RM 741,500.00. Therefore, the total cost of the Project was estimated to be RM 2,510,110.00 only;

The CER was approved by the Company in various stages by the Claimant’s superiors on 3.3.2016, 6.4.2016 and 3.6.2016;

(xi) On 16.5.2017, the Claimant invited 6 local vendors to submit their tender for POS C. The only tender bid was from Kejuruteraan Jubinas Sdn Bhd at RM 2,128,550.00. The bid resulted in the total cost of the Project to balloon to RM 4,227,931.00 far exceeding RM 2,510,110.00.

Reverting to the meeting called by the Company, the Claimant claimed that he was told to resign; failing which he will be dismissed.

Subsequent to the meeting, the Company issued a Show Cause Letter dated 13.10.2017, where 2 charges of misconduct were preferred against the Claimant. However, the second charge was withdrawn and is not the subject of the proceedings before the Industrial Court.

The charge upon which he was eventually dismissed reads as follows: That you had, in preparing and initiating the Guocera Heat Recovery System Capital Expenditure Request (CER) Ref. #GTIKG1691047 for Plant 5 which you have initiated on 25th February 2016, in gross dereliction of your duties grossly underestimated the capital expenditure to be incurred in respect of the said CER. You had - a) failed to make a proper estimate of the ducting costs; b) failed to include heat exchanger installation costs; c) failed to include the costs of additional chimneys; d) failed to include the bends and expansion joints in the costing; e) failed to include the heat exchanger installation platform costs; f) failed to use and if required to validate the information provided in the proposal from Poppi; and g) failed to highlight any risks in the installation costs estimates. The said CER, which you had initiated and which was approved on 30.5.2016 was for the sum of RM2,510,110.00 but in July, 2017, you realized that the cost for the Guocera Heat Recovery System Project was RM4,227.931.00, a variance of RM1,717,812.00. As a result of gross dereliction of duties and gross negligence, the Company has been subjected to a substantial increase in expenditure and is exposed to further losses in the event it does not proceed with the project. The above allegations would constitute serious misconduct inconsistent with the fulfilment of the expressed or implied terms and conditions of your service.

The Claimant replied to the Show Cause Letter on 20.10.2017, denying the allegations.

Thereafter, the Claimant issued a Notice of Domestic Inquiry dated 2.11.2017 to attend a Domestic Inquiry.

The Claimant attended the Domestic Inquiry on 28.11.2017 and fully participated in the same. His defence at the Domestic Inquiry was inter alia, that the Project was the first time he was involved in the preparation of a CER for a Heat Recovery System. He had no prior experience in preparing a CER. It was done at the insistence of the General Manager, one Mr. David Kelly. When the CER was prepared on 25.2.2016, he did not have the Engineering Drawings. The drawings were supplied by Poppi only in April/May 2017. The CER was prepared based on available information he had at the material time. Further, the CER was also based on consultation and input given by other officers of the Company.

Notwithstanding his defence, the Company proceeded to dismiss the Claimant by letter 18.1.2016. The dismissal was to take effect forthwith. The Company took the position that as the charge against him was grave and serious, and found to have been proven, the Company had no alternative but to dismiss him.

At the conclusion of the trial, the Industrial Court made an award in the Claimant’s favour and ordered the Company to pay a sum of RM 698,368.00 comprising of the following:

Backwages in the sum of RM 304,128.00;

(ii) Compensation in lieu of reinstatement of RM 394,240.00. Grounds for review

The Order 53 Statement contains as many as 83 grounds for review, which are principally to impugn the findings of fact. However, the Company in its Written Submissions reduces the grounds to 4 principal grounds for review against the decision of the Industrial Court.

Firstly, the Industrial Court committed an error of law when it misapplied the law relating to Domestic Inquiry. It wrongly concluded that the dismissal was without just cause and excuse because the Domestic Inquiry was held in breach of the rules of natural justice.

Secondly, the Industrial Court failed to take into account relevant evidence as follows:

The Claimant was a subject matter expert on energy matters in the Company;

(ii) The Claimant did not lack the requisite information to estimate the CER;

(iii) The Claimant gave contradictory and varying evidence on the increase in the CER;

(iv) That the CER prepared by the Claimant and approved by the Company had excluded the usage of the old pipes, and Poppi had declined responsibility for old pipes only after CER was approved by the Company;

The Claimant failed to highlight the risk in the installation cost estimates;

(vi) The contemporaneous evidence as to the role of a witness named Ms Chin Huey Min in the Project;

(vii) The Claimant was dismissed due to his negligence; and

(viii) The attendance of certain witnesses was not possible as they were no longer in the employ of the Company or had left the country.

Thirdly, the Industrial Court took into account irrelevant evidence as follows:

The tender price for the 3rd stage of the Project by Kejuruteraan Jubinas Sdn Bhd was RM 2,128,550.00 and not RM 2.8 million;

(ii) COW-4 was not impartial in the absence of evidence in support of that finding;

(iii) The testimonies of the Company’s witnesses were contrary to its case;

(iv) Poppi had stated that the old piping could be reused with modifications, hence a shorter length was used in the estimation of the 1st CER, when there was no such evidence in support;

Considered the 2nd charge when it had been withdrawn during the Domestic Inquiry; and

(vi) Financial losses suffered by the Company were due to the increase in the exchange rate.

Finally, it was contended that the Industrial Court had arrived at a decision that was irrational for the following reasons:

Drawing adverse inference against the Company for not securing the attendance of material witnesses;

(ii) Concluding that the Claimant’s evidence was more credible than the Company’s witness when the Chairman did not preside during the testimony of the Company’s witnesses, but was presided by his predecessor; and

(iii) A breach of natural justice was occasioned at the Domestic Inquiry when the Claimant’s witness was not present, and that COW-4 was a biased Chairman at the Domestic Inquiry. Analysis and findings

I shall start by stating what is trite law in the context of judicial review proceedings against a decision of an Industrial Court.

The grounds upon which a decision of an inferior tribunal can be successfully challenged in judicial review proceedings, namely procedural impropriety, illegality and irrationality are settled and trite law (See: R Rama Chandran v The Industrial Court of Malaysia & Anor [1997] 1 MLJ 145).

In R. Rama Chandran it was explained that illegality is relied on where the decision maker failed to understand directly the law that regulates his decision making power and failed to give effect to it. Where the decision is impugned on the ground of irrationality, it must be shown that the decision was so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it.

In exercising its powers of judicial review, the court does not interfere with the finding of facts as the evaluation of the evidence is the function of the Industrial Court. In Ranjit Kaur a/p S Gopal Singh v Hotel Excelsior (M) Sdn Bhd [2010] 6 MLJ 1 the Federal Court held: The Federal Court in Petroliam National Bhd v Nik Ramli Nik Hassan [2004] 2 MLJ 288 held that the reviewing court may scrutinise a decision on its merits but only in the most appropriate of cases and 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. 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 [2000] 7 MLJ 1; National Union of Plantations Workers v Kumpulan Jerai Sdn Bhd, Rengam [2000] 2 MLJ 144; [Quah Swee Khoon v Sime Darby Bhd [2000] 2 MLJ 600; Colgate Palmolive (M) Sdn Bhd v Yap Kok Foong and another appeal [2001] 4 MLJ 97; 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.

Similar views were expressed in Menara PanGlobal Sdn Bhd v Arokianathan a/l Sivapiragasam [2006] 3 MLJ 493), by the Court of Appeal as follows: From the authorities discussed above, I would think that in dealing with judicial review a judge should have the following principles, inter alia, in the forefront of his mind:

judicial review is not an appeal from a decision but a review of the manner in which the decision was made;

(ii) the High Court is not entitled on an application for judicial review to consider whether the decision itself, on the merits of the facts, was fair and reasonable; ….

(vi) the High Court will not interfere with finding of facts by the Industrial Court unless the same are completely unsupported by evidence and further, will not interfere merely because it may come to different conclusions on facts on the basis of the same evidence; weighing and assessing the evidence of the witnesses is the function of the Industrial Court and not that of the High Court. (See also: Ng Chang Seng v Technip Geoproduction (M) Sdn Bhd & Anor [2021] 1 MLJ 447).

Where a workman has been dismissed and the company gives a reason for his dismissal, then it is the duty of the Industrial Court to enquire whether the reason has been made out. If the company fails to prove the reason, then the inevitable conclusion is that the dismissal was made without just cause and excuse. (Goon Kwee Phoy v J & P Coats (M) Bhd [1981] 2 MLJ 129).

With these principles in mind, I shall now deal with the Company’s contention. Ground 1-misapplied the law when it held the Claimant was dismissed without just cause and excuse as the domestic inquiry was in breach of rules of natural justice

The Company’s contention in this respect is wholly misconceived. The Industrial Court did not at any time find the breach of rules of natural justice at the domestic inquiry to be the basis for concluding that the Claimant was dismissed without just cause and excuse.

The award must be read in full and not in part to avoid certain portions of the judgment being taken out of context. The Industrial Court was fully aware that the correct approach is not to regard the findings of the domestic inquiry as binding as it would hear the matter afresh to decide if a workman is dismissed with just cause and excuse. The Industrial Court referred to the decision of Hong Leong Equipment Sdn Bhd v Liew Fook Chuan & Others [1997] 1 CLJ 665 which provides guidance on the approach to be taken by the Industrial Court where a domestic inquiry had been held. The Industrial Court was fully aware that the findings of a domestic inquiry is not binding on it as it re-hears the matter afresh. (See: paragraphs 61 and 62 of the Award).

In my view, the finding on the breach of natural justice occasioned at the domestic inquiry conducted at paragraph 198 was not the ratio of the award of the Industrial Court. The preceding paragraphs would show that the Industrial Court had made its findings that the Company failed to prove on a balance of probabilities that the Claimant was guilty of the Charge preferred against him. (See: paragraph 196 of the Award). As a consequence of which, the Industrial Court found on the evidence, that the decision to dismiss the Claimant was unreasonable. Grounds 2 and 3-Failure to take into account relevant evidence/took into account irrelevant evidence

These grounds are encompassed under the ground of irrationality or what is sometimes referred to as Wednesbury unreasonableness, where a decision maker failed to take into account relevant considerations but took into account irrelevant considerations instead. Grounds 2 and 3 are to be dealt with together as it essentially challenges the evidential basis of the Industrial Court’s decision that the Claimant was dismissed without just cause and excuse.

Before proceeding to deal with the evidence which the Industrial Court was said to have disregarded, I am of the view that the complaint of the Company is a matter within the realm of findings of fact. The court in the exercise of its supervisory jurisdiction will not interfere with findings of fact made by an inferior tribunal.

It would appear from the extensive submission on the evidence, that the Company is aggrieved at the findings arrived at by the Industrial Court which did not favour its case.

I shall now deal with the specific evidence relied upon in support of the unreasonableness ground.

I find no failure on the part of the Industrial Court to consider the issue whether the Claimant had the requisite experience and expertise in the preparation of the CER. Having considered the evidence before it, it then came to a conclusion that the Claimant was not a subject matter expert as claimed by the Company.

Its findings are premised on the relevant evidence as follows:

the Claimant never admitted to being a subject matter expert. He merely stated that he was the originator of the

(ii) the Claimant informed the Company that he had no prior involvement or experience in the Heat Recovery System. His job description did not include preparation of the CER. Nonetheless, he was instructed to prepare the CER. He was only following the Company’s orders in relation to tender preparation, technical evaluation and generally all other works related to the Project;

(iii) His certification as an Energy Manager was pursuant to the requirement in the Electricity Supply Act 1990. The requirement stipulates that any company using 3,000,000 Kwh electricity for any period of six consecutive months must have a full time registered Energy Manager. The mere registration does not in any way make him an expert in Heat Recovery System;

(iv) The Claimant was only qualified in electrical energy and not in natural gas or thermal energy. The subject matter of the Project was natural gas because it involved building a kiln to bake ceramic tiles for the Company; and

The Claimant was not the Project Manager as evidenced by the documents before the court.

In view of the above evidence, the Industrial Court arrived at a finding that the Claimant was not a subject matter expert.

I am of the view that the evidence taken as a whole is reasonably capable of supporting the finding that the Claimant was not a subject-matter expert.

The Claimant’s preparation of the estimated CER was done in consultation with the manufacturing manager Ms. Chin Huey Min, Mr. David Kelly, the General Manager (both of whom were not called as witnesses), Mr. Ron Ho Yew Onn the Senior Engineering Manager (who testified for the Claimant), the Finance Manager and the Finance Controller.

The Industrial Court then concluded as follows: [83] If there was a misconduct with the 1st CER, then the whole CER team will have to be responsible for it. To single out the Claimant as the sole party alleged to have committed the misconduct is not proper, if the 1st CER was wrong then all members of the CER team should be subjected to D.I proceeding to find out their respective level of culpability before imposing the appropriate disciplinary actions. [84] Observing the 1st CER, the Claimant’s role in the CER was only to propose the 1st CER, he does not have the right to support or approve it. The approval came from the higher management. (Refer to page 13 of CLB-1). To then hold the Claimant to be solely responsible for the malfunction of the 1st CER (if any) seems superficial.

In short, based on the evidence, the Industrial Court found that the CER was not the sole decision of the Claimant; due consultation was undertaken with other senior employees of the Company.

Further, in arriving at its decision that the charge of negligence was not made out, the Industrial Court also considered the reason for the CER estimation of only RM 2,510,110.00. This estimation was on the basis that some parts of the old pipes could be salvaged and reused after modification by Poppi. However, subsequent to the CER, Poppi declined responsibility for performance warranty if the Company were to reuse parts of the existing piping. This was informed by Poppi vide its letter dated 28.11.2016. Following this letter, the Company then decided to replace the entire ducting with new piping to obtain the performance warranty.

What is material is that the Company was aware as far back as 2015 that some parts of the existing pipes could be reused. In its letter of 13.7.2015, Poppi had given the Company the option to reuse part of the existing ducting with modifications. The Claimant then discussed with the technical team and they collectively decided to recover some existing parts of the pipes to be reused to reduce cost.

His evidence was this: “During the preparation of the CER, I had discussions with the manufacturing Manager Miss Chin Huey Min, the engineering Manager Mr. Ron Ho, the finance Managers Mr. Goh Ser Tek, Mr. Ken Wong. We were very concerned with the cost of the Project. So, we considered reusing part of the existing pipeline. Poppi had stated that if the company were to recover some parts, they could include it in their new system by doing some modifications. I had discussed this matter with my superior Mr. David Kelly and he also agreed with that. That’s why I say I was not the only person involved in preparing the CER.”

Clearly, the Company had knowledge that the CER had envisaged reusing part of the existing pipe.

Following the decision to reuse, the preparation of the CER did not cost in the additional length of piping. It was only when Poppi declined warranty that the Company decided to have an entire new ducting.

In my view, the Industrial Court had basis to find that the Claimant cannot be faulted for the CER which was lower than the eventual amount for the Project. The Industrial Court held as follows: [88] It was only in a letter dated 28 November 2016, Poppi SpA informed the Company that it will not extend its guarantee to the old reused pipes in POS C. Poppi SpA rejected the reuse of the old pipers and required the pipeline in POS C to be replaced with brand new ones. Until then the 1st CER, was correct in calculation and estimation. It was that letter (28 November 2016) issued by Poppi SpA that created a ripple effect that required new components to be included in the 2nd

Another piece of material evidence with influenced the decision of the Industrial Court was the fact that the Claimant was not given all information for the preparation of the CER.

At the time of preparation of the CER in February 2016, there was only a schematic drawing by Poppi given on 14.7.2015. This drawing did not contain information on the diameter of piping, dimension of pipes, length and shape of ducting.

The detailed engineering drawing was not supplied. This drawing was necessary to determine the length of the pipelies. The engineering drawings were given only in April 2017, well after the CER was prepared.

This fact was not disputed.

I view this as a relevant piece of evidence which the Industrial Court rightly took into consideration when it found the act of gross negligence not proven. Its findings were as follows: [132] In furtherance, without the availability of the engineering drawing, there was no possibility of the Claimant including the estimation of the ducting, bends, joints, heat ex-changer, heat ex-changer platform and additional chimney.

To conclude on Ground 2, I am of the view that the Industrial Court’s decision was arrived at upon considering evidence relevant to the issue of whether the charge of gross negligence against the Claimant was made out. This is a critical finding which the Industrial Court is required to make in determining whether the Claimant was dismissed with just cause and excuse. Ground 2 therefore has no merit.

As for Ground 3 which in which the Industrial Court is said to have considered irrelevant evidence as enumerated above in paragraph 24, having considered the evidence, I find it to be unfounded. It was not the basis for the Industrial Court to find the Claimant was dismissed without just cause and excuse. Ground 4-irrational in its findings on the issue of witnesses

I now come to the final ground for review. This ground pertained to the findings of the Industrial Court with respect to the witnesses relied on by the parties for their respective case.

The Company contends that the Industrial Court was irrational to draw an adverse inference on the non-attendance of Mr. David Kelly and Ms. Chin Huey Min.

I am of the view that there is no irrationality demonstrated here. The Claimant’s rebuttal evidence on the critical issue of negligence was that Ms Chin Huey Min was involved in the preparation of the CER. She was also involved in the technical evaluation of the Project. She was in the discussion on the reuse and refurbishment of the old ducting.

As for Mr. David Kelly, it was the Claimant’s case that the former was involved in the preparation of the CER. Mr. Kelly was briefed on the proposal by the Claimant on the reuse of the ducting with some modifications, after conducting an inspection of the pipeline. Mr. Kelly endorsed on proposal. He was also briefed on the cost of the project and the components before the CER was submitted to obtain approval of the higher management. His involvement is substantiated by the documentary evidence particularly the exchange of emails between Mr. Kelly, the Claimant and other officers of the company.

The fact that these two witnesses were not present in court therefore led the Industrial Court to make an adverse finding as follows: [186] Ms Chin Huey Min who was the Claimant’s superior officer could have shed more light on the role and responsibility of the Claimant in the Poppi Project. Not securing her attendance in Court also invokes adverse inference against the Company as she is also a material witness. [187] On the facts of the present case, the Claimant was alleged to be the person in charge of the Poppi Project however the documentation and testimonial (sic) of witnesses show that either (sic) David Kelly is most likely the person in charge of Poppi Project. Therefore, securing his presence in this Court would have shed some light to the accountability and liability of the Poppi Project. [193] Since, David Kelly was not present in this Court as a witness to testify to his version and yet, the Claimant was present in Court to testify. Accordingly, this court relies on the Claimant’s version in this case, as his testimonial (sic) has more credibility and is corroborated by documentation and testimonials (sic) of other witnesses.

I find no irrationality in the finding of the Industrial Court.

Next, the Company complains that the Industrial Court was irrational in finding the Claimant’s evidence more credible than that of the Company’s witnesses. The Industrial Court which made the award did not have the benefit of hearing the Company’s witnesses as the Chairman did not preside over the hearing.

To my mind, the issue of credibility is a matter which the Chairman upon considering the prior evidence adduced, can come to a finding. Regardless of whether the evidence is oral or documentary, the Industrial Court evaluates the available evidence to decide on the cogency of evidence adduced by parties. The finding as to the credibility of the evidence is part and parcel of the evaluation expected of a trial judge.

To conclude, having examined the award of the Industrial Court and the evidence it considered in arriving at the decision, I am of the view that it was not one which was so in defiance of logic that no sensible person who had applied his mind to it would have arrived at that decision.

In addition, the grounds for review are premised largely on findings of facts by the Industrial Court. It bears repeating that the court in the exercise of its supervisory jurisdiction would be circumspect in interfering with the findings of the Industrial Court.

In the upshot, the Judicial Review application is dismissed. I order that costs of RM 5,000.00 be paid by the Applicant to the 1st Respondent. Dated: 8th July 2026 -sgd-Alice Loke Yee Ching Judge High Court Kuala Lumpur Counsel for Applicant: Pn. Mehala Marimuthoo (Pn. Sabrina bt Mohammad Fuad together with her) Tetuan Huang Lin Mehala & Chan Counsel for Respondent: En. Mariappen a/l Sadayan (Pn. Nurul Huda bt Yahya together with him)