58 LI LR 159, a parent company was held liable on a bill of lading signed on behalf of its wholly owned subsidiary, the court saying that the subsidiary was "a separate entity...in name alone and probably for the purposes of taxation". In another case, Spittle v Thames Grit & Aggregates Ltd [1937] 4 All ER 101, the court found no difficulty in treating a subsidiary as "to all intents and purposes" the same as the parent company which held 90 per cent of its shares. A licensing authority in exercise of its discretion has been held entitled to have regard to the fact that a parent and subsidiary company, though technically separate legal persons, in fact constituted a single commercial unit (Merchandise Transport Ltd v British Transport Commission [1962] 2 QB 173Devlin LJ at page 202) 28 | P a g e ...A good example of this is Bird & Co v Thos Cook & Son [1937] 2 All ER 227, in which an indorsement of a cheque to "Thos. Cook & Son Ltd." was treated as an indorsement to the allied but separate company of Thos. Cook & Son (Bankers) Ltd. by regarding it as a mere misdescription to be ignored under the principle falsa demonstratio non nocet." However, a careful look at the contemporary cases shows that, the view expressed by Salleh Abas FJ in the High Court and by Professor Gower no longer prevails. Indeed, the 7th edition of Gower"s work no longer canvasses the earlier opinion quoted by Salleh Abas FJ. But that is not to say that the court in the Hotel Jayapuri case was wrong in lifting the veil of incorporation on the facts of that case. The Hotel Jayapuri case was concerned with the Industrial Relations Act 1967 which requires the Industrial Court to disregard technicalities and to have regard to equity, good conscience and the substantial merits of a case. Accordingly, in industrial law, where the interests of justice so demand, it may, in particular cases be appropriate for the Industrial Court to pierce or to disregard the doctrine of corporate personality. That is what happened in the Hotel Jayapuri case and no criticism of that case on its facts may be justified. A moment ago I mentioned Gower’s 7th edition. The relevant passage is at page 184 and reads as follows: "Challenges to the doctrines of separate legal personality and limited liability at common law tend to raise more fundamental challenges to these doctrines, because they are formulated on the basis of general reasons for not applying them, such as fraud, the company being a "sham" or "facade", that the company is the agent of the shareholder, that the companies are part of a "single economic unit" or even that the "interests of justice" require this result. However, the courts seem, if anything, more reluctant to accept such general arguments against the doctrines than arguments based on particular statutes or the terms of particular contracts." 29 | P a g e The editor of the 7th edition cites Adams v Cape Industries Pic [19901 Ch 433 as the leading case on the subject and says this (referring to the judgment of the Court of Appeal in that case): "Moreover the court declared that it did not accept that: "as a matter of law the court is entitled to lift the corporate veil as against a defendant company which is the member of a corporate group, merely because the corporate structure has been used so as to ensure that the legal liability (if any) in respect of particular future activities of the group (and correspondingly the risk of enforcement of that liability) will fall on another member of the group rather than the defendant company. Whether or not this is desirable, the right to use a corporate structure in this manner is inherent in our corporate law." And in a later passage the learned editor goes on to say this under the heading "Interests of justice": "Although the interests of justice may provide the policy impetus for creating exceptions to the doctrines of separate legal personality and limited liability, as an exception in itself it suffers from the defect of being inherently vague and providing to neither courts nor those engaged in business any clear guidance as to when the normal company law rules should be displaced. Consequently, it is difficult to find cases in which "the interests of justice" have represented more than simply a way of referring to the grounds identified above in which the veil of incorporation has been pierced." I may add that the liberal view expressed by Lord Denning MR in such cases as DHN Food Distributors Ltd v Tower Hamlets London Borough Council (1976) 1 WLR 852 can no longer be sustained. In that case, the Master of the Rolls said: 30 | P a g e "Third, lifting the corporate veil. A further very interesting point was raised by counsel for the claimants on company law. We all know that in many respects a group of companies are treated together for the purpose of general accounts, balance sheet and profit and loss account. They are treated as one concern. Professor Gower in his book on company law says: "there is evidence of a general tendency to ignore the separate legal entities of various companies within a group, and to look instead at the economic entity of the whole group". This is especially the case when a parent company owns all the shares of the subsidiaries, so much so that it can control every movement of the subsidiaries. These subsidiaries are bound hand and foot to the parent company and must do just what the parent company says. A striking instance is the decision of the House of Lords in Harold Holdworth & Co (Wakefleld) Ltd v Caddies [1955] 1 All ER 725]. So here. This group is virtually the same as a partnership in which all the three companies are partners. They should not be treated separately so as to be defeated on a technical point. They should not be deprived of the compensation which should justly be payable for disturbance. The three companies should, for present purposes, be treated as one, and the parent company, DHN, should be treated as that one. So that DHN are entitled to claim compensation accordingly. It was not necessary for them to go through a conveyancing device to get it." In Woolfson v Strathclyde Regional Council 1978 SLT 159 Lord Keith in whose speech the other members of the House of Lords concurred said of the decision of the English Court of Appeal in the DHN case: "I have some doubts whether in this respect the Court of Appeal properly applied the principle that it is appropriate to pierce the corporate veil only where special circumstances exist indicating that is a mere facade concealing the true facts." (Emphasis added). 31 | P a g e In my judgment, in the light of the more recent authorities such as Adams v Cape Industries Pic, it is not open to the courts to disregard the corporate veil purely on the ground that it is in the interests of justice to do so. It is also my respectful view that the special circumstances to which Lord Keith referred include cases where there is either actual fraud at common law or some inequitable or unconscionable conduct amounting to fraud in equity. The former, that is to say, actual fraud, was expressly recognised to be an exception to the doctrine of corporate personality by Lord Halsbury in his speech in Salomon v A Salomon & Co Ltd [18971 AC 22, the seminal case on the subject. For, this what the Lord Chancellor said: "I am simply here dealing with the provisions of the statute, and it seems to me to be essential to the artificial creation that the law should recognise only that artificial existence — quite apart from the motives or conduct of individual corporators. In saying this, I do not at all mean to suggest that if it could be established that this provision of the statute to which I am adverting had not been complied with, you could not go behind the certificate of incorporation to shew that a fraud had been committed upon the officer entrusted with the duty of giving the certificate, and that by some proceeding in the nature of scire facias you could not prove the fact that the company had no real legal existence. But short of such proof it seems to me impossible to dispute that once the company is legally incorporated it must be treated like any other independent person with its rights and liabilities appropriate to itself, and that the motives of those who took part in the promotion of the company are absolutely irrelevant in discussing what those rights and liabilities are." 32 | P a g e [33] In the Appeals before us, it is quite clear that the Learned Judge of the High Court had applied the principles enunciated by the Court of Appeal in Asnah and proceeded to dismiss the Judicial Review and upheld the Industrial Court’s ruling to substitute Hubline for Hub Shipping and to add Highline as a party. The Court of Appeal referred to the decision of the Indian Supreme Court in Hochtief and the Court of Appeal’s decision in Co-operative Central Bank Ltd & Ors v Rashid Cruz Abdullah & Ors And Other Appeals [2004] 1 MLJ 626; [2004] 1 CLJ 849; [2004] 2 AMR 104 (CA)(“CCB”). Co-operative Central Bank Ltd v Rashid Cruz [34] We turn now to the Court of Appeal’s decision in CCB. In paragraphs [31] and [32] of the judgment in that case, Justice Gopal Sri Ram had alluded to the need to add or substitute third parties to enable the Industrial Court to determine the identity of the “real employer” and that “more than one person may be responsible for dismissing an employee without just cause or excuse”. This is how the Learned Judge had put it: [31] In the proceedings before the Industrial Court, it would be necessary for the adjudicating panel to determine as to who was the real employer at the material time. Here we have a case which is not entirely straight forward. In stricto sensu, it was not CCB which terminated the contracts of employment. It was the receivers. But they are no longer in the picture. They have been replaced by the appointees of BNM. One cannot help gaining the impression that the receivers on the one hand and the appointees on the other hand are equally keen to wash their hands off the trade dispute now looming in the Industrial Court. It is reasonably plain from the fact pattern that one of the questions that the Industrial Court will have to determine: ‘who is the person responsible for the termination of employment?’ It is trite law that more than one person may be responsible for dismissing an employee without just cause or excuse. 33 | P a g e Therefore, viewing the evidence with utmost objectivity, we cannot escape the conclusion that CCB, the receivers and the appointees of BNM are all necessary parties for the adjudication of the trade dispute before the Industrial Court. It may well be the receivers’ argument that they are not and have never been the employers of the respondents. However, industrial adjudication is no respecter of labels. In Dr A Dutt v Assunta Hospital [1981] 1 MLJ 304 refd at p 312, Chang Min Tat FJ cited the judgment of Mukherjee J in Bharat Bank Limited Delhi v Employees of Bharat Bank Ltd Delhi AIR 1950 SC 304 refd where it was said: In settling disputes between employers and workmen the function of the Tribunal is not confined to administration of justice in accordance with law. It can confer rights and privileges on either party which it considers reasonable and proper, though they may not be within the terms of any existing agreement. It has not merely to interpret or to give effect to the contractual rights and obligations of the parties. It can create new rights and obligations between them which it considers essential for keeping industrial peace. [32] For these reasons, we strongly dissent from the argument advanced by Mr Shahul Hameed Amirudin and Mr Jayasingam. In our judgment, the learned judge was entirely correct in holding that the joinder of BNM, the receivers and the BNM appointees are a sine qua non for the resolution of this dispute. For reasons given so far both the appeals No W–02–441 of 97 and W–02–507 of 1999 are dismissed. The appellants must pay the costs of these appeals to the respondents. [35] And in so far as the test for the addition or substitution of third parties, it is relevant and we might add, critical to note that at paragraph [39], Justice Gopal Sri Ram in CCB said, “…we are unable to see any reasonable factual or legal nexus between BNM and the dispute presently before the Industrial Court. Even taking the most extreme position on the facts, we are unable to perceive a situation whereby BNM can be held responsible for the termination of the respondents. 34 | P a g e Asnah [36] We turn now to Asnah’s case. The brief facts of Asnah (per the MLJ case summary) are as follows. The second respondent (‘Sime’) was the appellant’s employer and on finding that she was constructively dismissed from employment, the Industrial Court ordered Sime to pay her RM405,500 in compensation (‘the dismissal award’). Subsequent to the making of the award, Sime was wound up but two years earlier, EON Capital Bhd (‘EON’) had acquired Sime’s shares and taken over control of the company. EON, in Sime’s name, filed for a judicial review of the dismissal award but the application was dismissed by the High Court and the decision was upheld by the Court of Appeal. The appellant, meanwhile, had filed non-compliance proceedings in the Industrial Court in respect of the dismissal award and she applied to join the third, fourth and fifth respondents to that proceeding on the ground they had a nexus to EON and had involved themselves in the initiation of the judicial review application. The Industrial Court refused to allow the joinder. [37] The High Court refused to quash that decision holding that at all material times the third, fourth and fifth respondents were not the appellant’s employers; that there was no fraud to justify lifting of the corporate veil and that the appellant should have filed a proof of debt in Sime’s liquidation. In the instant appeal against that decision, the appellant argued that the parties sought to be joined had assumed liability from one another as a result of merger exercises, and they had an interest in Sime’s undertakings. 35 | P a g e [38] Accordingly, Court of Appeal took the view that the joinder should have been allowed and the parties so joined should have been directed by the Industrial Court to explain their involvement in the judicial review proceedings and to allow the court to determine whether they had, in fact, assumed liability to satisfy the dismissal award. The Court of Appeal posited that the test to be applied for joinder was whether there was any ‘reasonable factual or legal nexus’ between the respondents concerned and the matter before the Industrial Court, as to require them to answer to that court for their involvement in the dispute and, if appropriate, be liable under the dismissal award upon the hearing of merits. As such, the Court of Appeal concluded that no reasonable tribunal appraised with the facts of this case would say there was no factual or legal nexus of the third, fourth and fifth respondents in relation to the dismissal award. In amplification, the Court of Appeal observed that in support of the judicial review proceedings against the dismissal award, one of EON’s vice-presidents had deposed an affidavit stating that Sime was prepared to pay the dismissal award into a stakeholder’s account. [39] As such, the Court of Appeal opined that this was prima facie indication of assumption of liability by EON and the question as to why EON did it, or whether it would amount to admission of liability in the event the award was sustained, were issues for the Industrial Court to consider after joinder was allowed. [40] In the opinion of the Court of Appeal ss.29(a) and (b) of the Act gave wide powers to the Industrial Court to join or summon any person who, in the court’s opinion, was connected with the proceedings. 36 | P a g e [41] According to the Court of Appeal, there was no requirement for joinder that the party summoned had to be the appellant’s employer. Hence, the Court of Appeal concluded that since the Act was a social legislation, third parties could be made liable to pay an award notwithstanding they were not the employers. Therefore, third parties could not resist joinder or deny liability on the ground there was no privity, or of being a separate legal entity, etc when there was sufficient nexus between the party to be joined and the party named in the reference. [42] The Court of Appeal in Asnah held that the threshold test at the joinder stage was low and it was whether the employee could demonstrate by prima facie evidence that the party requested to be joined directly, indirectly or otherwise had assumed liability or could be made partly or wholly liable for payment of the award. The issue of liability could only be dealt with after the joinder was done and the merits were heard. So long as the employee’s complaint was not frivolous, vexatious and/or an abuse of process of court, joinder should be permitted if nexus was shown. [43] In summary, the Court of Appeal in Asnah’s case, endorsed a low threshold for joinder: the existence of a legal or factual nexus and has expressly enjoined the Industrial Court to ignore the fact that the proposed joinees (third, fourth and fifth respondents) were not the appellant’s employers and that there was no fraud to justify lifting of the corporate veil. 37 | P a g e [44] It is inevitable, therefore, that the approach enjoined by the Court of Appeal in Asnah’s case invites judicial overreach, and enables the Industrial Court to circumvent the doctrine of separate legal personality which is a firmly embedded and well-entrenched principle of company law, and to impute liability on entities or individuals who were not party or privy to the employment relationship and were not involved with or had anything to do with the dispute. [45] In our view, the mere fact that the actual employer is wound up or devoid of assets cannot justify the imposition of liability on third parties who are legally distinct and not privy to the employment contract. The law does not, nor should it in our view, allow courts to rewrite the legal identity of the employer ex post facto merely to ensure that an award does not become a “paper judgment.” To do so is to sacrifice legal principle at the altar of practical convenience. AIMS Cyberjaya [46] Ahmad Zahri Bin Mirza Abdul Hamid v AIMS Cyberjaya Sdn Bhd [2020] 5 MLJ 58 (FC). What happened in this case is that three months after being appointed as a Consultant in AIMS Data Centre 2 Sdn Bhd (“ADC”), the appellant, an expatriate, was given a contract for consultancy services by ADC for a fixed term of one year. The contract entitled him to participate in a performance bonus scheme. Simultaneous with the granting of that contract, ADC appointed the appellant as its Vice-President, Product Development. 38 | P a g e [47] Thereafter, without any change in the terms and conditions of his engagement, the appellant’s contract was renewed annually over three consecutive years during which time ADC’s merger with the respondent saw the appellant being reclassified as Consultant of the respondent and as Vice-President, Product and Solutions. When the time came for the appellant’s contract to be renewed for the fourth year, the respondent decided to remove the appellant’s entitlement to the performance bonus scheme. As this was not agreeable to the appellant, the respondent offered him a three-month work contract which the appellant refused to accept. The three-month contract stated that it would supersede all previous contracts which the appellant had had with ADC and the respondent and that the said contract was determinable by the giving of two months’ notice. [48] In purported exercise of that clause, the respondent gave the appellant two months’ notice of termination of the contract. The appellant complained to the Industrial Relations Department that he had been unfairly dismissed from employment. His case was referred by the Minister to the Industrial Court (‘IC’) for adjudication. The IC found that the appellant had been a permanent employee of the respondent all along and that he had been dismissed without just cause or excuse; that the purported ‘fixed term contracts’ were shams. The IC lifted the corporate veils of ADC and the respondent and found as a fact that the appellant worked for a group of companies as one enterprise; that his contract of employment had never been for a fixed term but had been a permanent and uninterrupted one which the respondent had renewed annually without the appellant having to apply for its renewal. The IC awarded the appellant back-wages and compensation in lieu of reinstatement. The High Court upheld the IC’s decision and dismissed the respondent’s judicial review application to quash the IC’s award. 39 | P a g e [49] The Court of Appeal (‘COA’), however, set aside both the High Court’s decision and the IC’s award holding, inter alia, that: (a) the appellant was appointed under a three-month fixed-term contract (the COA disregarded the earlier contracts the appellant had had with ADC and the respondent) which was determinable by the giving of two months’ notice; (b) the appellant never had continuity of employment because ADC and the respondent were separate legal entities; (c) in the absence of any allegation of fraud or unconscionable conduct, the IC and the High Court were wrong in lifting the corporate veils of ADC and the respondent to find that they were, in effect, a single unit. [50] The Federal Court took the view that the appellant’s contract of employment was a permanent contract and not a fixed-term contract and this was predicated on the IC’s finding of fact that the appellant worked for a group of companies as one enterprise. ADC and the respondent were part and parcel of the same group. There was ‘an essential unity of group enterprise’. The Federal Court opined that the Court of Appeal was wrong in treating ADC and the respondent as two separate entities and in failing to treat the appellant’s contract of employment as a continuous one from ADC to the respondent. The Court of Appeal’s failure to identify the employer-employee relationship ran contrary to the fundamental purpose of the Industrial Relations Act 1967. 40 | P a g e [51] The Federal Court held (allowing the appeal): [16] A court may lift/pierce the corporate veil where the relationship between companies in the same group is so intertwined that they should be treated as a single entity to reflect the economic and commercial realities of the situation. An argument of ‘group enterprise’ is that in certain circumstances a corporate group is operating in such a manner as to make each individual entity indistinguishable, and therefore it is proper to lift/pierce the corporate veil to treat the parent company as liable for the acts of the subsidiary. Lifting/piercing the corporate veil is one way to ensure that a corporate group, which seeks the advantages of limited liability, must also accept the corresponding responsibilities. [17] In the employment law perspective, the application of the ‘single economic unit’ test or ‘functional integrality’ test is particularly significant in ascertaining the continuity of employment for the scope of dismissal protection (see Manley Inc v Fallis [1977] 2 BLR 277). It recognises the complexity of modern corporate structures and that the corporate veil must only be pierced in exceptional circumstances. On the other hand, such complexity should not be an obstacle to defeat the legitimate entitlements of wrongfully dismissed employees. This approach has its root on the general notions of fairness, equality and proportionality in the treatment of vulnerable employees. It serves to balance fairness with evolving commercial realities. [18] One of the seminal cases in Malaysia on lifting/piercing the corporate veil is the Hotel Jaya Puri case. It was a decision in respect of judicial review application for certiorari against the decision by the Industrial Court ordering Hotel Jaya Puri Berhad (‘the Hotel’) to pay compensation of two months salaries plus fixed allowances in favour of workmen employed in the business of Jaya Puri Chinese Garden Restaurant Sdn Bhd (‘the restaurant’). the restaurant, which was a fully owned subsidiary of the Hotel had 56 workers employed and operated its business at the hotel premises by paying a rental. Subsequently, the restaurant closed its business due to financial losses and the employees were retrenched. It resulted in an industrial dispute and the matter was referred to the Industrial Court. 41 | P a g e The employees claimed that they had been dismissed rather than retrenched as they were employees of the Hotel. The Industrial Court issued an award directing the Hotel to pay compensation. [19] The Industrial Court found that the Hotel was in fact the employer of the workers and reasoned that: