Kesatuan Pekerja-Pekerja Perkilangan Perusahaan Makanan v 1. F & N Dairies Manufacturing Sdn Bhd (Permohonan Semakan Kehakiman No. WA-25-197-10/2016)

F & N Dairies Manufacturing Sdn. Bhd.

Mahkamah Perusahaan Malaysia … Responden-Responden 2 Grounds of Decision Azizah Nawawi, J: Application [1] This is the applicant’s judicial review application seeking the following prayers:

An order of certiorari to quash Award No. 880 of 2016 dated 2.8.2016 given in Industrial Court Case No.: 3(1)/6-683/2016 (the Impugned Award) and that the enforcement period of the 14th Collective Agreement is from 1.5.2012 until 30.4.2015; and

(ii) Alternatively, an order of mandamus directing the 2nd respondent to issue an Award which construes that the enforcement period for the 14th Collective Agreement is from 1.5.2012 until 30.4.2015. [2] The grounds of the application are:

The 2nd respondent had acted arbitrarily and/or in excess of jurisdiction and/or failed to take into account or give due weight to the relevant facts, and/or has considered and/or give due weight to the irrelevant facts. 3

(ii) The 2nd respondent’s decision is an error and cannot be used on the ground of Wednesbury unreasonableness.

(iii) The 2nd respondent had erred in law and had acted in excess of jurisdiction and/or without jurisdiction and had acted irrationally in arriving to the said decision when it failed to take into account and/or give due weight to the relevant matters.

(iv) The 2nd respondent made a decision that there was no ambiguity and uncertainty in the 1st Award whereas both ambiguity and uncertainty existed in the 1st Award. [3] Having considered the application and the submission of the parties, this court has allowed the application and quashed the Award No. 880 of 2016 dated 2.8.2016 and ordered that the enforcement period of the 14th Collective Agreement is from 1.5.2012 until 30.4.2015. The Salient Facts [4] The parties in this case are the applicant (the “Union”) and the 1st respondent (the “Company”). The 2nd respondent is the Industrial Court. 4 [5] A trade dispute arose between the Union and the Company pertaining to the terms and conditions to be incorporated into the 14th Collective Agreement encompassing the period of 1.5.2012 to 30.4.2015. [6] There are forty-seven (47) Articles in the 14th Collective Agreement. Parties are on common ground that only nine (9) Articles are in dispute, whereas thirty-nine (39) Articles have been agreed upon and thirty-eight (38) Articles have been signed by both parties. One of the agreed article is Article 3, which reads: “3.1 This Agreement shall be effective and binding on the parties with effect from 1st May 2012 and thereafter continue in force until superseded by a new collective agreement or award or unless terminated as provided therein.” [7] The trade dispute was then referred to the 2nd Respondent for determination following a ministerial reference pursuant to section.26(2) of the Industrial Relations Act 1967 (“IRA 1967”). [8] Prior to the hearing, it has been agreed by the Union and the Company on 11.3.2013 that pursuant to Article 3.1 of the 14th Collective Agreement, the agreement shall be effective and binding on the parties with effect from 1.5.2012. The agreed Articles were signed by the parties and are attached as part of the Award. 5 [9] Nevertheless, on 16.3.2016, the 2nd respondent handed down Award No. 288 of 2016 wherein it was held that the 14th Collective Agreement shall have retrospective effect from 1.10.2013 for a period of three (3) years (the 1st Award). The relevant part of the 1st Award reads: “Section 30(7) of the Act states that an award may specify the period during which it shall continue in force, and may be retrospective to such date as is specified in the award, provided that the retrospective date of the award may not be earlier than six (6) months from the date on which the dispute was referred to it. This dispute was referred by the Minister on 4 February 2014 and the period for the 14th CA from May 2012 to April 2015 has since lapsed. In accordance with section 30(7) of the Act, the court hereby orders that the effective date of commencement of the 14th CA be made retrospective to 1 October 2013 and it is for a period of three (3) years.” [10] Subsequently, the applicant filed an application for the interpretation of the 1st Award under section. 33(1) of the IRA 1967 for the purposes of removing the alleged ambiguity or uncertainty as to the effective date of the 14th Collective Agreement. 6 [11] The Union’s complaint on the ambiguity or uncertainty is that there are two (2) commencement date of the 14th Collective Agreement in the 1st Award. In paragraph [2] of the 1st Award, it is stated that: “The proposed 14th CA was meant for the period from 1 May 2012 to 30 April 2015. There are a total of 47 Articles in the proposed CA wherein 38 Articles have been agreed upon and signed by the parties and are attached as part of this award…” (emphasis added) This is reiterated in paragraph [66], which reads: “Articles 9 and 36 which have been agreed prior to the hearing, all undisputed Articles which have been signed by the parties and the annexure shall form part of this award.” (emphasis added) [12] Therefore, premised on the above, since Article 3 (on the commencement date of the 14th Collective Agreement, i.e.

1.5.2012) is an agreed article and duly signed by parties, and have been made part of the 1st Award, then this would seem to contradict the conclusion in the 1st Award that the commencement date shall be 1.10.2013. [13] After hearing both parties, the 2nd respondent (by a majority decision) had on 2.8.2016 handed down the Award No. 880 of 2016 (the Impugned Award) whereby it was held that there was no 7 ambiguity or uncertainty in the 1st Award and thus, the 2nd respondent’s decision in the 1st Award that the 14th Collective Agreement is take effect from 1.10.2013 was affirmed. The said Impugn Award, inter alia, reads: “[18] It is the majority voice of the honourable employer’s panel member and the Chairman of this court that there was no ambiguity in the said Award, I had perused the Articles in the proposed 14th CA read and considered the pleadings filed by the parties and the written submissions of learned counsels. I had also done research on the retrospective effect of an award under section 30(7) of the Act. Therefore, the said Award was handed down after a considered and conscious effort without any error on my part, regardless of the alleged ‘ambiguity’ or paragraph 2 and 66. … [21] It is well within the confines of Article 3.1 of the proposed 14th CA which was part of the Agreed Articles that the duration of the 14th CA could be superseded by an award of the court. That was exactly what this court was empowered to do in the said Award when it ordered that the date of commencement of the then proposed 14th CA be made retrospective to 1 October 2013 only. 8 [22] Having considered all the above and acting in equity and good conscience, this court by a majority dismisses the Applicant’s application, there being no ambiguity or uncertainty to remove from the said Award.” [14] Being aggrieved by the 2nd respondent’s decision dated 2.8.2016, the Union filed this present action to challenge the said Impugned Award. The Findings of the Court [15] This is an application to quash the majority decision of the Industrial Court which decided that there is no ambiguity in the 1st Award that the commencement of the 14th Collective Agreement is 1.10.2013, instead of the parties’ agreed date of 1.5.2012 under Article 3 of the 14th Collective Agreement. [16] In Booi Kim Lee v YB Menteri Sumber Manusia & Golden Plus Geaniait SB [1999] 3 MLJ 515, Justice KC Vohrah adopted Lord Diplock’s classification of grounds of judicial review in the House of Lords case of Council of Civil Service Unions V. Minister for the Civil Service [1985] AC 374 (the “CCSU”). The three (3) grounds described by Lord Diplock are: 9

illegality;

(ii) irrationality; and

(iii) procedural impropriety. [17] By illegality as a ground for judicial review, it means “that the decision-maker must correctly understand the law that regulates his decision-making power and must give effect to it’ and that “… the authority concerned has been guilty of an error of law in its action as for example, purporting to exercise a power which in law it does not possess.” (see Booi Kim Lee/page 127/b-c) [18] By irrationality it means ‘Wednesbury unreasonableness’ and “applies to a decision which is 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 upon could have arrived at it” (see Booi Kim Lee/page 127/g) [19] By procedural impropriety, it includes ‘failure by an administrative tribunal to observe procedural rules that are expressly laid out.” and “duty to act fairly”. (see Booi Kim Lee/page 128/a-d) [20] The above principles in CCSU’s case was also adopted by our Federal Court in R. Rama Chandran v. The Industrial Court of Malaysia & Anor [1997] 1 MLJ 145. 10 [21] In Ranjit Kaur S Gopal Singh v. Hotel Excelsior (M) Sdn Bhd [2010] 8 CLJ 629, the Federal Court held as follows: “The Federal Court, in Petroliam Nasional Bhd v. Nik Ramli Nik Hassan [2003] 4 CLJ 625, again held that the reviewing court may scrutinize 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 are grounded on illegality or plain irrationality, even where the reviewing judge might not have come to the same conclusion.” (emphasis added) [22] In the present application, the Union is mainly relying on the ground of illegality to challenge the Impugn Award of the Industrial Court. [23] Under the heading “illegality”, Justice KC Vohrah in Booi Kim Lee’s case adopted two categories, namely “ultra vires” and “irrelevancy”. Ultra vires is when an authority concerned has been guilty of an error of law in its action, such as purporting to exercise a power which in law it does not possess or action in contrary to the policy and objects of the relevant statute. At page 127, it was held that: “… the decision maker must understand correctly the law that regulates his decision – making power and must give effect to it.” 11 [24] It is the submission of the Union that the Industrial Court has committed an error in law when the Impugn Award affirmed the 1st Award which makes an order that pursuant to subsection. 30(7) of the IRA 1967, the effective date of commencement of the 14th Collective Agreement be made retrospective to 1 October 2013 and it is for a period of three (3) years. [25] It is not in dispute that both the Union and the Company have agreed that the 14th Collective Agreement is to be implemented from 1.5.2013 under Article 3, which reads: “3.1 This Agreement shall be effective and binding on the parties with effect from 1st May 2012 and thereafter continue in force until superseded by a new collective agreement or award or unless terminated as provided therein.” [26] However, the Industrial Court made the said Order in the 1stAward, that is, the effective date of commencement of the 14th Collective Agreement be made retrospective to 1.10.2013, based on subsection 30(7) of the IRA 1967, which reads: “Awards 30.

The Court shall have power in relation to a trade dispute referred to it or in relation to a reference to it under subsection 20(3), to make an award (including an interim award) relating to all or any of the issues. 12 ….

An award may specify the period during which it shall continue in force, and may be retrospective to such date as is specified in the award: Provided that the retrospective date of the award may not, except in the case of a decision of the Court under section 33 or an order of the Court under paragraph 56(2)(c) or an award of the Court for reinstatement of a workman on a reference to it in respect of the dismissal of a workman, be earlier than six months from the date on which the dispute was referred to the Court.” [27] It is the submission of learned Counsel for the Company that the Industrial Court has not committed any error of law as the Industrial Court has complied with the law in subsection. 30(7) of the IRA

It is not in dispute that under subsection. 30(7) IRA 1967, an award may specify the period and may be retrospective, but the retrospective date of the award may not be earlier than 6 months from the date on which the dispute was referred to the Industrial Court by the Minister under subsection 26(2) of the IRA 1967. [28] In the present case, the Minister had referred the dispute to the Industrial Court on 4.2.2014. Thus the retrospective date cannot be more than 6 months before 4.2.2014, that is 3.8.2013. Therefore, it is the submission of the learned counsel for the Company that when the Industrial Court decided that the effective date of the 14th 13 Collective Agreement is 1.10.2013, this is within the perimeter of s. 30(7). Learned counsel for the Company relied on the following cases:

In National Union of Hotel, Bar & Restaurant Workers v. Casuarina Beach Hotel Sdn Bhd [1981] ILR (Rep) 345, the Industrial Court Chairman held, inter alia, as follows: “Be that as it may once the dispute is referred to us, the court is bound by the provisions of Section 30(7) IRA which limits backdating to not more than six months from the date of reference by the Minister.”

(ii) In Riviera Bay Resorts & Condo Management Sdn Bhd v. Kesatuan Kebangsaan Pekerja-Pekerja Hotel, Bar dan Restoran [2004] 2 ILR 326, the Union had argued that the Collective Agreement was to take effect from 1.1.2002 to 31.12.2004. The Industrial Court held that it could not order a retrospective date earlier than 23.11.2002 as this would be more than the six (6) months after the ministerial reference date, that is 22.4.2003 and this would offend subsection 30(7) of the IRA 1967. [29] However, I am of the considered opinion and I agree with the decision of Justice Haidar in Sarawak Commercial Banks Association v. Sarawak Bank Employees’ Union [1990] 2 MLJ 315, that the restriction to award retrospectively pursuant to 14 subsection. 30(7) IRA 1967 is only applicable where parties have not agreed on the effective date. [30] In Sarawak Commercial Bank Association case, the parties had entered into a collective agreement relating to the terms and conditions of service for the period 1985-1987. When the agreement expired on 31.12.1987, the parties negotiated for a new collective agreement. Since the parties cannot conclude a new agreement, their dispute was referred to the Industrial Court by the Minister under section 26(2) of the IRA 1967. The parties have agreed on several terms, including article 2 which states that the effective date is 1.1.1988. When the Award was handed down on 5.5.1989, the Industrial Court ordered that the Award is to come into effect on the agreed affective date, that is, 1.1.1988. The issue before the court is whether the retrospective order is in breach of subsection 30(7) of the IRA 1967. At page 316, the Court said as follows: “However, Mr. Varughese, counsel for the applicant, submitted that even though it is clear that the rest of the items that were agreed on are to be effective from 1 January 1988 but since art 19 (rates of pay) is a disputed item, the Industrial Court should not follow the agreed effective date to be applicable to the other disputed items. With respect, I do not see the logic of such an argument as art 2 (pertaining to the date of the coming into force of the agreement) is an agreed item and there is no qualification to art 2 at all. In that 15 event, in my view, the implementation of all the articles in the agreement will have the same effective date. The issue for me to consider is whether the retrospective order made by the Industrial Court is in breach of s 30(7) of the Act and if so whether such breach is an error of law or that error goes to jurisdiction, power or validity.” (emphasis added) [31] Justice Haidar then looked at subsection. 30(7) of the IRA 1967 and held that the word ‘may’ in this provision is not mandatory but discretionary. At page 317, his Lordship held: “Section 30(7) of the Act reads: An award may specify the period during which it shall continue in force, and may be retrospective to such date as is specified in the award: Provided that the retrospective date of the award may not, except in the case of a decision of the Court under section 33 or an order of the Court under paragraph 56(2)(c) or an award of the Court for reinstatement of a workman on a reference to it in respect of the dismissal of a workman, be earlier than six months from the date on which the dispute was referred to the Court.” (Emphasis added) 16 Mr. Varughese, counsel for the applicant, urged the court to read the word ‘may’ as ‘shall’, thereby making sub-s 7 a mandatory provision and cited Fung Keong Rubber Manufacturing (M) Sdn Bhd v Lee Eng Kiat & Ors as the authority. But in my view the reasons given by the Federal Court in Fung Keong’s case for the strict construction on the time-limit clause are inapplicable here for the Federal Court said at p 240: In our view the whole purpose of this part of the legislation is to provide workmen with a cheap and speedy remedy to obtain reinstatement. Quite clearly it would be extra-ordinarily difficult for employers to keep industry going if claims for reinstatement on the ground of wrongful dismissal could be made many months or years, instead of the statutory period of one month, after dismissal had taken place. For myself I would read the word ‘may’ as discretionary and at most, directory and I say so for the following reasons:

The restriction imposed on the power to make the award retrospectively is applicable only in respect of cases where the parties do not agree on the effective date of the agreement. This is obvious as if the parties took time to settle the dispute on some substantial matters but agreed on 17 the date of its implementation and thereby finally referred the dispute under s 26(2) of the Act to the Minister of Labour late, then the whole scheme will be defeated especially in view of the fact that this agreement is to be a continuation of the previous agreement. In my view this will be in conflict with s 30(5) which reads: The Court shall act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal form.” (emphasis added) [32] The same position was taken by Justice Aziah Ali in Kumpulan O’ Connor’s (M) Bhd v. Mahkamah Perusahaan Malaysia and Ors [2010] MLJU 1124 where Her Ladyship held that s. 30(7) IRA 1967 only applies where the parties cannot agree on the effective date of the new Collective Agreement. In paragraph [10], it was held that: “[10] Having considered the submissions and provisions of section 30(7), I agree with counsel for the Applicant. In my opinion, section 30(7) only applies where parties cannot agree on the effective date of the new CA. I find no basis in the submission of counsel for the 2nd respondent that section 30(7) applies only to new CA i.e. the 1st CA. To my mind where parties have provided in the existing CA or agreed during negotiation on the 18 effective date of the new CA, then in such cases, there is no basis for the application of s. 30(7).” (emphasis added) [33] In the present case, since the parties have agreed on the effective date in Article 3 to be 1.5.2012, and that Article 3 also forms part of the 1st Award, then the 1st Award suffers from ambiguity when the said Award also made a retrospective order under subsection 30(7) of the IRA 1967 that the implementation date of the 14th Collective Agreement is 1.10.2013. [34] The ambiguity arose from the two (2) dates of implementation in the 1st Award and that the retrospective effect of the award was backdated to 1.10.2013 pursuant to subsection 30(7). Therefore, when the Industrial Court in the Impugned Award makes a finding that there was no ambiguity in the 1st Award, the Industrial Court has made an error of law in its interpretation of subsection 30(7) of the IRA 1967. Since the parties here have agreed that the effective date of the 14th Collective Agreement is 1.5.2012, therefore subsection 30(7) of the IRA 1967 is not applicable. [35] In the premise, I am of the considered opinion that the Industrial Court has committed an error of law in its interpretation and therefore part of the award, in respect of the effective date, is quashed and pursuant to Rama Chandran’s case, I ordered that the effective date of the 14th Collective Agreement is as agreed 19 in Article 3(1), that is 1.5.2012. Thus, the 14th Collective Agreement commenced on 1.5.2012 for a period of three years, until 30.4.2015. (AZIZAH BINTI HAJI NAWAWI) JUDGE HIGH COURT MALAYA (Appellate and Special Powers Division 2) KUALA LUMPUR Dated: 21st February 2018 For the Applicant : V.K Raj Messrs P. Kuppusamy & Co. Kuala Lumpur. For the 1st Respondent: Sebastian Tay Hanxin/David Tan Messrs Lee Hishammuddin Allen & Gledhill Kuala Lumpur. Cases referred:

Booi Kim Lee v YB Menteri Sumber Manusia & Golden Plus Geaniait SB [1999] 3 MLJ 515

R. Rama Chandran v. The Industrial Court of Malaysia & Anor [1997]

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

Sarawak Commercial Banks Association v. Sarawak Bank Employees’ Union [1990] 2 MLJ 315, 20

Kumpulan O’ Connor’s (M) Bhd v. Mahkamah Perusahaan Malaysia and Ors [2010] MLJU 1124.