Kong Seng Chai v Perusahaan Nasional Otomobil Sdn Bhd (W-02(A)-85-01/2018)

1 IN THE COURT OF APPEAL, MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO: W-02(A)-85-01/2018 BETWEEN KONG SENG CHAI … APPELLANT AND PERUSAHAAN NASIONAL OTOMOBIL SDN BHD … RESPONDENT [In the Matter of the High Court of Malaya at Kuala Lumpur (Appellate & Special Powers Division) Application for Judicial Review No: WA-25-170-06/2017 In the Matter of an application for leave for an order of certiorari to quash and in relation to Award No. 465 of 2017 dated 29.3.2017 by the Industrial Court No. 3

(13)(25)/4-844/14 received on 5.4.2017; And In the Matter of Section 20 of the Industrial Relations Act 1967 And In the Matter of Schedule 1 to the Courts of Judicature Act 1964 And In the Matter of Order 53 of the Rules of Court 2012 Between 2 Kong Seng Chai … Applicant And

1. Perusahaan Otomobil Nasional Sdn Bhd

2. Industrial Court Malaysia … Respondents] CORAM: TENGKU MAIMUN BINTI TUAN MAT, JCA MARY LIM THIAM SUAN, JCA HASNAH BINTI DATO’ MOHAMMED HASHIM, JCA JUDGMENT OF THE COURT [1] This was an appeal against the dismissal for an order of certiorari to quash the decision of the Industrial Court that had refused the appellant’s complaint that his dismissal by the 1st respondent had been without just cause and excuse. After due deliberations and considerations of the submissions, the appeal records and the award of the Industrial Court and more particularly, the decision of the High Court, we unanimously allowed the appeal for the following reasons. 3 The complaint [2] The appellant was employed by the 1st respondent on a fixed three year term contract with a monthly salary of RM30,000.00 with effect from 20.6.2011. [3] There was a change of management in the third quarter of 2012. On 29.8.2012, a Task Force Customer Compliance Meeting to discuss various issues in relation to the supply of cars to the customers was scheduled for 9.30 a.m. The meeting, held at the VIP Lounge of the premises, was to be chaired by the 1st respondent’s Deputy Chief Executive Officer, Lukman bin Ibrahim (COW 1), the most senior member of the management team as the 1st respondent did not have a CEO at that time. [4] The appellant, as head and General Manager, Supply Chain Management was required to attend and make a presentation. It is not in dispute that the appellant was present for a few minutes before the meeting started. He then left. He did not return, neither did he attend the meeting. [5] Disciplinary proceedings were then immediately commenced against the appellant. In fact, action was taken against him the very next day after the meeting, on the 30.8.2012. The disciplinary proceedings culminated in the termination of his employment. [6] These proceedings started with a show cause letter dated 30.8.2012 issued by the 1st respondent requiring the appellant to answer four charges framed against him before 6.9.2012: 4 Mr. Kong Seng Chai Staff No. 00032502 General Manager Supply Chain Management Dear Kong, SHOW CAUSE LETTER We have received a report that you have been alleged to have committed several acts of misconduct. As such you are required to explain the following charges leveled against you: Charge 1 You had committed an act of insubordination when you attended the Management Task Force customer complaint meeting held on 29 August 2012 at 9.30 a.m. at VIP Lounge, COE and you did not return to attend the said meeting when you were instructed by the Deputy Chief Executive Officer to wear a necktie during your presence at the commencement of the meeting. Charge 2 You have been absent from the Management Task Force customer complaint meeting held on 29 August 2012 at about 9.35 a.m. to 2.00 p.m. at VIP Lounge, COE; when you know or ought to know that you have to be present in the said meeting. Charge 3 You have not complied with the Company’s policy and guideline dated 14 May 2012 and a reminder policy and guideline dated 16 August 2012, by not wearing a necktie during your presence at the commencement of the Management Task Force customer complaint meeting held on 29 August 2012 at 9.30 a.m. at VIP Lounge, COE. Charge 4 By committing the acts as in Charge 1 to Charge 3 above, you have breached the trust and confidence of the Company being a member of the Management Team and especially holding the position of a General Manager, Supply Chain Management. The above charges whether taken singly or in combination and if satisfactorily established constitute clear violation of your duty of good faith and fidelity which you owed to the Company in that you have failed to exercise reasonable care and diligence and to act in the best interest of the Company and have breached your fiduciary duties to the Company. 5 We hereby request a written explanation from you as to why the Company should not take disciplinary action against you. We would expect your explanation to reach the undersigned by 6 September 2012. Should you fail to submit your explanation within the stipulated date and time, we will presume that you have no explanation to offer and therefore we will proceed to take appropriate disciplinary action against you. You are hereby suspended with half pay with effect from today until further notice. During the period of suspension, you are not allowed to enter the Company’s premises or attend any function or activities on behalf of the Company. Yours sincerely, PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. Sgd. WAN ROSLAN WAN ABBAS Director Group Human Resource c.c. Dato’ Lukman Ibrahim Deputy Chief Executive Officer I hereby acknowledge receipt of the letter and fully understood the contents herein. ---------------------------- (KONG SENG CHAI) [7] In essence, those charges relate to allegations of breaches of trust and confidence that the 1st respondent had in the appellant as a member of the Management Team; that the appellant was in “clear violation of your duty of good faith and fidelity which you owed to the Company in that you have failed to exercise reasonable care and diligence and to act in the best interest of the Company and have breached your fiduciary duties to the Company”. [8] The appellant duly replied vide letter dated 6.9.2012. The contents of his reply are as follows: 6 Dear Sir, RE: REPLY TO SHOW CAUSE LETTER DATED 30 AUGUST 2012 I refer to the show cause letter dated 30 August 2012, Ref No. GHR/IR/016/32502, duly signed by your good-self and hand delivered to me by Encik Nadzrin-HR wherein I am asked to submit my explanation in writing by 6 September 2012 as to why the disciplinary action should not be taken against me based on the charges stated therein. Before I respond to the said show cause letter and the four (4) charges preferred against me, perhaps it is best that I should state an account of the relevant incidents that transpired on 28 August 2012 and 29 August 2012. It is my hope that this will provide a better explanation. Among others, the relevant incidents are as follows: 1) Preparatory meeting was called by En Abdul Rashid at 3.00-5.00 pm on the 28th August 2012, in his office wherein:  I attended this meeting at the request of En Abdul Rashid.  Key points within this meeting that are relevant to the events transpired during the meeting with the Deputy Chief Executive Officer at 9.30 am on 29 August 2012 are as follows: i. En Hisham, previously ETM head, now newly reassigned to the Deputy Chief Executive Officer’s office, informed that the Deputy Chief Executive Officer only wanted to meet the Sector Heads and not any of their subordinates, indicating that I’m NOT supposed to be in that meeting. However, En Abdul Rashid did inform that he wanted me to go for this meeting to make the presentation. Thereafter, he’ll assume responsibility in making the necessary reports to the Deputy Chief Executive Officer himself. ii. Only when I asked, I was told what to prepare for the meeting. The meeting ended before 5pm and immediately thereafter I went back to my office. En Hashim and En Sarul were both called to my office immediately for the necessary preparatory work. The necessary data were only given to me by En Hashim just before 7pm. As I have a dinner appointment for which I was already late, I had to take the data back home to work. iii. After my dinner appointment, I had to work till just before midnight to complete the necessary presentation materials for the meeting on the 29 August 2012. 7 iv. I duly attended the said meeting, in Proton’s uniform. 2) Management Task Force meeting (which was being held for the first time) was called by the Deputy Chief Executive Officer at 9.30am at VIP Lounge, COE office on 29 August 2012.  I had arrived in the COE office block much earlier than the scheduled meeting time in order to get the additional information which I feel will be required for the meeting and as such I met with Cik Alia since Cik Norelis was on medical leave, to obtain previous sales data and CBU stock records.  I arrived at the meeting venue approximately 5 minutes before the stipulated starting time of 9.30 am.  The Deputy Chief Executive Officer, En Abdul Rashid and 2 other persons were already seated.  I proceeded to the laptop which was already on the table to copy my presentation file into the laptop but to my dismay before I could insert my thumb drive into the laptop, the Deputy Chief Executive Officer asked me, why I wasn’t wearing a tie. I explained politely that I am from the plant. His response to my explanation was, “Is this the plant?”  I looked at him and I was waved out of the meeting by En Abdul Rashid. As I was walking out the meeting room, I could hear the Deputy Chief Executive Officer saying, “Macam budak sekolah.”  Having been waved out of the meeting room by En Abdul Rashid, I left thinking that my presence is not required and I proceeded back to my office to continue working as usual.  I forwarded the presentation file to the office of En Abdul Rashid, in case he may need it. Up to and until I left for lunch at 1.00 pm, I didn’t receive any calls from anybody to return to the said meeting.  With the experience of what had happened in the said meeting, I arrived for work the next day, 30 August 2012, with a tie, to be left in my office, in case I need it. At approximately 8.30 am, I walked to the Proton clinic to see the doctor for a follow up on a blood test done before the Hari Raya Puasa shutdown.  Having seen the doctor, on my way back to my office, I received a call from En Nadzrin from HR and an appointment to meet was made at 9.45 am. I asked for En Hashim to see me on some work matters before the appointment with En Nadzrin as I still have time. 8  I was shocked to receive a show cause letter from En Nadzrin wherein I was also suspended immediately with half pay. Even more shocking and embarrassing was the way I was escorted to leave my office immediately as though I am a criminal.  With Nadzrin’s approval, I took some of my personal files with me while being escorted out. Now, having stated all the above relevant incidents, let me now explain the four (4) charges that has been preferred against me, which I think will effectively dispel the charges against me. It is also apparent that all the four (4) charges are one and the same issue and for reasons best known to the Company, the said issue has been split into four (4) charges to portray as though I have committed serious misconducts. In reply to Charge 1, I vehemently deny committing any act of insubordination as alleged therein. As I have explained hereinabove, after I entered the meeting venue, I was asked why I wasn’t wearing a tie, to which, I provided a reasonable explanation that I am from the plant. Thereafter, for no apparent reason by way of sign language, I was waved out from the meeting room by En Abdul Rashid and there was no instruction whatsoever for me to return to the said meeting. Furthermore, as I have stated above, as mentioned by En Hisham I wasn’t even supposed to be in the meeting because the Deputy Chief Executive Officer only wants to meet the Sector Heads (I am not one of them). However, I attended the meeting as requested by En Abdul Rashid and when he waved me out, I left the meeting thinking that my presence was not required. In reply to Charge 2, I vehemently deny being absent from the said meeting as alleged therein. The fact remains that I was physically present in the meeting 5 minutes before the scheduled time. I left the meeting upon being waved out and/or instructed to leave the meeting upon being asked as to why I wasn’t wearing a tie. In fact as I have stated hereinabove, I have spent so much time and effort, to the extent of working late at work, and till almost midnight at home, to complete the preparatory work so that I can attend the said meeting. In response to Charge 3, I vehemently deny being not in compliance to the said Company’s policy and guideline as alleged therein. It is within the Company’s knowledge that the responsibilities within my job scope, and especially where my normal work office is, dictates that I’m involved in production and furthermore my office is within the plant premises. Hence, I have complied with the company’s policy and guidelines issued, when I am wearing the company’s uniform issued to me as that being my normal proper working attire. To state further, I had been wearing the uniform provided by the Company without a tie since I commenced employment and was not in any point in time told and/or warned that it is against the Company’s policy and guidelines issued. Despite the express provision in the 9 Company’s policy and guidelines that I need not wear a tie, due to the incident in the said meeting, I do now have a tie in my office. With regard to Charge 4, based on all the aforesaid explanations, I maintain my stand that I have always acted in the best interests of the Company and had never breached the so called “trust and confidence” of my office as alleged by the Company. I strongly refute all the charges preferred against me and the Company it put to strict proof thereof. Lastly, I would also like to raise a very strong protest over my suspension with half salary as there was no such provision under my existing employment contract with the Company. Hence, my suspension should be with full salary and I hereby demand that the same is rectified immediately, failing which I am left with no alternative but to resort to other recourse available to me under the employment law. Based on all the above narrations, I sincerely believe that I did not commit any misconduct that warrants any disciplinary action to be taken against me as alleged. In fact my suspension by the Company is unwarranted. Hence, hope to hear a favourable reply at the soonest. Please do not hesitate to contact me for further clarification on any matters in this letter you deem to be still unclear. Thank you. Yours sincerely, Sgd. Kong Seng Chai GM-SCM Proton Cc Dato’ Lukman Ibrahim Deputy Chief Executive Officer I hereby acknowledge receipt of the letter. -------------------------------- Name: Date: [9] On 29.9.2012, the appellant received a Notice of Inquiry dated 26.9.2012 wherein he was informed that because his “… explanation which is unsatisfactory and our investigation in the matter, a domestic inquiry will 10 be convened for you to answer the following alleged charges leveled against you.” The domestic inquiry was scheduled for 10.30 a.m. on 2.10.2012. In that same notice, the appellant was informed that three charges were now leveled against him: Charge 1 In view of the importance of the Task Force Customer Complaint Meeting that was held on 29 August 2012 at 9.30 a.m. at VIP Lounge, COE; and the presentation you were to make to the Deputy Chief Executive Officer, it was incumbent upon you as a staff holding a General Manager position to ensure that you were properly attired by wearing a necktie when you attend the said meeting. You failed to wear a necktie and had thereby acted disrespectfully. Charge 2 At the Task Force Customer Complaint Meeting that was held on 29 August 2012 at 9.30 a.m. at VIP Lounge, COE, the Deputy Chief Executive Officer commented on your failure to wear a necktie and you were instructed by the Deputy Chief Executive Officer to get a necktie. It was clear and implied from his instruction that you were to return to the said meeting wearing a necktie and to make your presentation. You left the meeting at about 9.35 a.m. and failed to return to the said meeting to make the presentation. In doing so, you had been insubordinate and disobedient. Charge 3 In failing to make the presentation at the Task Force Customer Complaint Meeting that was held on 29 August 2012 at 9.30 a.m. at VIP Lounge, COE, you had also disobeyed the instruction of Encik Abdul Rashid Musa, Sector Head Technical Operations where the instruction was given earlier to you during the Preparatory Meeting on 28 August 2012 between 2.30 p.m. to 4.30 p.m. at his office. [10] The appellant attended the domestic inquiry on 2.10.2012, complained that the charges differed from those in the show cause, and pleaded that he was not guilty of all three charges. The inquiry was then adjourned to 11

4.10.2012 in order to allow the appellant time to prepare and “get his witnesses.” [11] After a hearing held over several hearing dates, the appellant received on 2.11.2012, a letter dated 30.10.2012, informing him that he had been found guilty of the charges preferred against him. He was further informed that due to the gravity of his misconduct, his services with the 1st respondent was terminated with effect from 24.10.2012. [12] The appellant resorted to the statutory dispute resolution mechanism found under the Industrial Relations Act 1967. He filed a complaint with the Minister of Human Resources who, on 13.10.2014 and pursuant to section 20(3) of the Industrial Relations Act 1967, referred his representation to the Industrial Court. [13] The representation before the Industrial Court was heard de novo where the domestic inquiry notes were not relied on. Three charges were levelled at the appellant. Those three charges were the same as those preferred at the domestic inquiry. [14] The Industrial Court evaluated the evidence and found that on a balance of probabilities, the totality of the evidence before the Court proved misconduct on the part of the appellant for which he was terminated by the 1st respondent. These were the findings of the Industrial Court on each of the three charges. 12 [15] On the first charge, the Industrial Court found that the appellant had failed to wear a necktie and had thereby acted disrespectfully. This was because the meeting was a “first TFFM ever held by the Company and it was chaired by the most senior management head and it was inexcusable that the Claimant had not made an effort to wear a tie.” The Industrial Court held that as a General Manager, the appellant “should not have been at odds with the higher management”; that the appellant’s attire “was in direct contravention with the Company’s rules and guidelines on the Company’s dress code.” [16] The second and third charges were taken together wherein the Industrial Court found that the appellant had been insubordinate and disobedient when the appellant “willfully ignored the instructions of COW 1 and COW 2 and had failed to return to the meeting” to make the presentation. According to the Industrial Court, the appellant “was well aware that the meeting was an important meeting during which he was required to make a presentation. Yet the Claimant did not find it fitting to be properly attired for the meeting which was chaired by the most senior member of the management and had walked out of the said meeting upon being confronted by COW 1.” [17] The Industrial Court added that “despite knowing that his presentation was required for the purposes of the said meeting, the Claimant had taken more than two hours to e-mail the presentation material to COW 2’s personal assistant.” The appellant was also said to have been “insubordinate and defiant of his superior orders from the time he left the meeting room”; that because it was his duty, after receiving his superior orders, to ensure that he 13 executed their orders and not for his superiors to chase after him to perform the assigned task”, it was irrelevant that no one contacted him about his presentation. [18] According to the Industrial Court: “Although the Claimant’s failure to conform to the Company’s dress code in not wearing a neck tie for the meeting could be viewed as a minor misconduct, what had ensued after the Claimant had left the meeting was serious misconduct. It was a reflection of the Claimant’s conduct and attitude in not being able to accept his superior’s instructions to go back to the meeting with a neck tie and to deliver his presentation. These acts amount to serious acts of insubordination and disobedience. Furthermore, the Claimant was a General Manager and he was to make his presentation to the higher management of the Company. The insubordinate acts cannot be condoned by the Company as they may lead to disrespect and defiance in any establishment and cause conflicts and result in dire consequences.” [19] The Industrial Court then dismissed the claim, confirmed the decision of the 1st respondent in terminating the appellant as the punishment meted against the appellant; that following the doctrine of proportionality and acting “with equity and good conscience and the substantial merits of the case without regard to the technicalities and legal form as stated under section 30(5) of the Act”, found that the termination of the appellant’s employment was “appropriate and commensurate with the serious misconduct committed” by the appellant. [20] The appellant filed an application for judicial review at the High Court. 14 At the High Court [21] After reminding herself of the applicable principles as set down in Ranjit Kaur S Gopal Singh v Hotel Excelsior (M) Sdn Bhd [2010] 8 CLJ 629 and the leading decisions discussed therein, the learned Judge dismissed the application. The learned Judge found that there were two versions of the “effect of the wave” before the Industrial Court. [22] Having heard and seen the witnesses giving evidence, the Industrial Court “accepted the Company’s version”, a finding of fact which the High Court should not readily interfere following Menara Pan Global Sdn Bhd v Arokianathan a/l Sivapiragasam [2006] 3 MLJ 49. A further finding of fact made by the Industrial Court was that the “acts of the applicant leaving the Meeting without delivering his presentation as directed by the Company amount to serious acts of insubordination and disobedience and that the punishment of termination was appropriate and commensurate with the serious misconduct committed”; a finding that the High Court was also not inclined to disturb on the ground that “the same cannot be said to be perverse”. Our deliberations and decision [23] The place to start our deliberations must be the Federal Court’s decision in Ranjit Kaur S Gopal Singh v Hotel Excelsior (M) Sdn Bhd [supra]. One of the central issues in that case was whether the decision in R Rama Chandran v Industrial Court of Malaysia & Anor [1997] 1 CLJ 15 147 had altered the principles commonly understood and applied when reviewing decisions of inferior tribunals. [24] A reading of the Federal Court’s decision in Ranjit Kaur indicates that it is not so much that the Court cannot look at the facts, matters or issues that fell for consideration before the tribunal or in this case, the Industrial Court. Rather, due to the peculiar jurisdiction that is invoked, the Courts have, to some degree, limited powers, purpose and jurisdiction. The Courts look not just at the process but also the substance under which an inquiry, complaint or cause is conducted and the impugned decision reached. In that examination, the Courts employ concepts of reasonableness or unreasonableness, relevance or irrelevance, rational or irrational, legality or illegality, proportionality or otherwise, all with the object of ensuring that procedural fairness and the rules of natural justice are observed. The Courts avoid straying into the merits of the matter save in the exceptional cases and where there has been a violation of those principles just enunciated. [25] This may be deduced from the decision in Ranjit Kaur where after acknowledging that over time, the Courts have made “inroads” into the field of administrative law, not confining itself to intervene where the decision making process of the impugned decision is flawed on the ground of procedural impropriety, the Federal Court had held that in the “mother of all those cases”, that is, Rama Chandran, such decisions may be scrutinised “not only for process but also for substance. It allowed the Courts to go into the merits of the matter. The distinction between review and appeal no longer holds.” 16 [26] The Federal Court nevertheless cautioned and reiterated the position that it had taken in Kumpulan Perangsang Selangor Bhd v Zahid Mohd Noh [1997] 2 CLJ 11 as well as in Petroliam Nasional Berhad v Nik Ramli Nik Hassan [2003] 4 CLJ 625; that is, while the Rama Chandran decision is affirmed, 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.” At paragraphs 17 to 19 of its judgment, the Federal Court added: [17] The Federal Court, in Petroliam Nasional Berhad 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 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) [2000] 1 CLJ 681, Quah Swee Khoon v Sime Darby Bhd [2001] 1 CLJ 9, Colgate Palmolive (M) Sdn Bhd v Yap Kok Foong & Another Appeal [2001] 3 CLJ 9. However, there are exceptions to this restrictive principle where:

204. Association of Bank Officers, Peninsula Malaysia & Anor [1988] 3 MLJ We are consequently obliged to exercise our appellate powers and intervene to right the error and misapprehension of the High Court [72] We are in no doubt and have no hesitation in concluding that this instant appeal was an appropriate case which was amenable to the Rama Chandran approach and the High Court ought to have alerted itself to that. Findings of fact of the Industrial Court must nevertheless be scrutinized and the object and overarching principle of acting with equity and good conscience, the intent of the Industrial Relations Act 1967 be observed and applied in a real and meaningful way lest the function and purpose of judicial review fall into disuse or be a dead letter. [73] Finally, there is the matter of the remedy that ought to have been awarded by the Industrial Court had it been so inclined in the appellant’s 33 favour. We note that this was submitted by the appellant’s then counsel before the Industrial Court – see page 335 of the record of appeal, and this would be the general purport of any judicial review application. We were however, not inclined to make any consequential order for the payment of any salaries, compensation or for variable pay as none were sought. On reflection, it may perhaps have been more appropriate had the matter be remitted to the Industrial Court for determination of the amount of compensation to be paid to the appellant. Conclusion [74] For the reasons set out, we agree with the submissions of the appellant and we allow the appeal. The decision of the High Court is set aside and we further allow the application in the terms as sought with costs. Dated: 4th April 2019 (MARY LIM THIAM SUAN) Judge Court of Appeal Malaysia 34 Counsel/Solicitors For the appellant: Kong Seng Chai No.7381, Jalan 1 Taman Selayang Baru 68100 Batu Caves Selangor For the respondent: Thavalingam C. Thavarajah (Ahmad Addlan Nabil with him) Messrs Lee Hishammuddin Allen & Gledhill Level 6, Menara Dutamas, Solaris Dutamas No. 1, Jalan Dutamas 1 50480 Kuala Lumpur