Perusahaan Otomobil Nasional Sdn Bhd v 1. Mahkamah Perusahaan Malaysia (Permohonan Semakan Kehakiman No. WA-25-157-09/2016)

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

An order of certiorari to quash the entire Award No. 710 of 2016 dated 10.6.2016 (the “Award”); and

(ii) That all further proceedings to enforce or execute the Award and all proceedings in the Industrial Court Case No. 7/4- 767/13 be stayed pending full disposal of this action. [2] The grounds of the application are:

The 1st respondent had misdirected itself in applying the correct principles of industrial law and jurisprudence or had acted beyond/against its jurisdiction by taking into account irrelevant matters.

(ii) The 1st respondent had misdirected itself in applying the correct principles of industrial law and jurisprudence or had acted beyond/against its jurisdiction when it failed to take into consideration relevant matters. 3

(iii) The 1st respondent had misdirected itself in applying the correct principles of industrial law and jurisprudence or had acted beyond/against its jurisdiction when it arrived at its findings without considering and/or had failed to sieve trough and evaluate the evidence adduced by both parties before it.

(iv) The 1st respondent had misdirected itself in applying the correct principles of industrial law and jurisprudence or had acted beyond/against its jurisdiction when it arrived at erroneous findings and/or failed to consider the fundamental law pertaining to evidence.

The 1st respondent had misdirected itself in applying the correct principles of industrial law and jurisprudence or had acted beyond/against its jurisdiction when it reached a decision that so perverse without justification which no similarly circumstanced tribunal would have reached.

(vi) The 1st respondent had misdirected itself in applying the correct principles of industrial law and jurisprudence or had acted beyond/against its jurisdiction when it reached a decision that is against the policy and objectives of the Industrial Relations Act 1967. [3] Having considered the application and the submission of the parties, this court had dismissed the applicant’s application with costs. 4 The Salient Facts [4] The applicant was Malaysia’s National Automotive Manufacturer whilst the 2nd respondent was employed as an Executive of the applicant since September 1999. [5] On 16.11.2010, the Group Internal Audit (the “GIA”) of the applicant’s Holding Company, PROTON Holdings Berhad was instructed to conduct a review on the rejected insurance claim by Export-Import Bank of Malaysia (EXIM Bank) with regards to the defaulted trade debts owed by Zagross Khodro of Iran to the Applicant. [6] Vide its letter dated 3.8.2010, EXIM Bank stated to the applicant that it was unable to admit liability on the claims made by the Applicant due to the breached terms and conditions of the Comprehensive Policy Contract (CPC) between the Applicant and EXIM Bank. [7] As a result of the non-compliance, the applicant suffered a loss of RM6.28 million after EXIM Bank disagreed to pay the applicant the total claim amounting to RM15.71 million. EXIM Bank only paid a portion of the amount i.e. RM9.43 million to the applicant. [8] Based on its review, GIA discovered that there was no proper mechanism in the applicant to ensure the terms and conditions as stipulated in the CPC are monitored and fully adhered to. In 5 addition, GIA also discovered that the 2ndrespondent, as the applicant’s Acting Head of International Sales and Service Division, had failed to diligently discharge his duties by not submitting the Statement of Account Overdue (the “SOO”) to EXIM Bank within the specified dateline despite EXIM Bank’s approval of an extension of 180 days. Therefore, GIA recommended that appropriated disciplinary action be initiated against the 2nd respondent and other employees for their negligence in not timely submitting the requisite SOO to EXIM Bank despite reminders from EXIM Bank. [9] The applicant subsequently issued a show cause letter dated 3.10.2011 to the 2nd respondent and the applicant found that the explanation given by the 2nd respondent was unsatisfactory. Hence, vide a notice of domestic inquiry dated 14.11.2011, the applicant outlined the charges framed against the 2nd respondent. Following the conclusion of the domestic inquiry, the inquiry panel found the 2nd respondent to be guilty of the first charge. The 2ndrespondent’s service was terminated vide a letter dated 15.3.2012. [10] The 2nd respondent filed a representation against the applicant under S.20(1) of the Industrial Relations Act 1967 for being dismissed without just cause and excuse. The 2nd respondent’s representation was referred to the 1st respondent (the “Industrial Court”) for adjudication. [11] Upon hearing both parties, the Industrial Court had, on 10.6.2016 handed down the Award whereby it was held that the 2nd 6 respondent’s dismissal was done without just cause or excuse and ordered the applicant to pay the 2nd respondent a compensation in lieu of reinstatement and back wages in the sum of RM633,528.00. [12] Being dissatisfied with the Industrial Court Award, the applicant filed this present judicial review application to challenge the said Award. The Findings of the Court [13] The Federal Court in Ranjit Kaur S Gopal Singh v. Hotel Excelsior (M) Sdn Bhd [2010] 8 CLJ 629 has set out the function of the court in an application for Judicial Review and the correct test to be applied in reviewing findings of fact made by the Industrial Court, to be as follows: “[15] …… Historically, judicial review was only concerned with the decision making process where the impugned decision is flawed on the ground of procedural impropriety. However, over the years, our courts have made inroad into this field of administrative law. Rama Chandran is the mother of all those cases. The Federal Court in a landmark decision has held that the decision of inferior tribunal may be reviewed on the grounds of "illegality", "irrationality" and possibly "proportionality" which permits the courts to scrutinize the decision not only for 7 process but also for substance. It allowed the courts to go into the merit of the matter. Thus, the distinction between review and appeal no longer holds. [16] The Rama Chandran decision has been regarded or interpreted as giving the reviewing court a license to review without restrain decisions for substance even when the said decision is based on finding of facts. However, post Rama Chandran cases have applied some brakes to the courts' liberal approach in Rama Chandran. The Federal Court in the case of Kumpulan Peransang Selangor Bhd v. Zaid Mohd Noh [1997] 2 CLJ 11 after affirming the Rama Chandran decision held that there may be cases in which for reason of public policy, national interest, public safety or national security the principle in Rama Chandran may be wholly inappropriate. [17] The Federal Court, in Petroliam Nasional Bhd v. Nik Ramli Nik Hassan [2003] 4 CLJ 625, again held that the reviewing court may scrutinise a decision on its merits but only in the most appropriate of cases and not every case is amenable to the Rama Chandran approach. Further, it was held that a reviewing judge 8 ought not to disturb findings of the Industrial Court unless they were grounded on illegality or plain irrationality, even where the reviewing judge might not have come to the same conclusion. [18] The Court of Appeal has in a number of cases held that where finding of facts by the Industrial Court are based on the credibility of witnesses, those findings should not be reviewed (see William Jacks & Co (M) Sdn BHd v. S Balasingam [1997] 3 CLJ 235, National Union of Plantation Workers v. Kumpulan Jerai Sdn Bhd (Rengam) [2001] 1 CLJ 681, Quah Swee Khoon v. Sime Darby Bhd [2001] 1 CLJ 9, Colgate Palmolive (M) Sdn Bhd v. Yap Kok Foong & Another [2001] 3 CLJ 9. However, there are exceptions to this restrictive principle where:

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

there is no evidence to support the conclusion reached. (See Swedish Motor Assemblies Sdn Bhd v. Hj. Md Ison Baba [1998] 3 CLJ 288 ]. 9 [19] It is clear from the above authorities that the scope and ambit of Rama Chandran had been clearly explained and clarified. Decided cases cited above have also clearly established that where the facts do not support the conclusion arrived at by the Industrial Court, or where the findings of the Industrial Court had been arrived at by taking into consideration irrelevant matters, and had failed to consider relevant matters into consideration, such findings are always amendable to judicial review”. (emphasis added) [14] Bearing in mind the above principles, the issue before the Industrial Court whether the 2nd respondent has committed an act of misconduct which justified a dismissal. In Wong Yuen Hock v Syarikat Hong Leong Assurance Sdn Bhd & Anor [1995] 2 MLJ 753, the Federal Court held that the Industrial Court is required to determine the following issues:

whether the misconduct relied upon by the Management as the basis for the dismissal, was in fact committed by the workman; and if so,

(ii) whether such grounds constitute just cause and excuse for the dismissal. 10 [15] After hearing the evidence, the Industrial Court found that the 2nd respondent has not committed the misconduct complained of by the applicant. [16] The 2nd respondent was issued with a show cause letter dated 3.10.2011 on 4 charges. The 2nd respondent replied in a letter dated 5.10.2011. The 2nd respondent was informed by the applicant that a domestic inquiry would be held on 2.11.20111. After the domestic inquiry, the 2nd respondent’s service was terminated vide a letter dated 15.3.2015, whereby the applicant had been found guilty in respect of the following charge: “That you between 23rd August 2007 to 30th October 2008, while you were then as the Acting Head of International Sales and Service Division failed to discharge your duty diligently by not submitting the Statement of Amounts Overdue (SOO) to Exim Bank within the specified dateline; after the bank approved the extension of 180 days in its letter of reference UDW/2007- CLD 0033 dated 18 December 2007 as follows: 11 No Shipment date Amount (RM) Original due date New date as per EXIM letter Actual submission date

1.

22.1.2007 3.92 million 23.7.2007 22.1.2008 12.10.2009

2.

28.1.2007 13.53 million 29.7.2007 28.1.2008 12.10.2009

3.

10.2.2007 820,044 11.8.2007 10.2.2008 12.10.2009 4.

18.3.2007 990,369 19.9.2007 18.3.2008 12.10.2009 5.

22.3.2007 53,268 23.9.2007 23.11.2007 12.10.2009 Due to the non compliance with the new submission date, resulted in PROTON breaching the Terms and Conditions of the Comprehensive Policy Contract under Paragraph 13(i)(b) Policy No. CPC/0041/09/2006 as follows:

The Exporter shall declare to the Company: -

On or before the tenth day of each month all amounts which at the end of the previous month remained wholly or partly unpaid for more than two months from the original due 12 date of payment in respect of contracts and exports previously declared. And as a result of non-compliance with EXIM Bank’s Comprehensive Policy Contract’s Terms and Conditions, PROTON suffered a loss of RM6.28 million after EXIM disagreed to pay PROTON the total claim amounting to RM15.71 million, but only paid a portion of the amount ie. RM9.43 million.” [17] The 2nd respondent was dismissed based on charge of late submission of the SOO. However, when the applicant made its claim under the policy, EXIM Bank had rejected the claim based on three (3) reasons, namely:

late declaration of export;

(ii) late notification of SOO; and

(ii) late payment of premium. [18] The 2nd respondent was only involved in reason (ii), and had nothing to do with reason (i) or (iii) above. On this issue, the Industrial Court made the following finding: “Clearly, the issue of late notification of the SOO is one of the reasons and not the only reason. COW1 in cross examination agreed that charge 1 against the Claimant has nothing to do with reasons 1 and 3 stated in the 13 rejection letter by Exim Bank. Charge 1 was solely for the late issuance of the SOO which was only one of the reasons for the rejection. The Learned Counsel for the Company submitted that the Company had suffered a loss of RM6.28 million after Exim Bank Bhd disagreed to pay the total claim; due to the Claimant’s gross negligence in not submitting the SOO in accordance with the extended dateline. However, the question is: was this loss suffered due to all the 3 breaches of terms and conditions in the letter of rejection or was it only for the second breach stated i.e late notification of overdue amount?No explanation was given by the Company as to this; none of the Company’s witnesses have given evidence to show that the loss suffered was solely due to the late submission of the SOO. Whereas, it is also the evidence before this Court that Exim Bank Berhad had reminded the Company in relation to the late payment of premium in their letter dated 12.03.2009 and 12.06.2009. further, COW1 in cross examination had also agreed that there were delays in the payment of premiums by the Company (COB page 26). How then, did the Company arrive at the conclusion that the Claimant was solely to be blamed for the rejection of the claims by Exim Bank Berhad?” (emphasis added) 14 [19] Therefore, the Industrial Court has made a finding of fact that the late notification of the SOO is not the only reason for EXIM Bank’s rejection of the applicant’s claim, and therefore it cannot be said that the late notification of the SOO had caused PROTON to suffer the RM6.28 million. [20] Having considered the decision of the Industrial Court, I am of the considered opinion that the Industrial Court has made finding of facts with regards to the Statement of Amounts Overdue (SOO), which was only one of the reasons for EXIM Bank to refuse to honour the policy resulting in the loss of RM6.28million as alleged by the Applicant. Therefore, it is reasonable for the Industrial Court to conclude that the loss suffered by the applicant cannot be solely due to the late submission of the SOO as none of the applicant’s witnesses have given evidence to show the same. [21] Added to that, the Industrial Court has made a finding of fact that no evidence was given to support the claim that the SOO was the main cause of the loss as EXIM Bank’s letter dated 12.3.2007 makes it very clear that the Bank had accepted the SOO that was issued in August. In the same letter, EXIM Bank also warned the applicant that failure to pay its premiums may jeopardise any claims, as the applicant had not been paying the premiums. Therefore, the possibility is that the more important reason for EXIM Bank’s rejection was the non-payments of the premiums, and not the issue of the SOO. The Industrial Court then makes this finding in paragraph 56: 15 “The Court is of the view that it is best known only to Exim Bank Berhad as to why there was a sudden change of stand and an about turn by Exim Bank Berhad of the Company’s claim; as to why the said claim was rejected. This question, could only be answered by Exim Bank Berhad, where again the Company failed to provide such evidence before this Court.” [22] In the premise, based on the evidence before the Industrial Court, it cannot be said that the findings of the Industrial Court to be irrational or perverse. The application is dismissed with costs. (AZIZAH BINTI HAJI NAWAWI) JUDGE HIGH COURT MALAYA (Appellate and Special Powers Division 2) KUALA LUMPUR Dated: 25 May 2018 For the Applicant : Ahmad Addlan bin Nabil Messrs Lee Hishammuddin Allen & Gledhill Kuala Lumpur. For the 2nd Respondent : Shanker Subbramaniam/Juanita Chua Messrs Shanker & Arjunan Kuala Lumpur. 16 Cases referred:

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

Wong Yuen Hock v Syarikat Hong Leong Assurance Sdn Bhd & Anor [1995] 2 MLJ 753.