Tekun Concrete (M) Sdn Bhd v Zulkafah Bin Norazri (JB-16-2-04/2021)

This is an appeal against the decision of the Director-General of Labour in Muar given on 31 March 2021 whereby the Director-General of Labour (through the Deputy Director of Labour in Muar) ordered that the Appellant / Defendant to pay the sum of RM18,266- 95 being the balance of salaries for the period between July 2017 until September 2020.

The cause papers are as follows: i. Notice of Appeal. ii. Appeal Records. iii. Supplementary Appeal Records.

The Respondent began working as a Crane Lorry Driver on 4 July 2017 and was given an offer letter dated the same. On 9 October 2017 the Respondent was confirmed in his position as a Crane Lorry Driver. In the confirmation letter, it was written that the “Basic salary remains unchanged”. He worked for 8 hours a day from Monday to Saturday. He has a family with his family and 3 children. November 18, 2021 3

The Respondent had for many years, complained to the management of the Appellant (a company) but it was said to have fallen on deaf eyes. The Appellant was said to have taken from the trips allowance to pay the basic salary and the Respondent’s view was that this tantamount to oppression while the Appellant was of the view that the Respondent is not an employee and hence not entitled to a basic salary. Hence the complaint to the Labour Department and this appeal. THE ISSUES IN THIS APPEAL i. Whether the Respondent is an employee of the Appellant ii. Whether the Appellant is legal obliged to pay a basic salary to the Respondent I shall deal with the issues accordingly. i. Whether the Respondent is an employee of the Appellant

It is not in dispute that the Respondent began working as a Crane Lorry Driver on 4 July 2017 and was given an offer letter dated the same. On 9 October 2017, the Respondent was confirmed in his position as a Crane Lorry Driver. In the confirmation letter, it was written that the “Basic salary remains unchanged”. He worked for 8 hours a day from Monday to Saturday.

It was submitted by the Learned Counsel for the Appellant that the Respondent is not an employee of the Appellant for the following reasons: November 18, 2021 4 a. The confirmation letter as found in Enclosure 4 page 90-96. In the basic salary is left blank and hence there is no basic salary. b. The Respondent is only paid per trip basis and not bound by the Appellant (as a company or employer).

I have perused over the said confirmation letter which is not disputed by any parties. I found a few matters which is of significance: i. The letter is intituled “appointment letter”. ii. It has a Worker ID which is 8274. iii. The letter head bears the name “Tekun Concrete (M) Sdn Bhd” iv. The opening of the letter is “The management is pleased to inform you that following your interview, we are pleased to offer you the position as Driver Crane in Logistic department under the following term and conditions...”. v. There is a Clause 2 entitled “Job Title” and clause 2.2. states “Your appointment shall commence on 3 July 2017 and you are to report duty on this date. The scope of work shall be not limited to the terms and conditions specified herein…”. vi. Clause 3 is on Remuneration. vii. Clause 4 is on Hours of employment. viii. Clause 5 is on Holidays. ix. Clause 6 is on leave of absence. x. Clause 7 is on pension, There is no pension scheme applicable but clause 7.2 states that the “Letter of Appointment is valid only until age 60s”. xi. Clause 8 is on probation period which is specified at 3 months. November 18, 2021 5 xii. Clause 9 is on EPF, SOCSO and Income Tax. xiii. Clause 10 is termination of employment clause. xiv. Clause 11 is on confidentiality. xv. Clause 12 is non solicitation of customers. xvi. Clause 13 is on Disciplinary Rules and Company Policies. xvii. Clause 15 on the return of company’s documents. xviii. Clause 16 is on absolute assignment of design right.

I shall found that the payment slip of the respondent (which is not in dispute) which as an example at page 241 Enclosure 4, clearly states EPF contributions, SOCSO Contributions, allowances etc.

There is also an undisputed document called “Confirmation Letter” from the Appellant dated 9 October 2017 and it states (among others) “Basic salary remains unchanged”.

The Appellant called the following witnesses to support its case before the Labour Court: a. Rina binti Ibrahim b. Tan Hing Peng c. Yu Gia Chang

The evidence are as follows: Rina binti Ibrahim who is the Human Resource Executive of the Appellant gave evidence that she deliberately left the basic salary column as blank because there was none. The work is on order basis. Her evidence is supported by Tan Hing Peng, Head of Logistics of the Appellant. The evidence was essentially the same November 18, 2021 6 as Rina’s. The third witness for the Appellant was Yu Gia Chang, the Head of Accounts Department who also corroborated the evidence of the earlier Appellant’s evidence.

It was also submitted by the Learned Counsel for the Appellant that since the salary column in the Appointment Letter was left blank hence the appointment letter promised nothing of salary and hence it is not an employment and hence the Appellant need not pay salary. Therefore, the Director-General of Labour erred in ruling that the Appellant is the employer of the Respondent.

I found in the Appointment Letter and the Confirmation Letter contained all the terms and conditions for an employment. I found that there were some minor deficiencies in the letter but it is clear that the letter was meant to instruct the Respondent. This can be seen in the language deployed and the contents of the letter.

I prefer the documentary evidence against evidence from witnesses as they are more reliable and trustworthy, untainted with biasness and / or preference, no matter how innocuous it may seem. This is found in s. 91 & s. 92 Evidence Act.

This is found in s. 91 & s. 92 Evidence Act s. 91 Evidence states the following EVIDENCE ACT 1950 91 Evidence of terms of contracts, grants and other dispositions of property reduced to form of document November 18, 2021 7 When the terms of a contract or of a grant or of any other disposition of property have been reduced by or by consent of the parties to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of the contract, grant or other disposition of property or of the matter except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained. ..... 92 Exclusion of evidence of oral agreement When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to section 91, no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting, varying, adding to, or subtracting from its terms: Provided that-

any fact may be proved which would invalidate any document or which would entitle any person to any decree or order relating thereto, such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, the fact that it is wrongly dated, want or failure of consideration, or mistake in fact or law;

the existence of any separate oral agreement, as to any matter on which a document is silent and which is not inconsistent with its terms, may be proved, and in considering whether or not this November 18, 2021 8 proviso applies, the court shall have regard to the degree of formality of the document;

the existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract, grant or disposition of property, may be proved;

the existence of any distinct subsequent oral agreement, to rescind or modify any such contract, grant or disposition of property, may be proved except in cases in which the contract, grant or disposition of property is by law required to be in writing, or has been registered according to the law in force for the time being as to the registration of documents;

any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description may be proved if the annexing of any such incident would not be repugnant to or inconsistent with the express terms of the contract; and

any fact may be proved which shows in what manner the language of a document is related to existing facts. (see also AJWA FOR FOOD INDUSTIES CO (MIGOP) EGYPT v. PACIFIC LUTENG LUEK SDN BHD [2013] 2 CLJ 395; [2012] 3 MLRA 383; SYARIKAT BINAAN UTARA JAYA V. KOPERASI SERBAGUNA SUNGAI GLUGOR BHD [2009] 1 CLJ 786; [2008] 2 MLRA 809.) [16] Further, it is the considered view of this Court that the Court may only interpret within the 4 walls of a contract (See AZMIN HUSSAIN & CO V. ANDREW-DAVID WONG & ONG [2016] 10 CLJ 235; [2016] MLRHU. 1527). November 18, 2021 9 [17] Having set down the relevant facts, I note that the Appellant controlled the remuneration of the Driver, his leave are subject to applications and approval as well as he is subject to a certain disciplinary standard, failing which, would result in termination of the agreement. Further, termination due to disciplinary issues would result in no compensation for the Driver. [18] The issue at hand is whether the Driver is an employee of the Applicant (by making the agreement, a contract OF service) or an independent contractor, paid for his services in a particular contract (which makes it a contract FOR service) in which case, does not render him an employee and hence all benefits of an employee is not available to him. [19] Under the Employment Act 1955 “Contract of service” is defined as: “contract of service” means any agreement, whether oral or in writing and whether express or implied, whereby one person agrees to employ another as an employee and that the other agrees to serve his employer as his employee and includes an apprenticeship contract; [20] Hence, a contract of service is any agreement whether in writing or verbal, expressed or implied, whereby: i. One person agrees to employ another as an employee, and ii. The other person agrees to serve the employer as an employee. [21] It is to be noted that an apprenticeship contract or agreement is also considered a contract of service. November 18, 2021 10 [22] A contract of service can be in the form of a letter of appointment / employment but not limited to such an arrangement. Even an oral arrangement that has all the requirements or an understanding that the same attributes would constitute a contract of service. It is imperative that there is a consensus ad idem on the nature of the relationship. A written agreement is indeed desirable but it is not a must. [23] A written document is handy to settle disputes such as this, in the event that there are conflicting evidence from different sides of the divide. The employer cannot change the terms and conditions of employment unless the employee agrees to it. [24] Any terms and conditions of employment, in a contract of service, that is less favourable than the relevant provision under the Employment Act is illegal, null and void. The provision in the Act will take precedence over a particular contractual term that is less favourable. [25] It is important to note the requirements of Regulation 8 of the Employment Regulation 1957 which states: “Employer to furnish certified copy of particulars under regulation 5(b);” [26] Regulation 5(b) states as follow: “Details of terms and conditions of employment:

Name of employee and NRIC No. November 18, 2021 11

Occupation or appointment;

Wage rates (excluding other allowances);

Other allowances payable and rates;

Rates for overtime work;

Other benefits;

Agreed normal hour of work per day;

Agreed period of notice for termination of employment or wages in lieu;

No. of days of holidays and annual leave;

Wage period.” [27] If Regulation 5 is not observed, particularly by the employer, it does not vitiate the Contract of Service. It merely makes the employer open to legal actions under the Employment Act or any Regulations made thereunder. [28] Further, remuneration need not be in a specific quantified sum. It can come in the form of percentage of income, commissions, and any other tangible formula. It is different for a contract for service where payment is tied to the specific nature of a particular project. Of course, if the project is recurring and ongoing, a specific formula of payment for each project must be laid out. Each project is deemed to be a contract in itself as distinct from other projects, notwithstanding it is recurring. November 18, 2021 12 [29] Lord Denning in STEVENSON, JORDAN & HARRISON LTD v. MACDONALD & EVANS LTD [1952] 1 TLR 101, puts it, “it is often easy to recognise a contract of service when you see it, but difficult to say wherein the difference lies”. [30] An important aspect for consideration is that only an employee under a contract of service will be entitled to invoke the jurisdiction of the Industrial Court in the event where his rights under the statute had been violated by the employer. If not, the claimant can only seek remedy for a breach of contract in a Civil Court. [31] Under s. 20 of the Industrial Relations Act (IRA) 1967, a person has to be qualified as a workman before he can make a claim to be reinstated in his former employment for dismissal without just cause or excuse. [32] The term “workman” is defined under the Act as “any person, including an apprentice, employed by an employer under a contract of employment to work for hire or reward and for the purposes of any proceedings in relation to a trade dispute includes any such person who has been dismissed, discharged or retrenched or in connection with or as a consequence of that dispute or whose dismissal, discharge or retrenchment has led to that dispute”. [33] The judgment of his Lordship Federal Court Justice Chang Min Tat in Federal Court in DR A DUTT v. ASSUNTA HOSPITAL [1981] 1 LNS 5; [1981] 1 MLJ 304 ruled that the term “workman” is to be interpreted liberally and flexibly. The question of whether an individual is a “workman” or not for the purposes of the Act is a mixed November 18, 2021 13 question of fact and law and it is for the Industrial Court to determine this question. Further, the Federal Court held that the label attached to the workman is irrelevant, it is the functions and duties of the particular workman that was discharged and the purpose of the engagement which is important. [34] In s. 2 Employment Act 1955, “employer” means “any person who has entered into a contract of service to employ any other person as an employee and includes the agent, manager or factor of such first mentioned person, and the word “employ”, with its grammatical variations and cognate expressions, shall be construed accordingly”;. [35] In a contract for service, there is no employer and employee relationship. The person is usually self-employed or may provide his/her services on a freelance basis at a fee. He/she is not an employee within the definition in the Employment Act. [36] S.2 Employment Act states that – “contractor” means any person who contracts with a principal to carry out the whole or any part of any work undertaken by the principal in the course of or for the purposes of the principal’s trade or business; “contractor for labour” means a person who contracts with a principal, contractor or sub-contractor to supply the labour required for the execution of the whole or any part of any work which a contractor or sub-contractor has contracted to carry out for a principal or contractor, as the case may be; November 18, 2021 14 [37] Difference between a Contract of Service and a Contract for Service. [38] A contract of service is an agreement whereby one person agrees to employ another as an employee and the other agrees to serve his / her employer as an employee. The employer would need to contribute EPF and comply with relevant statutory benefits such as annual leave, sick leave and et cetera for its employees engaged under a contract of service. [39] On the other hand, a contract for service is an agreement whereby a person is engaged as an independent contractor, such as a self-employed person or vendor engaged for a fee to carry out an assignment or a project for the company. [40] Under such a work arrangement, there is no employer-employee relationship, and the employee is not covered by the Employment Act. A contract for services, such a contract refers to a relationship akin to an agency. Generally, a person engaged via a contract for services is not an employee. [41] There is no single conclusive test to distinguish a contract of service from a contract for service. Some of the factors to be considered in identifying a contract of service include (non-exhaustive): i. Control Test. ii. Independence Test. iii. Integration Test. iv. Economic Reality Test. November 18, 2021 15 The Tests i. Control Test [42] The traditional test, how much control is being exercised over the worker by the employer. The more control that is being exercised, the more likely it is that the worker is an employee regardless of what the contract says. [43] Traditionally ‘masters’ exercised actual control over their ‘servants’. However, in more recent days, because people are becoming more specialized, employees will often know more about the subject area they are working in than their employers. The control test does not therefore look at whether the employer is operating actual control, but rather asks whether the employer could exercise control. [44] The Federal Court in HOH KIANG NGAN v. MAHKAMAH PERUSAHAAN MALAYSIA & ANOR [1996] 4 CLJ 687, where his Lordship, Federal Court Justice Gopal Sri Ram stated that the degree of control, also known as the Control Test, of which an employer exercises over a claimant is an important factor. The more control that is being exercised over the individual by the employer, the more likely the worker is an employee of the company. His Lordship further stated that “however, this may not be the sole measure. The terms of the contract between the parties must first be ascertained in order to determine the nature of the latter's duties and functions”. [45] In J MATHEW MIRANDA v. BAHTERA GLOKAL SDN BHD [2018] 1 ILR, the claimant claimed that he has been constructively November 18, 2021 16 dismissed without just cause or excuse by the company. However, the company contended that the claimant was not an employee of the company, thus not falling within the meaning of “workman” under s. 20(1) of the 1967 Act. The burden then falls on the claimant to prove that he is indeed an employee of the company before the issue of constructive dismissal can be assessed by the court. The company exercised little or no control over the claimant as the latter was free to come into and out of the office as he liked. Also, the claimant failed to prove that he was a workman under the Act as, inter alia, there was no evidence from the claimant of the requirement for him to observe the working hours of the company as what regular employees must do. Furthermore, there was no evidence offered by the claimant that his works were integrated into the business. Thus, the claimant's claim of constructive dismissal was dismissed. ii. Independence Test [46] It’s pretty much the flip side of the control test, does the worker has independence in deciding how his/her work is to be done, can he/she decide his/her own work hours, subcontract out work, and et cetera. iii. Integration Test [47] Is the work being performed under the contract integral to the operation of the business structure as a whole, or is it only works on the side of the main business? One feature which seems to run through the instances is that under a contract of service, a person is employed as part of the business and his/her work is done as an November 18, 2021 17 integral part of the business whereas under a contract for service, his/her work, although done for the business, is not integrated into it but is only an accessory to it. [48] The Integration Test, a principle which was introduced by Lord Denning in STEVENSON, JORDAN & HARRISON LTD (supra). The test was whether the work being performed under the contract is integral to the operation of the business structure as a whole, or it is only works on the side of the main business. In this case, it was stated that an employee is a person who is integrated with others in the work place or business even though the employer does not necessarily exercise a detailed control over what the employee does. iv. Economic Reality Test [49] Is the worker dependent upon the job for economic survival (can other employment be undertaken, for example). [50] Lord Denning in BANK VOOR HANDEL EN SCHEEPVAART NV V. SLATFORD [1953] 1 QB 248, 295 where His Lordship held: The test of being a servant does not rest nowadays on submission to orders. It depends on whether the person is part and parcel of the organisation. [51] In LIAN ANN LORRY TRANSPORT & FORWARDING SDN BHD v. GOVINDASAMY PALANIMUTHU [1982] CLJ 173, the Federal Court opined-

Definition of “employee”. November 18, 2021 18 The first constituent element of the definition of “insured person” requires us to determine whether the respondent was at the time of the accident an employee. For this purpose we have to refer to item

of section 2 of the Act which defines this term as follows;

‘employee’ means any person who is employed for wages under a contract of service or apprenticeship with an employer; whether the contract is expressed or implied or is oral or in writing, on or in connection with the work of an industry to which this Act applies and:-

who is directly employed by the principal employ on any work of, or incidental or preliminary to or connected with the work of, the industry, whether such work is done by the employee on the premises of the industry or elsewhere; or

(ii) who is employed by or through an immediate employer on the premises of the industry or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the industry or which is preliminary to the work carried on in or incidental to the purpose of the industry; or

(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire entered into a contract of service, but does not include a person of the descriptions specified in the First Schedule. Paragraph (1) of this Schedule describes one such person to be “any person whose wages exceed five hundred dollars a month.” This means that such person is excluded from the definition of “employee.” November 18, 2021 19 [52] In MANDONG TRANSPORT & TRADING SDN BHD v. PERTUBUHAN KESELAMATAN SOSIAL (PERKESO) (ENCLS 1 & 8) [2020] MLRHU 375, the High Court ruled that, The respondent in this case was employed on a daily rated wage of RM15.00 a day and had only served the appellants three days. As a result of the accident which accrued on the fourth day of his employment, he became incapacitated and had to cease employment. According to the appellants' managing director (DW1) the respondent was put on daily rated wage because he was a new employee, and had he been treated as a permanent employee he would have been employed on a fixed monthly wage of RM90.00 per month plus commissions based on the tonnage of goods transported by him. The learned trial judge held that because the respondent was employed as a daily paid worker and not as a permanent employee of the appellants he was therefore not employed under a contract of service as envisaged by the Act. In our view, the duration and nature of an employment, be it temporary or permanent, is immaterial for the purpose of determining the existence of a contract of service. As long as there exists a relationship of a master and servant or that of an employer and employee, the law will infer a contract of service existing between them, notwithstanding the fact that the service or the employment is intended by the person in the position of master to be temporary or of a short duration only. And the law will imply the existence of such relationship where a person is hired by another as an integral part of the latter’s business. STEVENSON JORDAN

AND HARRISON LTD. V. MACDONALD AND EVANS [1952] 1 TLR READY MIXED CONCRETE (SOUTH EAST) LTD. V. MINISTER OF PENSIONS AND NATIONAL INSURANCE [1968] 2 QB 497, 524. The circumstances of this case clearly show that there was a contract of service between the appellants and the respondent because the respondent was employed as part of the appellants’ transport business; the term of the employment being that the respondent was placed on a temporary basis at a daily wage of November 18, 2021 20 RM15.00 per day until he would eventually be absorbed into permanent service or otherwise have his employment terminated. Thus clearly the respondent was an employee. [53] Coming back to our instant case, I found the following based on the agreement as exhibited in Appeal Record: i. The remuneration is based on commission basis with a fixed formula as a basis of calculation. ii. The Driver work every day except for leave days which is stipulated in the agreement. iii. The letter is intituled “appointment letter”. iv. It has a Worker ID which is 8274. v. The letter head states Tekun Concrete (M) Sdn Bhd. vi. There is a Clause 2 entitled “Job Title” and clause 2.2. states “Your appointment shall commence on 3 July 2017 and you are to report duty on this date. The scope of work shall be not limited to the terms and conditions specified herein…”. vii. Clause 3 is on Remuneration. viii. Clause 4 is on Hours of employment. ix. Clause 5 is on Holidays. x. Clause 6 is on leave of absence. xi. Clause 7 is on pension, There is no pension scheme applicable but clause 7.2 states that the “Letter of Appointment is valid only until age 60s. xii. Clause 8 is on probation period which is specified at 3 months. xiii. Clause 9 is on EPF, SOCSO and Income Tax. xiv. Clause 10 is termination of employment clause. xv. Clause 11 is on confidentiality. xvi. Clause 12 is non solicitation of customers. November 18, 2021 21 xvii. Clause 13 is on Disciplinary Rules and Company Policies. xviii. Clause 15 on the return of company’s documents. xix. Clause 16 is on absolute assignment of design right. [54] I shall found that the payment slip of the respondent (which is not in dispute) which as an example at page 241 Enclosure 4, clearly states EPF contributions, SOCSO Contributions, allowances etc. [55] Based on the above, it is my finding that the Driver is not tied down with a single project or delivery but rather the working days as well as approval for personal things. Further his leave entitlement is subject to the period of service with the company. Since his working time is dictated by the company, he is economically dependent upon the company. [56] On the other hand, in a service for contract, an independent contractor, is only duty bound to deliver as per the project. It does not allow the company to dictate his personal time and his other activities unrelated to the project that he is doing for the company. He is not subject to the rules and regulations of the company that hired him for his services because beyond the delivery of his project, the company has no say in his free time or remuneration or working hours. [57] In GREAT EASTERN MILLS BHD v. NG YUEN CHING & ORS [1998] 3 CLJ 847 his Lordship, Justice Nik Hashim (as he then was) held that, inter alia, [3a] Under s. 30(5) of the Act, technicalities and legal forms are exempted in industrial adjudication. A liberal and not a restricted or rigid interpretation must be adopted and applied November 18, 2021 22 in determining whether the respondents were workmen and whether there were contracts of service between the Applicant and the respondents. [3b] The respondents were lorry drivers for the Applicant and some of them had been in the Applicant's service for more than 20 years. They were paid remuneration or commissions according to the trips they made. Their lorries were maintained and fuel was supplied by the Applicant. Further, the respondents were insured by the Applicant against personal accident. These fact were sufficient to imply that the respondents were employed under contract of service. [58] Applying the tests enumerated earlier, I find that the Respondent has a contract OF service with the Applicant and NOT a contract for service. Whether the Appellant is legal obliged to pay a basic salary to the Respondent. [59] In the case of BANK ISLAM MALAYSIA BHD v. LIM KOK HOE & ANOR AND OTHER APPEALS [2009] 6 CLJ 22, His Lordship Justice Raus Sharif (as he then was) said - “it is trite law that the Court should not rewrite the terms of the contract between the parties that it deems to be fair or equitable. This Principle has been clearly expressed in numerous cases.” [60] The law recognises the principle of freedom of contract. Parties to a contract are free to determine for themselves what their obligations are. As Sir George Jassel MR said in PRINTING AND NUMERICAL November 18, 2021 23 REGISTERING COMPANY v. SAMPSON [1875] LR 19 Eq 462 at 465: ... men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice. Therefore you have this paramount public policy to consider - that you are not lightly to interfere with this freedom of contract. [61] It is also trite that an Agreement must be construed by the words used in the Agreement and the court is not empowered to improve upon the instrument which it is called upon to construct. This is stated in BERJAYA TIMES SQUARE SDN BHD v. M CONCEPT SDN BHD [2010] 1 CLJ 309; [2010] 1 MLJ 597 where it was reiterated: The court has no power to improve upon the instrument which it is called upon to construct, whether it be a contract, a statute or article of association. It cannot introduce terms to make it fairer or more reasonable. However, that meaning is not necessarily or always what the authors or parties to the document would have intended. It is the meaning to a reasonable person having all the background knowledge which would reasonable be available to the audience to whom the instrument is addressed; (See INVESTORS COMPENSATION SCHEME LTD v. WEST BROMWICH BUILDING SOCIETY 1997] UKHL 28) [62] It is this objective meaning which is conventionally called the intention of the parties, or the intention of Parliament or the intention of whatever person or body was or is deemed to have been the author of the instrument. November 18, 2021 24 [63] The House of Lords in INVESTORS COMPENSATION SCHEME LIMITED v. WEST BROMWICH BUILDING SOCIETY [1998] I WLR 896 had occasion to observed: The ‘rule’ that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one were to nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention, which they plainly not have had. [64] The Federal Court in SPM MEMBRANE SWITCH SDN BHD v. KERAJAAN NEGERI SELANGOR [2016] 1 CLJ 177 has endorsed generally the approach taken in the landmark case of INVESTORS LTD v. BROMWICH BUILDING SOCIETY[1998] 1 WLR 896 with respect to the principles of interpretation of contract as follows: “[27] The judgment of Lord Hoffmann is reproduced below, where His Lordship stated that: ...I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in PRENN v. SIMMONDS [1971] 1 WLR 1381, 1384-1386 AND REARDON SMITH LINE LTD v. YNGVAR HANSEN-TANGEN [1976] 1 WLR 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any November 18, 2021 25 serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of ‘legal’ interpretation has been discarded. The principles may be summarised as follows:

Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

The background was famously referred to by Lord Wilberforce as the 'matrix of fact', but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them. November 18, 2021 26

The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see MANNAI INVESTMENTS CO LTD v. EAGLE STAR LIFE ASSURANCE CO LTD [1995] 1 WLR 1 508.

The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in ANTAIOS COMPANIA NAVIERA SA v. SALEN REDERIERNA AB [1985] AC 191, 201: If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to conclusion that flouts business common sense, it must be made to yield to business common sense. [65] In the case of CIMB BANK BHD v. ANTHONY LAWRENCE BOURKE & ANOR [2019] 2 CLJ 1, the facts were that the appellant (‘the defendant’) had granted a term loan facility in the sum of November 18, 2021 27 RM715,487-00 to the respondents (‘the plaintiffs’) to finance the purchase of a property. The property was still under construction and, under the loan Agreement, the defendant was obligated to progressively make direct payments, whenever such sums became due, to the developer on behalf of the plaintiffs. In 2014, the developer sent an invoice which contained an architect's certificate. The notice was received by the defendant on 13 March 2014 and the due date for payment was 25 March 2014. On 20 March 2014, eight days after the receipt of the invoice, the defendant's disbursement department sent an email, requesting its branch to conduct site visit inspection on the property. Three months after the invoice due date, there was no confirmation of any site visit inspection being conducted on the property. The defendant's disbursement department sent several other emails to its branch to conduct the site visit but there was no response. The defendant did not notify either the developer or the plaintiffs on the need of a visit inspection as an additional condition to disburse payment of the invoice. The defendant also did not make any request to the developer to extend the invoice due date in order for them to conduct the site visit. After about a year, the sum remained unpaid and the defendant terminated the sale and purchase Agreement (‘SPA’). This prompted the plaintiffs to commence a claim for damages at the High Court against the defendant, premised on a breach of contract and / or negligence and breach of fiduciary duty following the termination of the SPA. The plaintiffs’ claim was dismissed as the High Court found cl. 12 of the loan Agreement absolved any liability against the defendant. Dissatisfied with the decision of the High Court, the plaintiffs appealed to the Court of Appeal and the appeal was allowed. The Court of Appeal found that

the defendant breached its main obligation under the loan November 18, 2021 28 Agreement when it failed to fulfil the terms to pay the invoice issued to it and such a breach was a breach of the most fundamental terms of the loan Agreement, which goes to the root of the contract; and

(ii) cl. 12 of the loan Agreement was a clause that absolutely restrained legal proceedings and it was void under s. 29 of the Contracts Act 1950 (‘the Act’). Hence, the present appeal. The questions of law that arose for adjudication were whether s. 29 of the Act may be invoked to strike down and invalidate an exclusion clause which (i) exonerates a contract breaker of liability for a breach of that contract (exclusion clauses that absolve primary obligations); and (ii) negates the contract breaker’s liability to pay compensation for non-performance of that contract (exclusion clauses which absolve general secondary obligations). It was held by the Federal Court, inter alia, [26] We agree with the defendant that parties are bound by the terms of the contract which they entered into and that it is the court's duty to give effect to the clear and plain meaning of the words in the said clause. That is quite trite. [66] Further down in the learned judgment, it is stated: [30] In respect of exclusion clauses, the approach to be adopted was explained by the House of Lords in AILSA CRAIG FISHING CO LTD v. MALVERN FISHING CO LTD [1983] 1 All ER 101; [1983] 2 AC where Lord Wilberforce explained: ... Whether a condition limiting liability is effective or not is a question of construction of that condition in the context of the contract as a whole. If it is to exclude liability for negligence it must be most clearly and unambiguously expressed, and in such a contract as this, must be construed November 18, 2021 29 contra proferentem... one must not strive to create ambiguities by strained construction, as I think the appellants have striven to do. The relevant words must be given, if possible their natural, plain meaning. [31] In dealing with the issue of interpreting and applying exclusion clauses, we take it as settled law and agree with the submissions of the defendant that post PHOTO PRODUCTION LTD v. SECURICOR TRANSPORTS LTD [1980] AC 827 whether an exclusion clause applies is a matter of construction as was decided by this court in CIMB BANK BHD v. MAYBANK TRUSTEES BHD & OTHER APPEALS [2014] 3 CLJ 1; [2014] 3 MLJ 169. As such, we do not deem it necessary to dwell any further on the issue of the applicability of the concept of fundamental breach or a breach of the fundamental term of the Agreement. [32] We are dealing here with cl. 12 of the loan Agreement. In our view, given its natural and ordinary meaning, the said clause is susceptible to one meaning only and that meaning must be given effect to and enforced however unreasonable the court may think it is. The words in the clause are clear and one does not even need to resort to the contra proferentum rule of construction. [67] The Agreement binds both the offeror and offeree. The offeror is equally bound to follow the terms and conditions of the Agreement as much as the offeree. [68] In Halsbury Laws of England, vol II, 3rd edn, p. 382, it was said It is not permissible to guess at the intention of the parties and substitute the presumed for the expressed intention. November 18, 2021 30 [69] In GOH GOK HOON v. ABDUL HAMID & ANOR. [1966] 1 LNS 52 where his Lordship, Justice Ismail Khan (later Chief Justice Borneo) said at pp. 39-40: It is a cardinal rule in the interpretation of documents that the intention of the parties must be gathered from the written instrument itself. [70] In the landmark case of INVESTORS COMPENSATION SCHEME LTD v. WEST BROMWICH BUILDING SOCIETY [1998] 1 WLR 896, 16 912-913 "(ICS)" provides a starting point for the consideration of the relevant principles. The judgment of Lord Hoffmann is reproduced below, where His Lordship stated that: ...I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in PRENN V. SIMMONDs[1971] 1 WLR 1381, 1384- 1386 and REARDON SMITH LINE LTD V. YNGVAR HANSEN-TANGEN[1976] 1 WLR 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of 'legal' interpretation has been discarded. The principles may be summarised as follows:

Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. November 18, 2021 31

The background was famously referred to by Lord Wilberforce as the 'matrix of fact', but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see MANNAI INVESTMENTS CO LTD V. EAGLE STAR LIFE ASSURANCE CO LTD [1995] 1 WLR 1508.

The ‘rule’ that words should be given their 'natural and ordinary meaning' reflects the common sense proposition November 18, 2021 32 that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. [71] Although it was not stated in the Appointment Letter, the exact salary (which in my view is an unfair practice and a deplorable one too) the payslip and the other evidence is sufficient to indicate what was the basic salary and I found the Director-General of Labour was right in computing the salary which (through the Deputy Director) did. CONCLUSION [72] I would like to reiterate the principles of interpretation of the terms of a contract for its application in our instant case. They are:

Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

The background was famously referred to by Lord Wilberforce as the ‘matrix of fact’, but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would November 18, 2021 33 have affected the way in which the language of the document would have been understood by a reasonable man.

The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see MANNAI INVESTMENTS CO LTD v. EAGLE STAR LIFE ASSURANCE CO LTD [1995] 1 WLR 1 508.

The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that November 18, 2021 34 something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in ANTAIOS COMPANIA NAVIERA SA v. SALEN REDERIERNA AB [1985] AC 191, 201 which is if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to conclusion that flouts business common sense, it must be made to yield to business common sense. [73] The Court bore in mind that the Employment Act is a social legislation and this concept of social legislation was explained in CRYSTAL CROWN HOTEL & RESORT SDN BHD (CRYSTAL CROWN HOTEL PETALING JAYA) v. KESATUAN KEBANGSAAN PEKERJA-PEKERJA HOTEL, BAR & RESTORAN SEMENANJUNG MALAYSIA [2021] 4 CLJ 775 when the Court has this to say, Social Legislation [46] Our Federal Constitution guarantees equal protection of laws to all citizens. However, the full purport of such a guarantee may not be available to all segments of society, particularly the poor and vulnerable sections. It is to ensure social justice that special measures are taken by Parliament in the form of, for example the enactment of minimum wage legislation and industrial adjudication legislation to ensure that there is equality of justice available and accessible to these marginalised persons. [74] An appellate court will not, generally speaking, intervene and interfere unless the trial court is shown to be plainly wrong in arriving November 18, 2021 35 at its conclusion. Matters of finding of facts and legitimate exercise of discretion by the courts of original jurisdiction are often not interfered with by the appellate courts. (See: WEE LIAN CONSTRUCTION SDN BHD v. INGERSOLL-JATI MALAYSIA SDN BHD [2010] 4 CLJ 203; [2010] 3 MLJ 425, MASTER JAYA ENVIRONMENTAL SDN BHD v. PENTAS FLORA SDN BHD [2020] 2 CLJ 609; [2020] 2 MLJ 117). [75] However, appellate interference is warranted where the trial judge has made a decision which is plainly wrong. A decision is plainly wrong if it is one which no reasonable judge could have reached. [76] The Federal Court in S QUARRY SDN BHD v. DESARU DEVELOPMENT CORPORATION SDN BHD & ORS [2019] 1 LNS 93; [2019] MLJU 99 laid down several instances when decisions are considered to be plainly wrong or perverse. Some of the instances where the trial judge's decision is perverse, are where he had:-

misdirected itself on the evidence;

(ii) failed to judicially appreciate the evidence;

(iii) failed to consider any material evidence;

(iv) acted on some irrelevant evidence as to render the decision wholly erroneous;

made wrong inference from facts;

(vi) misapprehended the facts; November 18, 2021 36

(vii) gave reasons which are wholly unsatisfactory or contradictory of each other. (See also: LEE ING CHIN @ LEE TECK SENG & ORS v. GANI YOOK CHIN AND ANOR [2003] 2 CLJ 19). [77] I found that the Appellant has failed to discharge the burden of showing that the Director-General of Labour Department has erred in law and in fact in making the Orders that he did. [78] Having heard all parties and after perusing over the cause papers and having given our most anxious considerations, I dismissed this appeal with cost. I affirmed the decision and the Orders made by the Director-General of Labour Department. Dated this 18 November 2021 at Muar in the State of Johore t.t. AWG ARMADAJAYA BIN AWG MAHMUD Judicial Commissioner High Court of Malaya Muar Johor Darul Ta’zim Curia Advisari Vult Counsels: For the Appellant : Kavitha a/p Guna Segaran with Paramjit Singh a/l Pretam Singh For the Respondent : Mohd Radzi Bin Yatiman November 18, 2021 37 Solicitors: For the Appellant Messrs GS Kavitha Advocates & Solicitors M-4-1, Phase 3, Pantai Hillpark Jalan Pantai Dalam 59200 Kuala Lumpur Wilayah Persekutuan Kuala Lumpur. [Ref. No.: GSK/LIT/1094/BIMACH/2020(HC)] For the Respondent Messrs Azlina Ruslan & Co. Advocates & Solicitors No. 62-G, 1st Floor Jalan Genuang 85000 Segamat Johor [Ref. No.: ] Hearing Date : 25th March 2021. Decision Date : 22nd August 2021. LEGISLATURE: ➢ S. 91 & S. 92 EVIDENCE ACT 1950 ➢ EMPLOYMENT ACT 1955 ➢ REGULATION 8 OF THE EMPLOYMENT REGULATION 1957 ➢ S. 20 OF THE INDUSTRIAL RELATIONS ACT (IRA) 1967 LITERATURE: ➢ HALSBURY LAWS OF ENGLAND, VOL II, 3RD EDN, P. November 18, 2021 38 CASES REFERRED TO: ➢ GOH GOK HOON V. ABDUL HAMID & ANOR. [1966] 1 LNS 52 ➢ INVESTORS LTD BROMWICH BUILDING SOCIETY [1998] 1 WLR 896, ➢ PRINTING AND NUMERICAL REGISTERING COMPANY V. SAMPSON [1875] LR 19 EQ 462 ➢ BERJAYA TIMES SQUARE SDN BHD V. M CONCEPT SDN BHD [2010] 1 CLJ 309; [2010] 1 MLJ 597 ➢ INVESTORS COMPENSATION SCHEME LIMITED V. WEST BROMWICH BUILDING SOCIETY [1998] I WLR 896 ➢ SPM MEMBRANE SWITCH SDN BHD V. KERAJAAN NEGERI SELANGOR [2016] 1 CLJ 177 ➢ INVESTORS LTD BROMWICH BUILDING SOCIETY[1998] 1 WLR 896 ➢ PRENN V. SIMMONDS [1971] 1 WLR 1381, 1384-1386 ➢ MANNAI INVESTMENTS CO LTD V. EAGLE STAR LIFE ASSURANCE CO LTD [1995] 1 WLR 1 508. ➢ ANTAIOS COMPANIA NAVIERA SA V. SALEN REDERIERNA AB [1985] AC 191 ➢ CIMB BANK BHD V. ANTHONY LAWRENCE BOURKE & ANOR [2019] 2 CLJ 1 ➢ AILSA CRAIG FISHING CO LTD V. MALVERN FISHING CO LTD [1983] 1 ALL ER 101; [1983] 2 AC ➢ PHOTO PRODUCTION LTD V. SECURICOR TRANSPORTS LTD [1980] AC 827 ➢ CIMB BANK BHD V. MAYBANK TRUSTEES BHD & OTHER APPEALS [2014] 3 CLJ 1; [2014] 3 MLJ 169 ➢ REARDON SMITH LINE LTD V. YNGVAR HANSEN-TANGEN [1976] 1 WLR 989 ➢ MANDONG TRANSPORT & TRADING SDN BHD PERTUBUHAN KESELAMATAN SOSIAL (PERKESO) (ENCLS 1 & 8) [2020] MLRHU 375 ➢ GREAT EASTERN MILLS BHD V. NG YUEN CHING & ORS [1998] 3 CLJ 847 ➢ BANK ISLAM MALAYSIA BHD V. LIM KOK HOE & ANOR AND OTHER APPEALS [2009] 6 CLJ 22 ➢ STEVENSON JORDAN AND HARRISON LTD. V. MACDONALD AND EVANS [1952] 1 TLR 101. November 18, 2021 39 ➢ READY MIXED CONCRETE (SOUTH EAST) LTD. V. MINISTER OF PENSIONS AND NATIONAL INSURANCE [1968] 2 QB 497 ➢ BANK VOOR HANDEL EN SCHEEPVAART NV V. SLATFORD [1953] 1 QB 248 ➢ LIAN ANN LORRY TRANSPORT & FORWARDING SDN BHD V. GOVINDASAMY PALANIMUTHU [1982] CLJ 173 ➢ DR A DUTT V. ASSUNTA HOSPITAL [1981] 1 LNS 5; [1981] 1 MLJ 304 ➢ HOH KIANG NGAN V. MAHKAMAH PERUSAHAAN MALAYSIA & ANOR [1996] 4 CLJ 687 ➢ J MATHEW MIRANDA V. BAHTERA GLOKAL SDN BHD [2018] 1 ILR ➢ AJWA FOR FOOD INDUSTIES CO (MIGOP) EGYPT V. PACIFIC LUTENG LUEK SDN BHD [2013] 2 CLJ 395; [2012] 3 MLRA 383; ➢ SYARIKAT BINAAN UTARA JAYA V. KOPERASI SERBAGUNA SUNGAI GLUGOR BHD [2009] 1 CLJ 786; [2008] 2 MLRA 809 ➢ AZMIN HUSSAIN & CO V. ANDREW-DAVID WONG & ONG [2016] 10 CLJ 235; [2016] MLRHU. 1527 ➢ STEVENSON, JORDAN & HARRISON LTD V. MACDONALD & EVANS LTD [1952] 1 TLR 101 ➢ CRYSTAL CROWN HOTEL & RESORT SDN BHD (CRYSTAL CROWN HOTEL PETALING JAYA) KESATUAN KEBANGSAAN PEKERJA-PEKERJA HOTEL, BAR & RESTORAN SEMENANJUNG MALAYSIA [2021] 4 CLJ 775 ➢ WEE LIAN CONSTRUCTION SDN BHD V. INGERSOLL-JATI MALAYSIA SDN BHD [2010] 4 CLJ 203; [2010] 3 MLJ 425, ➢ MASTER JAYA ENVIRONMENTAL SDN BHD V. PENTAS FLORA SDN BHD [2020] 2 CLJ 609; [2020] 2 MLJ 117 ➢ S QUARRY SDN BHD DESARU DEVELOPMENT CORPORATION SDN BHD & ORS [2019] 1 LNS 93; [2019] MLJU 99 ➢ LEE ING CHIN @ LEE TECK SENG & ORS V. GANI YOOK CHIN AND ANOR [2003] 2 CLJ 19