INDUSTRIAL COURT MALAYSIA

CASE NO. 17/4-1743/12

BETWEEN

SOO KWOK WAH

AND

F & N BEVERAGES MANUFACTURING SDN BHD

AWARD NO: 1243/2014

BEFORE : Y.A. TUAN DUNCAN SIKODOL Chairman (sitting alone)

VENUE : Mahkamah Perusahaan Malaysia, Kota Kinabalu, Sabah

DATE OF REFERENCE: 25.09.2012

DATES OF MENTION: 26.12.2012, 29.01.2013, 12.11.2013, 07.05.2014 & 16.05.2014

DATES OF HEARING: 19.12.2013, 20.12.2013, 23.12.2013, 24.12.2013, 03.03.2014, 04.03.2014,02.06.2014, 05.06.2014,16.06.2014 &17.06.2014

DATES OF CASE MANAGEMENT: 02.04.2013

REPRESENTATION: For the Claimant Mr Vanugopal Messrs S. Vanugopal & Partners

For the Respondent- Ram Singh Messrs Ram Singh and Co

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REFERENCE:

This is a reference by the Honourable Minister of Human Resources under Section20(3) of the Industrial Relations Act 1967 ("the Act") arising out of the dismissal ofSOO KWOK WAH (hereinafter referred to as the Claimant) by F & N BEVERAGESMANUFACTURING SDN. BHD. (herein referred to as the Company) on the 14thSeptember 2011.

Introduction

This case was initially handled by YA Tuan Haji Yusob Bin Md Tasir who was then theChairman of the Industrial Court, Sabah Branch from the 1st date of mention on the26th December 2012. After YA Tuan Hj Yusob Bin Md Tasir was transferred to theIndustrial Court Kuala Lumpur, I took over the hearing of this case on the 2nd June2014 after I was transferred to this Court. Tuan Haji Yusob had heard the evidence of2 of its witnesses namely Alexander Yong (COW1) and Lily Foong Yoke Yip (COW2)when he had to go. I took over and continued to hear the evidence of Goh Eng Hua(COW3) as well as the Claimant CLW1 himself. In respect of the evidence in chief andthe cross examination of the earlier witnesses, I have relied on the notes ofproceedings left behind by my predecessor. I had completed the hearing of this matterand am now handing down the award in respect of this case.

Brief Background Facts

The Claimant joined the services of Fraser & Neave (Malaya) Sdn Bhd, as theCompany was then known, on the 1st November 1982 as a Management trainee witheffect from the 1st May 1983 in terms of the letter of Employment at page 2 of CLBD.

Subsequently, the Claimant was promoted to the position of Plant Manager and was

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based in Sandakan with effect from the 1st April 1984.

With effect from the 1st March 1996, the Claimant was transferred to F&N Coca Cola(Malaysia) Beverages Sdn Bhd, Kota Kinabalu and his position was redesignated toLogistic and Distribution Manager. As of the 15th January 2004, the Claimant wasredesignated to the post of Plant Manager.

On the 1st October 2010, the Claimant was subsequently transferred to F&NBeverages Manufacturing Sdn Bhd (formerly known as F&NCC Beverages Sdn Bhd)and his position was redesignated as Production Manager. According to CLW1, as theproduction Manager, his scope of duty was merely to take charge of the manufacturingfunctions of the Company.

On the 4th April 2011, the Company issued the Claimant with a show cause letteralleging that he as the Logistic and Distribution manager had failed to effectivelymanage the Companys products at the warehouse resulting in ullages of theCompanys products for the months of October, November and December 2010 invarious amounts and despite not having received approval from the National FinanceOffice (NFO) destroyed the ullages. Vide letter dated 18th April 2011, the Claimantprovided his explanation on the said allegations. The Company being dissatisfied withthe Claimants explanation to the Show Cause Letter decided to hold a DomesticInquiry from the 6th 7th July 2011.

The Company had vide letter dated 28th June 2011 preferred 6 charges against theClaimant and the charges against him are as follows:-

Charge 1

That you, in the month of October 2010 have been grossly negligent in carrying out yourduties as Logistics & Distribution Manager in that you failed to effectively manage theCompany's products at the warehouse resulting in ullages of Company products amounting toRM43,295.76 for the month of October 2010.

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Charge 2

That you, in the month of November 2010 have been grossly negligent in carrying out yourduties as Logistics & Distribution Manager in that you failed to effectively manage theCompany's products at the warehouse resulting in ullages of Company products amounting toRM51,721.80 for the month of November 2010.

Charge 3

That you, in the month of December 2010 have been grossly negligent in carrying out yourduties as Logistics & Distribution Manager in that you failed to effectively manage theCompany's products at the warehouse resulting in ullages of Company products amounting toRM32,937.57 for the month of December 2010.

Charge 4

That you had, despite clear instruction from your superiors to the contrary and/or despite thefact that you had yet to receive any approval from the National Finance Office (NFO) for theRequest For Disposal (RFD), proceeded to dispose ullages of Company products for themonth of October 2010 amounting to RM43,295.76.

Charge 5

That you had, despite clear instructions from your superiors to the contrary and/or despite thefact that you had yet to receive any approval from the National Finance Office (NFO) for theRequest For Disposal (RFD), proceeded to dispose ullages of Company products for themonth of November 2010 amounting to RM51,721.80.

Charge 6

That you had, despite clear instructions from your superiors to the contrary and/or despite thefact that you had yet to receive any approval from the National Finance Office (NFO) for theRequest For Disposal (RFD), proceeded to dispose ullages of Company products for themonth of December 2010 amounting to RM32,937.57.

Based on the outcome of the DI, the Claimant was informed by letter dated 14th

September 2011 from the Company that he had been found guilty of all the 6 chargesand he was dismissed with effect from 14th September 2011. At the time of hisdismissal the Claimant held the position of Production Manager and his last drawnsalary was RM10,168.00 per Month.

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Witnesses

The following witnesses testified at the hearing of this case:

COW1 Alexander Yong, Regional Manager and his witness statement was marked as WSCOW-1

COW2 Lily Foong Yoke Yip, Accounts Office in the Company and her witness statement was marked as WSCOW-2

COW3 Goh Eng Hua Region Manager-South and his witness statement was marked as WSCOW- 3.

CLW1 - Soo Kwok Wah and his witness statement was marked as WSCLW-1 (a),WSCLW-1 (b), WSCLW1- (c).

The following bundle of documents were also used in court and marked as follows;

COB -1, COB - 2, COB - 3, EXT COB - 4 (a) & (b) - Companys Bundle of documentsCLB -1, CLB -2, CLB 3, CLB - 4, EXT CL- 5 - Claimants Bundle of Documents

The Law

In the often cited case of MILAN AUTO SDN BHD v WONG SHE YEN (1995) 4 CLJ449, the duty of the Industrial Court in dismissal cases on a reference under s. 20 wasstated by His Lordship Mohd Azmi FCJ as follows;

As pointed out by this Court recently in Wong Yuen Hock v Hong Leong Assurance(1995) 3 CLJ 344, the function of the Industrial in dismissal cases on a referenceunder s. 20 is twofold: first, to determine whether the misconduct complained by theemployer has been established and secondly whether the proven misconductconstitutes just cause or excuse for the dismissal.

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It is trite law that the Company bears the burden to prove that the claimant hadcommitted the alleged misconduct and the conduct warrants the Claimants dismissal.See Ireka Construction Bhd v Chantiravanathan a/l Subramaniam James (1995) 2ILR 11 (Award No. 245 of 1995).

The Company needs only to prove misconduct justifying the dismissal or terminationon the balance of probabilities. See Telekom Malaysia Kawasan Utara v KrishnanKutty a/l Sanguni & Anor (2002) 3 CLJ 314 (CA).

Issues for determination

In this case, it is an undisputed fact that the Claimant was dismissed by the Companyon the 14th September 2011 vide letter dated the 14th September 2011. It now remainsto be considered whether the dismissal was with just cause or excuse. Since theCompany had conducted a D.I prior to the Claimants dismissal, it is thereforenecessary to examine whether the Company had complied with the rules of naturaljustice when it conducted the D.I.

Before that, I shall firstly at the outset deal with some of the preliminary legal issuesraised by the learned counsel for the claimant in its submission.

Learned counsel for the Claimant contended that it was wrong in law for F& NBeverages Manufacturing Sdn Bhd to terminate the services of the Claimant for analleged misconduct purportedly committed in the course of carrying out the functionsof another entity, F& N Beverages Marketing Sdn Bhd and he cited the case of LucySu Pik Kwong v Minister of Human Resources & Anor (2013) 3 ILR 13 in supportof the above contention, where the Learned JC struck out the Judicial reviewapplication of the applicant on the ground that the applicant sued the wrong party orhad failed to join her legal employer in the suit.

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According to the Learned Counsel, the Claimant with effect from 20 th March 2006 wastransferred to F & N Coca-Cola (Malaysia) Sdn Bhd and redesignated as theLogistics & Distribution Manager and that subsequently with the effect from 1st October2010 he was transferred to another entity, F & N Beverages Manufacturing Sdn Bhdand redesignated as Production Manager. Please see answer to Question 1 atparagraphs (f) and (g) of the Claimants Witness Statement, CLWS-1(a). Thisevidence was not challenged by the Company.

The Claimant further explained at Q18 of his Witness Statement, CLWS 1 (b), that asthe logistics and distribution functions came under the legal entity of F & N Coca-Cola(Malaysia) Sdn Bhd his legal employer when he was the Logistics and DistributionManager was F & N Coca-Cola (Malaysia) Sdn Bhd and that on 24 th November 2009the name of F & N Coca-Cola (Malaysia) Sdn Bhd was changed to F & N BeveragesMarketing Sdn Bhd.

The Claimant further at Q19 of his Witness Statement, CLWS 1(b), explained thatwhen his position was redesignated to that of Production Manager as of 1st October2010, his functions came under another legal entity, i.e. F & N BeveragesManufacturing Sdn Bhd and that therefore his legal employer was F & N BeveragesManufacturing Sdn Bhd with effect from 1st October 2010.

In support of his contention that these 2 companies are different entities the Claimantproduced and showed the Companies commission search results at pages 405 to 416of CLB4. This evidence was also not challenged by the Company neither did he replyto this legal point raised by the Claimants Counsel via his submission.

Having considered the legal principle and written submission by the learned counselfor the Claimant on this preliminary legal issue, I am of the considered view that it isnot wrong in law for F&N Beverages Manufacturing Sdn Bhd to terminate the servicesof the Claimant although F&N Beverages Manufacturing Sdn Bhd and F&N Beverages

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Marketing Sdn Bhd are separate entities. This is because from the facts of the case,F&N Beverages Manufacturing Sdn Bhd and F&N Beverages Marketing Sdn Bhd arepart of a group of Companies. The facts of the case also shows that the responsibilityof Logistics with the assistance of a Logistic executive was added as part of theClaimants function as Production Manager, a fact acknowledged by the Claimant atpage 62 CLB2 (Inquiry notes line 9 from bottom), though not in written form. Thus,since F&N Beverages Manufacturing Sdn Bhd and F&N Beverages Marketing SdnBhd are part of a group of Companies, logistics becomes part of his job. As part of agroup of Companies, there is no reason why the Claimant cannot be assigned extraresponsibility within the group by his employer, he being a very senior employee in theCompany. It is not a case where logistic is not part of his functions in his presentemployment and yet he was made responsible for what took place in anotherCompany. This can be contrasted with the case of Lucy Su Pik Kwong v Minister ofHuman Resources & Anor (2013) 3 ILR 13 where in that case, there was no linkwhatsoever between the Claimants employer and the 2nd Respondent.

Having considered the above, I shall now consider whether the Claimant had beendismissed with just cause or excuse. In this case, since the Company had conducted aDI prior to the Claimants dismissal, it is therefore necessary to examine whether theDI was valid in that whether the Company had complied with the rules of naturaljustice when it conducted the DI.

Whether the DI held by the Company against the Claimant was valid?

It is trite law that a where DI had been conducted, the court should first considerwhether or not the DI was valid and whether the DI notes ate accurate. SeeBumiputra Commerce Bank Bhd v Mahkamah Perusahaan Malaysia & Anor(2004) 7 CLJ 77.

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Disciplinary inquiry flawed

The Claimants pleaded case is that the DI that was held in this case was flawed inthat the panel took into account irrelevant matters when it decided that the claimantwas guilty of all the 6 charges, relied on 34 documents, copies of which were nevergiven to him, directed the claimant to submit his written submission at the end of thehearing but did not direct the Company to do likewise, the DI was conducted in KLfrom 9-6 with only short breaks despite the Claimants complaints that he was mentallyexhausted, no reason given for decision of DI and that the charges against theClaimant are defective especially charges no 1-3. The Companys pleaded case onthe other hand is that the DI which it held was valid and that the inquiry notes areaccurate.

I have carefully scrutinized the pleadings, the DI notes and the written submissions ofboth parties in respect of the DI held and I am of the view that there are indeedshortcomings of the DI in terms of its validity especially on the fact that no reason weregiven by the panel for its decision in finding the Claimant guilty of all the 6 chargespreferred against him. As Edgar Jr J said in Rohana bte Ariffin & Anor v UniversitiSains Malaysia (1989) 1 MLJ 487 a reasoned decision can be an additionalconstituent of the concept of fairness. This fact was admitted by COW3 during crossexamination when he said that its findings recorded in Exh COB 4(a) and (b) onlystates that the decision and not the reasons for its decision. To me, even if the inquirynotes are accurate as claimed by the Company, the failure of the panel to give reasonsfor its decision is a clear breach of natural justice, the right of a person to know whyhe is guilty being one of the bastion of the principle natural justice. He by right shouldbe given the reasons why he is found guilty so that he can then properly prepare hisappeal. Based on this fact alone, I find that the DI as a whole is flawed.

Be it as it may, this does not mean that the entire DI proceedings are declared null andvoid but it is safer to rely on the evidence adduced at the trial to determine whether or

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not the Claimants dismissal was with just cause or excuse. In so doing, this court willbear in mind the Court of Appeals decision in Hong Leong Equipment Sdn Bhd vLiew Fook Chuan & Other Appeals (1997) 1 CLJ 665 where the Court held that :

The fact that an employer has conducted a DI against his workmen is, in my judgment, an entirely irrelevant consideration to the issue whether the latter had been dismissed with just cause or excuse. The findings of a DI are not binding upon the Industrial Court which rehears the matter afresh. However, it may take into account the fact that aDI had been held when determining whether the particular workman was justly dismissed.

Were it otherwise, the guilt or innocence of a workman upon a charge of misconduct would be decided not by the Industrial Court, but the employer himself. That, with all respect, is not the purpose for which parliament went through the elaborate process of legislatingthe Act and setting up special machinery for the vindication of the right of workmen

Hence, in determining whether the Claimant had been dismissed with just cause orexcuse, this court would take into account the fact that a DI had been held as well asthe evidence at the trial proper as a whole.

Whether the dismissal of the Claimant was with just cause or excuse?

The main issue confronting this court in determining whether the dismissal of theClaimant was with just cause and excuse is whether the 6 charges preferred againstthe Claimant is valid in the first place.

The Claimants Counsel drew the Courts attention to O.P. Malhotra, in The Law ofIndustrial Disputes, 5th ed, Vol. 2 at page 940 which states that:before proceeding with the domestic enquiry against an offending employee,he must be informed clearly, precisely and accurately of the charges leveledagainst him. It is the duty of the employer to indicate to the delinquentemployee not only the precise nature of the charges, but also the documents, ifany, upon which the charges are based. He went on to state that the charge-

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sheet should specifically set out all charges and should also state all relevantparticulars without which he cannot defend himself. The object of thisrequirement he said is that the delinquent workman must know what he ischarged with and have the amplest opportunity to meet the charge and todefend himself by giving a proper explanation, after knowing the nature of theoffence with which he is charged, otherwise it will amount to his beingcondemned unheard. Fair hearing presupposes a precise and definite catalogueof charges, so that the person charged may understand and effectively meetthem. If the charges are imprecise or indefinite, the person charged would notbe able to understand them and defend himself, effectively, and the resultingenquiry would not be a fair and just enquiry.

In the case of Khiew Chee Sun and HSL Electronics Sdn Bhd (Award no 1671 of2012) Industrial Court Chairman YA Peter Iruthayaraj a/l Pappusamy stated in hisaward that The employer cannot justify his action on any grounds other than thosecontained in the charge sheet and or stated in the letter of termination. If the chargesare vague and the workman has no opportunity to reply to them, and the particulars ofsuch charges are also not disclosed to the workman, the inquiry will not be inconformity with the rules of natural justice.

It is the Claimants pleaded case that charges 1, 2 and 3 are defective as they lack inparticulars. Equally challenged for lacking in particulars are the charges in no. 4, 5 and6 on the grounds that they did not state what were the alleged instructions from hissuperiors, who were those superiors and when were these alleged instructions givento the Claimant. It is therefore the Claimants learned Counsels submission that thecharges against the Claimant are void ab initio and hence should be dismissed.

Although these issues were raised by the learned Counsel for the Claimant at length inhis submission, the learned Counsel for the Company unfortunately did not in hissubmission addressed to me, in reply to the above contention. This issue to me is very

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pertinent to the issue of whether the Claimant was dismissed with just cause orexcuse.

Claimants Contention

It is the Claimants learned Counsels submission that the charges sets out in theCompanys Notice of Domestic Inquiry dated 28th June 2011 at pages 48 to 49 ofCLB1 are acutely lacking in particulars because:

(a) In respect of charges 1,2 and 3

(i) The first 3 charges which are in respect of the Claimants allegedmisconduct of gross negligence resulting in ullages, fail to specify theparticulars of the negligence i.e. charges 1, 2 and 3 do not specify in whatways the Claimant had failed to effectively manage his duties as theLogistics & Distribution Manager since the term effectively managepresupposes standard management procedures in ullages management;

(ii) The first 3 said charges also do not provide the details of the Companysproducts which were rendered ullages particularly in view of the fact thatthe Company was dealing with many types of beverages which arebottled, canned or packed in plastic bottles and come in differentvolumes;

(iii) Since gross negligence alludes to a deviation of set standards, theCompany had failed to state by how much the ullages which the Claimantallegedly destroyed exceeded the acceptable levels;

(iv) Since the alleged ullages were made up of 3 types of ullages, viz marketreturns; secondary corrosion and excess stocks, the failure toparticularize the ullages according to these types of ullages had seriouslyheld liable for ullages resulting from market returns or Companys witnessconfirmed at cross-examination Qs 51 and 57 that he does not know what

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was the proportion of the ullages from market returns or from corrosion ofcans. [See Cross-examination Q57 for the Companys Witness,Alexander Yong]

(b) In respect of charges 4, 5 and 6

Charges 4, 5 and 6 are also acutely lacking in particulars because they do notstate:

(i) What were the alleged instructions from his superiors;(ii) Who were those superiors; and(iii) When these alleged instructions were given to the Claimant.

Courts Evaluation and Findings

After analyzing the submission by the learned counsel for the Claimant on the issuerelating to the validity of the charges 1, 2 and 3, I am in total agreement with theClaimants learned Counsel that the charges leveled against the Claimant are indeedgrossly defective based on the grounds which he had eluded thereto.

Since it is the principle of law that it is the duty of the employer to specifically set outall charges with all relevant particulars, it is therefore incumbent upon the company inthis case to specifically specify the particulars of the negligence, the details of theCompanys products which were rendered ullages and the how much of the ullageswere destroyed which exceeded the acceptable levels. Of utmost important in my viewis the Companys failure to particularize in the 3 charges according to the type ofullages which the claimant is alleged to have failed to effectively managed, since thealleged ullages were made up of 3 types of ullages viz a viz market returns, secondarycorrosion and excess stocks. By not specifically particularizing the type of ullages, ithas indeed clearly prejudiced the Claimant because that would mean that he is liable

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for all types of Companys product which are rendered ullages including ullagesresulting from market returns or through corrosions of cans, which by right he shouldnot be held liable.

In respect of Charges 4, 5 and 6, it is also the learned Counsel for the Claimantscontention that the said charges are defective as they are also lacking in particulars asthey do not state;

1. What were the alleged instructions from his superiors,2. Who were those superiors and3. When were these alleged instructions given to the Claimant?

Again, I am in total agreement with the learned Counsel that there is a need to specifythe above in the said charges as the claimant alleges that he is redesignated asproduction manager in a different entity. In view of that, the question of who is thesuperior who gave the instructions to him is vital to specify in the charges so as toenable the Claimant to defend himself effectively. This is especially so because fromthe facts of the case, the instructions from his superior COW1 were indeed followed.The question is whose instruction is that he failed to follow?

In Esso Petroleum (M) Inc v Maimunah Bte Ahmad & Anor (2002) 2 MLJ 458, theemployee appeared in the employers board of inquiry on 2 charges viz receivingRM400 from the employers contractors in return for assistance rendered in relation topayment of that contractors invoice, in contravention of the employers gift andentertainment policy and conflict of interest, and the concealment and failure todisclose to the employer the existence of irregular business practices and/or violationby the employer. Those charges did not state the date, time and place of the allegedoffences. Abdul Kadir Sulaiman JCA held that those charges were bad in law for wantof particulars and were void ab initio. In delivering the Judgment of the Court, hestated that:

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Hence the substance relating to the two charges cannot be brushed aside asbeing of no significance. Taking the words of the learned Counsel for theappellant in his submission that the first respondent admitted and did notdispute either during the domestic inquiry or during the proceedings before thesecond respondent that she had received the money and cashed it, and therewas also in evidence that there was a statement recorded from her during theinvestigation stage. At least from the purported statement surely the date, timeand place the offences alleged to have been committed would have been knownto enable proper charges be framed against her. On the two charges, the burdenis on the party that alleges to satisfy the tribunal adjudicating the matter that thecharges had been proved before the first respondent could be condemned.They are material particulars required to be disclosed in the charges. Withoutthat, how would one accused upon the charges be able to prepare properdefenses to them? Simply upon the admission and non dispute either duringthe domestic inquiry or during the proceedings before the second respondentwould not entitle the learned judge of the High Court in this instant, to proceedto consider the merits of the case? The validity or otherwise of the charges isthe threshold of the matter before the merit could be considered. Looking at thetwo charges as they stood, we would not hesitate to say that they are bad andthe learned judge was therefore, correct when he said that such charges forwant of material particulars is void ab initio. With that we agree with the learnedjudge that on such improper charges before the board of inquiry the finding ofguilt upon the first respondent could not stand thereby rendering the dismissalof the first respondent by the appellant to be without just cause or excuse andtherefore unlawful. On this ground alone, this appeal of the appellant againstthe decision of the learned judge ought to be dismissed.

The judgment in Esso Productions case was followed by the High court in the case ofIntrakota Consolidated Bhd v Mohamad Roslin Md Shah & Anor (2008) 8 CLJ 81where the Learned Judge held that the material particulars as to time, place and

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identity of persons referred to in the charge were essential to enable the employee toknow with certainty the charge leveled against him and to allow him to prepare andconduct his defence.

The employer cannot justify its failure to specify the particulars in the charge byclaiming that particulars are within the personal knowledge of the Claimant. HerLadyship in such a situation held that:

What is of particular importance is the validity of the charge preferred againstthe 1st respondent and therefore material particulars as to time, place andidentity of persons referred to in the charge are essential to enable the 1st

respondent to know with certainty the charge leveled against him and to allowhim to prepare and conduct his defence, as the learned chairman stated at page8 of the impugned award, it may well be that it is also within the personalknowledge of the claimant (1st Respondent), but it is not for the claimant to fill inthe gaps..It is for the Respondent to lay all the bare facts as the burden isalways upon the Respondent to show by evidence that the excuse or reasonsgiven to terminate the claimants employment has been made out or proven.

Based on the principle and line of authorities above, I find that all the 6 chargesagainst the Claimant could not stand as it is grossly defective and bad in law for wantof material particulars and hence it is therefore void ab initio. On this ground alone, Ifind that the Claimants dismissal was without just cause or excuse without having toconsider the merits of his termination which is flawed from the beginning. See EssoPetroleum (M) Inc v Maimunah Bte Ahmad & Anor (Supra) and IntrakotaConsolidated Bhd v Mohamad Roslin Md Shah & Anor (supra).

In the event I am found to be wrong in arriving at such a conclusion, I shallnevertheless deal with the charges as it is framed. As the charges are similar, I shalltherefore deal with charges 1,2 and 3 together and 4,5 and 6 likewise.

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The charges against the Claimant in 1, 2 and 3 are in respect of the Claimantsmisconduct of gross negligence to effectively manage the Companys productsresulting in ullages for the month of October 2010, November 2010 and December2010. In considering the above, the following issues shall be considered.

In what way did the Claimant failed to effectively manage the companysproducts.

Companys contention

According to COW3, the claimant although he was the production Manager, he wasalso in charge of Logistics and Distribution. COW1 in cross examination confirmed thatalthough the Claimant was the production manager, he also oversees productions andlogistic warehouse production in Sabah. This fact was acknowledged by CLW1 inanswer to Q4 of the statement of Investigation dated 10th march 2011 as follows;

Q4 Despite your lateral transfer as Production manager, were you still in charge ofLogistics and Distribution?

A. Yes, with the assistance of a logistic Executive.

CLW1 also said that there was no black and white to that effect.

During re examination, COW3 was asked how they arrived at the decision that theClaimant was negligent.

COW3 in reply stated that in arriving at its decision on charges of negligence undercharges 1, 2 and 3, they took into account the following matters. That the Claimant,

1. Did not use stock in transit report,2. Did not stop the supplies from Shah Alam,3. Did not normalize the stocks

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4. Did not reject if there was excess and5. Did not repack the stock when there was secondary corrosion

Claimants Contention

The Claimant denies that he was negligent in managing the Companys productbecause ullages are a natural phenomena in any food and beverage manufacturingactivity and that they are a function of both inherent and external factors that arebeyond his control.

In answer to Q22 of WS-CLW1-C on what caused the ullages for the month ofOctober, November and December 2010, CLW1 replied as follows:

the causes of warehouse ullages for the said months were due to the limited spaceand aggravated by roofs that leaked and the flooding of the warehouse both of whichcaused secondary erosion to beverages in cans. Further, the slow movement ofproducts also resulted in the products reaching expiry dates and such products losttheir carbonation and had to be destroyed. The Claimant agreed with Edwin Thomas,the Warehouse Manager at Shah Alam who gave evidence at the Domestic Inquiry atpage 65 CLBD that limited warehouse space could be a reason for high ullages. TheClaimant attributed the reason for the space at the warehouse to be tight during themonths of October, November and December because indents kept on coming due tothe festive and holiday seasons.

When asked in Q24 how this limited space contributes to high warehouse ullages, theClaimant replied as follows;

When there is limited warehouse space, the goods, i.e. mainly the canned beveragesin paper trays are piled one on top of the other and are closely stacked. The AssistantStore supervisors would not be able to detect and remove the trays which are leaking.

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This undetected leakage would cause secondary corrosion of other cans in othertrays. All corroded cans would be classified as ullages for destruction. I will also addthat due to limited warehouse space new stocks arriving at the Kota Kinabalu Portafter customs clearance had to be kept in the open space at the port exposed to bothsun and rain. Such harsh exposure would lead to high spoilages. Further, the Claimantalso said that the leaks in the warehouses roof whereby when it rains heavily, waterwill come in through the leaks and flood the area to the height of 2 feet alsocontributed to high ullages. Hence, because of the flooding, secondary corrosion ofcanned beverages would also take place in the trays stacked nearer to the roof andfrom the trays placed on the floor of the warehouse.

As to the causes of the ullages in respect of beverages in plastic bottles which arecalled PET bottles, he replied that PET ullages takes place when marketing anddistribution is not fast enough resulting in the PET bottles reaching near expiry dateswith signs of leakages at the closures (i.e. at the caps). Such bottles would also haveto be destroyed.

Evaluation and Findings

This court after considering the above contentions and weighing the evidencepresented by both parties, finds that the Company had failed to prove to thesatisfaction of this court on a balance of probability that the Claimant was negligent inhis duty which contributed to the alleged high ullages for the months of October,November and December 2010. The finding of this court is premised on the followingevidence:

a. CLW1, as of 1st October 2010, was merely assisting F&N Beverages MarketingSdn Bhd which was responsible for the logistics and distribution functions. If thatis so, then it is not fair to put the blame entirely on CLW1 for the high ullages ofthe Companys product for the month of October, November and December

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2010. b. Ullages are natural phenomena in any food and beverage manufacturing activity

and these are caused both by inherent and external factors which are beyondthe control of the Claimant.

c. From the evidence adduced, the main cause of the ullages during the month ofOctober, November and December 2010 was the long periods of storage of theproducts at the port as well as at the Kota kinabalu ware house. See CLB1 pg14, Claimants reply to show cause letter. The supplying plant at Shah Alam keptclearing their stocks by shipping them out to Kota Kinabalu without regard to itswarehouse problem and according to CLW1, this is beyond his control and alsowithin the management's knowledge.

d. As to the allegation that the Claimant failed to stop the supplies from Shah alamcoming if there is excess, again the Claimant in my view cannot be faulted forthat as he is not the person responsible for the orders.

e. On the allegation of the Claimant failing to normalize the stocks, Exhibit AE100showed that the Claimant have requested the Regional Manager Alex Yong notto indent further the Sprite PETI 1.5L and V Coke PETI.5L. However evidenceshowed that was never done by Alex.

f. On the accusation that he mismanaged the stocks, I find that it is without basisas the problem is due to the lack of space in the warehouse and has nothing towith the Claimant being negligent.

Hence, as he was only asked to assist in the Logistics and Distribution of products, Ifind that the charge of gross negligent against the Claimant in carrying out his duties ismost wanting. It is to be noted that he was under the supervision of Alexander Yong(COW1), the Companys main witness in this trial before me. As the superior, heshould have monitored what CLW1 was doing and adviced him accordingly. To nowput all the blame to him which is beyond his control, I think is most unfair.

In the premises, having taken the evidence as a whole, it is my considered view that

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charges 1,2 and 3 against the Claimant has not been made out by the Company on abalance of probability.

In respect of charges 4, 5 and 6, the Claimant was alleged to have disposed ullages ofCompanys product for the months of October, November and December 2011 despiteclear instructions from his superiors to the contrary or despite the fact that he had yetto receive any approval from the National Finance Office for the request for disposal.In considering the above, the following issue had to be considered:

Whether the Claimant was guilty of disposing the Companys products withoutauthority.

Companys Contention

COW1 testified during examination in chief that the Claimant never followed theprocedure on destruction of ullages and that he had acted beyond his authority withoutapproval by NFO, resulting in losses to the Company.

COW3 testified that in respect of charges 4, 5 and 6, the panel find that the Claimantdid not follow the chart of authority. For the amount of more than RM2 thousand, theClaimant must set approval from the General Manager finance before clearing thestocks. COW3 went on to state that despite the Regional Manager saying No, theClaimant went ahead. The Claimant also disposed the stock via a Company which hasnot given the Company any quotation and issued the gate pass and signed it. TheClaimant also did not weigh the disposals before disposing it.

Claimants Contention

Claimant contended that the destruction of ullages was carried out after obtaining theapprovals and in accordance with established practice of the Company. He had on

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numerous other occasions in his capacity as the Logistics and Distribution Managerhad also destroyed the ullages after getting only the regional Managers approvalwithout waiting for the approval from the NFO.

The evidence in chief of the Claimant is reflected in his witness statement CLWS 1which he testified in court on the 17th June 2014. In answer to question 7, the Claimantstates that the ullages for October 2010 were identified in the beginning of October2010 in the warehouse and they were moved out of the warehouse and stored in theopen near the water treatment plant area waiting for approval for its destruction. Theullages for October 2010 were destroyed at the end of October 2010 after obtainingthe approval for its destruction. In respect of the November 2010 ullages, CLW1 statesthat they were identified in the beginning of November 2010 in the warehouse andwere moved out of the warehouse and stored in the same place waiting for approvalfor its destruction. The November ullages were destroyed at the end of November2010 after obtaining approvals for its destruction. Similarly in respect of the December2010 ullages, CLW1 states that it was identified in the beginning of December 2010and moved out and stored in the same place and were only destroyed during the firstweek of December after being instructed by the said General Manager Manufacturing.This was confirmed by Alexander Yong (COW1), the Deputy Region Manager who isalso the immediate superior of CLW1 in his answer to Q2 of the statement ofInvestigation at page 380 CLSBD dated 16th March 2006 as follows;

2. Could you please explain and elaborate if there were any discussions between SooKwok Wah and yourself regarding the destruction of ullages without obtaining approvalfrom National Finance Office?

There are 2 occasions on discussion on ullages to be destroyed pending RFDapprovals.

The 1st occasion was last year during Abdus Sani and Lee Joon Hins site visit on the

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plant project. The project team needed space desperately for placement of theirequipment and working space for civil work on the effluent waste plant. During theproject progress discussion at KKs conference room, Abdus Sani enquired about thespace and when can the ullages be cleared. We were not able to clear the ullages asthe RFD is pending for approval. Options were discussed and due to the urgency, Icontacted Phillip Chin (for finance and policy guideline), what alternative can we have.I was advised by Phillip that we can destroy the ullages but all records anddocumentation must be proper and there must be photographs to prove that suchullages are taken out to be destroyed pending RFD approval. The same message wasbriefed to Soo, in the absence of Abdus Sani and Lee Joon Hin.

That space was desperately needed and ullages from the warehouse had to beremoved was also confirmed by COW1 in answer to cross examination Q108 wherehe agreed that the reason why he agreed to the destruction of the October andNovember ullages was that space was urgently required by the construction of thebottling plant.

The 2nd occasion was in January 2011. I was out of the office, Soo called me to informme that he is sending a truck to load ullages to be destroyed. I asked him, have theRFD for these batches been approved. He said No. He further said the ullages arealready loaded onto the truck. I said No, dont do it, unload the ullages and we canonly destroy upon RFA approval.

That the ullages on the 2nd occasion in January 2011 were not destroyed wasconfirmed by COW1 in answer to question 4 of the said statement of investigationwhere he said as follows;

Q4. Did Soo Kwok Wah proceed to destroy the ullages during the 2nd occasion when you told him not to proceed? (Please provide your answer)

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A. No, he did not, the ullages was unloaded from the truck.

CLW1 went on to say in answer to Q11 of CLWS 1 that the NFO eventually sometimein April 2001 approved for disposal the warehouse ullages. He went further to statethat this further substantiates my point raised earlier that there has never been asingle instance when the NFO had not given its approval for the destruction of theullages once approval had been obtained from the Region Manager or Deputy RegionManager

This fact was confirmed by COW1 in cross examination Q78 that NFO did infactsometime in April 2011 approve the destruction of the ullages applied for by theClaimant for the months of October, November and December 2010.

In question 3 of the statement of investigation, he was further asked the followingquestion;

Q3. Can you please explain the contradiction in your answers pertaining to the 1st occasion where there seems to be approval granted to Soo Kwok Wah but not

on the 2nd occasion, you told him not to do it?

A. 1st occasion, a discussion was held amongst Mr Abdus Sani, Mr Lee Joon Hin and Mr Soo Kwok Wah onto how to vacate for space for manufacturing work to proceed and Admin Manager was consulted on the steps to do it, pending RFDsapproval. All due to the urgency to vacate for space.

2nd occasion was not allowed as we were already pointed out and queried by NFO on the 1st case, the destruction of ullages, even for urgency and with proper documentations/photos, without RFD approval is not in accordance with the SOP.

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In question 6 of the statement of investigation, COW1 was also asked if there wereany express or implied consent /authority given to Soo Kwok Wah to destroy ullagespending approval from NFO and his answer was No, except the 1st case where I haveconsulted Finance and Admin Sabah due to the urgency for space, but with theconditions of proper recording as advised.

From the Claimants bundle of documents, this court noted that such conditions weresatisfied by the claimant as shown at pages 374 to 376 CLB2 (documents) and pages26 to 28 CLB1 (photographs) See Claimants witness statement in answer to Q 17.

Evaluation and Findings

From my analysis of the evidence above, there seems to be a mistaken conclusion bythe Company which made them think that the Claimant did not obtain the approvalsprior to destroying the ullages for the period stated in the above charges.

That the ullages must be destroyed is not an issue in this case as otherwise the NFOwould not have ultimately approved its destruction in April 2011. On the 1st occasion,when ullages were destroyed, COW1 who was guided by the advice of one Phillipchin, the Regional Administration Manager, that the ullages can be destroyed providedthat records and documentation were proper and photographs taken, accordinglyadvised the Claimant due to the urgency for space. In respect of the ullages on the 2nd

occasion, COW1 also confirmed that the Claimant did not destroy the ullages upon hisinstruction and unloaded them from the truck. From the evidence of COW1, I find thatthe ullages were indeed destroyed by the Claimant based on proper instruction.Hence, based on the following, I also find that the Company has failed to discharge itsburden of proof in respect of charges 4, 5 and 6 on a balance of probability.

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Conclusion

In the final analysis, based on the totality of evidence adduced by both parties as wellas submissions made and also having regards to equity and good conscience as wellas substantial merits of the case without regard to technicalities and legal form asstated in s. 30(5) IRA, this court finds that the Claimants dismissal was without justcause or excuse. Accordingly, the Claimants claim is hereby allowed. Hence I shallnow examine the remedy.

Before that, I would like to address in my award on the point raised by the Company inpara 7.11 in its submission where it said that the test to be adopted in this case indeciding whether the Claimants dismissal was with just cause or excuse is thatadopted in Feroda Ltd v Barnes (1976) I.C.R 439.viz a viz the court should askwhether it is satisfied that the employer had, at the time of the dismissal, grounds forbelieving that the offence put against the employee was in fact committed and notwhether it is satisfied that the offence was committed.

On this point, I am in agreement with the learned Counsel for the Claimant that thesaid test above is only good when the employee is dismissed for an offence which iscriminal in nature. The Company drew my attention to the Court of Appeal case ofTelekom Malaysia Kawasan Utara v Krishnan Kutty A/L Sanguni Nair & Anor(2003) 3 MLJ 129 to illustrate its point. Here, the court of Appeal made it very clearthat if the employee is dismissed grounded on criminal misconducts as opposed tofacing criminal prosecution, the standard of proof required is on the balance ofprobability. Since in this case the charges against the Claimant are not criminal innature, this court therefore need only be satisfied whether the Company has provedthe 6 charges against the Claimant on a balance of probability and not on the test assuggested by the Company.

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Remedy

Based on the Courts assessment of the industrial climate between the parties, it iscertainly not conducive to reinstate the Claimant as the relationship between thecompany and the Claimant has been badly strained. In the circumstances, it isinappropriate to order the remedy of reinstatement. Instead, the Claimant will beawarded compensation under 2 heads namely, backwages and compensation in lieuof reinstatement.

Back wages

Back wages is calculated based on the Claimants last drawn salary but limited to 24months. See Court practice Note 1 of 1987. From the back wages, the court isrequired to make a deduction for any contributory conduct, post dismissal earningsand delay in the hearing of the case but such a deduction need not involve amathematical calculation. See Dr James Alfred (Sabah) v Koperasi SerbagunaSanya Sdn Bhd (Sabah) & Anor (2001) 3 CLJ 541.

a. Contributory Factor

I have carefully examined the facts and evidence in this case and I am of the view thatthere is no contributory factor on the part of the Claimant in respect of all the 6charges. Hence, under this item, no deduction shall be made.

b. Delay

From an examination of the notes of proceedings, I noticed that the Claimant did notoccasion any delay in connection with the hearing of this ministerial reference. Hence,there is also no deduction down under this head.

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c. Gainful employment

At the time of dismissal, the Claimant was 52 years and 2 months. His last drawnsalary was RM 10,168.00. On the facts of this case, there is no evidence that he wasin gainful employment after he was dismissed by the Company. Similarly, there is alsono deduction under this item

In conclusion, I hereby hand down to the Claimant a monetary award in the total sumof RM528, 736.00, in lieu of reinstatement, which is arrived as follows:

a. Back wages for 24 months based on his last drawn salary of in the sum ofRM244,032.00.

b. Compensation in lieu of reinstatement for 28 years of service (from 1stNovember 1982 to 14th September 2011) at the rate 1 month salary for eachcompleted year of service @ RM284, 704.00.

c. It is further ordered that the Company shall pay the total amount ofRM528,736.00 through the Claimants solicitors firm of Messrs S. Vanugopal &Partners within 30 days from the date of this award subject to statutorydeductions, if any.

HANDED DOWN AND DATED THIS DAY OF 10Th NOVEMBER 2014.

- sgd -

(DUNCAN SIKODOL) CHAIRMAN

INDUSTRIAL COURT MALAYSIA SABAH BRANCH

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