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DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR (BAHAGIAN RAYUAN DAN KUASA-KUASA KHAS) PERMOHONAN SEMAKAN KEHAKIMAN NO. R1-25-24-2010 ANTARA THUM SOON YIN DAN 1. EDEN INC. BERHAD (formerly known as Eden Enterprises (M) Bhd) 2. MAHKAMAH PERUSAHAAN MALAYSIA ... PEMOHON

RESPONDEN... RESPONDEN

JUDGMENT Aziah Ali J : The Applicant claims constructive dismissal by the 1st Respondent. By Award No.7 of 2010 dated 4.1.2010 the Industrial Court found that the Applicants claim of constructive dismissal was misconceived and dismissed his claim. By way of this application for judicial review under Order 53 of the Rules of the High Court 1980, the Applicant seeks for an order of certiorari to quash the Award of the Industrial Court. I found no error of law committed by the Industrial Court. Thus I dismissed the application with costs of RM5,000.00 to the 1st Respondent.

[2]

The background facts and correspondences exchanged between the

Applicant and the 1st Respondent leading to the claim of constructive dismissal are found in the Award. Briefly the 1st Respondent was the holding company of the companies within the Eden Group. The 1st Respondents core business was in food and beverage which were operated through its subsidiaries. The Applicant commenced employment with the 1st Respondent sometime in the year 1974. On 2.6.1994 he was appointed to the position of Director and Executive Director/Senior General Manager of the 1st Respondent as well as aIl the 1st Respondents 13 subsidiaries.

[3]

The evidence before the Industrial Court shows that the 1st

Respondent had been suffering huge losses between 1999 and September 2002. The audited financial statements showed that the 1st Respondent and the Eden Group suffered from negative shareholder funds meaning that it could not meet its debt obligations and it faced legal action from various banks. In October 2002 the 1st Respondent and its 13 subsidiaries were bought over by the Zil Group of Companies (Zil) which was involved in the business of infrastructure/power, general manufacturing and property. Zil concluded a reverse takeover of the 1st Respondent through the injection of assets into the 1st Respondent in exchange for shares. The evidence showed that the 1st Respondents Board of Directors sanctioned the takeover. At the time of takeover the Applicant was a director of the 1st Respondent.

[4]

The Industrial Court found that one of the conditions for the takeover

was that the directors named in the agreements between Zil and Multi Destar (M) Sdn Bhd, which brokered the takeover, would sign letters of resignation from all their executive and salaried positions in the Eden Group without any claim whatsoever for compensation for loss of office. The Applicant agreed under cross examination that following the takeover of the 1 st Respondent by Zil, it was agreed that all directors of Eden Group were to resign from the Board of Directors. The Applicant was one of the persons who resigned but
he states that he resigned as a director of the 1st Respondent but did not

resign as Executive Director. He agreed that the title of Executive Director was after he was appointed to the Board. The Applicant agreed that he was not removed but he resigned on his own and that by 18.10 2002 he ceased to be a director of the 1st Respondent and its subsidiaries. The Applicant agreed that after October 2002 he was no longer entitled to directors fee or allowance. Apart from the Applicant, Dato Robert Chuan the Executive Chairman, Terry Wong Soo Teong, Chuan Hooi Huat who were directors of the 1st Respondent also resigned on the same terms as the Applicants letter of resignation. After the takeover the Applicant was the only one amongst the directors who stayed on to work for the 1st Respondent.

[5]

Pursuant to the takeover of the operations of the Eden Group, the

Chief Operating Officer one Zahar Zaman by letter dated 1.1.2003 informed all management staff including the Applicant of the organization and reporting structure of the 1st Respondent and the composition of the Board of Directors. The group activities of the 1st Respondent was reorganized and Food and

Beverage was divided into Restaurant and Non-Restaurant business and the Applicant was designated as Senior General Manager, Restaurant reporting to the Director of Operations, one Abdullah Rasul (exh. T-4).

[6]

Upon completion of the general transition of the business pursuant to

the takeover, by a letter dated 26.3.2003 the Applicant was offered the position of Senior General Manager, Operations reporting to the Director of Operations effective 1.3.2003. The salary offered was RM10,000 per month. The Applicant rejected the offer and contended that the 1st Respondent by its conduct is repudiating its contract by demoting him to the post of Senior General Manager at a reduced salary. The Applicant gave the 1 st Respondent time to withdraw the letter of offer failing which he would claim constructive dismissal. The 1st Respondent replied denying any demotion or reduced salary package. It is the 1st Respondents stand that the Applicant had resigned from all directorships and that since October 2002 the Applicant no longer functioned as Executive Director of any of the companies. Therefore the 1st Respondent states that the issue of restoring the Applicant to the position of Executive Director does not arise. According to the 1 st Respondent there is no basis to claim constructive dismissal from a position which the Applicant no longer held. The 1st Respondent extended the offer till 9.4.2003. The Applicant did not reply but on 11.4.2003 the Applicant returned the company car. The 1st Respondent deemed the Applicants action as a rejection of the offer. On 21.5.2003 the Applicant wrote again demanding reinstatement to his former position as Executive Director failing which he would consider himself as constructively dismissed.

[7]

On the evidence adduced the Industrial Court made the following

findings of fact (a) (b) since October 2002 the Applicant no longer functioned as Executive Director of any of the 1st Respondents companies; in cross examination the Applicant admitted that following the takeover of the 1st Respondent, by a memo dated 1.1.2003 he was redesignated as Senior General Manager Restaurant reporting to the Director of Operations; the Applicant had complied with the memo and reported to Abdullah bin Rasul; if the Applicant was indeed the Executive Director he would not have reported to Director of Operations who was not an Executive Director; the Applicants claim that he was demoted vide the letter of offer was an afterthought; the Applicant ought to know that he was no more an Executive Director when he resigned; the Applicant was asked to stay on a temporary basis during the transition period; that there was such an arrangement; the facts that the Applicant had resigned shows that his position as Senior General Manager was temporary; there were too many doubts regarding the tenure of the Applicants employment after the takeover of the 1st Respondent by Zil Group; the only one certain thing was that the service of the Applicant was retained by the 1st Respondent on a temporary basis after the takeover;

(c) (d) (e) (f) (g) (h) (i) (j) (j)

(k) (l) (m) (n)

the resignation by the Applicant included his resignation as Executive Director; the offer of employment was a mere offer and had not been implemented by the 1st Respondent; the Applicants claim of constructive dismissal was premature; the Applicant had resigned on his own accord as he did not accept the new offer of employment.

Decision [8] The letter dated 1.1.2003 issued by the Chief Operating Officer of

the 1st Respondent on the reorganization and reporting structure of the 1 st Respondent, and the chart marked Appendix III(a) and (b) of exhibit T-4 shows that the Applicant was the Senior General Manager, Restaurant reporting directly to the Director of Operations.

[9]

The 1st Respondents organizational structure shows only one post

of Executive Director. The composition of the 1st Respondents Board of Directors shows that the Executive Director of the 1 st Respondent was one Datin Fadzillah Md Ariff. Thus the evidence shows that as of 1.1.2003 the Applicant was in fact not an Executive Director of the 1st Respondent. If the Applicant was the Executive Director as he contended, then he ought to have raised the issue with the 1st Respondent upon having noticed that his name was missing from the composition of the 1st Respondents Board of Directors. I find that the Industrial Court has not erred in its finding that the Applicants

claim of demotion which was made in March 2003 is an afterthought. The evidence supports the finding of the Industrial Court that the Applicant had resigned from his position as director and as Executive Director. I agree with counsel for the 1st Respondent that the Industrial Court's findings of facts were clearly supported by evidence.

[10]

From the Award I find that the Industrial Court has applied the

correct test for constructive dismissal (Western Excavating (E.C.C.) Ltd v Sharp [1978] 1 All ER 713; Wong Chee Hong v Cathay Organization [1988] 1 MLJ 92). I find that the Industrial Court has not erred in its finding that there was no constructive dismissal. There is no error of law that merits curial intervention. For the reasons stated I dismissed the application with costs of RM5,000.00 to the 1st Respondent.

Dated 8th February 2011

AZIAH BINTI ALI JUDGE HIGH COURT MALAYA KUALA LUMPUR

Counsel : For the Applicant : VK Raj (Messrs P Kuppusamy & Co.) K Sivakumar (Messrs Skrine)

For the 1st Respondent