Case No.

: 2/4-661/18

INDUSTRIAL COURT OF MALAYSIA

CASE NO : 2/4-661/18

BETWEEN

ENIS ARNAUT

AND

NOVA BETA (M) ENERGY SDN BHD

AWARD NO. 416 OF 2020

Before : Y.A. PUAN ROSENANI BINTI ABD RAHMAN - Chairman

Venue : Industrial Court Malaysia, Kuala Lumpur

Date of Reference : 19.2.2018

Dates of Mention : 5.4.2018; 31.5.2018; 8.6.2018; 3.10.2018; 8.11.2018;

Dates of Hearing : 4.12.2018; 16.1.2019; 25.3.2019; 9.4.2019; 10.4.2019;

Representation : Mr Akif Rusli

Mr Amardeep Singh
Messrs Lee Hishammuddin Allen & Gledhill
for the Company

Reference:

This is a reference made under Section 20(3) of the Industrial Relations Act,

1967 arising out of the dismissal of Enis Arnaut (“the Claimant”) by Nova Beta

(M) Energy Sdn Bhd (“the Company”).

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AWARD

Brief Facts

The Company is a subsidiary of Warisan Harta Sabah Sdn Bhd (WHSSB) who

owned 70% equity in the Company while the remaining 30% is owned by the

minority shareholder Dr Sabina (the Claimant's wife). WHSSB is the investment arm

of Sabah State Government (SSG) which function as a catalyst to drive Sabah's

economic development and growth in various sectors creating opportunities for the

people in the industry.

On 20.3.2013, WHSSB was granted the exclusive right by SSG to undertake

the development of all the Small Hydro power Plant (SHP) projects up to a

maximum capacity of 30 mw each utilizing all natural water resources (rivers) in the

state of Sabah. Following the grant of the exclusive right, WHSSB decided to enter

into a collaboration with the Claimant due to his sound, technical knowledge of SHP

development. A Head of Agreement was signed between the Company and WHSSB

on 2.10.2013 where the Claimant signed in his capacity as General Manager/Chief

Executive Officer (pages 4-14, COB 1).

Subsequent to the share acquisition of the Company by WHSSB the Claimant

who was a non-executive director of the Company at the material time was

nominated to be the Executive Director of the Company due to his expertise in Small

Hydro Power Project. The Claimant negotiated and subsequently agreed to a

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contract for service dated 19.8.2014 for a fixed term of 2 years for the position of

Executive Director (pages 29-41, COB 1). The Company claim that the Claimant

was unable to report for duty until 3.11.2014 due to his ongoing employment with

Tenaga National Berhad and for him to obtain a work permit.

The Claimant states that the actual effective date of his employment with the

Company was on 3.11.2014 as per the decision granted in the Meeting of Board of

Directors of the Company held on 20.6.2014. (Annexure 2 of Statement of

Case). Te Claimant further states that the date of the commencement of the

Claimant's position should be in conform with the decision made in the Board

Resolution dated 20.6.2014 and he denied that there was a delay in reporting for

duty until 3.11.2014. The Claimant duties and responsibilities were based on the

appointment of the Company by WHSSB to carry out the feasibility studies for SHP

projects which were dependent on WHSSB maintaining the SHP exclusive rights

granted by SSG. His duties and responsibilities are as follows:

(i) To coordinate with the Chief Executive Officer of WHSSB being the

holding company of the Company to prepare and furnish all technical,

financial and feasibility studies for SHP projects to be undertaken by

WHSSB.

(ii) To monitor and submit comprehensive reports on the performance and

progress of each small SP projects undertaken by WHSSB.

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(iii) Identify, follow up and manage potential business leads in SHP

generation projects in Sabah.

(iv) To conduct research and financial/date analysis by the Company upon

engagement by WHSSB or its appointed nominee for SHP generation

project.

On 1.2.2016, the Claimant's wife (CLW 2) and the minority shareholder of

the Company has made an application and recommendation to the Company's Board

of Directors to extend the Claimant fixed term contract (page 42, COB 10). The

matter was referred to WHSSB's Board whereby during the meeting the Claimant

was advise that eventually he would become a non-executive director and the

Company's business would be manage by a manager (page 53, COB 1).

In the Statement in Reply, the Company states the facts and circumstances

leading to the non renewal of the Claimant's fixed term contract due to the

revocation of the SHP exclusive right granted by SSG with effect from 29.6.2016.

Refer to para 5(a) - (j). In para 5(e) the Company states that the Claimant's

fixed term contract expired on 19.8.2016. As an interim measures before a final

decision is made on his employment's status the Company informed the Claimant

that his engagement as Executive Director would continue on a month to month

basis pending WHSSB's Board of Director Meeting.

On 14.9.2016, the Board of Director resolved the recommend to the Company

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the non-renewal of the Claimant's fixed term contract. The board felt that following

the revocation of the SHP exclusive right by SSG with effect from 29.6.2016

whereby the intended purpose of collaboration with the minority shareholder had

been defeated. The Company's Board of Director resolved not to renew the

Claimant's contract for service on 19.10.2016 due to the said revocation. By a

letter dated 24.10.2016, the Claimant was informed that his contract of services

would not be renewed and that his last day of service as Executive Director will be

on 31.10.2016. He will continue to serve as a non-executive Director in the

Company. He was also provided with 2 months bonus as completion bonus of the

fixed term contract.

Upon receipt of the said letter on 31.10.2016, the Claimant did not dispute

that his employment came to an end due to the revocation of SHP exclusive right

granted to WHSSB and his fixed term contract had expired due to effluxion of time.

He only disputed that the decision was made without consulting the minority

shareholder who is the Claimant's wife (CLW 2) who raised her dissatisfaction by the

letter dated 8.11.2016 that the Claimant's contract was not renewed without

consulting her.

The Claimant avers that the recommendation not to renew his contract of

service was clearly being on unlawful interference with the employment contract of

the Claimant with the Company. The termination was done without the consent

from the minority shareholder which is expressed in the letter dated 8.11.2016

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forwarded by CLW 2.

The Claimant further aver that the attempt to push him out of the Company

was contemplated planned by WHSSB and merely using the Claimant's expertise and

qualification as a tool to obtained the said project. The Claimant's dismissal was

without any just cause or excuse and in breach of the principles of natural justice

and unlawful.

The Law

In the Supreme Court case of Wong Chee Hong v Cathay Organisation

(M) Sdn Bhd [1988]1 CLJ 45 [1988]1 CLJ (Rep) 298, Salleh Abas LP (as His

Lordship then was) said that:

“When the Industrial Court is dealing with reference under S.20, the first

thing that the Court will have to do is to ask itself a question whether there

was a dismissal, and if so whether it was with or without just cause or

excuse.”

In General Container Sdn Bhd v Yip Siew Ling [1994]2 ILR 912,

Industrial Court had stated as follows:

“It is a trite principle of industrial law that only a workman who has been

dismissed by his employer may seek the remedies available under s. 20 IRA.

This is a jurisdictional fact which is more often than not a matter which is not

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disputed. Where, however, the employer denies that he had dismissed the

workman and alleges that it was the workman who had resigned, then the

[IC] has the duty to decide first of all the preliminary issue whether there

was a dismissal. Once it is established that there was a dismissal the issue

that is left for the court to decide is whether or not the employer had just

cause or excuse for dismissing the workman.”

The burden is on the Claimant to prove that he was dismissed by the

Company. In the case of Weltex Knitwear Industries Sdn Bhd v Law Kay

Toy & Anor [1988]1 LNS 258, Abdul Kadir Sulaiman J (as His Lordship then was)

held as follows:

“The law is clear that if the fact of dismissal is not in dispute, the burden is

on the company to satisfy the court that such dismissal was done with just

cause or excuse. This is because, by the 1967 Act, all dismissal is prima facie

dine without just cause or excuse. Therefore, if an employer asserts

otherwise, the burden is on him to discharge. However, where the fact of

dismissal is in dispute, it is for the workman to establish that the was

dismissed by his employer, If he fails, there is no onus whatsoever on the

employer to establish anything for in such a situation no dismissal has taken

place and the question of it being with just cause or excuse would not arise.”

The Issues

This is a case where dismissal is in dispute. The Court has to determine:

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1. Whether there was a fixed term contract of 2 years that had expired or just a

contract of employment.

2. Whether there was a dismissal by the Company and that if so whether it was

with just cause or excuse.

Evaluation and Findings

In the present case the issue of dismissal is in dispute. The Claimant has

pleaded that he was wrongly terminated and/or constructively dismissed and/or not

extended his contract for service. It seems that the Claimant is not certain of his

own claim when he relied on the above grounds alternatively. The Court is of the

opinion the Claimant should have chosen one ground because each ground have

different burden of proof. When the dismissal is in dispute the burden is on the

Claimant to prove his case. Only if the Claimant is able to prove the fact of

dismissal, the burden then shift to the Company to prove that it had just cause or

excuse for the dismissal.

It is the Company's case that the Claimant was not dismissed. His

employment ceased following the expiration of his fixed term contract. Here this

Court refers to the letter dated 24.10.2016 received by the Claimant on 31.10.2016.

The heading of the said letter clearly states “Notification Conclusion of Contract for

service as Executive Director of Nova Beta (M) Energy Sdn Bhd”. There is no

mention of the word dismissal or termination in the said letter. The purpose of the

letter is to notify the Claimant that his contract of employment as Executive Director

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has came to the end and not renewed by the Company. This was not an issue of

poor performance or misconduct that require a show cause letter or warning letter

to be issued by the Company.

Here the Court finds that there are no issue on the appointment of the

Claimant as the Ex Director whereby all the terms was agreed and accepted by both

parties. As a result, the fixed term contract was signed by both parties (pages 29-

41, COB 1). It is stated in para 1 and 3 of the said contract that:

“1. The Board of NBE on 27 March 2014 had agreed to nominate EA as t

he Executive Director (hereinafter referred to “ED”) of NBE by virtue f

the Heads of Agreement executed between NBE and Warisan Harta

Sabah Sdn Bhd dated 2 October 2013 on a two (2) years fixed term

contract for service basis based on terms and conditions stipulated

herein.

3. NBE has agreed to offer EA and EA has agreed to accept the

appointment as ED on a Fixed-Term Contract For Service basis for a

period of two (2) years.”

It is clearly stated that the Claimant's appointment as Ex Director is on a fixed

term contract for a period of two years.

The evidence shows that at all material time the Claimant is aware of the

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above fact. This can be seen from the recommendation by CLW 2 (Dr Sabina Topcic

Arnaut) on the extension of the Claimant's fixed term contract as early as 1.2.2016

(pages 42-43, COB 1). This is followed by the Company Board of Director

Meeting on 1.2.2016 where the Claimant's extension of contract was discussed

(page 53 of COB 1). It was during the meeting that the Claimant was informed

that he would eventually became a non-executive director whereas the business

would be manage by a manager to allow him to pursue other business endeavors.

Clause 11.3 of the Fixed Term Contract expressly states that the Company

shall notify the Claimant in writing of its intention to offer him further employment

not less than 3 months before the expires of the said contract (page 37, COB 1).

When asked during cross examination the Claimant has been evasive in answering

whether he had received a written notification from the Company.

The Claimant and CLW 2 were fully aware that his fixed term contract expires

on 19.8.2016. This can be seen from the application and recommendation by CLW

2 to the Company's Board to extend the Claimant's contract where she confirmed

the date of execution on 19.8.2014. There was no mention of 3.11.2016 as the

expiration date in the application. The Court finds that from the Claimant's response

upon receiving the notification of conclusion of the contract and CLW 2's letter of

protest dated 8.11.2016 (pages 76-77, COB 1) demonstrate that the Claimant and

CLW 2 never suggested that his contract was permanent in nature. They are fully

aware that the Claimant was employed under a fixed term contract of 2 years and

that is why CLW 2 (the Claimant's wife and the minority shareholder) had made an

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application to extend the fixed term contract.

During cross examination the Claimant concede that his employment was

contingent upon WHSSB maintaining the SHP exclusive right granted by SSG. The

Court agrees with the Company that by reason of the revocation of SHP exclusive

right by SSG would lead to the Company no longer carrying on operation and

ceasing business. Refer to the letter of revocation dated 1.8.2016 at page

56 of COB 1. The Court is of the opinion that it is the consequential events that

took place at that material time as the result of the revocation. Pursuant to the said

revocation WHSSB issued a letter to the Claimant dated 4.8.2016 to informed him to

discontinue all works on SHP project in Sabah by the Company.

The evidence shows that the Company does not have any active business,

has ceased all business activities and is a dormant Company. As of end of the year

2017 Company has no more employee and has closed its EPF account since no

longer has any employee and does not make any EPF contribution. The Company

also no longer has an office space and has terminated the service provided by

Telekom Malaysia Berhad. As a result of the revocation the Claimant himself had

directed the staff of the Company to take leave and subsequently issued letter to

notify them that the Company would not renew their fixed term contract (pages

70, 78 and 79, COB 1). The Claimant testified that in light of the decision of SSG

to revoke the SHP exclusive right, he had suggested to put the Company on hold

(Q+A 29, page 34, CLWS 1A). During cross examination the Claimant

confirmed his answer and state that putting the Company on hold was to protect the

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interest of the Company and if there is no project the Company will not employ staff

including the Claimant himself.

It is undisputed that the Claimant last day of employment was 31.10.2016.

Base on the fixed term contract that commenced on 19.8.2014 the expiry date

should be on the 19.8.2016. Here the Claimant's contention that since he

commenced employment on 3.11.2014 his fixed term contract should expire on

3.11.2016 and not 19.8.2016. Putting aside all the technicalities, this Court finds

that the Claimant's argument as that point is acceptable and it does not change the

fact that the Claimant contract of employment is a fixed term contract of 2 years.

The short of 3 days can be compensate by the payment of 2 months bonus and 3

month salary in lieu of notice by the Company to the Claimant.

On the totality of the evidence adduced and having considered all the written

submissions from both parties, where the submission in reply from both the

Claimant and Company was only received by the Court on 14.2.2020. It is the

finding of the Court that the Claimant's contract of employment is a fixed term

contract for 2 years. The Court also finds that the Company did not dismissed the

Claimant but the contract has come to an end and not renewed by the Company

due to the revocation of the SHP exclusive right y the SSG.

Base on the factual matrix and circumstances of the case the Court finds on

the balance of probabilities the Claimant failed to establish that he was dismissed

by the Company on 31.10.2016. Having said that the next question of whether the

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dismissal was with just cause or excuse would not arise. Once it was established

that there is a genuine fixed term contract, the dissolution of the contract upon

reaching the expiry date of the fixed term would clearly spell the end of the workers

tenure with the relevant Company. ( See the High Court case of M Vasagam

Muthusamy v Kesatuan Pekerja-Pekerja Resort World Pahang & Anor

[2003]5 CLJ 448).

Conclusion

In conclusion taking into account the evidence of the witness and submission

by both parties and bearing in mind section 30(5) of the Industrial Relations Act

1967 the Claimant's claim is hereby dismissed.

HANDED DOWN AND DATED THIS 18 FEBRUARY 2020.

- signed -

( ROSENANI BINTI ABD RAHMAN )

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