Legal Update 24 of 2016

Whether the termination of an employee on the grounds of redundancy was just and lawful.

CASE:

Pan Malaysian Pools Sdn Bhd v Kwan Tat Thai & Anor [2016] 12 MLJ 251 HC

 


BRIEF FACTS:

  • The defendants (Kwan Tai Thai and Wan Kong Wai) are former employees of the plaintiff (Pan Malaysia Pools Sdn Bhd/ Company).

  • The Company conducted a number forecast totalisator business which placed great reliance on IT infrastructure.

  • Kwan Tat Thai was a general manager of the Company headed its IT department. He was also a member of its Major Tender Committee and the chairman of its Minor Tender Commitee, which were internal commitees that approved equipment purchases. 

  • Wan Kong Wai was the manager of the plaintiff's data centre operations within the IT department. 

  • The Company's procurement department discovered that quotations for the purchase of routers received from vendors recommended by the defendants were significantly higher than those obtained from independent vendors identified by the procurement department. 

  • All investigation was carried out and it was discovered that a group of vendors were regularly called upon to provide quotes and that the prices quoted, although close to one another, were significantly higher than the prices quoted by vendors that had been independently sourced by the procurement department. 

  • The Company was of the view that the defendants had breached the terms of their employment and the defendants were suspended from work.

  • Further investigations suggested a profit sharing arrangement between the defendants, certain shareholders and/or directors of the plaintiff's registered vendors and other parties in respect of certain purchases of IT-related equipment.

  • The Company claimed against the defendant for breach of their express and/or implied terms of their employment contract; and breach of their terms of employment for entering into an unlawful profit sharing arrangment with the vendors of the plaintiff.


DECISION: Claim Dismissed

  • The defendants' joint purchases of the properties meant that they had acquired an interest that may conflict with the interests of the Compan; their employer.

  • The Company did not have an interest in ensuring that the employees had a role in the process of selecting vendors and suppliers to the plaintiff to carry out their functions impartially. 

  • That was the key consideration in determining whether or not there was any breach of the terms of the relevant policies.

  • The interests of the defendants acquired through the joint property purchases ought to have been disclosed in writing to the Company. 

  • The defendants had breache their terms of employment by not disclosing the fact that they had made joint purchases of real properties together with the directors and shareholders of vendors of the Company.

  • The probative value of the forensic-generated documents was insufficient to prove that on a balance of probabilities, a profit sharing arrangement existed between the defendant and the relevant representatives from the vendors.

  • It may not have been proven that there existed a secret profit arrangement.

  • However, it was impropriety on the part of the defendants due to the existence of the pecuniary relationship between them and the directors and shareholders of registered vendors to the Company.

  • The existence of the joint purchases of the properties and the fact that those purchases had not been disclosed in writing to the plaintiff had not caused any loss to the plaintiff as would entitle it to the general damages claimed.

  • The plaintiff had already availed itself of its remedy for breach of the employment terms when it dismissed the defendants.

  • The conduct of the defendants had however resulted in litigation having been brought by the Company, thus it was held appropriate for them to bear the costs.

 

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