IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(CIVIL DIVISION)
ORIGINATING SUMMONS NO: S24-1729-2009
In the matter of Contract dated
25.8.1989, 3.1.2000 and 26.3.2005
between Affin Bank Berhad and
Kasim @ Kamal Bin Ibrahim
And
In the matter of Order 7 and 28 of the
Rules of the High Court, 1980
And
In the matter of the transfer of the
Finance Company Business of AffinACF Finance Berhad to Affin Bank
Berhad pursuant to be Business
Transfer Agreement and the Vesting
Order dated 26.5.2005
1
BETWEEN
MOHD KASIM @ KAMAL BIN IBRAHIM
…PLAINTIFF
AND
AFFIN BANK BERHAD
…DEFENDANT
Judgment of Judicial Commissioner
Y.A Tuan Lee Swee Seng
Prologue
Banks and Finance Companies in Malaysian banking industry have gone
through in the last 10 to 15 years a slew of mergers and acquisitions
premised on the rationale that in order to compete internationally one has
to be of a certain size not just to cushion bad times but also to capitalise on
economy of scale. Whilst working in a bank was at one time an all-time
stable vocation, today many may be retrenched or laid-off simply because it
does not make sense to merge and still maintain the same workforce.
2
This case explores some of the issues that surround the plight of one Bank
manager, Encik Mohd Kasim who found himself in a quandary when the
entity he once worked for, AFFIN Finance Berhad is now no more, and in
its place a new employer and pay-master AFFIN BANK, the Defendant
herein.
Parties
The Plaintiff had started work with AFFIN Finance Berhad (“AFFIN
Finance”) as “Manager-Operations” on 16.11.1989. Some ten years later
he saw the phenomenon of mergers of banks and finance companies in
Malaysia. AFFIN Finance was not spared and it merged with Asia
Commercial Finance (M) Bhd (“AFFIN-ACF merger”) resulting in the
transfer of assets and liabilities from the former to the latter.
By way of a Letter of Employment dated 3.1.2000, it was agreed that the
employees of AFFIN Finance would be absorbed by Asia Commercial on
terms “no less favourable” than those that were applicable to the Plaintiff
prior to the merger. The Plaintiff accepted the offer.
3
After the AFFIN-ACF merger, the new entity was known as AFFIN-ACF
Finance Bhd (“AFFIN-ACF”).
In June 2005, AFFIN-ACF entered into a Merger Agreement with the
AFFIN BANK resulting in transfer of AFFIN-ACF’s assets and liabilities to
AFFIN BANK (AFFIN-ACF-AFFIN BANK merger).
Problem
The AFFIN-ACF Employee Handbook (“the staff handbook”) states that the
former AFFIN Finance executives who joined Asia Commercial prior to
1.1.1998 have a retirement age of 60 years old. The Plaintiff would come
under that category and class.
To the Plaintiff’s surprise, the Plaintiff was offered a new Contract with
AFFIN BANK after the AFFIN-ACF-AFFIN BANK merger which now
stipulated that the Plaintiff is to retire at the age of 55 and not 60. This was
in spite of the fact that AFFIN-ACF had written a letter dated 29.3.2005
stipulating that AFFIN BANK had offered the Plaintiff employment on same
terms and conditions. The Plaintiff was shocked and saddened by this
sudden turn of events and had written emails to the management of AFFIN
4
BANK and AFFIN ACF in supplication of his case and to express his
disappointment and disillusionment over his dilemma. The emails
categorically asked for AFFIN BANK’s consideration as the Plaintiff has
outstanding loans with the bank and has a family to support, specifically the
education of the Plaintiff’s youngest child which was costing the Plaintiff
RM200,000.00. Despite the Plaintiff’s plea and petition, AFFIN BANK, the
Defendant herein, was adamant with their avowed desire to retire the
Plaintiff at the age of 55.
By a letter dated 31.5.2005, Mr. Kamarul Zaman Nordin, Head of Human
Resource of AFFIN-ACF, had voiced his concern over the predicament of
the Plaintiff and 103 employees like him and advised the AFFIN BANK that
the vested rights of employees should not be taken away. Out of 104 staff,
46 staff are currently having their staff housing loans that will mature on or
before their retirement age of 60, including the Plaintiff and they have
conveyed their unhappiness against the above unilateral alteration of the
retirement age from 60 to 55.
The Plaintiff had no choice but to accept the Letter of offer by AFFIN BANK
under protest. The said protest is recorded on the letter of offer. The
5
Plaintiff only signed the letter of offer on 3.6.2005. The Plaintiff said he had
no choice but to sign the letter of offer under protest and that the signing
was induced by “undue influence”. AFFIN BANK on 16.1.2006 issued a
letter to the Plaintiff titled “Retirement from service” notifying the Plaintiff
that his last day of service will be on 22.2.2006.
By a letter dated 27.1.2006 the Plaintiff wrote AFFIN BANK stating “I wish
to point out that the retirement age stipulated in the staff handbook of
AFFIN ACF Finance is 60 years and not 55. In view of this, I do not
accept the Bank’s one sided attempt to unilaterally impose a shorter
retirement on me”.
By a letter dated 9.2.2006, AFFIN BANK replied the Plaintiff and stated
firmly that the Bank is standing by their letter dated 16.1.2006 and
reiterated that the Plaintiff must retire on 22.2.2006.
By a letter dated 22.2.2006, the Plaintiff informed AFFIN BANK that due to
the unilateral amendment of his Employment Contract the Plaintiff
considers himself to be constructively dismissed.
6
After the Plaintiff was forced to retire, his loans were converted to normal
rates and no more the preferential rates which he used to enjoy as a staff
of AFFIN BANK. AFFIN BANK had sent letters threatening to foreclose the
Plaintiff’s matrimonial home and had since filed 2 suits in Shah Alam
Sessions Court demanding the return of the Plaintiff’s staff loans which was
pegged until the Plaintiff was to retire that is on his 60th Birthday.
Prayer
The Plaintiff is seeking for a several declaratory reliefs namely:
(a) a declaration that the Plaintiff is entitled to work until the age of 60;
(b) a declaration that the Plaintiff’s retirement at the age of 55 was
unlawful;
(c) a declaration that AFFIN BANK is bound by the vesting Order dated
26.5.2006;
(d) a declaration that the Contract dated 26.3.2005 unilaterally altered
the term of retirement, which was never accepted and was never
agreed by the Plaintiff at any material time and was induced by
“undue influence”;
(e) a declaration that the Plaintiff is entitled to ESOS that was offered
before 22.2.2005;
7
(f) a declaration that the Plaintiff does not owe AFFIN BANK any
housing loan, car loan and sundry loan;
(g) damages for breach of contract for loss of income for 5 years, loss of
EPF contribution, loss of medical coverage, loss of staff housing loan,
loss of staff vehicle loan loss of sundry loan, loss of insurance
coverage, loss of bonus, loss of ESOS and the Plaintiff is also asking
for general damages for breach of Contract and general and/ or
aggravated damages, interest and costs on a solicitor-client full
indemnity basis.
Principles
This case falls to be considered on pure contractual principles and by
reference to the Vesting Order as approved by the Court.
The salient Orders of the Vesting Order, inter-alia, state as follows:
Order 1:
“The Business Transfer Agreement dated 6.5.2005 entered between the 1st
Applicant (“AACF”), the 2nd Applicant (“ABB”) and their shareholders
(“Business Transfer Agreement”) which seeks to implement the merger
between the commercial banking business of ABB and the finance
company of AACF is hereby given effect by this Honourable Court.”
8
Order 2:
“The date of 1.6.2005 is fixed as the date on which AACF’S finance
company business is effectively transferred to and vested in ABB in
accordance with the terms and conditions of the Business Transfer
Agreement (the effective date).”
Order 5:
“On the effective date, any existing agreement to which AACF was a
party to or any AACF Contracts (as defined under the Business
Transfer Agreement) to have effect as if the ABB had been a party
thereto instead of AACF.(emphasis added)
The Business Transfer Agreement defines AFFIN-ACF contracts as “any
agreements, contract, deeds, indentures, deed, polls or instruments to
which AACF is or has ever been a party.”
The Plaintiff was not informed and/or not shown the Vesting Order and the
Business Transfer Agreement when he signed the 8-month Contract under
protest.
9
There is no dispute that the Plaintiff’s Employment Contract was not
renewed by the AFFIN BANK on 22.2.2006.
The Issue is a legal one, i.e. is the Employer, AFFIN BANK obliged to offer
employment on no less favourable terms to all employees including the
Plaintiff. AFFIN BANK had contended that they were under no such
obligation to offer continuous employment on no less favourable terms as
they have offered the Plaintiff an 8-month contract.
It is not disputed that AFFIN BANK did make an offer of employment to the
Claimant but on less favourable terms, i.e. a contract for 8 months was
offered to the Plaintiff without any compensation on the unilateral
amendment of the retirement age of 60 to 55.
Plaintiff’s counsel, Mr. Bhavanash Sharma, referred to the following cases
on unilateral amendment where the basic principle is that a contract cannot
be unilaterally amended or terms varied without the consent of the other
party:
Hss Integrated Sdn Bhd v Leow Yew Onn [2004] 5 CLJ 321 and
10
Pelangi Enterprise Sdn Bhd v Oh Swee Choo & Anor [2004] 6 CLJ 157
Plaintiff’s contention is that AFFIN BANK, if it chooses to offer employment
to employees of AFFIN-ACF, then such offer must be on terms not less
favorable. AFFIN BANK would have to honour all of AFFIN-ACF’S
contracts which include the Plaintiff’s Employment Contract dated 3.1.2000.
Order 5 of the Vesting Order is clear:
“On the effective date, any existing agreement to which AACF
was a party to or any AACF Contracts (as defined under the
Business Transfer Agreement) to have effect as if the ABB had
been a party thereto instead of AACF”.
The Business Transfer Agreement defines AFFIN-ACF contracts as “any
agreements, contracts, deeds, indentures, deed, polls or instruments to
which AACF is or has ever been a party.” ‘Contracts’ would include all
employment contracts. In other words, by operation of law, AFFIN BANK as
Defendant now steps into the shoes of AFFIN-ACF as if AFFIN BANK had
been a contracting party to all contracts that AFFIN-ACF had entered into
including this employment contract of 3.1.2000. It is as if the AFFIN-ACH
11
Employee Handbook had been issued by AFFIN BANK with the reference
to retirement age at 60 years old.
It is not for AFFIN BANK the Defendant herein to say that they cannot
countenance a situation other than one where while the rest of AFFIN
BANK’s employees retire at 55 then all, irrespective of the binding efficacy
of contracts, have to retire at 55. There is the principle of the sanctity of
contract that must be upheld here with all its seriousness and solemnity as
affecting the livelihood of an employee and more so when it is a single, sole
and solitary soul pitted against the structure and strength of a solid bank.
The Plaintiff was only offered an 8-month contract expiring at his newlyimposed retirement age of 55 with suggestions from Mr. Ahmad Ghuzal of
AFFIN BANK that his Contract can be renewed at the Bank’s discretion. By
no stretch of the imagination nor by mental gymnastic can it ever be said
that such an offer is on terms no less favourable than what the Plaintiff was
enjoying then with AFFIN-ACF!
Plaintiff submitted that AFFIN BANK has breached Order 5 of the Vesting
Order and the Business Transfer Agreement in that, they have not offered
12
the Plaintiff their vested rights under the Vesting Order and the Business
Transfer Agreement is binding on AFFIN BANK by law.
Paragraph 7 Re-employment of the Business Transfer Agreement, it was
stated that “ABB shall, within 7 days of effective offer to continue to
employ all existing employees of AACF under terms and conditions of
employment which are not less favourable than those under which
the employees were previously employed before the merger..”
Plaintiff’s counsel further referred me to the following authorities and
provision of the law on the effect of a vesting order in the context of a bank:
Leong Moh Sawmill Co Sdn Bhd (in liquidation) v Standard Chartered
Bank & Ors [1997] 2 CLJ 131;
Shaharom & Anor v AFFIN BANK Case No: 11/4 -1733/07 Award no: 505
of 2009. (“said Award”) ;
Section 50 (3) of the Banking and Financial Institution Act 1989
The Learned Chairman had given his reason on pages 277 to 279 of the
said Award why he believed by not honouring the vesting Order and the
13
Business Transfer agreement AFFIN BANK had breached the terms of the
Claimants’ employment Contracts.
AFFIN BANK had filed an application for Judicial Review and was heard
before Yang Arif Dato Azian where the learned Judge had dismissed the
Judicial Review with costs on 28.7.2010. The law now is as per the case of
Mohd Shaharom & Anor v AFFIN BANK on the law of merger and
vesting order vis-à-vis an Employment Contract.
Plaintiff’s counsel submitted that the instant case and the facts of Mohd
Shaharom & anor are very similar. With the recent decision of the High
Court, it has by conduct overruled and/ or distinguish Affin Bank v.
Zaulkifli Bin Md [Award 1308/2004] and Affin Bank v Chuan Eng Kee[Award 778/2005] .
I am grateful to the Plaintiff’s counsel for drawing the Court’s attention to
cases which seemingly on the surface are against the Plaintiff but the
learned counsel had sought to deftly distinguish it from the present case. In
the case of Affin Bank v. Zaulkifli Bin Md [Award 1308/2004] the
Claimant there was employed by BSNC effective from 1.1.1995 as its
14
General Manager with a fixed term contract for three years and which was
renewable for a further period of three years. On 31.1.2000, the Claimant’s
employment was further extended until 10.2.2002. On 3.3.2000, BSNC
entered into an Acquisition of Business Agreement with Affin Holdings
Berhad and Affin Bank wherein Affin Bank took over the banking business,
assets and liabilities of BSNC. Pursuant to the vesting order BSNC
terminated the Claimant’s employment on the grounds of redundancy and
paid the Claimant a sum of RM207, 210.20 as termination benefits. Affin
Bank then offered the Claimant a totally different position at a lower salary,
which the Claimant rejected. The Claimant then referred the matter to the
Industrial Court for unlawful termination and claimed reinstatement with
Affin Bank.
One of the issues that arose for determination in that case was whether
BSNC or Affin Bank had just cause to terminate the Claimant’s employment
on the grounds of redundancy.
The Court, upon hearing evidence in that matter, was of the view that the
Claimant’s position was indeed redundant as his position had been given to
another General Manager of BSNC and that Affin Bank had no other
15
equivalent position to offer the Claimant. The clear distinction in the instant
case at hand is that there is no issue of redundancy here and no
redundancy payments were made in the instant case. Moreover there is a
clear legal obligation on the part of the successor bank, AFFIN BANK
under Order 5 of the Vesting Order and under the Business Transfer
Agreement to offer employment to the Plaintiff on terms no less favourable.
If at all they do not want to because of redundancy they should then be
prepared to make redundancy compensation payments. The issue of
redundancy was never raised by the Defendant. They just wanted to
standardise everybody’s retirement age at 55. They question is can they do
that when they had agreed to take over AFFIN-ACF business along the
terms of the Business Transfer Agreement and the Vesting Order. The
answer must be a resounding ‘NO’!
See also Mensa Mercantile (Far East) Pte Ltd v Eikobina (M) Sdn Bhd
& Ors [1991] 2 MLJ 258 and Gleeson v J Wippell & Co Ltd [1977] 3 AER
54.
The facts of Affin Bank v Chuan Eng Kee- [Award 778/2005] were very
similar to Affin Bank v. Zaulkifli Bin Md. One of the issues that arose for
determination in that case was whether BSNC or Affin Bank had just cause
16
to terminate the Claimant’s employment on the grounds of redundancy.
The business of BSNC had ceased because of change in ownership and
therefore, BSNC could not continue to employ the Claimant as the General
Manager. Accordingly, the Claimant’s function as an employee of BSNC
ceased and became redundant. BSNC was depending on Affin Bank to
offer the claimant an equivalent position. However, Affin Bank had no
equivalent position for the claimant. Thereupon, Affin Bank offered the
claimant a lower position with lower pay and benefits which the claimant
declined. Consequently, BSNC after the merger had no means to keep the
claimant in employment but to terminate his services. The Claimants
situation is different from the instant case.
The Claimant there had never been employed by Affin Bank. The Claimant
could not be reinstated to a position that he had not even held for a day.
What the court will do in such a situation is to order compensation in lieu of
reinstatement if the dismissal was without just cause nor excuse. The
claimant was paid 6 months’ salary as indemnity in lieu of notice, gratuity
payment and balance of annual leave totaling RM 122,145.00 upon
termination of employment but the Plaintiff here got paid zero
compensation with outstanding loans to settle.
17
On the significance of the Vesting Order made under section 50(3) of the
Banking and Financial Institutions Act 1989 (BAFIA) it was held in the Court
of Appeal case of Leong Moh Sawmill Co. Sdn Bhd (supra) that the
transfer of any property or business pursuant to an order of the High Court
under sub-section (1) shall, from the transfer date, be vested in or held by
the transferee and that the order shall have effect according to its terms
notwithstanding anything in any law or in any rule of law.
The Defendant’s counsel, Mr. Peter Chanther Jayaraja, argues that the
Plaintiff was not a party to the Business Transfer Agreement and the
Vesting Order and as such based on the principle of privity of contract the
Plaintiff cannot claim any of the reliefs against the Defendant. With respect
that, to say that is to miss the point altogether. The vesting of the property
and business of AFFIN-ACF in AFFIN BANK has the effect of continuity
and certainty with the ease of an uninterrupted conduct of banking
business in question. Otherwise a take-over or mergers of banks would be
disproportionately disruptive to the intended seamless connectivity and
continuity of the business. Defendant’s counsel submitted that the Vesting
Order and the Business Transfer Agreement between AFFIN-ACF and the
18
Defendant does not mean all the contracts of AFFIN-ACF will be
automatically transferred to or vest in the Defendant. As authority he cited
Barat Estates Sdn. Bhd. & Anor v Parawakan Subramaniam & ors
[2000] 3 CLJ 625, where Gopal Sri Ram JCA (as he was then) held that
employees cannot be transferred from one employer to another without the
consent of the employees. In other words an employee is not a chattel to
be traded or transferred at the wishes of his employer just by a stroke of a
pen in an agreement. The employment laws in Malaysia prohibit this.
It must be noted that in Barat Estates case (supra) there was no vesting
order of a Court under any legislation. It was the previous employer
disposing of its estate to a new employer and it is right that employees
have a choice as to whether they want to be employed by the new owner of
the estate. Generally what is done is that if that is agreeable, the parties
mutually
agree
to
terminate
the
1st
employment
contract
and
simultaneously enter into a 2nd employment contract with the new owner of
the estate/new employer with no loss of seniority and benefits that have
accrued and on terms no less favourable. The consent of the employee is
still very much in place and if the employee said ‘No’ then he would still be
under the employ of the 1st employer and the 1st employer having no
19
business now to run, would have to follow the procedure under the law on
redundancy and lay-offs and the termination notice and the payments
made thereunder.
In the instant case, there is a Vesting Order with the effect that under Order
5 thereof, on and from the Effective Date, any existing agreement to which
AFFIN-ACF was a party or any AFFIN-ACF Contracts to have effect as if
AFFIN BANK had been a party thereto instead of AFFIN-ACF. I suppose
one can say that herein lies the power of the law and in this case section
50(3) of BAFIA. The employee like the Plaintiff can choose not to work for
the successor bank the Defendant herein. However should he choose to
work for the successor bank, he is entitled to do so under the same terms
and conditions as before or if not on terms no less favourable. But he
cannot be asked to sign a fresh employment contract that now says your
retirement age is no more 60 but 55. If he is asked to do so, then he can do
so under protest. Substituting a party into an employment contract does not
give the right to the successor bank who has been so substituted a right to
unilaterally alter the terms of a contract of employment and in this case the
retirement age from 60 to 55.
20
The argument of a lack of privity is misplaced as with the substitution
arising as a result of the vesting has the effect of now constituting the
employment contract of the Plaintiff with AFFIN-ACF to one now between
the Plaintiff and the Defendant.
A further point that needs to be addressed is whether the prayer for a
declaration that the retirement age for the Plaintiff should be 60 make the
the relief into one of specific performance of an employment contract? This
matter has been addressed in See Teow Chuan & Anor v YAM Tengku
Nadzaruddin Ibni Tuanku Jaafar & Ors [2007] 2 CLJ 82 (see page 91 to
94) where the Court of Appeal held that unilateral imposition of the
retirement age of 55 was unlawful and the Plaintiffs were entitled to
continue to enjoy the said benefit on a personal to holder until they attained
the age of 70, did not amount to specific performance of a service
contract.
See also Francis v Municiple Councillors of Kuala Lumpur [1962] MLJ
407 and Kanagawagi S/O Seperumaniam v Penang Port Commission
[2001] 5MLJ 433.
21
As for damages for breach of an employment contract, Plaintiff’s counsel
submitted that at common law the employee can only sue for damages, the
cases above should distinguish that the Plaintiff was not dismissed but he
was retired unlawfully. See Teow Chuan & Anor v YAM Tengku
Nadzaruddin Ibni Tuanku Jaafar & Ors [2007] 2 CLJ 82 is authority for
that proposition.
Damages for unlawful dismissal at common law may also include any
contractual payment that the employee is entitled to had he continued his
employment until the expiry of his notice period. This would be until the
Plaintiff turns 60. (see Chitty on Contracts, Vol 2 28th edition. This may
include gratuities, bonus, housing and travelling allowance that are
contractual in nature.
Plaintiff further contended that he had pleaded with the bank not to take
away his vested right (as seen in the emails). The Plaintiff had a family to
support and had to remain employed. By no means when the Plaintiff
signed the contract under protest did the Plaintiff agree to the Retirement
clause. The said contract is induced by “undue influence” this is stated
under paragraphs 13, 14 and 15 of the Plaintiff’s Affidavit in Support..
22
Plaintiff’s counsel had cited Tan Meng Yang v Telekom Malaysia Sdn
Bhd [2006] 2 CLJ 68 as authority for the claim for ESOS.
The Plaintiff had also claimed for aggravated damages on ground that
AFFIN BANK had caused the Plaintiff serious financial strain, serious
mental torture, anguish and anxiety. The Plaintiff had also pleaded that he
has been having sleepless nights as he was unable to get a job. He has
borrowed money from relatives and friends to support his family.
The Defendant vide a letter dated 26.3.2005 offered employment to the
Plaintiff wherein in the said letter it set out the terms of employment
amongst others, that the retirement age is 55 years old.
The Plaintiff subsequent to the Defendant’s offer of employment in its letter
dated 26.3.2005, vide e-mail communications to the Defendant had raised
his unhappiness in respect of the retirement age stipulated in clause 6 of
the offer letter dated 26.3.2005 being 55 years old and his concern in
respect of some outstanding loans the Plaintiff had with AFFIN-ACF
23
wherein the Plaintiff had agreed to service the loans until he achieves the
age of 60 years old.
The Defendant’s counsel in his submission drew the court’s attention to the
fact that the declaratory reliefs are a matter within the court’s discretion and
should not be given as of right if other remedies are available. In the case
of Dominic Selvam S Gnanpragasam v. Kerajaan Malaysia & Ors
[2006] 8 CLJ 114 it was held that:
“The basic feature of seeking a declaratory order is that it is a
discretionary remedy. It features prominently in private law and it is
useful in that it would settle disputes before the right is infringed
(Woolf and Zamir, The Declaratory Judgment, 2nd edn). A declaratory
judgment states the rights or the legal position of the parties as they
stand without changing them in any way whatsoever. It is quite
common in this court to find applications for declaratory relief’s
seeking, inter alia, the meaning of some provisions in the will, or
whether a particular statute applies to a particular case that is
awaiting adjudication, or whether the contract has been duly
performed by the applicant, etc. litigants are conscious of the value of
seeking for a declaration. It is a remedy that is applicable to a wide
24
variety of cases. A declaration usually decides and clarifies a legal
position that faces the party (Petaling Tin Bhd v. Lee Kian Chan
[1994] 1 CLJ 527; [1994] 1 MLJ 657 at 673; Datuk Syed Kechick bin
Syed Mohamed v. The Governments of Malaysia and Sabah [1978] 1
LNS 44; [1979] 2 MLJ 101). Section 41 of the Specific Relief Act 1950
provides for a declaratory decree. It stipulates that any person who is
entitles to any “legal character”, or to any “right as to any property”,
may institute a suit against any person denying, or interested to deny,
his title to the “character” or “right”. The phrase “legal character” used
in s.41 of the Specific Relief Act 1950 is a phrase that is all
encompassing. It covers a wide range of situations particularly where
the legal right of an individual is infringed by an illegal or ultra vires
action of the administrative authority. Even the phrase “right as to any
property” found in s.41 of the Specific Relief Act 1950 is of
significance. It does not mean that an individual has a right in the
property. Being a discretionary remedy, the court has the final say.
The court will not grant a declaration when there is an alternative
remedy that is available.
25
Order 15 r. 16 of the RHC makes provision for the court to issue
declarations. It stipulated as follows:
No action or other proceeding shall be open to objection on the
ground that a merely declaratory judgment or order is sought
thereby, and the court may make binding declarations of right
whether or not consequential relief is or could be claimed.
The court have been wary. It will not grant declaratory reliefs to
resolve matters which are not justiciable. In Nixon v A.G. [1930] 1 ch.
566, the court refused to grant a declaration to determine the civil
servants’ superannuation allowances. The court also refused
declarations for those claims based upon the European Convention
on Human Rights (Malone v. Metropolitan Police Commissioner
[1979] Ch. 344-in regard to telephone tapping). In short, declaratory
reliefs would be refused to spectators, speculators and busybodies.
Those who ask hypothetical questions too would not be entertained
(Re Barnato [1949] Ch. 258; and Harrison v. Croydon London
Borough Council [1968] Ch. 479)”
26
Defendant’s counsel also cited the following cases in support of his
proposition that a declaratory relief would be totally unsuitable in this case:
Manggai v Government of Sarawak [1970] 2 MLJ 41
Mohd Bin Ahmad v Yang Di Pertua Majlis Daerah Jempol, Negeri
Sembilan & Anor [1997] 2 MLJ 361
Fung Keong Rubber Manufacturing (M) Sdn Bhd v Lee Emg Kiat & Ors
[1981] 4 MLJ 238
Francis v Municipal Councillors of Kuala Lumpur [1962] 3 ALL ER 634
The Defendant submitted that there is no legal ground for the declaration
that the Defendant is bound by the employment contracts of 25.8.1989 and
3.1.2000 as the Defendant was never a party to the contract dated
25.8.1989 and 3.1.2000 and that what the Plaintiff intends this Court to
declare is that the Defendant specifically performs the terms of the contract
dated 25.8.1989 and 3.1.2000 which states that the Plaintiff is entitled to
work till he is 60 years old. See the case of Sathiaval Maruthamuthu v.
Shell Malaysia Trading Sdn Bhd [1998] 1 CLJ Supp 65 where at p. 73 it
was his Lordship Kang Hwee Gee J (as he then was) stated the exception
simply as follows:
27
“A clearer exposition of the law appears in Francis v. Municipal
Councillors of Kuala Lumpur [1962] 28 MLJ 407 which involved the
termination of a council worker. It was held on appeal to the Privy
Council, that where there has been a purported termination of a
contract of service a declaration that the contract still subsisted would
rarely be made and would not be made in the absence of special
circumstances, because of the principle that the courts would not
grant specific performance of contracts of service (per Lord Morris of
Borth-y-Gest).”
As I have stated before, the Defendant cannot escape liability by saying
that they were not a party to the two previous employment contracts. The
1st employment contract has merged into the 2nd employment contract
which in turn had substituted the Defendant as a contracting party to the
contract with the Plaintiff as provided in Order 5 of the Vesting Order. The
Defendant’s argument is, with respect, quite misplaced and totally misses
the point. With respect to special circumstances mentioned above in
Sathiaval’s case (supra) his Lordship continued at p. 73:
“Special circumstances have been held to exist to merit the grant of a
declaration where without such a declaration the plaintiff would be
28
forever disabled from following his chosen trade (Vine v. National
Dock Labour Board [1956] 3 All ER 939) and where side benefits
would accrue to the employee if his employment continued and
damages for wrongful dismissal might not cover loss of those side
benefits (Lavarack v. Woods of Colchester Ltd [1963] 2 All ER 683;
See P W Young Declaratory Orders (2nd ed.) para 2203 p. 194).”
I would say that special circumstances exist in this case as if a successor
bank in a merger exercise were to be allowed to unilaterally change key
terms of employment contracts like retirement age then that would be
tantamount to giving the green light to do as they like when the should take
over another bank. That was not what was intended by Bank Negara
Malaysia under whose supervision all banks and merged banks still come
under. It is different if it is a genuine retrenchment exercise where proper
procedure is followed. Likewise, here the Plaintiff has accrued benefits of
car and housing loan and also ESOS to be exercised.
Lest it be thought that by granting the declarations sought, this Court would
be in effect granting a specific performance of a personal contract of
service not unlike that of reinstatement under the Industrial Court regime,
one can draw some comfort and consolation from the dicta of Gopal Sri
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Ram JCA (as he then was) who in See Teow Chuan & Anor v.YAM
Tunku Nadzaruddin’s case (supra) at p.95 explained thus:
“Likewise, a declaration that in accordance with cl. 26 of the Human
Resource Package the plaintiffs are entitled to continue as managing
director and executive director respectively without a retirement age
and are entitled to continue to enjoy the said benefit on a personal to
holder basis until they attain 70 years of age does not amount to the
specific enforcement of a service contract. This is because we are
merely requiring the defendants to adhere to that part of the board
resolution that introduced the Human Resource Package. We would
impose the age limit of 70 years as this is a requirement of the
Companies Act.”
In the instant case the Plaintiff is not asking for reinstatement as if that
must naturally flow from a declaratory relief granted. There is no issue of
the Court making an order of damages to be assessed.
I agree with the Defendant’s submission that no case for an award of
aggravated damages has been made out.
Pronouncement
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The Plaintiff before the decision of this Court was delivered had withdrawn
his prayer for a declaration that he does not owe the Defendant any
amount of housing loan, car loan, sundry loan and credit card loan and so
the prayer is struck out.
Having heard the arguments of the parties, I ordered the following:
(a) a declaration that the Plaintiff is entitled to work until the age of 60
(which is not to be interpreted as a specific performance order);
(b) a declaration that the Plaintiff’s retirement at the age of 55 was
unlawful;
(c) a declaration that AFFIN BANK is bound by the vesting Order
dated 26.5.2006;
(d) a declaration that the Contract dated 26.3.2005 unilaterally
altered the term of retirement, which was never accepted and was
never agreed by the Plaintiff at any material time and was induced
by undue influence;
(e) a declaration that the Plaintiff is entitled to ESOS that was offered
before 22.2.2006 subject to the terms and conditions under which
the ESOS was offered;
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(f) General damages to be assessed by the Registrar for breach of
contract covering loss of income for 5 years, loss of EPF
contribution, loss of medical coverage, loss of staff housing loan,
loss of staff vehicle loan, loss of staff sundry loan, loss of
insurance coverage, loss of bonus and loss of right to ESOS
together with interest as prayed for and costs of RM5,000.00 to
the Plaintiff.
Dated: 8.11.2010.
Sgd
Y.A. TUAN LEE SWEE SENG
Judicial Commissioner
High Court (Civil Division)
Kuala Lumpur
For the Plaintiff: Bhavanash Sharma (Messrs Gill & Tang)
For the Defendant: Peter Chanter Jayaraja (Messrs Ramadass & Assoc)
Date of Decision: 11.8.2010
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