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INDUSTRIAL COURT OF MALAYSIA
CASE NO: 26(1)(21)/4-272/07
BETWEEN
ENCIK DAVID VANNIASINGHAM RAMANATHAN
AND
SUBANG JAYA MEDICAL CENTRE SDN BHD
AWARD NO : 179 OF 2013
Before : AHMAD TERRIRUDIN BIN MOHD SALLEH CHAIRMAN (Sitting Alone)
Venue : Industrial Court Malaysia, Kuala Lumpur
Date of Reference : 28.08.2006
Dates of Mention : 16.02.2007, 27.04.2007, 15.06.2007,29.06.2007, 01.10.2007, 04.01.2008, 28.03.2008, 27.06.2008, 09.10.2008, 30.01.2009, 10.03.2009, 29.04.2009, 22.06.2009, 30.07.2009, 04.09.2009, 09.10.2009, 05.11.2009, 01.12.2009, 13.01.2010 &03.03.2010
Dates of Hearing : 02.08.2010, 03.08.2010, 24.08.2010, 25.08.2010,
26.08.2010, 16.11.2010, 09.12.2010, 22.02.2011, 01.03.2011, 02.03.2011, 21.03.2011, 11.04.2011, 11.07.2011, 13.07.2011, 30.11.2011, 06.01.2012, 03.02.2012, 27.02.2012 & 22.03.2012
Date of Hearingof Application : 09.02.2011
Representation : Mr. Su Tiang Joo, Mr. Teh Eng Lay & Mr. Abdullah KhubaybFrom Messrs. Cheah Teh & SuCounsel for the Claimant
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Y. Bhg Dato' M. Pathmanathan From Messrs. M. Pathmanathan & Co. Counsel for the Respondent/Company
Mr. Rutheran Sivagnanam From Messrs. The Chambers of R. Sivagnanam & Associates, Solicitor for the Respondent /Company's Counsel
Ms. Janice Anne Leo with Ms. Kathlyn Lee Sue Im From Messrs. Shook Lin & BokCounsel for the Application for Summons (Form 'O') against Ms. Cheong Pek Yim to be set aside
Reference:
The reference of the Honourable Minister of Human Resources, Malaysia is
regarding the alleged dismissal of Encik David Vanniasingham Ramanathan
(“the claimant”) by Subang Jaya Medical Centre Sdn. Bhd (“the company”) on
31 July 2005.
AWARD
(NO : 179 OF 2013)
The parties to the dispute are David Vanniasingham Ramanathan (“the
claimant”) and Subang Jaya Medical Centre Sdn Bhd (“the SJMC”). The dispute
between the claimant and the company arose out of the alleged dismissal of
the claimant by the SJMC.
Brief Background Facts
The claimant is a doctor by profession and has been in medical practice since
1963. The claimant has been with the SJMC for the last 20 years until the
alleged dismissal. The claimant then received a Notice of Non-Renewal dated 1
2
June 2005 (page 135 of CLB1) stating that his services with the SJMC will not
be renewed. For ease of reference the said notice is reproduced below :
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The claimant contends that the Notice of Non-Renewal is an unjust dismissal
without any cause.
It is the contention of SJMC that the claimant’s medical practice was regulated
through various agreements and at all material time the claimant was not
under the employment of SJMC. SJMC further contends that the claimant was
not dismissed but they decided to exercise their option stipulated in the
agreement not to renew the claimant’s service agreement.
Witnesses
The following witnesses for the SJMC testified at the hearing of the case :
(1) Y. Bhg Dato’ Dr. Jacob Thomas, the then Chief Executive
Officer (CEO) of SJMC and currently the Group Medical
advisor and member of the Board of Directors of the SJMC
(COW1);
(2) Y.Bhg Dato’ Setia Dr. Annuar Marzuki is the Consultant
Cardiologist (COW2); and
(3) Chin Lee Ping is the Assistant Financial Controller of SJMC
(COW3).
The following witnesses for the claimant testified at the hearing of the case:
(1) Cheong Pek Yim is the current Chief Executive Officer of
SJMC who was at the material time the Chief Financial
Officer of the company as well as the officer primarily in
charge of Medical Staff Services Sdn Bhd (“MSS”) (CLW1);
(2) Dr. Ngun Kok Wah who was a member of the Medical Advisory
Board (MAB) of SJMC at the material time (CLW2);
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(3) Dr. Arlene Frances Fung Ngan was the Chairperson of MAB for
the term immediately following the claimant's dismissal
(CLW3);
(4) Dr. John Tan Hong Guan was a member of MAB for the term
immediately following the claimant's dismissal (CLW4);
(5) Dr. Fong Chee Kin a consultant who left Assunta Hospital
together with the claimant to join the company in 1985
(CLW5); and
(6) The claimant (CLW6).
Issues
In this case the court reiterates that the claimant contends that the
termination of his services under his contract of service is a dismissal without
just cause or excuse and seeks reinstatement. However, the SJMC contends
that the claimant was not dismissed since he was not under the employment of
SJMC. Therefore, the so called “dismissal of the claimant” is actually non-
renewal of his service contract.
In view of the above, court feels that the critical issues for the determination
of the court are as follows:
(a) What is the status of the claimant: is he a workman as
envisaged by the definition of “workman" under section 2 of
the Industrial Relations Act 1967 (“the Act”) or is it a
contract for services?;
(b) If the claimant’s is a contract for services then the claimant
is not a workman within the meaning of the Act and the
question of an unjust dismissal will not arise;
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(c) However, if the court finds that the claimant’s contract is a
contract of service, as it is commonly referred to in case law
then the claimant is considered as a workman under the Act
and the next question to be addressed is whether he had
been dismissed without just cause or excuse.
The Law
As for the first issue, the court opines that it is mundane for the court to
determine the meaning of workman within the meaning of section 2 and by
extension section 20 of the (the Act). In the same breath, the court further
opines that it is also germane as a starting point for this case to refer to the
decision of Gopal Sri Ram JCA (as he then was), sitting in the Federal Court in
the case of Hoh Kiang Ngan v. Mahkamah Perusahaan Malaysia & Anor [1996] 4
CLJ 687 where his Lordship espoused as follows:
“In our judgment, the correct test to be applied in determining whether
a claimant is a workman under the Act is that enunciated by Chang Min
Tat FJ in Dr. A. Dutt v. Assunta Hospital [1981] 1 LNS 5; [1981] 1 MLJ
304 at p. 311. We accordingly hold that a workman under the Act is one
who is engaged under a contract of service. An independent contractor
who is engaged under a contract for services is not a workman under the
Act. We take this view because it provides, as earlier observed, for a
flexible approach to the determination of the question. It is fairly plain
to see why flexibility is achieved by having resorted to this test. In all
cases where it becomes necessary to determine whether a contract is
one of service or for services, the degree of control which an employer
exercises over a claimant is an important factor, although it may not be
the sole criterion. The terms of the contract between the parties must,
therefore, first be ascertained. Where this is in writing, the task is to
interpret its terms in order to determine the nature of the latter's duties
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and functions. Where it is not then its terms must be established and
construed. But in the vast majority of cases there are facts which go to
show the nature, degree and extent of control. These include, but are
not confined to, the conduct of the parties at all relevant times. Their
determination is a question of fact. When all the features of the
engagement have been identified, it becomes necessary to determine
whether the contract falls into one category or the other, that is to say,
whether it is a contract of service or a contract for services. There is not
a single satisfactory test that is available for the determination of the
issue.”.
(See also : Kuala Lumpur Mutual Fund Bhd v. J. Bastian Leo & Anor [1988] 2
CLJ 175 and Transportable Camps Sdn Bhd v. Liew Chong Juk [1991] 2 ILR
891A).
On the issue of control, the court understands and is well aware that the
nature of modern employment requirements and practices, specialization
skills, responsibility levels and varied work locations are such that the
application of the control test as sole criteria to determine the existence of a
contract of service has become blunt. And on this the court refers to the
Halsbury's Law of Malaysia Vol. 7, 2000 Edn reads at page 8 as follows :
“The test that used to be considered sufficient, that is to say the control
test, can no longer be considered sufficient, specially in the case of
highly skilled individuals, and it is now only one of the particular factors
which may assist a court or tribunal in deciding the point.”.
(See also : Mat Jusoh Daud v. Syarikat Jaya Seberang Takir Sdn. Bhd. [1982] 2
MLJ 71).
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The Privy Council in the case of Lee Ting Sang v. Chung Chi-Keung & Anor
[1990] 2 AC 382 had to determine what is the standard to apply to answer the
question whether the workman was working as an employee or as an
independent contractor. Their Lordships agreed with the Court of Appeal when
they said that the matter had never been better put than by Cooke J in
Market Investigations Ltd. v. Minister of Social Security [1969] 2 QB 173, pp.
184-185:
“The fundamental test to be applied is this: 'Is the person who has
engaged himself to perform these services performing them as a person
in business on his own account?' If the answer to that question is 'yes',
then the contract is a contract for services. If the answer is 'no', then
the contract is a contract of service. No exhaustive list has been
compiled and perhaps no exhaustive list can be compiled of the
considerations which are relevant in determining that question, nor can
strict rules be laid down as to the relative weight which the various
considerations should carry in particular cases. The most that can be
said is that control will no doubt always have to be considered, although
it can no longer be regarded as the sole determining factor; and that
factors which may be of importance are such matters as whether the
man performing the services provides his own equipment, whether he
hires his own helpers, what degree of financial risk he takes, what
degree of responsibility for investment and management he has, and
whether and how far he has an opportunity of profiting from sound
management in the performance of his task.”.
It might also be useful to refer to the case of Ready Mixed Concrete (South
East) Ltd v. Minister of Pensions [1968] 1 WLR 439, at p. 440 MacKenna J set
out three conditions to be fulfilled before a contract of service exists, namely:
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(i) The servant agrees that in consideration of a wage or other
remuneration he will provide his own work and skill in the
performance of some service for his master.
(ii) He agrees, expressly or impliedly, that in the performance of
that service he will be subjected to the other's control in a
sufficient degree to make that other master.
(iii) The other provisions of the contract are consistent with it
being a contract of service.
The court also notes that the modern test if one is under a contract of service
seems to be dependent on whether the person is part an parcel of an
organization (see : Bank Voor Handel En. Scheerpvaart N.V. v. Straford And
Another [1953] 1 QB 248) at page 295).
In Syarikat Kilang Japan Pesaka Terengganu Bhd v. Terengganu Timber
Employees Union [1987] 2 ILR 32. The court held as follows :
“The court is mindful that the dividing line between a contract of
service and a contract with an independent contractor is very fine nd
must depend on the facts of each case.”.
Section 2 of the Act defines “workman” and “contract of employment” as
follows :
“workman” means any person, including an apprentice, employed
by an employer under a contract of employment to work for hire or
reward and for the purpose of any proceedings in relation to a
trade dispute includes any such person who has been dismissed,
discharged or retrenched in connection with or as a consequence of
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that dispute or whose dismissal, discharge or retrenchment has led
to that dispute; and
“contract of employment" means any agreement, whether oral or
in writing and whether express or implied whereby one person
agrees to employ another as a workman and that other agrees to
serve his employer as a workman.
In view of the above decided cases and definitions, the court discovers as
follows :
(i) there is no clear cut test to determine whether the claimant
is a workman (see : Australian Mutual Provident Society v.
Allen [1997] 16 SASR 237);
(ii) any single test is insufficient; and
(iii) the facts of each case must be examined throughly.
Thus, the court will now proceed to deal with merits of the case.
Evidence Tendered By The Parties
SJMC’s Case
To start the case for SJMC, COW1 in his witness statement (COWS1), stated
that the claimant was a General Surgeon at SJMC and started practising on 1
July 1987. Regarding the working status of the claimant, COW1 contends that
the relationship between the claimant and SJMC was governed by Agreement
Active Status dated 1 August 1987 (“Agreement dated 1 August 1987”) which
was for a period between 1 August 1987 to 1 October 1995 (pages 17 to 39 of
COB1). The second Agreement Active Status was executed on 1 October 1995
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covering the period from 1 October 1995 to 31 July 2005 (“Agreement dated 1
October 1995”) (pages 55 to 66 of COB7). COW1 pointed out that clause 7 (a)
of the Agreement dated 1 October 1995 clearly states as follows:
“At the end of the first three year renewal the contract will
automatically further renewed for subsequent three year periods until
the consultant reaches 60 years of age unless either party gives written
notice of at least sixty (60) days prior to the term ending to the other
party of its intention not to renew the agreement.”.
Therefore, COW1 said based on the above clause, it is the SJMC's contention
that both parties had a right of non-renewal which could be exercised in the
event either party wished to bring the Agreement to an end. To further clarify
the status of the claimant, COW1 also highlighted that clause 13 of the
Agreement dated 1 October 1995 which provides that the claimant shall be an
independent contractor and not the agent of servant of SJMC. For ease of
reference, clause 13 states as follows:
“Independent Contractor
For the purposes of this Agreement and all the obligations undertaken
and the services to be provided hereunder the Consultant shall be an
independent contractor and not the agent or servant of SJMC. The
Consultant shall have no authority to make any statements
representations of commitments of any kind or to take any actions which
shall be binding on SJMC unless with the prior written consent of
SJMC.”.
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COW1 in his written evidence, further explained the status of the claimant
with the following contentions:
(a) The claimant never ask to be made the employee of SJMC;
(b) The claimant did not ask his tax, EPF to deducted from his
salary;
(c) The claimant did not earn a salary but he received
professional fees from patients less agreed deductions for
facilities which he purchased from the SJMC for which SJMC
was the collection agent;
(d) All employee remunerations are paid directly to the
employees concerned and in claimant’s case the fees payable
to him was remitted to a private company nominated by the
claimant namely Colram (M) Sdn Bhd;
(e) The claimant was not subjected to deductions for EPF and
income tax;
(f) The claimant’s terms and conditions of service were not
administered by the Human Resource Department of SJMC;
(g) The claimant was not subjected to the terms and conditions
stipulated in the various handbooks issued by SJMC;
(h) If the claimant was absent or decided to take leave then he
would not be entitled to any remuneration in that time and
he is free to make his own decision on how to assign patients;
(i) The claimant was not subjected to scrutiny of any annual
appraisal. He also did not receive any increments or bonuses
nor was he subject to the retirement age provision that apply
to a normal employee;
(j) The hospital determines regular business hours but the exact
times and frequency for clinic session is determined by the
doctors themselves;
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(k) As for the nurse, COW1 contends that it is the standard
feature in a clinic and agreed by both parties;
(l) The claimant had to paid for the use of medical facilities
such as medical instruments, tool and support staff;
(m) The claimant was allowed to treat his own patients subjected
to the payment for the use of the hospital facilities and in
doing so and compliance with the admission process;
(n) The hospital did require a detailed record of the care and the
claimants’ patients for the establishment of a system; and
(o) On the issue that the claimant was restricted from residing
and practising outside the Klang Valley, it is the contention
of SJMC that being a Klang Valley hospital services are time
sensitive because it dictates response times.
On the agreement dated 1 October 1995, COW1 alleged that the said
agreement was only finalised and executed after extensive negotiations
between the doctors’ representatives and the representatives of SJMC. COW1
further stated that during the negotiations the doctors were able to seek legal
advice and in fact the claimant was one of those who represented the doctors
and had agreed to these terms. To support this contention, COW1 exhibited
various minutes of the meetings (pages 3 to 16, 40 to 44 and 47 to 52 of
COB1).
According to COW1, unlike the claimant, doctors employed by SJMC have an
employment contract (page 1 of COB2). COW1 contends that although the
claimant was offered the opportunity to purchase any new houses (page 131 of
CLB1) by Sime Darby Group that does not make the claimant an employee of
SJMC. This is because the benefits including purchase of houses offered by
Sime Darby Group were also made available to many of its business affiliates
and other professional including lawyers and accountants. Regarding the
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Medical Staff Services Sdn Bhd (MSS), COW1 said that MSS was set up to
provide various services. COW1 further stated that the scheme provided by
MSS did allow the doctors who elected to subscribe the shares of MSS to enjoy
revenues generated by the MSS. However, COW1 explained that the
subscription of shares in MSS does not make the claimant an employee of SJMC
since the Agreement Active Status did not mention about it.
COW2 in his witness statement (COWS2) confirmed the evidence of COW1 that
both Agreements Active Status were formulated after extensive discussions
between the doctors’ representatives and SJMC. COW2 said he did have
personal knowledge of what was discussed and transpired in those meetings
because he chaired it with the exception of the meeting on 13 May 1994. He
further confirmed that the claimant was involved in those meetings. To
support his contention, COW2 exhibited Minutes of the Meeting (pages 2 to 10,
12 to 14, 16 to 21 of COB4 and pages 1 to 4 of COB4). COW2 said he had
written a letter to the claimant expressing his gratitude for the claimant’s
involvement (page 34 of COB4). COW2 further stated that by virtue of clause
13 of the Agreement Active Status they are not employees of the hospital but
are independent medical practitioners who practice at the hospital as
independent contractors. COW2 explained that basically they are in a
partnership with the company whereby the company provides medical
facilities and equipment and the doctors provide the professional skills. COW2
deny any suggestion that doctors are monitored or supervised by nurses who
are assigned by the SJMC since the nurses come as part of the clinic and their
costs are part of the rental which the doctors pay. In term of clinic sessions,
COW2 said that they are not under control in the sense that somebody telling
them when and how many sessions to hold or how many patients they must
treat. However, COW2 did not deny that they rely on SJMC to administer their
decisions in terms of ensuring that there is a clinic and sufficient support in
terms of the related facilities. As for the by-laws, policies, rules, regulations
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and procedures (pages 80 to 85, 86 to 95 and pages 346 and 347 of COB1),
COW2 informed that these were drawn up jointly with the company and in
conjunction with Medical Advisory Board (MAB) with input from doctors from
the relevant area of specialties. He further said that by laws and rules
established for them to work together. As such, COW2 did not agree that the
doctors work under the control of the hospital and in his view they are working
in a kind of partnership. Regarding the use of equipment of the hospital, COW2
said it is not a question of being compelled but this arrangement allows the
doctors to focus on their work while the Sime Darby Group takes on the costs
and the risk of capital and equipment. However, if a doctor refused to agree
on this arrangement he will not affiliate himself with the hospital (pages 348
to 355 of COB1). As for leave, COW2 said that there is no necessity to obtain
approval from the hospital as an employee would all that need to be done is to
notify them. On the issue of MSS, COW2 said MSS is a long term investment
scheme for participating medical consultants and not open for employees of
SJMC. COW2 said that a doctor does not become an employee of the hospital
by participating in MSS.
The last witness for SJMC is COW3. In her witness statement (COWS3), COW3
confirmed that the claimant nominated a company known as Colram (M) Sdn
Bhd (“Colram”) to receive his revenue. She further confirmed that based on
the summary of payments remitted to the claimant from year 2002 to 2005
(attachment 1 of COWS3), the claimant did give specific instruction to SJMC to
remit all revenues due to him to be paid to Colram. According to COW3, based
on the documents in Colram the claimant is a director and shareholder (pages
114 to 120 of COB1). Based on Attachment 1 of COWS3, COW3 stated that
there was no deduction for income tax.
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Claimant’s Case
CLW1 in her oral testimony during examination in chief, denied that she was
aware that one Robert M. Manson (“Robert”) did assure the claimant that he
can continue with the SJMC as long as he is healthy. With regards to the MSS,
COW1 admitted that she was involved in the formation of MSS and was
entrusted by the doctors to work with Messrs. Lee Hishamuddin and Price
Water House to come up with a program for them. CLW1 agreed that the
purpose of MSS contained in the claimant’s Redeemable Preference Shares
(RPS)-Terms and Conditions of Issue (page 1 of Tab 3 of CLB2). CLW1 admitted
that MSS did contribute EPF to its employees including the claimant and
doctors because they are employees of MSS. CLW1 admitted that the claimant
was given allotment of RPS. For the MSS scheme, CLW1 testified that the
doctors who invested are given RPS which can be redeemed after certain
period of time based on a formula agreed and set by the doctors in the M&A.
On the issue of payments made to SJMC, CLW1 said the doctors did pay rental
at the end of the month. The second witness for the claimant testified that he
first knew about the claimant’s termination when there was an ad-hoc meeting
called in the early morning of 1 June 2005 by the Chairman of MAB one Dr. R.
Pathmanaban at the request of COW1 and in that meeting the members of the
meeting were told by COW1 that the meeting had been called to discuss the
management’s decision not to renew the claimant’s contract. It is the
contention of CLW2 that claimant should have been given a warning instead of
having his contract terminated. This is because CLW2 said that when imposing
a heavy sentence with such has a far reaching consequences that may affect
someone for the rest of his professional life and to him the claimant should
always be given a second chance to amend his ways. In fact he said, MAB was
aware of the dispute between Dr. Ng Soo Chin (“Dr.Ng”) and the claimant and
had advised Dr. Ng to resolve the matter amicably. CLW2 said that he was
supposed to draft a letter on behalf of the MAB to the claimant to advise him
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to settle. However, they were informed by COW1 that the management had
decided to handle the issue themselves and MAB was stopped from issuing the
letter. CLW2’s opinion was shared by Dr. Sanjay Woodhull and Dr. A.
Vimalanathan. It is the contention of CLW2 that according to COW1 the basis
for the non-renewal of the claimant’s contract was because of his actions in
EGM and QMS meetings together with Dr. Ng’s letter of complaint against the
claimant. CLW2 further contends that COW1 said that there were several
issues involving the claimant including his attempt to remove the PEC and CDM
sub-committee of Dr. Ng and Dr. Pathamanathan, his opposition against the re-
credentialing programme and his stand against the purchase of Megah Medical
Specialist Centre (“Megah Specialist”) that had undermined the organization of
the hospital and were detrimental to the hospital, all of which led to the
termination of his contract. As to the MAB’s stand with regards to the
claimant’s termination, CLW2 stated that the meeting ended without any
common stand or statement from MAB. CLW2 alleged that COW1 informed that
no warnings had been given to the claimant but COW1 said that the claimant
could appeal for his so called non-renewal. CLW3 has given a written
testimony during examination-in-chief (CLWS3), stating that when he was
elected as the Chairperson of MAB there were lot of questions by the doctors
in relation to MSS. According to CLW3, MSS was like a pension fund to
encourage the doctors to work at SJMC in the long run. CLW3 further stated
that for MSS scheme the doctors paid 10 cent and the hospital would pay the
balance of 90 cent per share. As to the entitlement of shares the doctors were
entitled to it would depend on their categories with the hospital and upon
their retirement or after certain number of years in service with the hospital,
the doctors would be able to cash it on the shares. Regarding the duration of
MSS, CLW3 informed the court that MSS was supposed to be open-ended but on
his request, CLW1 told him that MSS was terminated by the Sime Darby
management because the objective of the scheme to retain the doctors and
their loyalty was not met. The fourth witness for the company is Dr. John Tang
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Hong Guan. CLW4 did prepare a witness statement (CLWS4). CLW4 explained
that the events leading to the dismissal of the claimant by firstly stating that
there were series of meetings regarding the issue of new CDM. CLW4 pointed
out that during the meeting on 25 February 2005 the doctors were unhappy
that their recommendations on the proposed new CDM were not taken into
account and they were kept in the dark over the whole negotiations and there
was also the feeling that the negotiations for the new CDM was too hurried and
rushed. As for the claimant, CLW4 said that the claimant was very vocal during
the meeting but he said it is not only him because a lot of the doctors also
aired their disappointments. As for MSS, CLW4 confirmed that he only paid
part of the price shares while SJMC paid the rest. CLW5 is the second last
witness for the claimant’s case. CLW5 has a written testimony (CLWS5). CLW5
stated that the claimant and him were both colleagues at Assunta Hospital and
joined SJMC at the same time. CLW5 further stated that after he resigned from
Assunta Hospital he joined SJMC sometime in 1985 and there was no contract.
As such, he said the matter was brought up several times regarding to what
kind of tenure the doctors are going to have at SJMC as they were still young
and had a long career in front of them so Robert assured them in one of the
meetings which the claimant was present that they would have a long tenure
and as long as they are healthy they were allowed to work there. CLW5 said
finally he was given a contract in 1987 and as far as he is concerned based on
the assurances given by Robert his services will be continued without intervals.
CLW5 explained that the most significant difference between 1987 and 1995
contracts is that the roll over clause inserted that consultants over the age of
60 would have their contracts renewed on a yearly basis and this was done in
case the doctors became infirm and could no longer carry on the practice of
the medicine. As to the issue whether they are independent contractors, CLW5
said that he is not really independent because they have to obey some rules
regarding how they investigate. He said for example if he wants to operate on
somebody he has to do some investigations on the patient first by using facility
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in the hospital, to treat them using equipment provided by the hospital and he
cannot tell them what machine or instrument to buy. However, compared with
independent contractor they can buy machine or instrument they want.
Regarding leave, CLW5 said he had to apply leave just like employees be it
vacation leave, study leave or conference leave. For on call, CLW5 confirmed
he is also subjected to the roster drawn up by the administration of the
hospital. CLW5 did not deny that SJMC did provide staff to run the clinic but
they cannot remove them. In respect of items charged and bills, CLW5 said
SJMC issued bills to the patients and if any decision to write off the fees it will
the decision of SJMC while he is only allowed to waive his consultant fees but
not the hospital’s fees. Further, he said they are not allowed to collect fees.
CLW5 also described a situation whereby if a patient refuses to pay the bill,
the hospital is the one who decides whether to write off or pursue the patient
and not him. Apart from that they have to follow by-laws and to him
independent contractor would mean free to collect own fees, send their
patients to buy medicine at pharmaceuticals where they choose. As for
remuneration, CLW5 confirmed that he received his remuneration on a
monthly basis by cheque and was made in the company’s name for tax
benefits. Regarding other benefits, CLW5 said he also enjoyed discount on
houses, cars, foodstuff and others offered by SJMC. Finally, on MSS CLW5
denied the suggestion that this scheme was suggested by doctors and in fact
he said this was the idea mooted by Mack Banner when they faced the
impending opening of Sunway Hospital so Mack Banner developed a pension
scheme, a sort of EPF for the doctors to stop them from being enticed to
Sunway and to attract new doctors. In his understanding, MSS was managed by
SJMC and was like a pension scheme with the doctors paying for some
redeemable preference shares with the understanding that the hospital would
pay for the 90% of the price of the shares while the doctors put in the
remaining 10%. CLW5 confirmed that he was aware that he was an employee of
MSS and MSS did pay their salary and EPF. On the events leading up to the
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dismissal of the claimant, CLW5 supported the evidence of CLW4 on CDM and
the claimant’s involvement. The claimant vide his witness statement (CLWS6)
gave evidence as the final witness. In his written evidence, the claimant
mentioned that he joined SJMC since its inception in 1985 and was one of the
pioneers. Prior to joining the hospital, the claimant was approached by Robert
to join SJMC. The claimant explained that there was no written agreement
between SJMC and him when he joined in June 1985 because the doctors
including him were more interested in making the hospital a success.
According to the claimant, the proposed agreement (pages 3 to 51 of CLB1)
was only given subsequent to him commencing employment with SJMC. It is
the claimant’s contention that the arrangement at that material time between
SJMC and him was the claimant to be allowed to practice medicine without
management interference into the clinical aspect of his practice and was also
told that so long he is healthy he can continue practising at SJMC. The
claimant admitted that for this arrangement there was no written agreement.
The claimant agreed that subsequently he entered into two Active Agreement
Status dated 1 August 1987 (pages 52 to 74 of CLB1) and Agreement Active
Status 1995 (pages 75 to 86 of CLB1) with SJMC. With regards to the issue
whether at the material time he was an independent contractor by virtue of
clause 13 of both agreements, the claimant claimed that he was never an
independent contractor and clause 13 was a mere label from day one. The
claimant said that the clause 13 was inserted by the corporation to arm itself
against medical negligence actions. The claimant claimed that he was referred
to as a medical staff and was treated as an employee. The claimant reiterates
that he was told that he can stay as long as he is healthy and he trusted SJMC
on this all this while and committed himself exclusively to SJMC and he had no
clinic and had not provided services elsewhere. The claimant further contends
that from the time he joined SJMC until end of July 2005 he never practised
outside SJMC and he has been a Consultant Surgeon with category A. Thus,
under category A and based on the “Bylaws of the Medical Staff of SJMC” (“By
20
laws”) (pages 87 to 107 and 108 to 118 of CLB1) the claimant was not allowed
to practice elsewhere. As to the By laws, the claimant said it was made by the
Chief Executive Officer (“CEO”) of SJMC acting jointly with MAB and any
amendments to the Bylaws would then have to have the concurrence of the
CEO. In relation to other restrictions, the claimant also contends as follows:
(a) To comply with the By laws, Rules, Regulations, policies and
procedures of the SJMC (clause 2(a) and (b) of the
agreements (pages 53, 54, 76 and 77 of CLB1));
(b) Being the category A, the claimant was obligated to conduct
clinic sessions during office hours as may be determined by
SJMC and shall be on call rotation at such time and for such
period as SJMC may decide (clause 2(g) and (j), clause 2(g) of
page 77 and clause 2(i) and (I) of pages 54 and 55 of CLB1);
(c) Was allocated a clinic in SJMC but not allowed to have own
nurse, not allowed to put up signage like an outside clinic;
(d) Name card , business card and letterhead provided by SJMC
(pages 124, 125 and 126 of CLB1);
(e) Obligated to exclusively use the investigate, therapeutic,
surgical, pharmaceutical and other services available at the
hospital (clause 2 (j) and clause 2 (h) of pages 55 of 77 of
CLB1);
(f) SJMC provided all the medical instruments, equipment and
tools and support staff and was not allowed to use any other
medical instruments, equipment and not even the freedom to
purchase his own medical instruments;
(g) The support staff including administrative staff and nurses
were SJMC’s employees and were not only assist his work but
also to monitor him and to comply with SJMC’s stringent
procedures;
21
(h) Not allowed to dispense drugs and medicine directly to the
patients and must prescribe them from dispensary run by
SJMC;
(i) Not allowed to refer patient to any alternative hospital with
lower charges and must recommend to the patients the
services, treatments and the use of the facilities at SJMC and
give the quote of charges;
(j) SJMC stipulated the location of his personal residence that is
the claimant was required to reside and practise within Klang
Valley (clause 2 (g) and clause 2 (f) of pages 54 and 77 of
CLB1);
(k) Required to put in a form if the claimant needed to go on
leave (page 127 of CLB1);
(l) SJMC control appointment, admission of patients and the
reference or assignments of patients to his care;
(m) In respect of medication, SJMC provided and sold medication
to the patients through its dispensary and the claimant could
only prescribed. The patients pay SJMC and SJMC issues
receipt of payments to the patients;
(n) Surgery and the use of operation theatre was also controlled
by SJMC;
(o) There was also detailed procedure in relation to recording
the care and treatment of patient. SJMC can take disciplinary
action against the claimant if he failed to follow procedure;
and
(p) Could not practise outside Klang Valley;
The claimant also claimed that being a category A medical staff he is required
to provide medical services at SJMC clinics outside Klang Valley that is Kerteh,
Terengganu (pages 128 and 129 of CLB1). On control over treatment and care,
22
the claimant admitted that for clinical judgment, the SJMC did not directly
exercise control but SJMC after consulting the MAB sitting as the Disciplinary
Committee could take disciplinary action if his clinical judgment was below
professional standards. There are the Rules and Regulations of the Medical of
the Medical Staff of SJMC (Tab 6 and 7 of CLB1). Regarding the other benefits,
the claimant said that SJMC is part of Sime Darby Group of companies and
through his relationship, the doctors including him were given certain benefits
for examples housing loans, hire purchase loans at a lower interest rates and
discounted price when purchasing BMW’s car (page 131 of CLB1), discount for
purchase of merchandise such house hold items, toiletries and groceries from
Sime Darby staff shop (Memorandum (dated February 28) page 132) and
medical benefits of free inpatient treatment on an unlimited basis and
outpatient treatment (page 133 of CLB1).
On the issue of MSS, the claimant said that it was a pension fund established
for the benefit of the medical staff at SJMC. From 1995 to 2004, SJMC and the
claimant paid respective shares of contribution. According to the claimant,
this fund was to dissuade medical officers from leaving SJMC to join Sunway
Medical Center. The claimant said in 1994 SJMC also started paying his EPF
under the guise of MSS. The claimant explained that MSS operated as follows:
(a) MSS was to operate in the form of redeemable preference
shares to be issued by MSS to the medical staff of SJMC by
virtue of their services at SJMC and the medical staff would
be listed as employees of MSS. The medical staff would be
entitled to redeem the preference shares with the premium
premised upon the number of years served with SJMC.
(b) As part of the scheme, it was envisaged that the holders were
only required to pay 10% of the issue price of the said shares
23
whereas the claimant believes that remaining 90% of the said
shares would be paid by SJMC.
The claimant said that he does not have any record of employment with MSS
but he is subjected to EPF deductions (Tab 2 and Tab 5 of CLB2). The claimant
denied that SJMC was only entrusted to manage the MSS because he said SJMC
was the one who initiated the MSS and had full control of MSS.
With regards to clause 7 for both agreements (pages 58 and 80 of CLB1), the
claimant alleged that this clause was put by SJMC for its own benefits whereby
SJMC could get rid of doctors when the needs arose. To his understanding,
clause 7 is understood to have intended to regulate a situation where a
consultant reaches an age when he is physically or mentally infirm as to impair
the discharge of his duties as a medical professional. The claimant said he is
fit and capable medically to continue his work and to discharge his duties as a
medical professional and in SJMC there are at 20 consultants who are over 60
years of age with 2 of them over 70 years of age. As for his non-renewal, the
claimant said that there was no proper consultation with the MAB. The
claimant contends that his termination was because he has been active in
pursuing the interest of the doctors practising at SJMC to the dislike of SJMC
and COW1 mentioned to him that he had been disruptive. The claimant then
narrated the events leading to his termination as follows:
(a) On 25 February 2005, during the Quarterly Meeting of the
Medical Staff, the claimant along with several other doctors
questioned the purpose of SJMC’s proposal for having a
Recredentialing Programme for doctors which he opposed it;
(b) During that meeting the claimant also requested that the
Code Data Management or CDM which is the fees’ schedule to
be revised upwards;
24
(c) On 8 March 2005, the claimant chaired a Surgeons and
Anaesthetists Meeting to discuss the CDM proposal. Following
that meeting, an EGM was called.
(d) Unknown to the claimant, COW1 requested the Chairman of
MAB, Dr. Pathmanathan to recount the events occurring in
the meeting on 25 February 2005. Dr.Pathmanathan then
wrote a letter dated 14 March 2003 (pages 160 to 162 of
CLB1). The claimant believes that the said letter has brought
about a DI against Dr. Ng. Therefore, the claimant and other
doctors protested against the treatment meted out against
Dr.Ng (page 163 of CLB1). The claimant then requested
another EGM on 11 May 2005 and during that meeting the
claimant protested against what had happened to Dr. Ng.
However, the claimant was surprised when SJMC responded
by dismissing him through the Notice of Non-Renewal dated 1
June 2005. The claimant again believes that this was done to
stop him from participating in pursuing the interests of the
doctors practising at SJMC.
Evidence, Evaluation and Findings
Based on the evidence tendered in this case, the court reiterates that before
determining the issue whether the claimant was dismissed by the SJMC without
just cause and excuse, it is vital and fundamental for the court to decide
firstly, whether the claimant was working under the employment of SJMC or on
his account or independently and not employed as an employee of the SJMC.
Thus, after having considered the produced evidence as a whole on this
question and with due regard to the extensive submissions filed by both
learned counsels together with the authorities in support of their contentions,
25
the inescapable conclusion would be that there was never an intention on the
part of SJMC to create legal relations with the claimant on the basis of a
relationship of employer and employee. In other words, the claimant cannot
be considered as a workman for the purpose of the Act. This is because firstly,
the court finds that there was no written contract of employment at the
material time between the claimant and SJMC and the claimant did not deny
this fact. The court is of the opinion that if SJMC ever wanted to include the
claimant as part of its workforce definitely a letter of employment would have
been issued to him rather keeping quiet without any proper documentation for
the last 20 years. The court also does not think that SJMC intended to employ
the claimant because COW1 gave evidence that SJMC have their own medical
officers appointed with proper formal appointment letters (a sample of the
appointment letter (pages 1 and 2 of COB2)). Further, the claimant during
cross-examination did not dispute the existance of these medical officers as
employees of SJMC. Thus, in court's view if the claimant did ever regard
himself as the employee of the SJMC he should been asking SJMC why he has
not been issued a letter of employment like the other medical officers?
The court admits that though contract of employment is not the sole criteria in
determining the issue whether the claimant at the material time was
employed as an employee of SJMC but by having a documented written
contract of employment would definitely assist the court in ascertaining the
actual status of the claimant's employment. To support this finding, the court
looks at the case of Klinik Bukit Jambul v. Balavendrian Anthony [2002] 3 ILR
638 at page 643 where Industrial Court held as follows :
“This court agrees with the company's submission that the best
convincing evidence that the claimant was a permanent employee would
be the contract of employment. Failing to produce the contract of
26
employment, the claimant would need to produce at least the
mandatory deduction of EPF, but none of there are available.”.
Still on the same point, the court is also aware that “a contract of service
under the Act need not be in writing. It can be implied” (see : Kilang Gula
Perlis Sdn Bhd v. Aman Shah bin Khalid [1998] 5 MLJ Supp 700).
In the absence of a written contract of employment, the court left with no
option but has to look at the conduct of both parties and other relevant
evidence or documents to determine whether and the material time there was
a binding contract between the claimant and the SJMC since the claimant
alleged that SJMC had employed him under a contact of service (see: Lau
Sieng Nguong v. Hap Shing Company Ltd [1969] 1 LNS 80).
Therefore premised on the above and basing on the tendered evidence, the
court discovers that for nearly 20 years the relationship between the claimant
and SJMC was only governed by Agreement Active Status dated 1 August 1987
(from 1 August 1987 to 1 October 1995) (pages 17 to 39 of COB1) and
Agreement Active Status (from 1 October 1995 to 31 July 2005) (pages 55 to 66
of COB1) (“the Agreements”). It is the understanding of this court that these
Agreements set out the parameters for doctors having status like the claimant
to practice in SJMC. It is to be noted that both parties did not dispute the
existence of these agreements. As such, it is important to interpret the terms
contained in the said Agreements in order to determine the nature of the
claimant's duties and functions.
Upon scrutinizing thoroughly both Agreements, the court finds that it is
abundantly clear that the nature of relationship between the parties at the
material time was more of a contract for services. In coming to this finding,
the court had perused at clause 13 of the Agreements which clearly spelt out
27
the actual status of the claimant during his tenure at the SJMC was an
independent contractor. For ease of reference the court again reproduced
below the said clause 13 :
“Independent Contractor
For the purposes of this Agreement and all the obligations undertaken
and the services to be provided hereunder the Consultant shall be an
independent contractor and not the agent or servant of SJMC. The
Consultant shall have no authority to make any statements
representations of commitments of any kind or to take any actions which
shall be binding on SJMC unless with the prior written consent of
SJMC.”.
(emphasis added)
It is apparently clear from the above clause, the court gets the impression that
it is not the intention of the parties to create a master and servant
relationship (see : Chan Whye Sc Sons Contractors v. Sarawak Shell Berhad
[2002] 1 LNS 192).
In this aspect also the court refer to the case of SP Fast Trading (SP) Sdn Bhd
v. Esso Malaysia Bhd [2009] I LNS 1620 where the High Court held as follows :
“[10] Fiduciary Relationship
The plaintiff claims that its relationship with the defendant is a
fiduciary one and by entering into the agreement the plaintiff has by its
heavy investment put itself in a vulnerable position such that the
defendant's conduct in selling directly to its dealers would ruin it
financially. It claims to be entitled to the protection of equity despite
the clear terms of Clause 21.1.1 of the agreement that states :-
28
“Stockist is an independent contractor of the Company.
This Agreement does not create any agency joint venture,
partnership, fiduciary or employment relationship between
Company and Stockist or between any affiliate of Company
and Stockist.”.
In Frame v. Smith [1987] 42 DLR (4th) 81 referred to with approval by
Gopal Sri Ram JCA (as he then was in Tengku Abdullah Ibni Sultan Abu
Bakar v. Mohd Latiff Shah Mohd [1997] 2 CLJ 607 Wilson J said that
fiduciary obligations are seldom present in dealings of experienced
businessmen of similar bargaining strength acting at arm's length and
the law takes the position that such individuals are perfectly capable of
agreeing as to the scope of the discretion or power to be exercised, ie,
any Vulnerability' could have been prevented through the more prudent
exercise of their bargaining power and the remedies for the wrongful
exercise or abuse of that discretion of power, namely damages, are
adequate in such as case. The finding of fiduciary relationship in this
case would fly in the face of clear provision the the contrary and would
be unjustified on the facts.
[11] In the Seven Seas case (above), the second respondent (a
shareholder of the first respondent company) sub-contracted to the
appellant the assembly of leaders which formed integral components of
compact disc based equipment. In 1993 the appellant commenced
operations but only formalised their relationship in 1996 with the
execution of a sub-contractor contract. In 1998 the first respondent
served notice of its intention to terminate the contract. Among the
issues the plaintiff raised were first, whether there was a fiduciary
relationship between the parties; and secondly if so, whether there is
implied in the contract an obligation of good faith between the parties
was that of trust and confidence and their unequal bargaining power
was evidence of the existence of a fiduciary relationship. The Court of
29
Appeal held after examining the terms of the delivery, payment
and calculation of fees payable. Although there was a close
relationship between the parties owing to the nature of the
contract, there was no element of trust and confidence an no party
was put in a vulnerable position under the contract. Thus, the
relationship was no more than that of principal-contractor.
[12] I find the Seven Seas case is on all fours with the instant case. As
the plaintiff did in this case, the appellant in that case expanded its
operations from one assembly plant to two and then replaced both
plants with a third one. Nevertheless this did not convince the Court of
Appeal that this placed it in a position of vulnerability such as to render
the relationship a fiduciary one. The terms of the agreement in this
case are no different from other contracts of services and the
relationship is no more than a principal-contractor relationship
(and expressly stated to be so), not a fiduciary one with elements
of trust and confidence.
[13] For the reasons stated, the application was dismissed with costs.”.
(emphasis added)
The above finding is further fortified by the claimant’s own admission during
cross-examination that based on clause 13 of the said Agreements he
confirmed that he is an independent contractor and did not make any request
to change his status from an independent contractor to employee. In other
words, the claimant did not dispute that clause 13 did confirm his status as
independent contractor for nearly 20 years. Further, the court notes that
COW2 when affirmed in court testified that by virtue of the said Agreements
they are not employees of the SJMC. He further affirmed that they are
independent medical practitioners who practice at the SJMC as independent
30
contractor and are in a partnership with the company. The court agrees with
the “partnership” label given by COW2 because from the opening words of the
preamble of the Agreements it is clearly stated that the “consultant is desirous
of using the facilities of the hospital”. Further, clause 5 of the Agreements
subsequently provides as follows:
“Covenant By SJMC
(a) SJMC hereby undertakes to use all reasonable endeavours to
operate the hospital either by itself or through any appointed
agent so as to ensure that the medical facilities and services
provided by the hospital are of reasonable quality, meet all
governmental licensing requirements and generally accepted
accreditation program guidelines for its services.
(b) SJMC undertakes to provide the Consultant with a program of
benefits as may be stipulated by SJMC in its Standard Operating
Policies from time to time.”.
From the above, it appears to the court that SJMC is not obliged to employ or
engage the service of the claimant and the claimant too on the other hand is
not obliged to provide for his services if he does not want it. However, both
parties agreed to form a business joint venture whereby two parties on a
collective basis have agreed to conduct their affair on a particular dealing.
“Dealing” here refers to the SJMC providing the place, medical facilities and
equipments and in return the doctors provides the necessary skills to operate a
specialist medical centre. If the claimant alleged that he is an employee of
SJMC, the remaining question is why there is a need to have a written
document stating explicitly not only the agreement reached but also the
dichotomy of relationship between the parties? As such, the court did not
agree with the claimant's contention that the term “Independent Contractor”
31
used in the Agreements is merely a label from the day he joined SJMC. The
court is further of the view that if SJMC intended to employ the claimant as its
employee a simple letter of employment would be sufficient rather than going
through the process of spelling out the boundaries of each parties rights in
writing. In fact according to COW1 and COW2, various meetings took place
between the doctors and SJMC to obtain views of the doctors on the
agreements and finally it was accepted by the doctors including the claimant
(page 54 of COB1). As such, it can be safely concluded that the claimant
participated in this arrangement willingly. The court further finds that in the
instant case it is not a situation where an employer acted unilaterally to have
the agreement signed. The court also opines that if SJMC is the employer of
the claimant why there is a need to discuss or negotiate with claimant on
terms of the Agreements. This is because being the employer there is no
need for SJMC to discuss on the terms of employment since they are the
paymaster who is paying the claimant’s monthly salary.
In light of the above findings in particular the fact that the said Agreements
were agreed by both parties after extensive negotiations, the court also
rejects the following contentions raised by the claimant :
(a) That as a Category “A” Doctor he worked exclusively for
SJMC and could not worked elsewhere;
(b) That he was directed to work at the satellite clinics operated
by SJMC;
(c) That he was not allowed to dispense drugs directly to the
patient and must prescribe from dispensary run by SJMC;
(d) He was restricted from staying outside Klang valley; and
(e) That he was not allowed to refer patient to alternative
hospital.
32
In addition, it is to be noted also that (a) (b), (c), (d) and (e) of the above are
actually clauses (f), (h), (I) and (m) of the Agreements which was agreed by
the parties. Thus, the court again has to reject the nation that SJMC did
impose the above restrictions on the claimant unilaterally.
The other obvious aspect of the Agreements which attract the attention of the
court is period of the agreement. Clause 7 of the Agreements (page 60 of
COB1) clearly provides that both parties had a right of non-renewal which
could be exercised in the event either party wished to end the agreement. It is
to be noted that the claimant during cross-examination affirmed the existence
of the said clause 7 of the Agreements and agreed that there is no requirement
to give reason in the event either party decided not to renew the agreement.
In the instant case, the court notes that SJMC decided not to renew the
claimant’s contract and in compliance of clause 7, a Notice of Non-Renewal
(page 53 of COB1) was issued to the claimant. In court’s view, if the intention
to include the claimant as an employee of SJMC there is no necessity to have
the said clause 7 of the Agreements. This is because the said clause 7 has
made it crystal clear that the claimant’s employment shall not be renewed
automatically but subjects to the right of the parties to give a notice of non-
renewal. It is to be further noted that if the claimant is an employee of SJMC
he should be enjoying a continuous employment for an indefinite period
without any interval clause in his letter of employment. The court agrees with
the claimant’s argument that for nearly 20 years he has been enjoying
uninterrupted medical practice in SJMC but that does not mean that the
agreement reached by both parties on the non-renewal clause has been
superseded. It is the opinion of this court that the right not to renew has been
there all this while but SJMC did not exercise it because they needed the
services of the claimant and the claimant also agreed to provide his services
for nearly 20 years. Therefore, when the SJMC finally decided not to continue
with the services of the claimant he cannot termed himself as being dismissed
33
since SJMC has fully complied with requirements of Agreements. In court's
view the said clause 7 is clear and unambiguous so the court must not rewrite
the contract or audit the bargain reached between the parties (see : Wong Pa
Hock v. American International Assurance Co Ltd (2002) 2 CLJ 267). The court
is further of the view that the same rule is applicable if the claimant on his
part decided not to renew his joint venture with the SJMC. In this matter,
again it must be borne in mind that these Agreements were formulated and
agreed after extensive discussions between doctors' representatives and the
SJMC. On the same point, it is pertinent to note that “procedural safeguard
such as right to consultation and right to be heard afforded in terminating a
contract of service not in applicable to the present case” (see : Chan Whye Sc
Sons Contractors v. Sarawak Shell Berhad (supra)).
Having considered all aspects of facts and law, the court further finds that the
relationship between the parties also did not fulfill the basic characteristics to
conclude that the claimant was an employee of SJMC. Firstly, the court notes
that the claimant did paid a monthly rental for the use of the clinic facilities
and it was deducted from his monthly earnings. Further, CLW1 in her oral
evidence confirmed that at times the doctors will have to pay rental
separately vide by signing a cheque if the amount that is fees collected from
the patients is insufficient. Thus, in court’s view this has created a situation
something like a tenant and landlord relationship. To support this finding the
court refers pages 330 to 338 of COB1 which are correspondences between the
claimant and SJMC on the clinic session rental charges.
In term of salary, it seems to the court that the said Agreements did not
mention at all on the salary to be paid to the claimant for the services
rendered. Secondly, the claimant admitted that he was not paid fixed salary
and it differs from month to month. In the case of Syarikat Pengangkutan
34
Pekan Baru v. Mohan A/L Darasamy [1996] 1 ILR 229, the Industrial Court
states as follows :
“The claimant did not receive payment of fixed remuneration, sickness
pay or holiday pay. The claimant received 25% on the number of trips
when he drove the various lorries. his income fluctuated from month to
month. Whether the claimant was a workman employed by the company
to drive lorry or whether he was a contractor for service is a question of
fact. In the light of the facts so found it is the finding of this Court the
employment contract is a contract for service.”.
The claimant also admitted that the salary he was referring too was actually
the professional fees that he charged his patients for consultations. Thirdly,
based on the evidence, the court notes that the claimant will charge his
patients for seeking treatment from him and this is in accordance with Fee
Schedule (Schedule B of the Agreements). However, the payments made by
the patients will not go directly to the claimant but SJMC will be acting as a
collecting agent and at the end of each month to be exact on 25 working day
of the calendar month SJMC will remit the fees due to the claimant but only
after deducting the mandatory payments which has been agreed by the parties
in the Agreements such as rental for clinic and for the used of medical
facilities (clauses 3 and 4 of the Agreements). The court is of the view that if
the claimant is an employee of SJMC he should not be made to pay to use the
said medical facilities and working space. On the contrary, it is the duty casts
upon the SJMC to provide these facilities to its employees. Further, the fees
charged by the claimant for the consultation is based on the agreement agreed
by both parties and not SJMC alone. So, if SJMC is the employer of the
claimant why there is a need for them to get the consent or agreement on the
fees to be charged to the patients?. Lastly, the court also finds that the
claimant was not subjected to any salary increment.
35
In light of the above, the court finds that SJMC did not have control over the
claimant.
From the evidence tendered also, the court finds that the said fees was not
paid directly to the claimant but remitted to a private company nominated by
the claimant namely Colram (M) Sdn Bhd (“Colram”) and this arrangement was
made based on the claimant’s instruction to SJMC (letter from the claimant to
the company dated 21 January 1991 (page 103 of COB1) and Documents
Relating to Colram (M) Sdn Bhd (pages 114 to 328 of COB1)). This finding is
further strengtened when the claimant during cross-examination confirmed as
follows :
(a) that he was not paid through the SJMC payroll system;
(b) he did not deny that he was the Director of Colram;
(c) Colram employed him to provide medical services to SJMC;
and
(d) for his services to SJMC he was given a salary by Colram.
Therefore, based on this payment arrangement it is without doubt that the
claimant cannot be treated as an employee of SJMC and in fact it has been
proven that the claimant was under the employment of another company.
Although, it is the argument of the claimant that Colram was set up purely to
deal with his tax but Colram’s Financial Statements ended 30 June 2003 (page
171 of COB1) did not support this contention. The Colram’s Financial
Statements clearly states the business of the company as follows:
“Principal Activities
The Company is primarily engaged in the provision of specialized
medical services.”
36
Clearly, Colram was not set-up to deal with Claimant's income tax. Further,
the above finding is further corroborated when the claimant in his cross-
examination confirmed (the claimant also signed a Statutory Declaration to
confirm this (page 177 of COB1)) that “specialized medical services” here
refers to his services to SJMC.
On the issue of income tax and Employee Provident Fund (EPF), the court
notes that the claimant was not subjected to these deductions. This is clearly
stated from remission of payments made from SJMC to Colram which does not
show that any of these deductions have been made (pages 103 to 104 and 114
to 120 of COB1). Further, the court accepts and believes that the evidence of
COW3 when he testified that SJMC did not do the necessary deductions
because the claimant was not an employee by virtue of the terms of
agreement. In court's view, contribution of EPF is always regarded as one of
the determining factors that a person is an employee (see : Chong Kim Gong v.
Metatrade Sdn Bhd [2004] 2 ILJ 439). The claimant also in his cross-
examination admitted that he paid income tax as an employee of Colram.
Therefore, the court is of the opinion that it is inappropriate at this stage to
contend this issue. In court’s view this is an afterthought on the part of the
claimant. In Massey v. Crown Life Insurance [1978] 2 ALL Er 576 CA, Lord
Denning M.R. held as follows:
“In the present case there is a perfectly genuine agreement entered
into at the instance of Mr. Massey on the footing that he is self-
employed. He gets the benefits of it by avoiding tax deductions and
getting his pensions contributions returned. I do not see that he can
come along afterwards and say it is something else in order to claim
that he has been unfairly dismissed. Having made his bed as being self-
employed he must lie on it.”.
37
In attempting to convince the court, the claimant's counsel have also touched
on the issue that the law puts the obligation on the employer that is the
company to make the necessary deductions for tax and EPF and not on the
claimant. As such, the claimant cannot be faulted for not making these
deductions. However, the court finds that this argument is untenable because
the claimant in the first place is not the employee of SJMC therefore there is
no necessity on the part of SJMC to make the said deductions. Secondly, if the
claimant alleged that he is an employee of SJMC the remaining question is why
he allowed for nearly 20 years payment of tax to be made by his nominated
company in respect of his services to SJMC and did nothing to remedy the
situation?. In court's view, the claimant being a Medical Consultant it is highly
improbable for him to ignore or neglect to attend to this important fact. The
court is also perplexed is to why he channeled his salary to a private limited
company and allowed his tax to be deducted from that company and not at
source?. In this matter, the court reiterates that the claimant during his cross-
examination admitted that he paid income tax as an employee of Colram. The
court is further of the view, the claimant's income tax should be paid by the
company which employed him and not through a third party for services
rendered by the first party.
On the issue of bonus, it has been firmly established by SJMC that the claimant
was not given any bonus and all his income were generated through his fees
that he charged his clients.
Regarding leave, the court finds that there is no evidence to show that the
claimant must get approval from his superior before he goes on leave. It is to
be noted that after perusing the documented evidence (pages 356 to 363 of
COB1) and based on the evidence of COW1 and COW2, the court tends to agree
that the claimant was only required to inform or to give notice to SJMC that he
will be going on leave on certain dates and there is no necessity for the
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claimant to obtain the approval from SJMC. Based on these documents also,
the court further discovers that before going on leave the claimant has to
made the arrangement for his clinic to be covered by other doctors. It is the
opinion of the court that if the claimant is an employee of SJMC there is no
necessity on the part of the claimant to make the arrangement for his
replacement. The court wishes to stress that the so called leave form did not
show that it has to be approved by SJMC and the claimant during cross-
examination did not challenge this fact. Further, the claimant confirmed that
there is no fix amount for his annual leave entitlement. In addition, the
claimant also confirmed that if he goes on leave he will not make money.
Therefore, it can be concluded that the claimant can independently determine
his working schedule (see : STP Distributor (M) Sdn Bhd v. Chen Woei Hong
(Award No 396 of 1996)).
On the issue of By-Laws, Policies and Procedure, the court notes that it is the
contention of the claimant’s counsel that throughout the services of the
claimant he was subjected to the By-Laws, rules and regulations of the
medical staff of SJMC (pages 67 to 79, 80 to 85, 86 to 90 and 91 to 95 of
COB1). It is further contended that the claimant only maintained his clinical
independence but still subjected to disciplinary action and all policies and
procedures stipulated by SJMC. The court admits that at the material time
there were By-Laws, policies and procedures enforced by SJMC but the court
does not find that it was done without consultations with the doctors including
the claimant (as testified by COW2). This is because according to COW1 and
COW2, these By-laws, policies and procedures were drawn up collectively
between company and Medical Advisory Board (MAB) who represented the
doctors including the claimant. The court believes this statement because
although the claimant worked independently but since he has agreed to station
his medical practice in a specialist medical centre owned by another party
surely a mechanism must be established or promulgated to map out the
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standard and parameters so that there would be not problem in servicing the
customers who are coming to SJMC for treatments. Further, the court notes
that it was not challenged when COW1 said that SJMC did not have By-Laws for
its employees because they receive instructions from their superiors. On this
issue also, it is mundane to note that the claimant did not have any superior to
report to and he managed his own clinic. Further, it has been firmly
established by SJMC that the claimant was not subjected to any scrutiny of an
annual appraisal by the hospital.
Premised on the above findings, the court confirms claimant as an
independent contractor who is not bound generally to obey such orders as his
employer may from time to time give but and he is free to act as he thinks fit
within the terms of his contract (Halsbury's Law of England (3rd Edn. Vol. 28 at
age 22)).
In contending that claimant was employed as an employee of SJMC the
claimant’s counsel contends that the claimant was obligated to take up clinic
at the SJMC and he could not share with any doctors or consultants not
affiliated with the outside doctors. After looking at the evidence, the court
cannot agree with claimant’s counsel because the court again stressed that the
relationship between the parties in this case is based on mutual agreement or
understanding and in ensuring the success of this joint venture, both parties
have to establish a working arrangement. Therefore, if the claimant wants to
bring non-affiliated doctors he must seek the consent of SJMC. Further, SJMC
is the owner of the specialist medical centre. Secondly, the court totally
agrees with COW2 when he testified as follows:
“We affiliate with the hospital because it allows us to focus on our works
while Sime Darby Group takes on the costs and the risks of capital and
equipment.”.
40
On the holding of clinic session, the counsel for the claimant argued that the
claimant was obligated to conduct clinic sessions during such office hours as
may be determined from time to time by SJMC and shall be on call rotation at
such time and for such period as decided by SJMC. As such, the claimant is
part of the SJMC work force. In replying to this issue, the court agrees with the
testimony of COW1 when he did not deny that SJMC determines the regular
business hours but the exact times and frequency for clinic session is
determined by the doctors themselves. The court is also of the view that being
a specialist medical centre it is important to have a standard working hours for
all the clinics operated by the doctors so that the patients know the regular
business hours for all the clinics. The court is further of the view that, should
the reasoning advanced by the claimant be accepted then it would defeat the
purpose of having a specialist medical centre with various medical specialties
under one roof. Further, the court notes that SJMC only decides on the
business hours but not how many sessions to hold or how many patients to
treat. COW2 in his evidence testified as follows :
“Q21 : What sort of control is placed upon doctors in regard to the
holding of clinic sessions?
A21 : We are not under control in the sense of somebody telling us
when and how many sessions to hold or how many patients we
must treat. That is something that we must decide. However
we rely on the Company to administer our decision in terms of
ensuring that there is a clinic and sufficient support in terms of
the related facilities. For example, I am a consultant
cardiologist. So, if I want a particular clinic session, I would
need the hospital to make available the relevant support
facilities for me to do my work. This is where we have an
agreed system on how to set our clinic session and how to
change them.”.
41
Clearly, from the above, the claimant has bona fide control over the business
aspects of delivery of his services. To buttress this finding, the court refers to
the case of Chye Hin Co. (Perak) Ltd v. Public Prosecutor [1960] I LNS 21
where the High Court held as follows :
“Looking at the facts of this case as a whole I cannot agree that the
prosecution has proved that a contract of service exists between the
Company and each of the sawyers. To distinguish between an
independent contractor and a servant one of the tests is whether or
not the employer retains the power not only of directing what work
is to be done, but also of controlling the manner of doing the work. I
cannot find in this particular case any evidence that the person doing
the work could be overlooked and directed in regard to the manner of
his doing the work. The Manager appears to have criticised the work
when completed but never to have interfered while the work was
being done.”.
(emphasis added)
In Letchumanan Gopal v. Pacific Orient & Co. Sdn Bhd [2011] 5 CLJ 866 Court
of Appeal held as follows :
“An independent Contractor is always under control of his employer as to
what he must do. But the employer cannot control the actual manner in
he does the work. He is free to decide as to the work. He is free to
decide as to the method of doing the work. In short, the independent
contractor are said to work under of service.”.
(emphasis added)
(See also : Federal Court's case of Employers Provident Fund Board v. MS Ally
& Co. Ltd (Federal Court, Kuala Lumpur 28.03.1975 Civil Appeal No. of 1974).
42
Regarding the status of the claimant as an independent contractor the court
also would like to point out the case of Tan Eng Siew & Anor v. Dr. Jagjit
Singh Sidhu v. Anor [2006] 5 ILJ 175. Although the court admits that case is on
vicarious liability but it is interesting the observe that the learned High Court
touched on the status of medical consultant being an independent contractor.
The learned High Court Judge held as follows (at page 187) :
“The first defendant was, at the material time a consultant with clients
of his own. Though he was attached to the second defendant it was only
an arrangement to use the second defendants facilities such as running
his clinic there, and using its operating facilities. For this the first
defendant had to pay and the form of payment was a percentage of the
first defendant's charges to his clients. These clients were exclusively
that of the first defendant who had a full control in the form of
treatment, management, and care to be administered upon them as well
as the amount of fees to be charged.
Though there is no denial that when the second plaintiff was first
admitted to the second defendant's hospital for treatment, and the
second defendant had proposed the first defendant, but this does not
mean that the second defendant had control over the first defendant. To
me, this exercise was only a recommendation by the second defendant
to the second plaintiff to take on the services of the first defendant. The
second plaintiff could reject or refuse this recommendation of the second
defendant. And similarly, the same option was opened to the first
defendant. And when both the second plaintiff and the first defendant
agreed to accept each other they entered into an independent contract
with each other, The second defendant had absolutely no control over
the terms and conditions of this contract relating to either the type of
services to be provided or regarding the terms of payment for it.
43
Though the second plaintiff has stressed that the first defendant is or was
at all material time a shareholder of the second defendant but he was not
in the management of the second defendant. The first defendant was not
in control over the affairs of the second defendant. He only practiced
medicine by using the premises of the second defendant for which, as
stated, he paid for it. At best, being just a shareholder, the first
defendant is or was merely an investor. To me, the first defendant was
an independent contractor.”.
(emphasis added)
The court notes that the claimant also enjoys certain benefits accorded to the
employees of SJMC such as discount on houses build by Sime Darby Group,
discount to purchase a car etc. However, after perusing through the evidence
of COW1, it was revealed that these benefits not only made available to the
employees of SJMC but also extended to its business affiliates who had dealing
with them such as lawyers and accountants. Therefore, in court’s view these
benefits cannot be termed as exclusively applicable to the employees of SJMC.
In relation to the issue of equipment, it is not challenged that claimant has to
pay to SJMC through monthly deductions for the use of these medical
facilities. Secondly, the court reiterates that if the claimant alleged that he is
an employee of SJMC the remaining question is why he has to pay for using
these facilities? Looking back at the evidence, the court again stressed that
the mutual understanding between the disputed parties are SJMC is the
provider of the capital, equipment and services and the doctors will provide
the medical skills. The court feels that the doctors agreed with this
arrangement because they want a peace of mind and to focus on their
medical practice and not to be disturbed with logistic problems such finding a
place to practice, buying of equipment, employing of staff, finding patients
44
etc. Therefore, the claimant cannot be considered as part and parcel of SJMC
work force.
In relation to the status of the nurses, based on the testimonies from COW1
and COW2, the court finds that the nurses are part of the clinic and the
claimant was charged for it which is part on the rental for the clinic. In any
event, the court finds that this is one of the items agreed by the parties in the
Agreements.
Pertaining to the contention that SJMC controlled the admission of patients,
reference or assignment of patients and medical records, the court agrees
with testimony of COW2 when he said as follows:
“Q27 : Why do you have procedures to regulate the appointments
and admission of patients as well as the reference of
assignments of patients under the Claimant's care?
A27 : At any given time you will have more Doctors than
equipment. This required careful administration in terms of
appointments scheduling and admissions of patients as well
as the scheduled usage of hospital facilities such as
operation theatres. We need to ensure smooth operations
at the hospital. As the owner we need to have a system to
track the use of equipment and facilities otherwise there
will be chaos. As the owner it was agreed that this is our
rule and contribution for which we the Company are paid.
This again discussed with MAB.
Q31 : Why did the hospital require a detailed record of the care
and treatment of the Claimant's patients?
45
A31 : A patient is entitled to a proper record of his treatment.
Therefore whatever the working arrangement with the
Doctor the same process of record keeping would have to
follow. In the context of our relationship as between
Owner-Doctor, hospital would establish a system of record
keeping which is updated by Doctors and retained at the
hospital.”.
On the issue of MSS, the court notes that it is the contention of the claimant
that he was given a pension benefit by SJMC via subscription of RPS in MSS.
The claimant further contends that he was named as employee of MSS because
claimant’s employment is intrinsically linked his service with the company. To
support his contention, the court was referred to Article 15 of the Articles of
Association of MSS (pages 107 to 158 of CLB3). As for this contention, it is to
be noted that both parties did not dispute that at the material time MSS did
exist. The court has carefully scrutinized this issue and from the evidence
finds as follows:
(a) MSS was incorporated to allow the participating doctors to
subscribe the shares of MSS;
(b) The participating doctors participated voluntarily
(c) MSS provides medical services to SJMC; and
(d) SJMC is the only client for MSS;
(e) The participating doctors will enjoy revenue through services
provided by MSS to SJMC;
(f) The said revenue comes from the holding of shares in MSS.
46
Despite the above findings, the crux of the matter remains whether the
claimant can consider himself to be the employee of SJMC through holding of
shares in MSS. Based on the evidence, the court is clear that MSS only provides
medical services to SJMC but this does not in anyway allows the participating
doctors to declare that they are the employees of SJMC. This is because based
on the evidence of CLW1, MSS was set up through a mutual agreement
between the doctors and SJMC and SJMC through CLW1 was entrusted to
manage the MSS. Therefore, the SJMC did not initiate the set-up of MSS but it
is a company form for the doctors “to allow” the doctors the generate income.
Although, it is contended that the claimant is the employee of MSS and MSS did
pay his EPF but the court did not find any nexus to link MSS and SJMC. In
court’s view the mechanism is simple that is MSS was set up to provide medical
services to SJMC and in return SJMC will pay for the said services. Therefore,
MSS cannot be construed as part and parcel of SJMC's organization but more of
an outsider company. The court also agrees with the SJMC’s counsel
contention that had the claimant been the employee of SJMC he would not be
able to contribute to the scheme. On the issue of the alleged contribution of
SJMC for the RPS, the court finds it has no bearing in this case. This is because
apart from the said alleged contribution there is no evidence to connect it
with the claimant's employment. As for the court is concerned the employment
of the claimant at the material time rests with MSS.
To counter the claimant’s contention, the court also finds that if it is true that
by virtue of claimant’s employment with MSS he is deemed to be an employee
of SJMC, the remaining question is why the Agreement Active Status 1995 did
not mention about the status of MSS employees since MSS was launched in
December 1994?. The court also finds it is highly improbable for the parties to
ignore the issue of MSS during the deliberations for the Agreement Active
Status 1995 since it has serious legal effect on clause 13 of the agreement
which spelt out clearly the status of the claimant at the material time. As
47
such, the court believes the version rendered by COW1 when he testified as
follows:
“Q39 : Does the subscription of shares in Medical Staff Services Sdn
Bhd deemed the Claimant an employee of the Company?
A39 : No it does not. The agreement Active Status with the
Company was created in 1984 even before the scheme had
even come into being. Further even when the Agreement
Active Status was revised in 1995 no mention was made
anywhere in it about employment in MSS or the scheme.
The Claimant is well aware of this fact as he was involved
in the deliberations between the MAB and the Company
which led to the variations of the Agreement Active Status
in 1995. See Additional Company's Bundle of Documents.
There was therefore no difference in the status of the
Agreement Active Status in the period preceding and post
creation of the scheme and MSS. This again shows that the
two are completely distinct and separate.”.
Finally, the court is of the opinion that if the claimant wants to be termed as
employee of SJMC he must strictly applied all the characteristics of a
“workman”. In other words the claimant is not at liberty to ignore the
characteristics which are deemed to be not in his favour.
Conclusion And Decision
In summary therefore, on the evidence, facts, equality, good conscience and
law, the court is more inclined to think that the claimant at the material time
was under a contract for services. Therefore, court holds that the claimant is
48
not a workman who is employed on a contract of service and automatically
falls outside the scope of the Act. It therefore follows that the issue whether
the claimant has been dismissed for just cause and excuse does not arise.
Accordingly, the claimant's claim is hereby dismissed.
HANDED DOWN AND DATED THIS 21ST JANUARY 2013
-signed-
AHMAD TERRIRUDIN BIN MOHD SALLEH
CHAIRMAN
MALAYSIA INDUSTRIAL COURT
KUALA LUMPUR
49