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

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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).

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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.

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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

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