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2025 MarsdenLR 3839
HIGH COURT MALAYA KUALA LUMPUR
GOH SHU WEI & ORS – Appellant
Versus
NATASYA ELMI MOHD NAWAM – Respondent
[Civil Appeal No: WA-16A-40-03-2024]
Joinder of parties is essential under the IRA 1967 to ensure that any award by the Industrial Court remains effective and enforceable, particularly where companies have been wound up.
Headnote:(A) Industrial Relations Act, 1967 - Section 20(3) and Section 29(a) - Joinder of parties in Industrial Court proceedings - Court held that sufficient legal nexus established between the Appellants and the wound-up company justifying joinder for effective enforcement of any potential award - Previous decisions indicate that third parties may be liable for an award even without privity of contract - Appellants' appeal dismissed with costs. (Paras 1.1, 10.1, 10.2)
(B) Joinders - Legal principles governing the joinder of parties under the IRA 1967 include establishing a reasonable factual or legal nexus to make proceedings effective and enforceable. (Paras 8.1, 10.2)
Facts of the case:
The respondent claimed constructive dismissal against Skymind Holdings after failing to receive payment, and applied to join its directors as parties due to the company's winding-up. (Paras 2.4, 3.1)
Findings of Court:
The Appellants, as directors, bear joint responsibility for ensuring any awarded compliance given the context of the parent and subsidiary relationship. (Paras 10.1, 10.2)
Issues: The necessity of joining Appellants to ensure enforceability of the award was the central issue addressed by the court. (Paras 6.4, 10.2)
Ratio Decidendi: The court emphasized the relevance of formal joinder to ensure that awards remain enforceable against parties with sufficient connections, notwithstanding the corporate veil. (Paras 10.1, 10.2)
Result: Appeal dismissed with costs of RM5,000.00 awarded to the respondent.
Key Points: - The Industrial Court may order joinder of parties under s 29(a) IRA 1967 to make awards effective and enforceable, especially when a company is wound up (!) (!) (!) . - The required test for joinder is a two-fold nexus: (i) whether inclusion will make the award effective/enforceable, and (ii) there is a reasonable factual or legal nexus between the proposed joiners and SEGSB/SHB (!) (!) (!) . - The threshold for joinder is low and the claim must not be frivolous, vexatious, or an abuse of process; third parties can be liable notwithstanding privity of contract (!) (!) (!) . - Joinder decisions can pierce or disregard the corporate veil when equity and merits require, particularly where a wound-up subsidiary’s liability can be attributed to directors/holding entities to ensure compliance with a potential award (!) (!) (!) . - The court emphasized that a single joinee (e.g., Joinee G) may suffice to ensure enforceability, and joinder of all proposed parties is not required where nexus exists (!) (!) (!) . - The appeal was dismissed; the respondent’s application for joinder was upheld, with costs awarded to the respondent (!) (!) (!) .
How to determine the necessity and scope of joinder of parties under the Industrial Relations Act 1967 to ensure enforceability of an Industrial Court award?
What is the test for establishing a reasonable factual or legal nexus for joinder under the IRA 1967?
What is the effect of winding up and corporate veil on joinder and enforceability of potential awards in Industrial Court proceedings?
| Table of Content |
|---|
| 1. introduction to facts and appeal initiation. (Para 1 , 2) |
| 2. details about the industrial court proceedings. (Para 3) |
| 3. background on the legal foundation for joinder application. (Para 5) |
| 4. arguments by the appellants against the joinder of parties. (Para 6) |
(Enclosure 1)
Introduction
[1] The appellants filed this Notice of Appeal (L.1) to challenge the interim award of the Industrial Court Award No 471 of 2024 dated 1 April 2024 (IC Interim Award) allowing the Appellants to be joined as parties to the respondent's constructive dismissal case at the Industrial Court.
1.1 On 18 February 2025, after duly perusing the cause papers and the parties' respective submissions on the balance of probabilities, I find no merit in the appeal. I dismissed it with costs of RM5,000.00 awarded to the respondent.
1.2 Aggrieved, only the 5th Appellant (A5) appealed, and my reasons are as follows.
Background Facts
[2] From 1 April 2020 to 30 April 2021, the respondent (Natasya) was employed by Skymind Holdings Berhad (SHB), which wholly owns Skymind Education Group Sdn Bhd (SEGSB) and was its sole shareholder:
(1) On 1 May 2021, the respondent was transferred to SEGSB (the Company) and entered into an Employee Contract.
(2) All of the Appellants are directors of the 6th Appellant during the material period of the respondent's employment.
2.1 The respondent avers that the Company, in express breach of the said Employment Contract, failed, neglected and/or refused to pay her salary from April 2022 until 15 July 2022 and continues to remain unpaid until today.
2.2 On 9 June 2022:
(1) The Company issued a Notification of Retrenchment dated 9 June 2022 informing the respondent that she would be retrenched effective 8 August 2022.
(2) The Company would pay her RM10,000.00 as compensation, which the respondent claimed was in bad faith.
2.3 The respondent therefore cited a breach of the material term of her employment contract and claimed constructive dismissal.
2.4 The respondent lodged a representation at the Industrial Relations Department, under s 20(3) of the IRA , 1967 and was referred to the Kuala Lumpur Industrial Court Case No: 21/4-365/23 for hearing.
2.5. On 3 August 2022, SEGSB changed its name to SEPD Sdn Bhd. SEGSB was later wound up on 24 May 2023.
2.6 On 17 October 2023, the respondent applied for leave from the winding- up Court to continue with the proceedings at the Industrial Court. Leave was granted to the respondent on 2 December 2023.
At The Industrial Court
[3] On 16 July 2022, a reference was made to the Industrial Court, under s 20(3) of the Industrial Relations Act 1967 ( IRA ).
3.1 On 23 December 2023:
(1) The respondent applied under s 29(a) of the IRA 1967 for an order to include SHB and five (5) directors of SHB to be joined as parties in the said action.
(2) They are:
(a) Muhammad Asyraf bin Muhammad (Joinee A) is the sole director of the present company, SEPD Sdn Bhd. However, it was later discontinued because, according to the claimant/ respondent, he became a director on 11 August 2022 after the respondent was allegedly constructively dismissed on 16 July 2022.
(b) Goh Shu Wei (1st appellant — Joinee B).
(c) Cheng Wei Wei (2nd appellant — Joinee C).
(d) Eow Wan-Lin (3rd appellant — Joinee D).
(e) Tan Ying Siang (4th appellant — Joinee E).
(f) Datuk Yasmin Mahmood (5th appellant — Joinee F).
(g) Skymind Holdings Berhad 201801041673 (1303705-V) (6th appellant — Joinee G).
The legal foundation in her joinder application was that any Award of the Industrial Court would be rendered ineffective and unenforceable because SEGSB had been wound up unless the Appellants were added as parties.
3.2 On 1 April 2024, the Chairman of the Industrial Court (IC) allowed the application vide Interim Award 471 of 2024.
3.3 Dissatisfied with the learned IC Chairman's decision, the appellants filed the present appeal against the said Interim Award in this Court.
[4] On 18 February 2025, after duly perusing the cause papers and th
