The separate legal personality principle must be upheld in Industrial Court proceedings, and mere connections between entities do not warrant substitution or joinder without demonstrating a reasonable nexus and legal responsibility.

Introduction

[1] There are two appeals before us, namely Civil Appeal No: W-01(A)-128-03/2021 ("Appeal 128") and Civil Appeal No: W-01(A)-142-03/2021 ("Appeal 142") (collectively, "the Appeals").

[2] We shall preface this judgment by stating that at stake in the Appeals is the sanctity of the doctrine of separate legal personality which is a firmly embedded and well-entrenched principle of company law since Salomon v. A Salomon & Co Ltd [1897] AC 22 ("Salomon"), and which remains the cornerstone protecting individual corporate entities from the liabilities of their affiliates. In the context of proceedings before the Industrial Court , it appears that the doctrine is increasingly under strain — especially in cases where the true employer is insolvent, and the employee attempts to enforce remedies against sister or parent companies in the same corporate group. The tension is especially acute under s 29(a) of the Industrial Relations Act 1967 ("the Act"), which gives the Industrial Court broad powers in procedural matters. Section 29 (a) provides: "The Court may, in any proceedings before it — (a) Order that any party be joined, substituted or struck off."

[3] This judgment examines the limits of that power.

[4] Critically, the question of importance is whether parties to proceedings before the Industrial Court may use s 29(a) to bring in, or replace a non-employer corporate entity (for instance, a holding company or subsidiary or its directors) in the proceedings, solely because the real employer is insolvent and because there is overlap in directors, registered address, company secretaries or managerial personnel and despite the fact that the proposed additional party played no role in the dispute?

[5] This has given rise to a conflict between the demands of fairness, equity and good conscience in employment disputes (per s 30(5) of the Act) and the orthodox protection of the corporate veil. In particular, the related question is whether the Industrial Court , guided by the equitable mandate in s 30(5) of the Act, can override or ignore the separate legal personality doctrine (per Salomon) and impose liability on a non-employer company? Or does such joinder or substitution under s 29(a) constitute an impermissible encroachment on corporate separateness?

[6] This judgment considers whether the more expansive reading of joinder and substitution adopted in cases like Hotel Jaya Puri Bhd v. National Union Of Hotel Bar & Restaurant Workers & Anor; [1980] 1 MLJ 109 ("Hotel Jaya Puri") and Asnah Ahmad v. Mahkamah Perusahaan Malaysia & Ors; 2015 MarsdenLR 1001 ; [2015] 4 MLJ 613; [2015] 3 CLJ 1053; [2015] 2 ILR 469; [2015] 3 AMR 197 ("Asnah") has stretched statutory interpretation and the core principles of corporate law beyond what the Act authorizes.

[7] We may turn now to the brief facts.

Brief Facts

[8] The appellant in Appeal 128 is Hubline Berhad ("Hubline"), whilst the appellant in Appeal 142 is Highline Shipping Sdn Bhd ("Highline").

[9] The individuals who are named as the 1st to 36th Respondents in these appeals were employees of either Hub Shipping Sdn Bhd ("Hub Shipping") or EM Shipping Sdn Bhd ("EMS"). We shall, for convenience, refer to them collectively as "the Claimants". The Claimants were all retrenched by their respective employers, ie either Hub Shipping or EMS. The Claimants made representations to the Director General of Industrial Relations under s 20(1) of the Industrial Relations Act 1967 , claiming that they had been dismissed withou