Ng Suan Chiek v Astrazeneca Sdn Bhd [2011 ] MLJU 1238 PDF

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NG SUAN CHIEK v ASTRAZENECA SDN BHD CaseAnalysis | [2011] MLJU 1238

Ng Suan Chiek v Astrazeneca Sdn Bhd [2011] MLJU 1238 Malayan Law Journal Unreported

HIGH COURT (KUCHING) YA RAVINTHRAN PARAMAGURU JC SUIT NO 22-56-2009-11 17 October 2011

Mr Desmond Kho (Kho & Partners Advocates) Mr Robert Jawan Wellingtons (Zaid Ibrahim Advocates)

YA RAVINTHRAN PARAMAGURU JC JUDGMENTIntroduction The plaintiff is a former senior employee of the defendant. He left the company after signing a Separation Agreement. He was paid termination benefits amounting to RM904,592. In this Suit he is claiming that he signed the Separation Agreement under duress or coercion. His claim in this Suit is that he was entitled to a much higher compensation, i.e. RM2,008,683. The defendant has denied subjecting the plaintiff to duress or coercion. In their counterclaim, they are counterclaiming legal costs of RM300,000.

Case for the Plaintiff The plaintiffs pleaded case can be briefly stated as follows. He worked with the defendant who is a pharmaceutical company operating in Malaysia, Singapore and Brunei in 1980. The defendant is also part of the multinational company known as AstraZeneca International. At the material time between July 2007 and July 2008, he "was subjected to harassment and

Ng Suan Chiek v Astrazeneca Sdn Bhd [2011] MLJU 1238

discrimination" by senior executives of the defendant. He pleaded mat on 31st day of July, 2008 he consented to mutual termination under duress. He also pleaded that by the terms of his employment, he was entitled to termination benefits totaling RM2,008,683. He did not plead that he was paid RM904,592. However, during the trial, he did not dispute that he received the said payment.

Evidence of Plaintiff at trial Apart from testifying on his own behalf, the plaintiff called two other witnesses who are former employees of the defendant. The first witness was Chung Siong Yieng (P.W. 1) who is also known as Vincent Chung. He had worked for Astrazeneca Sdn. Bhd. for about 26 years. His last posting was as a sales manager. He requested a separation package from the company as he was unwell. He signed a Separation Agreement with the defendant and was paid RM251,767.90. Vincent Chung said that as a sales manager he was entitled to 2 months base salary for every year of service but that the total payout was capped at 32 months. The payout he received also amounted to the salary he would have received until the age of retirement. He had no complaints about the compensation that he received. However he said that a sales director such as the plaintiff was entitled to a factor of 4 months base salary. However, he conceded that he only heard that some employees received four months' salary for every year they had worked. He could not remember the name of the employee although he claimed to have seen the document. When pressed further, Vincent Chung admitted that he had no documentary proof and said that it was the practice in the pharmaceutical industry to pay compensation on a factor of four month's base salary to higher management staff. The second witness was Teoh Hood Leong (P.W. 2). He is a former Regional Business Manager of the defendant. He reported to the plaintiff who was the Sales Director. He noticed that the plaintiff was not his usual jovial self from end of 2007 until he left in the middle of 2008. He said that the plaintiff suffered acute depression as he was under pressure due to rumours in the office that he was about to be sacked as Sales Director. Teoh Hood Leong said that on one occasion he found a legal opinion in his In Tray on how much it would cost the company to terminate a senior employee. The document was addressed to the Human Resources Manager and was prepared by Zaid Ibrahim and Co. He also said that the top management had pressured the plaintiff. He cited a few instances. The Acting Marketing Company President at the time, Ms Ragini Ponnudurai (D.W. 1) openly criticized the plaintiff during meetings. Page 2 of 14

Ng Suan Chiek v Astrazeneca Sdn Bhd [2011] MLJU 1238

Previously, such criticism was made in private. On another occasion Ragini Ponnudurai had gone around the office asking for the plaintiffs whereabouts when she knew that he was outstation in Brunei and Kota Kinabalu. When the plaintiff came back from outstation, Ragini Ponnudurai gave Teoh Hood Leong and the plaintiff until 5 p.m. to do analysis on the sales figures but during the meeting when the figures were presented, she looked bored and disinterested. Teoh Hood Leong said that soon after the new Company Acting President, Alex Chua (D.W. 2) took over, the plaintiff was terminated. The plaintiff was not even given a farewell dinner. After leaving the company, the plaintiff opened a "Kopitiam" business. However in December of 2008, the Sales Managers were informed by Alex Chua's secretary that the Plaintiffs services as a caterer should no longer be used. In respect of the appraisal system in the company, Teoh Hood Leong said he was once instructed by the "grandfather" which refers to the line manager above him, to give Below Expectation (BE) rating to his subordinate. Teoh Hood Leong was asked to focus on the weakness of the employee although he had performed well in other areas. The plaintiff (P.W. 3) who is also known as Willie Ng worked for the defendant for 28 years. He joined the defendant as a Sales Representative in 1980. He said he spent most his career in Sarawak where he built up the business of the defendant. By 1999 he had been promoted as Sales Manager in charge of sales for Sabah, Sarawak and Brunei. During this time he had worked for Astra Pharmaceuticals which had been merged with Zeneca Pharmaceuticals and is now known as AstraZeneca Sdn. Bhd. In 2005, the plaintiff was transferred to Kuala Lumpur as the Regional Sales Manager. The plaintiff said that the defendant had gone through a slump in sales and he was asked to help out. On 1st May 2005, he was promoted as Sales Director for Malaysia. The plaintiff said he worked loyally and diligently for the defendant. He said the company's sales increased from RM60 million in 2001 to RM160 million in 2007. However, according to the plaintiff, his relations with his employer turned sour by end of 2007. The plaintiff made serious allegations against a number of senior executives of the defendant. The gist of his evidence is that the defendant relentlessly persecuted him until he agreed to discuss a separation package. He even said that his former employer is still harassing him. He highlighted some of the alleged instances of harassment and wrongdoing during the material time that led him to discuss the terms of the Separation Agreement. The first instance he cited was about a meeting in Singapore on 7th June 2007. Bhasker Iyer who had been appointed as the Area Vice President for Southeast Asia and India refused to shake his hands. Bhasker Iyer, however, Page 3 of 14

Ng Suan Chiek v Astrazeneca Sdn Bhd [2011] MLJU 1238

shook hands with the other senior executives of the defendant from Malaysia. The second instance related to a legal opinion on the potential liability of the defendant if an employee of 27 years standing was terminated. The plaintiff said mat a copy of this opinion was left around the office to humiliate and undermine his authority with his subordinates. The Company Marketing President at that time was Takara Kitaguchi. He said that Takara Kitaguchi had given him a Below Expectation rating because he was pressured by Bhasker Iyer who was his boss. It was allegedly part of a scheme to pressure him to leave the company. Takara Kitaguchi was not called as a witness by either party as he had left for Japan after retirement. After he left, Ragini Ponnudurai took over for four months as the Acting Company Marketing President. According to the plaintiff, Ragini Ponnudurai always humiliated him during meetings with the sales managers in order to undermine his authority. According to the plaintiff, Ragini Ponnudurai derided him when he spoke or gave explanations during meetings. When he decided to keep quiet, she criticized him for not contributing. He also referred to some instances where Ragini Ponnudurai had accused him unfairly of wrongdoings. Ragini Ponnudurai had ordered an investigation into a purchase requisition made by the plaintiff although she had verbally approved it. She also told the plaintiff in a meeting on 6th March 2008 that she heard from Bhasker Iyer that he wanted to "move on". Apparently, the plaintiff had expressed his wish to leave the company to Takara Kitaguchi. Ragini Ponnudurai had also gone around the office enquiring loudly about his whereabouts when she ought to have known that he was outstation. The plaintiff said that Alex Chua, the new Company Marketing President who took over from Takara Kitaguchi also wanted him out of the company. When the plaintiff wrote to Bhasker Iyer for clarification on his performance bonus, Alex Chua accused him of being money minded. On 11th July 2008, Alex Chua told the plaintiff that his services were no longer required and that he would be compensated according to his contract. However, the plaintiff said that he was short changed in the negotiations that were conducted on 29th July and 31st July 2008. Alex Chua and Felicia Teh (D.W. 3, the Human Resource Manager) were present during the negotiations. The plaintiff said that a person in his position should have received 4 months base salary for every year of service which in his case totalled 112 months. Alex Chua only offered him two months base salary and capped the maximum number of months to 30. The plaintiff said that if a factor of.2 months base salary was used to calculate compensation, he was entitled to a total of 56 months' salary as he had worked for 28 years. He said that D.W. 2 only offered him 30 months' salary as compensation. The plaintiff said that he signed the Separation Agreement under duress. He

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Ng Suan Chiek v Astrazeneca Sdn Bhd [2011] MLJU 1238

alleged that he had suffered for a few months from acute depression and insomnia as a result of the actions of the defendant who wanted to get rid of him. He said that the real reason the defendant wanted to terminate his service was because he wanted to stop the culture of "bribing" doctors by offering them free lunches, dinners and giving gifts. The plaintiff said mat he had also discovered that the defendant was under reporting profits to the Inland Revenue Board. The defendant called three senior executives to testify on their behalf, i.e. Ragini Ponnudurai, Alex Chua Meng Fai and Felicia Teh. Ragini Ponnudurai denied all the allegations of the plaintiff. She denied systematically running down the plaintiff. She said that the plaintiff had changed the targets for medical representatives three days before the close of sales and that was the reason urgent meetings were called and a warning letter was issued to the plaintiff as he provided poor leadership. She said that her actions were related to office work and did not target the plaintiff personally. She denied trapping the plaintiff into signing the post dated purchase requisition in question. She was concerned that the purchase requisition was dated after the event and that was the reason she ordered an investigation. However, she approved it after the investigation was completed. In respect of the bribery allegations, she emphasized mat the defendant company had a strict policy on the matter. She only wanted the plaintiff to promote a drug called "Nexium" as it was listed for over a year by the Ministry of Health. She never ordered the plaintiff to bribe doctors to include "Nexium" in the tender. She said that if she had forced the plaintiff to bribe doctors, the plaintiff could have used the "whistle blowing" channel, which is a channel to complain directly to the top management using the company's website. However, she said that the defendant practised giving out cultural gifts such as mandarin oranges. In respect of the plaintiffs intention to "move on" from the company, she heard about it from her line manager. She asked the plaintiff about it merely because he was her peer for many years and she did not suspect that he wanted to leave. She said that plaintiff agreed that he wanted to leave and in a subsequent e-mail even thanked her for treating him professionally during the time they worked together. She also denied asking about the plaintiffs whereabouts in respect of the occasion cited by the plaintiff because she, as the acting Marketing Company President, had approved his travel itinerary. She said that the allegation that the sales target of the plaintiff was increased as part of a scheme to pressure him was false. During cross-examination, Ragini Ponnudurai said that she had no knowledge that defendant wanted to terminate the services of the plaintiff as she had no mandate to discuss it.

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Ng Suan Chiek v Astrazeneca Sdn Bhd [2011] MLJU 1238

The second witness for the defendant was Alex Chua. He became the Marketing Company President from May 2008 to February 2011. He took over from Ragini Ponnudurai who had acted in that capacity for about 4 months. Alex Chua is a crucial witness because he directly negotiated the severance package with the plaintiff. He was not familiar with the plaintiff because he was recruited from outside the company. He told the court that the plaintiff told him during one of their discussions mat he was agreeable to a mutual separation package and was prepared to negotiate. The negotiations took place on 29th July 2008 and 31st July 2008. The only other company officer present apart from Alex Chua and the plaintiff was Felicia Teh.However, her role was limited to recording the minutes of me meeting. The plaintiff was offered a compensation package of 30 months base salary. Alex Chua said that although a factor of 2 months base salary for every year of service was applied, the company policy was to cap the compensation at 30 months base salary. However, the plaintiff disagreed and the meeting was adjourned to 31st July 2008. At the outset of the meeting on 31st July 2008, the plaintiff apologized for being aggressive in the earlier meeting and tendered his apologies. The plaintiff then told D.W. 2 that he expected a total of 48 months base salary as the termination compensation package. He apparently "begged" Alex Chua to call Bhasker Iyer who was based in Singapore to increase the offer of 30 months base salary. Alex Chua called Bhasker Iyer and made an offer of 40 months base salary as the final compensation package. According to Alex Chua, the plaintiff accepted this offer without any protest and thanked him. However, the plaintiff did not immediately sign the Separation Agreement as he asked for time of about one week to seek legal advice. In an email dated 6th August 2008, the plaintiff told Alex Chua that he had taken legal advice on the matter. The plaintiff came to the office on 7th August 2008 to sign the Separation Agreement which he did without any protest. He also acknowledged the receipt of RM904,581.85 as compensation vide two cheques. Alex Chua said that the plaintiff was not compelled to accept or sign the Separation Agreement. The plaintiff was told at the outset that the purpose of the meetings was to discuss a separation package and that the meetings were not meant as a threat. Alex Chua also had no knowledge that the plaintiff was suffering from depression as he appeared to be in full control of himself. After signing the Separation Agreement, the plaintiff wrote to the company to demand for free air tickets for himself and his family to fly back to Kuching. Alex Chua also said that the defendant did not under report profits to the Inland Revenue Board as alleged by the plaintiff. The profits that the plaintiff referred to are profits earned by Astra Zeneca UK which is taxable in the United Kingdom. In respect of the Page 6 of 14

Ng Suan Chiek v Astrazeneca Sdn Bhd [2011] MLJU 1238

allegation that the sales target of the plaintiff was changed, Alex Chua said that only the target of the medical representatives were changed. Alex Chua said that if the plaintiff had been harassed and discriminated, he could have availed himself of the "whistle blowing" channel of the company but he failed to so. The third witness was Felicia Teh (D.W. 3). She said that the plaintiff had been issued two warning letters in 2007 for providing poor leadership. In 2007 mid-year and year-end review, the plaintiffs performance was "Below Expectation" as he had missed some targets. She attended the two meetings held on 29th July 2008 and 31st July 2008 where Alex Chua discussed the severance terms with the plaintiff. Felicia Teh said that the plaintiff voluntarily agreed to cease employment with the defendant effective 31st August 2008 in exchange for a compensation sum of RM904,581.85. In the Separation Agreement signed by the plaintiff, it was agreed that neither party would have any further claim against each other. Felicia Teh said that on the two occasions when the parties negotiated settlement, Alex Chua did not threaten to sack the plaintiff if he refused to accept the compensation sum offered. The plaintiff even consulted his lawyers before signing the Separation Agreement. After the post-dated cheques in the sum of RM904,581.85 were issued to the plaintiff, he did not return them to indicate that he was unhappy with the compensation or that he had changed his mind. In respect of the allegation that other senior employees had been paid "a factor of 4 months base salary for every year they worked, Felicia Teh said that the plaintiff had agreed to the "factor of 2 months". Felicia Teh was also unaware of any former employee who had been given termination compensation based on "a factor of 4 months". The plaintiff had mentioned a former employee by the name of Christi David had received compensation based on "a factor of 4 months". Felicia Teh clarified that the said employee had left the company long before the merger of Astra Pharmaceuticals and Zeneca Pharmaceuticals. In respect of the legal opinion on liability of the defendant if an employee with 27 years' service is dismissed, Felicia Teh denied that it referred to the plaintiff as the letter was not found in his personal file. She also said that the plaintiff was not the only employee with 27 years of service in Astrazeneca Sdn. Bhd. Finally, Felicia Teh said that the defendant could not call Takara Kitaguchi and Bhasker Iyer as witnesses as they had left the company and could not be located.

Issues In his lengthy evidence and cross-examination of the defendant's witnesses, the plaintiff has Page 7 of 14

Ng Suan Chiek v Astrazeneca Sdn Bhd [2011] MLJU 1238

alleged the threat of unfair dismissal, condonation of bribery, tax evasion, harassment and intimidation of employees on the part of the defendant. These are serious allegations against the employer. The plaintiffs application to refer his case under section 20 of the Industrial Relations Act 1967 was rejected by the Minister of Human Resource. The plaintiff pleaded that his consent to the Separation Agreement was obtained under duress. He further pleaded that the compensation that he was entitled to was RM2 million plus. The compensation provided for in the Separation Agreement which he accepted was RM904,581.85. The issue that falls for determination is therefore only two-fold, i.e. whether the Separation Agreement was vitiated by duress or coercion and if so, what is the compensation that the plaintiff is entitled under his contract of employment? For this reason, the question of whether the defendant company had indulged in bribing of doctors and evaded tax does not strictly call for an answer in this trial.

Duress In the Statement of Claim and the Reply, the plaintiff pleaded that the Separation Agreement was vitiated by "duress". The plaintiff also told the court that he was under duress when he agreed to sign the Separation Agreement. In his final submissions, Counsel for plaintiff submitted the plaintiff was "coe...