Wong Jun Chuan v Auto Bavaria (Sime Darby Motor Division Sdn Bhd) [2022] MLJU 3548

Case: Wong Jun Chuan v Auto Bavaria (Sime Darby Motor Division Sdn Bhd) [2022] MLJU 3548

Court: Court of Appeal (Putrajaya)

Topic: Implied Duty of The Employee

Facts 1.         The Respondent in this suit is a company that carried out the business of selling BMW and Mini Vehicles to the customers.

2.         The Appellant on the other hand was a sales advisor of the Respondent whose main duty was selling BMW and Mini vehicles and handling the subsequent release of the cars to the customers.

3.       In January 2012, the Appellant assisted a walk-in customer named Mr. Nagappan, who wanted to buy a BMW 528i Sport model.

4.       Mr. Nagappan placed an order on 9 February 2012 and provided a cheque for RM 3,000.00 (“the First Cheque”) as an initial payment.

5.      On 28 February 2012, he gave another cheque for RM 418,617.05 (“the Second Cheque”) which the Appellant submitted to the Sales Admin Accounts of the Respondent.

6.       On 29 February 2012, the Appellant registered the BMW528i Sport with the Road Transport Department and the Second Cheque was deposited on 1 March 2012. An Official Receipt was issued on the same day, stating that it would be valid after cheque clearance.

7.       Mr. Nagappan received the vehicle on 2 March 2012 without the Appellant verifying if the Second Cheque had cleared.

8.       As it turned out, the Second Cheque bounced, and the Respondent investigated the matter.  The Appellant was asked to explain the misconduct charge in a letter dated 30 March 2012.

9.      The Appellant received a Notice of Domestic Disciplinary Inquiry on 18 April 2012 and was charged with two offences. The first charge was for registering a BMW vehicle for a customer, Mr. Nagappan, before receiving the full payment, causing potential financial losses to the Respondent.  The second charge was for releasing the same BMW vehicle to the customer before full payment was cleared, leading also to potential financial losses.

10.     The Disciplinary Inquiry found that the Appellant guilty on both charges, and he was dismissed from the company on 8 June 2012.

11.      The Respondent claimed that the Appellant had a poor disciplinary record, with a prior suspension and a show cause letter for below-standard performance.  However, the Appellant argued that he was a top-performing sales advisor, receiving awards and prizes from the Respondent.

12.    The Appellant filed a representation at the Industrial Court, which ruled in his favor, stating that his dismissal was unjust.

13.     The Respondent disagreed and filed for a Judicial Review at the High Court, which quashed the Industrial Court’s decision.

14.      The Appellant then appealed to the Court of Appeal to challenge the decision of the High Court.

Issue 1.      Whether the learned High Court Judge was wrong to hold that there was implied duty on the part of the Sales Advisor to ensure payment was received from the customer prior to registering and/or releasing a vehicle?
Ratios 1.        To determine the issue on the implied duty of Sales Advisor, the Court of Appeal considered the evidence of witnesses from both parties where there was sufficient evidence to indicate that it was the duty of the Sales Advisor to verify payment clearance before registering and delivering the vehicle to the customer.

2.      The company’s witness, Salmi binti Nik (COW-2), the Sales Administration Supervisor, explained the role of the Sales Administration Department in a vehicle sales transaction during her testimony as follows:

“The Sales Administration Department (Sales Admin) starts its role when the Sales Advisor submits the Retail Customer Order (RCO) along with the 1% booking payment. They then create a vehicle file and input the order details into the company’s system. Once a vehicle is assigned to the customer, and in cases of a car loan application, after loan approval and receipt of the balance 9% deposit, registration fees, and insurance cheque, Sales Admin accesses the Jabatan Pengangkutan Jalan (JPJ) website to obtain a K1 form. They also prepare cheques for road tax and registration fees with JPJ.

 After receiving the customer’s banked-in cheques and vehicle registration by the Sales Advisor, Sales Admin prepares the original receipt and vehicle invoice. Before handing over the vehicle to the customer, Sales Admin provides the Sales Advisor with the official invoice, Vehicle Delivery Note, and warranty card, to be signed by the Head of Sales.

 In cases of full payment by cash/cheque, the process remains the same, but vehicle registration occurs only after the balance purchase price cheque is received and payment is cleared.”  [Emphasis Added]

3.     The COW-2 further testified to the Court that the duty to enquire on whether the payment of the cheque(s) has cleared prior to registration and/or release of the vehicle to customer lies with the Sales Advisor.

4.     Another Sales Advisor, Hazila Abdul Razak (COW-4) had testified before the Domestic Inquiry on the duty of being a Sales Advisor where she told it was a taught and practiced responsibility to check with the Sales Admin on status on full payment made by cheque, only then they can proceed with registration of the car.

5.     Furthermore during the Domestic Inquiry, the Appellant’s superior, Yeap Cheng Wooi (CLW-1), who was the Head of Sales, testified about the responsibilities regarding car registration and payment clearance in which he told the Court that it is the Sales Advisor’s responsibility to register the car and verify the payment status with sales admin.  Sales admin is there to assist in generating documents and submitting the JPJ cheque for car registration.

6.     It was further confirmed by CLW-1 himself that the Sales Advisor including the Appellant was well aware of the processes in place in the Respondent’s business.

7.     During CLW-1’s testimony, he explained to the Court that the Sales Advisor was tasked to ensure the payment was received by the Respondent because the Sales Advisor was in full corresponding with the customer and in best position to know when the car should be released to customer.

8.     The position above was further strengthened by COW-4 where the Court was made to acknowledge that it is the responsibility of the Sales Advisor to get confirmation from the Sales Admin staff whether cheque has been cleared or not, and this has been the practice of the Respondent for many years where all of its Sales Advisors were aware of it.

9.     Although there was no written SOP at the time of the incident, CLW-1 testified during cross-examination that the sales team had consistently followed the same process before his transfer to Glenmarie Branch as Head of Sales in May 2010.

10.  He also frequently reminded the sales team during their regular briefings to strictly adhere to rules and regulations, ensuring that no vehicle was registered or delivered until full payment was received and cleared. Therefore, it was clear that the Appellant was well aware of the correct procedure for handling vehicle registration and delivery.

11.   The Court of Appeal agreed with the learned High Court Judge, and found that the Industrial Court Chairman made a legal error by overlooking the Sales Advisor’s duty to ensure full payment from customers before registering and releasing the vehicle to them.

Decision 1.     There was implied duty on the part of the Sales Advisor to ensure payment was received from the customer prior to registering and/or releasing a vehicle.

2.     The appeal was thus dismissed by a majority decision of the High Court with costs.

Key Take Away 1.     It must be noted that the absence of a written Standard Operating Procedure (SOP) in the company does not negate an employee’s duty to act with due care and diligence.

2.     In the absence of a formalized SOP, employees are still expected to exercise care and diligence in their work to ensure that they are carrying out their tasks responsibly and professionally.

3.     Even though there was no formal Standard Operating Procedure (SOP) in place regarding the duty to ensure payment before releasing vehicles, the evidence presented during the case strongly supported the existence of an implied duty on the part of the Sales Advisor as the employee to ensure payment clearance before delivering vehicles to customers.

4.     Despite the argument that the company practice might have been unclear on this matter, the overwhelming evidence in the present case supported the view that such duty was indeed in place.

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