Employment and Industrial Relations Update: Court of Appeal Reinforces Duty to Disclose Conflict of Interest

The Court of Appeal delivered its decision on 6 February 2026 in the case of Tai Lai Mun v Heineken Malaysia Berhad/Heineken Marketing Malaysia Sdn Bhd¹ In this case, the Court of Appeal considered an appeal wherein the main issues between parties were:

1. whether the former Area Sales Manager’s dismissal, which was primarily premised on the grounds of failing to declare a conflict of interest and allowing his girlfriend (“Chan”) to be appointed as a director of SSST Connections, was warranted;
2. whether the non-attendance of a witness (“Siddieq”) impaired Heineken Malaysia Berhad/Heineken Marketing Malaysia Sdn Bhd's ("Company") case and consequently rendered the evidence given by its witnesses as hearsay; and
3. whether the onus of proof lies on the former employee in this instance since he alleged that he was not aware of Chan’s directorship and shareholding in SSST Connections; the owner of L’Nine Pub & Grub which was a recipient of the Company’s event-based sponsorship.

Brief background

During his employment, the former employee to the Company’s Human Resources Department that Chan was his wife. Chan was a noodle seller from Kepong and was introduced to Siddieq by the former employee.

Siddieq was one of the directors and shareholders of SSST Connections, as well as the owner of L’Nine.  A contract was entered into between the Company and SSST Connections. As part of the contract, RM320,000.00 was given as opening sponsorship to L’Nine and payment was made to SSST Connections.

Industrial Court decision

The Industrial Court in its Award² ruled that the former employee’s dismissal was justified. The Industrial Court took into account the roles and functions of the former employee being the Area Sales Manager, the fact that he had dealings with Siddieq, that he introduced Chan to Siddieq and independent Companies Commission of Malaysia records reflecting Chan’s directorship and shareholding in SSST Connections.

The Industrial Court ruled that Siddieq’s non-attendance before the Industrial Court did not impair the Company’s case as the other oral and documentary evidence adduced were sufficient to prove its case. 

High Court decision

The former employee challenged the decision vide judicial review proceedings and the High Court³ dismissed the Appellant’s application for judicial review. 

In affirming the Industrial Court award, the High Court — in relation to the issue whether the former employee knowledge that Chan was a director in SSST Connections — held that knowledge of a certain fact is directly linked to the mental element and that whether a person has knowledge of a fact can be proved by inference from the surrounding circumstances. 

In this instance, the High Court ruled that the onus of proof lies with the former employee that he did not know his common law wife was a director in SSST Connections and that it was incumbent on him to have called Chan as a witness to corroborate his allegation, but he failed to do so.

Court of Appeal decision

The Court of Appeal unanimously concurred with the decision of the High Court. Consequently, the Court of Appeal dismissed the Appellant’s appeal and affirmed the High Court’s decision. The Court of Appeal ruled that there is no evidence of illegality, irrationality or procedural impropriety which would warrant appellate intervention in the matter.

Key takeaways

The decision above reinforces employees’ duty to disclose a conflict of interest situation to their employer. The decision re-affirmed that non-disclosure of conflict is the core misconduct. In this case, the evidence that the former employee had influence over the relevant dealings made it implausible that he was unaware of his girlfriend’s involvement in the matter.

The Court of Appeal’s decision also makes it clear that senior employees face stricter scrutiny in that the higher the role, the higher the duty to disclose and uphold integrity. 

In addition, a party’s case will not fail simply because a witness does not testify. It goes to show the courts are now slow to draw an adverse inference absent evidence of withholding or suppression of a witness.

The case further illustrates an important distinction between the burden of proof and the onus of proof. The Company bears the burden of proof to establish that the former employee’s dismissal was justified. Once the former employee asserted that he was unaware of his girlfriend’s directorship and that she did not inform him of anything regarding the same, the onus of proof shifted to the former employee to adduce evidence in support of his assertions.

The Company was represented before the Court of Appeal by Vijayan Venugopal and Jamie Goh, both of whom are Partners in the Employment &  Industrial Relations Practice.

Footnotes:

1. A-01(A)-158-03/2024.
2. No. 744 of 2020 dated 3 June 2020.
3. AA-25-17-09/2020.