KUALA LUMPUR – The federal government is unable to prevent the judiciary from ruling on the constitutionality of its failure to pay Sabah funds from a special grant for the years 1974 to 2021.
The Court of Appeal reached this decision following the attorney-general’s challenge to a high court ruling on November 11, 2022, which granted the Sabah Law Society (SLS) leave to challenge the matter via judicial review.
Initially, in their application to the high court, SLS argued that, pursuant to Article 112C and Section 2 of Part IV of the 10th Schedule of the Federal Constitution, Sabah is entitled to 40% of the revenue Putrajaya derives from the state.
Termed “Special Grants”, these funds are also subject to review every five years under Article 112D of the Federal Constitution, with the first two reviews intended for the periods of 1969 and 1974.
SLS noted that on April 20, 2022, the federal government, via Review Order 2022, agreed to pay Sabah RM669.8 million for the financial years 2022 to 2026.
However, for the years 1974 to 2021, SLS contends Putrajaya failed to make payments to Sabah.
“The period between 1974 and 2021 is referred to by SLS’ counsel as the ‘Lost Years’.
“It was argued in the high court and before the Court of Appeal that the said failure is a breach of the federal government’s constitutional duty towards Sabah.
“Counsel for the SLS was at pains to point out that the judicial review action … is only aimed at compelling the federal government to perform its constitutional duty,” the Court of Appeal’s judgement reads.
However, the attorney-general opposed the arguments, contending to the Court of Appeal that the high court’s decision allowing SLS leave for judicial review was incorrect.
The attorney-general argues that the payment of special grants to Sabah by Putrajaya, as stipulated in the Federal Constitution, involves policy matters that the judiciary is not equipped to handle.
“The learned senior federal counsel (representing the attorney-general) submitted the subject of the judicial review is not justiciable for the following reasons.
“The exercise of review (for the payment of special grants) under Article 112D(2) of the Federal Constitution has to take into account the ability of the federal government and the needs of the Sabah government as stated in the clause.
“These involve policy matters which the court is not equipped to deal with,” the Court of Appeal’s judgement said.
The attorney-general also explained to the court that when the special grant was awarded to Sabah via an order in 2022, it was done by way of offer and acceptance.
Thus, the attorney-general argued that, with non-legal considerations at play, it was not within the court’s jurisdiction.
The Court of Appeal dismissed the attorney-general’s arguments, ruling that SLS is not challenging the validity of special grants already given but whether Putrajaya’s failure to award funds to Sabah from 1974 to 2022 is constitutional.
“SLS’ counsel pointed out in their prayers of the judicial review application that they are not challenging the lawfulness of the special grant. If that were the case, it would immediately attract the justiciability argument as it is a matter agreed upon by the federal government and the Sabah government.
“The overarching focus of the judicial review application is the alleged omission in the 2022 order to account for the missing ‘Lost Years’.
“The learned high court judge thought that this is a matter of interpretation to be decided in a full hearing and we find that we cannot disagree,” the Court of Appeal judgement explained.
The matter was heard at the Court of Appeal by Datuk Ravinthran Paramaguru, Datuk Mohd Nazlan Ghazali, and Datuk Choo Kah Sing on June 18.
In June 2022, Chin was the president of SLS when the body filed a leave application for a judicial review, naming the federal government and the Sabah state government as the first and second respondents, respectively.
SLS former president Datuk Roger Chin hailed the Court of Appeal’s decision to allow the SLS’ judicial review proceedings as a significant milestone for the state.
Describing the best possible outcome for the proceedings, Chin expressed hope that the judicial review would culminate in a landmark ruling that not only rectifies the financial disparities experienced by Sabah but also sets a precedent for greater accountability and transparency in federal-state relations. – June 20, 2024