KOTA KINABALU (Oct 17): The merits of the Sabah Law Society’s (SLS) challenge, to ensure that Sabah’s entitlement to compel from the federal government a return of 40% of federal revenue earned from the state according to the Malaysia Agreement (1963) and a review of revenue that was lost for 48 years, will be heard at the High Court.

This follows the Federal Court on Thursday refusing to grant permission to the federal government to appeal the Kota Kinabalu High Court’s decision to allow SLS’ challenge, which was upheld by the Court of Appeal.

A three-member bench led by Federal Court judge Tan Sri Nallini Pathmanathan, in dismissing the federal government’s appeal, said it was not necessary for the apex court to decide on the matter as argued by the government.

“There is no prima facie case at this juncture to justify the conclusion that this matter falls within the exclusive jurisdiction of the Federal Court under Article 128(1)(b) and, as SLS has threshold locus standi (legal standing) to bring this judicial review application, there is no necessity for the grant of leave.

“This is particularly so as the issue of substantive locus standi may, if necessary, be considered in the course of the substantive judicial review on the merits,” she said.

Nallini sat with fellow Federal Court judges Datuk Zabariah Mohd Yusoff and Datuk Rhodzhariah Bujang.

The apex court judge added that this matter deals with whether the failure to review and provide Sabah’s Special Grant amounts to a breach of the relevant Articles of the Federal Constitution, and whether Sabah was entitled to damages for the period from 1974 until 2021.

“That is not a matter of policy (as argued by the Federal Government). Therefore, the grant of leave is not warranted, and the matter should proceed to be heard on its substantive merits (at the KK High Court),” Nalini said.

The federal government had posted four questions of law for determination by the apex court, and all of them were dismissed.

SLS had filed the judicial review application in 2022 to overturn the federal government’s gazette of a RM125.6 million annual grant for Sabah that year, claiming that it violated the state’s revenue rights under the Malaysia Agreement 1963 (MA63) to have 40% returned.

After having failed to conduct a review by the end of 1974, the federation allegedly “failed to remedy Sabah’s 40% entitlement for the annual payments for the period from 1974 to 2021 in its decision, action, and omission under the Review Order 2022”. This is referred to by SLS as the “Lost Years”.

Initially, the Sabah state government, along with the federal government, had challenged SLS’ judicial review, only for the Sabah government to drop its appeal at the apex court level following a change in the state attorney general.

On June 18, the Court of Appeal dismissed the government’s appeal against SLS’ leave bid for judicial review.

The federal government was appealing against the Kota Kinabalu High Court’s decision on November 11, 2022, to grant SLS leave (permission) to seek a judicial review be heard on its merits.

Challenges to government decisions may only be done via judicial reviews.

On Nov 11, 2022, High Court judge Ismail Brahim granted SLS’ application for leave for the judicial review, ruling that SLS had locus standi for a judicial review as it was a public interest matter.

The Attorney General’s Chambers (AGC) obtained a stay order to stop the High Court from hearing the merits of the case pending the appeal at the Court of Appeal.

In the Court of Appeal’s decision, which was unanimous, COA judge Datuk P Ravinthran said that SLS had at the very least established locus standi for a judicial review as it was clearly a public interest litigation taken for the benefit of the public.

He said it was not taken to seek redress for a personal wrong or grievance of the SLS.

The focus of the judicial review application is the alleged omission in the Review Order 2022 to account for the missing ‘lost years’.

The ‘lost years’ is referred to by Sabahans as a 48-year period of a second mandatory review of the state’s 40% revenue grant originally due by 1974, but only undertaken in 2022.

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