Sabah's 40pc grant: August 7 for e-review

Daily Express

08-07-2025

Published on: Tuesday, July 08, 2025
Published on: Tue, Jul 08, 2025
By: Jo Ann Mool Text Size: The SLS is seeking a declaration, among others, that the Federal Government's failure to hold a second review in 1974 with the State Government was a breach and contravention of its constitutional duty stipulated under Article 112D, Clauses (1), (3) and (4) of the Federal Constitution. Kota Kinabalu: The High Court hearing the Sabah Law Society's (SLS) judicial review over Sabah's 40 per cent special grant has fixed August 7 for an e-review of the matter. Judge Datuk Celestina Stuel Galid set the date on Monday after hearing oral arguments by the parties on the substantive merits of the judicial review. In setting the date, Judge Celestina said that, as indicated during case management, the court normally delivers its decision within four weeks after the final submission, but the present matter would be an exception as more time was needed to consider the submissions. She fixed an e-review date in the fourth week for the court to issue further directions or set a date for the decision. The SLS filed a judicial review leave application on June 8, 2022, after the Federal Government announced on April 14, 2022 that an agreement had been reached with the Sabah Government, and named the Federal and State governments as the first and second respondents. On Nov 11, 2022, the High Court granted SLS leave to proceed with the judicial review, while the Attorney General's Chambers (AGC), acting for the Federal Government, later secured a stay order to halt the High Court from hearing the merits of the case, pending appeal. On June 18, 2024, the Court of Appeal dismissed the Federal Government's appeal against the leave granted to SLS and directed the High Court to fix a date for the full hearing. The Federal Government then applied for leave to appeal the ruling to the Federal Court, but in Oct 17, 2024, the Federal Court dismissed the application. The SLS is seeking a declaration, among others, that the Federal Government's failure to hold a second review in 1974 with the State Government was a breach and contravention of its constitutional duty stipulated under Article 112D, Clauses (1), (3) and (4) of the Federal Constitution. It said the 40 per cent entitlement remained due and payable by the Federal Government to the State Government for each consecutive financial year for the period of 1974 to 2021, in which a failure to pay the entitlement was a breach of the fundamental right to property of the Sabah Government and ultimately, of the people of Sabah as enshrined under Article 13 of the Federal Constitution. SLS also sought an order of mandamus directed to the respondent to hold another review with the State Government under the provisions of Article 112D of the Federal Constitution, to give effect to the payment of the 40 per cent entitlement for each consecutive financial year from 1974 to 2021 within 30 days, and to reach a decision within 90 days from the date of the order, and that the respondent pays the entitlement to the State Government or as constitutional damages for breach of Article 13 of the Federal Constitution, or both. Counsel Dr David Fung, Jeyan Marimuttu, Janice Lim, and Grace Liew represented SLS; Senior Federal Counsel (SFC) Ahmad Hanir Hambaly @ Arwi, Nurhafizza Azizan, and Azza Azmi, together with Federal Counsel (FC) M. Kogilam Bigai and Nur Atirah Aiman Rahim, represented the Federal Government. Sabah State Attorney-General Datuk Brenndon Soh, together with State Counsel Devina Teo and Roland Alik, represented the Sabah State Government. On Monday Dr Fung submitted, among others, that the core issue centres on the 2022 review conducted by both the Federal and State governments. He submitted that the review was unlawful, having been carried out beyond the powers conferred on both governments under Article 112D of the Federal Constitution. The 2022 review failed to consider Sabah's entitlement to the 40 per cent net revenue payment that ought to have been made annually by the Federal Government for the 'lost years', from 1974 to 2021. He referred to the 2022 Review Order issued by the Federal Government, which only provides for a five-year period starting from Jan 1, 2022, covering the financial years 2022 to 2026. Dr Fung also pointed out that while Sarawak has its own special grant, it is not entitled to the 40 per cent net revenue entitlement. Sabah's position is distinct, as it is constitutionally entitled to a revenue growth-based grant. As such, he emphasised, there remains a significant gap in revenue payments spanning the period from 1974 to 2021. Dr Fung further referred to the 1970 Review Order, which had been signed off by Tun Abdul Razak, the then Finance Minister of Malaysia. The 1970 Review Order set out the special grant allocations for Sabah for the financial years from 1969 to 1973, amounting to RM20 million, RM21.5 million, RM23.1 million, RM24.8 million, and RM26.7 million respectively. However, from 1974 to 2021, the Federal Government retained 100 per cent of the revenue derived from Sabah, without any remittance of the State's entitled share. There was no application of the constitutional formula providing for a share in the growth of federal revenue derived from Sabah. Dr Fung submitted that during this entire period, there was no review conducted, no agreed intervals as required, no Order issued by the Yang di-Pertuan Agong, and no annual grants provided under Article 112C of the Federal Constitution. These, he argued, constituted breaches of constitutional obligations. In response to a question from the court regarding whether any documents existed to explain the prolonged silence or failure to provide Sabah's 40 per cent entitlement over the 'lost years,', Dr Fung said that there were no such documents. Dr Fung submitted that the crux of their case is the absence of any reviews conducted for the 'lost years' and that the Federal Government, on the other hand, maintains that there is an 'ongoing review'. SFC Ahmad Hanir, meanwhile, submitted that there were 'no lost years' because the matter had been subject to ongoing review, and both the Federal and State governments had held numerous meetings to discuss it. 'The fact is, both the Federal Government and the Sabah Government have had numerous meetings to discuss this matter. There are ongoing negotiations. The review is a process,' he said. Asked by the Court if there is any document to show that the ongoing review is taking place, the SFC replied in the negative, stating that 'most of those documents are classified.' The evidence, the SFC said, was the grant itself, namely the Review Order. 'Until an order is made to alter the 1969 review order, it is evidence of Sabah's acceptance of the same being continually in force,' he said. The SFC went on to state that the admission of ongoing meetings and correspondences between the Federal and State Governments is sufficient. At this juncture, Brenndon interjected, saying there was nothing in that affidavit to say that there is an ongoing negotiation or review. 'What the Sabah Government did was to request,' he said. When asked by the Court if he agreed that 48 years are a fairly long time for the Sabah State Government to be quiet about it, Brenndon said: 'This is where we disagree on the breach of Article 112D(3). There is no review and no negotiations under Article 112D. No evidence to show the same.' The Court then asked the SFC that, notwithstanding what the Sabah State Attorney-General had said, if it is the Federal Government's stand that there has been ongoing negotiation or review for the 48 lost years, which the SFC answered in the affirmative. The SFC also submitted that the Federal Constitution provides for other grants other than the Special Grants to Sabah. The SFC also objected to the SLS' prayer regarding a mandamus order because it is not entitled to it on the merits. 'There is nothing in the Federal Constitution that imposes a duty on both the Federal Government and the Sabah Government to provide accounts. Hence, both governments cannot be compelled by this Court to do so. That's why SLS is not entitled to the mandamus order,' he said in concluding his submission. Meanwhile, Brenndon, submitted among others that that no review had been carried out for the 48-year period between 1974 and 2021, and that the Review Order merely specified the sums provided, without extending beyond that. He submitted that Sabah is entitled to its 40 per cent special grant for the unreviewed years. He added that the Sabah Government had agreed to accept an interim special grant from 2022 onwards on a 'without prejudice' basis, while reserving its right to rely on the original formula under Article 112C and to claim arrears for the Federal Government's failure to conduct a review. Brenndon further submitted that the State Government agreed there was scope for the Court to issue the declarations sought, including a mandamus compelling a review for the lost years, but maintained there was no basis for the Court to quash the 2022 review order. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available.
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