Appeals court to decide on federal govt's stay bid in Sabah 40pct grant case on Monday

 

The Court of Appeal has fixed next Monday to deliver its decision on the federal government’s application for an interim stay of the High Court’s ruling in a judicial review filed by the Sabah Law Society (SLS) concerning Sabah’s special grant entitlement.

A three-member bench chaired by judge Zaini Mazlan fixed April 6 for the decision after hearing submissions from senior federal counsel Ahmad Hanir Hambaly, who appeared for the federal government, as well as counsel David Fung, representing SLS, and Sabah Attorney-General Brenndon Keith Soh, who acted for the Sabah government.

“We’re not going to deliver a decision today. We need ample time to consider the issues in this application, and we propose to deliver our decision next Monday,” said Zaini, who sat with judges Ismail Brahim and Muniandy Kannyappan.

Earlier, Hanir said the appellant filed the motion seeking an interim stay of the High Court’s order, save and except for paragraph 2(b) thereof, which concerns the calculation of the 40 percent formula provided under subsection 2(1), Part IV, 10th Schedule, read together with Article 112C of the Federal Constitution, pending the hearing and disposal of the appellant’s appeal before this court.

He said that the interim order sought by the appellant to stay the operation and effect of the High Court order ought to be granted pursuant to Section 44 of the Courts of Judicature Act, as such relief is necessary to preserve the integrity of the present appeal and to prevent the appeal from being rendered nugatory.

Hanir said the appellant is directed to hold another review with the second respondent (the Sabah government) regarding the implementation of the 40 percent entitlement for each consecutive financial year from 1974 to 2021, to be completed within 90 days, and to reach an agreement within 180 days from the date of the High Court’s order on Oct 17, 2025.

“The appeal in the present case raises serious and significant constitutional questions concerning the interpretation and proper operation of Article 112D of the Federal Constitution, within the constitutional framework governing the financial relationship between the federation and the state, which ought to be properly determined by the Court of Appeal before any irreversible steps are taken pursuant to the High Court’s order.

“The interpretation and application of Article 112D will determine the proper methodology and mechanics for the determination of the special grant during the disputed period,” he said.

Hanir further said that the appellant is engaged in ongoing negotiations with the second respondent, and that the negotiations on the special grant entail a comprehensive evaluation of the federal government’s financial position and the net revenue derived by the federation from Sabah from 1974 to 2021.

Meanwhile, Fung submitted that the relief the federal government needs is an extension of time rather than filing an application for a stay.

“According to the SFC, there are ongoing negotiations between the appellant and the second respondent. Therefore, the appellant should seek an extension of time from the Kota Kinabalu High Court, as that court has the power to extend time,” he said.

Brenndon said the appellant should have applied to the High Court in the first place before coming to the Court of Appeal.

“We are also of the view that the appeal would not be rendered nugatory if the stay is not granted by this court,” he added.

On Oct 17 last year, the Kota Kinabalu High Court ruled that the federal government had acted unlawfully and beyond its constitutional authority by failing to fulfil Sabah’s right to 40 percent of federal revenue from 1974 to 2021.

The court also ordered the federal and Sabah governments to review Sabah’s 40 percent revenue entitlement for 1974-2021, giving them 90 days to complete the review and 180 days to reach a final agreement.

The judge made the ruling after allowing the SLS’ application for a judicial review, which contended that both the federal and Sabah governments had breached their constitutional duties by failing to legally review the payments.

The case centred on the interpretation of Articles 112C and 112D of the Federal Constitution. Article 112C deals with special grants and the assignment of revenue to Sabah and Sarawak, while Article 112D provides for periodic reviews of these grants.

- Bernama