PUTRAJAYA, April 6 — The Court of Appeal has allowed the Federal government’s application to stay the High Court order on the review of the calculation and payment of Sabah’s Special Grant entitlement.
A three-member bench chaired by Judge Datuk Mohamed Zaini Mazlan, with Datuk Ismail Brahim and Muniandy Kannyappan, granted the stay pending disposal of the appeal.
“We are therefore satisfied that special circumstances have been established. The applicant (Federal government) would suffer prejudice if a stay is refused, and the appeal may be rendered nugatory.
“Accordingly, we allow the application and grant a stay of execution in terms of the applicant’s motion. We make no order as to costs as the applicant did not seek any order as to costs in its application,” Justice Zaini said.
On October 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 per cent of federal revenue from 1974 to 2021.
In allowing the Sabah Law Society’s (SLS) application for a judicial review, it also ordered the Federal and Sabah governments to review Sabah’s 40 per cent revenue entitlement for 1974-2021, giving them 90 days to complete the review and 180 days to reach a final agreement.
Delivering today’s decision via Zoom, Judge Zaini noted that the applicant has no issue with the 40 per cent entitlement.
The applicant’s primary concern is the High Court’s order that the review be held within 90 days and that the parties reach an agreement within 180 days of the order.
“The 90-day period had already expired on January 14, 2026. We noted that the applicant has already commenced the review and has had four meetings with the second respondent (the Sabah government).
“The 180-day period will end very soon on April 15, 2026. It is clear that the applicant is under time constraints.
“The applicant contended that the review would involve a comprehensive evaluation of their financial position and the second respondent’s net revenue for the period from 1974 to 2021. This would require identifying, verifying, and reconciling financial data, voluminous documents, and historical records spanning 47 years, from 1974 to 2021,” he said.
Judge Zaini added that the applicant also argued that the High Court erred in directing the review in a manner inconsistent with the scheme mandated by Article 112D of the Federal Constitution, in particular by imposing rigid timelines and failing to provide for recourse to an independent assessor in the event of disagreement.
“In our view, the applicant would be prejudiced if a stay is not granted because there is a real risk of non-compliance with the timelines imposed by the High Court, which, given the scope and complexity of the exercise, seem onerous,” he said.
The impugned orders may not align with the constitutional framework under Article 112D, particularly regarding the mechanism for resolving disputes.
“To enforce compliance in such circumstances, before the appeal is heard, would deprive the applicant of an opportunity to ventilate its challenge. It also appears that the High Court’s order was not consistent with the provisions of Article 112D.
“For example, the applicant is obliged to make a payment when Article 112D stipulates that, in case of disagreement, the matter should be referred to an independent assessor. The applicant would clearly be prejudiced if forced to comply with the court’s order without the opportunity to present its case on appeal,” Judge Zaini said.
He noted that the court’s order not only directs negotiations but also requires the applicant to make payment from the Federal Consolidated Fund within 180 days of the High Court’s order.
“This could have serious financial consequences, especially given the current challenging global economic climate. Under Article 112D of the Federal Constitution, any review must consider the applicant’s financial position in relation to the needs of the second respondent.
“The imposed timelines may not give the parties enough opportunity to determine the correct quantum payable. The payments ordered are of such magnitude that their execution, prior to the determination of the appeal, would create a fait accompli.
“The applicant has confirmed that it does not intend to delay proceedings and has taken measures to speed up the hearing of its appeal,” Judge Zaini said.
