GOVERNMENT WINS APPEAL OVER RM1.7 BILLION PENSION ADJUSTMENT ORDER

PUTRAJAYA, March 9 (Bernama) -- The government has succeeded in its appeal to set aside a High Court decision that ordered it to pay pension arrears amounting to RM1.7 billion to 531,976 pensioners based on their final salary according to the 2016 Public Services Department Circular.

The decision was made by a three-member bench of the Court of Appeal comprising Justices Datuk Lim Chong Fong, Datuk Azhahari Kamal Ramli and Datuk Meor Hashimi Abdul Hamid in a judicial review application filed by Aminah Ahmad, who retired as a civil servant with the Foreign Ministry.

Reading out the unanimous decision, Justice Azhahari said the issue of pension adjustments had already been decided by a previous Court of Appeal in 2022 in relation to Aminah’s first legal action (originating summons (OS)) in 2017.

Following today's decision, the government does not have to pay the amount to the pensioners.

Aminah filed the judicial review application on Jan 12, 2024, in her own capacity and on behalf of 56 retired members of the public service.

Justice Azhahari said the High Court judge had decided that the applicant’s contention that the implementation of the two per cent annual rate of pension increment is less favourable compared to the adjustment of pension based on salary revision prior to the amendment made under the 2013 Amendment Act, was incorrect, hence the issue of loss was not proven. 

“In our view, the issue of loss that was raised in the 2017 OS was meant to support her prayer for the payment of the arrears of her pension,” he added.

The judge said Public Services Department (PSD) No 1 Circular 2016 should be raised in the 2017 OS, and the issue of the applicant’s entitlement to pension adjustment based on the pre-2013 Amendment Act belongs to the claim in the 2017 OS. 

“It ought to have been brought forward as part of the subject in the 2017 OS, but they have not done so, probably due to inadvertence or accident. In the circumstances, under the law, the judicial review application is prohibited by res judicata as issue estoppel,” he added. 

He further said the appellate court held the view that the filing of the judicial review application is an abuse of the process, intending to relitigate the issue of payment of arrears in the pension adjustment. 

Justice Azhahari said Aminah’s pension entitlement and her entitlement to the arrears, which were the subject matter of the 2017 OS, had been determined by the Court of Appeal.

“Hence, issue estoppel would prevent her from relitigating the same issue at the judicial review's application. Even if res judicata does not apply, the court should also consider whether the doctrine of abuse of process is applicable to the facts of the case,” he noted.

Justice Azhahari said, in the present appeal, the High Court judge in the judicial review application did not correctly consider the doctrine of abuse of process. 

“In our view, the High Court judge fell into error when he merely considered the applicability of the doctrine of res judicata only, without correctly considering the doctrine of abuse of process and applying it to the facts of the case,” he said.

According to the judge, Aminah had not appealed against the decision of the High Court judge in the 2017 OS that she had failed to prove her losses as a result of Sections 3 and 7 of the Pensions Adjustment Act (Amendment) 2013 (PAA 2013) (2013 Amendment Act).

Justice Azhahari said the issue of whether the PSD No 1 Circular 2016 referred to earlier constitute salary revision among the civil servants, giving the applicant the right for pension adjustment, is irrelevant in this appeal. 

“In the circumstances, we are of the opinion that this is an appropriate case where we should exercise appellate intervention to correct the plain error committed by the learned High Court judge. This appeal is hereby allowed. We set aside the decision of the learned High Court judge,” he said.

The bench made no order as to costs since this appeal is of wide public interest and concern.

On Jan 16, 2025, High Court judge Datuk Amarjeet Singh, when allowing the judicial review by Aminah, ordered the PSD director-general and the government to pay the arrears within three months from the date of the judgment (Jan 16).

However, on March 4, 2025, Judge Amarjeet allowed the government's application to stay the payment of pension arrears to 531,976 pensioners amounting to RM1.7 billion, pending the disposal of its appeal at the Court of Appeal.

Aminah initially lost her OS case at the High Court in 2020. She then appealed to the Court of Appeal, which decided in her favour. The government and the PSD director-general then obtained leave to appeal from the Federal Court in 2023.

On June 27, 2023, the Federal Court affirmed the Court of Appeal's decision that declared the amended pension null and void. The five-member bench also dismissed the appeal by the government and the PSD director-general to overturn the appellate court's decision.

Following that, Aminah filed the judicial review application seeking a mandamus order to compel the respondents to expedite the pension adjustments to the qualifying amount following the formula contained in Sections 3 and 6 of the Pensions Adjustment Act 1980 (PAA 1980) before amendments were made under Sections 3 and 7 of the Pensions Adjustment Act (Amendment) 2013 (PAA 2013).

She also sought an order for the respondents to pay the pension arrears within 14 days, in addition to a declaratory order stating that the failure to pay violates the Federal Constitution.

Under the old scheme, the retiree's pension is revised based on the prevailing salary of incumbent civil servants in that grade. However, the 2013 amendment was introduced based on a flat rate of two per cent annual increment.

When met after the proceedings, Aminah’s lawyer, Datuk Dr Baljit Singh Sidhu, said that they would file an appeal at the Federal Court.

The government and the PSD were represented by senior federal counsel Ahmad Hanir Hambaly @Arwi and federal counsel Mohammad Sallehuddin Md Ali. 

-- BERNAMA