PUTRAJAYA (Sept 9): A three-member Court of Appeal (COA) bench led by Datuk Lim Chong Fong has on Tuesday reserved its decision on the federal government’s appeal against the High Court’s decision in January that had ordered the government to pay an increase in pensions for retirees, based on their final salary according to the 2016 Public Services Department (PSD) Circular One, effective January 2022.

Lim, who heard the government’s appeal with judges Datuk Azhahari Kamal Ramli and Datuk Meor Hashimi Abdul Hamid, decided that the judges needed more time to deliberate before delivering a decision, and fixed Sept 17 for case management.

On Jan 16, High Court judge Datuk Amarjeet Singh Serjit Singh had ruled that a pension increase for retirees, based on their final salary according to the 2016 PSD Circular One, effective January 2022, is allowed, and ordered for the government to be compelled to pay the arrears within three months. However, later, Amarjeet granted a stay of his decision pending appeal.

In his grounds, Amarjeet had dismissed two circulars issued in 2013 by the PSD, as they did not amount to a salary revision but an enhancement to the salary. However, he said that the 2016 circular has the effect of a salary revision for all civil servants, and hence, the pensioners are entitled to the increment.

“In light of the Federal Court’s decision (that dismissed the government’s and PSD’s appeal), the arrears are to be paid effective January 2022 (the date of the Court of Appeal’s decision that allowed pensioner Aminah Ahmad’s appeal). The court makes no order as to costs,” the High Court judge had ruled.

Aminah and 56 other pensioners had named the PSD director general and the government in their application last year, which was allowed by the High Court, where PSD director general Tan Sri Wan Ahmad Dahlan Abdul Aziz said that it would involve an additional fund of RM1.7 billion to be paid.

Argument should not be raised as res judicata applies

Earlier, senior federal counsel (SFC) Ahmad Hanir Hambaly @ Arwi said the issue raised had already been decided in Aminah’s first originating summons (OS), which had been filed in 2017 and decided on by the appellate court in 2022.

Ahmad Hanir said as the issue over the 2016 PSD Circular One had been raised before in the OS and decided on, the pensioners should not raise the argument again as it is res judicata.

Res judicata is a Latin term to denote that a matter has already been adjudicated by a competent court, and therefore may not be pursued further by the same parties.

The government’s representative said the COA decision in the 2022 OS had already been decided, as the 2016 PSD Circular One had also been brought up and the pensioners are not entitled to receive any arrears, but the claim could be made from January 2022 onwards.

“The 2022 appellate bench had declined to make any order for retrospective adjustment to pensions paid and for any shortfall to be paid by the respondents (the Public Services Department and government) on the ground that it has not been proven that any actual loss has been suffered by Aminah and the other plaintiffs,” Ahmad Hanir said.

The SFC argued that the no-losses ruling also applies to the PSD Circular One, and by filing this judicial review and the High Court granting it previously, the pensioners would be given a second bite of the cherry. This goes against legal principle, as this issue had already been raised and it was found that there are no actual losses. Raising the matter now would therefore be an abuse of the court process.

Ahmad Hanir also said that in Aminah’s 2024 judicial review, nowhere was a reference made to paragraph three of the PSD Circular One on it being a salary revision, and that the High Court judge in his Jan 16 decision had erred in saying that the revision amounted to an increase in salary and that this increase also is warranted to the pensioners.

“The 2016 PSD Circular One only mentions improvement or rationalisation in the scale of salary, and not an increase in salary. This is to include professional qualifications and includes TVET (technical and vocational education and training),” he said.

Judge asks why pensioners’ pensions should not increase

Lim asked Ahmad Hanir that if the improvement in the 2016 circular had led to a salary increase for those groups, why were the pensioners not entitled to an increase in pension too, to which the SFC replied that the circular applies to an improvement to change the structure of the salary.

“It is not a salary revision (which could be extended to pensioners), but an improvement in the salary structure,” the senior federal counsel added.

Lawyer Datuk Dr Abdul Shukor Ahmad, who appeared with Datuk Baljit Singh Sidhu for Aminah and the other pensioners, said any revision in salary has to apply across the board and include pensioners.

“If there is a salary increment, it has to apply across the board. The 2016 PSD Circular One refers to salary adjustment, and mathematically they also involve pensions. An improvement in salary scale must also involve salary adjustment.

“Since Sections 3 and 6 of the Pension Adjustment Act involve a one-year salary increment, this should result in pension adjustments also. The approach taken by the High Court judge in its January decision is correct, as a salary scale adjustment shows they must receive salary adjustment, and this involves pensioners as well,” he said.

Despite this being an action by Aminah on behalf of herself and the 56 other retirees, a decision on this matter will affect a sum of RM1.7 billion.

In January 2022, a three-member COA bench, in allowing Aminah’s appeal, had ruled that the Pension Adjustment Act 2013 (PAA 2013) was null and void, and the court had declared Sections 3 and 6 of the amendment as being unconstitutional.

Aminah, a former Wisma Putra staff member who had retired in 2002, brought the action in 2017, and named the government and the PSD director general as respondents.

She claimed that the PAA 2013 amendment, which had brought about a flat rate of 2% increment, was unconstitutional when compared to the PAA 1980, which was more favourable, since the pension of government retirees was revised based on the prevailing salary of incumbent civil servants at that grade.

The COA’s unanimous decision in January 2022, written by then-judge Datuk Darryl Goon Siew Chye, agreed that the PAA 2013 amendment may result in a less favourable position, and hence contravenes Article 147 of the Federal Constitution. However, the appellate bench ruled that the decision should apply prospectively from January 2022, and not retrospectively.

Article 147, regarding the protection of pension rights, stipulates: The law applicable to any pension, gratuity or other like allowance (in this constitution referred to as an “award”) granted to a member of any of the public services, or to his widow, children, dependants, or personal representatives, shall be that in force on the relevant day or any later law not less favourable to the person to whom the award is made.