Wheather An Opinion Is Amenable To Judicial Review - A Recent Decision By The Federal Court

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A panel of 7 Federal Court judges presided by the Chief Justice had recently sat on and determined the appeals in the case of Tan Giap How.[1] The appeals raised an important point relating to whether an opinion is amenable to judicial review.

Our Senior Partner, Datuk D.P. Naban acted as the lead counsel for the 2nd and 3rd Respondents and successfully opposed the Appellant’s appeals.

This alert highlights the key points of contention and the significance of this case.

Background

The Appellant (Tan) was a former employee of the 2nd and 3rd Respondents (the Employers). Under the employment contract, Tan would be entitled to a basic monthly salary, as well as an incentive bonus equivalent to 50% of the net brokerage ‘earned from business and dealings in securities…’.

After the end of Tan’s employment, he complained to the 1st Respondent (EPF), that the Employers had wrongly deducted their portion of EPF contribution (in respect of the incentive payments) from the gross brokerage. EPF investigated and informed Tan that the incentive bonus was essentially a profit-sharing arrangement and not wages – thus the Employers were not required to make EPF contribution in respect thereof. In any case, EPF also informed that a deduction from the gross brokerage was not wrong, because such deduction was necessary to arrive at the net brokerage, 50% of which would be Tan’s incentive bonus. As such, EPF was of the view that the Employers were right and had not contravened Section 47 of the Employees’ Provident Fund Act 1991 (EPF’s Response).

Dissatisfied, Tan claimed that the EPF’s Response is a decision and applied to quash the same by way of judicial review. The High Court allowed Tan’s application and the Employers filed an appeal.

Court of Appeal’s Decision

The Court of Appeal ruled in favour of the Employers and set aside the High Court’s decision based on the following grounds:

a) The EPF’s Response was only an advisory opinion and not a decision. It is not legally binding. An opinion is not open to judicial review.

b) In any event, the EPF’s Response was the result of EPF’s exercise of its investigative / prosecutorial powers, which is not open to judicial review.

c)       Tan’s case was really a contractual claim, which was predominantly private in nature. His case was therefore outside the ambit of judicial review which concerns the realm of public law. 

d) Since Tan was entitled to 50% of the net brokerage, the Employers were entitled to deduct their EPF contribution, a legitimate head of costs and expenses, from the gross brokerage to arrive at the net amount.

As regards the principle that the exercise of prosecutorial power is beyond the remit of judicial review, the Court of Appeal noted that this is subject to an exception – that is when such power is exercised mala fide. In this regard, the Court of Appeal found that it was very clear from the records that there was no mala fide established against EPF.

Dissatisfied, Tan applied for and obtained the leave to appeal to the Federal Court based on 2 questions of law. The first question is relevant for purposes of this alert:

“Whether an opinion provided by the Employees Provident Fund… is amenable to judicial review…”

Key Arguments Before The Federal Court

The key argument raised by Tan’s counsel is that paragraph 1 of the Schedule to the Courts of Judicature Act 1964 confers the Court a very wide power to review the acts of the executive. It was submitted that every exercise of statutory powers is reviewable. According to Tan, even decisions which lack finality is reviewable if they cause or have caused injustice.

As regards the point that Tan’s case is predominantly private in nature, Tan’s counsel contended that in the context of Tan’s case, it was not clear whether judicial review or ordinary action is the proper procedure. It is therefore safer to make an application for judicial review than to commence an ordinary action.

The key argument raised by the Employers’ counsel was that the Court of Appeal was right to hold that:

a) The EPF’s Response was an opinion which lacks finality and is not binding – thus not amenable to judicial review.

b) The EPF’s response was made pursuant to EPF’s exercise of its investigative power which, by longstanding principle, ought not be interfered by way of judicial review.

On that premise, the Employers’ counsel submitted that paragraph 1 of the Schedule to the Courts of Judicature Act 1964 must be cautiously applied and confined to established principles. It does not confer limitless power to the Court to bypass established law. As regards the ‘safer to apply for judicial review’ argument, the Employers’ counsel responded that Tan’s claim was clearly and predominantly private in nature, for it concerned the arrangements agreed between Tan and the Employers.

Commentary

Upon hearing the submissions by both parties, the Federal Court unanimously dismissed Tan’s appeals and upheld the Court of Appeal’s decision. This reinforces the principle that only a person adversely affected by the decision of a public authority is entitled to apply for judicial review.

The suggestion by Tan that an opinion which lacks finality is reviewable, if it causes injustice – is an interesting one. It begs the question: how does an opinion devoid of legal effect and binding force cause injustice? In fact, rather than challenging the EPF’s Response via judicial review, Tan was perfectly entitled to ventilate his grievance and to establish his case against the Employers via an ordinary action without suing EPF in the process. In fact, this was done successfully by the employee in the case of Funk David Paul v Asia General Asset Bhd.[2]

This Federal Court’s decision also reinforces the principle that not all decisions and actions of public authority are amenable to judicial review, in particular those made pursuant to its investigative power. The underlying rationale is simple – if it were to be otherwise, the government machinery may not be able to function smoothly, as the investigation process of all enforcement agencies would be open to constant judicial review, as observed by the Federal Court in Suruhanjaya Pencegahan Rasuah Malaysia & Ors v Latheefa Beebi Koya & Anor.[3] It is also noteworthy that the expenses incurred to defend against judicial review proceedings are borne by the public purse. The Court is therefore rightly circumspect when dealing with judicial review applications.

The Federal Court’s refusal to entertain Tan’s safer approach argument, may be justified by the principle of ignorantia facti excusat, ignorantia juris non excusat (ignorance of fact excuses, ignorance of law does not excuse). As such, Tan is not at liberty to contend that he does not know which is the proper procedure (judicial review or ordinary action). More so, when there is the precedent of the Funk David case where the employee successfully claimed against the employer via an ordinary action.

The Federal Court’s decision reflects the Court’s commitment to jealously scrutinise judicial review applications in order to balance between delivering justice to genuine grievance caused to individuals by the State, and to safeguard the State’s machinery against frivolous and academic applications.

Authored by Hayden Tan, an Associate with the firm’s Dispute Resolution practice.

[1] Tan Giap How v Kumpulan Wang Simpanan Pekerja & 2 Ors and Another Appeal [Civil Appeal No. 02(f)-96-12/2019(W) and 02(f)-95-12/2019(W)]

[2]  [2014] 1 MLJ 681.

[3] [2017] 5 MLJ 349.

June 22, 2021