Court of Appeal of Malaysia

DALAM MAHKAMAH RAYUAN MALAYSIA

(BIDANGKUASA RAYUAN)

RAYUAN SIVIL NO. W – 01 – 17 – 2002

Antara

Asa’ari bin Muda

(Mendakwa bagi pihak Diri Sendiri dan

bekas Pegawai Jabatan Hasil Dalam Negeri

yang bukan Ahli Kesatuan dimana Pencen

dan status layak Pencen mereka belum

dikenalpasti)                                                                 … Perayu

Dan

1.   Kerajaan Malaysia

2.   Ketua Pengarah Perkhidmatan Awam

3.   Ketua Penolong Pengarah Bahagian Pencen

Jabatan Perkhidmatan Awam                                  … Responden-

Responden

(Dalam perkara Mahkamah Tinggi Malaya di Kuala Lumpur

Saman Pemula No. S2-21-06-2000

Dalam perkara mengenai Akta Pencen 1980 (Akta 227), Akta Pencen Pihak-Pihak Berkuasa Berkanun dan Tempatan 1980 dan Akta Lembaga Hasil Dalam Negeri

Dan

Dalam perkara mengenai Artikel-Artikel 8, 136 dan 147, Perlembagaan Malaysia

Dan

Dalam perkara mengenai Seksyen 41, Specific Relief Act, 1950 (Akta 137)

Antara

Asa’ari bin Muda

(Mendakwa bagi pihak Diri sendiri dan

bekas Pegawai Jabatan Hasil Dalam Negeri

yang bukan Ahli Kesatuan dimana Pencen

dan status layak Pencen mereka belum

dikenalpasti)                                                                  … Plaintif

Dan

1.   Kerajaan Malaysia

2.   Ketua Pengarah Perkhidmatan Awam

3.   Ketua Penolong Pengarah Bahagian Pencen

Jabatan Perkhidmatan Awam                                   … Defendan-

  Defendan)

Coram :    Gopal Sri Ram, J.C.A.

Abdul Aziz bin Mohamad, J.C.A.

Mohd Ghazali bin Mohd Yusoff, J.C.A.

JUDGMENT OF GOPAL SRI RAM, J.C.A.

1.       The plaintiff and all those whom he represents (whom I will refer to as “the plaintiffs”) are servants of the first defendant, the Government of Malaysia.    They were employees of the Department of Inland Revenue (“the Department”).    And they claim that they had, by reason of their employment, acquired the right to a pension under section 7 of the Pensions Act 1980.    In 1995, the collection of revenue was privatised.     A Board, called the Inland Revenue Board (“the Board”) was constituted under the Inland Revenue Board of Malaysia Act 1995 (“the IRB Act”) which came into force on 1 March 1996.    For present purposes, section 15 of the IRB Act is important.    Because the plaintiffs rely heavily on it.    And this is what it says:

“15 (1) The Board shall on the appointed day accept into its employment every person who immediately before that date is in the employment or service of the Inland Revenue Department, Malaysia, and who was given an option by the Government of Malaysia and has opted to serve as an employee of the Board.

(2) Every such person who opts under subsection (1) to serve as an employee of the Board shall be employed by the Board on terms and conditions of service not less favourable than the terms and conditions of service to which he was entitled to immediately before the date mentioned in subsection (1).

(3) Until such time as terms and conditions of service including the conduct and discipline of its employees are drawn up by the Board, the scheme and terms and conditions of service including the conduct and discipline of employees of the Government shall mutatis mutandis continue to apply to every person employed by the Board under subsection (1).”

2.       After the IRB Act came into force, the plaintiffs, all of whom were below 40 years of age at the material time, were given the option to transfer their service with the Department to the Board.    The plaintiffs exercised this option.    They then became employees of the Board.     This was with effect from 1 March 1996 , that is to say, the date on which the IRB Act came into force.

3.       Later, in 1997, the Board introduced a new scheme – the IRB Scheme – containing the conditions of service of those employees who had opted to transfer their service with the Department to the Board.    This, of course, included the plaintiffs.     I would pause and mention that the Board in acting as it did was no doubt exercising its powers under section 15(3) of the IRB Act.    Having introduced IRB Scheme the Board gave the plaintiffs the option of being employed under that Scheme or to continue under the existing Scheme A.    There were differences between the two Schemes.    Under Scheme A the plaintiffs were prima facie entitled to receive a pension on their retirement.    That was not the case under the IRB Scheme.    However, the IRB Scheme had other features that made it substantially more advantageous to employees than Scheme A.    For example, under the IRB Scheme the Board has to make a 17½ % contribution to the Employees Provident Fund Board.    This takes into account the period of pensionability that the plaintiffs enjoyed while in the Department.    The plaintiffs also received salary warrants under the IRB Scheme which they would not have received had they opted to remain with the Department.    The plaintiffs consciously elected to choose the IRB Scheme.    But they felt that they had suffered harm as a result because, according to them, they have lost their right to receive a pension.    They brought an action to assert their claim.    The High Court dismissed it.    They appealed to us.    We dismissed their appeal.

4.       I find the plaintiffs’ claim to be without any merit, as did the learned trial judge, Abdul Hamid Said J, a judge with much experience in service matters.    Here you have a case where the Board was acting entirely within its statutory powers.    Second, the claim to an absolute right to a pension is misconceived.    For, section 3(1) of the Pensions Act 1980 expressly says that “No officer shall have an absolute right to compensation for past service or to any pension, gratuity or other benefit under this Act.”    See also Haji Wan Othman v Government of Malaya [1965] 2 MLJ 31    Of course, a civil servant who has not misconducted himself has a legitimate expectation to receive a pension on his retirement.    But such an expectation does not arise on the facts here.    And that brings me the most important point in the case.

5.       There is a third reason why the plaintiffs must fail.    It is apparent from the evidence on record that the plaintiffs had, prior to their exercise of the option to be transferred to the Board, been briefed in full about the terms of service they would be subject to in the event they opted to be transferred to the Board.    One of the paragraphs in the papers made available for the briefing very clearly states that if the Department’s employees opted to accept the Board’s service conditions then their pensionable status would cease but that this would be substituted with contributions to the Employees Provident Fund.    So the plaintiffs knew all about it and they came in with their eyes open wide.    Having made their choice – not once but on two occasions – they must be held to their word.    Otherwise it would be impossible for the Board to conduct its affairs and make financial provision for its employees’ wages and other emoluments.    In short it would not be fair to the Board.

6.       Let me make it absolutely clear that this is not a case where the plaintiffs were contracting out of a statutory protection conferred upon them by Parliament.    Had that been the case, then their opting to the IRB Scheme would not be enforceable against them.    For it is settled law that where a statute is passed for the benefit or protection of a class one or more members of that class cannot waive the benefit or protection or contract out of the provisions of that statute.    See, Kiriri Cotton Co Ltd v Dewani [1960] AC 192; Rasiah Munusamy v Lim Tan & Sons Sdn Bhd [1985] 2 MLJ 291    Nor is this a case where there has been a waiver or contracting out of the Constitution.    For it is equally well settled that you cannot contract out of any of the provisions of the supreme law, especially the fundamental rights it guarantees.    See, Lionel v Government of Malaysia [1971] 2 MLJ 172 , where Ong CJ said:

“Just as it is impossible to contract out of the provisions of rent control legislation, a fortiori must the terms of the appellant’s appointment (including regulation 36 of General Orders, Chapter D) be invalid where it is inconsistent with the Constitution.”

7.       In Olga Tellis v Bombay Municipal Corp AIR 1986 SC 180 , a 5 member Bench of the Indian Supreme Court held as follows:

“There can be no estoppel against the Constitution.     The Constitution is not only the paramount law of the land but, it is the source and sustenance of all laws.    Its provisions are conceived in public interest and are intended to serve a public purpose.    The doctrine of estoppel is based on the principle that consistency in word and action imparts certainty and honesty to human affairs.    This principle can have no application to representations made regarding the assertion or enforcement of fundamental rights.     There can also be no waiver of fundamental rights.     No individual can barter away the freedoms conferred upon him by the Constitution.     A concession made by him in a proceeding, whether under a mistake of law or otherwise, that he does not possess or will not enforce any particular fundamental right, cannot create an estoppel against him in that or any subsequent proceeding.    Such a concession, if enforced, would defeat the purpose of the Constitution.    Were the argument of estoppel valid, an all-powerful State could easily tempt an individual to forgo his precious personal freedoms on promise of transitory, immediate benefits.”

8.       To sum up, the Government of Malaysia, the first defendant in these proceedings was bona fide exercising its managerial powers when it put the plaintiffs to their election.    It informed them fully of the consequences of their choice.    Armed with all relevant information the plaintiffs made their choice.    They must be held to it.    They have suffered no hardship or injury by making their choice.    In point of fact they received benefits that they would have never received under Scheme A.    Also, there has been no violation of either the Pensions Act 1980 or the IRB Act or the Constitution by any of the defendants to the action.   Nor has there been any attempt by the Government or the other defendants to get the plaintiffs to contract out of statutory or constitutional provisions.

9.       As I have already said, the appeal was dismissed.    The deposit in court was ordered to be paid out to the Government of Malaysia in full satisfaction of its costs.

10.     My learned brother Mohd Ghazali bin Mohd Yusoff, J.C.A. has seen this judgment in draft and has expressed his agreement with it.

Dated: July 3, 2006

Gopal Sri Ram

Judge, Court of Appeal

Malaysia

Counsel for the appellant :           N. Mahalingam

Solicitors for the appellant :        Tetuan Maha & Peri

Counsel for the respondents :      Alice Loke, Senior Federal Counsel

Solicitors for the respondents :    Peguam Negara Malaysia