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2010 MarsdenLR 1927
HIGH COURT MALAYA KUALA LUMPUR
ARUNAMARI PLANTATIONS SDN BHD & ORS – Appellant
Versus
LEMBAGA MINYAK SAWIT MALAYSIA & ORS – Respondent
[Suit No: S7-21-288-2008]
The court ruled the Cess Order 2007 as ultra vires due to its unconstitutional imposition of cess not authorized by the Malaysian Palm Oil Board Act, affirming strict adherence to legislative delegation principles.
Headnote:(A) Malaysian Palm Oil Board Act 1998 - Section 35 - Federal Constitution - Articles 8, 96, 67, 97(1), 104(3) - Cess Order 2007 is attacked on grounds of unconstitutionality and ultra vires -Plaintiff contends that the Cess Order discriminates; lacks legislative authority and purpose; and infringes upon constitutional provisions. (Paras 4, 5, 6, 13, 14, 15)
(B) Executive Powers - The principle of purposive interpretation applied to statutes, including taxing statutes, where authorization for the minister to impose cess was upheld - Court cannot interfere in policy or wisdom of legislative decisions unless legislative power is exceeded. (Paras 8, 12, 61)
Facts of the case:
The plaintiff challenged the legality of the Cess Order 2007 under the Malaysian Palm Oil Board Act on constitutional grounds claiming violations of multiple Federal Constitution articles. (Paras 2, 4)
Findings of Court:
The court found that the Cess Order's purpose of subsidizing cooking oil prices was ultra vires the Malaysian Palm Oil Board Act, rendering the order void. (Paras 13, 14)
Issues: Whether the Cess Order 2007 is unconstitutional; whether it exceeds the powers delegated by the Act; and whether it has discriminatory implications. (Paras 4, 5, 14)
Ratio Decidendi: The court determined that Cess Order 2007, enacted without proper legislative authorization for its declared purpose, was invalid. Jurisprudential principles of statutory interpretation, particularly limiting legislative power delegation, were reaffirmed. (Paras 8, 12, 14)
Result: Cess Order 2007 is declared void, and prayers for relief accepted without an order for costs.
| Table of Content |
|---|
| 1. plaintiff's challenge to the cess order 2007. (Para 2 , 3) |
| 2. issues surrounding the constitutionality of the cess order. (Para 4) |
| 3. defendants' arguments against the challenge. (Para 5) |
| 4. court's interpretation of statutory provisions. (Para 6 , 8 , 14) |
| 5. discussion on the legality of exemptions under the cess order. (Para 9 , 12) |
| 6. possibility of a refund if cess collection deemed unconstitutional. (Para 15 , 16) |
[1] Enclosure 1 was heard on 4 February 2010 and continued on 1 March 2010, and after hearing extensive and interesting arguments on the points of law canvassed by respective counsel, I reserved my decision to 31 March 2010 wherein I granted an order in terms of prayers (h) only of encl 1, and I append below my reasons for so doing.
[2] From a gleaning of the various prayers of encl 1, it can be observed, that the plaintiff has mounted an attack on the Malaysian Palm Oil Board Act 1998 and the regulations made there under (the said Act) on the grounds it violates several provisions of the Federal Constitution and is therefore unconstitutional and/or ultra vires and are praying for certain provisions of the said Act and orders made there under to be struck down. To better understand the application of the plaintiff, there is a need to go through briefly the background facts leading up to this application.
[3] The background facts which are basically found in para 4 to 16 of encl 2 are as follows:
The Malaysian Palm Oil Board (Cess) (Oil Palm Fruit) Order 2007 (hereafter "the Cess Order 2007") - was made by the 2nd Defendant (hereafter "the Minister") under the authority of s 35 of the Malaysian Palm Oil Board Act 1998 (the said "Act") - and came into operation on 1 June 2007. This order 2007 has been revoked from 1 August 2008.
1. The Cess Order 2007 provided for the levy and collection of cess by, the 1st Defendant, the Malaysian Palm Oil Board (hereafter "the Board"), from oil palm fruit producers on oil palm fruits - para 4 of the Cess Order 2007. By virtue of the Cess Order 2007 (para 2) oil palm fruit producers who owned (a) oil palm holding which is not less than 40.46 hectares or (b) oil palm holdings which in aggregate amount to not less than 40.46 hectares, were required to pay the Board a Cess for every metric ton of oil palm fruit produced at the rates specified in the schedule to the Cess Order 2007 (para 3), when the monthly average price of crude palm oil exceeds RM1,500 per metric ton.
2. The following oil palm fruit producers were however expressly exempt from paying cess under the Cess Order 2007 ie, any government land scheme with settlers or individuals participant, planted with oil palm or (b) any oil palm small holding owned by individuals but managed and controlled by government agencies. Hence, the Cess Order 2007 granted an exemption from payment and cess to government or government related schemes such as FELDA, FELCRA, RISDA, KESEDAR, LKPPP, SALCRA, LKTNS, Koperasi Sungai Manilan and Beliawanis.
3. Further, the Cess Order 2007 did not apply to oil palm fruit producers who owned oil palm holding(s) which was/were less than 40.46 hectares. Neither did the Cess Order 2007 apply to millers, refiners, packers, end-producers, end product retailers, suppliers and/or wholesalers. The Cess Order 2007 did not also apply to end users.
4. The reason for the making of the Cess Order 2007 and the imposition of a cess is set out in para 16 of encl 2.
[4] Issues raised by the plaintiffs.
(i) whether the Cess Order 2007 is ultra viresart 96 and art 67 of the Federal Constitution;
(ii) whether the Cess Order 2007 is ultra vires the Federal Constitution as it does not provide for payment of the cess as a federal tax into the consolidated Fund under art 97(1) of the Federal Constitution;
(iii) whether the Cess Order 2007 is ultra vires the Federal constitution as its declared purpose of providing a subsidy for keeping down the price of cooking oil is not authorized by federal l
