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2026 MarsdenLR 198
COURT OF APPEAL PUTRAJAYA
FAIZAH JAMALUDIN, JCA
KERAJAAN NEGERI KEDAH DARUL AMAN & ANOR – Appellant
Versus
LEE BAK CHUI & ORS AND OTHER APPEALS – Respondent
[Civil Appeal Nos: K-01(A)-430-07/2024 K-01(A)-431-07/2024 K-01(A)-432-07/2024 K-01(A)-433-07/2024 K-01(A)-435-07/2024 & K-01(A)-436-07/2024]
State executive action, though purportedly exercised under local government powers, is invalid if its substance and effect constitute a blanket prohibition on a federally regulated activity. Courts may judicially review such policy decisions where they violate constitutional limitations or federal law.
Headnote:(A) Federal Constitution - Arts 4(1), 73, 74, 75, 80, 81(b) - Ninth Schedule, List I, Item 4(l), List II, Item 4(a) - Pool Betting Act 1967 - Section 5 - Local Government Act 1976 - Section 107 - Exercise of State executive power - Constitutional demarcation of legislative fields - Principle of harmonious construction.
(B) Judicial Review - Justiciability of policy decisions - Policy decisions affecting constitutional limits are justiciable - Courts review legality rather than underlying merits of policy.
(C) Public Law - Impairment of federal licensing - Blanket state-wide prohibition on federally licensed activities - Prohibition of activity disguised as premises licensing - Doctrine of pith and substance.
(D) Damages - Assessment of damages in public law - Entitlement to damages where loss is attributable to unlawful public act.
Facts of the case:
Public authorities within a particular state decided to stop renewing business premises licences for pool betting operations that were federally licensed under a national statute. The authorities issued notifications threatening enforcement action if operations continued, citing a state-level policy decision. The affected businesses challenged these decisions in court, arguing that the state's move effectively prohibited an activity reserved under the federal constitutional list.
Findings of Court:
The court determined that while the administration of local premises licensing falls within state jurisdiction, such power cannot be used to nullify or suppress activities explicitly covered under federal legislation. A blanket state-wide ban on a federally-licensed activity constitutes an unauthorized entry into a field reserved for the federal government.
Issues: The main issues were whether the state-level decision to ban licensed pool betting activities was justiciable, whether the exercise of local premises licensing power was unconstitutional, and whether the claim for damages was properly allowed.
Ratio Decidendi: In determining constitutional demarcation, the court looks beyond the form of the action to its substance and effect. Since the decision functioned as a prohibition of a federally-regulated activity rather than a genuine exercise of local premises regulation, it exceeded state constitutional competence and was irrational.
Result: Appeals dismissed; High Court decision affirmed.
JUDGMENT
Introduction
[1] These six appeals arise from the High Court 's decision at Alor Setar, delivered on 20 June 2024, allowing the respondents' applications for judicial review. The respondents challenged the Kedah State Government's decision, and its consequential implementation by the relevant local authorities, not to renew or issue business premises licences for pool betting businesses in Kedah with effect from 1 January 2023.
[2] The 1st appellant is the Government of the State of Kedah. The 2nd appellant is the Menteri Besar of Kedah, who presides over the Majlis Mesyuarat Kerajaan Negeri Kedah ("EXCO"). The respondents are pool betting operators, agents, premises operators, and persons directly affected by the cessation of renewals of business premises licences for federally licensed pool betting operations in Kedah.
[3] STM Lottery Sdn Bhd and ENE (Penang) Sdn Bhd held pool betting licences issued by the Minister of Finance under s 5 of the Pool Betting Act 1967 ("PBA 1967"). The individual agents and premises operators conducted business within that federal licensing framework and pursuant to the necessary premises licences issued by the relevant local authorities.
[4] These appeals do not concern unlicensed gambling. Nor do they require this Court to pronounce upon the social or moral desirability of gambling. The question is one of constitutional and public law: whether a State executive decision, implemented through local authority premises licensing, may in substance be used to impose a State-wide prohibition on federally licensed pool betting operations.
[5] For the reasons that follow, I would answer that question in the negative. These appeals should be dismissed, and the orders of the High Court affirmed.
The Material Facts
[6] The PBA 1967 is a federal statute. Section 5 empowers the Minister of Finance to grant licences for pool betting, subject to such conditions and restrictions as the Minister may impose during the currency of the licence. The power to license pool betting is therefore vested in the Federal Executive acting under federal law.
[7] Those licences are not unconditional. Section 5(3)(d) provides that licences issued under s 5(1) are subject to such conditions or restrictions as the Minister may impose during the currency of the licence. The licences in evidence contained conditions, including the requirement that the words "JUDI ADALAH HARAM DI SISI AGAMA ISLAM" be printed on tickets sold to the public. The federal regime therefore proceeds on the footing that pool betting, though lawful, is controlled.
[8] In November 2021, after tabling the Kedah State Budget, the Menteri Besar announced that the Kedah State Government would no longer renew business premises licences for gaming outlets in Kedah. EXCO subsequently made a decision to that effect.
[9] In 2022, the respondents received letters from the relevant local authorities headed "Memberhentikan Pengeluaran Lesen Premis Perjudian Seluruh Negeri Kedah Mulai 1 Januari 2023". The letters referred to the EXCO decision and, in substance, conveyed two matters: first, that the Minister of Finance would no longer consider renewal of gambling licences in Kedah for 2023 because such licences were within the Minister's jurisdiction; and second, that if licence holders continued to operate after 31 December 2022, the relevant local authorities together with the Royal Malaysia Police would take firm enforcement action.
[10] It is common ground that the Minister of Finance did in fact renew the relevant PBA 1967 licences for 2023. The premise on which the local authority letters proceededthat the Minister of Finance would no longer renew the federal licenceswas therefore wrong.
[11] The respondents' applications to renew their local business premises licences were not approved. Some respondents had operated from their respective premises for many years, in some instances since 1988. The practical effect of the impugned dec
