The grant of planning permission by a local authority is impeachable in judicial review proceedings. The Federal Court in the decision of Perbadanan Pengurusan Sunrise Garden Kondominium v. Sunway City (Penang) Sdn Bhd & Ors [2023] upheld the setting aside of a local council’s planning permission previously granted to Sunway City (Penang) Sdn Bhd (“Developer”).

Two appeals were brought by Perbadanan Pengurusan Sunrise Garden Kondominium and Sim Khoo Tneah Seng and Goon Swee Keng (“Appellants”). The Federal Court restored the decision of Penang Appeal Board (“PAB”) and upheld its decision to set aside the planning permission given by Majlis Bandaraya Pulau Pinang (“MBPP”) to the Developer to develop a hillside land into a gated housing development. We examine below the grounds of the Federal Court.

History of the Planning Permission and Judicial Proceedings

On 3 May 2011, MBPP approved the Developer’s application for planning permission for a gated housing development. of a gated the development. MBPP thereafter notified the neighbouring landowners, including the Appellants of their right to object to the application.

MBPP heard the objections of the Appellants and other neighbouring landowners on 10 May 2011, but did not hear further from MBPP over the objections which were raised.

It was later discovered that the State Authority approved the Developer’s application for excision of the hill land in December 2011 with conditions, including a special premium payment of RM1 million. The MBPP had granted planning permission to the Developer on 21 February 2012, unbeknownst to the Appellants.

Local Authorities Cannot Rely on Subsequent Events to Retrospectively Justify an Administrative Decision

The revocation of the status of the lands as ‘hill land’ under the Land Conservation Act 1960 was gazetted on 12 June 2012, approximately 4 months after the grant of the planning permission in February 2012.

In March 2012, the Developer’s application for excision of ‘hill land’ was approved, and the Developer paid the premium sum in April 2012 pursuant to the State Authority’s conditions. The excision of ‘hill land’ status from the subject land was however only gazetted in June 2012.

It was observed that the local authority may not rely on an event which occurs subsequent to the local authority’s decision (i.e. the excision of land as ‘hill land’), to retrospectively justify its decision to grant planning permission.

Town and Country Planning Act 1976 (TCPA) – The Right to be Heard and the Duty to Give Reasons

The primary legislation governing planning approvals in Malaysia is the Town and Country Planning Act 1976 (“TCPA”). Section 21(6) and (7) of the TCPA imposes a duty on local authorities to notify neighbouring landowners of their right to object to planning permission applications and to hear those objections if a hearing is requested. However, the TCPA does not expressly require the local authorities to address these objections or give its reasons for its decision.

The MBPP in this case had further deviated from the Penang Structure Plan 2020 (“Structure Plan”), relied on committee drafted definitions beyond the scope of the TCPA, and further deviated from the requirement to obtain advice from the National Physical Planning Council (“NPPC”). One of the functions of the NPPC is to promote environmental protection and sustainable development.

The Federal Court took the views set out below:

• The neighbouring landowners’ right to be heard is not merely limited to the literal expression of objections at a meeting. The right to be heard includes the right to have their objections considered and weighed in the local authority’s process in granting the planning approval.
• Where local authorities had deviated from TCPA and other applicable regulations, the giving of reasons by local authorities is necessary to ensure that sufficient and careful consideration was given to the objections of neighbouring landowners.
• Local authorities may be expected to give their reasons through documentary evidence or oral averments, to demonstrate that objections of neighbouring landowners were given due consideration but were rejected for specific reasons.

Key Takeaways

1. Grant of planning permission to a developer is impeachable. It is crucial for developers to consider that its planning permission application, if granted, is not vulnerable to challenges arising from shortcomings in the process of obtaining the grant of planning permission.
2. Local authorities have a duty to establish that it has considered and weighed in the objections of stakeholders. Depending on the regulations which are applicable to a municipality, local authorities may be required to convey sufficient reasons to stakeholders as to why their objections to a development are dismissed. Local authorities may also be expected to furnish documentary or oral evidence to the effect that the objections were given due consideration, but were rejected for specific reasons.
3. Local authorities cannot justify its decisions retrospectively. A local authority may not justify its earlier decision in hindsight by relying on an event that occurs subsequent to the decision.

Collaborating with experienced professionals who can guide and support the development process is highly recommended for developers. It is crucial that developers partake in the stakeholder engagement process with the local authorities in order to mitigate against potential setbacks.

Do not hesitate to get in touch with us if you have any queries as to how this decision may affect you or your organisation.