Quashing the ‘compensation’ bogey

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There has been a lot of scaremongering about the state government or local authorities having to pay compensation if its decisions are overturned in certain circumstances. Gurdial’s excellent piece below should go a long way in dispelling such talk.

This is from theSun:

Law Speak – Local authorities cannot be sued for invalid planning approvals
Posted on 9 March 2016 – 07:34pm
Last updated on 9 March 2016 – 08:17pm
Gurdial Singh Nijar

I wrote in my last column of the decision by the Penang Appeal Board to set aside the planning permission given to a developer to build some 603 housing units on sensitive hill land – land that is 250 feet above sea level and/or with a gradient of 25°.

The fear persists among local authorities and state governments that they may, nonetheless, be sued for millions by a developer for costs incurred and damage allegedly suffered for the grant of the planning permission in the first place.

It is my respectful view that this fear is unfounded in law.

First, the Appeal Board – acting under powers given to it under the Town and Country Planning Act 1976 – sets aside any planning permission on the basis that the permission was flawed; it violates the applicable legal architecture. In short, the law prohibits any grant.

This implies that the developer did not have any right to the grant of the permission in the first place. It is an elementary principle of law that a court cannot countenance an illegality – which it will be doing if it awards damages in respect of a right that the law, as declared, does not recognise. This applies even if the planning authority misinterpreted the law wrongly.

This was made clear in a recent 2015 case decision of the High Court in England. In summarily dismissing the suit brought by a corporation for damages for loss suffered as a result of the planning authority’s negligence in granting the planning permission in the first place (later refused), the Judge said: “It would be an extreme and unwarranted extension of a local authority’s liability at common law to require it to pay damages to compensate for loss suffered by a member of the public, whether corporate or individual, because of a mistake made by it in granting planning permission to that person, in circumstances where the planning permission, in fact, subsequently had to be set aside or quashed.”

Secondly, what if the developer argues that its loss was because of the representation made by the local authority that such permission would be, and was in fact, granted? This is referred to in law as an estoppel – if a person makes a representation that is acted upon, it is binding on the parties. Else it would be unfair and inequitable.

But the law confines this principle to private law. It does not apply to public authorities exercising public functions. The highest court in England – the House of Lords – made this abundantly clear in a 2002 case (Ex parte Reprotech): “These concepts of private law should not be extended into the public law of planning control, which binds everyone.” Because remedies against public authorities must also take into account the interests of the general public, which the authority exists to promote.

“The general principle”, said the House of Lords, (is) “… that a public authority cannot be estopped from exercising a statutory discretion or performing a public duty.”

This case was approved by the Malaysian Court of Appeal in Majlis Daerah Dungun v TNB (2006); which in turn was cited with approval by the Penang Appeals Board in Goh Kheng Huat v Majlis Perbandaran Seberang Perai (2010).

Thirdly, in any event the Town and Country Planning Act explicitly protects public authorities, including local authorities and its officers, for any act they perform to carry out their functions. This means they cannot be sued for damages “in respect of any act, neglect, or default done or committed” (section 54).

Finally, it is noted that while the Act provides for some situations where damages may be claimed, it says nothing of that kind when it deals with the power of the Appeal Board to set aside a decision of the planning authority. This further reinforces the legal position that there is no basis under the statute to sue the local authority.

On these several grounds it is safe to conclude that no claim for damages can succeed against a local authority for its initial grant of planning permission that is set aside as being invalid in law.

Gurdial is professor at the Law Faculty, University of Malaya. 

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Don Anamalai

Although the Penang government may not be liable for compensating developers whose planning permission is cancelled by the State Appeals Board (SAB), the threat of bankruptcy is real, said Chief Minister Lim Guan Eng.

He said this was the reason his administration had “unwillingly acceded” to all previous rulings made by the previous Barisan Nasional (BN) government to avoid huge compensation payouts.

He cited two cases of compensation where RM29.4million was paid to landowner Tang Hak Ju and where RM20million was paid to Boustead Holdings Bhd as examples.



more than 3. many in this world. dicarprio the oscar man said to believe in climate change flew from NY to LA in privatd jet 7 times in 7 weeks. he could have use commercial jet.
also in this website comment guidelines there many listed points. they are lies as they are not adhere. so all are liers


you can be lenient why not others like authories?

Tabik Kopi O

RM3Ok compensation for Pulau Tikus Kampung Siam community to make way for 5 Star Hotel there. Nasi Pattaya may be history should the residents evicted http://www.freemalaysiatoday.com/category/nation/2016/03/11/residents-evicted-from-nearly-200-year-old-village/


2 visible towers now projecting upwards in low rise housing estate around Cantoment/Moulmein Pulau Tikus area. More compensation expected as older estate in the vicinity the backdrop of Gurney/Kelawei likely to be acquicred en-bloc way for more high rise commercial cum residential suites. Sometimes the accolades for Penang Island as retirement destinations (latest from Conde Naste Magazine) may not be good news for the struggling locals as the new richer immigrants (eg Msia as 2nd home scheme) may inevitably cause prices of goods to rise. Higher cost of living can be choking (besides the carbon monoxide emissions from uncontrollable motor… Read more »


Henson, no way Raj will move out. Look at what they love to contribute? No suggestions or discussion but taking potshots with political agenda. Nothing betterment for Penang.


Mbpp must be doing a worse job than KL cityhall as reported in Malaysian insider. With billion ringgit budget, armno kl mayor only paved part of the road in jln kepong one of the busiest part going up north to Penang. See road tax is paid but only part is done and what happen to the rest. Sure KL cityhall is not lackadaisical than mbpp. No body kau beh kau pu.


Nasi Goreng Pattaya (Stuffed Omelette Fried Rice)
About this recipe: Despite its Thai sounding name, Nasi Pattaya originated from Malaysia. It’s a simple fried rice in omelette parcel; available at Malay hawker stalls and usually served with sliced cucumber, tomato and drizzled with ketchup or chilli sauce.
For Penang’s hot & heavenly Nasi Pattaya, go to TNB Kantin (basement floor)@Anson Road.
Don’t forget to order a hot cuppa of Kopi-O kau kau.


Felt very hungry at the mention of Nasi Pattaya.
Also brings up hot issues from MBPP’s lackadaisical.


So another lies by the CAT CM has been laid bare.

BTW, what the hell happened to the state govt’s promise to make public the agreements on lad reclamation and sales? It has been months since LGE’s promise. So much for FIA.


I think LGE can also have OSA to keep it as secret. Learn the trick from Najib.


You ask on 19 feb and james k reply it is available in komtar. apa mau lagi? out of 3 who is not right??


So we have 2 … liars.
One at Federal Level call Ah Jib.
Another one use this terms frequently in Penang…

rajraman. Political Trader will sell anything,you buy their saliva and they will keep repeating the lies until most blokes allies to them won’t question them.


You can join the PAS-led 3rd Force, and embrace hudud along the way.


Something seriously wrong with your brain.
Pas (uses) their God name to be in power.
They are worst then Political Traders.

rajraman. Give me a better opinion next time…


In the event PAS led whatever force they use to win and become the ruling party,I hope you will stay put in Malaysia and be part their Hudud force or just watch this country goes to indah water drain. As Henson ask, am i given up hope on Barisan and Pakatan will i migrate? The answer now i will pack and leave this country if PAS comes to power since idiots who voted them will have the same brain as them. rajraman.If Politician like the Deity used the “Mantra Compensation” every time to manipulate for his Political mileage can’t be… Read more »

Hocky ManChee

You need to help Bala’s widow who is now disillusioned over RM20K.


For Private School?
That deal done with PKR not me.

rajraman. Anyway i totally stop donating to Political Traders and anyone link to Political Traders.I choose who deserve to get my $$$ even up to a penny now.


the same mongering apply by greenies about botak hills. as long it is tree cutting and no major earthworks and pernament structures built, it is within the law. one can do any clearing, paving or road extension on his garden or backyard. so why blame gomen when owner botak the hill and make an access within his property. if anyone is within his property wo permission the person is trespassing and maybe. question by polis for possible stealing.


greenie means clearing durain trees digging holes in your property is illegal.


We voted for something, that something played the fool with the laws. B’cos majority of people are not law graduates, the play-the-fool can easily scare us into docile acceptance of a false eventuality of compensation, which by the very law is non-existent. So, who can now believe in that Niao Kong? That Chow Chow barking falsehood & non-admittance with a thick face, black heart. The general public should be more civic-conscious, environmentally alert & politically savvy about these play-the-fool in our very midst. Many things are at stake if we continue to allow to be played-the-fool, more so when our… Read more »