Five key takeaways from the landmark Federal Court judgment on Sungai Ara

By Lim Kah Cheng

On 20 January, after a long legal battle, the Federal Court set aside the planning permission granted by the Penang Island City Council to Sunway City (Pg) Sdn Bhd to develop environmentally sensitive hill land in Sungai Ara.

Here are five key takeaways from the Federal Court decision:

1. A first-grade land title with no restrictions in land use does not give the owner a blank cheque to do as he or she pleases. The land is subject to development laws, especially the Town and Country Planning Act 1976, amended in 2001 (TCPA)
2. The pelan dasar (land use policy plan) in Penang cannot be used as a substitute for a local plan. It was drawn up under repealed legislation, and there was no public participation in its drafting and approval, unlike a local plan. This is against the TCPA, which emphasises public participation
3. The “special projects guidelines” are invalid. They are an attempt to bypass the TCPA, which provides that any changes to the structure plan have to go through an amendment process that requires public participation and consultation with the National Physical Planning Council (NPPC)
4. The state planning committee (the state government) cannot ask the local council to just use the pelan dasar and the special projects guidelines to give planning approval to Sunway City. The SPC is required to seek the advice of the NPPC and treat any changes to the Penang Structure Plan as a variation of the structure plan, which requires public participation in the process
5. What the Penang Island City Council did was beyond its powers

My suggestions

The city council should be held accountable for the wrong decisions it made in the Sungai Ara case and for the costs incurred in fighting against the residents of Sungai Ara.

The city council, being a local authority funded by taxpayers’ money, is answerable to the taxpayers for the following:

• Why did it side with the developer against the fears of the residents and the general prohibition of the Penang Structure Plan?
• Why did it not abide by the decision of the Penang Appeals Board to set aside the planning approval given to Sunway City and instead joined with the developer to take legal action all the way to the Federal Court to allow for this massive project?
• How much did the city council spend on legal fees to engage outside lawyers to fight for the developer against the Sungai Ara residents?
• How will the city council pay for the RM150,000 costs ordered by the Federal Court to be paid to the Sungai Ara residents for the costs they incurred in trying to protect their rights?
• Why did the city council not have a local plan despite the Penang Structure Plan 2020 being gazetted in 2007, as chided by the Federal Court? Section 12 of the TCPA provides: “The local planning authority, while a draft structure plan is being prepared, or before the State Authority gives assent to a draft structure plan that has been prepared, may, if it thinks desirable, prepare a draft local plan for any part of its area. (2) Where a structure plan for the State has come into effect, the local planning authority shall as soon as practicable prepare a draft local plan for the whole of its area.”

The rulings in the judgment above should be widely publicised to everyone, including the civil servants, to ensure that environmental protection and the right to be heard is respected and carried out when making decisions.

Civil society should work harder to get the relevant laws amended to allow for elections of the mayor and local councillors and to restrict the length of their terms to prevent corruption.

The one-stop centre should be abolished as it allows for corruption. All applications for planning approvals of a certain size (to be decided) should be subject to debate and the decision of the full council. Such meetings should be opened to public participation.

Planning process

The quality of our life depends on the actions of the government. For example, traffic jams, floods or landslides are human-made problems. The government’s function is to solve and prevent such problems, not cause them.

The powers that be need to make sure that decisions benefit the people and are not just for the profits of developers and big corporations. There are laws for the government to comply with.

Government decisions that affect us most directly are those of the local council (local authority). For example, decisions on what we can build and where, density and building height controls, the cleaning of streets, and land use planning are under the jurisdiction of the local council.

Yet the mayor and councillors of the local council are not elected. The political parties controlling the state select them.

However, the local council is required to follow federal laws such as the Local Council Act 1976, the Street, Drainage and Building Act 1974, the Uniform Building By-Laws 1984 and the TCPA.

Parliament passes these federal laws to ensure uniformity of development requirements across the states.

In Penang, any developer who wants to develop a property has to submit applications to one of the two local councils depending on the location of the property in question. The one-stop centre of the relevant local council approves or rejects the applications.

Each one-stop centre comprises the mayor, four selected councillors (out of 24) and heads of technical departments. The process is not open to the public.

As there is still no approved local plan for Penang Island, any application for permission has to be sent to the adjoining landowners for their objections, if any. Those who object will be heard by the one-stop centre, after which the one-stop centre decides and its decision needs to be endorsed by the full council.

Case background and judgment

This following section simplifies the background to the case and the key points from the Federal Court’s decision. Parts of the section below have been reproduced or paraphrased from the original summary judgment to make it more accessible to the lay person.

In the Sunway City case, the Penang Island City Council gave planning permission in 2012 for a massive development comprising 600 homes involving 13 condominium blocks and three-storey houses covering 32.7ha (80.9 acres), 43% of which is on “hill land”, ie land with an elevation of more than 76m (250ft) above sea level and/or with a gradient exceeding 25 degrees.

Hill land development is generally prohibited by the Penang Structure Plan (gazetted in 2007) unless the development falls within an exception that makes it a “special project”.

In 2009 the SPC adopted a set of special project guidelines, which in effect varied or expanded the Penang Structure Plan’s exceptions to the prohibition against hill land development.

The special projects included government infrastructure projects for public use (Category 1), those which involve soil works such as quarries, rock extraction and agricultural activities (Category 3), and housing if the hill land in question was zoned for housing (Category 2) under the pelan dasar approved by the SPC as an interim zoning plan intended to substitute the 1973 interim zoning plan, which was repealed (pending the local plan).

There is a dispute over whether this Category 2 refers only to projects with approved planning permission before the gazetting of the Penang Structure Plan or includes those on hill land zoned for housing under the pelan dasar but with no planning approvals given yet.

The city council relied on the pelan dasar and the special projects guidelines to approve Sunway City’s application. It interpreted that it was sufficient for the proposed development to meet the condition that it was located within the areas zoned for housing development under the pelan dasar.

The residents appealed to the Penang Appeal Board, which decided in their favour.

Sunway City went to the High Court to review and set aside the Penang Appeal Board’s decision. It won.

The residents’ appeal to the Court of Appeal was rejected.

The residents then appealed to the Federal Court, which decided in their favour on January 2023, after a 10-year struggle to protect their homes and the environment.

The Federal Court decided that the planning approval granted by the city council to Sunway City to build on hill land was not valid as the approval was beyond its powers and contravened the provisions of the Penang Structure Plan and the amended TCPA.

The Federal Court held that:

• Any planning permission given must comply with the laws set out in the Penang Structure Plan, the TCPA and the Land Conservation Act 1960 (LCA). The provisions in the Penang Structure Plan have a clear prohibition against the use of hill land for any development. This is in line with the overarching objective of the structure plan. “Exceptions to that prohibition must be interpreted purposively and restrictively so as not to depart from the Structure Plan and its aim of conserving hill land, preventing its further degradation, and maintaining ecological balance.”

• The special projects guidelines issued by the SPC contravene the express provisions of the TCPA. Any attempt to deviate, revise, expand, alter or amend the substance of the structure plan through directions or guidelines would be outside the power conferred on the SPC. That power cannot be exercised to bypass the provision that expressly provides for the SPC to ‘trigger’ the alteration procedure. The SPC should have directed the state director to submit proposals for alterations to the structure plan. Such special project guidelines cannot themselves contain matters varying the existing structure plan relating to the control of development on hill land or slopes. The guidelines were done outside the powers of the State Planning Committee as it was without the approval of the National Physical Planning Council (NPPC) and public participation. The guidelines contravene the TCPA and are thus unlawful.

• The purported effect of the special projects guidelines was to provide for substantive deviations from the Penang Structure Plan, not to mention the NPPC’s blueprint. The public have a right to know and object to the special project guidelines under the TCPA

• When the local authority decided that the planning application by Sunway City fell under ‘special projects’, it should have referred the application to the SPC for the committee’s approval. Then the SPC is under a duty pursuant to the TCPA to request from the NPPC its advice on the application. It is beyond the powers of the city council to approve the application by just following the special project guidelines, which are void.

• The city council’s use of the pelan dasar was flawed because the express provision of Section 12 of the TCPA envisaged that work on the local plan ought to have begun before or soon after the Penang Structure Plan came into effect in 2007. The pelan dasar cannot be a substitute for the local plan. This is because unlike preparing a local plan, there is no element of public participation in the drafting of the pelan dasar. The 1996 directive of the SPC to the local authority to use the pelan dasar essentially ousted the role of the public in being heard and influenced how development takes place in their area. It obstructed a lynchpin of the TCPA, ie the role of public participation in controlling development.

• It is clear from the series of events described by the local authority itself that there was a deliberate decision made not to follow the requisite statutory procedure for altering a structure plan, pursuant to sections of the TCPA. In particular, instead of using the SPC’s power to trigger the alteration procedure under Section 11(2) of the TCPA, the SPC elected to issue guidelines purportedly pursuant to Section 4(5) to define the term ‘special projects’ used in the structure plan. This was because it would take too long to comply and the guidelines were required expeditiously to allow for the many planning applications which were piling up to be processed. But issuing or relying on secret, unpublished guidelines to make decisions on granting or rejecting planning permission would be antithetical to the TCPA and its objective, which had given importance to including public participation in the land planning process through the structure plan and the local plan.

• Development affecting hill tops and hill slopes is no longer just an issue of local state governance. It is a federal and national issue. The coordination of the three levels (local, state and federal) ensures development takes place in a well-balanced manner with shared responsibilities. The governance of property development requires constant vigilance and a holistic approach in decision-making by the relevant authorities

• Public interest precedes private interest in the use and development of land. The 2001 amendments to the TCPA enables the federal government to play its role pertaining to town and country issues in the spirit of shared responsibility as provided in the Federal Constitution.

• Any development on hilly land and steep slopes is intrinsically related to sustainable development in the context of environment law.

• The SPC and the city council cannot use the guidelines to circumvent the prohibition of building on hill land even if the hill land owners have first- grade freehold titles with no restriction of land use. Possession of a land title does not give the owner a blank cheque to do whatever he or she pleases with the land. This would have “the potential of allowing for unsustainable development outside the purview of the TCPA and the LCA [Land Conservation Act] and defeat the object and purpose of the Acts and negate the intent of Parliament in enacting those statutes”. The SPC had deliberately excluded itself from the planning approval process through its direction to the local authority that no further reference to the SPC was required once the local authority decided that an application falls under ‘special projects’. This led to an approval process that excluded the SPC and, in effect, excluded the role of the NPPC. The amendments to the TCPA had introduced new provisions aimed at ensuring the integration of federal and state government policies, and “ensuring uniformity of law and policy” in the peninsula. Section 10(4) provides that the SPC has a duty to consult with the NPPC for its direction and advice.

• The 2001 amendments that were introduced throughout the TCPA, demonstrate the legislative intent to make the statute play a more prominent and effective role in environmental protection.

• Where there is an inconsistency between the category of land use under the National Land Code and planning control under the TCPA, the TCPA prevails for the purpose of development. The express condition on the land title must be read in conjunction with the relevant regulatory laws in place. In relation to development, the right provided under the title is not absolute. The absence of an endorsement on the land title stating that the subject land was reserved as ‘hill land’ under the LCA, does not equate to a legitimate expectation that there would be no restrictions to the proposed development of the subject land. The land use stipulated in the title document does not supersede the application of the TCPA or the LCA.

Lim Kah Cheng is a retired lawyer who wants to see the rivers of Penang clean again

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

AGENDA RAKYAT - Lima perkara utama

1. Tegakkan maruah serta kualiti kehidupan rakyat
2. Galakkan pembangunan saksama, lestari serta tangani krisis alam sekitar
3. Raikan kerencaman dan keterangkuman
4. Selamatkan demokrasi dan angkatkan keluhuran undang-undang
5. Lawan rasuah dan kronisme

Support our work by making a donation. Tap to download the QR code below and scan this QR code from Gallery by using TnG e-wallet or most banking apps: