Economic Undertakings

All it takes is an opportunity to perform


TWENTY years ago, in 2001, the Tawau City Council (“the City Council”) terminated the operation of the Fuji Market (“the Market”) in Tawau.

The market was then held on two sites (“the sites”) made up of 104 hawker stalls and had been operating since 1992.

The previous owner of the land had obtained City Council approval to build the market and when the land was transferred to the new owner, ATS Land Sdn Bhd (“ATS”), the latter was granted a business license to continue the operation. operation of the market with retroactive effect from 1 November 1998.

A Law Pang Ching and 67 others were traders (“the traders”) at the market, but they had no contractual relationship with the city council.

They simply paid the license fees to ATS, which then paid the fees to the city council.

Traders claimed that during a lunch hosted by ATS, the chairman of the city council verbally stated that traders can continue to do business in the market.

Later, however, by letter to ATS, the city council ended the operation of the market.

ATS wrote to the city council asking for their reasons for abruptly closing the market and reconsidering their decision, but the city council, based on its approval letter and bylaws, wanted to proceed with the market closure.

The traders appealed in writing to the City Council to reconsider its decision but the latter asked them to move.

When all attempts failed, ATS informed traders that it had decided not to take legal action against the city council’s decision to end the operation of the market.

The traders, who never had a chance to be heard in person, continued their application for judicial review, in which they sought certiorari and a declaratory judgment, but the High Court dismissed their request.

The traders appealed to the Court of Appeal. A number of grounds for appeal have been raised.

The main issue, however, was whether traders had a legitimate expectation that permission to continue trading in the market would not be withdrawn without first giving them the opportunity to make representations.

The majority (2: 1) Court of Appeal dismissed the traders’ appeal with costs.

The majority (Raus Sharif and Abu Samah JJCA) ruled that the business of the market was between ATS and the city council and that the letters of approval and subsequently the end of the operation of the market were only addressed to ATS.

Therefore, any complaint that the city council did not respect the principle of natural justice in making its decision to end the operation of the market should come from ATS.

However, it appears that ATS has accepted City Council’s decision to end the operation of the market.

ATS, in fact, took a position that it would not exercise legal recourse but that it would comply with the decision of the municipal council.

According to Raus Sharif JCA, the facts of the case showed that traders did not have standing to complain that the city council had been deprived of the right to be heard and the right to due process when they were foreigners to the arrangement between the ATS and the city council.

Gopal Sri Ram JCA was a dissident. According to the learned judge of appeal, the traders were people who had been wronged by the decision of the municipal council and therefore had standing to seek compensation by judicial review.

The merchants had a legitimate expectation that they would continue to stay at the Fuji Market. This gave traders a substantive right of action. This in turn was sufficient to confer locus standi on traders to file an application for judicial review.

In addition, there was no overriding public interest that called for a negation of the legitimate expectation created among traders by the representation made to them by the municipal council.

The legitimate expectation is explained by Professor Christopher Forsyth as follows:

“Good government depends to a large extent on whether officials are believed by the governed. Nothing could be more corrosive to the fragile public confidence in government if it were clear that public authorities could freely reverse their past commitments or long-established practices.

“The law expects high standards from public bodies in such circumstances. Public authorities in general are required to act with high principles, being sometimes subject to a stricter duty of fairness than that which would apply between private citizens. Thus, except in cases of overriding public interest, it is argued that it will generally be unreasonable to leave substantial legitimate expectations unprotected. “(See Christopher Forsyth,” Wednesbury Protection of Substantive Legitimate Expectation ” [1997] Public law 375)

Gopal Sri Ram JCA ruled that the city council’s decision to close the market was null and void and of no effect.

Despite the majority ruling against traders, it did not speak out against the doctrine of legitimate expectation. In fact, he acknowledged that the doctrine was invoked by the Supreme Court (as it then stood) in 1987 in JP Berthelson v Director General of Immigration, Malaysia & Ors.

In that case, the Supreme Court ruled that an American working in Kuala Lumpur as a correspondent for the Asian Wall Street Journal had a legitimate expectation that his employment card would not be canceled before giving him the right to make representations.

Abdool Cader SCJ said that “whatever had to be given was an opportunity to make a performance”.

In the majority judgment, the legitimate expectation would have applied if the land where the market was held had belonged to the merchants. But it was not. The land did not belong to the merchants. The market was held on private land. The registered owner was ATS.

Abu Samah JCA referred with approval to the judgment of Lord Diplock in the English case Council of Civil Service Unions & Ors v Minister for Civil Service [1985] AC 374 that for there to be a legitimate expectation, the decision must affect the other person by depriving him of a benefit or advantage which is:

(i) it had been permitted in the past by the decision-maker to enjoy and which he can legitimately expect to be permitted to continue to do until he has been given rational reasons for withdrawal upon which he received an opportunity to comment; Where

(ii) he has received assurances from the decision-maker that he will not withdraw without first giving him the opportunity to put forward reasons for arguing that they should not be withdrawn.

The learned appellate judge was also aware that “the non-renewal of an existing license is usually a more serious matter than the refusal to grant a license in the first place. Unless a license holder has already understood at the time of licensing that a renewal is not expected, non-renewal can seriously upset their plans, cause them economic loss and possibly damaging his reputation.

It may therefore be fair to imply an obligation to hear before a decision not to renew where there is a legitimate expectation of renewal, even if no such obligation is implicit in the making of the initial decision to grant or to refuse the license. (See SA de Smith, Judicial Review of Administrative Action, 1973)

But the fact that the landowner, ATS, was not a party to the judicial review application was an “insurmountable problem”. ATS was not in court. The merchants could not claim to have a better interest or right than the landowner.

There is a legitimate expectation when a person responsible for making a decision has induced in someone who may be affected by the decision a reasonable expectation that they will receive or retain a benefit or that they will be heard before the decision is made. socket.

The key is this: a legitimate expectation arises if the injured parties are in direct contact with – without any intermediary – the decision-makers.

Then all that remains is to give the opportunity to make representations.

• Hafiz Hassan reads The Malaysian Insight.

* This is the opinion of the author or post and does not necessarily represent the views of The Malaysian Insight.