Challenging Rate Imposed by a Local Authority - Messrs Steven Thiru & Sudhar Partnership

The Federal Court of Malaysia in the recent case of Majlis Daerah Segamat v. Tenaga Nasional Berhad decided that the imposition of rates by a local authority under the Local Government Act 1976 (“LGA”) can be challenged by judicial review in circumstances where the objection to the imposition of rates does not fall under Section 142 LGA. This is despite the appeal procedure to the High Court provided under Section 145 LGA.

A local authority, Majlis Daerah Segamat (“MDS”) had imposed rates on Tenaga Nasional Berhad’s (“TNB”) holdings located within MDS’ area of jurisdiction, including seven high tension transmission lines. TNB objected to the imposition of rates on the pylons of the high-tension transmission lines (“the pylons”), on the basis that TNB did not own the land on which the pylons were situated. Instead, TNB only had a wayleave right over the said lands under Section 7 of the Electricity Supply Act 1990.

TNB challenged the imposition of rates by way of an application for judicial review at the High Court, contending that MDS had acted ultra vires the LGA. MDS raised a preliminary objection that TNB could not resort to judicial review, as the LGA had provided a specific appeal procedure under Section 145 LGA. The High Court allowed MDS’ preliminary objection and dismissed TNB’s application for judicial review. The Court of Appeal allowed TNB’s appeal.

MDS was granted leave to appeal to the Federal Court. At the Federal Court, TNB’s submissions were as follows:

1.            The appeal procedure under Section 145 LGA is limited in scope to an objection under Section 142 LGA (or Section 144 LGA, which was not relevant in the circumstances). For Section 145 LGA to be applicable, an objection must fall within the grounds expressly listed in Sections 142 LGA.

2.            Under the LGA, MDS may only impose rates on the owners of holdings. As TNB was not an owner of the lands on which the pylons were located, MDS had acted ultra vires the LGA in imposing such rates on TNB.

3.            The complaint that MDS had acted ultra vires the LGA in imposing rates on TNB who did not own the lands falls outside the scope of Section 142 LGA, therefore it cannot be a subject matter of the appeal procedure under Section 145 LGA. Accordingly, an application for judicial review is the proper course of action.

4.            In any event, even where a statutory appeal may apply, lack of jurisdiction is an exceptional circumstance where judicial review may be invoked. Further, the basis of TNB’s objection was firmly imbedded in public law principles, seeking to invoke the supervisory jurisdiction of the Court.

The Federal Court dismissed MDS’ appeal with costs and made the following findings:

1.            The jurisdiction of the High Court under Section 145 LGA is tied to Section 142 LGA.

2.            TNB’s objection related to the jurisdiction of MDS to levy rates, as TNB is not the owner of the holdings which had been levied.

3.            TNB’s objection was not an issue that falls under Section 142 LGA, therefore it does not fall within the scope of the appeal procedure in Section 145 LGA. Accordingly, it is open to TNB to challenge the imposition of rates by judicial review.

4.            Further, judicial review cannot be ousted, as the Court’s supervisory jurisdiction is within the inherent jurisdiction of the Court.

David Mathew of Messrs Steven Thiru & Sudhar Partnership appeared as Co-Counsel for TNB at the Federal Court, with Priscilla Faith Lim assisting.