MULTINATIONAL PROPERTY DEVELOPMENT LTDV.
URBAN DEVELOPMENT AUTHORITY.COURT OF APPEAL.
C.A. 891/94MAY 07,1996.
Urban Development Authority Law 41 of 1978 – Decision to allocate landon 99 year Lease- Payments made-Final draft ready-Change of Policy -Cheques returned – Decision revoked – Legitimate expectation – Rule ofAudi Alteram Partem.
'Chalmers Granaries' was vested with the Urban Development Authority(UDA). The U.D.A. approved a project by the Petitioner company to con-struct a complex car park on the said land and decided to allocate the saidland on a 99 year lease. The sums agreed were paid and the final draftwas ready.
After the change of Government the UDA decided not to allocate the saidland to the Petitioner Company.
The Petitioner complains that the Respondent had arrived at the said de-cision (a) without affording it an opportunity of being heard (b) decisionwas arbitrary and mala fide.
A substantive change to policy resulting from a change in the ExecutivePresidency cannot be avoided, but where a New Policy is to be applied, theindividuals who have legitimate expectations based on promises madeby public bodies that they will be granted certain benefits, have a right to beheard before those benefits are taken away from them on the ground thatthere had been a change of policy.
In the public law field, individuals may not have strictly enforceablerights but they have legitimate expectations. Decisions affecting such le-gitimate expectations are subject to judicial review.
Per Ranaraja, J.
‘It is no excuse to say that even after a hearing the decision will not bechanged in view of the change of Policy, and that there is no purposeserved by giving a hearing. This attitude by public bodies funded by thePublic to serve the Public should best be avoided.
AN APPLICATION for a writ of Certiorari.
Cases referred to:
R v Secretary of State for the Home Department ex parte Kahu (1985)
1 All E.R. 40
CCSU v Minister for Civil Service 1984 3 All E.R. 950 at 954
E.D. Wickramanayake with P.C. Crosette Thambiah, D.W. Thurairajah andPrasanna Jayawardene for the Petitioner.
Romesh de Silva, P.C. with Palitha Kumarasinghe and Hiran de Alwis forRespondent
Cur. adv. vult.
May 07, 1996DR. RANARAJA, J.
The land on which "Chalmers Granaries" Fort/Pettah, stand, in ex-tent of acres 3 roods 27.2 perches, was vested with the 1 st Respond-ent Urban Development Authority by Special Grant certificate (R1) bear-ing No. 4/2/8988 dated 20th June 1980. In terms of the Urban Develop-ment Authority Law No. 41 of 1978 as amended, the Respondent hadon 1.3.83 approved a project by the Petitioner Multinational PropertyDevelopment Ltd, to construct a shopping complex and car park onthe said land. (p1). By letter P5 dated 28.2.94 the Respondent in-formed the Petitioner that it had decided to allocate the said land on a99 year lease for a premium of Rs.142,848,000/- at 90,000/- per perch,subject to the conditions set out therein. The Petitioner accepted theoffer of the lease by letter P6 dated 4.3.94, and forwarded cheque No.858951 dated 11.3.94 for a sum of Rs. 7,200,000/- being 10% of thepremium for 5 acres of the said land as requested by P5 The Petitioneralso paid a sum of Rs.1,50,000/- as legal fees, and a further sum ofRs. 64,800,000/- being the balance premium (P13). The Respondentprepared the final draft of the lease agreement (P6) on 14.7.94. It alsoaccepted a sum of Rs. 750/- on 15.7.94 as annual ground Rent. (P17).
By letter P18 dated 28.9.94 the Petitioner requested the Respond-ent to fix an early date for the execution for the lease agreement. TheRespondent by P19 dated 10.10.94 informed the Petitioner that it haddecided not to allocate the said land to the Petititoner. The Re-spondent enclosed two cheques for Rs. 72,223,501/- as a refund of thepremium, legal fees and stamp fees. By letter P20, dated 15.10.94 thePetitioner protested and refused to accept the Respondent's cheques.The Petitioner also wrote to the Minister in charge of the subject. Therewas no reply to either letter.
The Petitioner's complaint is that the Respondent had arrived at thedecision not to allocate the said land to the Petitioner, (a) without af-fording it an opportunity of being heard regarding any reason whichmay have motivated the Respondent's decision,
(b) The decision was arbitrary and mala fide.
The Petitioner therefore seeks an order quashing that decision.
The Respondent has filed objections setting out the reasons for thesudden decision not to allocate the land to the Petitioner inter alia asfollows.
It cannot reasonably be denied by the Respondent that items 4 to11 above, were matters which were well within the knowledge of theRespondent at the time the decision to allocate the land to the Peti-tioner was taken and the Draft deed was prepared. If the reasons givenfor revoking the decision of the Respondent are genuine, it had everyopportunity of calling upon the Petitioner to satisfy the Respondentthat those matters were properly dealt with.
The Respondent relies on R6 dated 13.7.94 to support the revoca-tion of the decision to lease the said land to the Petitioner. By thatletter the Secretary to the Ministry of Housing has directed the Re-spondent to suspend action on signing of the agreement. The Re-spondent has failed to produce any evidence in support of the aver-ment (Except Newspaper reports) that the then Leader of the Opposi-tion protested to the then President of the proposed lease. Factually, itwas the change in policy of the new Executive President which led theRespondent to change its decision.
However, when the Respondent prepared the final draft of the leaseagreement for signature, the Petitioner had a "Legitimate Expectation"that the Respondent would conclude the transaction.
“In the public law field, individuals may not have strictly enforceablerights but they may have legitimate expectations. Such expectationsmay stem either from a promise or representation made by a public
bodyA promise to confera substantive benefit, may
give rise to an expectation that the individual will be given a hearing
before a decision is taken not to confer the benefitDecisions
affecting such legitimate expectations are subject to judicial review. ”-Judicial Remedies in Public Law – Lewis P 97.
"Where a member of the public affected by a decision of a publicauthority had a legitimate expectation based on a statement or under-taking by the authority that it would apply certain criteria or follow cer-tain procedures in making its decision, the authority was under a dutyto follow those criteria or procedures in reaching the decision providedthat the statement or undertaking in question did not conflict with theauthority's statutory duty". R v Secretary of State for the Home De-partment, ex parte Kahnl'K
In the instant application, the Respondent had at no stage indicatedto the Petitioner, until it wrote P19, that it had failed to follow the re-quired procedure to obtain the lease of the relevant land. It is in theobjections filed by the Respondent that new criteria have been intro-duced for the granting of the lease. Those conditions were not contem-plated even in the final Draft Lease Bond prepared by the Respondent.
The Respondents' decision not to allocate the land to the Petitionerit appears was based on the policy of the new Executive President toreview the transactions of the earlier regime in respect of state lands.The Secretary to the then Executive President had informed the Sec-retary to the Ministry of Housing by a note dated 13.7.94, the changeof policy which led the Respondent to suspend its earlier decision toexecute the Deed of Lease. A substantive change in policy resultingfrom a change in the Executive Presidency cannot be avoided. Butwhere a new policy is to be applied, the individuals who have legitimateexpectations based on promises made by public bodies that they willbe granted certain benefits, have a right to be heard before those ben-efits are taken away from them on the ground that there had been achange of policy.
The principle which has been entrenched in the branch of adminis-trative law regarding legitimate expectation is that of being allowedtime to make respresentations, especially where the aggrieved partyis seeking to persuade an authority to depart from a lawfully estab-lished policy adopted in connection with the exercise of a particularpower because of some suggested exceptional reasons justifying sucha departure. – CCSU vMinister For Civil Service(2).
The Petitioner has sought the quashing of the decision of the Re-spondent communicated by P19 which admittedly was taken withoutgiving the Petitioner a hearing. It is no excuse to say that even after ahearing the decision will not be changed in view of the change of policy,and that there is no purpose served by giving a hearing. This attitudeby public bodies funded by the public to serve the public should bestbe avoided.
Relief is accordingly granted in terms of prayer (b) to the applica-tion. The Respondent is directed to give the Petitioner an opportunityof satisfying the Respondent on any matters stated in the objectionswhich it claims were the reasons for revoking its earlier decision tolease the said land to the Petitioners, and make a determination ac-cording to Law.
The application is allowed in terms of prayer (b) without costs.Application allowed.
MULTINATIONAL PROPERTY DEVELOPMENT LTD v. URBAN DEVELOPMENT AUTH