1. Theory in administrative law, formulated by Professor Dr. Christopher Forsyth
In ‘The Metaphysic of Nullity’ — Invalidity, Conceptual Reasoning and the Rule of Law’ (Christopher Forsyth and Ivan Hare (eds) (Clarendon Press, 1998) 159), Dr. Forsyth explained the theory:
“… unlawful administrative acts are void in law. But they clearly exist in fact and they often appear to be valid; and those unaware of their invalidity may take decisions and act on the assumption that these acts are valid. When this happens the validity of these later acts depend upon the legal powers of the second actor. The crucial issue to be determined is whether the second actor has legal power to act validly notwithstanding the invalidity of the first act. And it is determined by an analysis of the law against the background of the familiar proposition that an unlawful act is void.” (Emphasis mine)
The above extract was quoted by the Federal Court in Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd and other appeals [2024] 5 MLJ 897 (“Obata-Ambak”).[1]
2. To deal with the problem where unlawful administrative acts are theoretically void yet functionally voidable
Dr. Forsyth, in his paper titled “The legal effect of unlawful administrative acts: the theory of the second actor explained and developed”, stated the following:
“So here is the central conundrum that set me thinking about this problem: unlawful administrative acts are theoretically void yet functionally voidable.”
3. Antidote in cases where earlier decision by public authority subsequently declared ultra vires
In Obata-Ambak, the Federal Court referred to the theory as the ‘perfect and preferred antidote’:
“… where an innocent party had relied on an earlier decision made by a public authority that was subsequently declared ultra vires, the Second Actor Theory is applicable and should be the perfect and preferred antidote.”[2]
4. Applicable in Malaysian jurisprudence
The Federal Court in Obata-Ambak answered the following leave question in the affirmative:
“Whether the Second Actor Theory as endorsed by the United Kingdom Supreme Court in the case of R (Majera) v Secretary of State for the House Department [2022] AC 461 has any application where an innocent third party had relied on an earlier decision made by the public authority which was subsequently declared ultra vires.”[3]
Gopal Sri Ram JCA (later FCJ) applied the theory in Pan Wai Mei v Sam Weng Yee & Anor [2006] 2 MLJ 1 and remarked that “The theory is one that has both the merit of logic and judicial support.”[4]
5. Accepted in foreign jurisdictions
The theory has been accepted among others, in the United Kingdom[5] and South Africa.[6]
6. Could be developed further
In his paper titled “The legal effect of unlawful administrative acts: the theory of the second actor explained and developed”, Dr. Forsyth has proposed two further principles to guide the courts in determining whether the second actor had the power to act validly notwithstanding the illegality of the first act:
(a) where human rights would be infringed upon were the act of a second actor to be unexpectedly invalid, then a court may readily infer that the second actor has that power to act validly; and
(b) where it is plain from the relevant legislation that the first act is intended to be relied upon by second actors and that there would be substantial injustice and administrative inconvenience if those second acts were afterwards found to be void because of the invalidity of the first act, ‘ then the court might infer an intent that the second actor could act validly.
[1] Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd and other appeals [2024] 5 MLJ 897 (FC), at para 112
[2] Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd and other appeals [2024] 5 MLJ 897 (FC), at para 134
[3] Obata-Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd and other appeals [2024] 5 MLJ 897 (FC), at paras 51 & 136
[4] Pan Wai Mei v Sam Weng Yee & Anor [2006] 2 MLJ 1 (CA), at p. 7
[5] E.g. R (Majera) v Secretary of State for the House Department [2022] AC 461 (UKSC)
[6] E.g. Oudekraal Estates (Ptv) Ltd v The City of Cape Town & Ors [2004] ZASCA 48 (SCA)
