In administrative law, the traditional wisdom is that discretion cannot create law. It must operate within parameters set out by statute or binding policy. Where a public authority acts outside those parameters, it risks legal excess – and the courts, through judicial review, are tasked with redrawing the limits. But is this always true in planning law?
The recent judgment of the Court of Appeal (Inferior Jurisdiction) in Fr. Paul Formosa nomine vs Planning Authority et (26 March 2025, per Chief Justice Mark Chetcuti) highlights a more fluid reality. Here, discretion did not merely interpret the rules – it effectively generated a new regulatory pathway, allowing minor encroachment into ODZ land in exchange for compensatory inaction within the development zone. This was not written in any statute. It was not clearly expressed in policy. And yet, the Tribunal – and ultimately the Court – accepted it as legitimate. The facts are narrow, but the implications are wide. The permit in question approved a terraced house and pool in Għarb, Gozo, a portion of which – 15 square metres – fell in ODZ territory. The justification? An equivalent portion of land within the scheme boundary (16m²) would be left undeveloped. The Tribunal approved the arrangement, citing Policy 6.4 of the Rural Policy and Design Guidance 2014 and the “end of development” principle under DC15. The Court of Appeal endorsed this approach, holding that the discretion had been exercised “b’mod raġonevoli u kawt”, consistent with Article 72(2) of the Development Planning Act.
But as the appellant rightly pointed out, nowhere in law is there a provision stating that development outside the zone is permissible if compensated inside it. So how can such a result be lawful? Under the conventional model of public law, this would be ultra vires. The discretion of a decision-maker – even a specialist tribunal – is confined to the powers explicitly or implicitly conferred by the legal framework. If the law prohibits development in ODZ, and the policy does not create an exception based on compensatory trade-offs, then a decision to allow development on that basis would be legally defective. This is the logic that underpins much of judicial review: discretion is derivative, not generative. It is the “space” the law gives, not the law itself.
And yet – perhaps this logic fails to account for the unique nature of planning law. Unlike other areas of administrative law, planning operates in a dynamically negotiated policy environment. It balances environmental protection, spatial design, economic needs, and social patterns in ever-changing configurations. Most planning policies are deliberately framed to allow for context-sensitive interpretation – and discretion is frequently used not to fill gaps, but to reconcile competing priorities in real time.
In this light, the kind of discretion exercised in Formosa may not be an abuse of legal limits, but rather an example of public law adaptation. In areas like planning, discretion may serve not only to interpret policy but to operationalise it in the face of site-specific realities – especially where formal policies are silent or incomplete. This is a jurisprudential shift worth studying: in highly policy-driven fields like development planning, discretion may act as a source of regulatory meaning, provided it remains anchored in the overall planning framework and justified in transparent, principled terms.
If this is correct, then Formosa signals a need for public law to refine its understanding of discretion. Rather than insisting that all discretion must be pre-scripted, the law might instead recognise that in sui generis regulatory systems like planning, certain forms of structured discretion may lawfully extend the policy logic into new applications – provided they are reviewable, reasoned, and proportionate. This doesn’t mean that “anything goes.” But it does mean we must shift the focus of judicial review from asking “is this written in policy?” to asking “does this reflect a coherent and principled application of the policy framework, even in novel form?” In that sense, the boundaries of discretion are not necessarily closed – they may be contingent, contextual, and evolutive.
The discomfort expressed by the appellant in Formosa is not without merit. It reflects a real concern that when legal frameworks are unclear, discretion may mutate into arbitrary power. But perhaps the answer is not to deny such discretion altogether – rather, it is to recognise it as a new form of policy-embedded reasoning that demands its own standards of justification and review. Planning law may be the laboratory in which public law begins to acknowledge that some discretion creates law-like outcomes. If so, then cases like Formosa are not aberrations. They are harbingers – and they deserve serious doctrinal attention.
