Chap 9 Compulsory LAND Acquisition PDF

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COMPULSORY LAND ACQUISITIONSection 40(a) of the NLC 1965 stated that Stated Authority shall have power over all State land within the territories of the State. Land acquisition is consider as an interference with an individual`s right to property. However, the right of property is not absolute right...

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COMPULSORY LAND ACQUISITION Section 40(a) of the NLC 1965 stated that Stated Authority shall have power over all State land within the territories of the State. Land acquisition is consider as an interference with an individual`s right to property. However, the right of property is not absolute right since it is subject to many other provisions. For instance, the State Authority has the right to take over land. In the case of land acquisition, the property is acquired by the State against the will of the proprietor or occupier or owner of the land. This is a serious encroachment on the right of property. However, the acquisition of land is subjected to two essential conditions namely, private property is to be taken for public use and just compensation must be given to the landowner for the property taken. ARTICLE 13 Article 13(1) of the Federal Constitution stated that no person shall be deprived of property save in accordance with law. Article 13(2) of the Federal Constitution stated that no law shall provide for compulsory acquisition or use of property without adequate compensation. SAVE IN ACCORDANCE WITH LAW The acquisition of land is a serious encroachment on the right of property. However, under Article 13(1) of the Federal Constitution, issue arises from the phrase ‘save in accordance with law’ as to what does the term ‘law’ means? In the case of ComptrollerGeneral of Inland Revenue v NP, the court stated that the term ‘law’ under Article 13(1) of the Federal Constitution can only mean an enacted law. However, after this case, different judicial opinion seems to have undergone some changes. In the case of S.Kulasingam &Anor v Commissioners of Lands, Federal Territory & Ors, the Federal Court prepared to read the term ‘law’ in a broad sense as ‘a system of law that incorporates those fundamental rules of natural justice which had formed part and parcel of the common law of England which was in operation at the commencement of the Constitution’. Although individual has the right to property as stated under Article 13(1) of the Federal Constitution, however, the phrase ‘save in accordance with law’ means that such right shall be based on other laws. If other laws allow the State or any other authorities to gain the land from an individual, the State shall have the power to do so. For instance, Section 40(1) of the NLC 1965 vested power in State Authority in State land. If the State Authority decided

to acquire certain land, subject to two conditions mentioned above, the landowner may not reject such acquisition if the conditions have been fulfilled. This shows that the right to property of an individual is not absolute. THE ABSENSE OF PUBLIC PURPOSE REQUIREMENT Article 13(2) of the Federal Constitution stated that no law shall provide the compulsory acquisition or use of property without adequate compensation. This is one of the condition for State Authority to acquire land where compensation must be given to the landowner. If it fails to do so, no acquisition is allowed. However, another condition in relation to the acquisition of private property can only be acquired if it is for public purpose was not mentioned under this provision. However, it can possibly be argued that Article 13(2) of the Federal Constitution incorporates the doctrine of land acquisition and hence the concept of public purpose can be implied therein. THE PURPOSE OF ACQUISITION Before the State Authority is allowed to acquire a land the purpose of the acquisition must fall within the categories stated under Section 3(1)(a), Section 3(1)(b) and Section 3(1) (c) of the Land Acquisition Act 1960 (LAA 1960). Before the amendment of Section 3 of the LAA 1960 , it was stated that the State Authority may acquire any land which is needed, section 3(a) of any public purpose; or section 3(b) by any person or corporation undertaking a work which in the opinion of the State Authority is of public utility; or section(c) for the purpose of mining or for agricultural, residential, commercial or industrial purpose. After the amendment of Section 3 of the LAA 1960 in 1991, section 3(b) was amended to ‘by any person or corporation for any purpose which in the opinion of the State Authority is beneficial to the economic development of Malaysia or any part of the public generally or any class of the public. In 1997, section 3 of the LAA 1960 was again amended to insert the phase ‘recreational purposes or any combination of such purposes’ under section 3(c). a. Beneficial to the economic development under section 3(b) The amendment of the LAA 1960 in 1991 in relation to section 3(b) was said to have broader the purposes of acquisition and further extended the power of acquisition of State

Authority. The terms added in were not clearly defined in any provisions in LAA 1969 and the matter is subjected merely to the view of State Authority. Such discretion may lead to the existence of threat of fraud and abuse of power as it will erode the positive meaning of public and national economic development. In the case of Honan Plantations Sdn Bhd v Kerajaan Negeri Johor & Ors , the plaintiffs owned a land until it was acquired. The plaintiff alleged that the acquisition was invalid and was done in bad faith. The court held that the State Authority may acquire any land which is needed by any corporation or person for the purpose which is beneficial to the economic development of Malaysia. b. Public Purpose under section 3(a) The term ‘public purpose’ is broad and is not defined by any provisions under LAA 1960. In the case of S.Kulasingam &Anor v Commissioners of Lands, Federal Territory & Ors, the court held that even if the public sporting events had been held on the land this did not constitute user for a public purpose as the use was at the discretion of the association and subject to the payment of fees. It was also stated that the expression of ‘public purpose’ was incapable of precise definition but it was still best to employ a simple common sense test which is by looking at whether the purpose serves the general interest of the public. In the case of Ahmad bin Saman v Kerajaan Negeri Kedah , the court used the common sense test to determine the public purpose. The issue arose whether the purpose serves the general interest of the community. If the answer to this issue is yes, then it is for public purpose. In this case, the purpose of acquisition was for tourism industry. The court held that it falls within the ambit of public purpose. In the case of Yew Lean Finance Development (M) Sdn. Bhd. v Pengarah Tanah dan Galian Pulau Pinang, the land was acquired for industrial, residential and public purpose. The plaintiff contended that the land was being acquired for some vague purpose and thus the notice of intended acquisition was null and void. The court held that the State Government has the exclusive right to make a decision in regards to what constitutes a public purpose. It was further added that such decision is not to be challenged by any court. In the case of Bajirao T Kote v State of Maharashtra, the court stated that the term ‘public purpose’ was not capable of precise definition. The court in each case has to consider in relation to the purpose for which acquisition was sought for. It was to serve the general interest of the community as opposed to the particular interest of the individual. Hence,

public purpose would include the purpose in which the general interest of the society as opposed to the particular interest of the individual was directly and vitally concerned. c. Purpose of mining residential, agricultural, commercial, industrial, recreational or any combination of such purposes under section 3(c) In the case of Syed Omar Alsagoff v Government of Johore, some parts of the land acquired were marked for “special purposes”. A challenged the acquisition asserting that the land was in fact acquired for purposes other than that permitted under LAA 1960. The court held that in the absence of bad faith, it is not possible to challenge that a portion of the land to which the declaration in the Gazette relates is in fact wanted for a purpose other than those specified. One the declaration in Form D is published in the Gazette under S. 8(1) LAA 1960, this is conclusive evidence that the land is needed for such purposes in the declaration. Thus, cannot be challenged. PROCEDURE FOR LAND ACQUISITION a. Preliminary notice Section 4(1) of the LAA 1960 Section 4(2) of the LAA 1960 Section 4(3) of the LAA 1960 Section 4(4) of the LAA 1960 In the case of Ng Kim Moi v Pentadbir Tanah Daerah, Seremban, Negeri Sembilan, the appellant`s land was acquired. The appellants complained that the acquisition was void as Forms A and B were never issued and Form D, E and F were not served. The court held that the wordings in Section 4(1) of the LAA did not make the notification under the provision of the LAA mandatory but merely directory. b. Entry and survey on land Section 5(1) of the LAA 1960 Section 5(2) of the LAA 1960 c. Preparation of Plan and Lists of Lands Section 7 of the LAA 1960 d. Declaration of intended acquisition Section 8(1) of the LAA 1960 Section 8(3) of the LAA 1960 Section 8(4) of the LAA 1960

In the case of Honan Plantations Sdn Bhd v Kerajaan Negeri Johor & Ors , the court held that the declaration in Form D was the final and conclusive evidence that the lands specified were required. e. Land to be Market out and note on RDT Section 9 of the LAA 1960 f. LA to consult planning Authorities on Land Use Section 9A of the LAA 1960 In the case of Pemungut Hasil Tanah, Pulau Pinang v Ong Gaik Kee, the issue aorse whether a notification in Form A must be issued before issuing a declaration in form D? The court held that there is no necessity to issue the notification in Form A before the declaration of Form D. Hence, it is not a prerequisite that a declaration under section 8 of the LAA 1960 must be preceded by the publication of notice under section 4 of the LAA 1960. In the case of Ng Kim Moi v Pentadbir Daerah, Seremban, Negeri Sembilan Darul Khusus, the court held that section 4 of the LAA 1960 had no mandatory effect but merely directory as the failure of the State Authority to issue Form A would not render the acquisition of land to be illegal or unconstitutional. In the case of Honan Plantations Sdn Bhd v Kerajaan Negeri Johor & Ors , the court held that the declaration in Form D is conclusive as to the purpose for which the scheduled lands were required which mean that the Parliament has decided that the State Authority was in the position to be the best judge to determine what amounts to a purpose that is beneficial to economic development. i.

Right to be heard to the landowner In the case of S Kulasingam v Commissioner of Lands, Federal Territories, a sport

stadium which belong to a cultural association sought to acquire by the State Authority to build a hockey stadium. The sole surviving trustee of the association objected such acquisition as there was no pre-acquisition hearing before the acquisition of land. It was argued that although the statues are silent on such rights, the defendant ought to be given an opportunity to be heard. The court held that under the LAA 1960, there is no right of preacquisition hearing. In the case of Goh Seng Peow & Sons Realty Sdn Bhd v The Collector of Land Revenue Wilayah Persekutuan, the registered owners were informed that their lands had been compulsorily acquired. The owner claimed that the acquisition proceeding was illegal, null and void because the registered owner of the lands had no necessary notices and

documents served upon them as required by law. They also contended that there is contravention to Article 13 of the Federal Constitution. It was also in breach of the rules of natural justice in that as the registered owners, and they had not been made a party to the acquisition proceedings. The court accepted the argument and held that the acquisition had taken place contrary to Article 13 of the Federal Constitution and was in breach of natural justice and the owner had made out a case that was constitutional right might have contradict to Article 13 of the Federal Constitution, hence allowing the owners to seek for a declaration.

ii.

Judicial review of notification under section 4 and section 8 Section 8(3) of the LAA 1960 In the case of Yew Lean Finance Development (M) Sdn Bhd v Director of Lands

& Mines, Penang, the notification issued by the State government under the LAA 1960 was challenged on the ground that the lands were being acquired for a vague purpose and hence, the notice of acquisition was null and void. However, the court had rejected the challenge to the notification. By virtue of Section 3 of the LAA 1960, the court held that the government has the right to decided what constitute a public purpose and the decision by the government could not be questioned in a civil court. In the case of Tan Boon Bak & Sons Ltd v Government of the State of Perak & Anor, the preliminary notice issued under section 4 of the LAA 1960 stated that the land in question was required for an ‘integreated town development project’. Later, in the declaration issued under section 8 of the LAA 1960, the purpose of acquisition was changed to construction of a ‘commercial complex’. This was challenged. However, the court rejected such challenge on the ground that the changed purpose fell within section 3(c) of the LAA 1960 and hence it was lawful. ASSESSMENT OF COMPENSATION The next step in the process of land acquisition is to assess the compensation for the land acquired. Article 13(2) of the Federal Constitution stated that no law shall provide for compulsory acquisition or use of property without adequate compensation. Section 10(1) Section 10(2) Section 11 Section 12(1) Section 14 Section 37

In the case of Tan Yen Foon v Pentadbir Tanah Wilayah Persekutuan Kuala Lumpur, the issue arose as to whether the plaintiff can make an objection to the court against the amount of compensation? The court held that under section 37(2) of the LAA 1960, the compensation which was below RM 300 was said to be final and no objection can be raised against it. a. The duty of Land Administration during inquiry In the case of Pemungut Hasil Tanah, Daerah Barat Daya (Balik Pulau), Pulau Pinang v Kam Gin Paik, the collector disregarded evidence adduced at the inquiry, did not allow counsel to submit on facts and law and did not permit the government valuation officer to cross-examine. The court held that none of these amounted to breach of natural justice. It was stated that although section 12 of the LAA 1960 stated Procedure at Enquiry, however, no detailed procedure was laid down in the section. The respondent argued that the term ‘full enquiry’ under section 12 of the LAA 1960 implied that all rules of natural justice should be observed before the collector makes the award. However, the court seems to be equivocal on the question of application of natural justice to the inquiry. b. Principles on fixing adequate compensation The principle in relation to the determination of compensation can be found in the First Schedule of the LAA 1960. There are three criteria to be determined when it comes to the amount of compensation that need to be awarded namely, the market value of the land, list of matters to be taken into consideration and list of matters which have to be neglected. The question is whether these criteria fulfil the requirements for adequate compensation. i.

Market value

There are three common considerations that would influence the decision of the court.  Willing seller or willing buyer criteria In the case of Nanyang Manufacturing Co. v CLR Johor, the court stated that the market value of the land may be described as the price where an owner willing and not obliged to sell might reasonably expect to obtain from a willing purchaser. In the case of Ng Tiou Hong v Collector of Land Revenue, Gombak, the court held that by looking at the nature of the land, regard must be given to its locality. For example, some of the factors would be the distance of the land to or from a town; the availability of an access road to and within it; whether the land was allocated within or near a developed area; or the presence of the road reserve indicates a likelihood of an access road to be constructed in the near future. The compensation should be determined based on the price which a willing seller might reasonably expect to obtain rom a willing buyer. It must be treated on the

willingness of vendor to sell and the purchaser to buy based on the market price without any element of compulsion.  Previous sale of comparable or similar lots of land The real test where market value could be arrived at is to use the price of the previous sales of the land in the vicinity about the time of the acquisition. The pieces of land that was previously sold should be in the same size and physical nature in order to be accepted as comparable lots of land. If it is not similar, the valuation is subject to adjustments of size, time factor and other dissimilarities between the previous land acquired and the subject land. In the case of Hock Lim Estate Sdn Bhd v The Collecter of Land Revenue, Johore Bahru, the appellant appealed to the valuation officer`s report and claimed that the compensation was inadequate. The court dimissed the appeal and held that the safest guide when deciding a fair and asequate compensation was by looking at the recent sales of similar land in the vicinity. In the case of Pentadbir Tanah Daerah Petaling v Glenmarie Estate Ltd, the court stated that if a judge uses previous award as relevant consideration of market value, the judge must follow the normal and accepted guide in determining the value. In the case of Ko Rubber Plantations Pte Ltd v Pemungut Hasil Tanah, Batu Pahat, the court held that the acquisition award previously made was relevant to determine the market value but was subject to adjustments of its size, time factor and other dissimilarities between the previous land acquired and the subject land. When a judge used the previous acquisition award of the same estate as relevant consideration indicative of the market value of the property, the judge should follow the normal and accepted guide to determining the fair market value of the land through the consideration of sales of similar piece of land in the neighbourhood after making due allowances for all circumstances, when evidence of such is available. He should not impose his own discretion in doubling awards. In the case of Che Pa bin Hashim & Ors v The Collector of Revenue, Kedah , the court concluded that the purported sale transaction was not bona fide after considering the circumstances of the case and the current property values. The value of the land should be considered as it was in its actual condition at the material date will all its advantage due to carrying out of any scheme by the government in which the land is compulsorily acquired.  Potential development The potential development of the land is not to be taken into consideration when the market value of the land is being assessed.

In the case of Bukit Rajah Rubber Co Ltd v Collector of Land Revenue, Klang , the court held that the proper method to be used to arrive at a fair market value was to assess its existing value with its inseparably essential elements, which is its potential development value. In the case of Harrisons & Crosfiled Sdn Bhd v Pemungut Hasil Tanah Wilayah Persekutuan, if there is evidence to show that the land was suitable for high quality development, it should be considered and the valuation of the land should be assessed accordingly. The owner of the land had submitted a proposal for development of land to set up two petrol stations. The court held that his proposal constitute potential development which should be considered in the assessment of compensation. In the case of Kwang Hap Siang Ltd v Pentadbir Tanah Daerah Gombak, the land was acquired for the purpose to construct highway. The owner porposed to develop the land and was informed that the land can be used to build two pretrol station. The courd held that the valuation of the land s...