DALAM MAHKAMAH RAYUAN MALAYSIA (BIDANG KUASA RAYUAN) RAYUAN SIVIL NO. W-01(NCVC)(A) /2013 ANTARA KEMBANG MASYUR SDN BHD...

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1 DALAM MAHKAMAH RAYUAN MALAYSIA (BIDANG KUASA RAYUAN) RAYUAN SIVIL NO. W-01(NCVC)(A) /2013 ANTARA KEMBANG MASYUR SDN BHD... PERAYU DAN PENTADBIR TANAH WILAYAH PERSEKUTUAN KUALA LUMPUR... RESPONDEN (Dalam Perkara Rujukan Tanah No. S-15NCVC-16-07/2012 Di dalam Mahkamah Tinggi Malaya Di Kuala Lumpur Antara Kembang Masyur Sdn Bhd... Pemohon Dan Pentadbir Tanah Wilayah Persekutuan Kuala Lumpur Responden CORAM: ZAHARAH BINTI IBRAHIM, JCA MOHD ARIFF BIN MD YUSOF, JCA ABANG ISKANDAR BIN ABANG HASHIM, JCA

2 - 2 - JUDGEMENT OF THE COURT INTRODUCTION [1] This was an appeal from the decision of the High Court at Kuala Lumpur on a reference made to the High Court by the Land Administrator of the Federal Territory of Kuala Lumpur (the Respondent) pursuant to an objection filed by the Appellant. [2] The learned Judge of High Court, sitting with two assessors as required under section 38 of the Land Acquisition Act 1960 [ Act 486 ], by a unanimous decision had allowed the Appellant s application and increased the value of the acquired land, but dismissed the Appellant s claim for injurious affection. BRIEF FACTS [3] The Appellant was the registered proprietor of Lot (1456) held under GM 771 in the Mukim of Petaling, in the Federal Territory of Kuala Lumpur, having an area of 15,892 square metres or 171,062 square feet [ Scheduled Land ]. [4] A portion of that Scheduled Land was acquired under Act 486 for the purpose of Projek Pembesaran Lebuhraya Kuala Lumpur- Seremban (Plaza Tol Sungai Besi hingga Selatan kepada Jejambat Salak), as can be seen from the declaration published in the Gazette on 18/02/1993 under section 8 of Act 486. This was the date, under Act 486, by reference to which the value of the land was to be made. [ Reference Date ].

3 - 3 - [5] The area acquired [ Acquired Land ] was square metres or 7,964 square feet. This was equivalent to 4.656% of the total area of the Scheduled Land. After the acquisition, the area of the Scheduled Land was reduced to 163,098 square feet. [6] The Scheduled Land was held under a freehold title and was subject to an express condition that it was only for the growing of fruit trees, coconuts and rubber trees. However it was situated in an area zoned for residential purpose for purposes of town planning under Pelan Pembangunan Lengkap 1040/1041. [7] It was not in dispute that on the Reference Date, the Scheduled land was vacant, hilly and swampy. The acquired area was on a steep slope adjoining the Kuala Lumpur-Seremban Highway. [8] It was also not in dispute that no representative of the Appellant was present at the inquiry held on 24/04/1993 by the Land Administrator. [9] The Land Administrator subsequently made an award of compensation of RM 95, to the Appellant with interest to be paid from the date of Borang K (formal possession) until the date of payment, at the rate of 8% per annum. This was equivalent to RM per square metre or RM12.00 per square foot. [10] The Appellant accepted the award under protest and filed its objection in the prescribed form dated 08/03/1995 ( Borang N ) under subsection 38(1) of Act 486.

4 - 4 - [11] In paragraph 3 of Borang N the Appellant stated that its objection was against the amount of compensation ( jumlah pampasan ). [12] The Land Administrator however neglected to refer the Appellant s objection to the High Court within the time prescribed in subsection 38(5) of Act 486. He then applied, by way of an ex parte originating summons, under subsection 38(6) of the Act to the High Court on 12/06/2012 (some 17 years later) for extension of time to refer the Appellant s objection to the High Court. The application was granted on 22/06/2012. The reference (in the prescribed Borang O) was filed on 29/06/2012. LAND REFERENCE IN THE HIGH COURT [13] The High Court, sitting with two assessors as required under section 40A of Act 486, heard the reference and considered the valuation report of the Government Valuer (for the Respondent) and the valuation report of the Private Valuer (for the Appellant). [14] The assessors accepted as appropriate the land transactions used by the Government Valuer for purposes of comparison with the Scheduled Land in determining the market value of the Scheduled Land [ Comparables ]. They based their opinion on the fact that the transactions took place before the Reference Date. [15] The assessors, in their report as recorded in paragraph 5, and parts A and B of paragraph 6, of the judgement of the High Court, explained their reasons for accepting the Government Valuer s Comparables.

5 - 5 - [16] They reached a common view that the best of the Comparables was Lot 730 Mukim Petaling, being the lot closest in location to the Scheduled Land, as it is only ¼ kilometre from the Scheduled Land. That Lot was transferred on 11/11/1992. Therefore it was also closest in time to the Reference Date. [17] The assessors also took into account the fact that the Comparables used by the Government Valuer were also all land with similar category of land use, namely the category of agriculture. They were also similar in other attributes to the Scheduled Land. [18] The assessors declined to accept the Private Valuer s Comparables and explained in their report the reasons for that decision. Of the 4 Comparables used by the Private Valuer, one transaction was not in fact concluded. Two Comparables involved commercial land. One Comparable was land with a bungalow erected on it and with an approved development plan for a 24-storey condominium. [19] As at the Reference Date, in order to develop the land, the Scheduled Land needed to go through a conversion process on category of land use, and to change the express condition, unlike the Comparables used by the Private Valuer. [20] The assessors noted in their report that the Scheduled Land had been granted a development order. They were therefore of the opinion that there is no denying the fact that the land has development potential. [21] The assessors then determined by unanimous decision that the market value of the Scheduled Land for the purpose of the

6 - 6 - award of compensation for the Acquired Area was RM14.00 per square foot. [22] On injurious affection, the assessors noted that the remainder of the Scheduled Land, after the acquisition of the Acquired Area, still had the same road access as it had before the acquisition. The area of such remainder was still large and was still capable of being developed without any problem. [23] The assessors were also of the opinion that as the Acquired Area was small and was on the steep portion of the Scheduled Land, the acquisition did not really affect the Scheduled Land in a detrimental way. [24] The assessors therefore were of the opinion that no compensation should be paid for injurious affection. [25] Based on the unanimous opinion of the assessors, the Court determined that the compensation to be paid was to be calculated based on a market value of RM14.00 per square foot. This translated to a total of RM 111, for the Acquired Area of 7,964 square feet. The claim for injurious affection was not allowed by the Court. [26] Interest at 8% per annum was ordered on the amount of compensation so awarded from the date of formal possession (18/08/1993) to the date of actual payment of compensation. [27] The Appellant was still dissatisfied and filed an appeal to this Court against the decision of the High Court.

7 - 7 - APPEAL AT THE COURT OF APPEAL PRELIMINARY [28] When parties appeared before us, Encik Amarjeet Singh, for the Appellant, informed us that the Appellant was not challenging the validity of the acquisition of the Acquired Area. The Appellant was only challenging the compensation. [29] We indicated to the parties that we would proceed on the basis that section 40D of Act 486 applied to the acquisition but that if we were wrong, we needed to consider the merits of the Appellant s challenge on the adequacy of the compensation awarded. Counsel on both sides agreed with that approach. [30] We therefore proceeded to hear submissions on the adequacy of the compensation. APPELLANT S SUBMISSIONS [31] The Appellant s submissions on the adequacy of compensation were in respect of the category of land use of the Scheduled Land, the development potential of the Scheduled Land, and injurious affection. [32] Learned counsel for the Appellant, Encik Amarjeet Singh, submitted that as the category of land use was not stated, being a pre-1965 alienation, the land could still be used for other purposes even though there was an express condition on land cultivation.

8 - 8 - [33] According to the Appellant, there was an application for conversion made to the Land Office in 1985, with the premium having been also paid. As such the land should not be treated simply as agricultural land [34] On the development potential, the Appellant submitted that there was a layout plan which was approved by the local authority for the development of a commercial complex and recreational centre on the Scheduled Land. Therefore the land should have been valued with such development potential. Learned co-counsel for the Appellant, Encik W.K. Yee submitted that the best Comparable was the transaction of the adjacent land, being a transaction of land similar in characteristics to the Scheduled Land, and being a transaction which occurred just a few months after the Reference Date. [35] On the issue of injurious affection, the Appellant submitted that the assessors should have formed their opinion on the basis of how the acquisition had affected the value of the remaining land. They were deprived of direct access. RESPONDENT S SUBMISSIONS [36] On the issue of development potential, the learned Senior Federal Counsel submitted on behalf of the Respondent, that the development order of 1984 which was amended in 1986, required several actions to be taken by the Appellant. There was no evidence that the development order was still valid on the Reference Date.

9 - 9 - [37] On the issue of development potential, the Respondent submitted that the assessors had in fact taken into account the development potential and consequently made a final decision to award a higher value of RM per square foot as opposed to the Land Administrator s award of RM per square foot. [38] On the issue of injurious affection with regard to access, the learned Senior Federal Counsel pointed out that the conditions imposed in the development order as amended in 1986 included the condition that there was to be no direct access to the Kuala Lumpur- Seremban Highway. DECISION Jurisdiction [39] Section 40D of Act 486 provides as follows: Decision of the Court on compensation 40D. (1) In a case before the Court as to the amount of compensation or as to the amount of any of its items the amount of compensation to be awarded shall be the amount decided upon by the two assessors. (2) Where the assessors have each arrived at a decision which differs from each other then the Judge, having regard to the opinion of each assessor, shall elect to concur with the decision of one of the assessors and the amount of compensation to be awarded shall be the amount decided upon by that assessor.

10 (3) Any decision made under this section is final and there shall be no further appeal to a higher Court on the matter. [emphasis added] [40] Subsection 49(1) of Act 486 further provides as follows: 49. (1) Any person interested, including the Land Administrator and any person or corporation on whose behalf the proceedings were instituted pursuant to section 3 may appeal from a decision of the Court to the Court of Appeal and to the Federal Court: Provided that where the decision comprises an award of compensation there shall be no appeal therefrom. [emphasis added] [41] In the case of Calamas v Pentadbir Tanah Batang Padang [2011] 5 CLJ 125 the Federal Court held that subsection 40D(3) and the proviso to subsection 49(1) of Act 486 did not allow appeals against awards of compensation made by the High Court in land acquisitions referred to the High Court. [42] Borang N filed by the Appellant in this case clearly stated that its objection was against the amount of compensation ( jumlah pampasan ). [43] The proceedings before the High Court and the submissions before us clearly were in respect the assessment of the market value of the Scheduled Land and the amount that should have been awarded as injurious affection. Market value and injurious affection were components of an award of compensation

11 [44] We were therefore of the view that subsection 40D(3) and the proviso to subsection 49(1) of Act 486 applied to the acquisition of the Acquired Area. The decision of the Federal Court in Calamas v Pentadbir Tanah Batang Padang applied. We were therefore satisfied that we did not have the jurisdiction to hear this appeal. This appeal must therefore be dismissed. Adequacy of Compensation [45] As stated above, we had proceeded to hear submissions on the adequacy of compensation in case we were wrong in our view that we lacked jurisdiction to hear this appeal. Land use [46] It was not in dispute that the Scheduled Land was alienated before Our perusal of the title showed that it was in fact alienated on 06/01/1916. It was held under Geran Mukim. The category of land use was not expressly stated on the title. [47] Section 53 of the National Land Code [ NLC ] contains provisions affecting the use of land alienated before the date of commencement of the NLC (01/01/1966) until a category of land use is imposed on the land. [48] Under subsection 53(2), land which was (a) country land or (b) town or village land held under Land Office title shall become subject at that commencement to an implied condition that it shall be used for agricultural purposes only. Section 115 of the NLC will apply to that land.

12 [49] Under section 115 of the NLC land subject to the category of use agriculture can only be used for agricultural purposes. However, buildings to be used as dwelling houses of the proprietor or his servants or workers and buildings for agricultural purposes can be constructed on the land. [50] Subsection 53(2) however saves buildings constructed before the date of commencement even if the buildings would not be permitted under section 115 of the NLC. It also allows the continued use of the land for industrial purposes if it was lawfully so used before the commencement date. [51] The Scheduled Land was held under Mukim grant and therefore, by virtue of the definition of Land Office title in section 5 of the NLC, it was held under Land Office title. [52] In those circumstances, it was understandable that the assessors treated the Scheduled Land as being subject to the category of land use agriculture. In our view, however, that was a more generous treatment of the Scheduled Land than what in fact was required by section 53 of the NLC. [53] Subsection 53(1) of the NLC states as follows: 53. (1) This section applies to all land alienated before the commencement of this Act other than land which, immediately before that commencement, is subject to an express condition requiring its use for a particular purpose. [emphasis added]

13 [54] The Scheduled Land had the following express condition endorsed on its title: That not less than 20 fruit trees, coconut or rubber trees shall be planted to the acre and the whole area shall be planted within 3 years from and thereafter maintained in good condition. Nature of Cultivation: Fruit trees. [55] It was clear from the express condition that the Scheduled Land could only be used for the cultivation of fruit trees. That express condition (requiring the use of the Scheduled Land for a specific purpose) placed the Scheduled Land OUTSIDE the ambit of section 53 of the NLC. [56] We were unable to agree with the Appellant that the Scheduled Land could be therefore be used for other purposes. [57] The exclusion of land with express conditions from the ambit of section 53 was precisely because it is already expressly required to be used for a particular purpose. [58] There was no evidence to show that as at the Reference Date, the express conditions had been removed or a category of land use had been applied to the Scheduled Land to enable it to be developed in accordance with the layout plan which the Appellant had obtained conditional development order for in [59] The Government Valuer had taken all these into account in arriving at her valuation. So did the assessors.

14 Development potential Development order for the Scheduled Land [60] As we have mentioned in paragraph 20 above, the assessors noted in their report that the Scheduled Land had a development order for the Scheduled Land. However, we noted that the development order had a lifespan of one year and had to be renewed every year. There were conditions imposed by the planning authority. There was no evidence that on the Reference Date the development order was still valid. [61] The Private Valuer s Report stated that he inspected the Scheduled Land on 21/11/2011, more than 18 years after the Reference Date. Yet he found the land to be overgrown with trees and thick shrubs. The development order had clearly lapsed. Best Comparable [62] With regard to the Comparables, the Appellant submitted, as mentioned above, that the best Comparable was the land adjacent to the Scheduled Land. That Comparable must be Lot as described in paragraph 2.23 of the Appellant s written submission. [63] The Appellant s Comparable of Lot was disregarded by the Government Valuer and the assessors for two reasons. The main reason was that the transaction was never concluded. [64] In our view, when the sale and purchase transaction of a parcel of property is not concluded, the value of the aborted sale

15 should not be used for determining the market value of land being acquired. [65] The secondary reason was that that Lot had a valid development order on the date of transaction. The development order was issued on 14/11/1992, about 3 months before the Reference Date. [66] We have also examined the development order for Lot and noted that Lot must have already been converted to building for commercial purposes on the date of acquisition. [67] Unlike the 1984 and 1986 development orders for the Scheduled Land, which had a condition making the orders subject to the conversion of land use by the Land Office, no such condition could be found in the development order for Lot Interestingly, the development order for Lot contained the following paragraph: 21. Memohon dan memperolehi kelulusan Pengarah Jabatan Tanah, Wilayah Persekutuan sebelum Perakuan Menduduki Bangunan dikeluarkan untuk menyelaraskan kadar cukai tanah bagi lot/lot-lot yang terlibat mengikut kegunaan tanah, iaitu perdagangan. [68] The requirement in paragraph 21 (and in the subsequent paragraph 22) of the development order for Lot in relation to the approval of the Land Office referred to the stage before the certificate of fitness for occupation was issued, NOT before the commencement of development. Further, the reference in paragraph 21 was to the adjustment of the rate of quit rent of the individual

16 developed lots so that they would be consistent with the land use. The land use as stated in that paragraph was perdagangan. [69] We were therefore of the considered view that the Government Valuer and the assessors were correct in disregarding Lot for purposes of comparison. Injurious affection [70] The assessors had taken into account the fact that the Acquired Area was on that part of the Scheduled Land that was on a steep slope. The Acquired Area was adjacent to the then existing boundary of the Kuala Lumpur-Seremban Highway. [71] The Private Valuer was of the opinion that the acquisition had the effect of reducing the direct frontage of the subject property to the Kuala Lumpur-Seremban Highway. The Private Valuer acknowledged that the Acquired Area was on a steep slope. However the Private Valuer was of the opinion that even though the portion acquired is very steep, this should not exclude the possibility that the section can be filled with earth to flatten it. [72] After the acquisition, the Scheduled Land still had substantial direct frontage to the Highway. As mentioned above, the Acquired Area was only equivalent to 4.656% of the total area of the Scheduled Land, and situated at one corner of the Scheduled Land. After the acquisition of 7,964 square feet, the remaining area of the Scheduled Land was 163,098 square feet. We had no basis to disagree with the assessors opinion that remaining area was still large and was still capable of being developed without any problem.

17 [73] It was not in dispute that the Scheduled Land had a then existing road access at Kampung Malaysia Tambahan towards Jalan Sungai Besi. This was not affected by the acquisition. Any access to the Kuala Lumpur-Seremban Highway could only be constructed subject to the approval of the Malaysian Highway Authority. This was made clear in the 1986 development order. We found therefore no basis to disagree with the assessors that after the acquisition the Scheduled Land continued to have the same road access that it had before the acquisition. [74] Having examined the reports of both the Government and Private Valuers, we found no error in the assessors opinion that the acquisition did not affect the remainder of the Scheduled Land in a detrimental way. CONCLUSION [75] We were unanimous in our conclusion that the High Court had arrived at the correct decision in assessing the value of the Scheduled Land, and in dismissing the claim for injurious affection. [76] We therefore dismissed the appeal by the Appellant. However, we made no order as to costs. tt (ZAHARAH BINTI IBRAHIM) Putrajaya. 15 June 2015.

18 For the Appellant: Encik Amarjeet Singh Encik W.K. Yee [Tetuan Wan Chin & Co] For the Respondent: Puan Narkunavathy Sundareson, Senior Federal Counsel [Jabatan Peguam Negara, Cawangan Wilayah Persekutuan]