ANJUR WAJAR SDN BHD v Kerajaan Negeri Pahang (CA-25-8-10/2025)

These two judicial review applications involve the same parties and arise from a common factual matrix relating to the Applicant's rights under a Lease Agreement for Land and the Extraction of Remaining Timber and Logging Residue within the Forest Plantation Development Project at Kemasul Forest Reserve, Mukim Semantan, Temerloh dated 2 July 2014 ("the Agreement").

The first judicial review ("JR1") challenges the Respondent's decision communicated by way of a letter dated 24 December 2024 informing the Applicant that it would only receive an ex gratia consolation payment amounting to 30% of the sum of RM597,600.00 assessed by the Temerloh Valuation and Property Services Department ("JPPH").

The second judicial review ("JR2") challenges the Respondent's purported decision revoking:

the approval to lease the subject land to the Applicant; and

the approval permitting the conversion of the land use from forest plantation to a Large Scale Solar ("LSS") project. [4] As the issues arising in JR2 have a direct bearing upon the justification advanced by the Respondent in defending the impugned decision in JR1, both applications were heard together. [5] Having carefully considered the affidavits filed, the written and oral submissions of learned counsel together with the entire record of proceedings, this Court allowed both judicial review applications. PROCEDURAL HISTORY [6] The chronology of these proceedings deserves particular mention as it explains why both judicial review applications were ultimately determined together. [7] JR1 was commenced first. In that application, the Applicant sought to challenge the Respondent's decision dated 24 December 2024 whereby the Applicant was informed that only 30% of the compensation assessed by Jabatan Penilaian dan Perkhidmatan Harta Temerloh ("JPPH") would be paid to the Applicant by way of an ex gratia consolation payment. [8] Before this Court could deliver its decision in JR1, the Applicant commenced a second judicial review application ("JR2"). JR2 challenged an entirely different administrative decision, namely the Respondent's alleged revocation of the approval to lease the subject land together with the approval permitting the conversion of the leased area from a forest plantation project to a Large Scale Solar ("LSS") development. [9] The Respondent objected to the grant of leave in JR2. After hearing the parties, this Court allowed leave to commence JR2. [10] Having considered the issues raised in both proceedings, this Court formed the view that although the two judicial review applications challenged different administrative decisions, they arose from the same contractual relationship, involved substantially the same factual matrix and more importantly, the Respondent's defence in JR1 was heavily predicated upon the validity of the alleged revocation challenged in JR2. [11] In particular, one of the principal justifications advanced by the Respondent for reducing the compensation payable to the Applicant to only 30% was the contention that the Applicant's rights under the lease and the approval for the LSS development had already been revoked. [12] It therefore became apparent that any determination of JR1 without first deciding the legality of the alleged revocation in JR2 carried a real risk of inconsistent findings and unnecessary duplication of judicial effort. [13] In the exercise of this Court's inherent case management powers, the hearing and determination of JR1 was therefore stayed pending the disposal of JR2. Subsequently, both judicial review applications were heard together. [14] On 4 June 2026, after hearing full submissions from all parties, this Court delivered its decisions in both matters. JR2 was first allowed, following which this Court also allowed JR1. [15] Although the two applications were disposed of on the same day, it must be emphasised that each application was considered independently upon its own legal and factual merits. The decision in JR2 did not automatically determine the outcome of JR1. Nevertheless, the Court's findings in JR2 necessarily formed part of the factual and legal context within which the issues arising in JR1 fell to be determined. [16] This Court considered it undesirable to determine JR1 in isolation while the legality of the alleged revocation remained unresolved in JR2. Judicial review proceedings ought, where possible, to be determined in a manner that avoids inconsistent findings on overlapping factual issues, promotes procedural economy and enables the Court to examine the impugned administrative decisions in their proper factual and legal context. The stay granted in JR1 was therefore not a postponement of justice but a case management measure intended to facilitate the just, expeditious and coherent disposal of both proceedings. BACKGROUND FACTS [17] In 2013, the Pahang State Executive Council approved the Applicant's application to lease approximately 170 hectares within the Kemasul Forest Reserve for the purpose of establishing a forest plantation. [18] The approval was subsequently formalised through the Agreement dated 2 July 2014. [19] Pursuant to the Agreement, the Applicant was granted the right to manage and develop the leased area for a period of up to sixty (60) years, subject to the agreed terms and conditions. [20] It is undisputed that throughout the ensuing years the contractual relationship between the parties continued and the Respondent consistently accepted rental payments from the Applicant. [21] In 2019, the Applicant applied to convert the use of the leased land for the development of a Large Scale Solar project. That application was approved in principle by the State Executive Council. [22] Sometime between 2023 and 2024, part of the leased area became affected by the East Coast Rail Link ("ECRL") project. Consequently, a valuation exercise was undertaken by JPPH Temerloh. [23] JPPH assessed the reasonable compensation payable for the affected area at RM597,600.00. Subsequently, however, the State Executive Council resolved that only 30% of the assessed amount would be paid to the Applicant by way of an ex gratia consolation payment. [24] In these proceedings, the Respondent seeks to justify that decision principally on the basis that the lease approval and the approval for the solar project had already been revoked. ISSUES FOR DETERMINATION [25] In the opinion of this Court, the principal issues for determination are:

whether the revocation decision challenged in JR2 was lawfully communicated to the Applicant;

(ii) whether the revocation was made in accordance with the requirements of natural justice;

(iii) whether the decision to reduce the compensation to 30% in JR1 was lawful, rational and procedurally fair;

(iv) whether the Respondent was under a duty to provide reasons for that decision; and

whether the impugned decisions violated the Applicant's legitimate expectation. FINDING AND ANALYSIS JR2 - THE CHALLENGE AGAINST THE REVOCATION DECISION Whether the Respondent proved that the revocation was communicated to the Applicant [26] The cornerstone of the Respondent's defence is that the State Executive Council had revoked the relevant approvals in 2022 and that a letter dated 7 September 2022 ("MIJ-7") had been sent to the Applicant. [27] The critical question before this Court is not whether such a letter existed. Rather, the true question is whether the Respondent has discharged its burden of proving that the letter was in fact dispatched and communicated to the Applicant. [28] In this regard, the Respondent produced nothing more than a copy of the letter itself. Beyond the letter, there was neither evidence of posting, an acknowledgment of receipt card, a postal receipt, courier records nor proof of delivery. Equally absent was any witness who could testify as to the actual dispatch of the letter. [29] Ultimately, what this Court is left with is merely a copy of a letter bearing the Applicant's address. [30] In the judgment of this Court, the existence of a letter does not, without more, establish that the letter was ever sent. The burden of proving communication lies upon the party who seeks to rely upon the decision contained in that communication. [31] Where an administrative decision is intended to affect or extinguish a person's rights, it is incumbent upon the decisionmaker to prove that the decision was effectively communicated to the affected party. [32] This Court accepts that the address appearing on MIJ-7 is identical to the address used in other correspondence exchanged between the parties. However, the fact that the address is correct does not constitute proof that the letter was actually posted. [33] It merely establishes that the intended recipient's address was correctly identified. It does not establish that the letter ever left the possession of the Respondent. The conduct of the parties following the alleged revocation [34] The subsequent conduct of the parties is likewise inconsistent with the Respondent's contention that the revocation had been effectively communicated. [35] After the alleged revocation:

the Respondent continued accepting rental payments;

the Respondent continued dealing with the Applicant as the lessee;

the Applicant continued asserting rights over the leased area; and

at no point did the Respondent reply by informing the Applicant that its rights had already been revoked. [36] More significantly, when the issue of compensation arising from the ECRL acquisition arose, the Respondent did not take the position that the Applicant no longer possessed any rights whatsoever. Instead, the Respondent itself approved a payment, albeit reduced, to the Applicant. [37] Such conduct is fundamentally inconsistent with the Respondent's present contention that the Applicant's rights had ceased years earlier. [38] Conversely, it is entirely consistent with the Applicant's assertion that no revocation had ever been communicated. Natural Justice [39] While this Court readily accepts that the State Authority possesses extensive statutory powers over State land and forest reserves, those powers are by no means immune from judicial scrutiny. [40] That principle has long been established in Pengarah Tanah dan Galian Wilayah Persekutuan v Sri Lempah Enterprise Sdn Bhd [1978] LNS 143. [41] There exists no such thing as an unfettered administrative discretion. Every exercise of public power must be exercised lawfully, fairly and reasonably. [42] In the present case, there is no evidence that:

any show cause notice was issued;

the Applicant was afforded an opportunity to be heard; or

any representation made by the Applicant was considered before the alleged revocation. [43] Although the power to revoke may lie within the authority of the State Executive Council, the manner in which that power was exercised failed to satisfy the minimum requirements of procedural fairness. [44] On that ground alone, the purported revocation cannot be sustained. JR1 - THE CHALLENGE AGAINST THE 30% COMPENSATION DECISION Whether this is merely a contractual dispute [45] This Court does not accept the Respondent's submission that this dispute is purely contractual in nature. [46] What is being challenged is not a breach of contract per se. Rather, the Applicant challenges a decision of the State Executive Council exercising public power. [47] Such a decision remains amenable to judicial review. The Effect of JR2 Upon JR1 [48] This Court emphasises that JR1 does not automatically succeed merely because JR2 succeeds. [49] Nevertheless, once the revocation decision is quashed, one of the principal foundations relied upon by the Respondent to justify the reduction of compensation necessarily falls away. [50] The Respondent's case is premised upon the contention that the Applicant had ceased to possess any rights over the leased area and was therefore only deserving of 30% of the assessed amount. [51] Once the revocation itself is found to be unlawful, that premise cannot stand. Failure to Give Reasons [52] In the opinion of this Court, the most significant issue in JR1 is the Respondent's complete failure to provide any reasons for reducing the assessed compensation. [53] JPPH professionally assessed the compensation payable at RM597,600.00. The State Executive Council thereafter decided that only 30% would be paid. [54] The Respondent's position throughout these proceedings may be summarised as follows:

the Applicant's rights had been revoked;

the Applicant was therefore not entitled to compensation;

nevertheless, MMK decided to approve a payment equivalent to 30% of JPPH's assessment as an ex gratia payment. [55] With respect, this explanation gives rise to more questions than answers. [56] If the Applicant was truly entitled to nothing, the Court is unable to discern why compensation was fixed at 30%. Why not 10%, 20% or 50%? Why not no payment at all? [57] No affidavit evidence was produced identifying:

the criteria adopted by MMK;

the factors considered;

the methodology employed;

the basis upon which 30% was selected.

what justified the departure from the professional valuation [58] The Court is therefore left with a figure unsupported by any disclosed reasoning process. [59] Not to be mistaken, this Court does not suggest that the State Executive Council was legally bound to adopt the valuation prepared by JPPH. It was entitled to accept, reject or depart from that valuation. [60] However, where the Executive chooses to depart by as much as seventy percent from a professional valuation obtained by the Government itself, some intelligible explanation becomes indispensable. [61] Without reasons, this Court is unable to examine whether the decision is rational and similarly, the affected party is deprived of any meaningful opportunity to understand or challenge the decision. Without reasons, transparency in public administration becomes illusory. Legitimate Expectation [62] This Court accepts that the doctrine of legitimate expectation cannot override an express statutory power. [63] That much was made clear by the Federal Court in North East Plantations Sdn. Bhd [2011] 4 CLJ 729. However, North East Plantations cannot be understood as permitting public authorities to disregard procedural fairness. [64] In the present case:

the Agreement had subsisted for many years;

rentals continued to be paid;

rentals continued to be accepted;

JPPH undertook a formal valuation exercise; and

the Respondent itself accepted that some form of compensation ought to be paid. [65] In those circumstances, the Applicant possessed, at the very least, a legitimate expectation that it would be informed of any decision affecting its rights, it would be given reasons for any substantial reduction in compensation and it would be treated fairly throughout the decision-making process. [66] Those expectations were plainly not met. CONCLUSION AND DECISION [67] Ultimately, this case is not about whether the State Authority possesses power over State land and forest reserves. That power undoubtedly exists. [68] This case is also not about whether this Court ought to substitute its own decision for that of the Executive. It ought not to do so. [69] The real question is whether public power was exercised lawfully. [70] This Court finds that the revocation decision challenged in JR2 was never proven to have been lawfully communicated to the Applicant and was made in breach of the requirements of procedural fairness. [71] This Court further finds that the impugned decision in JR1 reducing the assessed compensation to 30% was made without any disclosed reasoning, without procedural fairness and is therefore unsustainable in public law. [72] Accordingly, both judicial review applications are allowed with a global costs of RM15,000.00 subject to allocatur. Dated: July 2026 (SAMRY BIN MASRI) JUDICIAL COMMISSIONER HIGH COURT KUANTAN Counsel for the Applicant : Tetuan Bodipalar & Partners Peguambela & Peguamcara Unit 10-3, Level 10 Wisma Mont Kiara No.1, Jalan Kiara, Mont Kiara 50480 Kuala Lumpur Counsel for Respondent : Pejabat Penasihat Undang-Undang Negeri Pahang Tingkat 3, Blok B Wisma Sri Pahang 25200 Kuantan