Horsedale Development Berhad v Pentadbir Tanah Daerah Petaling (BA-15-209-10/2019)

This is a land reference pursuant to section 38 of the Land Acquisition Act 1960 (“the LAA”) in respect of the compulsory acquisition of part of the Applicant’s land. The said land was acquired for Project Transit Aliran Ringan Laluan 3, pursuant to a declaration under section 8 of the LAA vide Selangor Gazette Notification No. 2795 dated 26.7.2018.

The Applicant’s land size was 57,707 square meters. Part of it measuring 7,624.08 square metres (“the Scheduled Land”), was 2 taken in acquisition. Particulars of the Scheduled Land, relevant to the proceedings, are as follows:- Lot/Title No. : PTD 2097 (63212) HSD 266794 Mukim : Bandar Glenmarie District/State : Petaling, Selangor Tenure : Interest in perpetuity Category of land use : Building Express Condition : Bangunan Kediaman Restriction in interest : Nil Encumbrances : Nil The award by the Land Administrator

3.

Value of the land RM 12,198,528.48

Severance and injurious affection RM 5,853,363.20

Loss of development costs RM 402,000.00

Encroachment RM 712,843.20

Valuer’s fee RM 30,400.00 3

Items (a) and (b) were determined based on the market value of the Scheduled Land assessed at RM 1600 per sq metres. (“psm”).

The Applicant was dissatisfied with the award of the Land Administrator. In its Form N dated 29.5.2019 filed with the Land Administrator, the Applicant’s objection to the amount of compensation as determined by the Land Administrator was specifically stated as:-

Pampasan bagi tanah atau nilai pasaran tanah dalam amaun RM 12,198,528.48 yang diberikan adalah tidak adil dan tidak berpatutan kerana tidak menggambarkan nilai pasaran bagi tanah tersebut.

(ii) Pampasan munasabah bagi nilai pasaran tanah adalah terkandung di dalam laporan penilaian yang disediakan oleh pihak Knight Frank (Malaysia) Sdn. Bhd. Valuation Reports filed by respective parties

For the purpose of the land reference proceedings, the Applicant and Respondent each filed two valuation reports, being the first valuation report and rebuttal reports. The reports are as follows:

Private Valuer’s 1st Report (marked as Bundle C) dated 8.1.2020 by Sarkunan Subramaniam of Frank Knight Malaysia Sdn Bhd; 4

Government Valuer’s 1st Report (marked as Bundle D) dated 10.10.2018 by Sr Fung Cheng Loong;

Private Valuer’s Rebuttal Report (Bundle E) dated 5.5.2020; and

Government Valuer’s Rebuttal Report (Bundle F) dated 27.7.2020.

The report filed on behalf of the Respondent caused some consternation on the part of the Applicant as the Government’s valuer, Sr Fung Cheng Loong was of the view that the Applicant was not entitled to compensation for severance, injurious affection, loss of development costs and encroachment, and hence no award ought to have been made by the Land Administrator. His valuation report filed for these proceedings also opined that the market value of the Scheduled Land ought to have been RM 1400 psm instead of RM 1600 as awarded by the Respondent. In summary, his view was that the award of the Land Administrator ought to be reduced in the land reference proceedings.

His opinion led to the Applicant filing a Notice of Application dated 24.9.2020 to expunge portions of the Government valuer’s report recommending a reduction in the award by the Land Administrator as the matters raised therein were not the subject of any Form N objection filed. Consequently, this court has no jurisdiction to consider any reduction of the award made.

The application was heard on 2.10.2020 and dismissed as this court viewed that any objection to the Government Valuer’s Report 5 can be taken by way of legal arguments. The expungement application was considered unnecessary. Proceedings before this Court

The land reference proceedings then commenced on 9.10.2020. Two assessors were appointed to assist the court in determining the merits of the objection filed. They were Encik Sr Mohd Haris bin Yop, a government valuer and Encik Sr Ahmad Fairos bin Mohamad Zamani appointed from private sector.

Before proceeding to consider the merits of Form N, both parties were invited to submit on whether this Court has jurisdiction to consider grounds of objection outside of that stated in Form N filed by the Applicant. The Respondent submitted that Emasin Resources Sdn Bhd v Pentadbir Tanah Port Dickson [2018] 4 MLJ 816 did not preclude the Court from reviewing the award notwithstanding no objection had been filed on the items awarded.

The Applicant on the other hand, submitted that the facts of Emasin (supra) can be distinguished from the present case. The objector in that case sought for an increase in the compensation for injurious affection. The land reference court in considering the objection filed, not only dismissed the claim for additional compensation for injurious affection, it proceeded to reduce the amount awarded. The land reference court was seized with jurisdiction to reduce the award for injurious affection notwithstanding the applicant had asked for an increase as the 6 award for injurious affection was the very subject-matter of the land reference proceedings.

In this case, the sole ground in Form N pertained only to market value of the land, and the determination of the court ought not to go outside the four corners of the objection in Form N.

Having considered the oral submissions of both parties, this Court agrees with the submission of counsel for the Applicant. In addition, this court was of the view that the provisions of section 38 of the LAA conclusively settles this issue. The provision reads, Form and content of application, etc.

(1) Any objection made under section 37 shall be made by a written application in Form N to the Land Administrator requiring that he refer the matter to the Court for its determination, and a copy thereof shall be forwarded by the Land Administrator to the Registrar of the Court.

Every application under subsection (1) shall state fully the grounds on which objection to the award is taken, and at any hearing in Court no other grounds shall be given in argument, without leave of the Court.

Every application under subsection (1) shall be made—

if the person making it was present or represented before the Land Administrator at the time when the Land Administrator made his award, within six weeks from the date of the Land Administrator’s award under section 14;

in other cases, within six weeks of the receipt of the notice from the Land Administrator under section 16 or within six months 7 from the date of the Land Administrator’s award under section 14 whichever period shall first expire.

(4)….

Land reference proceedings are commenced by the filing of Form N by the Applicant, which is a written application requiring the Land Administrator to refer his objection to the Court for determination. Paragraph (2) of section 38 precludes the hearing of any grounds not stated in Form N, unless leave of the Court is sought.

The provisions of section 38 therefore envisage that only the grounds in Form N filed by the objector can be considered. If a reduction in the award would is sought, then the party applying for acquisition should file a Form N. As there is no Form N filed on the ground that the award ought to be reduced, this court has no jurisdiction to consider any other ground except that in the Form N filed by the Applicant. Otherwise it would defeat the purpose of filing a Form N and strict observance of time lines stipulated in paragraph 3(c) of section 38.

Consequently, this court rules that only the ground of objection in Form N is to be considered by this court. The issue in this land reference proceedings is therefore a very confined one; limited to the value of the subject land. 8 Market value of land

The sole point of contention in these proceedings is the market value of the Scheduled Land. The starting point to determine market value is the First Schedule to the LAA, which reads, FIRST SCHEDULE [Sections 12, 35, 46 and 47] PRINCIPLES RELATING TO THE DETERMINATION OF COMPENSATION Market value

1.(1) For the purposes of this Act the term “market value” where applied to any scheduled land shall mean the market value of such land—

at the date of publication in the Gazette of the notification under section 4, provided that such notification shall within twelve months from the date thereof be followed by a declaration under section 8 in respect of all or some part of the land in the locality specified; or

in other cases, at the date of the publication in the Gazette of the declaration made under section 8.

In assessing the market value of any scheduled land, the valuer may use any suitable method of valuation to arrive at the market value provided that regard may be had to the prices paid for the recent sales of lands with similar characteristics as the scheduled land which are situated within the vicinity of the scheduled land and with particular consideration being given to the last transaction on the scheduled land within two years from the date with reference to which the scheduled land is to be assessed under subparagraph (1).

…… 9

The provisions of the LAA provide that the material date for valuation of the market value of the Scheduled Land is 26.7.2018, being the date of publication of the Selangor State Government Gazette Notification under section 8 of the LAA.

Case laws have established the applicable principles on the issue of market value. In Nanyang Manufacturing Co. v The Collector of Land Revenue, Johore [1954] 1 MLJ 69, Buhagiar J proffered a definition of market value as, “The market value of land may be roughly described as the price that an owner willing and not obliged to sell might reasonably expect to obtain from a willing purchaser with whom he was bargaining for the sale and purchase of the land.”

Whilst various methods of valuation can be adopted in determining market value, the most common and safest method is the comparison method. In Ng Tiou Hong v Collector of Land Revenue, Gombak [1984] 2 MLJ 35, the Federal Court held, The safest guide is evidence of sales of similar lands of similar quality or position in the locality at or prior to the time of acquisition. The prices paid for such sales can be used as comparables subject to making allowances for all the circumstances.

This method also receives statutory recognition in subparagraph

of the First Schedule. 10

Both parties in this case have adopted the comparison method of valuation to arrive at the market value of the Scheduled Land. As no two lands can be precisely similar in all their circumstances and conditions, a suitable allowance can be made for any differences.

Here, both parties have referred to their own comparables, there being no common comparables. The Applicant’s case

In support of its case for increased compensation, the Applicant relied on four comparables which were transacted, the brief details of which are as follows: No. Particulars of Comparables Transaction Date Transaction Value Adjusted Value 1. Lot 737, Section 13, Bandar Shah Alam 09.06.2016 RM 2,023.53 RM 2,448.47 2. Lot No. PT 49556 Mukim and District of Klang 16.01.2017 RM 2,151.99 RM 2,259.59 3. Lot 12 Section 40, Bandar Petaling Jaya, District of Petaling 24.08.2017 RM 1,906.51 RM 2,502.29 4. Lot Nos. 72024 and 72025 Pekan Country Height District of Petaling 13.04.2018 RM 3,874.08

The Applicant contends that firstly, its comparables are appropriate and suitable. In terms of locality, they are closer to the Scheduled Land as compared to the Government’s comparables. Secondly, its comparables are closest in terms of proximity of 11 sales. Having adjusted for dissimilarities between the comparables and the Scheduled Land, the Applicant’s valuer opined that the market value of Scheduled Land can be assessed at RM 2357.30 psm. The Respondent’s case

The comparables relied on by the Respondent are as follows: No. Particulars of Comparables Transaction Date Transaction Value (psm)

Lot 734, Section 13, Bandar Shah

13.7.2017 RM 1.241.31 2. Lot PT 80704, 80705, 80706 and

13.4.2015 RM 1,066.97 3. Lot PT 27758

14.4.2014 RM 961.15 4. Lot PT 29301

14.4.2014

Unlike the private valuer, the government valuer did not have an adjusted value for each of his comparable. Instead, having considered all the comparables, he viewed comparable no.1 to be the closest to the Scheduled Land and made the necessary adjustments to arrive at a figure of RM 1,365.44 psm. This figure was then rounded up to RM 1400 psm as his market value for the Scheduled Land. 12 Analysis and decision of this court

As the Applicant is seeking for an increase in the compensation, the onus of proving that the award was inadequate and ought to be increased lies with the Applicant. (See: Superintendent of Lands and Surveys, Sarawak v Aik Hoe & Co. Ltd [1966] 1 MLJ 243)

The provisions of the Third Schedule of the LAA provides that the Applicant’s valuation report alone must establish a prima facie case for the Applicant. It is also provided that the Respondent’s valuer’s report must be sufficient to rebut the Applicant’s valuer’s report. At the Applicant’s request the Respondent’s valuer was cross examined. Notwithstanding the evidence elicited during cross examination, the case for the Applicant was largely dependent on its own valuer’s report.

Having considered the description of the lands relied on as the Respondent’s comparable, we are of the view that comparable no. 2, 3 and 4 are unsuitable comparables. In rejecting these comparables, we kept in mind the guiding principle stated in Nanyang Manufacturing Co. v The Collector of Land Revenue, Johore (supra) that the evidence of sales of the same land or similar land in the neighbourhood would be a safe guide to fair market value. 13

Comparable no. 2 is land that is flat in terrain and is of road level. It was transacted at RM 2,152.99 psm and has an advantage in that it had received a planning approval from Majlis Perbandaran Klang for the development of 280 units of condominium and 9 units of shoplots. The land faces the Bukit Kemuning Golf and Country Resort and is proximate to shopping facilities as Econsave Kemuning Greenville, Aeon Big Bukit Rimau and Gamuda Walk Mall, facilities which in not within the locality of the Scheduled Land. It is also not proximate to the Scheduled Land as it is located some 23 kilometers away from the Scheduled Land.

In addition, the transaction for comparable no. 2 was a related party transaction involving same shareholders and directors of both the Vendor and purchaser company by way of a sale of equity of the company. It was therefore not a sale in the open market, and cannot be taken as a reliable comparison (See: Chuah Say Hai & Ors v Collector of Land Revenue, Kuala Lumpur [1967] 2 MLJ 99).

Comparable no. 3 is of a different category of land use. It is categorised as agriculture land with potential for commercial development known as a transit-oriented development. Generally, such land would result in an enhanced market value of the land as it would be valued as commercial land. Although it is a mere 5 km from the Scheduled Land, this comparable faces the NKVE Highway and is close to the Evolve Concept Mall. 14

The last comparable of the Applicant, comparable no. 4 comprise of 2 contiguous lots of land with the benefit of master approval for commercial use. The lands had been zoned and approved for service apartments development. Again, like comparable no. 3, it is dissimilar with the Scheduled Land as the value transacted is based on its commercial value. That being the case, it would fetch a higher price than the Scheduled Land.

As the Applicant’s comparables are dissimilar in several fundamental aspects, they are not proper comparables and it would be wrong to assess the market value on the basis of such comparables. (See: Pentadbir Tanah Daerah Kota Tinggi v Siti

The Respondent through its valuer also submitted 4 comparables which were relied on in assessing the market value of the Scheduled Land. We reject comparable no. 2, 3 and 4 for the following reasons.

All the comparables were transacted more than two years from the relevant date of valuation. Comparable no. 2 was transacted in 2015 whereas comparables no. 3 and 4 were transacted in 2014. They were clearly not recent sales and this fact would diminish the weight to be given to the price these lands were transacted. (See: Dato’ Yu Kuan Huat & 2 Ors v Pentadbir Tanah Wilayah Persekutuan Kuala Lumpur [2011] 1 LNS 1596; Selangor 15 Coconut Bhd v Collector of Land Revenue, Kedah [1995] 2

Comparable no. 2 was also transacted partially in cash and the other part of the consideration being several properties developed by the purchaser in Malaysia and Singapore. That being the case, comparable no. 2 is unsuitable for consideration as it is not a common sale transaction that can be relied upon in evaluating the fair market value of the Scheduled Land. Further, the land is situated in Serdang, Seri Kembangan area which is a low to medium class neighbourhood and thus not comparable to Bandar Glenmarie, the location of Scheduled Land.

As for comparables no. 3 and 4, apart from the fact that the sale of these lands were more than 4 years before the relevant date for valuation, they are too dissimilar in terms of locality and type of transaction. These lands are situated in Sungei Buloh, Taman Bukit Rahman Putra, which is within a different socio-economic neighbourhood.

Comparables no. 3 and 4 were also transacted collectively as one parcel, together with one other property and the sale price was apportioned between the three lots. The nature of the transaction would have an effect on the price transacted as the bulk purchase would reduce the price.

This then leaves us with comparable no. 1 submitted by the Applicant and also the Respondent’s comparable no. 1. 16

Whilst both comparables have their dissimilarities with the Scheduled Land, both are the closest comparable, and adjustments can be made for the dissimilarities. It is not possible for adjustments to be made with mathematical precision. This court is merely to arrive at a fair estimate of market value. In arriving at the market value, the estimates by assessors both of whom are experts in the field of valuation, have been of great assistance. (See: Jitender Singh a/l Pagar Singh & Ors v Pentadbir Tanah Wilayah Persekutuan and another appeal [2012] 1 MLJ 56). Market value of the Scheduled Land

The private assessor considered Lot 737, comparable no. 1 of the Applicant, to be the closest comparable. He then made upward adjustments for favourable factors; 5% for access, 10% for land held in perpetuity and 10% for shape of land to the transacted price of RM 2,023.53 psm. On the other hand, downward adjustments for less favourable factors were also made. 5% was deducted for size of the Scheduled Land, 20% for lack of planning permission, and another 15% for related party transaction. The nett adjustment was 15% downward adjustment of the transacted price. The market value arrived at after these adjustments was then rounded up to RM 1700 psm.

On the other hand, the government assessor considered Lot 734 to be a suitable comparable. Taking into account the transacted price at RM 1,303.37 in 2017, upward adjustments were made for several factors. As Lot 734 was transacted one year earlier than 17 the valuation date, a 5% adjustment was given. 10% adjustment was made for the location of the Scheduled Land as the comparable is situated in Section 13 of Shah Alam; a less favourable location. A further 5% was given for the dual frontage which the Scheduled Land had, in comparison to the single frontage of Lot 734. As the Scheduled Land is land held in perpetuity, a 10% adjustment was made to the transacted price of Lot 734. Another 5% adjustment was made for the Master Development Order obtained for the Scheduled Land, which Lot 734 did not have. The planning density of the scheduled land is higher than Lot 734, and therefore given a 10% upward adjustment. However a downward adjustment of 15% was made in respect of the size of the land as the comparable is three times smaller in size compared to the Scheduled Land. Land which is smaller in size generally fetches a higher price. Based on a nett upward adjustments of 30%, the market value of the Scheduled Land is assessed at RM 1,700 psm.

I find both the assessors’ valuation to be well reasoned. I am aware that I am not obliged to accept either of their views and I can come to a decision of my own on the authority of Semenyih Jaya Sdn Bhd v Pentadbir Tanah Daerah Hulu Langat & Another case [2017] 3 MLJ 561. However, I find no reason to disagree with their valuation of the market value of the Scheduled Land based on the provisions of the LAA and the relevant principles in decided cases. 18

For the foregoing reasons, the Applicant has established a prima facie case for an increase in the compensation awarded by the Land Administrator. We therefore arrive at the following decision in favour of the Applicant:

Additional compensation of RM 762,408.03 to be paid in respect of the Scheduled land, valued at RM 1700 psm;

(ii) Late payment charges at 5% per annum from the date of issuance of Form K (6.9.2019) to the date of realisation;

(iii) No order as to costs;

(iv) Deposit to the returned to the Applicant; and

Assessors fees of RM 500 each to be paid forthwith. Dated: 15th March 2021 -sgd- …………….………… Alice Loke Yee Ching Judicial Commissioner High Court of Malaya at Shah Alam Counsel for Applicant : Ms. Ira Biswas (Ms. Emily Lim with her) Tetuan Chooi & Company + Cheang & Ariff Counsel for Respondent: En. Mohd Abdul Hakim Peguam Kanan Persekutuan, Kamar Penasihat Undang-Undang Negeri Selangor 19