Jh Capital Services Sdn Bhd v Pentadbir Tanah Daerah Petaling (B-01(A)-134-03/2019)

Rayuan Sivil No: B-01(A)-134-03/2019 1 DALAM MAHKAMAH RAYUAN MALAYSIA DI PUTRAJAYA [BIDANG KUASA RAYUAN] RAYUAN SIVIL NO: B-01(A)-134-03/2019 ANTARA JH CAPITAL SERVICES SDN BHD (No. Syarikat: 989956-W) ... PERAYU DAN PENTADBIR TANAH DAERAH PETALING … RESPONDEN [Dalam Perkara mengenai Rujukan Tanah No.: BA-15-194-06/2018 dalam Mahkamah Tinggi Malaya di Shah Alam, Selangor Darul Ehsan Antara JH Capital Services Sdn Bhd (No. Syarikat: 989956-W) ... Pemohon Dan Pentadbir Tanah Daerah Petaling ... Responden] CORAM: HAMID SULTAN ABU BACKER, JCA KAMARDIN HASHIM, JCA HANIPAH FARIKULLAH, JCA Rayuan Sivil No: B-01(A)-134-03/2019 2 JUDGMENT OF THE COURT Introduction [1] This is an appeal in respect of a land reference under section 37 of the Land Acquisition Act 1960 (‘the Act’) heard and decided by the learned High Court Judge at Shah Alam, Selangor vide Land Reference No. BA- 15-194-06/2018 on 23.2.2019. The appellant was not satisfied with the award given by the Land Administrator and has accepted the award under protest. [2] At the High Court, the award was increased by the learned High Court Judge sitting with two Assessors. Dissatisfied with the decisions of the High Court, the appellant appealed to this Court. [3] We heard the appeal and after hearing the parties, we dismissed it with costs. We now give our reasons. Brief Facts [4] The appellant was the registered proprietor of a piece of land held under H.S.(D) 102165, PT 15978 (Lot 52777), Mukim of Damansara, District of Petaling, Selangor Darul Ehsan (‘the said Land’). The said Land was located in an area known as the Glenmarie Industrial Park, situated at the junction between Persiaran Kerjaya and Jalan Kerjaya. [5] The said Land has an area of about 2,628 square meters or 28,288 square foot with a freehold title catagorised as commercial building. Rayuan Sivil No: B-01(A)-134-03/2019 3 [6] The appellant’s land was subject to acquisition under the Act for the purpose of constructing the third Light Rapid Transit Line (‘LRT 3’) between Bandar Utama, Petaling Jaya and Johan Setia, Klang. The declaration of intended acquisition was gazetted on 23.2.2017. [7] The Land Administrator conducted an enquiry pursuant to section 12 of the Act on 31.10.2017 to determine the amount of compensation payable to the appellant. At the conclusion of the enquiry, the Land Administrator awarded compensation in the sum of RM1,568,156.85. The amount comprises of RM497,000.00 being the value of the land acquired (2,628 square metre at RM4,500.00 per square metre equal RM11,826,000.00 minus RM11,329,000.00 paid to bank as chargor), RM300,000.00 being compensation for loss of rental income suffered from the termination of the tenancy agreement with two tenants and RM771,156.85 being compensation for acquiring a new site and expenses incurred for mobilisation to the new site. Further sum of RM3,746,346.00 was paid to the 1st tenant, Kemas Maju Motor Sdn Bhd and sum of RM2,079,490.00 was also paid to the 2nd tenant, Sadra Motor Sdn Bhd. [8] The Land Administrator in his Award dated 31.10.2017, expressly stated that: “Nilaian tanah oleh pihak JPPH ialah sebanyak RM4,500.00 semeter persegi. Manakala pihak penilai yang dilantik oleh tuan tanah menuntut nilaian sebanyak RM7,535.00 semeter persegi. Berdasarkan kepada kedua-dua laporan nilaian tersebut, saya memutuskan untuk memberi nilaian sebanyak RM4,500.00 semeter persegi iaitu sama dengan nilaian oleh pihak JPPH. Oleh itu pampasan tanah yang diambil seluas 2,628 Rayuan Sivil No: B-01(A)-134-03/2019 4 meter persegi adalah sebanyak RM11,826,000.00” - see page 53, Vol. 2, ROA. [9] The appellant objected to the amount of compensation awarded to them by the Land Administrator by filing Form N requesting the Land Administrator to refer the matter to the Court for its determination pursuant to section 38 of the Act. The appellant contended that the compensation awarded was inadequate on the grounds that the Land Administrator had failed to consider, amongst others, the said Land was purchased at a price of RM10,749,360.00 on 10.9.2013 (principle of equivalence), potentialities, business compensation, relocation basis, extinguishment basis and replacement costs basis. [10] The learned High Court Judge sat with two assessors to determine the adequacy of the compensation payable to the appellant. After hearing the evidence and submissions of parties, the Land Reference Court allowed the appellant’s objection in part in respect of the current market value of the said Land which was increased from RM4,500.00 to RM5,000.00 per square metre. The Land Reference Court allowed an additional award for the sum of RM1,314,000.00 to be paid to the appellant. Other claims by the appellant was rejected. [11] The Learned Judge in his Grounds of Decision dated 13.5.2019 decided that: “[10] Untuk tujuan pencerahan, keputusan Mahkamah untuk menaikkan nilaian tanah pemohon daripada RM4,500.00 smp kepada RM5,000.00 smp dibuat setelah mendapatkan pandangan dan nasihat daripada pengapit-pengapit. Pengapit-pengapit sebulat suara mencadangkan Rayuan Sivil No: B-01(A)-134-03/2019 5 harga nilaian RM5,000.00 smp yang mana pada pandangan mahkamah adalah wajar dan munasabah berdasarkan kaedah perbandingan yang digunakan semasa mengemukakan pandangan.” [Emphasis added] [12] Before us, learned counsel for the appellant submitted that the appellant was not compensated for his true loss as there was no compensation for the potentialities of the said Land. Thus, learned counsel argued that there was no compliance with the principle of equivalence as decided by the Federal Court in Semenyih Jaya Sdn Bhd v. Pentadbir Tanah Daerah Hulu Langat & Another Case [2017] 5 CLJ 526. [13] Learned counsel further submitted that the actual cost for purchasing the said Land duly incurred by the appellant should include the late interests paid to the seller as well as the interest for the bank loan. These interest element ought to be compensated under the same principle of equivalence. [14] Finally, learned counsel argued that failure by the Land Administrator and the learned High Court Judge to complied with the principle of equivalence by not considering potentialities of the said Land and the interests element amount to a failure to adhere to the applicable laws and was acted in ultra vires of Article 13 of the Federal Constitution. [15] Now, Article 13 of the Federal Constitution provides: “13. Rights to property

(1) No person shall be deprived of property save in accordance with law. Rayuan Sivil No: B-01(A)-134-03/2019 6

(2) No law shall provide for the compulsory acquisition or use of property without adequate compensation.” [16] There is no doubt that the Act is a legislation that empowers a state authority to deprive a person of his property. Thus, the provisions of the Act must be strictly followed and complied with or otherwise the land acquisition exercise is not in accordance with the law. The Act is meant to safeguard the constitutional right to property under Article 13 of the Federal Constitution. The Act prescribes the procedure to be followed by the state authority for the land acquisition exercise, including the determination of the fair and reasonable amount of compensation to be paid to land owners and other affected parties. We are of the view that the provisions of the Act must be interpreted in favour of the land owners and other persons affected by the acquisition exercise of the property. [17] After perusing the Appeal Records and the issues ventilated before us by both parties in their oral and as well as in their written submission, we are of the view that the appellant’s appeal hinges on the amount of compensation. The appellant was not happy with the quantum awarded by the Land Administrator which was increased by Land Reference Court not up to their expectation. Their grievances was on their allegation that the price of the said Land paid by them and interest element were not taken into consideration in determining the award. [18] The argument advanced by the learned Assistant State Legal Advisor for the respondent is that, to which we agreed, the burden is on the appellant to make out a prima facie case of inadequate award. Only when the appellant succeeds in doing so would the respondent be called upon to Rayuan Sivil No: B-01(A)-134-03/2019 7 introduce their evidence; otherwise the appellant’s case must fail and the Land Administrator’s award should stand (see Ong Yan & Anor v. Collector of Land Revenue, Alor Gajah, Malacca [1986] 1 MLJ 405]. [19] Learned counsel for the appellant relied heavily on the Federal Court decisions in Semenyih Jaya Sdn Bhd (supra); Ng Tiou Hong v. Collector of Land Revenue, Gombak [1984] 1 CLJ Rep. 289; Malakoff Bhd v. Pemungut Hasil Tanah Seberang Prai Utara, Butterworth [2005] 1 CLJ 365; and Pentadbir Tanah Daerah Kota Tinggi v. Siti Zakiyah Sh Abu Bakar & Ors [2005] 4 CLJ 630 to support his argument. [20] Learned counsel for the appellant cited to us a few passages from Semenyih Jaya’s case on points of law regarding the issue on what was an adequate compensation which merit our reproduction below: “[197] Article 13(2) is a constitutional safeguard to land owners to receive “adequate compensation” upon acquisition. [198] But what is adequate compensation for a person who has been deprived of his or her property? The term “adequate compensation” is not defined in the Act. In Pentadbir Tanah Daerah Gombak v. Huat Heng (Lim Low & Sons) Sdn Bhd [1991] 1 CLJ 16; [1991] 1 CLJ (Rep) 356; [1990] 3 MLJ 282, the Supreme Court held that “the basic principle governing compensation is that the sum awarded should, as far as practicable, place the person in the same financial position as he would have been in had there been no question of his land being compulsorily acquired”. (see “Compulsory Acquisition and Compensation” by Sir Frederick Corfield QC and RJA Carnwath). Rayuan Sivil No: B-01(A)-134-03/2019 8 [199] The above principle is known as the principle of equivalence. By this principle, the affected landowners and occupants are entitled to be compensated fairly for their loss. But they should receive compensation that is no more or no less than the loss resulting from the compulsory acquisition of their land. ......... [209] It is our finding that the principle of equivalence requires that the appellant is compensated for his true loss. This must include compensation for loss of its business. Applying the principle laid down in Shun Fung Ironworks Ltd (supra), such claim falls under the heading “market value” of the land as stated in para. 2(a) and para. 1 of the First Schedule. [210] We are of the view that the value of the land in its actual condition together with its profit value should be considered in determining market value of the acquired land. This was also decided by the Federal Court in Ng Tiou Hong v. Collector of Land Revenue, Gombak [1984] 1 CLJ 350; [1984] 1 CLJ (Rep) 289; [1984] 2 MLJ 35 where Syed Agil Barakbah FJ held that: ... its potentialities must be taken into account. The nature of the land and the use to which it is being put at the time of acquisition have to be taken into account together with the likelihood to which it is reasonably capable of being put to use in the future e.g. the possibility of it being used for building or other developments. [211] It needs emphasis that the market value rule in para. 1 must not be construed rigidly. It is noteworthy that para. 1 of the First Schedule itself does not define the term market value. Instead, it enumerates the process of determining market value of the land. Apart from the price of Rayuan Sivil No: B-01(A)-134-03/2019 9 comparable sales of the acquired land in the vicinity, the conditions of the land form a basis in the computation of market value. Thus any restrictions in title, any specification and category in the land use ought to be considered in determining the market value of the land. Similarly, any improvement made by the owner to the land (subject to the restriction imposed in para. 1) and the existence of any building on the subject land are also to be considered. [212] In the present case, what was the actual condition of the appellant’s land at the time of acquisition? Clearly, the appellant had already embarked on commercially developing the land into an industrial area. Thus, the appellant’s loss of business is to be incorporated in the development value of profit value of the land forming part of the market value of the acquired land. In determining market value of the land as stated in para. 2(a) of the First Schedule, the Land Administrator and the court must give consideration to the profit value of the land at the time of acquisition. [213] It can be seen that the Act is sufficiently flexible to allow for the determination of equivalent compensation in the circumstances of the present case. Compensation should be for loss of any land acquired, for buildings and other improvements to the land acquired, for the reduction in value of any land retained as a result of acquisition and for any consequential losses to the livelihoods of the owners and occupants. A rigid application of detailed provisions may result in landowners and occupants not being compensated for losses that are not expressly identified in the legislation. [214] A pertinent observation is that para.1(1A) in the First Schedule was inserted by Act A999 so as to allow flexibility when assessing the amount of market value of a land acquired. Paragraph 1(1A) reads: Rayuan Sivil No: B-01(A)-134-03/2019 10 In assessing the market value of any schedule 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). [215] In view of the above, although comparable sales in the vicinity of the acquired land is an important component in the computation of market value of an acquired land, “any suitable method of valuation” is also allowed. Therefore, any appropriate method that serves to provide equivalent compensation to affected persons can be applied. Such methods may include compensation paid on the basis of replacement costs.” [21] From the above excerpt, learned counsel for the appellant submitted that in determining profit value and market value, potentialities must be taken into account together with the likelihood to which it is reasonably capable of being put to use in the future e.g. the possibility of it being used for building or other developments. Learned counsel further submitted that the Land Administrator and the learned High Court Judge have never put their minds to the question of potentialities of the said Land. [22] How assessment of compensation arising out of an acquisition was explained by the Federal Court in Semenyih Jaya’s case as follows: “[200] An assessment of compensation arising out of an acquisition is governed by the First Schedule to the Act. Based on the First Schedule, Rayuan Sivil No: B-01(A)-134-03/2019 11 the quantum of compensation is based on the market value of the land acquired plus the consequential loss suffered by the affected landowners and occupants. Thus, an assessment of compensation is underpinned by the principle of equivalence. The affected landowners and occupants are entitled not only to the market value of the land but also to compensation for the loss and disturbance occasioned, arising out of the acquisition. For a claim to be allowed, it must fall within the heads of compensation listed in para. 2 of the First Schedule. [201] Based on para. 2 of the First Schedule there are six matters (heads of compensation) which are to be taken into consideration when compensation is determined. The heads of compensation are: (a) market value; (b) increase in value of the other land of the person from whom land is acquired; (c) damage caused by severance from any other land of the person from whom the land is acquired; (d) injurious affection; (e) forced change of residence or place of business due to acquisition; and (f) where only part of the land is acquired, any undertaking given by the State Authority for the provision of facilities for the portion left unacquired.” [23] After perusing learned High Court Judge’s grounds, we disagreed with learned counsel’s submission that current market value and potentialities of the said Land was never considered by the learned High Court Judge. These could be distilled from the following paragraphs of the learned High Court Judge’s judgment which we reproduce below: “[4] Setelah meneliti dan menimbang Rekod Bantahan, laporan-laporan penilaian yang dikemukakan penilai-penilai pemohon dan responden, jawapan-jawapan kepada laporan penilaian, hujahan-hujahan yang dikemukakan peguam pemohon dan Peguam Persekutuan yang mewakili responden serta setelah mendengar pandangan-pandangan daripada kedua-dua pengapit, mahkamah telah memutuskan untuk membenarkan sebahagian bantahan pemohon. Nilaian pasaran Rayuan Sivil No: B-01(A)-134-03/2019 12 semasa tanah tersebut telah dinaikkan daripada RM4,500.00 semeter persegi (smp) kepada RM5,000.00 smp. Jumlah award tambahan adalah sebanyak RM1,314,000.00 diberikan kepada pemohon. Lain-lain tuntutan pemohon ditolak. ........ [10] Untuk tujuan pencerahan, keputusan mahkamah untuk menaikkan nilaian tanah pemohon daripada RM4,500.00 smp kepada RM5,000.00 smp dibuat setelah mendapatkan pandangan dan nasihat daripada pengapit-pengapit. Pengapit-pengapit sebulat suara mencadangkan harga nilaian RM5,000.00 smp yang mana pada pandangan mahkamah adalah wajar dan munasabah berdasarkan kaedah perbandingan yang digunakan semasa mengemukakan pandangan. ........ [16] Selain itu, keterangan juga menunjukkan bahawa tanah tersebut telah disewakan kepada 2 syarikat lain yang menjalankan perniagaan menjual kereta. Sila lihat perenggan 5(a) Afidavit Pemohon di Lampiran

12. Di perenggan 5(b) pemohon menyatakan bahawa penyewaan tersebut adalah untuk jangka pendek kerana pemohon berhasrat untuk membina bangunan komersial bertingkat di atas tanah tersebut. Jelasnya, pemohon tidak menjalankan apa-apa aktiviti perniagaan di atas tanah tersebut pada masa pengambilan. Berdasarkan fakta tersebut, sudah tentulah tuntutan pemohon tidak boleh dipertimbangkan menurut peruntukan di bawah subperenggan 2(e) Jadual Pertama APT 1960.” [Emphasis added] [24] It is clear to us from the learned High Court Judge’s judgment that the current market value based on the comparable transactions was considered and accepted by the Judge. The learned Judge did aware and Rayuan Sivil No: B-01(A)-134-03/2019 13 had considered about the proposed future development of the said Land. The learned High Court Judge did not erred in his findings. [25] We agreed with the learned High Court Judge findings that the appellant’s objection and appeal to this Court nothing but purely on the issue of quantum of compensation. On this point, learned High Court Judge reiterates his view: “[8] Apakah yang dimaksudkan dengan perkara yang hendak dirayu di perenggan (b) Notis Rayuan? Sekiranya rayuan tersebut adalah ke atas jumlah pampasan nilaian tanah, maka rayuan pemohon dihalang di bawah subseksyen 40D(3) APT 1960. Walau pun keputusan Mahkamah Persekutuan di dalam kes Semenyih Jaya Sdn Bhd v Pentadbir Tanah Daerah Hulu Langat and another case [2017] 3 MLJ 561 mendapati bahawa s 40D APT 1960 adalah tidak sah kerana bertentangan dengan peruntukan Perlembagaan Persekutuan, pada masa yang sama telah mengekalkan peruntukan subseksyen 40D(3) APT 1960....... [9] Jelasnya, keputusan kes Semenyih Jaya tidak membatalkan peruntukan subseksyen 40D(3) APT 1960. Dengan itu, pemohon dihalang daripada mencabar keputusan Mahkamah Tinggi yang membuat keputusan ke atas jumlah pampasan kecuali di atas persoalan undang-undang. Oleh kerana Notis Rayuan pemohon tidak menyatakan sebarang persoalan undang-undang yang hendak dibangkitkan, maka rayuan pemohon berhubung dengan jumlah award pampasan tambahan adalah dihalang subseksyen 40D(3) APT 1960. Setelah diteliti, perenggan 4(a), (g), (j), (k), (l), (m) dan (n) Alasan Bantahan adalah berkait dengan jumlah award pampasan tambahan yang telah diputuskan oleh Mahkamah.” [26] On the issue of the right of appeal and on the impugned section 40D of the Act, the Federal Court explained at great length as follows in extenso: Rayuan Sivil No: B-01(A)-134-03/2019 14 “[126] As regards the present s. 40D of the Act, since we have declared it to be unconstitutional, our decision is to have prospective effect. The doctrine of prospective overruling will apply here so as not to give retrospective effect to the declaration made. [127] As a matter of principle, a court judgment is “retrospective in effect unless a specific direction of prospectivity is expressed”. This principle has been decided by the Federal Court in PP v. Mohd Radzi Abu Bakar [2006] 1 CLJ 457; [2005] 6 MLJ 393. ........ [135] A perusal of the provisions limiting appeals under the Act is called for here. Subsection 40D(3) of the Act reads:

(3) Any decision made under this section is final and there shall be no further appeal to a Higher Court on the matter. Subsection 49(1) of the Act and its proviso reads:

(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) [136] We take the position that the word “decision” mentioned in sub-s. 40D(3) of the Act flows from the decision-making process described in its preceding subsections which we have held to be unconstitutional. Rayuan Sivil No: B-01(A)-134-03/2019 15 However our finding of unconstitutionality of s. 40D of the Act is because of the decision-making process only, ie, the determination of the amount of compensation by the assessors. No more no less. [137] The provision limiting appeal is in our view, a separate and distinct issue. It does not contribute to the invalidity of sub-s. 40D(3) of the Act. To hold otherwise would be contrary to sub-s. 68(1)(d) of the Courts of Judicature Act 1964 (CJA). The law recognises the power of the Legislature to enact laws limiting appeals by declaring the finality of a High Court order. Subsection 68(1)(d) reads: No appeal shall be brought to the Court of Appeal in any of the following cases: