Jw Properties Sdn Bhd v Pentadbir Tanah Kuala Selangor (B-01(A)-508-08/2018)

RM3, 035,145.00 (at RM75, 000.00 per hectare) as compensation for the market value of the Scheduled Land; and

RM180,000.00 as compensation for buildings and structures. [4] Dissatisfied with the awards made by the Respondent, the Appellant lodged an objection under section 38(1) of the LAA 1960 to refer the matter to the High Court. The Appellant filed the requisite form, that is, Form N objecting to the amount of the compensation awarded as well as the persons who will receive the compensation. The grounds of the objection taken by the Appellant are as follows: i. the fair market value of the Scheduled Land should be RM237,220.00 per hectare; ii. the amount of RM180,000.00 awarded as compensation for the buildings on the land was too low and claims a sum of RM8,859.039.00; and iii. the amount of valuer’s fee that was allowed. [5] There was also competing claim between the registered owner, PKPS and the Appellant in respect of the rightful person entitled to receive the compensation awarded. This dispute was settled by the Federal Court on 18.7.2017. The Federal Court dismissed PKPS’s appeal and held that the Appellant was the party entitled to the entire compensation awarded. THE FINDINGS OF THE LEARNED HIGH COURT JUDGE [6] After hearing the parties, the learned High Court Judge sitting with two Assessors dismissed the Appellant's application. In his grounds of 4 judgment, the learned Judge explained why he agreed with the Assessors and had rejected the Appellant's arguments. The opinion of the Assessors are as follows: a) The valuers referred to a common comparable that is, Lot 23. The Assessors found the common comparable Lot 23 to be unsuitable for the following reasons:

There were two transactions involving Lot 23, the first on 4.3.2011 and the second on 8.12.2017. In the first transaction the price of RM400,000.00 for 1/20 undivided shares, equivalent to RM87,274.31 per hectare. The second transaction transacted nine months later was transacted at a price of RM1, 638,225.00 for a 1/20 undivided share which is equivalent to RM357,453.00 per hectare. The assessors found that there was a price escalation of about 300% between the first and the second transaction for Lot 23, only nine months apart and with no plausible explanation for the sudden surge in value;

(ii) both transactions involved only 1/20 undivided shares and do not reflect the value of the whole land; and

(iii) the common comparable is freehold land zoned for residential purposes whereas the Scheduled Land is leasehold and zoned for agriculture, that is, aquaculture. 5 [7] The learned Judge agreed with the opinion of the Assessors that the best comparable transaction would be Lot 28415 (JPPH Comparable No. 3) transacted on 5.1.2011 at the price of RM59,305.21 per hectare and Lot 2970 (JPPH Comparable No. 4) transacted on 24.1.2011 at the price of RM59, 305.21 per hectare. Both these transactions have a base transaction value of RM59,305.21 per hectare. The Assessors made the adjustments as follows:

time (+5%) : RM62, 270.47;

(ii) location (+30%) and Size (+20%) : RM93,405.70; and

(iii) infrastructure (+20%) : RM112, 086.84. [8] The figure of RM112, 086.84 was rounded up to RM115,000.00 per hectare. The Court found that the market value of the Scheduled Land at the date of valuation was RM115, 000.00 per hectare. Therefore, the compensation for the Scheduled Land acquired would be 40.4686 hectares x RM115,000.00 = RM 4,653, 889.00. Since the Respondent had earlier awarded compensation in the sum of RM3,035,145.00, the additional compensation for the market value of the Scheduled Land awarded by the High Court is RM1,618,744.00 (RM4,653,889.00 - RM3,035,145.00). [9] In respect of the Appellant’s claim for compensation of buildings, structures, equipment and improvements on the land acquired, the learned Judge took into consideration that the Scheduled Land was not a bare vacant agricultural land when it was acquired, but was a fully operational aquaculture farm with buildings, ponds with aquaculture equipment with infrastructure constructed on it. The compensation under this head was divided into two categories, that is, for equipment used for 6 the aquaculture business and, for buildings and structures. The Appellant contended that the improvements were made as follows:

Water reticulation system : RM 624,734.01

(ii) Electrical Infrastructure : RM1,441,693.00

(iii) Water paddle wheel : RM 749,680.82

(iv) Water pump : RM 336,395.24 Total : RM3,152,503.95 [10] In ascertaining the current value of the equipment, the learned High Court Judge opined that the ‘depreciated replacement cost’ method is the most appropriate. He agreed with the Assessors that a 50% depreciation was warranted having considered the nature, type and age of the equipment. Therefore, the net value of the equipment after depreciating the value of the equipment at 50% is RM1, 576,251.97. The private valuer valued the buildings on the land at RM973, 760.00. However, the Assessors were of the opinion that the depreciated replacement cost would be 30% or less. The learned High Court Judge agreed with the approach taken by the Assessors and hence, the value of the buildings and structures is RM681, 632.00. The total compensation for the buildings, equipment and improvements would be RM2,257,883.97 (RM1,576,251.97 + RM681,632.00). The award of RM180,000.00 was deducted from the aforesaid sum, the net increased compensation is RM2,077,883.97. The total additional compensation is RM3,696,627.97 (RM2,077,883.97+RM1,618,744.00). [11] The High Court also awarded the sum of RM10, 000.00 as valuer’s fee as well as 5% late payment charge on the additional compensation from the date of Borang K. 7 SUBMISSION OF PARTIES [12] Learned counsel for the Appellant in this appeal sought the following:

setting aside of the High Court order and for the case to be remitted to the High Court for reassessment before a different Judge and set of assessors; and

(ii) further orders so that the reassessment can be conducted within the confines of the order to avoid similar error of law. [13] Before us learned counsel for the Appellant argued the learned High Court Judge and the Assessors had incorrectly applied the provision of section 40C LAA when determining the compensation awarded to the Appellant. Learned counsel further argued that the Assessors had also failed to consider all the relevant matters that ought to be considered as well as not giving any written opinion on each head of compensation and failed to assess based on the principle of equivalence. [14] The Appellant purchased the undeveloped Scheduled Land on 16.4.1997 for RM4, 999,990.00. The Appellant cleared and developed the Scheduled Land by constructing buildings and infrastructure and subsequently turning the Scheduled Land into a fully operational prawn farm. The Appellant’s heads of compensation are as follows:

7.1 Land before improvement RM13, 759,324.00 7.2 Improvements comprising; 8 a) Site Clearance RM 240,282.31 b) Roads RM 1,441,693.88 c) Cultivation Ponds RM 1,730,032.65 d) Reservoirs RM 2,595,048.98 e) Water Reticulation RM 624,734.01 f) Electrical Infrastructure RM 1,441,693.88 g) Paddle Wheel RM 749,680.82 h) Water pumps RM 336,395.24 i) Buildings RM 973.760.00 Subtotal before Depreciation RM 9,159,561.75 After Depreciation (10%) RM 8,243,605.58 TOTAL RM22,002,929.58 (See: pages 225 & 226 Bundle of Document) [15] It was submitted by learned counsel for the Appellant that the Assessors had chosen the Government’s valuer’s comparables 3 and 4, which are both swamp lands; different in characteristics from the Scheduled Land. The Assessors also did not take into consideration the filling cost required to turn the swamp land to one in good condition. Further, no upward adjustments were made to account for the difference between the conditions of the land. Therefore, learned counsel for the Appellant submitted that there was a failure to assess based on principle of equivalence. [16] It was argued that despite the stark dissimilarities, the Assessors failed to give any opinion in writing as required by section 40C LAA. There was evidence adduced that property prices in the vicinity of the Scheduled Land have risen considerably which was not taken into consideration. The Assessors have also not given any opinions why they had valued 9 the claim for site clearance, roads, cultivation points and reservoir at 20% of the value of the Scheduled Land before improvement. [17] Learned counsel for the Appellant contended that since the Assessors had merely given bare written assessments it was difficult to determine whether the rate of depreciation was excessive or otherwise. The High Court Judge in accepting the written assessments had merely rubber stamped the decision of the Assessors. Therefore, that Appellant should not be compensated for less than the purchase price paid for the Scheduled Land. [18] In reply, the learned Assistant State Legal Adviser (ALA) argued that the Appellant's appeal was in fact and in substance an appeal against the compensation and therefore not appealable by virtue of section 40(3) LAA as well as the proviso to section 49 of the same Act. Section 40D (3) of the LAA expressly provides that the decision of the Court on the amount of compensation under this section is final and binding: Decision of the Court on compensation.

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.

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.

Any decision made under this section is final and there shall be no further appeal to a higher Court on the matter. (Emphasis added) 10 OUR DECISION [19] The Appellant's claim before the High Court and the appeal before this Court is for a higher compensation. The main thrust of the Appellant’s appeal can be summarised as follows:

non-compliance with section 40C LAA as the Assessors did not give their reason or opinion for each head of compensation claimed by the Appellant; and

(ii) failure to assess compensation based on principle of equivalence. [20] Section 40C LAA provides: The opinion of each assessor on the various heads of compensation claimed by all persons interested shall be given in writing and shall be recorded by the Judge. [21] Both the Assessors gave their opinion in writing as required by section 40C LAA. The Government Assessor explained in paragraph 5 of her written opinion the reasons for rejecting of Lot 23 as a suitable comparable:

5.0 PENDAPAT UNTUK NILAI TANAH i) Berdasarkan bukti-bukti yang dikemukakan oleh kedua-dua penilai ini dan ulasan diatas, saya berpendapat Perbandingan Sepunya (common comparison) iaitu Lot 23, Geran 25954, Mukim Api-api, Daerah Kuala Selangor saperti ditunjukkan dalam Pelan Sepunya sebagai JPPH’s Com. 1 dan appraisal’s Comp 5 tidak sesuai digunakan kerana melibatkan syer yang kecil dan tidak menggambarkan nilai sebenar lot berkenaan. 11 ii) Pada pendapat saya harga balasan yang dinyatakan @ RM357, 453.00 sehektar adalah tinggi kerana pindahmilik melibatkan syer yang kecil iaitu 1/20 bahagian. Kes mahkamah A.K.A.C.T.V Alagappa Chettiar v Collector of Land Revenue Kuala Lumpur (Date 20/2/1968) “The sales price of the undivided half –interest provided no proper criterion for the subsequent valuation of the whole interest.” iii) Untuk membuktikan bahawa harga balasan ini adalah tinggi, saya merujuk kepada pelarasan untuk perbezaan faktor masa yang digunakan oleh Penilai Pemohon keatas Perbandingan no 3 dan 4% yang digunakan adalah 5% setahun…. [See: pages 24 and 25 Ikatan Dokumen Teras Bersama (Ikatan Penghakiman)] [22] Similarly, the Private Valuer Assessor was ad idem with the Government Assessor as explained in his written opinion [See: pages 29- 34 Ikatan Dokumen Teras Bersama (Ikatan Penghakiman)]. [23] We had carefully considered the arguments of both learned counsels and were of the view that the learned High Court Judge had carefully considered the opinions of the government valuer, the private valuer, as well as the opinion of the Assessors as explained in his grounds of judgment: [11] There is a common comparable lot that both valuers have referred to, and that is Lot 23. A common comparable is generally regarded as the best comparable transaction for the purposes of ascertaining market 12 value, unless there are compelling reasons to disregard them. ……However, the Assessors and I found the common comparable Lot 23 to be unsuitable for the following reasons. [12] There were two transactions involving Lot 23, the first was on 4.3.2011 and the second on 8.12.2011, i.e. some 9 months later. The first transaction was transacted at the price of RM400,000.00 for a 1/20 undivided shares which is equivalent to RM87,274.31 per hectare. Whilst, the second transaction was transacted nine months later on 8.12.2011, at a price of RM1,638,225.00 for a 1/20 undivided share, which is equivalent to RM357,453.00 per hectare. The JPPH valuer has relied on the first transaction as the best comparable, whilst the private valuer has preferred the second transaction as it was the most recent transaction before the valuation date, i.e. the Gazette notification. The private valuer is of the opinion that the second transaction is the most appropriate comparable in accordance to the First Schedule, para 1(1A) of the Land Acquisition Act 1960…. [13] However, both the Assessors find that there is price escalation of some 300% between the first and second transaction for Lot 23, which were just 9 months apart, and there is no plausible explanation for this sudden surge in value. Secondly, both transactions involve only 1/20 undivided share and they do not properly reflect the value of the whole land, as an undivided 1/20 share could be purchased at a premium peculiar to that land. In fact, the Respondent has made an astute observation that the price of RM237,220.00 per hectare as valued by the original private valuer, Messer CH William Talhar & Wong was far too high taking into consideration the prevalent transactions for lands used for aquaculture cultivation generally. Thirdly, the common comparable is freehold land, and zoning is for residential, whereas the Scheduled Land is leasehold and is zoned for agriculture, i.e. aquaculture. 13 [24] The learned High Court Judge concluded as follows: [14] Thus, the Assessors and I have rejected both transactions involving Lot 23 as a suitable comparable transaction. We found that the best comparable transaction would be Lot 28415 (JPPH Comparable No.3) transacted on 5.1.2011 at the price of RM59,305. 21 per hectare and Lot 2970 (JPPH Comparable No.4) transacted on 24.1.2011 at the price of RM59, 305.21 per hectare. [25] The Federal Court in Semenyih Jaya Sdn. Bhd v. Pentadbir Tanah Daerah Hulu Langat and another case [2017] 5 CLJ 526, at page 517, observed: [187] The importance of s. 40C of the Act also lies in the transparency of the decision-making process. In the words of Viscount Simon LC in Richardson v. Redpath, Brown & Co Ltd (supra) : It would seem desirable in cases where the assessor's advice, within its proper limits, is likely to affect the judge's conclusion, for the latter to inform the parties before him what is the advice which he has received. The opinion of the assessors serves to inform the interested persons that the court has considered all issues brought before the court and sought professional views before arriving at its decision. The provision in s. 40C of the Act is also significant in view of the bar to appeal provided for in sub-s. 49(1) of the Act. [26] The Federal Court in Semenyih Jaya (supra) further explained: [198]…..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). [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 14 that is no more or no less than the loss resulting from the compulsory acquisition of their land. Assessment Of Compensation Under The Act [200] An assessment of compensation arising out of an acquisition is governed by the First Schedule to the Act. Based on the First Schedule, 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. [27] We agreed with the learned ALA that it is without a doubt that the learned High Court Judge had fully complied with the requirements of section 40C LAA. The learned High Court Judge had analysed and considered the opinions and justification of both the government and private valuers and given his analysis as illustrated in his grounds of judgment. [28] The present appeal emanated from the application filed by the Appellant in Form N objecting to specifically to the amount of compensation:

Jumlah pampasan untuk tanah

Jumlah pampasan untuk bangunan,kolam dan lain infrastruktur

Kos jurunilai [29] Section 40D (3) LAA provides:

Any decision made under this section is final and there shall be no further appeal to a higher Court on the matter. 15 [30] The Federal Court case of Calamas Sdn Bhd v. Pentadbir Tanah Batang Padang [2011] 5 CLJ 125 decided as follows: Coming back to s. 40D (3) of the Act, I am of the view that the said section clearly stipulates that 'Any decision made under this section is final and there shall be no further appeal to a higher court on the matter’. [31] We agreed with the submission of learned ALA that this appeal relates to the amount of compensation; as such, we held that the appeal was precluded under section 40D of the LAA. We had also considered the points raised by the Appellant and were of the view that there were no questions of law involved. [32] In the light of the above settled principles and after having heard the parties at length, and upon careful perusal of the records of appeals, we found no merits in the issues raised by the Appellant and unanimously dismissed the appeal with costs of RM10,000.00. We affirmed the Order of the High Court dated 10.7.2018. Sgd (HASNAH BINTI DATO’ MOHAMMED HASHIM) Judge Court of Appeal, Malaysia Putrajaya Date: 9/7/2020 16 Counsel for the Appellant Jason Lai Chua Heaw Eng Messers Munhoe & Mar Advocate and Solicitors No. 3, Jalan Solaris 2, Solaris Mont Kiara, 50480 Kuala Lumpur, Federal Territory of Kuala Lumpur Counsel for the Respondent Siti Fatimah Talib Assistant State Legal Adviser Etty Eliany Tesno Senior Federal Counsel Kamar Penasihat Undang Undang Negeri Selangor Tingkat 4, Podium Utara, Bangunan Sultan Salahuddin Abdul Aziz Shah, 40512 Shah Alam, Selangor.