Rimdaya Sdn. Bhd. v The Government Of The State Of Sabah (S-01(NCvC)(A)-554-08/2022)

THE GOVERNMENT OF THE

THE DIRECTOR OF LANDS AND SURVEYS DEPARTMENT SABAH RESPONDENTS CORAM AHMAD ZAIDI BIN IBRAHIM, JCA MOHAMED ZAINI BIN MAZLAN, JCA ALWI BIN HAJI ABDUL WAHAB, JCA

This appeal is in respect of the dismissal of the appellant's Originating Summons by the High Court, where the appellant had 15/10/2025 15:50:08 S-01(NCvC)(A)-554-08/2022 Kand. 44 sought to be compensated by the respondents for the acquisition of part of its land in the district of Kota Kinabalu.

The first respondent's acquisition of the appellant's land was subsequently revoked under Section 10A of the Land Acquisition Ordinance 1950. The respondents maintained that there is no provision for the appellant to be compensated under Section 10A. One of the critical issues raised by the appellant is the constitutionality of Section 10A, on the basis that it infringes Article 13(2) of the Federal Constitution.

The appellant is the registered owner of a parcel of land measuring around 16.21 hectares held under Title No. CL015669806 at KM 4.5, Jalan Tuan Fuad Stephen, Tanjung Lipat, Teluk Likas, Kampung Likas, Kota Kinabalu ('the appellant's land'). The second respondent is the authorised officer appointed by the Yang Di-Pertua Negeri of the first respondent under the Land Acquisition Ordinance 1950

The first respondent had under Gazette Notification No. 51/2020 published on 30 January 2020 ('the first gazette) and 6 February 2020 ('the second gazette'), compulsorily acquired part of the appellant's land measuring 1.438 hectares ('the acquired land'). This acquisition was done under Section 3 LAO 1950. The acquisition was for a public purpose, namely to upgrade Jalan Tun Fuad Stephen and to repair the interSections of Persimpangan Bulatan Perkara, Persimpangan Jalan Istiadat, Persimpangan Jalan Pasir and Jalan Sulaman.

After the gazetting of the acquisition, the second respondent issued to the appellant a copy of the 'Declaration of Land to be Acquired' and the 'Notice of Acquisition' dated 18 June 2020, respectively, pursuant to Sections 3(2) and 7(1) LAO 1950. The appellant subsequently through its Valuers submitted its claim for compensation to the second respondent in a letter dated 14 July 2020. The appellant's claim for compensation was for RM58,512,220.00. The appellant however, did not receive any response from the respondents, which led them to file the Originating Summons on 5 February 2021. The appellant's case in the High Court

The reliefs that the appellant sought in their application were in gist as follows:

to be compensated for the acquired land including interests, and for a High Court Judge in Sabah, together with two assessors, to assess the compensation payable;

(ii) that copies of the documents, particulars and reports to be forwarded by the authorised officer to the Judge pursuant to Section 15 LAO 1950 be supplied to the appellant; and

(iii) an inquiry be held and the procedure to be followed, including the number of expert witnesses to be called pursuant to Sections 16 and 17 LAO 1950.

The Originating Summons was filed on 5 February 2021, which was within 12 months from the publication of the second gazette. This complied with Section 33 LAO 1950, which stipulated that any compensation claim must be made within twelve months after the declaration of acquisition was made under Section 3 LAO 1950.

The respondents in their affidavit in reply stated that the acquisition had been revoked by Gazette Notification No. 289/2021, published on 23 September 2021 pursuant to Section 10A LAO 1950 ('the third gazette'). The respondents contended that as a result, the appellant is no longer entitled to any compensation under Section 10A. It is noteworthy that the revocation was effected after the appellant had filed the Originating Summons.

One of the issues before the High Court was whether the appellant's claim for compensation could be defeated under Section 10A LAO 1950 by virtue of Section 3 of the Ordinance. The appellant contended that the acquisition of the acquired land had been completed and that the acquired land had become State Land after the second gazette by virtue of Section 3(3), which meant that the appellant had lost their rights to the acquired land, and was therefore entitled to compensation for the acquisition of the acquired land.

The High Court held that the respondents were entitled to revoke an acquisition and re-alienate the acquired land back to the appellant under 10A(1) and (2) LAO 1950. The High Court was of the view that the acquisition was merely on paper as there was no conveyance involved, and that there was no issue of the appellant's constitutional rights being infringed. The High Court also held that Section 10A(3) provides remedies for the appellant once the acquisition is revoked.

The other issue raised was the constitutionality of Section 10A LAO

The appellant contended that the Section violates Article 13 of the Federal Constitution, which protects the appellant's rights to property, and that these rights could not be taken away without compensation.

The appellant had also contended that Section 29(1) of the Government Proceedings Act 1956 prohibits them from seeking the recovery of the acquired land. The High Court agreed with the respondents' submission that the maxim generalia specialibus non derogant applies as Sections 3 and 10A LAO 1950 are specific provisions and therefore prevail over Section 29(1). The High Court concluded that there is no prohibition for the acquired land to be reverted to the appellant. The appellant however did not choose to advance this argument in this appeal.

The final issue dealt with by the High Court was the appellant's contention that the third gazette had only revoked the first gazette and that the second gazette was still valid and enforceable. The High Court, in dismissing this argument, held that Section 10A(1) LAO 1950 only requires one notification in the gazette for the purpose of revoking an acquisition. The appellant's Originating Summons was subsequently dismissed with no order as to costs. The appeal

The appellant contended that the ownership of the acquired land had already been vested in the first respondent upon the publication of the second gazette. The appellant highlighted that the respondents had only published the revocation gazette on 23 September 2021, which was well after the second gazette and the deadline for the appellant to claim compensation under the LAO 1950. The appellant submitted that the High Court erred in deciding that the acquisition of the land was “merely on paper”, as there was no conveyance, as Section 3(3) LAO 1950 states that the vesting of the land acquired is without conveyance and shall be deemed effected and completed upon the publication of the second gazette. This acquisition would then entitle the appellant to be compensated pursuant to Section 6

The appellant also took issue with the High Court's failure to hold that Section 10A LAO 1950 is unconstitutional. The appellant contended that Section 10A infringes Article 13(2) of the Federal Constitution, which states that "No law shall provide for the compulsory acquisition or use of property without adequate compensation."

The appellant referred to the Sabah High Court case of Eastern Euphoria Sdn Bhd v The Government of the State of Sabah & Anor [2023] CLJU 2450. This case was decided after the High Court here delivered its decision. Similar to this case, the respondents in the Eastern Euphoria case had revoked the acquisition of the applicant’s land under Section 10A LAO 1950. The revocation however, occurred after the parties had entered into a consent order in which the respondents agreed to pay a specified sum to the applicant. The High Court made several findings. First, it held that the consent order binds the respondents until it is set aside, meaning the respondents had to pay the agreed-upon amount. Second, the court held that the respondent had breached the requirements of Section 10A LAO 1950 by failing to provide any justification for the revocation. Finally, the High Court held that Section 10A is unconstitutional as it violates Article 13(2) of the Federal Constitution by absolving the State Government from paying adequate compensation for the compulsory acquisition of land.

Premised on the Eastern Euphoria (supra) case, the appellant contended that the High Court failed to uphold the supremacy of the Federal Constitution in failing to recognise that the revocation of the acquisition under Section 10A LAO 1950 without compensation is unconstitutional, as it deprives the appellant of adequate compensation.

The appellant submitted that their rights for compensation arose once the second gazette was published, as ownership of the acquired land had already been vested in the respondent without conveyance. The appellant contended that they lose the right to use the acquired land after the second gazette and may lose the right to get rental proceeds or the proceeds of produce for the land.

Finally, the appellant submitted that the High Court erred in deciding that Section 10A LAO 1950 merely requires one notification in the gazette to revoke the acquisition. The revocation notice referred only to the first gazette and is therefore insufficient, as it should have referred to both the first and second gazettes. The appellant submitted that the acquired land was only vested in the first respondent after the second gazette and without the need for any conveyance. The appellant contended that the second respondent should have issued the revocation notice for both gazettes, and if not, the second gazette. Since the notice was only for the first gazette, the revocation was invalid, meaning the acquired land is still vested in the first respondent.

We agree with the appellant's contention that the ownership of the acquired land had been vested in the first respondent upon the publication of the second gazette. The ownership of the acquired land had indeed been vested in the first respondent upon the publication of the second gazette. Section 3 LAO 1950 is as follows: ACQUISITION OF LAND AND ABANDONMENT OF ACQUISITION Acquisition of land

3.

If the Yang di-Pertua Negeri considers that any land should be acquired for a public purpose, he may cause a declaration to that effect to be made in the manner provided by this Section, and the declaration shall be conclusive evidence that the land to which it relates is required for a public purpose.

Every declaration shall be published in two ordinary issues of the gazette and copies thereof shall be posted on one of the buildings (if any) on the land or exhibited at suitable places in the locality in which the land is situate, and, where possible, be served on the owner of the land and in the declaration shall be specified the following particulars to the land which is to be acquired:

the district in which the land is situated;

a description of the land, giving the approximate area and such other particulars as are necessary to identify the land;

in cases where a plan has been prepared, the place where, and the time when, a plan of the land can be inspected;

the public purpose for which the land is required.

Upon the second publication of the declaration in the gazette as aforesaid the land and the buildings and erections thereon shall, without any conveyance, vest in the Government free from all encumbrances and shall be deemed to have been surrendered by the lawful owner thereof and the Director of Lands and Surveys shall take or cause to be taken all such steps as are necessary by way of registering memoranda against the titles to the land affected or otherwise to give effect to such order and every person in possession of any title or copy of title affected by this Section shall produce such title or copy to the Director of Lands and Surveys or, in Labuan, to the Collector of Land Revenue for such purpose.

Notwithstanding the provisions of the preceding subSection, where any buildings upon land vested in the Government under the provisions of such subSection are occupied by any person as a residence or for a trade or business, then possession shall not be demanded by or on behalf of the Government, unless the land in the opinion of the Yang di-Pertua Negeri is urgently required for the public purpose, until after the expiration of three months from the date of the first publication of the declaration made under the provisions of subSection (1), but in such case the owner of the land shall account to the Government for all rents as from the date of vesting or shall allow credit for reasonable rent in any claim for compensation if such owner occupies the building himself.

Nothing in this Ordinance shall be deemed to prevent the acquisition of lands for public purposes and the settlement of any compensation therefor by private treaty. (emphasis added)

However, it appears that the High Court may have oversimplified the issue by concluding that the acquisition was “merely on paper”. What the High Court may have intended to convey is that the process of vesting and transfer of ownership of the acquired land had not been fully completed in accordance with the statutory procedure prescribed under Section 3(3) LAO 1950. That provision requires the second respondent to take all necessary steps, including the registration of memoranda against the titles, or to take any other action necessary to give effect to the acquisition order. In the present case, there is no evidence to show that these procedural steps were taken, which leaves the acquisition process incomplete in law.

In the absence of evidence demonstrating that the statutory procedures under Section 3(3) LAO 1950 were duly complied with, it cannot be conclusively said that ownership of the acquired land had vested in the first respondent. While the acquisition order may have been lawfully issued, the completion of the acquisition process requires more than the issuance of an order, as it demands formal registration and endorsement on the relevant land titles to perfect the transfer of ownership. Until such steps are proven to have been taken, the acquisition remains inchoate and does not confer upon the first respondent a legally enforceable title to the land. The High Court’s characterisation of the acquisition as being “merely on paper,” though imprecisely expressed, meant that the acquisition process had not been legally completed.

The appellant's primary argument however, is that they are entitled to be compensated under Section 6 LAO 1950 once the acquisition of the acquired land has been completed. Section 6 reads as follows: Authorised officer to treat with landowner.

6.

As soon as any declaration has been published in accordance with the provisions of Section 3, the authorised officer shall, without delay, enter into negotiations (or further negotiations) for the purchase of the land to which the declaration relates upon reasonable terms and conditions, and by voluntary agreement with the owner of the land.

It shall not be necessary for the authorised officer to await the publication of the declaration before he endeavours to ascertain from the owner the terms and conditions on which he is willing to sell his land. Still, no negotiations or agreement shall be deemed to be concluded unless and until the Yang di-Pertua Negeri has approved the conditions of sale and acquisition.

It is apparent that the respondents did not take steps to negotiate with the appellant for the purchase of the acquired land, which led to the appellant's application pursuant to Section 33 LAO 1950, which states as follows: Limitation of time for making claims.

Notwithstanding anything contained in any other written law, except with the approval of the Yang di-Pertua Negeri in any case in which he considers that injustice may otherwise be done, no claim for compensation which may be made under the provisions of this Ordinance shall be admitted or entertained unless the same shall be made within twelve months after the date on which entry has been made on the land under Section 4 or, if a declaration has been made under Section 3, within a similar period after the date of the second publication of such declaration. (emphasis added) 13 25. The pertinent issue is whether the respondents are compelled to compensate the appellant based on the appellant's assertion that the acquisition of the land had been completed and the ownership of the land had been vested in the first respondent.

The respondents contended that the acquisition of the acquired land had been legally revoked under Section 10A LAO 1950, which reads as follows: Revocation of acquisition [c.i.f. 30.03.2012]

(1) The Yang di-Pertua Negeri may, at any time as and when he deems it necessary, by notification published in the gazette, revoke the acquisition of any land which has been acquired compulsorily under Section 3.

Upon the publication of the notification in the gazette, the land and the buildings and erections thereon shall revert to the owner or the person interested in the land, as the case may be, and the Director of the Lands and Surveys shall take or cause to be taken all such steps as are necessary to lawfully revert the land to the owner or the person interested.

Where any acquisition is revoked under subSection (1), any damages for actual loss or injury, if any, suffered by the owner or the person interested, arising by reason of the exercise of the power conferred by Section 3, shall be paid to the owner or the person interested.

No damages shall be payable in any case for loss of bargain or for breach of contract.

Two issues arise from the appellant’s submissions regarding the revocation. First, whether the revocation was valid as the revocation notice had only referred to the first gazette, and second, whether Section 10A LAO 1950 is unconstitutional as it does not provide for any compensation to the appellant. We shall address each issue in turn.

For an acquisition of land for a public purpose to be completed, two notices of declaration must be published and gazetted. This is the requirement under Section 3 LAO 1950. Here, the respondents chose to revoke the acquisition rather than abandon it. Section 10 governs the abandonment of an acquisition. However, Section 10A, which was inserted in 2012, regulates the revocation of an acquisition. Section 10A(1) confers a broad discretionary power on the Yang Di-Pertua Negeri of Sabah to revoke an acquisition “at any time”. This clearly means that the revocation of acquired land can occur at any time, even after the land has been acquired and some time has elapsed.

The appellant argued that the revocation was invalid as the notice had only referred to the first gazette, and submitted that the revocation notice should have referred to the second notice as the ownership of the land had only become vested in the first respondent after the second notice.

While Section 3 LAO 1950 states explicitly that two notices of acquisition must be issued and gazetted, Section 10A(1) on the other hand stipulates only one notification. This is apparent from the wording of the Section, which states "…by notification published in the Gazette, revoke the acquisition….", which means that only one notice of revocation is required. The other provisions in the LAO 1950 will state clearly where more than two notifications are needed. The omission of such a provision in Section 10A(1) must be regarded as deliberate.

We must emphasise that Section 10A LAO 1950 applies to a situation when the revocation is concerning a land that had already been completely acquired pursuant to Section 3, whereas Section 10 concerns an intended acquisition that has not been completed. Section 10 states as follows: Abandonment of acquisition.

10.

At any time before any land has been acquired compulsorily, the Yang di-Pertua Negeri may, by notification published in the gazette, declare that the intended acquisition of such land is abandoned.

When the acquisition of any land is abandoned in accordance with the provisions of this Section, or is deemed to have been abandoned under Section 9, any compensation payable by virtue of this Ordinance shall, in default of agreement, be assessed as though it were compensation payable under this Ordinance for the acquisition of land.

No compensation shall be payable in any case for loss of bargain or for damages for breach of contract. (emphasis added)

The provisions of Section 10 are therefore applicable to a proposed acquisition that has not been completed under Section 3, namely where the second notification has not been gazetted, or to proposed acquisitions under Sections 4 and 5.

We concur with the High Court's finding that Section 10A(1) LAO 1950 requires one notification to be gazetted to revoke the acquisition. We therefore find that the respondents' revocation of the acquired land is valid. Under Section 10A(2), ownership of the acquired land reverts to the appellant. However, it remains unclear whether the respondents had taken any steps pursuant to the second gazette to take ownership of the acquired land. The facts suggest they had not, which explains why the High Court had described the acquisition “was merely on paper”. Nevertheless, suppose the respondents had taken steps to register their ownership of the acquired land. In that case, the second respondent shall take steps that are necessary to revert the acquired land to the appellant. This is clearly stated in Section 10A(2).

The second issue is whether the appellant is entitled to be compensated for the price of the acquired land after the acquisition has been revoked. The appellant's claim for compensation is based on their contention that the acquisition of the land had been completed after the second gazette, which triggers the obligation under Section 17 6(1) LAO 1950, for the authorised officer to, without delay, negotiate for compensation. As the respondents had failed to do so, the appellant was compelled to file the Originating Summons seeking compensation, as Section 33 stipulates that no claim for compensation shall be admitted or entertained unless the claim is made within twelve months after the date of the second gazette under Section 3.

As we have held that the respondents' revocation of the acquisition was valid, there is no longer any basis for the appellant to seek compensation. The appellant would only be entitled to seek compensation if the respondents had not revoked the acquisition of the acquired land.

We must now address the issue of whether Section 10A LAO 1950 is unconstitutional. The appellant contended that Section 10A violates Article 13(2) of the Federal Constitution, which states that any compulsory acquisition must be compensated. The appellant also sought to rely on the Eastern Euphoria (supra) case, where the High Court held that Section 10A is unconstitutional as it violates Article 13(2) of the Constitution by absolving the State Government from paying adequate compensation for the compulsory acquisition of land.

The facts in the Eastern Euphoria (supra) case differ slightly from the appellant's case. In that case, the parties had already entered into a consent order, and the respondents had sought to resile from their obligation to compensate by revoking the acquisition under Section 18 10A LAO 1950. The High Court rightly held that the respondents are bound by the terms of the consent order, until it was set aside.

However, we respectfully disagree with the High Court's finding that Section 10A LAO 1950 is unconstitutional. Section 10A does not deal with the acquisition of land, but rather with revocation of an acquisition, which is clearly the converse of an acquisition. We agree that Section 10A would be unconstitutional if it pertained to the acquisition of land, as the absence of compensation would contravene Article 13(3) of the Federal Constitution. Any party that compulsorily acquires land will be obliged to compensate the land owner. However, where the acquisition is revoked, the ownership will revert to its owner, and the question of compensation does not arise.

In this case, since the acquisition has been validly revoked, there is no longer an acquisition to support a claim for compensation. The appellant however is not without remedy, as Section 10A(3) LAO 1950 expressly provides for damages in respect of actual loss or injury suffered arising from the acquisition prior to the revocation. The appellant is therefore entitled to pursue such damages if it can establish evidence of actual loss or injury.

We are therefore resolute that Section 10A LAO 1950 is constitutional. The only remedy available for the appellant is to seek damages, if at all suffered and not compensation. It must be pointed out that the legislative intent behind Section 10A LAO 1950 is to allow the Government to revoke an acquisition when the intended purpose has ceased to be viable or feasible, or if there was a change in policy from the original purpose of the acquisition. This provision also ensure fairness by restoring ownership of the land to the landowner instead of the Government having to pay compensation for land it no longer requires.

For the reasons set out, the appeal is dismissed with costs of RM15,000.00. Dated: 12 September 2025 -sgd- (MOHAMED ZAINI MAZLAN) (JUDGE) (COURT OF APPEAL MALAYSIA) Counsel for the Appellant : Michael Denis Tan & Wan Kher Ching. Messrs Michael Denis Tan & Co. Counsel for the Respondent : Mohd Saifurrazee bin Mohamed @ Hussin & Calvin Joy. Sabah State Attorney General's Chambers.