State Government of Sarawak … Appellant/ v Masa Anak Nangkai (01(f)-5-02/2016(Q))

GIMA BELON CIVIL APPEAL NO. 01(f)-6-02/2016 (Q) 2

LEMBAGA PEMBANGUNAN DAN LINDUNGAN TANAH …APPELLANTS/ 1st DEFENDANT

PELITA HOLDINGS SDN BHD …2nd DEFENDANT

TETANGGA AKRAB PELITA (PANTU) SDN BHD …3rd DEFENDANT 1

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GIMA BELON CIVIL APPEAL NO.: 01(f)-8-02/2016(Q) & CIVIL APPEAL NO.: Q-01(f)-9-02/2016(Q) 3 Penghulu Beliang Beliang Anak Jubang …APPELLANTS/ INTERVERNERS (Intervener on behalf of himself and all the NCR claimants of within the Development Area as gazetted on the 14.09.2006 in the Sarawak Gazette L.N. No. 79/2006 and described as “the Sg. Tenggang NCR Development Area)

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MORICE RENGGI GIMA BELON In the matter of Court of Appeal, Civil Appeal No. Q-01-(IM)-131-2011 heard together with Civil Appeal No.: Q-01-165-2011) Civil Appeal No.: Q-01-(IM)-131-2011 4 Penghulu Beliang Beliang Anak Jubang … APPELLANTS/ INTERVERNERS (Intervener on behalf of himself and all the NCR claimants of within the Development Area as gazetted on the 14.09.2006 in the Sarawak Gazette L.N. No. 79/2006 and described as “the Sg. Tenggang NCR Development Area)

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MORICE RENGGI GIMA BELON CORAM: RAUS SHARIF, CJ SURIYADI HALIM OMAR, FCJ ZAINUN ALI, FCJ BALIA YUSOF WAHI, FCJ JEFFREY TAN, FCJ 5 JUDGMENT OF THE COURT [1] The plaintiffs, hereinafter referred to as the respondents, filed a claim at the High Court at Kuching against Lembaga Pembangunan Dan Lindungan Tanah (LCDA), Pelita Holdings Sdn. Bhd (PHSB), Tetangga Akrab Pelita (Pantu) Sdn Bhd (TAPSB), and the State Government of Sarawak, respectively the 1st, 2nd, 3rd and 4th defendants (hereinafter interchangeably referred to as the 1st, 2nd, 3rd and the 4th appellants or collectively as the appellants). [2] The respondents won both at the High Court and the Court of Appeal, and hence the appeal before us by the appellants. [3] The facts unravelled showed that within an area earmarked and gazetted for development, there were occupants (Consenting NCR Owners), who had agreed that their Native Customary Rights (NCR) lands be merged and consolidated for development. To put into effect that agreement, the Consenting NCR Owners then entered into a 6 Principal Deed dated 3.9.2004 with the State Government of Sarawak (the 4th appellant) and PHSB (2nd appellant). For the development of the plots of land, the 2nd appellant, as trustee of the Consenting NCR Owners, entered into a Joint Venture Agreement (the JVA) dated 3.9.2004 with a joint venture company i.e. the 3rd appellant incorporated by the 2nd appellant and Tetangga Akrab Sdn Bhd (TASB). TASB was not a party to this suit. [4] The area for development, in short, was a State Government sanctioned development project, described as “The Sungai Tenggang NCR Land Development Area (hereinafter referred to as the Development Area) declared vide the Land Custody and Development Authority Order 2006 dated 8.8.2006 (“the Development Order”). An oil palm plantation project was also undertaken, established and on-going in that Development Area. [5] The Development Order was made under section 11(1) of the Land Custody and Development Authority Ordinance (No. 4 of 1981) (“LCDA Ordinance”), and duly 7 published in the Sarawak Gazette under SWK LN. 79 dated 14.9.2006. [6] It must be borne in mind that the respondents were neither parties to the Principal Deed nor the JVA. [7] In a nutshell, in the Statement of Claim, the respondents claimed that they were the original title holders or NCR owners of the lands within the Development Area and had never surrendered, abandoned, lost or waived their NCR rights. There was also no prior or proper extinguishment of their rights according to law and no provision was made for any compensation to them. The respondents also alleged that the Principal Deed, the JVA and the activities on their NCR land were invalid. [8] The respondents in their amended Statement of Claim prayed inter alia, for a declaration that they were the original title holders or were the NCR land owners of the Development Area, that their Articles 5 and 3 rights under the Federal Constitution had been violated, and that the 8 actions of the 1st, 2nd and 3rd appellants were ultra vires the Sarawak Land Code (in short the JVA with non-natives and the Principal Deed were void). [9] In their defence, the appellants denied that the oil palm plantation project undertaken, established and on-going in the Development Area, had encroached the respondents’ alleged NCR land. The appellants put the respondents to strict proof of their alleged NCR rights. [10] Before us, the appellants submitted that the respondents had no cause of action, as the NCR lands claimed by them were in fact unsurveyed State land; that the alleged respondents’ plots of land were virgin forest. The effect of this submission is that the appellants denied the respondents’ ownership of any NCR land in the Development Area. In sharp contrast, the Consenting NCR landowners’ plots of land were within the Development Area, and had been duly surveyed, verified and properly documented. 9 [11] Furthermore, this government sanctioned project was lawful, as apart from the development being carried out with the sanction and approval of the 4th appellant and the Consenting NCR Owners, the respondents also knew of it, and thus denied of any violation of their rights under the Federal Constitution. [12] The appellants submitted in the course of the appeal that the NCR lands were immediately amalgamated, and that titles were to be issued in the name of the joint venture company, without the participating landowners having any legal and/or beneficial interest on the titles. [13] After a full trial, the High Court allowed this respondents’ claim and ruled against the appellants on 18.2.2011. The High Court held that the respondents were entitled to their claim to lands under NCR in the Development Area, that the destruction of the respondents' NCR lands by the appellants was unlawful, and accordingly ordered damages to be assessed by the Deputy Registrar. The appellants were ordered to surrender vacant possession 10 of the respondents’ NCR plots of land. The appellants were also restrained from entering, occupying, clearing or in any way carrying out works in the respondents’ NCR lands. [14] Being dissatisfied with the decision of the High Court, the appellants (1st, 2nd and 3rd appellants) appealed to the Court of Appeal vide Civil Appeal No. Q-01-(IM)-131-

The 4th appellant filed a separate appeal vide Civil Appeal No. Q-01-165-2011. [15] At the Court of Appeal, the Consenting NCR Owners and participants of the Development Area (henceforth to be referred to as the interveners), totaling 361 people applied to intervene in the appeals. On 21.10.2011 the Court of Appeal granted leave to the interveners to participate in the appeals. The respondents did not appeal against the order of the Court of Appeal granting leave to the interveners. [16] The interveners thereafter filed civil appeal No. 01(f)- 8 & 9-02/2016(Q). Regardless of their late entry in the appeal, as the issues posed by them are similar to those 11 argued by the 1st, 2nd, 3rd and 4th appellants, the interveners shall also be referred collectively as the appellants (and only referred to as the interveners when the need arises). [17] On 29.12.2014 the Court of Appeal dismissed all appeals and affirmed the decision of the High Court. The Court of Appeal held in a nutshell that the respondents had been deprived of their NCR lands, which were sources of their livelihood, and had lost the rights to their property in direct violation of the Federal Constitution. [18] The Court of Appeal opined that the JVA was also in contravention of section 8 of the Sarawak Land Code, as neither the 2nd nor 3rd appellants were declared natives, and that things invalid from the beginning could not be made valid by any subsequent act. That being so, the respondents were entitled to their claim to lands under NCR in the Development Areas. The Court of Appeal held that there was absolutely no legal basis for the 1st, 2nd and 3rd appellants to remain on the respondents’ land and thus must vacate the same. 12 [19] Dissatisfied with the decision of the Court of Appeal, the appellants successfully applied for leave, on 14.1.2016, on the following questions of law: Civil Appeals No. 01(f)-5 & 6-02/2016(Q)

(a) Whether a Court is entitled to make an Order for delivery of vacant possession to some of the claimants of native customary land which is within a Development Area declared by the Minister under section 11 of the Land Custody and Development Authority Ordinance (No.4/81)( the Ordinance) to be developed thereunder.

(b) Where a native, whose native customary land is within a Development Area declared under Section 11 of the Ordinance, but does not agree with the scheme of development thereunder, the proper order and/or legal remedy to be granted to him by the Court, ought to be a declaration that the Minister should acquire his Native Customary Rights under 13 Section 15 of the Ordinance or exclude his land from the Development Area under section 11(4)?

(c) Whether section 11(4) of the Ordinance is in breach of Article 13 of the Federal Constitution?

(d) Whether section 72 of the Courts of Judicature Act, 1964 could apply to a case where irregularity in the Judgment or proceedings in the lower Court arose from the trial Judge making injudicious, disparaging and offensive remarks against witnesses of one party and consequently, his impartiality has been raised as an issue before the Court of Appeal?

(e) Whether a Joint Venture Agreement to develop native customary land within a Development Area declared under Section 11 of the Ordinance is invalid and/or remains invalid due to contravention of Section 8 of Sarawak Land Code if : 14 i. one of the parties thereto was a non-native at the date of such agreement; but ii. subsequently, declared or deemed a "native"

(f) Does a plaintiff claiming to nullify a trust deed or a joint venture agreement for the development of native customary land within a Development Area declared under section 11 of the Land Custody Development Authority Ordinance (no. 4/81) have to prove that he has native customary law within the Development Area? Civil Appeals No. 01(f)-8 & 9-02/2016(Q)

Whether the Court can ignore the fact that the Applicants/ Interveners are the landowners whose NCR land has been consolidated and declared a development area. 15

Whether the Court had acted in breach of the rules of natural justice when ordering vacant possession of the said NCR land.

Whether the Court can make a restraining Order against the 1st Appellant/ Defendant who are Trustees of the Applicants/ Interveners herein whose NCR land had been duly verified within the said Development Area as declared by the said Development Order the validity of which has never been expressly adjudicated upon.

Whether the Court can order the 1st Appellant/ Defendant as the agent of the State Government of Sarawak to deliver possession of the said Development Area to the Plaintiffs/ Respondents. [20] A perusal of the Notices of Appeal to the Federal Court filed by the appellants show that they were appeals against the entire decision of the Court of Appeal for having 16 affirmed the High Court’s decision in respect of the respondents’ claim. [21] The crux of the questions relates to the issues of whether the respondents’ alleged NCR lands were within the Development Area and whether the declaratory reliefs granted by the High Court were proper and legal having regard to sections 11(4) and 15 of the LCDA Ordinance. Furthermore, the leave questions require us to decide whether the Principal Deed and the JVA had violated section 8 of the Sarawak Land Code. The appellants’ submission [22] The appellants submitted that there was no factual basis to support the grant of declaration by the High Court as the respondents did not possess any NCR land within the Development Area. Further, the LCDA Ordinance makes provisions for the Minister to exclude the respondents’ NCR land from the Development Area if any, or to acquire the same with payment of compensation so as to enable the 17 development of the Development Area to continue for the benefit of the interveners. [23] The appellants also submitted that the onus was on the respondents to discharge the evidential burden to support their claims that they had NCR over their claimed lands within the Development Area. The appellants submitted that no cogent evidence was adduced by the respondents who thus failed to establish their case, let alone justified the granting of the declarations sought by them. [24] It was not denied by the appellants that Exhibit D75 (a map) showed that certain portions of the area claimed by the respondents of their NCR lands were situated within or overlapped with some portion of the Development Area, a concession arrived at after the Development Area was surveyed, and the individual lots identified and verified by the area headmen. Regardless of the concession, the appellants argued that none of the respondents succeeded in proving that they had any NCR land within the 18 Development Area except for the 1st respondent. In short, mere assertion did not amount to proof of their NCR over the Development Area. [25] It was also argued that the High Court’s order granting vacant possession to the respondents pre-empted or impeded the exercise of the statutory powers conferred on the Minister under sections 11(4), 15(2), 15(3), 15(4), 15(5) and 15(6) of the LCDA Ordinance. The appellants argued that section 11(4) of the LCDA Ordinance does not involve extinguishment of the respondents’ NCR land but rather, the alteration of the Development Area so that the respondents could be excluded therefrom for the benefit of the interveners. [26] As regards the illegality of the Principal Deed and the JVA, the appellants submitted that the question argued by the respondents of whether the JVA was invalid, was due to the fact that the 2nd and 3rd appellants (PHSB and TAPSB respectively) were non-natives. The appellants denied this argument and replied that they were declared and deemed 19 “native” pursuant to section 9(1) (d) of the Sarawak Land Code. Hence, no contravention of section 8 of the Land Code took place. The respondents’ submission [27] In reply, learned counsel for the respondents argued that the appellants were well aware that the establishment of the respondents’ NCR land had been proved during the trial at the High Court, and also accepted by the Court of Appeal. In short, finding of facts were made by both Courts. The respondents argued that the allegation of the appellants that their encroached area was outside the Development Area was baseless and untrue. [28] It was argued by the respondents that neither were they consulted nor had they given their consent during the implementation of the oil palm project. In fact they were ignored when they raised their objections to the destruction of their properties. 20 [29] On the issue of the validity of the Principal Deed and the JVA, the respondents argued that these documents, which purported to confer rights or privileges over the NCR lands on persons, companies or corporation who were not natives of Sarawak, were deemed illegal and void under section 8 of the Sarawak Land Code. This argument was in response to the argument submitted by the appellants earlier. [30] The respondents alleged that a breach of section 8 of the Sarawak Land Code was further compounded when on 6.1.2010, by a Deed of Agreement dated 6.1.2010, TASB transferred 60% of its shareholding in TAPSB (the JV company) to Kim Loong Corporation Sdn Bhd, which was not a native of Sarawak. The JV company only became a native on 27.9.2007 three years after the oil palm project started. The respondents submitted that there was thus a contravention of the LCDA Ordinance. (Note: even though the Statement of Claim was filed on 3.3.2005 and amended on 21.6.2006, the respondents never re-amended their amended Statement of Claim to include the above transfer 21 of the 60% shareholding in TAPSB to Kim Loong. As parties are bound by their respective pleadings we refrain from delving into this issue.) [31] The respondents also challenged the locus of the interveners, suggesting that they lost all interest in the NCR lands in dispute when they signed the Principal Deed and the JVA, with the 1st, 2nd, 3rd and 4th appellants. By executing the documents, the interveners vested and/or assigned all their rights over the NCR lands to the 2nd appellant, who now is the beneficial owner and trustee of the NCR lands. The respondents submitted that the Court of Appeal thus erred in allowing the interveners to intervene. [32] We find this argument quite perplexing, as, if the Principal Deed and the JVA were allegedly invalid, surely the interveners could not have lost their rights? With no appeal having been filed by the respondents against the order of the Court of Appeal allowing the interveners to intervene, the respondents were thus prevented from raising this issue of locus before us. 22 Decision [33] The Sarawak Land Code does not abrogate or extinguish the pre-existing NCR which existed prior to 1 January 1958, or impose a total ban on future creation of native customary rights. The phrase “in accordance with the native customary law” in section 5(1) of the Sarawak Land Code is a clear restatement of the law that the laws of Sarawak recognize NCR that existed prior to 1 January 1958. [34] Section 5 of the Sarawak Land Code provides that until a document of title is issued, a native that has acquired NCR is deemed to be a licensee of the government. Under s.5(2) of the Sarawak Land Code, the underlying basis for the recognition of a particular NCR acquired lawfully is the occupation of and usage of land according to customary practices of the community or communities concerned. It was clarified in Sapiah Mahmud v. Superintendent of Lands and Surveys Samarahan Division & Ors [2009] 9 CLJ 567, applying the principles laid down in Nor Anak Nyawai & Ors v Borneo Pulp Plantation Sdn Bhd & 23 Ors [2001] 2 CLJ 769 that a claim under NCR to land is based on continuous occupation, though the occupation need not be actual occupation. Superintendent of Land and Surveys Miri Division & Anor v. Madeli Salleh [2007] 6 CLJ 509 FC affirmed that 'occupation' need not necessarily mean actual physical presence on the land. [35] As long as the native has control over the land through supervision and continual visitation, that would suffice (Director of Forest, Sarawak & Anor v. TR Sandah Tabau & Ors and Other Appeals [2017] 3 CLJ 1). [36] Under native custom, a native may abandon his NCR land or claim to the NCR land. A claimant who has acquired rights over the NCR land, but allowed without objection, the use of the land by others, is held to have abandoned any customary rights which he may have acquired either by himself or in any other manner over the land (Nyalong v. The Superintendent of Lands & Surveys 2nd Division, Simanggang [1967] 1 LNS 116; [1967] 2 MLJ 249). 24 [37] In order for the respondents here to successfully establish their alleged NCR, as described in their Statement of Claim, it was imperative for them to establish first that these NCR lands were within the Development Area or overlap it. [38] According to paragraph 4(a) of the amended Statement of Claim, the respondents pleaded that their NCR lands were located in the area delineated in red on the map annexed to the amended Statement of Claim, marked “B”. It is trite law that litigants, in this case the respondents, are bound by their pleadings, and without more the alleged NCR lands must be those shown in Map B. [39] It was the factual finding of the High Court that the respondents were entitled to their claim to NCR lands in the Development Area. As said above, this finding was also accepted by the Court of Appeal. [40] As we needed to arrive at our own finding, we sifted the evidence adduced before the trial court to decide 25 whether the respondents had discharged the burden of proof that their lands were included in the Development Area, and also succeeded in establishing their NCR claims. PW8 (Nicholas Mujah Anak Asun), who gave evidence on behalf of the respondents, identified the claims of the respondents in Map B (P3). He testified that he was the person who prepared P3. In the course of the hearing he admitted being a social worker and had P3 prepared only after a request was made by the respondents. [41] The appellants tendered an alternative map i.e. D75, (prepared by a neutral licensed map maker). It revealed that certain portions of the respondents’ claimed NCR lands were indeed located within the Development Area. The Development Area was surveyed, and the individual lots within it were identified and verified by the map maker. This map which was of great help to the interveners’ claim over their respective NCR lands, as it confirmed their ownership, but unfortunately failed to establish the 360 respondents as owners of any NCR land within that area. 26 [42] From the evidence adduced by both parties, we are satisfied that the appellants had successfully established the interveners as verified owners of identifiable lots in the Development Area as shown in the enlarged map of D75, shaded in yellow. [43] The matter did not end there. It surfaced in the course of the hearing, as per the evidence of DW20 (Abdullah Chek), that there were in existence pockets of areas of unclaimed lots with no verified owners in the Development Area, as highlighted in D75 shaded in red. [44] Having sifted all the evidence, in particular with P3 being uncontroverted as regards the red area (hereinafter referred to as the red area in D75), which identifies the respondents’ claimed NCR lands to be on it, we are satisfied that the red area in D75, supposedly unclaimed and unverified, were plots of NCR land owned by some of the respondents. 27 [45] Even though the issue of the Development Order was never pleaded by the respondents, it is incumbent upon us to decide on its legality, as the substratum of the whole project in the Development Area is that Development Order dated 8.8.2006. [46] The Development Order was made pursuant to section 11(1) of the LCDA Ordinance, which reads: “11(1) Where it appears to the Minister … the Minister may by order in the Gazette declare such area of land (whether alienated land, unalienated land or Native Customary Land) to be a Development Area …” [47] The appellants in anticipation of this issue, in their written submission (para 2.1) also submitted that this Development Order was never challenged. Having considered the pleadings and the evidence we hold the view that the Development Order is valid. 28 [48] Section 11 of the LCDA Ordinance in short empowers the Minister to declare an area as a Development Area and determine its extent. Furthermore, under section 11(4) of the LCDA Ordinance the Minister may at any time by order in the Gazette alter, replace or extend any Development Area. The Minister thus may exclude or add land to an existing Development Area. [49] For purposes of this appeal, section 11 of the LCDA Ordinance cannot be read in isolation but read together with section 15(1) of the same Ordinance. It reads: “15(1) Where it is not possible to develop any land by arrangement or agreement with the owner, the Authority may, with the approval of the Minister, acquire such land by compulsory acquisition for purpose of carrying out any of its functions under this Ordinance.” [50] Section 15(6) of the LCDA Ordinance provides that compensation shall be payable by the Authority in respect of any land compulsorily acquired under sub-section (1). 29 Thus, section 15 of the LCDA Ordinance apart from providing for compulsory acquisition, also provides a mechanism of payment of compensation to the landowners. [51] Nevertheless, it was alleged by the respondents that the allusion to section 11(4) of the LCDA was found to be in breach of Article 13 of the Federal Constitution by the Court of Appeal. For ease of reference we reproduce Article 13 of the Federal Constitution, and it reads as follows: “13. Rights to property

(a) A person who is not a native of Sarawak may not acquire any rights or privileges whatever over any Native Area Land, Native Customary Land or Interior Area land; …” [58] Section 9 of the same Code states: “9. Acquisition of land by non-natives

(a) …

(d) where such non-native has been deemed to be a native, by the Majlis Mesyuarat Kerajaan Negeri, by 33 notification in the Gazette, in respect of any category of dealing over Native Area Land as stipulated in the notification” [59] The evidence showed that pursuant to section 9(1)

(d) of the Sarawak Land Code, by notifications in the Gazette, the 2nd appellant was deemed to be native with effect from 1.12.1995 whilst the 3rd appellant was deemed to be native with effect from 3.9.2004. We hold that the High Court judge had misdirected himself when he held that the JVA and the Principal Deed could not have valid retrospective effect. We find support in the case of Boustead Plantations Bhd & Anor v Kadam Embuyang & Ors and other appeals [2015] 1 MLJ 546 where the Court of Appeal (at pages 65-66) opined that: “[31] We were in agreement with the submissions of learned counsel Datuk JC Fong for the State that the gazetted Directions (D2 and D3) in so far as it deemed PHSB and JVC as natives had validity 34 retrospectively. Firstly, the prohibitions vide s. were expressly subject to the provisions of s. 9 and, secondly, there was nothing in s. 9(1)(d) which stipulated that the notification thereunder was only to have effect prospectively.” [60] With the remedial action taken, and the 2nd and 3rd appellants being declared and deemed “natives” retrospectively, the High Court was in error when it decided that the JVA and the Principal Deed were in contravention of section 8 of the Sarawak Land Code. In short, we find the JVA and the Principal Deed valid. [61] We lastly undertake a brief discussion of the tenor and language used by the High Court judge in his grounds of judgment and decide whether his ‘injudicious, disparaging and offensive remarks fell foul of section 72 of the CJA 1964. This provision reads: “72. No judgment or order of the High Court, or of any Judge, shall be reversed or 35 substantially varied on appeal, nor a new trial ordered by the Court of Appeal, on account of any error, defect, or irregularity, whether in the decision or otherwise not affecting the merits or the jurisdiction of the Court.” [62] It is beyond dispute that the High Court judge had descended into the arena as reflected in the abrasive words used in his grounds of judgment against witnesses which raised an issue of probable impartiality. Such an inclination affects the evaluation of the evidence before the trial judge, his view on the credibility of the witnesses, and generally affects the dignity of the Court. In the circumstances of the case, even though the unnecessarily harsh words do not fall under the phrase “error, defect or irregularity”, it is perhaps not inappropriate to remind judges to refrain from descending into the arena for fear of clouding his eventual judgment. [63] In the circumstances of the case, and for the aforesaid reasons, we therefore allow the appellants’ appeals 36 without costs. We hereby set aside the decisions of the High Court and the Court of Appeal and substitute their orders in the following terms:

the Development Order, Principal Deed and the JVA are found to be valid;

the red area in D75 is NCR land owned by some of the respondents;

the Authorities are to regularize the compulsory acquisition of the NCR lands from the rightful owners in the red area in D75, if necessary;

an enquiry is to be held in order to identify the rightful NCR owners in the red area in D75; and 5. the rightful owners of the red area in D75 are to be compensated by the Authorities pursuant to section 15 of the LCDA Ordinance. 37

Due to the nature of the appeals, and the way we have dealt with the matter before us, we find no necessity to answer the questions. Dated this 7th day of November 2017 Signed SURIYADI HALIM OMAR Federal Court Judge Malaysia For the Appellants/1st, 2nd, 3rd & 4th Defendants: Datuk J.C Fong State Legal Counsel Jabatan Peguam Besar Negeri Sarawak Sim Hui Chuang Lim Lip Sze Messrs. Reddi & Co. For the Appellants/Interveners: Mr. Lim Swee Huat Messrs. S.H. Lim & Co. Advocates For the Respondents: Mr. Dominique Ng Messrs. Dominique Ng & Associates