WENG LEE GRANITE QUARRY SDN BHD v Pentadbir Tanah Daerah Seberang Perai Tengah (P-01(W)-91-02/2023)

Increased the compensation awarded by the Pentadbir Tanah Daerah Seberang Perai Tengah, the respondent herein, from RM120 to RM124 psm; and

Dismissed the appellant’s claim on injurious affection, retrenchment costs for employees and professional charges. There was no order made as to costs. [3] The appeal was against the whole of the decision of the learned Judge. The Factual Background [4] The Appellant company has been, at all material times, a granite quarry operator since 1972, which areas of operation include the lands that are the subject matter of this appeal. [5] The land reference proceedings in the High Court arose from the acquisition of five pieces of quarry lands, namely Lot Nos. 1479, 1488, 1489, 1490 and part of Lot 1937, Mukim 17, Daerah Seberang Perai Tengah, Pulau Pinang (“subject Land”), involving a total area of 57,210.862 m2 made under s 8 of the Land Acquisition Act 1960 (“LAA”)

Mematuhi syarat-syarat kelulusan pelan kerja tanah oleh Majlis Perbandaran Seberang Perai iaitu telah menjalankan kerja-kerja pengorekan melebihi had terendah yang diluluskan dalam pelan kerja tanah berlulus bil. (11A/C) dlm. MPSP 50/9-47/21 bertarikh 15/7/2002. Tuan/Puan dengan ini diarahkan:-

Memberhentikan kerja-kerja pengorekan dan letupan batuan dengan SERTA MERTA dari tarikh notis.

(ii) Kerja-kerja pengorekan dan letupan tidak boleh dijalankan sehingga mendapat kebenaran/kelulusan bertulis daripada Majlis Perbandaran Seberang Perai. The purpose of the acquisition [8] The purpose of the acquisition was to expand the Mengkuang Dam. [9] The titles of these five lots contained an express condition that: … it shall not be affected by any provision of the National Land Code or any other written law prohibiting mining or the removal of specified materials beyond the boundaries of the land. This is known as Condition B under the National Land Code (Penang and Malacca Titles) Act 1963 (“National Land Code”). At the land enquiry [10] At the land enquiry, the Appellant claimed for the market value of the subject Land compulsorily and the injurious affection as follows:

Subject Lands Compulsorily Acquired (Portion P) at RM30,654,034.40;

(ii) Injurious Affection – Loss of Market Value for Balance Quarry:

Portion Q (Buffer Zone) at RM41,829,984.44.

Portion R (the remaining Quarry Land) at RM7,344,195.74. The Appellant claimed for the injurious affection as a result of the acquisition of the said five subject lands, or, in the alternative, the acquiring authority to acquire all the remaining quarry lands of the appellant by reason due to the expansion of the Mengkuang Dam. [11] After the enquiry under s 12 of the LAA, the Land Administrator awarded to the Appellant as follows: Lot

Value psm No. 1937 17430

RM120/psm No. 1490 16855.016

RM120/psm No. 1479 989.860

RM120/psm No. 1488 9149.986

RM120/psm No. 1489 12877 RM1,545,240.00 RM120/psm Dissatisfied with the Award, the appellant company lodged their objection via Form N of the LAA. The objection was then referred to the Penang High Court for the Judge to assess whether the compensation awarded was sufficient. At the High Court [12] At the High Court, the appellant contended that there was a buffer zone, 200 meters from the border on the appellant's remaining lands, where no quarry activities could be done within the buffer zone. The appellant’s contention is based on the EIA Report dated 15.3.2010. Para 4 of the EIA Report states as follows: Had Kawasan yang dibenarkan bagi aktiviti letupan dan pengkuarian ini hendaklah sekurang-kurangnya 200 meter daripada sempadan tapak cadangan projek pembesaran Empangan Mengkuang. [13] At the High Court, learned counsel for the appellant argued that since the area of 200 metres from the boundary of the Mengkuang Dam could not be used for quarrying activities due to the existence of the buffer zone, the appellant should, therefore, be compensated. [14] In short, the appellant contended that the method of valuation should be based on the profit method and not the comparable method. Learned counsel argued that the profit method was more appropriate because the appellant was carrying on a quarry business involving the production of rock materials and the life span of the quarry was estimated at 51.65 years. The subject Land had an estimated rock material reserve of 58,376,363 metric tons. [15] The appellant relied on the report (“PV1”) prepared by its valuer, Messrs CH Williams Talhar & Wong. The report in PV1 insisted that there was injurious affection arising from the subject of compulsory acquisition. The report in PV1 inter alia states as follows: However, we are not in agreement that there is no injurious affection arising from the subject compulsory acquisition. We humbly submit that it would not be viable for the Claimant to continue operating on the remainder portion of the quarry. This is because the shape as well as the size of the remainder portion of the quarry will not allow proper benching of the quarry face to reach and extract rock materials as have been determined in the EQM Ventures Sdn Bhd’s Report dated March 2014 to a level of minus 100M which is attached as Appendix X in our Valuation Report (Ref No. WTW/10/V/2133/14/TL(R1) dated 18 May 2015). The Claimant will have to retrench all staff and workers as the quarry had to cease operation due to the above-mentioned reason. [16] This line of argument was disputed by the respondent Land Administrator. The respondent’s position was that the relevant authorities had not imposed any buffer zone on the appellant’s remaining lands. [17] The learned Assistant State Legal Advisor (“ALA”) who represented the Land Administrator contended that the EIA Report was for the appellant's application for an Earthworks Plan for quarrying activities for Lots 229, 239, 1479, 1488, 1489, 1490, 1491 and 1937 and for the year 2010, while the acquisition of the subject land was in 2014. Under the circumstances, the learned ALA, to whom the learned Judge deferred, submitted that the EIA Report was no longer applicable. [18] The extension of the Land Administrator’s argument was that the acquisition of the subject land was for the purpose of establishing a buffer zone and that there would be no more buffer zones that the appellant would need to provide. The conditions for imposing the purported buffer zone would not apply if the appellant were to make a new application for an Earthworks Plan as confirmed by SR2, Puan Siti Rohaida binti Jamaluddin, the Assistant Senior Director of Majlis Bandaraya Seberang Prai. [19] Under the circumstances, the learned Judge took cognisance that the quarry had ceased operations and had not generated any income to the appellant ever since. It is for this reason that the learned Judge was of the view that the profit method was not suitable. [20] The learned Judge made the following further findings:

Apart from that, the evidence shows that the subject Land has been excavated to the lowest limit allowed, and some had even exceeded that limit.

In the circumstances, the potentiality of the subject Land is considered to have lapsed.

The applicant also did not make any fresh application after that. For these reasons, the learned Judge found that the comparable method is more accurate and appropriate. [21] In applying the comparable method, the learned Judge took cognisance of the opinion expressed by the government assessor that the value of RM120 psm should be maintained. However, the private assessor was of the view that the value should be increased to RM124 psm and an adjustment of 15% increase should be made. [22] For the reasons described above, the learned Judge dismissed the appellant’s claim for “injurious affection, retrenchment costs for employees and professional charges” in the land reference. However, in agreeing with the view of the private assessor, the learned Judge increased the value of the subject Land from RM120 psm to RM124 psm. [23] Aggrieved, the appellant appealed to the Court of Appeal. At the Court of Appeal [24] The main issue raised by the appellant before us is: Whether the restrictions imposed by the State Authority, namely:- (i) the imposition of 200 meters buffer zone on the Appellant’s lands of no blasting and/or excavation of rocks (quarrying) from the enlarged borders of the Mengkuang Dam; and/or (ii) the imposition of no blasting and/or excavation of rocks (quarrying) below +34MSL on the subject Land to maintain the safety and to protect the Mengkuang Dam, at the request of Jabatan Bekalan Air (acquiring beneficiary), constitute an injurious affection under paragraph 2(d) of the 1st Schedule to the LAA. [25] The thrust of the appellant’s claim for injurious affection is anchored on the premise that the acquisition of the subject Land made it not viable for the appellant to continue operating the remaining portion of the quarry. [26] The appellant's line of argument is this. According to the appellant, the acquiring authority was aware of the imposition of a buffer zone by the State Authority on the appellant’s other quarry lands where no quarry activities could be done within the buffer zone. Despite the awareness, the appellant further contended that the acquiring authority refused to wholly acquire the appellant’s balance quarry lands or alternatively made any compensation for such injurious affection claims on the appellant’s remaining un-acquired lands. Our Decision [27] The 500m buffer zone was imposed by the relevant authority as a condition for the quarry licence. This condition was already imposed in 2010 and the acquisition only started on 6.2.2014, the date of Gazette Notification No. 84. At the time of the Gazette, the quarry was no longer in operation due to the stop-work order issued by MPSP dated 3.4.2013 (“stop-work letter”). [28] It should be recalled that the stop-work order was never revoked or set aside by the appellant. The order, therefore, stays. There is also no evidence before the Court that the appellant had obtained a fresh approval from MPSP for the company to resume work under clause (ii) of the stop-work letter. [29] As alluded to earlier, it was after the stop-work order that the acquisition commenced. Is the respondent obliged to acquire the portions designated as Portion Q and Portion R, which were already set as a buffer zone under the quarry licence that had since been suspended? We are of the view that the answer is in the negative. Our reason is this. It is true that the appellant may, at a later stage, apply for a fresh quarry licence. But even if it were to be approved, it would be subject to the terms and conditions to be imposed by MPSP, bearing in mind that the acquisition was for the purpose of expanding the Mengkuang Dam. [30] The appellant contended that when they tried to apply for a fresh quarry licence after the decision of the Penang High Court, the application was not approved by the Department of Environment (“JAS”). [31] Before us, learned counsel attracted our attention to a letter dated 28.7.2023, which was issued by JAS Negeri Pulau Pinang (“the JAS letter”) and addressed to the Managing Director of one Boon Yong Lee Construction Sdn Bhd. The letter, which was issued after the delivery of the judgment of the Penang High Court, formed part of the Record of Appeal pursuant to the order of this Court dated 2.5.2024. [32] The JAS letter states that pursuant to a meeting held by the Technical Review Committee (“EIATRC”) on 21.7.2023, JAS had decided to reject the EIA Report prepared by Kamaruddin Harun Consultants Sdn Bhd and submitted by Boon Yong Lee Construction for the granite quarry operation which includes the subject Land. What is more important, according to learned counsel for the appellant, is para 10 of Lampiran 1 of the JAS letter, which states: 10) Berdasarkan ulasan daripada Badan Kawal Selia Air (BKSA) Pulau Pinang terdapat keperluan penyediaan zon penampan sejauh 500 m daripada sempadan empangan. [33] It is for this reason that the appellant further said that the condition of a 500m buffer zone was nevertheless still a requirement. With respect, if the appellant is indeed aggrieved with the decision stated in the JAS letter, the remedy is to commence a judicial review application to quash the said decision. It is not for the appellant to reopen the land reference matter on the ground that the witness SR1 had said that his understanding of the buffer zone was only 200m. We are of the considered opinion that there is no need to remit the matter back to the High Court on a mere conflict between the evidence of SR1 and the evidence procured by the appellant in the form of the JAS letter after the High Court hearing when the application for a fresh quarry licence was made. [34] Even if the 500m buffer zone remains a requirement, there is no guarantee that the authorities, including MPSP, would eventually approve the appellant’s application for the quarry licence. We cannot assume that the approval would be given as a matter of course. That amounts to indulging in surmise and conjecture. Surmise and conjecture are not evidence. If any authority is needed on the said proposition, it can be found in the judgment of the Court of Appeal in Telekom Malaysia Kawasan Utara v Krishnan Kutty a/l Sanguni Nair & Anor [2002] 3 MLJ 129 CA. It was held that: A finding based solely on conjecture, surmise or suspicion is a finding based on no evidence. In the instant case, the relevant authorities may take into consideration a multitude of factors and their decision is best challenged by way of an application for judicial review housed under O 53 of the Rules of Court 2012. [35] In so far as this Court is concerned, we are of the view that there was no necessity for the respondent to acquire the purported buffer zone designated in Portion Q and Portion R, which may have come with the conditions attached for the grant of the quarry licence which conditions were not challenged at that relevant time. Once there is a stop-work order and the quarry licence has expired, we cannot expect the respondent to acquire the remaining of the subject Land in Portion Q and Portion R, which the respondent does not require and which the appellant may be required to provide as a buffer should their application for a fresh quarry licence be successful. [36] For the moment, the subject Land has no category of land use and the express condition on the title is only with respect to the non-applicability of the prohibition under the National Land Code regarding the extraction of minerals from the subject Land. Despite the subject Land not being used for quarry purposes, the learned High Court Judge had factored in a 15% increase based on its original use for quarrying activities. [37] We hasten to add that the Federal Court in Amitabha Guha (as beneficiary for the estate of Madhabendra Mohan Guha) v Pentadbir Tanah Daerah Hulu Langat [2021] 4 MLJ 1 FC held that the questions concerning the determination of the market value of the acquired lands and injurious affection affecting the four contiguous lots in that case were not questions of law. The conclusions reached on both questions were essentially findings of fact on the evidence. [38] Just like in Amitabha Guha, the learned High Court Judge had considered all the valuation reports and relevant comparables tendered by both parties and had taken account of the opinions of the assessors before deciding not to award the appellant’s claim for injurious affection, retrenchment costs for employees and professional charges. [39] Under the circumstances, we therefore could not see how the High Court had erred in assessing the compensation sum. [40] We therefore find no merits in the appeal and so the appeal is dismissed with costs of RM20,000 to the respondent. Dated: 21 April 2025 -sgd- (WAN AHMAD FARID BIN WAN SALLEH) Judge Court of Appeal Counsel/Solicitors For the Appellant: Dato’ Lim Choon Khim Tan Swee Cheng Chin Yan Leng David Yii Hee Kiet [Messrs. SC Tan] For the Respondent: Naizatul Zima Bt Tajudin, ALA Charanjit Singh, ALA [Pejabat Penasihat Undang-Undang Negeri Pulau Pinang]