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LAND ACQUISITION

PROCEDURE FOR ACQUIRING LAND COMPULSORILY –PRESCRIBED BY LAA 1960

Copyright 1996-98 © Dale Carnegie & Associates, Inc.

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PROCEDURE

• Once the machinery of acquisition has started to operate, subject to the power to withdraw, the owner of the land who has no right to object to the acquisition has an interest only in compensation.

• Robinson v CLR [1980] 2 MLJ 255

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Notification of Intended Acquisition - s.4 LAA

• Preliminary notice - S 4

• (1) Whenever the State Authority is satisfied that any land in any locality in the State is likely to be needed for any of the purposes referred to in section 3 a notification in Form A shall be published in the Gazette

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Issuance of Notice of Intended Acquisition

• When the state authority thinks that the land may be required for purposes stated in s 3, the declaration in Form A must be made; see Wan Munah bte Wan Embong v Pemungut Hasil Tanah, Kuala Terengganu [1990] 3 MLJ 120

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Preliminary Notice in Form A

• Issuance of Preliminary Notice in Form A does not amount to acquisition. The land has not been acquired at this point in time; see Hong Lee Trading & Construction Sdn Bhd v Taut Ying Realty Sdn Bhd [1992] 1 MLJ 250.

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• The notification in Form A under s 4 is really a form of notice to the public at large that certain land in a particular locality in the state ‘is likely to be needed’ for any of the purposes referred to in s 3 and with that, preliminary investigation and survey of the land will commence under s 5 see Hong Lee Trading & Construction Sdn Bhd v Taut Ying Realty Sdn Bhd [1991] 1 MLJ 250 at 251.

•  

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• There is no obligation for a pre-acquisition hearing (S. Kulasingam & Anor v Commissioner of Lands Federal Territory & Ors [1982] 1 MLJ 204).

• In Indian law- the right to pre-hearing exists.

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Lapse of Notice

• The notification in Form A shall lapse in so far as it relates to any land or part of any land in respect of which there is not published in the Gazette within twelve months from the date of publication of such notification a declaration under section 8 (1).

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Power of entry and survey s 5 (1) LAA

• The State Director may by written authority in Form B generally or specifically authorise any officer or person, together with servants and workmen, to enter upon any land in any locality specified in a notification published under section 4, and to do such work as may be specified in such Form.

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Payment of damages –s 6 LAA

• Where any person authorized to survey land causes damage to any land entered upon, the landowner must be compensated. In case of any dispute as to the compensation to be paid refer the dispute to the decision of the Land Administrator. Any occupier aggrieved by a decision of the Land Administrator may appeal to the State Authority, whose decision thereon shall be final.

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Preparation of plan & list of land – s7

• Whenever any lands are needed for any of the purposes referred s 3 the Land Administrator shall prepare and submit to the State Authority

• (a) a plan of the whole area of such lands, showing the particular lands, or parts thereof, which it will be necessary to acquire; and

• (b) a list of such lands, in Form C.

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• The purpose of submitting a plan is for the convenience of the state government (Syed Omar Alsaggoff & Anor v State of Johore [1975] 1 MLJ 241 at 244; Yew Lean Finance Development (M) Sdn Bhd v Director of Lands & Mines, Penang [1977] 2 MLJ 45)

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Declaration that land is required for a public purpose - s 8 LAA• When the State Authority decides that

any of the lands referred to in s 7 are needed for any of the purposes referred to in s 3, a declaration in Form D shall be published in the Gazette

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• S 8 (3) LAA - A declaration in Form D shall be conclusive evidence that all the scheduled land referred is needed for the purpose specified therein.

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• The state authority is bound by the rules of natural justice; see Goh Seng Peow & Sons Realty Sdn Bhd v The Collector of Land Revenue, Wilayah Persekutuan [1986] 2 MLJ 395

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• The date of gazetting of Declaration should not be taken as the effective date of acquisition under our law. Such Declaration is merely an announcement that the State Authority has decided that the land concerned is needed for the purpose referred to in s 3 LAA.

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• Rather the date when acquisition is deemed to have been effected should be the date when the Collector makes a memorial in respect of the scheduled land to vest same in the State Authority, which must necessarily be accompanied by the taking of formal possession of the land concerned; Pentadbir Tanah Daerah Kuala Muda, Sg Petani, Kedah & Anor v OBS Development Sdn. Bhd. [1996] 2 AMR 1830; Malakoff Bhd & Anor v Pentadbir Tanah, Kedah [2000]2 MLJ 140, [2000] 1 CLJ 341, [2000] 1 AMR 939 (CA)

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• The date when acquisition is deemed to have been effected should make a memorial in respect of the scheduled land to vest same in the State Authority, which must necessarily be accompanied by the taking of formal possession of the land concerned; see Pentadbir Tanah Daerah Kuala Muda, Sg Petani, Kedah & Anor v OBS Development Sdn Bhd [1996] 2 AMR 1830; and Malakoff Bhd & Anor v Pentadbir Tanah, Kedah [2000] 2 MLJ 140, [2000] 1 CLJ 341, [2000] 1 AMR 939 (CA)

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• In Veeraraghavachariar v Secretary of State AIR 1925 Mad 837 – held that as the government declared that certain lands would be acquired for a public purpose as it was entitled to do, it ought to be presumed that the government was in possession of facts to induce the declaration that the purpose was a public purpose; the court will not review the decision of the government.

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• See JED Ezra v The Secretary of State for India 9 CWN 454; Wijeyesekera v Festing [1919] AC 646; Ponnaia v Secretary of State [1926] Mad 1099 (where the action was started before the declaration was released under s 5(1) of Indian LAA and it was held not to alter the position when the declaration was made)

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• The provision clearly provides that the declaration in Form D is conclusive as to the purpose for which the scheduled lands are required which would mean that Parliament has decided that the State Authority is the best judge to determine what amounts to a purpose which is beneficial to economic development’; see Honan Plantations Sdn Bhd v Kerajaan Negeri Johor & Ors [1998] 5 MLJ 129. 

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Inquiry Process

• Full Enquiry

• Summary enquiry -s 17

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Power to take possession in urgent cases – s.19 LAA• Where any land, described in any notice in Form E

given under s 10, is in the opinion of the SA urgently required for use for a public purpose, or for a public utility in the case of an acquisition under section 3(1)(b), the State Director may, on or after the expiration of fifteen days from the date of the giving of such notice, issue a Certificate of Urgency directing the Land Administrator to take possession of such land

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• It is implicit that an enquiry by a collector into the value of the land and the assessment of the amount of compensation is a judicial function -Ng Kam Loon & Ors v Director of Public Works Department, Johore & Anor [1990] 2 MLJ 229).

• The function of the land administrator is not administrative but there is implied a proper exercise of discretion -Pemungut Hasil Tanah Daerah Barat Daya, Penang v Kam Gin & Ors [1986] 1 MLJ 362).

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• The collector makes a full enquiry of all land and assess the amount of compensation (Oliver Young v Collector of Land Revenue, Batu Pahat [1972] 2 MLJ 208); in assessing the amount of compensation to be awarded, the considerations set out in the First Schedule should be followed (Nagappa Chettiar & Ors v Collector of Land Revenue [1971] 1 MLJ 59).

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Delay in Holding Inquiry

• The whole proceeding from the date of the acquisition to the payment of compensation must be completed within two years; see the Land Acquisition (Amendment) Act 1984 (Act A575) which amended s 8 (4).

• Previously, the courts have consistently ruled that undue delay in holding an enquiry resulting in inadequate compensation being awarded tantamounts to an abuse of power and renders the enquiry and subsequent acquisition proceedings null and void;

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• Oriental Rubber & Oil Palms Sdn Bhd v Pemungut Hasil Tanah, Kuantan [1983] 1 MLJ 315 (the delay was of six years—the award was quashed);

• Re Application of Tan Oon & Ors; Tan Oon & Ors v Pemungut Hasil Tanah, Kuantan [1985] 2 MLJ 67 (delay of six years).

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Purpose of enquiry

• To satisfy the land administrator of the amount of compensation payable (Pemungut Hasil Tanah Daerah Barat Daya, Penang v Kam Gin & Ors [1986] 1 MLJ 362).

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Award of Compensation

• Content of the award

• Apportionment of the award

• Finality of the award

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• Award. In many cases, the final amount awarded by the collector is far below that awarded after the matter is finally adjudicated; see Official Assignee (of the property of Prabhaker Chundulal Shah) v Collector of Land Revenue [1984]1 MLJ 155 and Chew Ming Teck v Collector of Land Revenue & Anor [1991]2 MLJ 65 (it was held in this case that the collector had erred in fact and in law). Where the land is held by tenants in common, the award should be apportioned accordingly (Chiam Ah Khim v Leong Ah Toon & Ors [1987]1 MLJ 348);

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• where the applicant has accepted the compensation pursuant to an award, he is estopped from saying that it is not an award (Ee Kim Kin v The Collector of Land Revenue, Alor Gajah [1967]2 MLJ 89). Although there is no provision for the land administrator to review his awards, so long as his act does not prejudice the rights of any person, the regularity of making an ex gratia payment will not be questioned

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• When the procedural requirements are merely directory and not mandatory, their non-observance is unlikely to be fatal to the acquisition; see S Kulasingam & Anor v Commissioner of Lands, Federal Territory & Ors [1982] 1 MLJ 204 on the omission to serve a notice under ss (1)(b). Where the omission was not enough to render the acquisition a nullity, the collector must make a note of the intended acquisition as soon as a declaration under s 8 is published -Hong Lee Trading & Construction Sdn Bhd v Taut Ying Realty Sdn Bhd [1991] 2 MLJ 250).

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Acceptance or rejection of offer of compensation – 21 LAA

• (1) Where the owner of a building accepts an offer of compensation under s 20 the LA—

• (a) may take possession of such building on the expiration of the period prescribed in the notice in Form J; or

• (b) may, upon its removal by the proprietor, pay the cost of its removal and re-erection.

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• (2) Where the owner of a building does not accept an offer of compensation under s 20 the LA—

• (a) where the building is a permanent structure, shall not take possession thereof until he has obtained a valuation of such building by a competent valuer; or

• (b) where the building is of temporary construction, or is otherwise capable of removal and re-erection, may himself remove and re-erect such building.

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Appeal Against Decision of LA

• s 37 provides a venue for the dissatisfied individual affected by the award of the collector to indirectly appeal to the High Court; see Re Application of Tan Oon & Ors [1985] 2 MLJ 67 at 70.

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Reference to Court -s 36

• (1) No reference to Court than by the Land Administrator.

• (2) The Land Administrator may, at any time of his own motion by application in Form M refer to the Court for its determination any question as to—

• (a) the true construction or validity or effect of any instrument;

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• (b) the person entitled to a right or interest in land;

• (c) the extent or nature of such right or interest;

• (d) the apportionment of compensation for such right or interest;

• (e) the persons to whom such compensation is payable;

• (f) the costs of any enquiry under the LAA and the persons by whom such costs shall be borne.

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Assessment of CompensationThe principles governing the determination of compensation payable to land acquired as prescribed by First Schedule, Land Acquisition Act 1960

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Article 13(2) Federal Constitution 1957

• No law shall provide for the compulsory acquisition or use or property without adequate compensation

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Adequate Compensation

• What is adequate compensation that can probably compensate a private landowner whose dreams are shattered when is land is forcibly taken away from him to ensure successful implementation of government’s development projects to benefit the general public

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Principles Determining Assessment Compensation 1st Schedule LAA 1960

• S 1 First Schedule – Market Value

• S 2 First Schedule –Matters to be considered in determining compensation

• S 3 First Schedule – Matters to be neglected in determining compensation

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Principles relating to determination of compensation

• First Schedule of LAA 1960

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Definition of Market Value

• LAA 1960 has not defined Market Value.

• Some of the common considerations influencing court decisions regarding the market value of a property are: *  willing seller/willing buyer criteria; *  previous sale of comparable/similar lots of land; *  potential development.

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• Therefore, must rely on the meaning as interpreted by courts

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Nanyang Manufacturing Co. v The Collector of Land Revenue, Johore [1954] 1 MLJ 69 Buhagiar J accepted the definition of Jenkins CJ in the Indian case of Kailas Chandra v Secretary of State as follow; “ the market value of land may be roughly described as the price that an owner willing and not obliged to sell might reasonably expect to obtain from a willing purchaser with whom he was bargaining for the sale and purchase of the land.”

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MARKET VALUE• Definition and concept of market value

• Material date for ascertaining the market value

• Principles in determining the Fair Market Value

• Potential Value

• Methods of Valuation

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• Hoe Guan Investment v Collector of Land Revenue, Batu Pahat [1978] 2 MLJ 115 at p.118

“the price that a owner willing and not obliged to sell might reasonably expect to obtain from a willing purchaser with whom he was bargaining for the sale and purchase of the land.”

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Fixing a price acceptable only to the Purchaser is not an assessment of market value” see Yeow Tiong Kok v Collector of Land Revenue Port Dickson [1970] 1 MLJ 116 at p.119

• Nagappa Chettiar & Ors v Collector of Land Revenue [1971] 1 MLJ 59 at p.60

• Wan Sulaiman J. the safest guide to determine the fair market value is the evidence of sales of the same land or similar land in the neighbourhood.

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Factors be considered in determining compensation S.2 of First Schedule

• Betterment

• Severance damage

• Injurious affection

• Disturbance claims

• Incidental expenses

• Accommodation works

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Matters to be neglected in determining compensation- S.3 First Schedule LAA 1960

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• A landowner affected by acquisition proceedings must not delay in approaching the courts, or else courts could be asked not just to invalidate the acquisition but also to undo, in effect, subsequent disposal or use of the land, or dealing with the land; see Lim Cheng Chuan Realty Co Sdn Bhd v Kerajaan Negeri Pulau Pinang [1999] 4 MLJ 669, HC (18 months delay from the date of formal possession).