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Case Update: Court of Appeal Stresses Evidence-Based Decision in Land Acquisition Proceedings

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15 November 2023

LAND LAW
Compensation for Land - Valuation Reports - Illegal Buildings - Adequate Compensation - Land Acquisition Act 1960

Khor Kheng Long v Pentadbir Tanah Daerah Seberang Perai Selatan
Civil Appeal No. P-01(A)-643-08/2022 | Court of Appeal
- see the grounds of judgment here

Facts Khor Kheng Long (the ‘Appellant’) is the owner of a piece of land situated in Seberang Perai Selatan. In 2020, a land enquiry was held by the Land Administrator to determine the market value of the piece of land. In the enquiry the Appellant averred that the fair market value for the scheduled land was RM346.60 per m² as at 5.11.2020. The Appellant was seeking compensation for the scheduled land in the sum of RM8,620,982.00 plus compensation of 20 units of residential building. During the enquiry, the Land Administrator referred to a meeting held between the appellant and the authority on 23.10.2020. The meeting minutes recorded that the Appellant had agreed to accept an offer made by the authority to the appellant in a sum of RM4,500,000.00 as the compensation amount for the acquisition of the scheduled land. The Land Administrator took cognizance of the meeting minutes. Premised on the above finding, the Land Administrator awarded the said compensation amount and made no award for any compensation for the buildings. The appellant was not satisfied with the decision of the Land Administrator and filed a Borang N to challenge the compensation award made by the Land Administrator at the High Court. The learned High Court Judge held that there was no agreement reached between the appellant and the authority. The learned High Court Judge, after having considered the appellant’s and respondent’s valuers’ reports respectively, referred to the comparables stated in the appellant’s valuer’s report and made substantial changes to the market value based on the recommendation of the private assessor’s findings. With regard to the claim for compensation of the buildings, the learned High Court Judge held that since the buildings were constructed and occupied by the squatters, therefore, they were illegal and no compensation was to be awarded for the buildings. The appellant was not satisfied with the High Court’s decision, and filed an appeal before the Court of Appeal.

Issues 1. Whether the High Court in determining the market value and adequate compensation under the First Schedule of the Land Acquisition Act 1960 can give an award below the lesser amount given by the valuation reports.
2. Whether buildings erected on the scheduled land are illegal buildings and thus not entitled to be compensated pursuant to subparagraph 1(3A) of the First Schedule of the Land Acquisition Act 1960.

Held In unanimously allowing the Appellant’s appeal in part, the Court of Appeal held that the High Court erred by not considering the "minimum opening" fair market value offered by the Valuation and Property Services Department (JPPH). The Court of Appeal emphasized that the High Court, in a land reference proceeding, should be guided by the evidence presented. The Appellant's valuer's report provided the initial evidence, and the respondent's report served as a rebuttal. In the absence of a common comparable between the valuers, the High Court should consider the best comparable available. The Court of Appeal held that the Learned High Court judge erred in accepting a value lower than what the Respondent was willing to offer and pay, emphasizing the constitutional right to "adequate compensation." The Court emphasizes Article 13 of the Federal Constitution, asserting that no person shall be deprived of property without adequate compensation. This constitutional right influences the Court's assessment of the fair market value. The Court of Appeal concluded that the compensation should be based on the "minimum opening" fair market value offered by JPPH. In respect to the 2nd question of law to be dealt with by the Court of Appeal, the Court held that it agreed with the High Court's finding that there was no evidence proving the legality of the buildings. The Court of Appeal emphasized that the burden was on the Appellant to demonstrate the legality of the buildings to warrant compensation and that the mere payment of cukai pintu (assessment) did not prove legality. Hence the Appellant’s appeal was allowed in part.

Zul Rafique & Partners
{15 November 2023}

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