When a State Authority acquires a piece of land, it deprives the landowner of his property – but, it must do so in compliance with the law. Whilst the Land Acquisition Act 1960 (LAA 1960) allows for compulsory acquisition of lands, Article 13(2) of the Federal Constitution provides a constitutional safeguard to land owners to receive adequate compensation upon acquisition.
The question then boils down to this – what is an adequate compensation?
The principle of compensation is well established – it must put the claimant in the same financial position as he would have been in had there been no question of his land being compulsorily taken. The aforementioned principle was laid down by the Supreme Court in Land Administrator, District Of Gombak v Huat Heng (Lim Low & Sons) Sdn Bhd [1990] 3 MLJ 464.
Under the LAA 1960, the principles relating to the assessment of compensation are set out in the First Schedule. This alert discusses whether a person, dissatisfied with an award of compensation, can make an appeal on the determination of such award.
Bar To Appeal
Section 37 of the LAA 1960 states that any interested person may make an application to the court if he is dissatisfied with the amount of compensation made by the Land Administrator. A perusal of the LAA 1960 would reveal a provision limiting appeals under the Act. 49(1) of the LAA 1960 and its proviso reads:
“(1) Any person interested, including the Land Administrator and any person or corporation on whose behalf the proceedings were instituted may appeal from a decision of the Court to the Court of Appeal and to the Federal Court:
Provided that where the decision comprises an award of compensation there shall be no appeal therefrom.”
Section 49(1) sets out the limitation in that there can be no appeal “where the decision comprises an award of compensation”. However, the apex court in the groundbreaking case of Semenyih Jaya Sdn Bhd v Pentadbir Tanah Daerah Hulu Langat [2017] 3 MLJ 561 pronounced that the bar is not one that is absolute.
It must be noted that a right to appeal is statutory. It means that when conferred by statute, the right of appeal becomes a vested right. On this note, the proviso to Section 49(1) seeks to qualify a full right of appeal relating to an award of compensation. However, the Federal
Court in Semenyih Jaya held that this ‘purported ouster of the right to appeal’ in respect of compensation ought to be narrowly and strictly construed.
The Federal Court held that the proviso to Section 49(1) must be strictly interpreted in favour of the person who has been deprived of its property so as to give meaning to the constitutional protection of a person’s right to his property. Be that as it may, this does not mean that no effect is to be given to the intention of Parliament in limiting such an appeal. The question is whether such an expression was intended to include any decision on compensation decided by the High Court. The Federal Court held that the proviso to Section 49(1) does not represent a complete bar on all appeals to the Court of Appeal from the High Court on all questions of compensation. Instead, the bar is limited to issues of fact on ground of quantum of compensation. The Federal Court in Semenyih Jaya enforced the fact that an aggrieved party retains the right to appeal against the decision of the High Court on questions of law.
Nusantara Daya Sdn Bhd Case
The Federal Court’s pronouncement in Semenyih Jaya clarified the legal issue of whether an interested person may appeal against an award of compensation. But for the reservation expressed in Semenyih Jaya, any appeal would have fallen squarely within the prohibition in the proviso to Section 49(1) and stand barred. This was the essence of the Federal Court’s decision in Pentadbir Tanah Daerah Johor v Nusantara Daya Sdn Bhd [2021] 4 MLJ 570.
Although the judgment of Semenyih Jaya was endorsed in Nusantara Daya, the Federal Court in Nusantara Daya took on the task of interpreting what constitutes a ‘question of law’ under the proviso to Section 49(1). Briefly, the facts Nusantara Daya were:
a) The Respondent, Nusantara Daya was awarded a sum of RM16,516,800 as compensation for the acquisition of its land by the Land Administrator. Dissatisfied with the amount, the Respondent referred the matter to the High Court.
b) The High Court, after making various and necessary adjustments, increased the amount of compensation to RM19,026,907 after being satisfied that this represented the fair market value of the acquired land.
c) Still dissatisfied with the decision of the High Court, the Respondent appealed to the Court of Appeal on ten ‘questions of law’. The Appellant, Pentadbir Tanah Daerah Johor argued that the ‘questions of law’ raised by the Respondent were actually factual questions affecting the quantum of compensation and the appeal was therefore barred by the proviso to Section 49(1).
The Court of Appeal allowed Nusantara Daya’s appeal and adjusted the High Court’s award thereby resulting in the compensation award being increased further. The Appellant then appealed to the Federal Court to set aside the decision of the Court of Appeal. In determining whether the appeal to the Court of Appeal was barred by the proviso to Section 49(1), the Federal Court queried as follows:
“[34] What then is a question of law properly and validly falling within the terms of the proviso to s 49(1)? What is the meaning and ambit of ‘question of law’; should this term be ascribed a largess or generous interpretation; or should it be a stricter narrower construction.”
This is because if the ten questions posed by the Respondent are truly ‘questions of facts’, then the proviso to Section 49(1) will apply. On that note, the Federal Court in Nusantara Daya adopted the general interpretation of law in Amitabha Guha v Pentadbir Tanah Daerah Hulu Langat [2021] 4 MLJ 1:
“[51] As a starting point, we would adopt the general proposition as set down in Amitabha Guha No 2, that ‘In a general sense, a question of law is an issue involving the interpretation of law (statutes or legal principles) and the application of the law to the facts of each individual case’, but with a strong rider and only to that extent…”
The Federal Court in Nusantara Daya cautioned against giving the phrase ‘question of law’ a wide or flexible understanding and proceeded to hold that a ‘question of law’ under the proviso to Section 49(1) must be “narrowly and strictly construed”. To hold otherwise would undermine the clear intent of the proviso – that there is no right of appeal in respect of decisions comprising an award of compensation.
On the facts of the case, the Federal Court held that issues of fact and/or application of valuation principles when computing the amount of compensation to be awarded for the acquisition as well as the application of valuation principles are not questions of law. With respect to the ten questions raised by the Respondent, the Federal Court held that “whether we take the ten questions as posed or as grouped into the ‘three issues’, these questions or issues are all about the award of compensation that was made by the High Court, how the final amount was arrived at and how that amount was wrong.”
As such, the Federal Court held that none of the questions posed were questions of law and room must be given for a divergence of opinion on the evaluation of such valuation evidence – more so when the appeal is statutorily limited.
Conclusion
The decision in Nusantara Daya clearly delineates the legal position relating to the proviso in Section 49(1). As canvassed above, the Federal Court looked at the substance of the complaint against the High Court decision and not the way in which the complaint is framed. This allowed the court to sieve through any feeble façade put forth by an aggrieved party. Therefore, while the judgment in Semenyih Jaya is embraced, it must not be interpreted in vacuo as Nusantara Daya has clarified that a superficial attempt by an aggrieved party to appeal on ‘questions of law’ will be subjected to scrutiny.
25 November 2024