compulsory land acquisition

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Ainul Jaria Maidin - LAW 3111 COMPULSORY LAND ACQUISITION This topic deals with the rights of the State Authority as eminent domain to acquire land belonging to private landowners (individual or group or corporate body) compulsorily

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Ainul Jaria Maidin - LAW 3111

COMPULSORY LAND ACQUISITION

This topic deals with the rights of the State Authority as eminent domain to acquire land belonging to private landowners (individual or group or corporate body) compulsorily basically for the purpose of public interest.

Ainul Jaria Maidin - LAW 3111

• The right to property is not absolute. This right has always been regarded as being subject to eminent domain, an inherent right of the state, an essential incident of the state sovereignty. This means taking private property for public use.

Ainul Jaria Maidin - LAW 3111

• Eminent domain is subject to two essential conditions: (i)   private property is to be taken only for public use; and (ii)  fair & just compensation paid for the property taken.

Ainul Jaria Maidin - LAW 3111

Public interest vs private interest

• Property is acquired by the state against the will of the landowner. This is a serious encroachment on the right to property. But this can be done in public interest and not for any private interest

Ainul Jaria Maidin - LAW 3111

Article 13 of the Malaysian Federal Constitution

• (1) No person shall be deprived of property save in accordance with law.

• (2) No law shall provide for the compulsory acquisition or use of property without adequate compensation.

Ainul Jaria Maidin - LAW 3111

Recognition of states’ rights to acquire land

• Land Acquisition is essential to balance the rights of the State vs Private property owners.

• This was recognised in ancient authorities as the Magna Carta 1215 where it was expounded that, “no freeman shall be disseized or divested of his freehold … and that no man shall be disinherited nor put his franchises or freehold, unless he be duly brought to answer, and be fore-judged by course of law…”

Ainul Jaria Maidin - LAW 3111

USA Constitution • The constitutional provision in the

USA is the fifth amendment of the constitution which runs as follows: “No person shall be deprived of life, liberty or property without due process of law; nor shall private property be taken for public use, without just compensation.”

Ainul Jaria Maidin - LAW 3111

• The USA provision requires: • (i) procedural safeguards; • (ii) a reasonable law fulfilling the

requirements of due process; • (iii) acquisition be made only for public

use; and (iv) just compensation. The word 'taken' in the above provision

has been interpreted broadly. It does not necessarily mean that possession or ownership of property should always vest in the government.

Ainul Jaria Maidin - LAW 3111

• If regulation of property goes too far, it may be regarded as 'taking' and compensation may become payable for the same.

• In the USA, the question of compensation is justifiable as it is a matter of a constitutional guarantee.

• The court can rule that compensation payable is not just for 'taking' property. Of all the constitutions, the US constitution gives the best guarantee to private property from government interference.

Ainul Jaria Maidin - LAW 3111

The Indian Constitution• In India, art 300A provides:

“No person shall be deprived of his property save by authority of law”

Ainul Jaria Maidin - LAW 3111

• Art 300A signifies that before a person can be deprived of his property, there should be a law authorizing such deprivation.

• This is a basic principle of democracy that no person can be deprived of his property without the authority of a valid law. A person cannot be deprived of his property merely by an executive order which has no legal basis.

• Further, the term 'law' in art 300A does not mean merely a law made by a legislature; it means a 'fair and reasonable' law.

Ainul Jaria Maidin - LAW 3111

• Maneka Gandhi v Union of India AIR 1978; SC 59, it can be argued that 'law' in art 300A cannot mean an 'unreasonable, arbitrary, oppressive or confiscatory law'.

• Article 14 can also be invoked as it has been held that an unjust or arbitrary law amounts to a denial of equality before law.

For further explanation see Jain, Indian Constitutional Law, (1987) at pp 662-702.

Ainul Jaria Maidin - LAW 3111

Land Acquisition Act 1960 (“LAA”)

• The LAA has two main parts: • (i) the acquisition of property; and • (ii) the assessment of compensation to

landowner

• The LAA has both substantive as well as procedural provisions. Both are important to ensure that there is no abuse of power in the matter of acquisition of property.

Ainul Jaria Maidin - LAW 3111

• Charanjit Lal Chowdhury v The Union of India and Others. [1951] 38 AIR S.C.41, BK Mukherjee J., said

• “It is a right inherent in every sovereign to take and appropriate private property belonging to individual citizens for public use. This right, which is described as eminent domain, in American law, is like the power of taxation, an offspring of political necessity and it is supposed to be based upon an implied reservation by Government that property acquired by its citizens under its protection may be taken or its use controlled for public benefit irrespective of the wishes of the owner.”

Ainul Jaria Maidin - LAW 3111

• The Charanjit Lal’s case was referred to in the Malaysian case of S. Kulasingam v Commissioner of Lands, Federal Territory &Ors.[1982]1 MLJ 204. (“Kulasingham’s case”)

Ainul Jaria Maidin - LAW 3111

Scope of Acquiring Powers• LAA s. 3. This may be characterized as

the 'purpose' clause, as it lays down the purposes for which private property can be acquired. This provision, before 13 September 1991, was as follows: The State Authority may acquire any land which is needed - (a) for any public purpose; or (b) by any person or corporation undertaking a work which in the opinion of the State Authority is of public utility; or (c) for the purpose of mining or for residential, agricultural, commercial or industrial purposes

Ainul Jaria Maidin - LAW 3111

Land Acquisition (Amendment) Act 1991

• Land Acquisition (Amendment) Act 1991 amended s 3 of the LAA and inserted a new clause in place of the old s 3(b). The new s 3(b) runs as follows: (b)   by any person or corporation for any purpose which in the opinion of the State Authority is beneficial to the economic development of Malaysia or any part thereof or to the public generally or any class of the public;

Ainul Jaria Maidin - LAW 3111

Amendments to LAA 1960• A new provision, s 68A, has also been

added to the LAA. Section 68A provides that:

• “Where any land has been acquired under this Act, whether before or after the commencement of this section, no subsequent disposal or use of, or dealing with, the land, whether by the State Authority or by the Government, person or corporation on whose behalf the land was acquired, shall invalidate the acquisition of the land.”

Ainul Jaria Maidin - LAW 3111

Amendments to LAA 1960• LAA s 8(3), reads as follows:

    “A declaration in Form D shall be conclusive evidence that all the scheduled land referred to therein is needed for the purpose specified therein.”

Ainul Jaria Maidin - LAW 3111

• Section 3(b), added in 1991, is harsh, vague and with wide scope and range.

• Under s 3(b), land may be acquired for a person or a corporation and not by the government for itself, and for a purpose which 'in the opinion' of the state authority is beneficial to the economic development of Malaysia or any part thereof or to the public generally or any class thereof.

• The term 'economic development' has not been defined.

Ainul Jaria Maidin - LAW 3111

• The questions may then arise: why, in such a case, should not land be acquired by the concerned person through negotiations with the landowner and why should the state machinery of acquisition be mobilized for a private, profitable, commercial venture?

• Not possible if the landowner refuses to sell on grounds of sentimental value etc. Therefore, cannot compel landowner to sell the land.

Ainul Jaria Maidin - LAW 3111

What is 'public purpose'• The term 'public purpose' used in s

3(a) is not defined anywhere in the Act. The SC of India in Bajirao T Kote v State of Maharashtra (1995) 2 SCC 442 defined public purpose.  

Ainul Jaria Maidin - LAW 3111

• ‘The expression “public purpose” is incapable of a precise definition. It is still best to hold a common sense test, that is, to see whether the purpose serves the general interest of the community’; per Hashim Yeop Sani J in Kulasingam & Anor v Commissioner of Land, Federal Territory & Ors [1982] 1 MLJ 204

Ainul Jaria Maidin - LAW 3111

• Public purpose is not capable of precise definition. Each case has to be considered in the light of the purpose for which acquisition is sought for.

• It is to serve the general interest of the community as opposed to the particular interest of the individual. Public purpose, broadly speaking, would include the purpose in which the general interest of the society as opposed to the particular interest of the individual is directly and vitally concerned.

Ainul Jaria Maidin - LAW 3111

public purpose• Generally, the executive would be the best

judge to determine whether or not the impugned purpose is a public purpose. Yet, it is not beyond the purview of judicial scrutiny.”Sir George Jessel MR said that ‘public benefit’ must involve a direct benefit. The question whether a particular thing is in the public interest is a question of the times and is a question of fact (cf Re Amalgamated Anthracite Collieries Ltd’s Application (1927) 43 TLR 672

Ainul Jaria Maidin - LAW 3111

Justification of public purpose

• Syed Omar bin Abdul Rahman Taha Alsagoff and Anor. v Govt of Johore [1979] 1 MLJ 49Facts-appellant challenged the acquisition proceedings as null & void

•  Not meant for public purpose• Ct- S.8(3) LAA –conclusive

evidence of purpose of acquisition

Ainul Jaria Maidin - LAW 3111

• Beneficial to the economic development of Malaysia or any part thereof or to the public generally or any class of the public. These words are wide and encompass a host of activities not merely restricted to undertakings of works which are of public utilities. The purpose can be anything as long as it is in the opinion of the State Authority economically beneficial to the country, the State or to the public or any class of public;

Ainul Jaria Maidin - LAW 3111

• Honan Plantations SB v Kerajaan Negeri Johor & Ors.[1998] 5 MLJ 129 (HC). The decision of the High Court to strike out the claim for disclosing no reasonable cause of action was overruled by the Court of Appeal in [1998]2 MLJ 498 based on the construction of s 8 (3)

Ainul Jaria Maidin - LAW 3111

• The questions whether a specific acquisition is 'beneficial' and is for 'economic development' are left to the subjective discretion of the state authority, as the words 'in the opinion of' indicate.

• If the term 'economic development' is given a broad meaning, then every commercial activity undertaken by a non-governmental body for its own profit may fall within the scope of this term.

Ainul Jaria Maidin - LAW 3111

• Any purpose - It is not necessary for the state authority to confine acquisition of land to purposes which come under one head only; see Yew Lean Finance Development (M) Sdn Bhd v Director of Lands and Mines, Penang [1977] 2 MLJ 4.

Ainul Jaria Maidin - LAW 3111

• Honan Plantations Sdn Bhd v Kerajaan Negeri Johor & Ors [1998] 5 MLJ 129

• Krishnan Moorthy P Manickam v Pengarah Tanah dan Galian Negeri Johor [1996] 4 CLJ 233

Ainul Jaria Maidin - LAW 3111

• S.Kulasingam and Anor v Commissioner of Lands, Federal Territory & Ors. [1982] 1 MLJ 204

• Yew Lean Finance Development (M) Sdn. Bhd. v Director of Land and Mines, Penang [1977] 2 MLJ 45.

• Tan Boon Bak & Sons Ltd. v Government of the State of Perak & Anor [1983] 1 MLJ 117

Ainul Jaria Maidin - LAW 3111

Acquisition of Land by State Authority

• Who is state authority –The Ruler acting on the advise of the State Executive Council headed by the Menteri Besar of the State. See Nik Ibrahim Bin Abdul Rahman & Anor. v Pentadbir Tanah Jajahan Gua Musang & Ors. [2001] 5 MLJ 59.

Ainul Jaria Maidin - LAW 3111

Types of land acquired • Alienated Land s.2(1) NLC 1965• Land occupied in expectation of title

(Applications for land approved pursuant to NLC 1965

• Land held under Interim Register – NLC 1963 – Penang & Malacca Titles Act s.2(1) & 9(3)

• Land occupied by virtue of Land (Group Settlement Areas) Act 1960 s. 2(1) & 9(2)

Ainul Jaria Maidin - LAW 3111

Other Related Laws• Town and Country Planning Act

1976• Electricity Act • Street, Drainage & Building Act • Civil Aviation Act.• But the acquisition procedure must

follow the LAA 1960.

Ainul Jaria Maidin - LAW 3111

• Land held under Mining Lease or certificate or Temporary Occupation License cannot be acquired since such land does not confer ownership mere possession only to the person. Ownership is vested in the State Authority.

Ainul Jaria Maidin - LAW 3111

Who can challenge acquisition proceeedings

• Interested Persons - S.2(1) LAA 1960

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PROCEDURE OF ACQUIRING LAND

• Carried out pursuant to the Land Acquisition Act 1960

Ainul Jaria Maidin - LAW 3111

Notification of Intended Acquisition

• s 4 Preliminary notice• (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.

Ainul Jaria Maidin - LAW 3111

notice to public• The notification 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 in s.3 and with that, preliminary investigation and survey of the land will commence under this section;

• see Hong Lee Trading & Construction Sdn Bhd v Taut Ying Realty Sdn Bhd [1991] 1 MLJ 250 at 251.

Ainul Jaria Maidin - LAW 3111

S.5 Power of entry and survey

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

Ainul Jaria Maidin - LAW 3111

S.6 - Payment for damage

• (1) Where any person authorized under section 5(1) causes damage to any land entered upon he shall as soon as possible compensate the occupier for all such damage.

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Declaration of Intended Acquisition -• Whenever any lands are needed for

any of the purposes referred to in section 3 the Land Administrator shall prepare and submit to the State Authority—

• S.7 Preparation of plan & list of lands• (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

Ainul Jaria Maidin - LAW 3111

purpose of submitting a plan

• 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 under s.8• (1) 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.

Ainul Jaria Maidin - LAW 3111

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

• 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.

Ainul Jaria Maidin - LAW 3111

Publication in Gazette• The date of gazetting of the Declaration

should not be taken as the effective date of acquisition. 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.

Ainul Jaria Maidin - LAW 3111

• 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, Madras HC –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.

Ainul Jaria Maidin - LAW 3111

• 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).

Ainul Jaria Maidin - LAW 3111

• ‘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.

Ainul Jaria Maidin - LAW 3111

• Land Administrator’s Inquiry

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Full Enquiry

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Summary Enquiry

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Certificate of Urgency

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Award of Compensation

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• Content of the award• Apportionment of the award• Finality of the award

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Payment of the award

• Lembaga Amanah Sekolah Semangat Malaysia v Collector of Land Revenue, Dindings [1978] 1 MLJ 34

• Mallisamy a/l Periasamy & Anor v Pentadbir Tanah Daerah Melaka Tengah & Anor [1998] 5 MLJ 495

• Oliver Young v Collector of Land Revenue, Batu Pahat [1972] 2 MLJ 208

• Tan Boon Bak & Sons Ltd. v Government of State of Perak & Anor.[1985]1 MLJ 117

Ainul Jaria Maidin - LAW 3111

Assessment of compensation

Ainul Jaria Maidin - LAW 3111

Principles relating to determination of compensation• First Schedule of LAA 1960

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Valuation• Market Value

Ainul Jaria Maidin - LAW 3111

• Market Value• No definition in LAA• Therefore, must rely on the

meaning as interpreted by courts

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Considerations influencing Court

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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

Ainul Jaria Maidin - LAW 3111

• Market Value• 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.”

Ainul Jaria Maidin - LAW 3111

“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 to be considered in determining compensation

S.2 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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Challenging acquisition proceedings

Ainul Jaria Maidin - LAW 3111

• Reference to court• Reference by Land Administrator -S.36(2)

LAA• Objection by the Person Interested -

S.36(2)LAA • Objection by any person or Government

or Corporation on whose behalf such land is acquired - S.37(3) LAA 1960

• Dissatisfaction with quantum of compensation

• Acceptance of compensation under protest

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Delay• Delay in holding inquiry• Case:• PHT Daerah Barat Daya, Pulau

Pinang v Ong Gaik Kee [1983] 2 MLJ 35

• Oriental Rubber and Palm Oil Sdn. Bhd. v PHT Kuantan [1983] 1 MLJ 315

• Sg.Bongkoh Estate v PHT Kuala Muda (1995) 1 CLJ 400