SUHAILA ENDUTASSIGNMENT GROUP 8MBE 141087ZULHILMI BIN ZAINUDDINMBE 141075

GROUP 8Skudai City Development purchases a piece of freehold land registered under Registry Title in Kempas within the township of Johor Bahru. Historically, the Johor State Authority alienates the land in 1901 to one, Datuk Bendahara. Thereafter, the land passes from purchaser to another until finally Skudai City Development now becomes the registered owner. It appears that, the title does not indicate the usual term as to the land use the land is subject to. The previous owners had planted fruit trees and carried out other agriculture activities on the land. The new owner now applies for planning permission to develop it into a housing and commercial centre. The Dewan Bandaraya Johor Bahru (DBJB) grants the application on condition that the developer converts the freehold land from agriculture to building. Thereafter, in compliance with the condition, the developer applies to the Land Office for the conversion and also subdivision of the land under section 124A of the National Land Code 1965. When the State Authority (SA) approves the application, it imposes Premium RM1 million based rate for commercial buildings; and the lands original freehold title is reduced to ninety-nine year lease. Skudai City is extremely unhappy with this turn of event and seeks you opinion on the legality of the conditions imposed by MBJB and Johor State Authority. Advise the developer.

Introduction

Section 52 of the National Land Code recognized three categories of land use that are agriculture, building and industry. The category of land use shall be endorsed on the document of title as determined by the State Authority1.

If the land was alienated before the commencement of the National Land Code, then, section 53 shall be effective. Section 53s implied conditions apply to all land alienated before the act2 until a category of land use is imposed under section 54 by the State Authority3. The implied conditions are as follow:i. Country land, or town or village land held under Land Office Title shall be used for agricultural purpose only. ii. All other land (town and village land held under Registry Title) shall not be used for agricultural or industrial purposes. Skudai City Development had applied for planning permission to develop the land into a housing and commercial centre. Under section 116 of the act which stipulate the implied conditions of building category, housing falls under sub-section (4)(a)4 while commercial centre falls under sub-section (4)(b)5.

__________________________________1 Section 522 Section 533 Section 544 Section 116(4)(a)5 Section 116(4)(b)In land development, a proprietor or land owner are required to surrender a certain portion of land to local authorities such as TNB, road and etcetera if they intends to carry out land development project which required them to subdivide the said land. Any approval for subdivision is given by State Authority6. The approval of subdivision is given by the Director of Lands and Mines (Registry Title)7 or Land Administrator for Land Office Title8. Subdivision shall only be approved if certain conditions are satisfied9.

Under the surrender and re-alienation there are 2 parts which can be used. First is surrender which has section 195 for total surrender of land and section 200 is for partial surrender of land. Second part is under surrender and re-alienation which the provision is in the NLC Section 203 to 204H, the portion of land wanted will be given back except for the remaining areas will be surrendered to SA. The form that will use is Form 12D which mention portion of land to be given back10. Surrender and re-alienation is approved by State Authority11 and the approval is exercise at its discretion12. The application for approval of surrender and re-alienation is as per follow13:a) Re-alienation according to approved layout planb) Land revenue (quit rent) must be paidc) Land is not under any attachment order by the courtd) No registered interest in the lande) Consent from interested parties have been obtained__________________________________6 Section 135 to 1397 Section 135 (2)8 Section 135 (2)(b)9 Section 13610 Section 20411 Section 204B12 Section 204E(1)13 Section 204CWhereas the procedure of surrender and re-alienation application in the following14:a) Submit application as prescribed in Form 12D -enclosing fee b) Consent from interested partiesc) Location plan /pre-computation pland) Approved layout plane) Issue document of title

Issues:

The following issues are identified based on the facts of the case:

1. The category of land use is not stated in the title. However, the local authority assumes the land title is agriculture and the State Authority imposed a premium of RM 1 million based rate for commercial building. 2. Whether SA can change the title condition upon submission of surrender and re-alienation by Skudai City Development.

DiscussionsGeneralThe National Land Code used two concepts that are classification of land and category of land. Classification of land refers to the location of land whereas category of land refers to the type of usage the land is subject to (refer to Section 52 under Introduction). According to Salleh Buang, these legal concepts are to ensure certain objectives are attained that is order in development, maximum utilisation of land and identification for future acquisition15.

__________________________________14 Section 204D15 Buang, S., (2007) Malaysian Torrens System: Second Edition, Dewan Bahasa dan Pustaka, Kuala Lumpur, page 71Issues (1): The category of land use is not stated in the title. However, the local authority assumes the land title is agriculture and the State Authority imposed a premium of RM 1 million based rate for commercial building.

The Johor State Authority alienated the land in 1901, way before the commencement of National Land Code 1965 from 1 January 1966. Further, there is no mention of the land use in the title but Dewan Bandaraya Johor Bahru (DBJB) instructed Skudai City Development to convert the land use category from agriculture to building. Section 110 paragraph (a) of the act provides that land alienated before the commencement of the Act shall be subject to such express conditions and restrictions in interest endorsed on the document of title16. Since the condition was not expressed, under paragraph (b) of the same section, the implied conditions under section 53(2) or 53(3) shall apply17. As the land is registered under Registry Title, section 53(2) is not applicable. The land is affected by section 53(3) which stated that it should not be used for agricultural or industrial purpose. Thus, the land category based on the implied condition is building.

__________________________________16 Section 110(a)17 Section 110(b)

This case is similar to Garden City Development Berhad v. Collector of Land Revenue, Federal Territory18. The proprietor had challenged the validity of notice requiring them to convert their land from agricultural land to commercial land and payment of premiums issued by the authorities. The Privy Council had allowed the appeal by the proprietor that under section 53(3), the provision allows the proprietor's land being lawfully used for building purposes.

Although a bit different, the case was also being referred to in Le Hazen Resources Sdn Bhd v. Land Administrator of Federal Territory Kuala Lumpur19. The category of land use for the proprietors land was not stated in the land title. Pursuant to section 53(2), since the land is a country land, the implied condition is that the land shall be used for agricultural purposes only. The proprietor argued that the land is town land as its location is in Kuala Lumpur and referred to the facts in Garden City. The argument was rejected by the High Court because in Garden City, the land is town land held under Registry Title whereas this case relates to country land.

Conclusion Issues (1)

Based on the facts above, Skudai City Development does not need to convert the land use category as instructed by DBJB and does not need to pay the RM 1 million premium to the State Authority.

__________________________________18 Garden City Development Berhad v. Collector Of Land Revenue, Federal Territory [1982] 2 MLJ 9819 Le Hazen Resources Sdn Bhd v. Land Administrator of Federal Territory Kuala Lumpur [2011] MLJU 1255

Issues (2): Whether SA can change the title condition upon submission of surrender and re-alienation by Skudai City Development.

The State Authority exercises the approval for surrender and re-alienation at its discretion12. However there is no provision for re-alienation approved by State Authority changed the title of the land. When a freehold land is surrendered to the SA, the re-alienation by SA shall also be as freehold, according to Section 204E(3) 20:Provided that where the original title is a title in perpetuity, the period for which the land is to be re-alienated shall also be in perpetuity, and where the original title is for a period of years, the period for which the land is to be re-alienated shall not be less than the remainder of the period of the lease for which the land was held under the original title.

The same case could be referred is in the Pengarah Tanah & Galian, Wilayah Persekutuan v. Sri Lempah Enterprise Sdn. Bhd21. Suffian LP said that:conditions to be valid must fairly and reasonably relate to the permitted development. In Ipoh Garden Berhad v. Pengarah Tanah & Galian22, Perak Raja Azlan Shah Ag. C.J. put his judgement briefly as follow:

__________________________________20 Section 204E(3)21 Pengarah Tanah & Galian, Wilayah Persekutuan v. Sri Lempah Enterprise Sdn. Bhd [1979] 1 MLJ 13522 Ipoh Garden Berhad v. Pengarah Tanah & Galian [1979] 1 MLJ 271

In my opinion, the present case falls to be decided on well established principles and they are to be found in the cases decided under the (U.K.) Town and Country Planning Acts. It is unfortunate that neither in the court below nor in this court has reference been made to any of them. The Acts empower planning authorities to refuse permission or to grant permission unconditionally or to impose such conditions as they think fit. On principle and authority, the discretionary power to impose such conditions as they think fit is not an uncontrolled discretion to impose whatever conditions they like.

Conclusion Issues (3)Although the power of approval is under SA jurisdiction, however it doesnt have any power to impose change of title from freehold to leasehold.

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