Court of Appeal Thwarts Overzealous Land Acquisition

30 June 2017

Witter Yee examines a recent land acquisition case.
 
On 29 March 2017, the Court of Appeal in a significant decision overturned the High Court’s decision and set aside the acquisition of a piece of land in United Allied Empire Sdn Bhd v Pengarah Tanah dan Galian Selangor & 4 Ors [2017] MLJU 392. This commentary highlights certain aspects of the judgment by the Court of Appeal.
 
BRIEF FACTS
 
United Allied Empire Sdn Bhd (“Appellant”) owned 26 acres of development land in Mukim Bestari Jaya, Daerah Kuala Selangor (“Land”). The Appellant had voluntarily reserved a part of that Land measuring slightly less than an acre for the expansion of an existing mosque “Masjid Ar-Ridwan” on the site.
 
The Land became the subject of a land acquisition exercise when the Respondents purported to acquire the whole of the Land under the Land Acquisition Act 1960 (“LAA”). The public purpose of the acquisition was to build a 26-acre mosque. According to the Government Gazette, the Land was being acquired for “Tujuan Tapak Masjid Ar-Ridwan”.
 
On 22 April 2013, the Appellant applied for leave to commence judicial review to set aside the acquisition and for the return of the Land.
 
On 12 February 2014, the Judicial Commissioner (“JC”) allowed the Appellant’s application and granted a stay of all further proceedings in the acquisition of the Land pending the disposal of the judicial review application.
 
DECISION OF THE HIGH COURT
 
The High Court dismissed the Appellant’s application. According to the Appellant, the learned JC had dismissed the application on the ground that the Appellant had not made out a case for judicial review. The Appellant appealed against the High Court’s decision to the Court of Appeal.
 
DECISION OF THE COURT OF APPEAL
 
In essence, the issues raised before the Court of Appeal were as follows:
 
(a)     Whether the Respondents complied with the requirements of the LAA pertaining to Form A and Form K;
 
(b)     Whether the Appellant’s legitimate expectation had been met;
 
(c)     Whether there had been mala fide on the part of the Respondents; and
 
(d)     Whether the intended use of the Land corresponded to stated purpose of the acquisition.   
 
Failure to serve Form A on the Appellant
 
The Appellant argued that under section 4(1) of the LAA, Form A must be issued by the Respondents when undertaking a land acquisition exercise under the LAA. Section 4(1) of the LAA provides as follows:
 
“(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”.
 
The Respondents on the other hand contended that there was no mandatory requirement to issue Form A, and relied on the Federal Court case of Pentadbir Tanah Alor Gajah & 1 Or v Ee Chong Pang & 3 Ors [2015] AMEJ 404, which had purportedly ruled that Form A under section 4(1) of the LAA was not a mandatory requirement in a land acquisition case.
 
The Court of Appeal distinguished Ee Chong Pang and held that the case did not negate completely what was clearly intended by Parliament as expressed in section 4(1) of the LAA. Datuk Abang Iskandar, JCA, who delivered the judgment of the Court of Appeal, said that Ee Chong Pang must be viewed and understood in its proper context. In His Lordship’s view, Ee Chong Pang decided that Form D may be issued before Form A was issued, but did not decide that Form A need not be issued at all.
 
The Court of Appeal held that as there is no issuance of Form A by the Respondents, there had been a fatal non-compliance with the requirements of law which rendered the acquisition an illegality.
 
The issuance of Form K
 
Abang Iskandar, JCA also agreed with the Appellant’s contention that the mere issuance of Form K, without the requisite memorial being endorsed on the register document of title under sections 23 and 66 of the LAA, would be insufficient to effectively or conclusively vest the title of the Land in the State Authority.
 
The Court of Appeal also overturned the High Court’s decision on this point where the JC, relying on the Court of Appeal case of Ishmael Lim Abdullah v Pesuruhjaya Tanah Persekutuan & Anor [2014] 7 CLJ 882, held that the title of an acquired land would vest in the State Authority the moment Form K was issued. The Court of Appeal distinguished Ishmael Lim on two grounds, namely that the Court in Ishmael Lim did not consider:
 
(1)     section 66 of the LAA, which clearly states that lands that are intended to be acquired shall vest in the State Authority only upon the making of the memorial; and
 
(2)     the circular, Pekeliling Ketua Pengarah Tanah Dan Galian Persekutuan Bilangan No 27/2009 (“Circular 27/2009”) issued by the Director General of Lands and Mines which emphasised the mandatory requirement for the making of the memorial.
 
According to the Court of Appeal, Circular 27/2009, issued pursuant to section 8(e) of the National Land Code 1965, was a subsidiary legislation as defined by section 3 of the Interpretation Acts 1948 and 1967 and has the force of law.
 
Legitimate expectation, mala fide and change in purpose
 
Abang Iskandar, JCA also noted that the Respondents’ affidavit filed in reply to the Appellant’s affidavit was “a curious mix of bare denials, contradictions of themselves and each other, blaming each other or just plain outright failure and/or refusal to answer the points raised” by the Appellant in its affidavit. His Lordship held that the Respondents’ intentional evasive conduct in failing to answer with the required candour in the performance of their public duty constituted conduct which was mala fide in the sense that it was done to deny the Appellant of its rightful property.
 
The Court of Appeal also held that the purpose of acquisition as declared in the Gazette was different from the intended use of the Land. The declared purpose of acquisition was for building a mosque. On the other hand, the Respondents admitted that the purpose declared in the Gazette was different from the intended use which included the use of the Land as a cemetery and for other buildings, none of which were properly declared in the Gazette. In this regard, the Court of Appeal held that the High Court erred when it held that there was no change in the purpose for which the Land was being acquired by the Respondents.
 
The Court of Appeal agreed with the Appellant that it was not open for the Respondents to freely ignore the existence of the Appellant’s legitimate expectation that the Respondents would act in accordance with the discretionary powers or duties lawfully conferred upon them by acquiring only what was needed and nothing more. Abang Iskandar, JCA added, “It would be incredulous and bordering on the perverse, to compulsorily acquire the entire land area belonging to the Appellant of about 26 acres for the purpose of building a mosque, even if such exercise would include erecting buildings normally associated with a mosque.”

CONCLUSION
 
This decision of the Court of Appeal is noteworthy in at least three respects. First, it upholds the fundamental right to property as guaranteed under Article 13 of the Federal Constitution. Secondly, it requires the relevant authority to declare the purpose of a proposed land acquisition in a clear and transparent manner.
 
Thirdly, the Court of Appeal has set the law back on its correct footing by emphasising the importance of section 66 of the LAA and declining to follow Ishmael Lim.