The landmark Federal Court decision in Semenyih Jaya Sdn Bhd v Pentadbir Tanah Daerah Hulu Langat & Another case [2017] 5 CLJ 526 held that in land acquisition proceedings, an aggrieved party has the right of appeal against the decision of the High Court on questions of law. The Federal Court said that the bar to appeal in Section 49(1) of the Land Acquisition Act 1960 is limited to appeals on the quantum of compensation and is not a complete bar on all appeals to the Court of Appeal even if the appeal affects the quantum of compensation.

Following Semenyih Jaya, however, the Federal Court in the two following cases appear to have narrowed the scope of possible appeals by a restrictive meaning to what amounts to a “question of law” for the purposes of an appeal under section 49(1) of the Land Acquisition Act 1960:

1. Amitabha Guha (as beneficiary for the estate of Madhabendra Mohan Guha) v Pentadbir Tanah Daerah Hulu Langat [2021] 4 MLJ 1 (Federal Court)(“Amitabha Guha”); and

2. Pentadbir Tanah Daerah Johor v Nusantara Daya Sdn Bhd [2021] 7 CLJ 1 (Federal Court) (“Nusantara Daya”).

Amitabha Guha on “Question of Law”

The Federal Court in Amitabha Guha made the following observations as to what is a “question of law” that justifies an appeal under the Land Acquisition Act 1960:

1. 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;

2. Questions of law are questions about what the correct legal test is. Questions of mixed law and fact are questions about whether the facts satisfy the legal tests;

3. A question of law is a question concerning the legal effect to be given to a set of undisputed facts. This includes an issue which involves the application or interpretation of a law;

4. The question of whether a decision-maker has jurisdiction to determine a particular matter is usually considered a question of law reviewable by a court on a standard or correctness;

5. Questions of law involve errors of law committed by a decision-maker. Errors of law includes the application of the wrong law, or a finding of fact in complete absence of any evidence;

6. Questions where there is real doubt as to the law on a particular point;

7. Questions of law includes the correctness of (a) pure statements of law (eg, as to correct interpretation of a statutory provision), and (b) the inferring of a conclusion from the primary facts (where the process of inference involves assumptions as to the legal effect of consequences of the primary facts).

Questions raised in Amitabha Guha

In Amitabha Guha, the following seven questions were raised and argued at the Federal Court. The Federal Court decided that questions 1 and 2 were not questions of law while the remaining questions were:

1. Question 1: Whether in accordance with paragraph 1(1A) of the First Schedule of the Land Acquisition Act 1960, the principle of equivalence and the decision of the Federal Court in Semenyih Jaya Sdn Bhd v. Pentadbir Tanah Daerah Hulu Langat & Another Case [2017] 5 CLJ 526; [2017] 3 MLJ 561 (Semenyih Jaya), the High Court was right to disregard some of the appellants’ comparables including the acquisition comparables – that is, the amount of compensation awarded by the Land Administrator for lands (which were situated within the vicinity of the acquired lands) when assessing the market value of the acquired lands?

Federal Court:

  • Question 1 is not a question of law;
  • There is nothing to indicate that the High Court or the assessors had committed any error of law or fact in not properly considering the evidence or in failing to apply the principles relating to the determination of compensation;
  • It is for the assessors in their professional assessment and judgment to decide on the suitability of the comparables; and
  • Similarly, the judge is vested with the discretionary power to consider and decide on the most suitable comparables.

2. Question 2: Whether the High Court was legally obliged to award injurious affection for all the four contiguous lots (adjacent to the acquired lands) owned by the appellants in view of the following factors:

(a) injurious affection was awarded for the remainder of the acquired lands (owned by the appellants, of which a portion was compulsorily acquired by the respondent under the of the Land Acquisition Act 1960 1960);

(b) the said four contiguous lots suffered from the same negative impact as the remainder of the acquired lands and were restricted to only one inadequate access road hence significantly impairing its development potential; and

(c) both assessors awarded injurious affection for the four contiguous lots?

Federal Court:

  • Question 2 is a question of fact; and
  • The learned judge’s findings are not unsubstantiated by the evidence and facts.

3. Question 3: Whether for the purpose of computation of late payment charges under section 32 of the Land Acquisition Act 1960, the phrase “taking possession of the land” in section 32(1C) of the Land Acquisition Act 1960 means taking physical possession of the land or taking formal possession of the land under section 22 of the Land Acquisition Act 1960?

4. Question 4: Whether for the purpose of computation of late payment charges under section 48 of the Land Acquisition Act 1960, the phrase “taking possession of the land” in section 48 of the Land Acquisition Act 1960 means taking physical possession of the land or taking formal possession of the land under section 22 of the Land Acquisition Act 1960?

Federal Court:

  • The phrase “taking possession of the land” in section 32(1C) of the Land Acquisition Act 1960 means taking physical possession of the subject lands; and
  • The phrase “took possession of the land” in section 48 of the Land Acquisition Act 1960 means taking formal possession of the subject lands by the Land Administrator under section 22 of the Land Acquisition Act 1960.

5. Question 5: Whether the provisions of the Land Acquisition Act 1960, that is the Amending Act No. A1517 (2016 Amending Act ) – in particular, the amended rate of late payment charges, that is, 5% per annum under sections 32 and 48 of the Land Acquisition Act 1960 – which came into force on 1 December 2017, apply to land reference proceedings pending before the High Court on 1 December 2017 in view of section 43 of the Amending Act?

Federal Court:

  • The 2016 amendments to sections 32 and 48 of the Land Acquisition Act 1960 are not retrospective so as to deprive the appellants of their substantive rights to late payment charges; and
  • The appellants acquired the right to late payment charges when they initiated the land reference proceedings in the High Court prior to the amendments coming into force.

6. Question 6: Whether the High Court ought to have awarded compound interest in order to adequately compensate the appellants for the loss suffered in accordance with the principle of equivalence?

Federal Court: Pursuant to section 32 of the Land Acquisition Act 1960, the appellants are entitled to late payment charges at 8% per annum.

7. Question 7: Whether the High Court ought to have awarded costs to the appellants.

Federal Court: The High Court was not wrong in refusing costs to the appellants.

Nusantara Daya on “Question of Law”

In Nusantara Daya, the Federal Court again had to consider the interpretation of Section 49(1) of the Land Acquisition Act 1960 and whether the appellant’s appeal was barred by the proviso to Section 49(1) of the Land Acquisition Act 1960.

The Federal Court in Nusantara Daya found that Semenyih Jaya did not define what is a “question of law” for the purpose of Section 49(1) of the Land Acquisition Act 1960. As a starting point, the Federal Court in Nusantara Daya adopted the general proposition set down in Amitabha Guha that “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”.

However, the Federal Court stated that the general proposition must be appreciated, understood and applied in the context of the proviso to Section 49(1) of the Land Acquisition Act 1960. This general proposition should not be taken as suggesting that section 49(1) of the Land Acquisition Act 1960 is to be given a liberal reading to render nugatory the clear intent of precluding appeals from decisions of the High Court on compensation. This proposition is not to be read as allowing in any way, appeals on compensation.

Accordingly, the Federal Court held that what may amount to a “question of law” under the proviso to Section 49(1) of the Land Acquisition Act 1960 must be narrowly and strictly construed. The Federal Court then opined that the suggestions or examples cited in Amitabha Guha are purely general suggestions, examples or illustrations and are not indicative of what a “question of law” is under section 49(1) of the Land Acquisition Act 1960.

Questions raised in Nusantara Daya

After explaining that a “question of law” must be narrowly and strictly construed,, the Federal Court looked at the ten questions of law raised at the Court of Appeal:

1. Whether the High Court is permitted to use or rely on a Government valuation report when it is proven that the report is misleading and failed to disclose material information?

2. Whether the failure to disclose material information in a valuation report prepared in connection with land acquisition cases renders the report unreliable and that consequently such a tainted report ought to be disregarded?

3. Whether the High Court in a land acquisition case is entitled to embark upon its own assessment of the market value of the land acquired, disregarding the valuation reports prepared by professional valuers and disregarding evidence of comparable sales referred to therein by professional valuers?

4. Whether the High Court erred in law in failing to apply the “mean principle” when faced with evidence from competent valuers of a range of price a property might fetch in the open market?

5. Whether the High Court erred in law in failing to hold that the respondent’s conclusion (that Lot 20952 Township of Johor Bahru was not transacted at RM42,000,000 but was instead the proceeds of a joint-venture) was wrong and that the respondent had thereby disregarded an appropriate comparable on an erroneous assumption?

6. Whether the High Court erred in law in failing to hold that the Government valuer had improperly rejected a comparable by the appellant’s valuer simply on account that the comparable was not in the immediate vicinity of the subject land?

7. Whether the High Court erred in law in holding that the potential development value of the scheduled land had already been factored into the transacted value of a comparable that had no development potential?

8. Whether the High Court erred in law in concluding that a deduction should be made to the scheduled land because of its larger size on the basis that it would attract lesser potential buyers?

9. Whether the High Court erred in law in holding that the proximity of a closed water treatment plant and a house of worship to the scheduled land is a negative factor that would impact potential buyers when there was no such evidence before the High Court?

10. Whether the High Court erred in law in failing to order the respondent to refund the deposit to the appellant despite the increase in the award?

After examining the questions, the Federal Court held that the questions are all about the award of compensation made by the High Court, how the final amount was arrived at and how that amount was wrong.

The High Court, as the land reference court, was entitled to make various deductions in order to arrive at the market value of the land. The deductions are fact-based decisions based on evidence adduced. The analysis of such evidence involves the court’s appreciation and impression of such evidence when applying principles of valuation to the facts. The Federal Court held that room must be given for a divergence of opinion on the evaluation of such evidence; more so when the appeal is statutorily limited.

The Federal Court further held that the issues raised were all complaints against the award of compensation, what the learned judge did, what the learned judge should not have done, and what the learned judge ought to have done in order to arrive at the award that the High Court finally did.

The Federal Court also held that the allegations of acting without evidence or acting against the evidence of a particular witness or report; or how a particular piece of evidence is to be treated, are actually complaints generally made in order to meet the general principles for appellate intervention.

Such complaints are generally correct in relation to (non land reference) appeals. Without the proviso to Section 49(1) of the Land Acquisition Act 1960, such appeals on points of law may be entertained even if the appeal is on compensation or the amount of compensation. However, in the presence of the proviso, and the restrictive reading given to the meaning of question of law as allowed in Semenyih Jaya, such complaints or grounds do not make the questions posed, questions of law.

The Federal Court reiterated that the complaints in the appeal essentially concerned issues of fact or application of valuation principles when computing the amount of compensation to be awarded for the acquisition. The aforementioned are not questions of law and not within the narrow and limited remit of what or how such a question of law may be properly and validly taken on appeal under section 49(1) of the Land Acquisition Act 1960.

Allowing questions of law to be posed in appeals on compensation, in the Federal Court’s opinion, should not mean or entail the same process of re-hearing where the Court of Appeal or the Federal Court “review the inferences and conclusions of the High Court and to draw its own inferences and conclusions” in relation to valuation. Otherwise, it would undermine the plain intent of the proviso to section 49(1) of the Land Acquisition Act 1960, render the intent of Parliament meaningless and the courts be accused of rewriting the law.

Based on the above, the Federal Court concluded that none of the questions posed, in any sense, and certainly not in the limited sense of Semenyih Jaya, were questions of law.

Misappreciation of evidence v. No evidence

The Federal Court in Nusantara Daya also held that any complaints regarding the wrong appreciation or application of evidence by the High Court are also not sufficient to constitute “questions of law” for the purposes of an appeal under section 49(1) of the Land Acquisition Act 1960.

However, it remains to be seen whether the Federal Court will in future decide that a question of law exists where there is a finding of fact by the High Court in the absence of any evidence. The Federal Court in Amitabha Guha had held that questions of law involve errors of law committed by a decision-maker which include a finding of fact in complete absence of any evidence.

There is arguably a difference between a misappreciation of evidence by the High Court and a finding of fact in absence of any evidence altogether

Conclusion

The Federal Court in Amitabha Guha and Nusantara Daya have taken a restrictive definition on what amounts to a “question of law” for the purposes of an appeal under section 49(1) of the Land Acquisition Act 1960. If an appeal concerns issues of fact or application of valuation principles when computing the compensation sum in acquisition proceedings, it is likely that the appeal will not be entertained as those issues are not “questions of law” for the purposes of section 49(1) of the Land Acquisition Act 1960.

Appeals against the decision of the High Court in a land reference remains an uphill challenge. This is especially so when the question of law to be raised on appeal relates in some way to the quantum of compensation awarded.

To find out more about the law on land acquisition in Malaysia, click here to read our article titled “Compulsory Land Acquisition in Malaysia, Compensation and Disputes” or click here to watch our online talk titled “Land Acquisition Appeals From the High Court to the Court of Appeal”

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Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.