Upon the compulsory acquisition of a land under the Land Acquisition Act 1960, the landowner is awarded compensation by the Land Administrator and that landowner normally has three options: (a) accepting the award of compensation with no objection; (b) accepting it with objection; or (c) rejecting it. 

If the landowner accepts the award of compensation with no objection, the matter normally ends there. 

However, what happens if another party challenges that award of compensation? 

Does the landowner have any say in these proceedings?

The recent Federal Court decision in Spicon Products Sdn Bhd v Tenaga Nasional Bhd & Anor [2022] 4 CLJ 195 provides the answer in the affirmative.

 

Background Facts

  • The land was acquired under the Land Acquisition Act 1960 on behalf of Tenaga Nasional Berhad (“TNB”) to construct a main substation. 
  • The landowner was awarded a sum of RM467,154.22 as compensation, which was accepted with no objection. 
  • TNB, however, as paymaster of the costs of acquisition, challenged the award of compensation awarded by the Land Administrator to the landowner by referring the matter to the High Court. TNB contended that the award of compensation ought to have been RM192,654.22 lower. 
  • As the objection was made by TNB, the parties to the land reference proceedings in Court was TNB and the Land Administrator only. The landowner was not named as a party in these proceedings.
  • The landowner sought to participate in the proceedings because it relates to the award of compensation given to the landowner, and that the landowner would be affected by any decision of the High Court on the compensation award.

 

At the High Court & Court of Appeal

The High Court allowed the landowner’s application to intervene. On appeal however, the Court of Appeal held that the landowner having accepted the award without objection could not intervene. The Court of Appeal further held that the interest of the landowner would be protected by the Land Administrator who will defend its award of compensation.

The landowner appealed to the Federal Court.

 

Federal Court’s decision

The Federal Court set aside the decision of the Court of Appeal and held that the landowner may intervene and participate in land reference proceedings initiated by another interested party.

  • Article 13 of the Federal Constitution guarantees that no person shall be deprived of property save under the law and that adequate compensation must be paid for any deprivation. Unless and until there are clear express provisions restricting a right of participation in any exercise to deprive property, any relevant law must be read to allow if not encourage such participation. Otherwise, the adequacy of any compensation paid for the deprivation of property may be compromised.
  • Since under the Land Acquisition Act 1960, the High Court must consider the interests of others (including people interested who have not accepted the award but who may not have filed an objection), it cannot be that the landowner cannot participate in proceedings relating to compensation for the acquisition.
  • The Land Acquisition Act 1960 allows for the Rules of Court 2012 to be resorted if they are not inconsistent with the Act.  As such, a landowner whose land stands acquired and whose interests are undeniably affected by an objection referred to the High Court, may invoke the Rules of Court 2012 to apply to intervene and participate in the reference proceedings to protect its rights and interests.
  • It is incorrect to say that the Land Administrator’s presence would protect the landowner’s interest. The Land Administrator does not necessarily defend its decision.

 

Commentary

The Federal Court has clarified that what is of greater importance is the rights of interested persons to be heard in the acquisition process, whether at the enquiry or at reference proceedings before the Court.  There cannot be injustice caused to an interested person in the name of a speedy disposal.  The Federal Court reminded the object of these land reference hearings – it is to determine the adequacy of compensation in compulsory acquisition, and the identity of persons interested. Any interpretation of the law must always have that consideration in mind.

There is a fundamental right under the Federal Constitution relating to deprivation of property and adequacy of compensation. A landowner, although previously having accepted an award of compensation, cannot be shut out of legal proceedings involving his land or the compensation paid for that land.

***

This article was written by Th’ng Yan Nie (Partner) from Donovan & Ho’s employment law practice. 

Donovan & Ho is a law firm in Malaysia, and our employment practice group has built a reputation for providing strategic employment advice to local and global organisations.  Our team of employment lawyers provide advice on employment law and industrial relations including review of employment contracts, policies and handbooks, advising on workforce reductions, and managing dismissals of employees for poor performance or misconduct. We also represent clients in unfair dismissal claims and employment-related litigation. Have a question? Please contact us.

 

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