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A Comedy of (Costly) Errors?

Claudia Cheah discusses the long-drawn saga of Semantan Estates 


INTRODUCTION

 

In November 2012, the Federal Court rejected a motion for leave to appeal against a decision of the Court of Appeal which was filed by the Government of Malaysia. The Court of Appeal had on 18 May 2012, declared the Government of Malaysia a trespasser of 263.272 acres of prime land in the Kuala Lumpur enclave of Jalan Duta, on which stands the National Hockey Stadium, the National Tennis Complex, the Institute of Islamic Understanding Malaysia, the Federal Territory Mosque, the National Archives, the Inland Revenue Office Complex and several other government buildings.

 

The decision of the Federal Court finally puts to rest a protracted legal battle arising from a land acquisition proceeding that started 56 years ago.

 


BACKGROUND FACTS

 

The origins of this case can be traced back to the pre-Merdeka era, to the year 1956. The Selangor Government declared that 225 acres of land belonging to the Plaintiff, Semantan Estates (1952) Sdn Bhd, was required for a public purpose, to wit, a Diplomatic Enclave. This was done by a gazette notification (Gazette 577/56) issued under section 6(i) of the Land Acquisition Enactment Cap 140 (“Enactment”).

 

At the hearing before the Collector on 20 November 1956, the area of the land to be acquired was shown to be 250 acres instead of 225 acres. The Plaintiff requested for a final plan of the land to be acquired and raised various objections. At the next hearing on 27 November 1956, the Plaintiff claimed compensation of RM13,000 per acre. The Plaintiff also forwarded to the Collector a letter which stated that Anglo (Thai) Corporation Ltd of Singapore was an interested party in that it had an option to purchase 63 acres of the land. The Collector awarded RM5,282 per acre. The total compensation awarded for 250 acres amounted to RM1,320,500 (“Award”).

 

On 3 December 1956, the Collector took possession of the 250 acres of land. The Plaintiff informed the Collector that they received the payment awarded under protest and that they required the Collector to refer the matter to the court.

 

Another notification was gazetted on 22 January 1958 (Gazette 61/58), whereby the Selangor Government stated that they would withdraw the acquisition of approximately 22 acres of land from the acquisition made under Gazette 577/56. Later, on 25 February 1958, the Selangor Government declared that an additional area of 60 acres 2 roods 27.5 poles was required for a public purpose, namely for extensions of the Diplomatic Enclave. The Collector then took possession of the 60 acres land without holding any enquiry or paying any compensation.

 

By a letter dated 3 May 1958 to the Plaintiff’s solicitors, the Collector admitted that the Award was invalid and the enquiry on 27 November 1956 was a nullity. The Collector further gave notice that the Government intended to take 202 acres 2 roods and 16 poles of land and an enquiry for the acquisition was scheduled on 18 June 1958. After several postponements, the enquiry was abandoned on 24 March 1959.

 

By a letter dated 1 August 1958 to the Attorney-General, the Plaintiff’s solicitors proposed that all procedural matters be settled in the manner set out in its letter. The State Legal Adviser agreed to the proposal by a letter dated 29 May 1959. By agreement of parties, a reference was made to the High Court in Semantan Estate (1952) Sdn Bhd v Collector of Land Revenue (1960) 26 MLJ 300 (“Semantan No. 1”). At the hearing, the Collector admitted that the Award was invalid and contained a fatal defect.

 

Ong J held that the conditions in section 22 of the Enactment, which sets out the procedures for a land reference to the court, must be complied with before the Collector can make a reference and the Court has jurisdiction to act on it. The learned Judge held that it was not possible for the parties by agreement between themselves to waive irregularities so as to confer jurisdiction on the Court. Accordingly, his Lordship held that he had no jurisdiction under the Enactment to entertain the reference by the Collector.

 

In his judgment, the learned judge also criticised the Collector, stating that “The matter has reached this stage entirely by reason of the respondent’s fault. The proper steps which should have been taken have not been taken.”

 

By a letter dated 27 February 1961, the Plaintiff’s solicitors requested the Collector to make an award in respect of proceedings initiated on the acquisition of the 202 acres or alternatively, if the Collector insisted that the Award was valid, to pursue the matter in the High Court under section 22(i) of the Enactment. The Plaintiff also requested the Collector to make an award in respect of the acquisition of the additional 60 acres.

 

In its reply letter dated 14 March 1961, the Collector claimed that the Award was valid and that the Plaintiff had received compensation for 263.272 acres of land. The Collector also added that if the Plaintiff wished to refer the matter to court, the Plaintiff should obtain the necessary leave to enlarge time for it to do so under section 22(iv) of the Enactment.

 

On 18 February 1963, the Ruler-in-Council granted 263.272 acres of land to the Federal Land Commissioner, which was then divided into 38 separate titles and registered in the name of the Federal Land Commissioner. Subsequently, the relevant authorities proceeded to build various government buildings on the land.

 

In the early 1980s, the Plaintiff applied for an order of mandamus against the Collector to complete the acquisition proceedings in accordance with the Land Acquisition Act 1960. The Plaintiff’s application was eventually dismissed by the Supreme Court.

 


THE HIGH COURT ACTION

 

Subsequently in 1989, the Plaintiff filed an action against the Government of Malaysia (“Defendant”) for trespass, claiming that the taking of possession of the land was unlawful and wrongful. The Defendant argued that the Plaintiff was estopped from challenging the validity of the Award as it had by its letter dated 1 August 1958, agreed to settle all procedural matters and to proceed with the assessment of the quantum of compensation. In addition, the Defendant contended that the Plaintiff had also received the full amount of compensation awarded.

 

The Plaintiff’s action was initially struck out by the High Court on the application of the Defendant but was reinstated on the Plaintiff’s appeal to the Supreme Court.

 

The parties then proceeded with full trial at the High Court, which delivered its decision on 31 March 2010 (Semantan Estates (1952) Sdn Bhd v Kerajaan Malaysia [2011] 2 CLJ 257).

 

The High Court found that the Defendant had not taken the 263.272 acres of land from the Plaintiff lawfully as the Award made was not in substantial conformity with the Enactment and there was no enquiry or award made in respect of the other 60 acres of land. The High Court ruled that the Defendant has remained in wrongful possession of the land and awarded mesne profits as damages to be assessed by the Senior Assistant Registrar.

 

Dissatisfied with the High Court’s decision, the Defendant appealed to the Court of Appeal.  

 


THE DECISION OF THE COURT OF APPEAL

 

By giving a conjunctive consideration to the letters exchanged between the parties, the Court of Appeal found that the letters were written for the purposes of trying to resolve the problems relating to the land acquisition and did not constitute a settlement agreement between the parties. As such, the Defendant could not rely on these letters as evidence that the Plaintiff had agreed to waive the irregularities in the acquisition proceeding, particularly when Ong J had held in Semantan No. 1 that the parties could not by an agreement, waive irregularities in procedure so as to seek a reference and confer jurisdiction on the court outside the scope of the Enactment.

 

On the facts, the Court of Appeal found that the Plaintiff accepted the payment awarded under protest and had continuously and persistently protested against the Award by letters and law suits.

 

The Court of Appeal held that the Collector had clearly not complied with various provisions of the Enactment, such as the failure to (i) cause the land to be marked out, measured and a plan made thereof under section 8; (ii) give the Plaintiff at least 21 days’ notice of the date of the enquiry under section 9(ii); (iii) apportion the compensation among all the persons known or believed to be interested in the land, as required under section 11(1), after being informed that Anglo (Thai) Corporation Ltd was an interested party by virtue of an option to purchase 63 acres of the land; and (iv) hold any enquiry under any written law after purportedly taking possession of the 60 acres of the land.

 

The Court of Appeal also held that the Defendant was estopped from asserting that the Award was valid as the Collector had admitted by letter that the acquisition was invalid and the enquiry pursuant to which the Award was made, a nullity. The Collector had further admitted at the hearing in Semantan No. 1 that the Award was invalid and contained a fatal defect. Further, Ong J’s judgment in Semantan No. 1 is binding on the parties, thus attracting the application of issue estoppel and res judicata.

 

In the premises, the Court of Appeal unanimously held that the Defendant had not lawfully acquired the land from the Plaintiff and hence, was a trespasser. Pursuant thereto, the Court of Appeal affirmed the High Court’s decision and dismissed the appeal with costs.

 

As the Defendant’s motion for leave to appeal to the Federal Court was dismissed, the decision of the Court of Appeal is final.

 


CONCLUSION

 

The Court of Appeal’s decision has put the Government of Malaysia in a quandary.

 

First, it is difficult to see how the Government, which has been declared a trespasser of the Plaintiff’s land, will be able, or willing, to return the land to the Plaintiff as numerous buildings, including the National Archives and the iconic Federal Territory Mosque, have been constructed on the land.

 

Second, the land involved has grown to become one of the most valuable tracts of real estate in Kuala Lumpur. It has been reported in The Edge (1 July 2013) that the land is now worth approximately RM4.6 billion based on a conservative valuation of RM435 per sq. ft. The same report further states that a property valuer engaged by the Plaintiff has estimated that the quantum of damages for trespass to the land is close to RM1.6 billion.

 

The series of errors made by the Collector in the land acquisition proceedings and the failure to hold any enquiry in respect of 60 acres of land, compounded by the Government’s failure to take steps expeditiously to resolve the dispute with the Plaintiff, may end up being a costly lesson that is to be borne by the Malaysian taxpayers.

 

 

 

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