Land Acquisition: The Right to Participate in Land Reference Proceedings

Introduction

In land acquisition proceedings, the Land Administrator will conduct an inquiry pursuant to Section 12 of the Land Acquisition Act (“LAA”) 1960 to hear the claims of every person claiming an interest in compensation to be made on account of the acquisition of land (“Persons Interested”). It is during this hearing that the Land Administrator will make a full enquiry into the value of the land(s) to be acquired and assess the amount of compensation to be given. 

Dissatisfaction with Compensation Awarded 

After the conclusion of the inquiry, the Land Administrator will deliver his award which sets out the amount of compensation awarded to the Persons Interested. Typically, the Persons Interested (such as the landowner) either accept these awards without objections or accept them under protest. If a landowner is dissatisfied with the compensation awarded, they are entitled to “accept the award with objections”, and subsequently lodge their objection via the use of a statutory form known as “Form N”. Apart from the landowner, the entity/party funding the acquisition (known as the paymaster), is also entitled to lodge an objection (via Form N) if it is of the view that the compensation awarded is too excessive. 

Once the Form N has been lodged, the Land Administrator is required to refer the objection to the High Court for a Judge to assess whether the compensation awarded is sufficient. This is commonly known as land reference proceedings. The person who lodged the objection would be given a right to be heard as to why the compensation awarded should be increased or decreased from the original sum. 

Whenever an objection has been lodged (whether by the landowner or paymaster), what usually follows in most cases is that the party who is happy with the Land Administrator’s award would seek to participate/intervene in the land reference proceedings before the High Court for the purpose of defending the award. The question that often arises here is whether they are entitled to do so because no Form N has been lodged. This issue was addressed by the Federal Court in Spicon Products Sdn Bhd v Tenaga Nasional Bhd & Anor [2022] 2 MLJ 721 (“Spicon”).

Landowner’s Right to Intervene in the Land Reference Proceedings

In this case, the landowner (Spicon Products), accepted the Land Administrator’s award without any objections. However, the paymaster (Tenaga Nasional Berhad a.k.a TNB) lodged an objection via Form N as it did not agree with the Land Administrator’s decision to include certain additional costs in the compensation awarded.

Spicon Products filed an application to intervene in the land reference proceedings. TNB opposed the application by arguing, amongst others, that Spicon Products lacked the right to intervene as it did not lodge a Form N. In making such an argument, TNB relied on the Federal Court’s earlier decision in Tenaga Nasional Bhd v Unggul Tangkas Sdn Bhd [2020] 2 MLJ 721 (“Unggul Tangkas”), where the apex court decided that the lodging of Form N was necessary for a paymaster to participate in land reference proceedings.

The Federal Court in Spicon held that there was no need for Spicon Products to lodge a Form N in order to participate in the proceedings as it is erroneous to insist that a landowner lodge a Form N (an application to refer an objection to the Court), when it accepted the award without any objections to begin with. 

Furthermore, it was held that the whole purpose for Spicon Products to participate in the land reference proceedings is to safeguard its rights and interests under Article 13 of the Federal Constitution in relation to the right to be adequately compensated in land acquisitions. The company’s intended participation was not for the purpose of objecting to the compensation awarded.  

The apex court also held that Spicon Product’s reason for intervening in the proceedings was entirely legitimate – that is, to safeguard its interests as the amount of compensation would be affected if TNB was successful in the land reference proceedings. Most importantly, the Federal Court also observed that there were no provisions within the LAA 1960 which expressly excluded a landowner from participating in land reference proceedings. In fact, Section 44 of the LAA 1960 expressly provides that the court shall take into consideration the interests of persons who are affected by the objections, regardless of whether those persons had themselves filed an objection or had been notified by the High Court to attend the proceedings. This includes even the category of all persons interested who have not accepted the award, but who may not have filed an objection as well. As such, a landowner must be allowed to participate in land reference proceedings although there is no requirement for them to be notified by the High Court of the same (as they accepted the award without protest). 

Interestingly, the Federal Court also expressed its disagreement with the judgment of the Federal Court in the earlier Unggul Tangkas case and held that paymasters are entitled to participate in such proceedings as well as their interests would be affected. The reason for this is explained below. 

Paymaster’s Right to Intervene in the Land Reference Proceedings

Prior to Spicon, the Federal Court in Unggul Tangkas held that a paymaster has no right to participate in land reference proceedings as it only has pecuniary interest as opposed to legal interest in relation to the compensation awarded to the landowner. This is because a paymaster is not claiming any compensation nor is it entitled to receive any compensation. With that, the Land Administrator is the party who will defend the compensation awarded during the land reference proceedings by leading the necessary evidence. 

However, the Federal Court in Spicon disagreed with the decision in Unggul Tangkas. It relied on the Court of Appeal’s decision in Sistem Penyuraian Trafik KL Barat Sdn Bhd v Kenny Heights Development Sdn Bhd & Anor [2009] 3 MLJ 809 and Lembaga Lebuhraya Malaysia v Cahaya Baru Development Bhd [2009] 5 MLJ 14 and held that a paymaster is entitled to participate in land reference proceedings as it has a direct legal interest in the amount of compensation payable by them for the land acquired. The apex court also noted that the panel that decided the Unggul Tangkas case did not consider some of the matters mentioned above. 

In fortifying its position as to the right of a landowner and paymaster to participate in such reference proceedings, the Federal Court in Spicon also highlighted that the Land Administrator does not really defend the award for anyone. In this regard, the Land Administrator merely explains its award and provides further justification (per the Third Schedule to the LAA 1960). Hence, it will be logical to allow for landowners and paymasters to participate in such proceedings to defend their legal and/or pecuniary interests.

It must be highlighted however that despite its disagreement with the Unggul Tangkas decision, the Federal Court in Spicon stopped short of expressly overruling Unggul Tangkas. As such, the principles laid down in that case are still binding and applicable. To this end, the conflict between the two decisions would likely be resolved only when a third case makes its way to the apex court to seek clarification as to which decision sets out the correct legal position.

Conclusion

The Federal Court’s decision in Spicon ought to be applauded as it ensures that the parties affected (be it a landowner or paymaster) are given a right to be heard in land reference proceedings. This is consistent with and also upholds the rules of natural justice.