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Land Reference Proceedings

In land acquisition proceedings, can a landowner who has accepted the compensation made by the land administrator without any objection be entitled to intervene and participate in Land Reference Proceedings initiated by another interested party, i.e. paymaster subsequently? 

Previously, in the landmark case of Tenaga Nasional Bhd v Unggul Tangkas Sdn Bhd & Anor And Other Appeals [2018] 4 CLJ 285, the Federal Court has stated that only a person interested who has properly objected to an award of compensation by lodging their objection via “Form N” is entitled to be a party to participate or intervene in the land reference proceedings. In their Lordship, the act of lodging Form N was necessary for a paymaster to participate in land reference proceedings. Nevertheless, this issue has once again been discussed by the Federal Court 4 years later in Spicon Products Sdn Bhd v Tenaga Nasional Berhad & Anor [2022] 4 CLJ 195.

According to Section 12 of the Land Acquisition Act 1960 (“the Act”), the Land Administrator shall make inquiry to hear the respective interests of every person claiming the award of compensation on the acquisition of land, for example, the Landowner or the paymaster. The Land Administrator will then decide and set out the compensation awarded to the person claiming. The person claiming may choose to either accept the award or accept the award with objection and lodge their objection via Form N if they are dissatisfied with the amount of the compensation awarded to them. 

The Land Administrator is then required to refer the objection to the High Court in order for the High Court Judge to assess whether if the compensation awarded is appropriate, i.e. the land reference proceedings. In assessing this, the person who has lodged the Form N objection is given a right to be heard in the court as to why the original amount of compensation should be reduced or increased. Questions arise as to whether the other party who is satisfied with the Land Administrator’s awarded compensation is entitled to participate and intervene in the land reference proceedings as no Form N has been lodged by them. 

Spicon Products Sdn Bhd v Tenaga Nasional Bhd & Anor

The paymaster (TNB) acquired the appellant’s land (Spicon Products) to construct its main substation. After enquiry, the Land Administrator made a compensation awarded to the landowner and Spicon Products accepted the award without any objections. However, this compensation is objected to by TNB and an objection via Form N has been filed. 

During the land reference proceedings in the High Court, Spicon Products filed an application under Order 15 rule 6(2)(b) of the Rules of Court 2012 to intervene and be made a party to the proceedings. TNB eventually relied on the Federal Court’s landmark decision in Unggul Tangkas to argue that the lodging of Form N was necessary for the paymaster to participate in land reference proceedings and such failure is fatal which would preclude it from becoming a party in the proceedings. Nevertheless, the High Court allowed the appellant’s intervention application and TNB appealed to the Court of Appeal subsequently. The Court of Appeal in agreeing with TNB, set aside the High Court’s decision. 

In allowing the appeal, the Federal Court held that despite the fact that Spicon Products has not filed a Form N objection and has accepted the compensation awarded without objection, there was no need for Spicon Products to file an objection to be entitled to intervene and participate in the land reference proceedings. The Court stated that there is none of the provisions of the LAA 1960 excludes a landowner from participating in land reference proceedings and instead, Spicon Products should be entitled to apply to intervene in the proceedings under Section 44 of the Act. Section 44 provides that the court shall consider the interests of all persons who are affected by the objection regardless of whether those persons have made an objection or are being notified by the High Court to attend the proceedings.

Also, the Court further stressed on the point that Spicon Products does not intend to object to the compensation awarded but only to safeguard its interests. In their Lordship, the whole purpose of Spicon Products’ application to intervene in the land reference proceedings was legitimate which is to safeguard its rights and interests as the outcome of the land reference would eventually affect the amount of compensation to which Spicon Products is entitled to. Thus, Spicon Products clearly has an interest to be added as a party and to participate in the reference proceedings. 

The Federal Court also took this chance to revisit the earlier decision in Ungkul Tangkas where in the case, it was the paymaster who applied to intervene in the landowner’s land reference. 

In Ungkul Tangkas, the Federal Court has adopted the Court of Appeal’s observation in Sistem Lingkaran Lebuhraya Kajang Sdn Bhd v. Inch Kenneth Kajang Rubber Ltd & Anor And Other Appeals [2011] 1 CLJ 95 and held that any application under Order 15 rule 6(2)(b) of the Rules of High Court 1980 to intervene in a land reference proceedings is inappropriate. In their Lordship, “filing of Form N is the most appropriate and the only mode available under the LAA 1960 to any person interested under the LAA 1960 to become a party in a land reference at the High Court relating to an objection to the amount of compensation” or else it would amount to an abuse of the court process.

However, this decision has been disagreed by the Federal Court in Spicon Products and held that the paymaster should be entitled to intervene and participate in the land reference proceedings. The Court held that although a paymaster is not claiming any compensation nor entitled to receive any compensation, it has a direct legal interest which would be affected by the result of the land reference. Both the landowner and the paymaster should be entitled to intervene and participate in the proceedings to defend their legal interests. 

Nevertheless, it should be noted that despite all the comments, Unggul Tangkas’ decision remains binding and applicable as the Federal Court in Spicon Products did not overrule the former.

Conclusion

While upholding landowners’ right to safeguard and protect their interests in the property, the decision of Spicon Productsalso enables the paymaster to participate in the land reference proceedings as it has a direct legal interest which would be affected by the amount of compensation awarded in the proceedings. Form N should not be the only determination to determine whether an interested person is entitled to participate in the land reference. However, the current legal position remains unclear due to these two conflicting authorities but nonetheless, each case must be confined to its own peculiar facts and circumstances. 

By George Miranda, Joy Sam Jia Qian, Kong Chai Yin

This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.

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