Case:

Brief Facts:

• MMC Tepat Teknik Sdn Bhd (“MMC”) owned three pieces of property, namely Lots 1604, 1605 and 1608 in the District of Klang, Selangor.
  
  
• Pursuant to National Land Code 1965 (“NLC”), Lot 1604 had an express condition of “agriculture” while Lot 1608 had none. Lot 1605 on the other hand, was categorised as “industry” with an express condition of “heavy industrial”.
  
  
• Despite the aforementioned categories, all three lots were used for heavy machinery fabrication and the buildings on the lots were constructed without proper zoning permits and also in violation of planning laws.
  
  
• On 8.10.2015, pursuant to Land Acquisition Act 1960, it was formally declared that part of Lot 1604 and the entire of Lots 1605 and 1608 would be acquired by Lembaga Lebuhraya Malaysia (“LLM”) for the construction of the West Coast Expressway (Taiping – Banting) Package 3.
  
  
• Following the above, the MMC claimed for amongst others, compensation for the value of the industrial buildings on all three lots.
  
  
• On 13.6.2016, the Land Administrator made an award of compensation in the total sum of RM59,282,800.90 to MMC. However, both LLM and MMC were dissatisfied with the award where the case was subsequently referred to the High Court.

THE DECISION OF HIGH COURT (HC)

• The HC maintained the award of compensation for both the value of land and of buildings in Lot 1605.
  
  
• However, in relation of Lots 1604 and 1608, only the award for value of land was maintained whilst the award of compensation for value of buildings located on these lots were rejected. Both LLM and MMC appealed.

THE DECISION OF COURT OF APPEAL (COA)

• The COA allowed MMC’s appeal only to the extent of reinstating the Land Administrator’s award on the contractual losses in ongoing projects or existing contracts.
  
  
• The LLM’s appeal was dismissed in its entirety. Once again, both LLM and MMC appealed. LLM’s appeal was against the award of compensation for the industrial building on Lot 1605

THE DECISION OF FEDERAL COURT (FC)

• The FC recognised that during a compulsory land acquisition, compensation must be paid not just for the lands acquired but also for the buildings built on such lands and any loss of the trees or crops planted on such lands.
  
  
• However, the FC found that Lots 1604 and 1608, which was categorised as agricultural lands, did not at all permit the construction of the industrial buildings.
  
  
• And the building on Lot 1605 stands conflicted with the planning laws as it was clearly used in contravention of the residential zoning status under the local plan.
  
  
• In light of the above, the FC rejected MMC’s appeal and emphasized that unless the use of the land is proper, valid and legal, compensation for value of buildings cannot be granted.
  
  
• Therefore compensation for the value of buildings in all three lots was rejected, affirming the utmost significance of complying with the relevant land code, planning and/or zoning laws at all times.