How is the land administrator supposed to assess the quantum of compensation to a land owner in a compulsory acquisition?

NUSANTARA DAYA SDN BHD V PENTADBIR TANAH JOHOR BAHRU [2020] 1 LNS 95

• Nusantara Daya Sdn Bhd was the owner of a piece of land measuring 4,464 square metre in area (“Owner”) which was acquired by the State Authority.

• The Land Administrator (“LA”) awarded the Owner compensation in the sum of RM16,516,800-00 at the rate of RM3,700-00 per square metre.

• Dissatisfied with the LA’s award, the Owner filed an application requiring the LA to refer the matter to the High Court.

• The High Court, assisted by assessors, ordered that the compensation be adjusted from RM16,516,800-00 to RM19,026,907-00 as the fair market value to be compensated to the Owner for the acquired land, after a ten per cent (10%) deduction to the market value due to the size of the land would have attracted lesser potential buyers.

• The Owner, dissatisfied with the High Court’s decision, has appealed to the Court of Appeal.

• The Court of Appeal found that the High Court judge had erred in its findings as there was simply no evidence to support its finding that the size of the scheduled land would have attracted lesser potential buyers.

• The correct approach was to consider market value of the land from the perspective that there would be a hypothetical person actively seeking land to fulfil needs which the scheduled land could fulfil.

• As such, the High Court judge’s conclusion is without evidential basis.

• The Court of Appeal then set aside the 10% deduction for the size of the land.

• The Court deducted 10% for factors like location, access and layer and awarded 25% for potentialities for development.