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2013 MarsdenLR 2329
HIGH COURT MALAYA KUALA LUMPUR
SHELL MALAYSIA TRADING SDN BHD – Appellant
Versus
PENTADBIR TANAH WILAYAH PERSEKUTUAN – Respondent
[Land Reference No: S15NCVC-6-02-2012]
Compensation for land acquisition must be based on market value regardless of the type of interest, and the court reaffirmed the entitlement to losses due to business cessation.
Headnote:(A) Land Acquisition Act 1960 - Sections 4, 8, and 12(1) - This case involves the acquisition of a leasehold land for a mass transit project and the determination of compensation payable - The court emphasizes that compensation must be based on market value of the land, regardless of whether the interest is that of a registered owner or lessee (Paras 11-12).
(B) Compensation for loss of profit - The court finds entitlement to compensation for loss of profits due to acquisition and clarifies the interpretation of the relevant sections post-amendment (Paras 28-30).
(C) Method of valuation - The court rejects the method of calculating compensation based on premium or rental paid and instead confirms the use of market value assessment methods (Paras 12, 15, 18).
Facts of the case:
The registered owner had leased land to the applicant, who later claimed additional compensation following government acquisition for a rail project, with disagreements on compensation valuations (Paras 1-6).
Findings of Court:
The court finds additional compensation of RM1,401,439.53 is due, following a detailed evaluation of market value, loss of profits, and removal costs (Paras 37-38).
Issues: The main issues addressed included appropriate methods for determining market value of leasehold interests and entitlement to loss of profits (Paras 7, 27).
Ratio Decidendi: The court concluded that assessment of compensation must derive from market value as stipulated by the Act and determined that the previously adopted valuation method was incorrect (Paras 11, 13, 15).
Result: The applicant's claim for additional compensation is allowed.
Key Points: - Compensation for land acquisition must be based on the market value of the land, regardless of the type of interest (registered owner or lessee) (!) (!) . - The method of calculating compensation based on premium or rental paid is rejected; market value assessment methods must be used (!) (!) . - A lessee is entitled to compensation for loss of profits due to land acquisition, even after amendments to the Land Acquisition Act 1960, based on paragraph 2(e) of the First Schedule (!) (!) . - The court found that the applicant was entitled to additional compensation for loss of profits, calculated as RM1,027,000.00 (!) (!) . - Removal costs for decommissioning a fuel station, including underground tanks and pipes, are recoverable as reasonable expenses occasioned by the acquisition (!) . - The applicant was awarded RM75,378.53 for removal costs (!) . - The court allowed the applicant's claim for additional compensation, totaling RM1,401,439.53 (!) (!) . - The market value of the applicant's interest in the land and buildings was determined to be RM2,555,085.00 (!) (!) . - The respondent's initial award to the applicant was RM2,267,400.00 (!) (!) . - Valuer's fees are recoverable under section 14(5) of the Land Acquisition Act 1960 (!) (!) .
What is the correct method for determining the market value of a leasehold interest in land acquisition cases?
What are the rights of a lessee to compensation for loss of profits due to land acquisition?
How are removal costs for decommissioning a business site to be treated in land acquisition compensation?
| Table of Content |
|---|
| 1. land acquisition facts and compensation awards. (Para 1 , 2 , 3 , 4 , 5) |
| 2. claims and parties' arguments on compensation. (Para 6 , 7 , 8 , 9) |
| 3. court's evaluation of arguments and statutory provisions. (Para 10 , 11 , 12 , 13 , 14 , 15) |
| 4. reasoning on market value assessment methods. (Para 16 , 17 , 18 , 19 , 20) |
| 5. court's critique of valuation methods used. (Para 21 , 22 , 23) |
| 6. valuation of buildings and overall interest. (Para 24 , 25 , 26) |
| 7. compensation for loss of business considerations. (Para 27 , 28 , 29 , 30 , 31 , 32 , 33) |
| 8. rulings on removal costs and fees. (Para 34 , 35 , 36) |
| 9. concluding orders on compensation. (Para 37 , 38) |
[1] This is a Land Reference pursuant to s 36 of the Land Acquisition Act 1960 ("the Act"). The facts of the matter is as follows. Syarikat Pemodalan Kebangsaan ("SPK") was the registered proprietor of a leasehold interest on a piece of Land measuring approximately 1,503.75 square meters (16,195 square feet) identified as Lot 137 (521), Seksyen 90, Bandar Kuala Lumpur, Daerah Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur and held under Title No PN 23538 ("the Land"). The lease on the title was for a period of 60 years expiring on 22 January 2055 ("the Main Lease").
[2] SPK had vide a Sub-lease agreement dated 18 September 1995 ("the Sub-lease Agreement") leased the Land to the applicant herein for a term of 30 years expiring on 18 September 2025 with an option to renew for a further term of 30 years ("the Sub-lease"). The Land was utilised to operate a fuel and service station. And in this regard the applicant had vide a license agreement dated 21 February 2007 appointed Syarikat Arbi Sdn Bhd ("the licensee") as licensee to operate the said station for a period of five years commencing on 1 January 2007 and expiring on 31 December 2011.
[3] The Land was acquired by the Federal Government for the Mass Rapid Transit Project ("the Project"). The requisite notifications under ss 4 and 8 of the Land Acquisition Act 1960 ("the Act") were published in the Federal Government Gazette on 11 February 2011 and 27 June 2011 respectively. As at the date of publication of the s 4 gazette notification on 11 February 2011, the applicant had about 14.6 years of the Sub-lease remaining.
[4] The respondent conducted an enquiry pursuant to the provisions of the Act to assess the amount of compensation payable to the persons who had an interest on the Land. At the conclusion of the enquiry, the respondent on 6 December 2011 made the following award of compensation to the following parties:
i. SPK as the registered owner, the sum of RM1,706,073.38;
ii. the applicant as the lessee, the sum of RM2,267,400.00; and
iii. the licensee as the station operator, the sum of RM234,794.52.
[5] The respondent's award is found at p 11 of the Court Reference Bundle - encl 1 and reads as follows:
PERINTAH AWARD
"Saya telah meneliti keterangan-keterangan yang ada dihadapan saya dan berpuas hati dengan keterangan-keterangan itu. Berdasarkan kepada prinsip-prinsip yang telah ditetapkan dalam Jadual Pertama Akta Pengambilan Tanah, 1960 dan setelah mengambil kira pendapat bertulis yang diberikan oleh Pengarah Jabatan Penilaian dan Perkhidmatan Harta Wilayah Persekutuan Kuala Lumpur seperti yang dinyatakan di dalam laporan nilaian. Tuntutan dari pihak atau orang berkepentingan maka saya memutuskan bahawa nilai tanah mengikut harga pasaran ialah RM1,620.00 semeter persegi. Dengan ini saya memerintahkan bayaran pampasan kepada orang-orang yang berkepentingan untuk kawasan yang terlibat dengan pengambilan seluas 1503.749 m2 adalah seperti berikut:
Tuan Tanah
RM1,620 X 3,127m2 = RM2,436,073.30 (bagi keseluruhan nilai tanah. Ditolak dengan perjanjian pajakan kepada Shell Malaysia Trading Sdn Bhd iaitu: RM1,500,000 selama 30 tahun menjadikan RM50,000.00 setahun. Pajakan berbaki 14.6 tahun bersamaan dengan RM730,000.00. Award akhir kepada tuan tanah adalah RM1,706,073.38.
Pemajak
Nilai tanah yang dibayar adalah bersamaan baki tempoh p
