State Authority lacks power to convert freehold land to leasehold; such actions deemed ultra vires and invalid under National Land Code and constitutional property rights.

(A) Introduction

[1] The short issue in this appeal is whether or not a State Authority, when approving a proposed conversion of category of land use and subdivision of land and in the process of re-alienating the land, may reduce its tenure from a term in perpetuity to a term of years not exceeding 99 years or in other words, from freehold to leasehold.

[2] This is a unanimous decision.

(B) Background Facts

[3] The original landowners in respect of the lands in question held them previously under four (4) documents of title under Certificate of Title ("CT") 19426 Lot 10304, CT 25458 Lot 10220, CT 25459 Lot 10221 and CT 25460 Lot 12222 respectively.

[4] The original landowners had the intention to develop the lands into a housing scheme. At that time, the status of the lands was for terms in perpetuity or freehold.

[5] The original landowners surrendered the CT's to the State Authority for the purpose of developing the lands into a housing scheme on the following dates:

[6] The Respondents were the purchasers of the properties developed/built by the landowners. They purchased the properties from a housing developer somewhere in 1980s. The status of the lands at the time of purchase was leasehold for a period of 99 years.

[7] The Respondents filed the current action seeking a declaration that each of the properties purchased by them and registered as leasehold for a term of 99 years be declared null and void. They also sought an order that the Land Administrator replace their titles for a period of 99 years with titles in perpetuity (freehold).

[8] The Respondents contended that when the individual titles were issued, there was a mistake because the land title status ought to have been for a term in perpetuity (freehold), rather than a term of leasehold for 99 years.

(C) Parties' Submissions

[9] The position taken by the Appellant is essentially twofold.

[10] First, that of estoppel.

[11] The Appellant contends that when the original developer/landowner had agreed to the condition imposed by the State Authority that the lands were given back in the form of leasehold for a term of 99 years, the Respondents are now estopped from claiming to have the lands reconverted back to freehold.

[12] The Appellant cited Boustead Trading (1985) Sdn Bhd v. Arab-Malaysian Merchant Bank Berhad 1995 MarsdenLR 744 ; 1995 MarsdenLR 1458 ; [1995] 4 CLJ 283 ; [1995] 3 AMR 2871 in support.

[13] Secondly, the Appellant invokes the maxim, caveat emptor. The Appellant asserts that when the Respondents bought the lands from the original developer/ landowner, it was their duty as the purchasers to practice due diligence in conducting a search and inspection as to the nature, condition or defects of the land before they decided to purchase the lands.

[14] Having failed in that endeavour, the Appellant submitted that the principle of caveat emptor or "let the buyer beware" would apply and therefore, the Respondents cannot now complain that the status of the lands ought to have been freehold.

[15] The Respondents were at liberty to not proceed with the Sale and Purchase agreements if they were unagreeable to the 99-year lease period.

[16] The Respondents, on the other hand, submitted that the State Authority was not empowered under the National Land Code ( NLC ) nor had they the discretionary power to alter the land tenure from its status as freehold to leasehold of 99 years.

[17] The Respondents further submitted that a plea of estoppel is not available when the act complained of is ultra vires.

(D) Analysis And Decision

[18] As stated at th