This document outlines the procedure for compulsory land acquisition in Malaysia as prescribed by the Land Acquisition Act 1960 (LAA 1960). It discusses the key stages of acquisition including preliminary notification, survey and investigation of land, declaration of intent to acquire, inquiry process, award of compensation, and appeal process. The principles for determining adequate compensation under the LAA 1960 and Federal Constitution are also examined, focusing on market value and matters to consider or neglect in assessing compensation.

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LAND ACQUISITION
PROCEDURE FOR ACQUIRING LAND
COMPULSORILY –PRESCRIBED BY
LAA 1960
Copyright 1996-98 © Dale Carnegie & Associates, Inc.

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PROCEDURE
• Once the machinery of acquisition has
started to operate, subject to the power
to withdraw, the owner of the land who
has no right to object to the acquisition
has an interest only in compensation.
• Robinson v CLR [1980] 2 MLJ 255

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Notification of Intended
Acquisition - s.4 LAA
• Preliminary notice - S 4
• (1) Whenever the State Authority is
satisfied that any land in any locality in
the State is likely to be needed for any of
the purposes referred to in section 3 a
notification in Form A shall be published
in the Gazette

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Issuance of Notice of
Intended Acquisition
• When the state authority thinks that the
land may be required for purposes stated
in s 3, the declaration in Form A must be
made; see Wan Munah bte Wan
Embong v Pemungut Hasil Tanah,
Kuala Terengganu [1990] 3 MLJ 120

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Preliminary Notice in Form A
• Issuance of Preliminary Notice in Form A
does not amount to acquisition. The land
has not been acquired at this point in
time; see Hong Lee Trading &
Construction Sdn Bhd v Taut Ying Realty
Sdn Bhd [1992] 1 MLJ 250.

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• The notification in Form A under s 4 is
really a form of notice to the public at
large that certain land in a particular
locality in the state ‘is likely to be needed’
for any of the purposes referred to in s 3
and with that, preliminary investigation
and survey of the land will commence
under s 5 see Hong Lee Trading &
Construction Sdn Bhd v Taut Ying Realty
Sdn Bhd [1991] 1 MLJ 250 at 251.
•

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• There is no obligation for a pre-
acquisition hearing (S. Kulasingam &
Anor v Commissioner of Lands Federal
Territory & Ors [1982] 1 MLJ 204).
• In Indian law- the right to pre-hearing
exists.

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Lapse of Notice
• The notification in Form A shall lapse in
so far as it relates to any land or part of
any land in respect of which there is not
published in the Gazette within twelve
months from the date of publication of
such notification a declaration under
section 8 (1).

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Power of entry and survey
s 5 (1) LAA
• The State Director may by written authority in
Form B generally or specifically authorise any
officer or person, together with servants and
workmen, to enter upon any land in any locality
specified in a notification published under
section 4, and to do such work as may be
specified in such Form.

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Payment of damages –
s 6 LAA
• Where any person authorized to survey land
causes damage to any land entered upon, the
landowner must be compensated. In case of
any dispute as to the compensation to be paid
refer the dispute to the decision of the Land
Administrator. Any occupier aggrieved by a
decision of the Land Administrator may appeal
to the State Authority, whose decision thereon
shall be final.

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Preparation of plan & list of
land – s7
• Whenever any lands are needed for
any of the purposes referred s 3 the
Land Administrator shall prepare and
submit to the State Authority
• (a) a plan of the whole area of such
lands, showing the particular lands, or
parts thereof, which it will be
necessary to acquire; and
• (b) a list of such lands, in Form C.

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• The purpose of submitting a plan is for
the convenience of the state government
(Syed Omar Alsaggoff & Anor v State of
Johore [1975] 1 MLJ 241 at 244; Yew
Lean Finance Development (M) Sdn Bhd
v Director of Lands & Mines, Penang
[1977] 2 MLJ 45)

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Declaration that land is
required for a public
purpose - s 8 LAA
• When the State Authority decides that
any of the lands referred to in s 7 are
needed for any of the purposes referred
to in s 3, a declaration in Form D shall be
published in the Gazette

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• S 8 (3) LAA - A declaration in Form D
shall be conclusive evidence that all the
scheduled land referred is needed for the
purpose specified therein.

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• The state authority is bound by the rules
of natural justice; see Goh Seng Peow &
Sons Realty Sdn Bhd v The Collector of
Land Revenue, Wilayah Persekutuan
[1986] 2 MLJ 395

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• The date of gazetting of Declaration
should not be taken as the effective date
of acquisition under our law. Such
Declaration is merely an announcement
that the State Authority has decided that
the land concerned is needed for the
purpose referred to in s 3 LAA.

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• Rather the date when acquisition is deemed to
have been effected should be the date when
the Collector makes a memorial in respect of
the scheduled land to vest same in the State
Authority, which must necessarily be
accompanied by the taking of formal
possession of the land concerned; Pentadbir
Tanah Daerah Kuala Muda, Sg Petani,
Kedah & Anor v OBS Development Sdn.
Bhd. [1996] 2 AMR 1830; Malakoff Bhd &
Anor v Pentadbir Tanah, Kedah [2000]2 MLJ
140, [2000] 1 CLJ 341, [2000] 1 AMR 939
(CA)

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• The date when acquisition is deemed to
have been effected should make a
memorial in respect of the scheduled
land to vest same in the State Authority,
which must necessarily be accompanied
by the taking of formal possession of the
land concerned; see Pentadbir Tanah
Daerah Kuala Muda, Sg Petani, Kedah &
Anor v OBS Development Sdn Bhd
[1996] 2 AMR 1830; and Malakoff Bhd &
Anor v Pentadbir Tanah, Kedah [2000] 2
MLJ 140, [2000] 1 CLJ 341, [2000] 1
AMR 939 (CA)

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• In Veeraraghavachariar v Secretary of
State AIR 1925 Mad 837 – held that as
the government declared that certain
lands would be acquired for a public
purpose as it was entitled to do, it ought
to be presumed that the government was
in possession of facts to induce the
declaration that the purpose was a public
purpose; the court will not review the
decision of the government.

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• See JED Ezra v The Secretary of State
for India 9 CWN 454; Wijeyesekera v
Festing [1919] AC 646; Ponnaia v
Secretary of State [1926] Mad 1099
(where the action was started before the
declaration was released under s 5(1) of
Indian LAA and it was held not to alter
the position when the declaration was
made)

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• The provision clearly provides that the
declaration in Form D is conclusive as to
the purpose for which the scheduled
lands are required which would mean
that Parliament has decided that the
State Authority is the best judge to
determine what amounts to a purpose
which is beneficial to economic
development’; see Honan Plantations
Sdn Bhd v Kerajaan Negeri Johor & Ors
[1998] 5 MLJ 129.

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Inquiry Process
• Full Enquiry
• Summary enquiry -s 17

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Power to take possession in
urgent cases – s.19 LAA
• Where any land, described in any notice in Form E
given under s 10, is in the opinion of the SA urgently
required for use for a public purpose, or for a public
utility in the case of an acquisition under section 3(1)
(b), the State Director may, on or after the expiration
of fifteen days from the date of the giving of such
notice, issue a Certificate of Urgency directing the
Land Administrator to take possession of such land

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• It is implicit that an enquiry by a collector into
the value of the land and the assessment of the
amount of compensation is a judicial function
-Ng Kam Loon & Ors v Director of Public
Works Department, Johore & Anor [1990] 2
MLJ 229).
• The function of the land administrator is not
administrative but there is implied a proper
exercise of discretion -Pemungut Hasil Tanah
Daerah Barat Daya, Penang v Kam Gin &
Ors [1986] 1 MLJ 362).

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• The collector makes a full enquiry of all
land and assess the amount of
compensation (Oliver Young v
Collector of Land Revenue, Batu
Pahat [1972] 2 MLJ 208); in assessing
the amount of compensation to be
awarded, the considerations set out in
the First Schedule should be followed
(Nagappa Chettiar & Ors v Collector of
Land Revenue [1971] 1 MLJ 59).

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Delay in Holding Inquiry
• The whole proceeding from the date of the
acquisition to the payment of compensation
must be completed within two years; see the
Land Acquisition (Amendment) Act 1984 (Act
A575) which amended s 8 (4).
• Previously, the courts have consistently ruled
that undue delay in holding an enquiry resulting
in inadequate compensation being awarded
tantamounts to an abuse of power and renders
the enquiry and subsequent acquisition
proceedings null and void;

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• Oriental Rubber & Oil Palms Sdn Bhd
v Pemungut Hasil Tanah, Kuantan
[1983] 1 MLJ 315 (the delay was of six
years—the award was quashed);
• Re Application of Tan Oon & Ors; Tan
Oon & Ors v Pemungut Hasil Tanah,
Kuantan [1985] 2 MLJ 67 (delay of six
years).

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Purpose of enquiry
• To satisfy the land administrator of the
amount of compensation payable
(Pemungut Hasil Tanah Daerah Barat
Daya, Penang v Kam Gin & Ors [1986]
1 MLJ 362).

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Award of Compensation
• Content of the award
• Apportionment of the award
• Finality of the award

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• Award. In many cases, the final amount
awarded by the collector is far below that
awarded after the matter is finally
adjudicated; see Official Assignee (of the
property of Prabhaker Chundulal Shah) v
Collector of Land Revenue [1984]1 MLJ
155 and Chew Ming Teck v Collector of
Land Revenue & Anor [1991]2 MLJ 65 (it
was held in this case that the collector
had erred in fact and in law). Where the
land is held by tenants in common, the
award should be apportioned accordingly
(Chiam Ah Khim v Leong Ah Toon & Ors
[1987]1 MLJ 348);

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• where the applicant has accepted the
compensation pursuant to an award, he
is estopped from saying that it is not an
award (Ee Kim Kin v The Collector of
Land Revenue, Alor Gajah [1967]2 MLJ
89). Although there is no provision for the
land administrator to review his awards,
so long as his act does not prejudice the
rights of any person, the regularity of
making an ex gratia payment will not be
questioned

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• When the procedural requirements are
merely directory and not mandatory, their
non-observance is unlikely to be fatal to the
acquisition; see S Kulasingam & Anor v
Commissioner of Lands, Federal Territory &
Ors [1982] 1 MLJ 204 on the omission to
serve a notice under ss (1)(b). Where the
omission was not enough to render the
acquisition a nullity, the collector must make
a note of the intended acquisition as soon as
a declaration under s 8 is published -Hong
Lee Trading & Construction Sdn Bhd v Taut
Ying Realty Sdn Bhd [1991] 2 MLJ 250).

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Acceptance or rejection of offer
of compensation – 21 LAA
• (1) Where the owner of a building accepts an
offer of compensation under s 20 the LA—
• (a) may take possession of such building on the
expiration of the period prescribed in the notice
in Form J; or
• (b) may, upon its removal by the proprietor, pay
the cost of its removal and re-erection.

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• (2) Where the owner of a building does not
accept an offer of compensation under s 20 the
LA—
• (a) where the building is a permanent structure,
shall not take possession thereof until he has
obtained a valuation of such building by a
competent valuer; or
• (b) where the building is of temporary
construction, or is otherwise capable of removal
and re-erection, may himself remove and re-
erect such building.

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Appeal Against Decision of LA
• s 37 provides a venue for the dissatisfied
individual affected by the award of the
collector to indirectly appeal to the High
Court; see Re Application of Tan Oon
& Ors [1985] 2 MLJ 67 at 70.

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Reference to Court -s 36
• (1) No reference to Court than by the Land
Administrator.
• (2) The Land Administrator may, at any time of
his own motion by application in Form M refer
to the Court for its determination any question
as to—
• (a) the true construction or validity or effect of
any instrument;

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• (b) the person entitled to a right or interest in
land;
• (c) the extent or nature of such right or interest;
• (d) the apportionment of compensation for such
right or interest;
• (e) the persons to whom such compensation is
payable;
• (f) the costs of any enquiry under the LAA and
the persons by whom such costs shall be
borne.

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Assessment of Compensation
The principles governing the determination of
compensation payable to land acquired as
prescribed by First Schedule, Land Acquisition
Act 1960

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Article 13(2) Federal
Constitution 1957
• No law shall provide for the compulsory
acquisition or use or property without adequate
compensation

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Adequate Compensation
• What is adequate compensation that can
probably compensate a private landowner
whose dreams are shattered when is land
is forcibly taken away from him to ensure
successful implementation of government’s
development projects to benefit the general
public

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Principles Determining
Assessment Compensation
1st Schedule LAA 1960
• S 1 First Schedule – Market Value
• S 2 First Schedule –Matters to be
considered in determining compensation
• S 3 First Schedule – Matters to be
neglected in determining compensation

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Principles relating to
determination of compensation
• First Schedule of LAA 1960

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Definition of Market Value
• LAA 1960 has not defined Market Value.
• Some of the common considerations
influencing court decisions regarding the
market value of a property are:
* willing seller/willing buyer criteria;
* previous sale of comparable/similar lots
of land;
* potential development.

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• Therefore, must rely on the meaning as
interpreted by courts

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Nanyang Manufacturing Co. v The Collector
of Land Revenue, Johore [1954] 1 MLJ 69
Buhagiar J accepted the definition of Jenkins
CJ in the Indian case of Kailas Chandra v
Secretary of State as follow;
“ the market value of land may be roughly
described as the price that an owner willing
and not obliged to sell might reasonably
expect to obtain from a willing purchaser with
whom he was bargaining for the sale and
purchase of the land.”

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MARKET VALUE
• Definition and concept of market value
• Material date for ascertaining the market
value
• Principles in determining the Fair Market
Value
• Potential Value
• Methods of Valuation

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• Hoe Guan Investment v Collector of Land
Revenue, Batu Pahat [1978] 2 MLJ 115 at
p.118
“the price that a owner willing and not obliged to
sell might reasonably expect to obtain from a
willing purchaser with whom he was bargaining
for the sale and purchase of the land.”

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Fixing a price acceptable only to the Purchaser
is not an assessment of market value” see
Yeow Tiong Kok v Collector of Land
Revenue Port Dickson [1970] 1 MLJ 116 at
p.119
• Nagappa Chettiar & Ors v Collector of Land
Revenue [1971] 1 MLJ 59 at p.60
• Wan Sulaiman J. the safest guide to determine
the fair market value is the evidence of sales
of the same land or similar land in the
neighbourhood.

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Factors be considered in
determining compensation
S.2 of First Schedule
• Betterment
• Severance damage
• Injurious affection
• Disturbance claims
• Incidental expenses
• Accommodation works

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Matters to be neglected in
determining compensation-
S.3 First Schedule LAA 1960

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• A landowner affected by acquisition
proceedings must not delay in
approaching the courts, or else courts
could be asked not just to invalidate the
acquisition but also to undo, in effect,
subsequent disposal or use of the land,
or dealing with the land; see Lim Cheng
Chuan Realty Co Sdn Bhd v Kerajaan
Negeri Pulau Pinang [1999] 4 MLJ 669,
HC (18 months delay from the date of
formal possession).