Sistem Lingkaran Lebuhraya Kajang Sdn Bhd v Orchard Circle Sdn Bhd & Anor [2025] 3 MLRA

Federal Court (Putrajaya)

Land Acquisition — Validity of surrender — Compensation — National Land Code

1. Orchard Circle Sdn Bhd (“OCSB”) was the registered proprietor and developer of land held under Lots 2630 and 8630 in Mukim Kajang, Selangor, intended for a commercial development known as Pusat Dagangan Putra Kajang. On 5 September 1998, OCSB applied to surrender part of its land pursuant to section 200 of the National Land Code (“NLC”) by submitting Form 12B for purposes including roads, drainage reserves, water retention ponds, public parks, parking areas and buffer zones. The application was approved by the State Authority on 11 January 1999.
2. Subsequently, on 10 December 2001, the State Authority issued a declaration in Form D under section 8 of the Land Acquisition Act 1960 (“LAA”) to compulsorily acquire a total area of 19,123.77 square metres from OCSB for the construction of the Kajang Traffic Dispersal Highway (SILK Highway). The declaration was gazetted on 20 December 2001.
3. At the first land inquiry held on 24 December 2002, the Land Administrator awarded nominal compensation on the basis that a substantial portion of the acquired land had already been surrendered. OCSB successfully challenged this award by way of judicial review on grounds of denial of the right to be heard, resulting in the award being quashed and a second land inquiry being ordered.
4. At the second land inquiry conducted on 17 February 2011, the Land Administrator found that 17,284.67 square metres had been surrendered and awarded nominal compensation of RM10.00 for that portion, while awarding RM514,948.00 for the remaining 1,839.10 square metres which were found not to have been surrendered. OCSB objected to the second award and initiated further judicial review proceedings, contending, inter alia, that the alleged surrender was invalid due to non-compliance with the NLC and that nominal compensation was erroneous.
5. The High Court upheld the Land Administrator’s finding that a valid surrender had taken place notwithstanding the absence of endorsement on the title. On appeal, the Court of Appeal reversed that finding, holding that the statutory requirements for surrender under the NLC had not been complied with and that the surrendered area ought to be assessed for compensation. The matter eventually came before the Federal Court.

1. Whether the question of whether the 17,284.67 square metres had been validly surrendered in accordance with the NLC constituted a question of law, a question of fact, or a mixed question of law and fact, such as to confer a right of appeal under subsection 49(1) of the LAA?
2. Whether, in light of subsection 49(1) of the LAA, an appeal was barred where the dispute related to compensation, notwithstanding that it involved issues concerning the legal effectiveness of a surrender?
3. Whether non-compliance with the procedural requirements for surrender under Part Twelve of the NLC rendered the surrender ineffective for the purpose of determining compensation under the LAA?

(1)  Whether the question of whether the 17,284.67 square metres had been validly surrendered in accordance with the NLC constituted a question of law, a question of fact, or a mixed question of law and fact, such as to confer a right of appeal under subsection 49(1) of the LAA?

(2)  Whether, in light of subsection 49(1) of the LAA, an appeal was barred where the dispute related to compensation, notwithstanding that it involved issues concerning the legal effectiveness of a surrender?

(a) The Federal Court addressed both issues together as threshold questions concerning appellate jurisdiction under subsection 49(1) of the LAA.

(b) The Court held that the determination of whether the 17,284.67 square metres had been validly surrendered required the interpretation and application of statutory provisions under the NLC to the established facts and therefore constituted a question of law, or at least a mixed question of law and fact, for the purposes of subsection 49(1) of the LAA.

(c)  Where the issue concerns the legal effect of undisputed or established facts, it falls within the category of a question of law. Although the dispute ultimately had implications for compensation, the majority held that the validity of the alleged surrender was a logically anterior legal issue which had to be resolved before any question of compensation could arise. Accordingly, the appeal was not barred by subsection 49(1) of the LAA (paras [37]–[39]).

(3)  Whether non-compliance with the procedural requirements for surrender under Part Twelve of the NLC rendered the surrender ineffective for the purpose of determining compensation under the LAA?

(a) Having held that it had jurisdiction, the Federal Court proceeded to consider the merits of the alleged surrender.

(b) The Court held that a surrender under sections 200 and 201 of the NLC only takes legal effect upon strict compliance with the mandatory procedural requirements prescribed by the statute. Subsection 201(4) imposes mandatory duties on the Land Administrator, including the endorsement of a memorial of surrender on the register document of title, revision of rent, and notification to the proprietor, and the use of the word “shall” was construed as mandatory rather than directory.

(c)  Applying these statutory requirements to the established facts, the Court found that there had been non-compliance. In particular, there was no endorsement of a memorial of surrender on the register document of title, no revision of rent, and no notification to the proprietor prior to the issuance and gazettement of Form D under the LAA.

(d) As a result, the Court opined that the alleged surrender was legally ineffective and could not be relied upon to exclude the impugned land from compensation under the LAA.

1. The Federal Court dismissed the appeal, affirmed the decision of the Court of Appeal, and held that there was no valid surrender of the 17,284.67 square metres of land under the NLC.

1. Compliance with the procedural and formal requirements for surrender under the NLC is mandatory, and a surrender does not take legal effect unless the statutory steps prescribed under ss 200 and 201 are fulfilled.
2. The legal effectiveness of a surrender is a question of law, or at least a mixed question of law and fact, particularly where it involves the interpretation and application of statutory provisions to established facts
3. In land acquisition proceedings, courts must carefully distinguish between issues going to the assessment of compensation and prior legal questions that affect entitlement to compensation.