The 7 points to decide the Compensation of Land Acquisition

Here are the key facts, as per report from the Edge By Hafiz Yatim dated 20 September 2023:

In 1956, government acquired the 263 acres "Duta Enclave" land along Jalan Duta owned by the company Semantan Estate (1952) at 1.32 million (RM0.11psf).

After 68 years:

• Compensation by Land owner : RM 13 billion.
• Compensation recommended by government : RM 289 million!

Seven reasons of lower estimation

The senior federal counsel, Mohammad Al Saifi Hashim gave seven reasons for the differing figures, namely:-

1. Rental on vacant land and building?

The mesne profits is supposed to be assessed based on market rental of vacant land only. However, Semantan Estate's valuer has included the rental of government buildings when factoring in simple interests and compound interests while calculating the compensation. 

2. Fair value in 1956?

The difference of base value in year 1956/1957, whereby the fair value of the subject land was assessed at RM3,764 per acre by the government while the company’s valuer estimated it to be RM6,000 per acre.

3. Source of Zoning?

The zoning details gazetted by Kuala Lumpur City Hall was not properly taken into consideration by Semantan Estate's valuer. Instead of referring to the zoning of the land based on the local plan enforced, it arbitrarily assessed the potential of the land base on surrounding development;

4. Source of Evidence?

The comparable evidence adopted by the private valuer were allegedly not suitable and improper, with some evidence’s source not found in the record the government’s valuer;

5. Value movements?

The value movement set by the company’s valuer for the period of 66 years was unreasonably high and not in line with the economic conditions;

6. Reference used for Rate of return of the land?

The rate of return of the land determined by the company’s valuer was allegedly totally inaccurate, resulting in the rental used to derive the compensation being way too high. This is due to its valuer benchmarking the rate of return against double-storey houses as opposed to the original status of vacant land; and

7. Is the compounding interest allowed?

The company’s valuer also factored in simple and compounding interest in their valuation. However, simple and compounding interest is not allowable under the law.

History of the case

The long-standing dispute concerns the 263.72 acres (106.72 hectares) land owned by Semantan Estate which was acquired in 1956 for RM1.32 million to be slated as the Duta enclave.

In 2009, the High Court ruled that the government had wrongly acquired the land and further ruled that it had trespassed on the land. The decision was affirmed by the Court of Appeal in May 2012 and the Federal Court upheld the courts’ decision ruling that the government had wrongly acquired the land.

The government tried to review the Federal Court’s decision in 2012, but the apex court dismissed its application in November 2018.

As a result of the decision, the High Court was ordered to estimate the mesne profits that is to be paid out to Semantan resulting in this ongoing hearing.

The company also filed a judicial review in a bid to acquire back the land titles to Semantan, but the High Court dismissed its judicial review to acquire the land in October 2021.

The company is appealing the failed judicial review at the Court of Appeal which is still pending.