LEGAL OPINION ON THE CONSTITUTIONALITY OF THE PERAK STATE GOVERNMENT TO PERMIT THE CONVERSION OF LEASEHOLD TITLES INTO FREEHOLD TITLES
1. It is reported in the media on 24-12-2008 that the DPM Datok Seri Najib Bin Tun Razak said that State Governments cannot make decision on land ownership without referring to the National Land Council. According to the press the DPM was commenting on the Perak Government’s proposal to issue title in perpetuity to the New Villages and Kampung Tersusun land.
2. To examine the legal validity of DPM’s comments it would be necessary to refer to the relevant constitutional provisions that govern the relations between the Federation and the States as encapsulated in Part VI of the Federal Constitution. In this connection Article 74 (1) and (2) of the Federal Constitution read as follows:
74(1) Without prejudice to any power to make laws conferred on it by any other Article, Parliament may make laws with respect to any of the matters enumerated in the Federal List or the Concurrent List (that is to say, the First or Third List set out in the Ninth Schedule).
(2) Without prejudice to any power to make laws conferred on it by any other Articles, the Legislature of a State may make laws with respect to any of the matters enumerated in the State List (that is to say, the Second List set out in the Nineth Schedule) or the Concurrent List.
3. It is pertinent to note that “land” falls under the Second List of the 9th Schedule to the Federal Constitution. Consequently the jurisdiction over land belongs to the State Government.
4. As for the National Land Council its establishment is provided under Article 91 of the Federal Constitution. The composition of the NLC is as follows: a minister as chairman; one representative from each of the States and a maximum of 10 representatives of the Federal Government.
5. The National Land Council appears to have no legislative powers. According to Article 91(5) of the Federal Constitution it shall be the duty of the National Land Council to formulate from time to time in consultation with the Federal Government, the State Governments and the National Finance Council a national policy for the promotion and control of the utilization of land throughout the Federation for mining, agriculture, forestry or any other purpose, and for the administration of any laws relating thereto; and the Federal and State Governments shall follow the policy so formulated.
6. To amend and consolidate the laws relating to inter alia land and land tenure Parliament has enacted the National Land Code (Act 56 of 1965) in pursuance of Article 76(4) of the Federal Constitution (hereinafter called “the NLC”). By virtue of LN 474/1965 the National Land Code came into force in each state on 1-1-1966.
7. On reading Section 76 of the National Land Code and the definition of “alienate” in Section 5 of the NLC (which means “to dispose of State land in perpetuity or for a term of years in consideration of rent and otherwise in accordance with the provisions of Section 76), it is clear that the State Government is empowered under Section 76(aa)(iii) of the NLC and at liberty to implement the aforesaid proposed conversion without the necessity of having to wait for any decision of the National Land Council on the matter as stated by the DPM. The action of the Perak State Government does not contravene any statutory provision. In this connection Section 76(aa) (iii) of the NLC expressly stipulates as follows:
76 “The alienation of State land under this Act shall consist of its disposal by the State Authority:-
(a) for a term not exceeding ninety-nine years;
(aa) in perpetuity –
(iii) where the State Authority is satisfied that there are special circumstances which render it appropriate it to do so”
8. The NLC contains no definition whatsoever on the meaning of “special circumstances” . It would appear from a plain reading of Section 76 (aa)(iii) that Parliament has left to it to the wisdom and discretion of the State Authority to determine the contents of “special circumstances”. It is the satisfaction of the State Authority rather than the National Land Council that is of paramount importance; it is for the State Authority to decide whether the alienation of the State land should in a given situation be in perpetuity or a leasehold. In other words the body that is duly vested with powers to decide whether a leasehold or freehold title should be issued is a State Authority and not the National Land Council.
9. There is no statutory provision in the Federal Constitution or the NLC which prohibits the above conversion exercise by the Perak State Government. There is no need for the Perak State Government to wait for any decision by the National Land Council on the matter.
10. In the absence of any legal impediment the Perak State Government can lawfully proceed to implement the proposed conversion of leasehold title into title inperpetuity and ignore the opinion of the DPM which is devoid of any statutory support. The opinion of the DPM that “Perak cannot implement this until decision is made by the Council is at best misconceived; in the words of Shakespeare it is “Much Ado AboutNothing”. It is a pity that the BN Government is still obstructive rather than supportive of the said visionary exercise by the Pakatan Rakyat which the BN Government failed to do anything despite 51 years of rule.
Dated this 24th December, 2008
Dato’ Ngeh Koo Ham