Land acquisition in Malaysia has long been outlined as a balancing exercise between public interest and private

rights of landowners, with compensation serving as the key instrument of fairness. Previous scholars have largely

focused on this dual tension. However, recent judicial developments acknowledge the emergence of a third

stakeholder which is the paymaster. Paymaster, often the concessionaires or acquiring bodies are those duty-

bound in the development of an acquired land and financially responsible for the payment of compensation to

the landowners. Although the paymaster holds no proprietary interest in the acquired land, Malaysian courts

Malaysian land acquisition law, raising urgent questions of fairness, accountability and the proper scope of

paymaster’s rights to be embedded or expressly excluded in the LAA. The study reveals that the judicial

recognition accorded to paymaster has allowed them to actively pursue every available procedural avenue under

the LAA, often with the underlying aim of reducing the compensation to the detriment of landowners. By

highlighting these issues, the paper contributes to the limited research on paymasters’ interests and lays the

foundation for future reform-oriented research in the Malaysian land acquisition law.

Keywords: Land Acquisition Act 1960, paymaster, land reference proceedings, compensation, person interested

Land acquisition in Malaysia has always been subject of legal and social debate, mainly due to its strain between

public necessity and private property rights. The LAA provides the statutory framework governing compulsory

refusing the compensation offered. Further tensions escalated in 2021 when the federal government invoked the

LAA to compulsorily acquire the land for redevelopment purposes. While the acquisition was maintained on

grounds of economic development, affected landowners challenged the adequacy and procedural fairness of the

acquisition (Hassan, 2025) This current on-going crisis highlights the procedural and substantive concerns that

arise when private development interests intersect with public acquisition powers. The Kampung Baru dispute

also reveals the fine lines between the State action and private beneficiary particularly when acquiring bodies or

concessionaires act as de facto stakeholders in land disputes.

Traditionally, the discussion and disputes surrounding land acquisition have centered on the rights of landowners

as the deprived parties seeking for adequate compensation for their loss to the private property. Compensation

disputes, challenges to valuation methods, and procedural safeguards for landowners dominate the literature on

The legal standing of paymaster in land reference proceedings is historically not an issue as they play no active

role in the proceedings. The earlier questions of law with regards to paymaster raised in court was whether they

qualify as “person interested” under the LAA, a legal status that would entitle them to participate in the land

reference proceedings, file objections towards the LA’s awards, or seeks variations to the compensation awarded

as against the landowners. The Federal courts answers in the affirmative. Recent case law, however, indicates a

judicial shift in which courts have increasingly recognized the rights of paymaster to intervene, participate and

object to the land reference proceedings in particular challenging the compensation awarded to landowners. The

Federal Court decisions in Spicon Products Sdn Bhd v Tenaga Nasional Bhd & Anor [2022] 4 CLJ 195 and

Cahaya Baru Development Bhd v Lembaga Lebuhraya Malaysia [2011] 2 MLJ 729 demonstrates this

recognition, reflecting the courts’ acknowledgment of the paymaster’s financial interest.

leaving a gap in understanding the broader implications of these judicial developments.

Accordingly, the objective of the paper is therefore to examine the judicial recognition of the paymaster as a

“person interested” under the LAA and analyse how this recognition is being used to influence compensation

decisions in land reference proceedings. Hence the question to be answered via this research is to what extent

does the judicial recognition of paymaster under the LAA affect the rights of landowners and the fairness of

compensation in land acquisition proceedings? Upon reviewing the cases, this paper argues that the recognition

of paymaster’s interests marks a significant shift in the Malaysian land acquisition law, raising urgent questions

of fairness and proper scope of paymaster’s rights to be embedded or expressly excluded in the LAA.

Land acquisition in Malaysia is governed by the LAA, a statute that scholars has often criticized for prioritizing

of the recent judicial recognition of a third stakeholder, the paymaster.

The LAA is the principal legal framework regulating compulsory land acquisition in Malaysia, emphasizing

Article 13(2) of the Federal Constitution which prohibits deprivation of property without adequate compensation.

Courts and scholars alike note that the LAA’s limited statutory guidance on achieving equity in compensation.

Legal critiques point to legislative-administrative dominance, whereby broad discretionary powers vested in the

State Authority are often exercised with minimal procedural oversight (Salleh & Peng, 2022; Hamid & Harun,

2011). This pattern reflects regional similarities across the Asia-Pacific, where compulsory acquisition powers

are expansive, but adjudicative remedies and compensation standards vary significantly (DL Callies et al, 2002).

While judicial decisions have occasionally emphasized purposive interpretation to balance competing interests,

Another issue in the land acquisition framework is whether compensation awarded to landowners reflects the

adequate and fair value. The Malaysian practice is based on market value, constrained by the First Schedule of

transparency and the inclusion of non-market losses such as livelihood, displacement and social ties (Omar,

2000; Olanrele & Said, 2017).

Beyond valuation, land acquisition has profound social and economic impacts on affected communities. Case

studies and land transaction date especially in the regions of Perak show significant patterns of ownership

transfers often away from Malay landowners, reflecting broader trends of development-induced dispossession

(Hamzah et al, 2013). Surveys and interviews indicate widespread dissatisfaction among landowners over both

compensation amounts and procedural opacity (Salleh & Sik, 2024). The inability to replace lost land and the

disruption of social networks have caused inter-generational hardship in some cases. These findings underscore

the non-pecuniary harms that monetary compensation alone cannot redress, particularly among vulnerable or

acquisitions were initiated but not completed or where compensation was not paid, hence raising questions of

unjust enrichment and enforceability (Botchwey, 2021). While regional literature links acquisition to

environmental degradation, Malaysian-specific studies lack robust empirical assessments that connect

acquisition processes directly to environmental harms (Yoshino et al, 2018).

Despite these extensive critiques, the emergency of the role and interests of the paymaster has been largely

overlooked in academic literature. Recent case law has granted them procedural standing as “person interested”

under the LAA which allows them to participate and play a major role in the dispute of compensation. This

recognition expands the LAA’s scope by judicial interpretation and introduces new tensions into the existing

legal framework. The paymaster typically does not hold a proprietary interest in the acquired lad but has been

judicial interpretation of these provisions in the Malaysian courts. The focus is on how the courts have recognized

the rights of paymaster as “person interested” in land reference proceedings and the implications this recognition

has on landowners’ rights to compensation. This research relies primarily on case law analysis, drawing from

This section presents the judicial evolution that have progressively recognized the paymaster as a “person

interested” under the LAA. The analysis is organized around recurring legal issues observed in recent case law,

focusing on procedural rights, objections to compensation and participation of paymasters in land reference

proceedings. The selected cases are first summarized in the table below, highlighting the legal issues, the decision

of the court and the key takeaway pertaining to the paymaster’s interest in the proceedings. A further discussion

is then conducted in the discussion section on each issue to highlight gap in the existing studies as mentioned in

the literature review. By examining these cases, it becomes clear that courts have increasingly accorded

paymasters significant standing though their interest is primarily monetary and even when such recognition may

affect landowners’ rights.

increasingly exercised their statutory right to object to the LA’s award through Form N under Section 37 of the

LAA. In practice, this has resulted in proceedings where both landowners and paymasters lodge objections with

opposing objectives. Landowners generally object in order to obtain higher compensation whereas paymasters,

In reported cases of West Coast Expressway Sdn Bhd v Pentadbir Tanah Daerah Klang & Other Cases [2025]

some items at the amount awarded by the LA and at the same time increase compensation for other items as

claimed by the landowners. The decision of the courts therefore represents a mix of reductions, increments and

some maintaining the award of the LA depending on the evidence presented, the statutory principles applied and

arguments by all parties to the proceedings.

award by filing Form N within a prescribed time. However, there are few instances whereby paymasters have

The courts, have, in several cases, granted these extensions, recognizing the paymaster’s role as the entity

ultimately funding the compensation. For example, in the recent cases of Malaysian Rail Link Sdn Bhd v PTG

Selangor [2024] CLJU 2881 and Malaysian Rail Link Sdn Bhd v PTG Selangor [2025] 6 CLJ 275, the High

Court allowed the application for extension of time, citing the special purpose nature of the company and the

extensive operational burden it faced. Similarly, courts have justified such extensions on grounds of justice and

have relied on this provision to object to landowners’ land references, arguing that the delay renders the

proceedings invalid.

out the landowners’ references. The judgement emphasized that interpreting Section 38(5) of the LAA as merely

However, other decisions with the same issue being brought up show a contrasting approach. In the series of

cases involving Tee Kim Tin & Ors v Pentadbir Tanah Daerah Klang; West Coast Expressway Sdn Bhd

(Interested Party) [2025] CLJU 17-27, the court dismissed the paymaster’s objection. The court reasoned that

mandatory for a notice relating to land reference proceeding to be issued to all persons interested in the objection

before the Court proceeds to hear and determine the objection pursuant to Section 43 of the LAA. Paymasters,

relying on their recognized status as “person interested” in the LAA have frequently invoked this provision to

reference and the paymaster’s reference were heard together. In Lim Wah Tian v Pentadbir Daerah Klang &

Another Cases [2024] CLJU 1063, the court allowed the paymaster’s challenge, with the decision that the

landowner’s additional award was drastically reduced to only RM61,940.00 as compared to the initial land

reference proceeding.

These proceedings demonstrate the far-reaching effect of judicial recognition of paymasters as “person

interested”. While landowners initially obtained a favourable outcome, repeated challenges by the paymaster

overturned earlier gains and substantially reduced the final compensation. This not only highlights the financial

influence wielded by paymasters but also underscores the tension between their monetary interests and the

landowner’s right to adequate compensation under compulsory acquisition.

shaping the trajectory and outcomes of compensation disputes via land reference proceedings.

The literature has highlighted ambiguities in the LAA’s statutory framework and a tendency toward legislative-

administrative dominance in acquisition decision (Salleh & Peng, 2022; Hamid & Harun, 2022). However, it has

not addressed how judicial interpretation has expanded the category of “person interested” to include paymaster.

As shown in the case of Cahaya Baru and SPRINT, the court’s interpretation of Section 2 of the LAA has created

a new legal pathway for paymaster to participate in compensation disputes. This significantly departs from earlier

academic framework which assumed that procedural rights were largely reserved for parties with proprietary

interests.

While prior studies have criticized the inadequacy of compensation and inconsistent valuation methods (Salleh

& Peng, 2022; Omar, 2000; Olanrele et al 2017), they have not considered how the procedural mechanism of

The granting of extensions of time to paymaster under Section 38 of the LAA for instances in Malaysian Rail

Link cases reinforces their recognition as substantive stakeholders. Yet, this judicial flexibility sits uneasily with

the earlier literature that has called for stricter procedural safeguards to protect landowners from State overreach

(Hamid & Harun, 2011; Ghimire et al, 2017). Where landowners often face procedural rigidity and tight statutory

deadlines paymasters are increasingly granted exceptions on grounds of operational complexity. This reflects a

judicial trend towards equating financial responsibility with legal standing, further entrenching the paymaster’s

role in a framework originally designed to mediate between State and landowners.

The findings also reveal an area of doctrinal inconsistency in the judicial interpretation of Section 38(5) of the

of landowners’ claims.

The analysis of Section 43 of the LAA, particularly after the case of Spicon Products highlights the judiciary’s

increasing emphasis on strict procedural compliance. The setting aside of landowner’s compensation awards due

to non-notification of paymaster as in the cases of WCE v Pentadbir Tanah Daerah Klang; WCE v Lim Tah Tian

raises deep concerns on substantive justice. Existing literature stresses that procedural shortcomings often

disadvantage landowners (Salleh & Peng, 2022; Ghimire et al, 2017). This study adds a new dimension by

showing that even successful claims can be nullified not due to the fault of the landowners but due to procedural

lapses involving the court or the LA. This illustrates how the procedural elevation of paymasters can result in

the erosion of landowners constitutionally protected right to adequate compensation.

powerful entities to influence outcomes in ways unavailable or unthinkable to ordinary landowners, thus creating

further an asymmetry of power and access to justice.

This paper has examined the evolving legal position of paymaster in Malaysian land acquisition proceedings and

found that judicial recognition of their status as “person interested” under the LAA has significantly reshaped

the procedural and compensation landscape of land acquisition. Previously excluded from the traditional

framework, paymasters are now actively participating in the land reference proceedings by filing objections,

seeking extension of time, challenging procedural impropriety and setting aside landowner’s compensation

awards. While this recognition protects their financial interests, it raises critical concerns on fairness, procedural

asymmetry and the limits of landowners’ constitutional right to adequate compensation. By recognizing and

land reference proceedings in the LAA should be reviewed taking into account repeated applications that prolong

proceedings to the disadvantage of the landowners financially. Most importantly, the structure of land acquisition

under the LAA must preserve the principle that compensation should not only be adequate, but just, timely and

resistant to manipulation by another stakeholder with financial interests. Hence, this paper lays the groundwork

for future legal reform and urges a redirection on the rights of person interested within the acquisition process.

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