Firm fails to get more land compensation

Court rejects bid to raise $14.2m sum to $23m after Tuas land was acquired for MRT use

A company whose Tuas land was acquired for MRT development failed in the Court of Appeal to raise the compensation paid to it from $14.2 million to $23 million.

But the court said the valuation issue involved a question of law that was subject to judicial review.

Compulsory acquisition of land pits the interests of the individual landowner against those of the State, said the court in judgment grounds released on Tuesday.

"Judicial oversight is thus a necessary and important check on the acquisition process," wrote Chief Justice Sundaresh Menon on behalf of the court, which included Judge of Appeal Chao Hick Tin and Senior Judge Chan Sek Keong.

The land in Tuas West Drive, leased by Novelty Departmental Store with 44.7 years left to run, was acquired in 2011 to develop the Tuas West MRT extension.

Covering about 9,000 sq m, a detached four-storey purpose-built block and an ancillary office block stood on the land.

The Collector of Inland Revenue awarded $13.2 million in August 2011, supplemented by an extra $1 million a year later.

Novelty appealed to the Land Acquisition Appeals Board which, in December 2014, rejected its claim that the compensation was unrealistic and inadequate.

The company then turned to the Court of Appeal which heard the case in January this year.

Novelty's lawyer Mirza Namazie argued, among other things, that the Board had erred in excluding sales of other units that involved sale and leaseback (SLB) arrangements when assessing the value of Novelty's land.

In an SLB arrangement, the owner sells the property and, at the same time, leases it back from the buyer.

The market value of a property with an SLB arrangement tends to be higher than one without, because the land comes with "a guaranteed stream of income" for the buyers, said the court.

It found that Novelty was effectively seeking "an unjustified windfall" in making such a comparison.

It also rejected Novelty's claim that its constitutional right of equal protection had been violated given that it had been treated differently from Cambridge Industrial Trust, whose land was also acquired.

The court held that the "constitutional challenge was unsustainable" as Cambridge Industrial Trust's land was subject to an SLB arrangement while Novelty's was not.

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A version of this article appeared in the print edition of The Straits Times on March 19, 2016, with the headline Firm fails to get more land compensation. Subscribe