The controversy over the conversion of foreshore land from leasehold and freehold land has not completely subsided.
While it may now be too late for the State to do anything about previous projects such as Queensbay, there may be current projects where applications have been submitted for conversion (from leasehold to freehold), which could now be awaiting approval.
Defending the conversion in the Queensbay case, the Penang Chief Minister was reported in theSun (16 October) as saying that he had been advised by lawyers and consultants with the PDC and the state legal advisor that the conversion was legal.
But is the opinion of the PDC – which had an interest in the project – independent and objective, asks conveyancing lawyer Agatha Foo.
The Chief Minister was said to have been advised that “after reclamation, there [was] no more seabed and foreshore” and therefore the National Land Code (NLC) prohibition on the alienation of foreshore or sea-bed for a period longer than 99 years would not apply.
To this, Agatha responds that although the foreshore and seabed ‘cease to exist …physically…’ after reclamation, in light of the spirit of the law the state’s argument may be legally untenable. If such argument holds, then the express prohibition of the proviso in s.76 NLC would be vitiated, she adds.
“It is clearly the intention of Parliament to ensure that the State has full control over its foreshore and sea-bed when it amended s.76 NLC by inserting the proviso,” she points out.
It is thus assuring to read the CM’s statement in theSun (16 Oct 2008) that “the new Penang state government has no plans to follow the previous state government’s policy of circumventing the National Land Code (NLC) by converting all reclaimed land from leasehold to freehold status”.
The other argument put forward in favour of conversion was that there were ‘special circumstances’ to support it.
In this case, the State would be obliged to fulfill the requirement under s.76(aa)(iii) NLC to justify such ‘special circumstances’, says Agatha.
One of the justifications given for the conversion was that it was to “guarantee the business success of the new developer … as an incentive for the company … to take over the development”.
That’s the big question, isn’t it? Does guaranteeing “the business success of the new developer” and “incentive for the company” qualify as ‘special circumstances’? Is it the job of the State to guarantee the business success of a developer or to act in the public interest? (What about guaranteeing public access to the beach, for instance?)
Although ‘special circumstances’ is not expressly defined in the NLC, Agatha points out that the courts have defined it to mean circumstances which are “not ordinary, common or usual”, “something exceptional in character, something that exceeds or excels in some way that which is usual or common”.
“It must constitute ‘something distinctive and out of the way’ which is sufficiently compelling for the State to render it appropriate to convert the land from leasehold to freehold,” asserts Agatha.
This requirement of ‘special circumstances’ applies to all types of alienation of land for a period exceeding 99 years unless the land is to be used for public purpose or unless such alienation is required by the Federal Government. Hence, the State does not have an unfettered discretion to arbitrarily construe the meaning of “special circumstances”, she says.