(d) where in respect of any particular holding, in the opinion of the Valuation Officer, there is insufficient evidence to base a valuation of annual value upon, the Valuation Officer may apply such methods of valuation as in his opinion appears appropriate to arrive at the annual value;” [Emphasis added] 24 [43] The word “machinery” is not defined in the LGA. The Privy Council in Corporation of Calcutta v Chairman Cossipore and Chitapore Municipality ILR 49 Cal 190, A1R 1922 PC 27, observed that the word “machinery” when used in ordinary language prima facie, means some mechanical contrivances which, by themselves or in combination with one or more other mechanical contrivances, by the combined movement and interdependent operation of their respective parts generate power, or evoke, modify, apply or direct mutual forces with the object in each case of effecting so definite and specific a result. However, the determination in any given case of what is or is not ‘machinery’ must to a large extent, depend upon the facts of the particular case. [44] It is important to note that paragraph (h) of the definition of “annual value” provides that “for the purposes of this paragraph “machinery” includes stream engines, boilers or other motive poser belonging to such “machinery”. [45] The Federal Court in Lembaga Pembangunan Industri Pembinaan Malaysia v. Konsortium JGC Corporation & Ors (Sued as Incorporated Partnership) [2015] 9 CLJ 273 stated that – “The word includes is generally used to enlarge words or phrases in a statute, as in the current Act, with those words or phrases together with those they should include, 25 understood to have their natural meaning (Dilworth v. The Commissioner of Stamps (1899) AC 99). Edgar Joseph Jr in Public Prosecutor v. Hun Peng Khai & Ors And Other Cases [1984] 2 CLJ 290; [1984] 2 CLJ (Rep) 391; [1984] 2 MLJ 318 at page 324 had occasion to remark that the word "includes" is a word of extension and not of definition. Evans J in Loke Yung Hong v. Ng See See (F) And 3 Others [1948] 1 LNS 29; [1948] 1 MLJ 123 opined: ... one using the word 'include' indicates an extension of the ordinary meaning which may be attached to the word.” [Emphasis added]. [46] The definition of “machinery” is not an exhaustive definition but an inclusive definition. The words “steam engines, boilers or other motive power belonging to such machinery” are used to enlarge the word “machinery” together with the ordinary or natural meaning of “machinery”. In Bennion on Statutory Interpretation (7th Edition) page 576 it was stated that – “The expressio unius principle is often applied to words of extension. Where it is doubtful whether a stated term does or does not include a certain class, and words of extension are added which cover some only of the members of the class, it is implied that the remaining members of the class are 26 excluded. The most common technique of extending the indisputable meaning of a term is by the use of an enlarging definition, that is one in the form ‘A includes B’. Where the stated B does not exhaust the class of which it is a member, the remaining class members are taken to be excluded from the ambit of the enactment. EXAMPLE The Immigration Act 1971, s 2(3) stated that for the purposes of s 2(1) of the Act the word ‘parent’ included the mother of an illegitimate child. The class to which this extension related was the parents of an illegitimate child. Lord Lane CJ said: “Under the rule expression unius exclusion alterius, that express mention of the mother implies that the father is excluded”. [47] We agree with the submission of learned counsel for the respondent that the significance of the enlargement of the definition in the present case is not what it is enlarged into but what it means without the enlargement. The significance lies in that the enlargement covers “machinery” in the popular sense of the word, namely, “steam engines, boilers or other motive power belonging to such machinery”. It suggests in the reverse that the pre-enlargement meaning gives a broader cover to 27 “machinery” namely that is not confined to the meaning of “machinery” in the popular sense. [48] It follows, therefore, without the enlargement the word “machinery” in section 2(b) would be governed solely by the words “any machinery used in the making of electricity”. “Any machinery” would mean machinery whether in the conventional sense or not. The Federal Court in the Majlis Perbandaran Seberang Perai (supra) observed (at [30]) – “The intention of the legislature in proviso (b) is to apply to all machinery in the production of articles or goods just like the function of SJPJ, that is, to produce electricity for sale to the consumers, large and small”. [49] In our opinion, the approach adopted by the learned High Court Judge in construing the word “machinery” by applying the “Functional Test” was correct. In IRC v Scottish and Newcastle Breweries Ltd [1982] 1 WLR 322, Lord Wilberforce in the House of Lords said – “The word “plant” has frequently been used in fiscal and other legislation. It is one of a fairly large category of words as to which no statutory definition is provided (“trade,” “office,” even “income” are others), so that it is left to the court to interpret them. It naturally happens that as case follows case, and one extension leads to another, the meaning of the word 28 gradually diverges from its natural or dictionary meaning. This is certainly true of “plant.” No ordinary man, literate or semi-literate, would think that a horse, a swimming pool, moveable partitions, or even a dry-dock was plant — yet each of these has been held to be so: so why not such equally improbable items as murals, or tapestries, or chandeliers? The courts have, over the years, provided themselves with some guidance in principle, starting with Lindley L.J. in Yarmouth v. France (1887) 19 Q.B.D. 647, 658. Plant, he said “in its ordinary sense … includes whatever apparatus is used by a business man for carrying on his business — not his stock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or moveable, live or dead, which he keeps for permanent employment in his business.” [Emphasis added] [50] In Yarmouth v France (1887) L.R. 19 Q.B.D. 647 Lindlay L.J said at page 658 – “There is no definition of plant in the Act : but in it ordinary sense, its includes whatever apparatus is used by a business man for carrying on his business, not his stock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or 29 moveable, live or dead, which he keeps for permanent employment in his business”. [51] In Jarrold (Inspector of Taxes) v John Good & Sons Ltd [1963] 1 W.L.R. 214, it was decided that the movable partition screwed to the floor and ceiling of a shipping agent’s office were plant within the meaning of section 279(1) and 280 of the Income Tax Act 1952. The Court held that in the circumstances of that case, the partition should be regarded as something more than a mere setting for the carrying out of the trade and that the setting and plant were not mutually exclusive conceptions, for the partitions were used in the carrying out the Company’s trade or business. [52] In IRC v Barclay Curle & Co. Ltd [1969] 1 W.L.R 675, Lord Reid in his judgment at page 679 had said – “… the only reason why a structure should also be plant which has been suggested or which has occurred to me is that it fulfils the function of plant in the trader’s operation …” [53] In Benson (Inspector of Taxes) v Yard Club Ltd [1979] 53 T.C. 67, “Functional Test” is also said to be the proper test with regard to the definition of plant. Templeman L.J. on page 88 said – “… the authorities disclose a distinction between premises in which a business is carried on and the plant with which a 30 business is carried on. There are borderlines case in which a structure forming part of business premises has been held to be plant because it does not merely consist of premises providing accommodation for the business but also performs a function in the actual plant and machinery as an “imposed loading on a building works”, they are not building works, but are loads on building works”. [54] We are alive to the point raised by learned counsel for the appellant that the above cases dealt with “plant” not “machinery”. However, on a parity of reasoning, we do not see any difference in “plant” and “machinery” for the purpose of adopting the “Functional Test”. The test looks at the function of the item in dispute and asks whether it has a functional purpose that enable the business to perform. As noted by Brightman J in Dixon (Inspector of Taxes) v Fitch’s Garage [1979] STC 266 – “The proper test is whether the canopy had a functional purpose to enable the taxpayer company to perform the activity of supplying petrol to motor vehicles. I ask myself, ‘Does the canopy help to supply petrol, or is it merely part of the setting where petrol is supplied?’ To use the words of Lord Reid [Inland Revenue Commissioners v Barclay Curle & Co Ltd [1969] 1 All ER 732 at 741], which I have already read, 31 is the canopy part of the means by which the operation of supplying petrol is performed?”. [55] The “Functional Test” can be applied to any subject matter as noted by Buckley LJ in Benson’s case (supra) – “So, in the case at any rate of a subject-matter which is a building or some other kind of structure, regard must be paid to the way in which it is used to discover whether it can or cannot be properly described as plant. This is what has been referred to as the functional test. Indeed I think that this test is applicable to every kind of subject-matter. In some cases the effect of the functional test may be so immediately apparent that the character of the subject-matter as plant goes without saying and the test need not be consciously applied. But in cases nearer the line, in my opinion, the functional test provides the criterion to be applied. Is the subject-matter the apparatus, or part of the apparatus, employed in carrying on the activities of the business? If it is, it is no matter that it consists of some structure attached to the soil. If it is not part of the apparatus so employed, it is not plant, whatever its characteristics may be.27” 32 [56] In Majlis Perbandaran Seberang Perai (supra), this Court had this to say – “The key issue here is that any machinery used for all or any of the purposes enumerated in items (i), (ii) and (iii) relating to any article (which we say includes electricity), the presence of such machinery which relates to “article production machinery”, the enhanced value of the holding from the presence of such “article production machinery” which may include generating plant and machinery shall not be taken into account in estimating the annual value of the holding of the respondent.” [Emphasis added] [57] Applying the “Functional Test”, we concluded that all the 5 elements, whether moveable or immoveable should be regarded as a single unit and should not be treated on a piecemeal basis for assessment rated. All the 5 elements are essential for the production of electricity. [58] We are of the opinion that both in the Tapah (supra) and the present case, the High Court had properly addressed their minds to the functions of the Dam and the Water Power Tunnel as part of whole hydroelectric process in generating electricity. In Tapah (supra), Mohd Ruzima J. (as he then was) observed at paras (27 - 28) – 33 “A comprehensive approach taking into account the role and function of each element in a hydroelectric power station is fair, reasonable and accurate for the court to interpret the meaning of “machinery” under the provisions of such law. A “piecemeal” approach that limits the meaning of “machinery” only to producers of articles that are not integrated with the land is contrary to the fact of the nature, role and function of the essential elements that make a hydroelectric power station a perfect “machinery” for the generation of the supply of electricity”. [59] In the present case, Zainal Azman J. likewise adopted the approach of seeing the whole production process as one interrelated entity. His Lordship ruled as follows at (39 - 40) – “Each element, through physically distinct, are crucial and interrelated with each other. Without one of these elements, the hydroelectric power station would not be able to function and thus generate electricity for public use. Therefore, in accordance with paragraph 2(b) of the Local Government Act, all elements within a hydroelectric power station must be considered as one entity, in which the roles and functions of each element are integral and inseparable. 34 Accordingly, this Court interprets it to be a machinery under the provisions of the law”. [60] With respect, we are unable to accept the suggestion advanced by learned counsel for the appellant that this Court should adopt the dictionary and ordinary meanings of the word “machinery” which envisages “devices or contrivances that possess mechanical functions”. Therefore, other structures such as the Diversion Tunnel, which operate as a conduit for the passage of water, the Tunnel Liners and the Closure of Dam Outlet, all of which are integrated with Dam cannot be defined as “machinery”. [61] Dictionary meaning can be helpful in interpreting the meaning of the statutory language. However, if a statute deals with a technical or specialized subject (e.g. hydroelectric, telecommunications, tax etc.), the words in the stature may have meaning that differ from their ordinary usage. [62] In Dy. Chief Controller of Imports and Exports New Delhi v K.T Kosalram and others [1970] (3) SCC 82, the Supreme Court of India observed thus – “In our opinion dictionary meanings, however helpful in understanding the general sense of the words cannot control 35 where the scheme of the statute or the instrument considered as a whole clearly conveys a somewhat different shade of meaning. It is not always a safe way to construe a statute or a contract by dividing it by a process of etymological dissection and after separating words from their context to give each word some particular definition given by lexicographers and then to reconstruct the instrument upon the basis of these definitions. What particular meaning should be attached to words and phrases in a given instrument is usually to be gathered from the context, the nature of the subject matter, the purpose of the intention of the author and the effect of giving to them one or other permissible meaning on the object to be achieved. Words are after all used merely as a vehicle to convey the idea of the speaker or the writer and the words have naturally, therefore, to be so construed as to fit in with the idea which emerges on a consideration of the entire context”. [63] In Cabell v Markham [1945] 148 F 2nd 737, Justice Learned Hand stated at page 739 – “Of course it is true that the words used, even in their literal sense, are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing; be it a 36 statute, a contract, or anything else. But it is one of the surest indexes of a mature developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning”. [64] In the present appeal, the contextual approach calls for an analysis from a functional standpoint of the apparatus, plant or machinery used in the “making” of the article or product which in this case is electricity. [65] We now turn to consider the functions of the 5 elements respectively. The High Court in Tapah (supra) had explained extensively the principal features of a hydroelectric power station at para [16] of the judgment as follows – “Empangan – dibina melintasi sungai atau lembah untuk menyekat aliran air bagi mewujudkan sebuah takungan air di bahagian hulu. Tekanan graviti dalam takungan dan kedudukannya di tempat tinggi mewujudkan tenaga keupayaan di dalam air yang ditakung. Alur masuk – dibina di dalam sebuah empangan atau sungai untuk membawamasuk air ke dalam terowong. Air yang masuk melalui alur masuk mengalirkan tenaga keupayaan 37 dan tenaga kinetik. Elemen ini mempunyai penapis, pengaut sampah dan pintu-pintu air bagi menapis, mengawal, melaraskan dan mengasingkan aliran air yang memasuki terowong air. Terowong air – dibina sebagai satu sistem saluran yang digunakan untuk mengalirkan air dari alur masuk kepada terowong air tekanan tinggi. Terowong air biasanya agak mendatar dan bertekanan rendah. Sebahagian besarnya adalah berdindingkan batu-batan semula jadi dan bahagian lain pula berdindingkan konkrit berbentuk ladam kuda yang digunakan untuk mengalirkan air yang mempunyai tenaga keupayaan dan tenaga kinetik ke terowong air tekanan tinggi. Di hujung terowong air terdapat perangkapperangkap untuk memerangkap, mengasingkan dan mengalir keluar mendapan tanah, pasir atau batuan bagi mengelak kerosakan kepada elemen-elemen lain. ‘Surge shaft/surge tank’ – adalah bukaan berbentuk bulat di hiliran terowong air yang dibina secara menegak dari terowong air ke arah permukaan bumi untuk menyerap dan melepaskan tekanan mendadak yang meningkat secara tiba-tiba di dalam terowong air serta membolehkan pemberian bekalan air dengan pantas ketika penurunan tekanan sementara di dalam terowong air. 38 Terowong air tekanan tinggi – adalah terowong keluli berbentuk bulat yang disaluti konkrit yang dibina secara curam dan berfungsi sebagai saluran untuk meningkatkan tenaga kinetik air yang mengalir melalui terowong air dan seterusnya mengalirkan air bertekanan tinggi dari empangan ke arah turbin. Bahagian permulaan setiap terowong air tekanan tinggi ada ‘upper valve chamber’ yang mempunyai ‘guard valve/isolation valve’ untuk menghentikan aliran air di dalam terowong bagi tujuan penyelenggaraan atau keselamatan. Terowong juga dilengkapi dengan ‘over velocity valve’ bagi mengesan had laju aliran air yang tidak normal dan seterusnya menutup aliran air secara automatik untuk menjaga keselamatan. Kedua-dua injap menggunakan tekanan air di dalam terowong bagi mengimbangi tekanan dan mencegah kesan ‘water hammer’ yang boleh memusnahkan semua elemen di dalam jana kuasa elektrik hidro. Turbin – adalah elemen yang digerakkan oleh air tekanan tinggi yang menukar tenaga keupayaan dan kinetik air kepada tenaga mekanikal. Turbin disambung kepada generator melalui sebatang aci atau ‘shaft’. Generator – setiap turbin disambungkan melalui sebatang aci kepada generator yang mana putaran mekanikal di dalamnya menukarkan tenaga mekanikal kepada tenaga elektrik. 39 Terowong pembuangan air – digunakan untuk mengalir keluar air tekanan rendah daripada turbin untuk dilepaskan semula ke dalam sungai ataupun tasik.” (Emphasis added) [66] The High Court in Tapah (supra), relying on the “Functional Test”, decided that all elements in a hydroelectric power station constitute a single unit of ‘machinery’ required for the process of generating electricity. Each element, although physically separated, is important and interconnected to each other, none of the elements in the hydroelectric power station can function without the other. [67] We accepted the MacReal Report where it enumerated the working mechanism of the hydroelectric power station at para 7.0 as follows – “In case of overflow during monsoon seasons there is a spillway that is ungated/free flow, with a maximum capacity of 7,000 cubic metres per second. Water flows through four penstocks into four turbines turning four air-cooled electric-generators rated at 100 megawatt each. The main component of the hydro power statement consists of a main embankment (dam), a saddle embankment (dam), pressure tunnels, turbines, generators, transformers and a spillway. 40 The process of hydro power station starts from the main dam water pressure, channel into the tunnels (water cleaned from rubbish) whilst pushing the water into the surge shaft/surge tank. The water from the surge shaft or surge tank will then increase immediate water pressure which will then push the turbines.” [68] Upon the analysis and discussion of the functions of the various components of the hydroelectric power station, and upon consideration of the “Functional Test” which is to regard all the features of the production process, whether moveable or immovable, as an integral whole and not to treat them on a piecemeal basis of assessment, we concluded that the functions and roles of each and every of the 5 elements are important and interconnected, none of them can function without the presence of the other. Thus, all of them are to be considered as a single unit of machinery for the production of electricity by fulfilling the respondent’s (trader) operations of production of electricity. Inevitably, such single unit of machinery falls under the definition of “machinery” under section 2(b) of the LGA, and hence it is ‘article production machinery’ which enjoys the exemption for computation of annual value of the Property. [69] In the course of arguments before us, both parties placed reliance on Majlis Perbandaran Seberang Perai (supra) with the aim of persuading the Court to accept their contentions. Therefore, it is 41 important for this Court to examine the case in detail. In this case, the appellant on 11 November 1995 issued a New Valuation List on a revaluation of the respondent’s power station known as Stesen Janaletrik Seberang Perai (“SJSP”) for the period effective from 1 January 1996. On 3 October 1996 the appellant rejected the respondent’s objection at the hearing before its Rating Appeal Committee in respect of the appellant’s valuation, taking into consideration, inter alia, and the enhanced value of the machinery used in the generation of electricity. The respondent contended that such machinery ought to be exempted from valuation and consequently, rates, pursuant to the exemption provision in section 2 of the LGA. One of the questions of law posed to be decided by the Federal Court in this case is that – “whether the machinery referred to in the proviso at (b) to the definition of “annual value” in s. 2 of the Local Government Act 1976 (Act 171) refers to machinery that is not integrated with the “land” and/or “building” as defined in s. 2 of the Local Government Act 1976 (Act 171);” [70] The Federal Court affirmed the High Court’s decision and answered the above question of law in the affirmative – “From the finding of the learned judge we can conclude that the machinery referred to in proviso (b) refers to “article production machinery” that are not integrated 42 with the “land” and/or “building”. The intention of the legislature in proviso (b) is to apply to all machinery in the production of articles or goods just like the function of SJPJ, that is, to produce electricity for sale to the consumers, large and small. We were advised that proviso (b) was applied in the valuation of the holding in respect of manufacturing plants and factories within the local authority area of the appellant and we see no reason why it should not be applicable to the respondent in this case. Rating has to be fair and equitable and the burden of rates should not be heavier on one party than on another. (see the comparison at pp. 449/450 of the Appeal Record). The respondent submitted that the power station are actually not integrated i.e., the machinery with the land and buildings. In fact the machinery in a power station is removeable just like any other machinery of the manufacturing plant or factories. (See p. 578/579 of the Appeal Record). There is no evidence shown to the contrary by the appellant.” [Emphasis added] [71] The Federal Court then proceeded to deal with the next question which is “Question (c)” as follow – 43 “whether the generating plant and machinery present in a power station are structures within the definition of “building” in s. 2 of the Local Government Act 1976 (Act 171) and accordingly, are to be taken into account in determining the annual value of the said power station.” The Federal Court held that – “In view of our answer to Question (a) that electricity is an article within the context of the said proviso (b), the question of the generating plant and machinery present in a power station are “structures” within the definition of “building” in s. 2 of the LGA and are to be taken into account in determining the annual value of SJSP does not arise and it is not relevant for our consideration. The key issue here is that any machinery used for all or any of the purposes enumerated in items (i), (ii) and (iii) relating to any article (which we say includes electricity), the presence of such machinery which relates to “article production machinery”, the enhanced value of the holding from the presence of such “article production machinery” which may include generating plant and machinery shall not be taken into account in 44 estimating the annual value of the holding of the respondent. In the circumstances, the matter of us answering Question