Tenaga Nasional Berhad v Majlis Daerah Segamat (01(i)-30-10/2020(J))

24.11.2014 The appellant received a notice dated 13.11.2014 from the respondent informing them that the respondent had prepared a new valuation list of the appellant’s holdings pursuant to section 141 of the LGA 1976. Attached to the notice was a list setting out particulars and revised improved value of 211 holdings, all located within the respondent’s area of jurisdiction. It listed 198 substations, 4 PMUs, 7 high tension transmission lines, 1 office building and 1 store building.

25.11.2014 The appellant wrote a letter to the respondent and lodged its objections against the respondent’s assessment of 3 improved value and rates imposed on all the 211 holdings.

12.10.2015 The appellant received a notice dated 17.08.2015 from the respondent informing that the respondent had considered the appellant’s objections against the assessment of the improved value and rates imposed on the appellant’s holdings and had agreed to reduce the assessment of improved value and rates imposed earlier in its notice dated 13.11.2014.

28.10.2015 The appellant, via a letter, again requested the respondent to reconsider and review the respondent’s first decision on the rates imposed on the appellant’s holdings.

23.05.2017 The appellant received a notice dated 16.05.2017 from the respondent stating that after considering the appellant’s objections, the respondent had decided to reject the objections. In that notice, the respondent explained, among others, that the assessment was made using the improved value method as compared to the annual value method used by other states where the electrical structures/ machineries located at the PMUs were valued as buildings under section 2 of the LGA 1976. 4

06.06.2017 Dissatisfied with the decision of the respondent, the appellant filed an appeal in the High Court by way of Originating Motion pursuant to section 145(1) of the LGA 1976 (‘Originating Motion’). In this respect, it is to be noted that the appellant’s appeal to the High Court was only against the rates assessed upon the improved value of the PMUs, an office and store building.

16.10.2017 The respondent raised a preliminary objection on the ground that the Originating Motion was filed outside the 14-day timeline prescribed by section 145(1) of the LGA

1976.

28.11.2017 The High Court allowed the respondent’s preliminary objection and dismissed the Originating Motion.

12.12.2017 The appellant filed an appeal to the Federal Court against the decision of the High Court pursuant to section 145(5) of the LGA 1976.

08.05.2018 The Federal Court allowed the appellant’s appeal and ordered the Originating Motion to be heard on its merits.

25.06.2018 A Consent Order was recorded where the High Court granted leave to the parties, among others, for the Originating Motion to be heard by way of oral evidence 5 including the cross examination of the respondent’s valuation report dated 05.09.2014 (prepared by Mohd Nor & Partners (Johor) Sdn Bhd) and appellant’s valuation reports dated 22.08.2017 (prepared by MacReal International Sdn Bhd). During the proceedings, the appellant called 2 witnesses; SP1 who is an Engineer and General Manager of appellant’s Grid Maintenance and SP2 who is a valuer. The respondent called 1 witness, namely SD1 who is a valuer. Decision Of The High Court [4] At the outset, it is pertinent to note that the High Court had dismissed the appellant’s appeal on the sole question raised by the parties i.e. whether the assessment of the improved values of the PMUs has not been carried out by the respondent in accordance with the definition of “improved value” in the LGA 1976 on the ground that it took into account the value of the component of the structures/machineries which were installed in the PMUs. [5] The High Court answered the question in favour of the respondent. The High Court accepted the respondent’s submission that the electrical structures/machineries located at the holding must be taken into account in assessing the rate payable for the PMUs. In arriving at its decision, the High Court pointed out, inter alia, that – 6

(i) the appellant’s own witness (SP1) testified:

(a) that the electrical structures/machineries components are the main equipments in ensuring the safety and reliability of appellant’s electricity transmission system. The electrical structures/machineries are the main apparatus in the making of all the PMUs. SP2 stated that it is the electrical structures/machineries in a PMU that makes PMU a property and agreed that the description of ‘property’ consist of land, building and electrical structures/machineries. Based on these evidence, the electrical structures/machineries which are the basis of a PMU, and which can be defined as ‘reka bina’, is closely related and is a part of a PMU’s definition. Thus, the electrical structures/machineries can be valued and be taken into account in determining the improved value of the four (4) PMUs as provided under section 2 of the LGA 1976;

(b) The appellant’s valuers, namely SP1 and SP2 did not value the electrical structures/machineries but only include the land and building in their valuation report. However, both SP1 and SP2 agreed that the ‘struktur elektrik’, which is the electrical structures/machineries, is included within the meaning of ‘reka bina’ which can be valued as it formed the main component of a PMU and of great value to the appellant. Conversely, the respondent’s valuer took into account all the components which make up the PMUs including the 7 electrical structures/machineries. As there is omission on the part of the appellant’s valuers to include electrical structures/machineries, the evidence given by the respondent’s valuer remained unchallenged and indisputable;

(c) Reliance was placed on the decision of the case The Shell Company of the Federation of Malaya Ltd v Commissioner of the Federal Capital of Kuala Lumpur [1964] 1 MLJ 302 which held that the definition of ‘land’ includes anything that is of permanent nature affixed thereto. The electrical structures/machineries are something which is compulsory to have in every PMU and attached in a way that is permanent and affixed; and

(d) The land and building should be considered for the assessment of the “improved value”. Otherwise, the description of the “improved value” in section 2 of the LGA 1976 would be rendered meaningless.

7.1 it amounts to a usurpation of the discretion vested in the local authority to ‘impose such rates as may be considered just and proper’ but instead obligate the local authority to levy the “improved value” rate method blanketly in Johor State as a matter of mandatory compliance;

7.2 the “improved value” rate method presupposes a previous value of the holding on which there has been an improvement. In other words, the “improved value” rate method implies that 9 as a result of improvements to the holding, the earlier value and rate based on it is no longer ‘just and proper’;

7.3 the “improved value” rate method is not an alternative or a substitute of the traditional “annual value” rate method which is used by all the other states in the country. Unlike the “improved value” rate method, the definition of the “annual value” in section 2 of the LGA 1976 expressly excludes for rating purposes, the presence of machinery that enhances the value of the holding. Therefore, it was submitted that the local authority cannot invoke a power under one provision of the rating statute to achieve something that is not permissible under another provision;

7.4 Rating must be made fair and equitable which embodied the principles of uniformity and fairness. It was contended that the “improved value” shall be made as an option instead of compulsion. If it were otherwise, it would offend the guarantee of a ‘just and proper’ rate as a cornerstone of rating law;

7.5 Learned counsel for the appellant argued that to apply the “improved value” method, there must be some sort of improvements made or any changes to a holding in ensuring that such ‘improvements’ alter the rate imposed, hence increasing the rate; and

7.6 Numerous cases have been referred to by learned counsel for the appellant in support of his submission. It would be an unprofitable exercise to go through them one by one. They merely demonstrate the various approaches that courts have 10 taken in the imposition of the “improved value” method for rating. [8] Secondly, in respect of whether electrical structures/machineries located at the holding must be considered in assessing the rates payable for the PMUs, learned counsel for the appellant submitted that only ‘land’ or ‘building’ fell for rating in the PMUs and that the electrical structures/machineries stood on their own and could not be rated as part of ‘building’ for assessments. Learned counsel for the appellant relied on the Federal Court case of Majlis Perbandaran Seberang Perai v Tenaga Nasional Bhd [2005] 1 MLJ 1 which held, inter alia, that machineries which are removable are not subjected to be rated as ‘land’ or ‘building’. [9] It was further submitted that there was no evidence of any part of the electrical structures/machineries located at the PMUs being permanently fastened to the earth for the electrical structures/machineries to be considered as ‘land’. Apart from that, electrical structures/ machineries are also not included in the descriptive definition of the term ‘building’ under section 2 of the LGA 1976. Learned counsel posited that the word ‘structure’ which appears in broad words at the end of the definition of the ‘building’: “… or any other structure, support, or foundation” must be read ‘noscitur a sociis’, to wit, a particular general word takes its meaning from its associate words. Therefore, the word 11 ‘structure’ must be used in relation to ‘support’ and ‘foundation’. It would mean something in the form of attachment or platform which gives support, for example, to the functional part of the electrical structures/machineries but not itself a functional component of the electrical structures/machineries. [10] Thirdly, learned counsel for the appellant submitted that the PMUs were specialized property and there would be no potential buyer for all 3 components as a whole of the PMUs i.e., the land, building, and electrical structures/machineries because of the specialized nature of the said electrical structures/machineries. Learned counsel strenuously argued that PMUs are operated and managed by the appellant as a single licensee for the distribution of the electricity in this country. As a result, the electrical structures/machineries located at the PMUs would not have any use for potential purchasers of the PMUs as the purchaser would not be able to distribute electricity. Additionally, it was submitted that since the electrical structures/machineries located at the PMUs have no market value, the respondent should apply the ‘Depreciated Replacement Cost Method’ to value the electrical components/machineries. By applying this method, the electrical structures/machineries would be excluded from the valuation of the ‘improved value’ because they have little value and no bearing on the PMU's market price. 12 [11] Fourthly, learned counsel for the appellant submitted that the learned High Court judge erred in rejecting the appellant’s valuation reports because the Consent Order granted by the High Court which governed the conduct of the proceedings between the parties permitted appellant’s valuation reports to be used in the proceedings. It was further submitted that the respondent did not file any fresh action to set aside the Consent Order and as such, the Consent Order remains a valid and binding order of the High Court which must be followed. The appellant also contended that the respondent did not disclose their valuation report up until they filed their affidavit in reply in respect of the appeal that was filed by the appellant at the High Court. Respondent’s Submission [12] For the respondent, learned counsel supported the reasoning of the High Court. The crux of learned counsel for the respondent’s argument in opposing the appeal may be summarised as follows. [13] Firstly, learned counsel submitted that the question whether the electrical structures/machineries located in the PMUs should be taken into account by the respondent in determining the “improved value” of the PMUs for the purpose of assessment of the rates under the LGA 1976 is purely a question of fact and therefore the decision of the High Court on this question shall be final and conclusive pursuant to section 145(4) of the LGA 1976. According to learned counsel, this question relates to 13 findings of fact which was duly supported by evidence on record, especially through the testimony of SP1 and SP2 as well as the valuation reports filed by both parties in High Court. [14] Secondly, relying on the definition of the word ‘building’ in section 2 of the LGA 1976, learned counsel submitted that the electrical structures/machineries located at the PMUs fell squarely within the items described in definition of the word ‘building’: “… post, pillar, … transmission lines, cables, … or any other structure, support, or foundation;”. Therefore, electrical structures/machineries located at the PMUs can be valued and be taken into account in the determination of “improved value” because they formed part of the building which is rateable. [15] Thirdly, learned counsel asserted that the appellant valuers’ valuation is without basis as they themselves, during the cross examination, agreed that the electrical structures/machineries located at the PMUs are included within the meaning of ‘rangka bina’ which can be valued as they formed the main components of a PMU and have great value to the appellant. Therefore, it should be rateable as a component of ‘land’ and ‘building’ in the PMUs. [16] Fourthly, learned counsel submitted that the appellant’s ‘fresh’ valuation report dated 22.08.2017 which was prepared by MacReal 14 International Sdn Bhd is an afterthought and should be rejected. This is because the appellant only decides to tender their ‘fresh’ valuation report dated 22.08.2017 after they have filed an appeal in High Court. Subsequently, the appellant deliberately ignored their earlier valuation report dated 16.03.2015 prepared by Mohd Asad bin Mohd Amin from Kumpulan Jurunilai Sdn Bhd. According to learned counsel, the appellant’s ‘fresh’ valuation reports dated 22.08.2017 was inconsistent with their earlier valuation reports dated 16.03.2015. They are not allowed to approbate and reprobate in the same breath. Our Analysis And Findings Whether the imposition of ‘Improved Value’ in state of Johor is ultra vires section 129 of the LGA 1976 [17] In the course of the argument of this appeal, learned counsel for the appellant informed the Court that he did not wish to make an oral submission on this issue. The issue was addressed in the appellant’s written submission. He was instructed by the appellant to raise the issue and urged the Court to consider the same. [18] We are of the considered view that in the circumstances of the case, this is an inappropriate issue for this Court to determine. There are so many reasons for our reluctance to do so. As a starting point, it is critical to note that the “improved value” method which is applied across the board in the State of Johor is made based on the policy considerations of 15 the State Authority of Johor. This is confirmed by the notice sent by the appellant to respondent dated 16.05.2017 which says, among others, that the assessment on the appellant’s holding was made using the “improved value” method as compared to the “annual value” method adopted by other states. The relevant parts of the notice are reproduced below – “Hasil keputusan nilaian ke atas harta bil. i dan ii sepertimana di atas, pihak Majlis berpendapat bahawa nilaian yang dikenakan ke atas harta milik tuan adalah masih munasabah, dengan kaedah nilaian yang dibuat berdasarkan kepada nilai tambah atau nilai pasaran harta iaitu nilaian harta yang digunapakai di negeri Johor, berbanding dengan kaedah nilai tahunan yang diguna oleh negeri lain di Semenanjung Malaysia …” (emphasis added). [19] However, the State Authority of Johor who made the policy to adopt the “improved value” method was not made as a party in the Originating Motion and therefore, a non-party before the Court. The appellant only named the Majlis Daerah Segamat, which is the local authority for the local authority area of Segamat, as the sole respondent. [20] The general rule is that the court has no jurisdiction over any person other than those brought before it and no order can be made for or against or bind a non-party before a proceeding. 16 [21] There is a plethora of authorities to support the proposition. Reference can be made to a few decisions. This general principle was stated by Seah FJ in a Federal Court case Kheng Chwee Lian v Wong Tak Thong [1983] 2 MLJ 320 in the following words – “In our judgment, the court below has no jurisdiction inherent or otherwise, over any person other than those properly brought before it, as parties or as persons treated as if they were parties under statutory provisions [Brydges v. Brydges & Wood; Re Shephard and Coleman], The terms "judgment" and "order" in the widest sense may be said to include any decision given by a court on a question or questions at issue between the parties to a proceeding properly before the court [see para 501 of Halsbury's Laws of England (4th ed.) Vol.26 at page 237]” (emphasis added). [22] In Brydges v Brydges and Wood (1909) P 187 which was referred by the Federal Court in Kheng Chwee Lian v Wong Tak Thong (supra), Farwell, L.J., at page 191 stated as follows – “But the court has no jurisdiction, inherent or otherwise, over any person other than those properly brought before it as parties or as persons treated as if they were parties under statutory jurisdiction (e.g., person served with notice of an administration decree or in the same interest with a defendant appointed to represent them), or persons coming in and submitting to the jurisdiction of their own free will, 17 to the extent to which they so submit (e.g., creditors of a bankrupt executor, who has carried on business under a power in the will, coming in to claim against the testator's estate in order to obtain subrogation to the executor's right of indemnity). But the courts have no jurisdiction to make orders against persons not so before them merely because an order made, or to be made, may or will be ineffectual without it. Even in the case of an injunction, Lord Eldon says in Inveson v. Harris,

“Power to impose rates The local authority may, with the approval of the State Authority, from time to time as is deemed necessary, impose either separately or as a consolidated rate, the annual rate or rates within a local authority area for the purposes of this Act or for other purposes which it is the duty of the local authority to perform under any other written law.” (emphasis added). [29] The basis for assessment of the rate which may be assessed upon the “annual value” of holdings or upon the “improved value” of holdings is provided in section 130(i) LGA 1976 – 22

“Limitation of assessment rate

“Amendments to Valuation List

(a) –

(b) any building erected, modified, altered, demolished or rebuilt, or other improvements made upon a rateable holding the value thereof has been increased; … the Valuation Officer may at any time amend the Valuation List accordingly and rates shall be payable in respect of the holding in question in accordance with the Valuation List so amended.” (emphasis added). Improved Value Rate Upon The Electrical Structures/Machineries [35] At the outset, it is important to note that the word ‘machinery’ is not mentioned in the definition of the “improved value” and ‘improvements’. Only the term ‘holding’ appeared in the definition of these two terms. 25 Furthermore, the word ‘machinery’ also is not separately defined in the LGA

However, the word ‘machinery’ is within the definition of “annual value” in section 2 of the LGA 1976. The relevant parts of the definition are as follows – “`annual value’ means the estimated gross annual rent at which the holding might reasonably be expected to let from year to year the landlord paying the expenses of repair, insurance, maintenance or upkeep and all public rates and taxes: Provided that-

(a) …

(b) in estimating the annual value of any holding in or upon which there is any machinery used for any or all of the following purposes –

(i) the making of any article or part of an article;

(b) to the definition of 'annual value' in s 2 of the LGA refers to machinery that is not integrated with the ‘land' and/or 'building’ as defined in s 2 of the LGA.” (emphasis added). [37] The appellant in that case who is the local authority argued that ‘machinery’ in proviso (b) of the section 2 of the LGA 1976 in the definition “annual value” refers to ‘machinery that is not integrated with the land and/or building but are on the land and enhances the value of the land’. This Court rejected the argument and held as follows – “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 27 respondent submitted that the power station is actually not integrated i.e., the machinery with the land and buildings. In fact, the machinery in a power station is removable 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. … In that event, we would answer Question (b) in the affirmative.” (emphasis added). [38] In the case of The Shell Co of The Federation of Malaya v President, Town Council Bandar Penggaram, Batu Pahat [1962] 1 MLJ 277, the Court held that petrol fuel tanks would not be subjected to rating as ‘building’. Adams J made the following important observations – If I am right in holding that the improved value of a holding must be based on the land and such things brought on to the land that attach to and form an integral part of the land, that is to say, on the facts of this case, the buildings, then the cost of the tanks must be excluded from the assessment because they are not buildings as defined under the Enactment. This I think must be correct. The basis upon which a ratepayer is to be assessed is a matter for the legislature. If the ratepayer were to be expected to pay on everything that he brought on to his holding for his own comfort or business which might in the widest sense be called an improvement, the law would have said so. It has not done so. It merely bases the assessment on the improved value of the holding which is the capital sum which the holding 28 (that is to say the land and any buildings on it) would be expected to realise if offered for sale on such reasonable terms as a bona fide vendor would require. These tanks were not buildings. They might as Viscount Simonds has said in the Shell-Mex case [1959] 1 All ER 391 probably be described as being a physical entity with buildings but as he further pointed out the metal containers were physical entities when they were put in the compartment, and they remain physical entities when they lie there and would still be physical entities if they were taken away as they easily could be. Mr. Anthony Hills underlined this when he said that in any sale of the holding the tanks would be the subject of a separate contract. In my opinion the tanks were wrongly included in the improved value of the holding upon which the assessment under section 28 of the Enactment was made.” (emphasis added). [39] In The Shell Company of The Federation of Malaya Ltd v Commissioner of The Federal Capital of Kuala Lumpur [1964] 1 MLJ 302 (‘The Shell Company of The Federation of Malaya Ltd’), the appellants are the owners of holdings under which are the constructed tanks for the storage of petrol. The tanks are buried two feet below ground level and are turfed over or covered with concrete or macadam. The respondent, in determining the annual value of the holdings, included the value attributable to the underground storage tanks. 29 [40] On appeal, the appellants contended that the underground storage tanks did not fall within the definition of 'building' and as such could not be or form part of ‘a holding’ and therefore not rateable. On the contrary, the respondent contended that the tanks had become part of the ‘land’ as fixtures and as such was within the definition of ‘holding’ and therefore rateable. The Court held that the underground tanks are ‘land’ within the definition of ‘land’ in the Land Code and as land they are rateable. The Court held as follows – “Secondly, I am of opinion that I ought to reject the too narrow view that was taken of the tanks having necessarily to be related or attached to buildings. A holding may either be "land" simpliciter, or land with buildings. … Land as such is rateable in this country because it is a “holding”, so that whatever forms part of the land becomes rateable. … The proviso has this effect. It reiterates and underlines that the legal definition of “land” includes fixtures. Hence all machinery which are fixtures are rateable, saving only the express exceptions. … In my view these tanks are land. The definition of “land” is given in section 2 of the Land Code as including things attached to the earth or permanently fastened to anything attached to the earth. Just as “real property” in English law extends to a great deal more than land in everyday speech, so “immovable property” in our Interpretation and General Clauses Ordinance, 1948, “includes land, benefits to arise out of land, and things attached to the earth.” In other countries of the common law 30 “land” has also the same meaning. … “Fixture” means anything which has become so attached to land as to form in law part of the land. The definitions of “land” which I have quoted above clearly comprise fixtures. The Shell Company's tanks are buried two feet below ground level and are turfed over or covered with concrete or macadam. The manner of their removal, if it has to be done, shows how firmly the tanks are embedded in the earth. … I would substitute “attached to the earth” for the phrase “built into the structure”. The resulting conclusion is inevitable. The tanks, when placed underground, were intended to remain in situ for as long as the filling-stations continue in operation. They are liable to be disturbed and replaced only in case an increase of storage capacity becomes necessary. Hence their attachment to the earth is, for all practical purposes, as permanent as the buildings erected on the filling stations. Their removability, when severance reconverts them into chattels or movable property, does not alter the fact of their integration with the land upon attachment thereto. An example will suffice. Bricks built into a house become land until the house gets pulled down, when the building material by severance from the land becomes reconverted into chattels. The instance cited by Mr. Carter, of the Shell Company removing their tanks from their Nee Soon Station upon the termination of the lease, is irrelevant because there is no evidence as to the terms of the lease. Finally, the fact that the tanks retain their identity as such below ground is entirely immaterial because oak trees, rubber trees and oil palms 31 are no less part of the land although they are growing things and not earth.” (emphasis added). [41] We derive from these decisions two broad principles relevant to case like this one where the question is whether electrical structures/ machineries should be taken into account in assessing the holdings based on “improved method”. Firstly, a holding may either be ‘land’ or ‘building’. In other words, only land and building are rateable for the purpose of LGA

Secondly, machinery on its own is not rateable under the LGA 1976. For machinery to be included in valuation for rating purpose, it must fall within the definition of the ‘land’ or ‘building’ as provided in section 2 of the LGA 1976. [42] With respect, we are of the opinion that the learned High Court Judge erred in concluding that the electrical structures/machineries located at the holdings must be taken into account (together with the land and building) in assessing the rates payable for the PMUs. The proper approach in a case such as this, in our judgment, is not whether the machinery is a main component of the holding or not, but whether the machinery falls within the definition of ‘land’ and ‘building’. 32 Whether Machinery Falls Under The Definition Of The ‘Land’ In Section 2 Of The LGA 1976 [43] Section 2 of the LGA 1976 defined the term ‘land’ in the following manner – “`land’ includes things attached to the earth or permanently fastened to anything attached to the earth”. [44] This definition is a common statutory meaning of the term ‘land’. This concept of land under the LGA 1976 is very much akin to the concept of land as prevalent in England. It is based on the maxim Quicquid plantatur solo, solo cedit which means “whatever is affixed to the soil belong to it”. [45] Generally speaking, the legal test to determine “things attached to earth or permanently fastened to anything attached to the earth” is whether the object is classified as fixture or chattel. Simply put, “fixtures” are those material things which are physically attached to the land so that they become part of the realty and property of the landowner. An object which becomes a fixture merge, so to speak, with the land and accordingly passed automatically with all subsequent conveyances of the land unless lawfully severed from it. A chattel on the other hand is a physical object which never becomes attach to the land even though placed in some close relation with it and so not pass with conveyances of the land. 33 [46] The distinction between fixtures and chattels is not entirely straight forward and a decision in one case will not necessarily be a guide to another case. The test for determining whether an object is a fixture or chattel includes –

(a) the degree of annexation; and

(b) the purposes of annexation. [47] As regards (a), an article is a fixture if it is attached to the land or building in some substantial manner, such as by nails or screws, and ‘the more firmly the object is affixed to the earth or building thereon, the more likely it is for the object to be classified as a fixture’. On the other hand, when ‘the article in question is no longer attached to the land than by its own weight, it is generally considered to be a mere chattel’ (See Holland v Hodgson (1872) L.R. 7 CP 328). It also been said that ‘if an object cannot be removed without serious damage to, or destruction of some part of the reality, there is a strong case that it has become a fixture’ (See Berkley v Poulett & Ors [1977] 1 EGLR 86). [48] As regards (b), the intention for which the particular object has been affixed is very important in determining whether a fixture has become a chattel. Broadly, the test can be summarised as follows: if it can be proven that the chattel was attached to the land to enhance the character, quality, enjoyment or status of the land, then it is likely that the chattel has become 34 a fixture, whereas if the chattel was attached to the land with the intention of increasing the use or enjoyment of the chattel as an independent object, then it is unlikely that the chattel has become a fixture. As noted by Sir Frederick Jordan in Australian Financial Assurance Co Ltd. v Coroneo [1938] 38 SR (NSW) 700 – “The test of whether a chattel which has been to some extent fixed to land is a fixture is whether it has been fixed with the intention that it shall remain in position permanently or for an indefinite or substantial period … or whether it has been fixed with the intent that it shall remain in position only for some temporary purpose …” [49] The question of whether a chattel is a fixture is question of law for the judge to decide. Ultimately, when making a decision on whether a piece of property is a chattel or fixture, is dependent on the surrounding fact of each case, and the answer to the questions of the degree, purpose, intention and object of annexation is the general starting off points. [50] Returning to the present case, the evidence of the SP1 revealed that –

(i) the electrical components at the PMUs are classifiable as primary equipment and secondary equipment. These include 35 transformer, circuit breaker, current transformer, voltage transformer, isolator and earthing isolator, and surge arrester;

(v) secondary equipment is arranged and spaced inside panels that form a line within the control room of the PMU. These panels include relay panels, control/switching panels, switchgear panels, telecommunication panels, and direct current. These panels are placed freely on the floor and some are affixed to the floor using nuts and bolts to ensure control of movement. Therefore, these panels are easily replaced or removable; and

(i) the definition of the term ‘building’ is a descriptive definition. It does not define the term ‘building’ in usual way of definition appears in the statute. It consists of a long list of 28 items and ends with the qualifying words ‘any other structure, support or foundation’;

(i) Rule of noscitur a sociis embodies the same jurisprudence as the general approach of reading a statute as a whole. By applying this rule, a particular general word was read into the context of the provision and takes its meaning from its associate words;

(a) and (f). As we will explain, it did not.” (emphasis added). [79] We venture to say that this is another reason why the word structure cannot be referred to machinery. If machinery was intended to be included, given the style and the nature of the definition of the ‘building’ which is descriptive and detailed in nature, one would expect to find the big item like ‘machinery’ in the body of the definition of ‘building’ itself. [80] There is another aspect of the matter. The respondent argued that the definition of the word ‘building’ in section 2 of the LGA 1976 is not exhaustive as the definition employed the word ‘includes’. In other words, the respondent submitted the word ‘includes’ in the definition of the word ‘building’ has an extensive force and does not limit the meaning of the ‘building’. With respect, we reject the argument. 52 [81] In this regard, the on-point case is the Australian case of YZ Finance Co Pty Ltd v Cummings [1964] ALR 667. The issue in this case was whether a promissory note fell within the definition of ‘security’ in the Moneylenders and Infants Loan Act 1941 (‘MILA’) of the New South Wales. Section 24 of the MILA provides as follows – “In this section “security” includes bill of sale, mortgage, lien, and charge of any real or personal property, and any assignment, conveyance, transfer or dealing with any real or personal property to secure the repayment of any loan.” (emphasis added). [82] After the High Court (the highest court in Australia) observed the definition of ‘security’ as including a long list of instruments, but with no reference to promissory notes, the majority of the High Court held that the long list of instruments in the definition of the ‘security’ was intended to be exhaustive notwithstanding the use of the word ‘includes’ in the definition. In reaching their decision, the majority considered the whole Act and held through McTiernan J as follows – “The word “include” is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause 53 declares they shall include. But the word “include” is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined.” (emphasis added). [83] Kitto J continued as follows for majority – “...a provision in which it [includes] appears may or may not be enacted as a complete and therefore exclusive statement of what the subject expression includes. ... Unlike the verb “means”, “includes” has no exclusive force of its own. It indicates that the whole of its object is within its subject, but not that its object is the whole of its subject. Whether its object is the whole of its subject is a question of the true construction of the entire provision in which the word appears. … The question whether a particular provision is exclusive although ‘includes’ is the only verb employed is therefore a question of the intention to be gathered from the provision as a whole.” (emphasis added). [84] Reference also can be made to the case of Dilworth v Commissioner of Stamps [1899] AC 99, where Lord Watson made the following observations – 54 “The word ‘include’ is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include.”. [85] However, in the same case, Lord Watson stated the following – “But the word ‘include’ is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to shew that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to ‘mean and include’, and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions.”. (emphasis added) [86] In Victims Compensation Fund v Brown and Ors (2002) 54 NSWLR 668, Spigelman CJ said as follows – “The word ‘includes’ has been given an exhaustive meaning where the context in which it appears indicates an intention to confine a general word by providing a limited list of words. Indeed, even though the primary meaning of ‘include’ is expansive, where the words that follow would ordinarily 55 fall within the meaning of the general word, the fact that they are expressed will often indicate an exhaustive or exclusive use of ‘includes’.” (emphasis added). [87] In summary, it is our observation that the word ‘includes’ will generally have an expansive, illustrative and or explanatory meaning, unless the statutory context in which it appears indicates that it must have an exhaustive meaning. The Court needs to look at the statute in its full context to see what the statute in its entirety provided for. [88] In the present appeal, as noted earlier, the definition of the term ‘building’ is a descriptive definition. It consists of a long list of 28 items and ends with the qualifying words in the definition ‘any other structure, support or foundation’. More importantly, such a big item like electrical structures/machineries are not included in the definition although the definition of the term ‘building’ appears to be descriptive and very detail. Apart from that, the word ‘structure’ in the qualifying words is not part of the specific descriptions or things comprising ‘building’. The word ‘structure’ appears in the phrase ‘any other structure, support or foundation’, appears in broad terms. [89] Looking at the definition of the word ‘building’ in its full context, the word ‘structure’ should be read in the context of giving ‘support’ or providing the ‘foundation’ to the building. Therefore, in our opinion, the 56 word ‘includes’ in the definition of the word ‘building’ was not intended to expand the meaning of the ‘building’ but to cover all structures that support or provide foundation to the building but under different names. [90] Finally, learned counsel for the respondent by relying on the definition of the word ‘building’ in section 2 of the LGA 1976, submitted that the electrical structures/machineries located at the PMUs fall squarely within some items described in definition of the word ‘building’ such as “… post, pillar, … transmission lines, cables,”. In our opinion, the answer to this issue is in the respondent’s valuation report itself. What appeared from the respondent’s valuation report is that the electrical structures/machineries were valued as whole single unit and not for its various component’s parts such as cables, pillar etc. The SD1 carried the valuation based on land, building, and electrical components. Therefore, the submission of the learned counsel for the respondent on this point is devoid of merit. [91] At the risk of repetition, we say that in a nutshell that the words ‘structure’, ‘support’ or ‘foundation’ in the definition of ‘building’ under section 2 of the LGA 1976 have to be read within the context of the definition as a whole and reading as a whole, we do not find the word ‘machinery’ anywhere. Therefore, the Court cannot interpret the word ‘structure’ to include ‘machinery’ when the word ‘structure’ appears in the context of its associated words, namely ‘support or foundation’. Looking 57 through this lens, electrical components/machineries cannot fall under the definition of building. If the electrical components/machineries were intended to be included, given the style and the nature of the definition of the ‘building’ which is descriptive in nature, one would expect to find the word ‘machinery’ in the body of the definition itself. Conclusion [92] As a conclusion, the above discussion may be briefly summarized as follows –

(i) based on the trite principles that court cannot pronounce any judgment or order that binds non-parties who are not properly brought before the court and court cannot make any order which breaches the principle of the natural justice, this Court ought to decline to answer the question on whether the imposition of improved value in State of Johor is ultra vires section 129 of the LGA 1976. The State Authority of Johor which is the right party to clarify on this matter was not made as a party in this Originating Summon. It would be unfair for the Court to make any order without considering any facts, materials, or submission by the State Authority of Johor in determining the policy opted by them in applying improved value method instead of annual value method;

(i) that the decisions of the Mesyuarat Penuh Majlis Daerah Segamat dated 26.04.2017 (which affirmed the decisions dated 14.03.2017 and 12.04.2017 of the Jawatankuasa Cukai Harta) and 59

29.07.2015 (which affirmed the decision of the Jawatankuasa Bantahan Cukai Harta (Harta Khas) Siri 14/2015 convened on 28.04.2015) in respect of the assessment of the improved value of the following holdings are unlawful and are set aside:

(a) Main Intake Substation (Pencawang Masuk Utama) Bukit Siput situated on the land held under No. Hakmilik HSD 33979, No. Lot PTD 7917, Mukim Sungai Segamat, Daerah Segamat, Negeri Johor Darul Takzim where the improved value of the holding had been assessed is fixed at RM46,000,000.00;

(b) Main Intake Substation (Pencawang Masuk Utama) Lebuhraya Segamat-Kuantan situated on the land held under No. Hakmilik HSD 24132, No. Lot PTD 3950 and No. Hakmilik HSD 24133, No. Lot PTD 3951, Mukim Buloh Kasap, Daerah Segamat, Negeri Johor Darul Takzim, where the improved value of the holding had been assessed is fixed at RM41,758,000.00;

(c) Main Intake Substation (Pencawang Masuk Utama) Jementah situated on the land held under No. Hakmilik PN 63877, No. Lot 9759, Mukim Jementah, Daerah Segamat, Negeri Johor Darul Takzim, where the improved value of the holding had been assessed is fixed at RM36,500,000.00; and

(d) Main Intake Substation (Pencawang Masuk Utama) Gemereh situated on the Land held under No. Hakmilik GM 318, No. Lot 1274, Mukim Gemereh, Daerah Segamat, Negeri 60 Johor Darul Takzim, where the improved value of the holding had been assessed is fixed at RM12,835,000.00.

(d) above which carry out the function of altering or converting high voltage electricity to a low voltage electricity and for switching, controlling and regulating the high voltage electricity power cannot be imposed with rates under the LGA 1976 and therefore, assessment carried out by the respondent that took into account the improved value of these electricity equipment and apparatus in ascertaining the amount of rates of holdings is unlawful and therefore are set aside;

(v) the costs of this appeal in the sum of RM 20,000 subject to the payment of allocator fees to be borne by the respondent. 61 [94] The case to be remitted back to the Muar High Court for assessment. Dated: 4th January 2022 Signed (MOHD ZAWAWI SALLEH) Federal Court Judge Malaysia Case No.: 01(i)-30-10/2020(J) Counsel for the Appellant : Dato' Dr. Cyrus V. Das (together with him Gurmel Singh a/l Jit Singh and David Dinesh Mathew) Messrs. Kenth Partnership Suite J-03-07, Block J Solaris Mont’ Kiara, No. 2 Jalan Solaris 50480 KUALA LUMPUR Counsel for the Respondent : Mohd Radzi Bin Yatiman Messrs. Rahim & Lawrnee No. 124 & 125, Tingkat 1 Jalan Sia Her Yam 85000 Segamat JOHOR DARUL TAKZIM [This judgment is subject to final editorial approved by the Court].