This is an appeal against the Rating Assessment conducted by the local government. The parties are:
- Appellant: Shell Company of the Federation of Malaya
- Respondent: Commissioner of the Federal Capital of Kuala Lumpur.
The respondents (i.e., the Commissioner of the Federal Capital of Kuala Lumpur) imposed a rating assessment on petrol filling and service stations belonging to the appellant (i.e., Shell Company of the Federation of Malaya Ltd).
The defendants included underground tanks in the rates; the appellants disagreed.
Ong J delivered the judgement of the High Court on 29 May 1964.
This judgement came after the decision in Shell Company of the Federation of Malaya v. President, Town Council, Bandar Penggaram, Batu Pahat  MLJ 277. You may read the entry here.
The question before the court was “whether the underground tanks at such stations are rateable.”
The High Court considered the same question two years back. In Shell Company of the Federation of Malaya v. President, Town Council, Bandar Penggaram, Batu Pahat  MLJ 277, the High Court ruled in favour of the appellant and allowed the appeal.
Unlike the previous case, the Respondent included an element of value attributed to the underground storage tanks in the annual value of the company’s holdings.
Underground Tanks: Holding or Building?
The attorney for Shell Company in 1964 was the same that represented it in 1962: Mr. Anthony Hills. The learned counsel repeated his arguments before Adams J.
The respondent, being a different entity and under the jurisdiction of another State Authority, was represented by a different person. Mr. Yong Pung-How contends that “holding” is basically “land”. The Respondents acknowledge that the tanks themselves are not a “building” as defined by s. 2, Town Boards Enactment (Cap 137). Instead, the tanks’ attachment to the soil makes it part of the land in the eyes of the law: quicquid plantatur solo, solo cedit (translation: whatever is affixed to the soil belongs to the soil).
In summary, this is how the arguments are presented:
- Appellant: The tanks are not part of the building, thus should not be included in the rating assessment.
- Respondent: The tanks are not part of the building; however, the “land” includes and comprises the tanks.
I. Are the underground tanks “building” or “structure”?
Neither. That’s the common ground from the decision in Shell-Mex & BP v Holyoak  1 All ER 391;  1 WLR 188.
II. Should Tanks be Related or Attached to Buildings?
No. The learned judge rejected the narrow view. A holding is either “land” simpliciter or land with buildings.
III. Fundamental Distinction between Malayan and English Laws
s. 32, Town Boards Enactment of the Federated Malay States Cap. 137, compels owners to pay the rates. In England, it is the occupier that is rateable.
But as the occupier of land is rateable in respect of that land, it is sometimes convenient, for the sake of brevity, to say that land is rateable. But there is always a danger in substituting for the words of a statute another phrase which is not an exact equivalent. If the substituted phrase be made the foundation of an argument, a fallacy may be involved.Ryde on Rating, 11th Ed., p. 16
If the land is rateable because it is a “holding”, then whatever becomes part of the land is also rateable.
While the provisio to s. 2, Town Boards Enactment, allows the rating of fixtures. Hence, Ong J concluded that the enactment “reiterates and underlines that the legal definition of “land” includes fixtures.” In England, s. 24, Rating and Valuation Act 1925, and the Plant and Machinery (Valuation for Rating) Order, 1927 de-rates all plant and machinery which do not fall within Schedule 3.
IV. What is “Land”?
s. 2, Land Code, defined “land”. This includes things attached to the earth or permanently fastened to anything attached to the earth.
The Interpretation and General Clauses Ordinance 1948 defined “immovable property” to include “land, benefits to arise out of land, and things attached to the earth.”
Malaya is not alone in that definition. In other common law countries, “land” has the same meaning.
A. United States of America
“Land” includes not only the soil or earth, but also things of a permanent nature affixed thereto or found therein, whether by nature, as water, trees, grass, herbage, other natural or perennial products, growing crops or trees, mineral under the surface, or by the hand of man, as buildings, fixtures, fences, bridges, as well as works constructed for use of water, such as dikes, canals, etc. Raynard v City of Caldwell 55 Idaho 342 296 42 P2d 292; City of Newport News v Warwick County 159 Va 571 580 166 SE 579; Morris Plan Bank of Fort Worth v Ogden Tex Civ App 144 SW 2d 998 17 2 Bl Comm 16; Sex v Miracle 35 ND 458 719 160 NW 716; Wynn v Margate City 9 NJ Misc 1324 566 157 A 565. It embraces not only the surface of the earth, but everything under or over it. Gas Products Co v Rankin 63 Mont 372 997 207 P 993 24 ALR 294; Garnsey Coal Co v Mudd CCA Als 281 F 183 184; Jones v Vermont Asbestos Corporation 108 Vt 79 303 182 A 291; Holloway’s Unknown Heirs v Whatley Tex Civ App 104 SW 2d 646 648. It has in its legal signification an indefinite extent upward and downward. Reynard v City of Caldwell 55 Idaho 342 296 42 P 2d 292; Bituminous Casualty Corporation v Walsh & Wells Mo App 170 SW 2d 117 121. It may include a franchise connected with land. Delancy v Lowery 25 Col 2d 561 679 154 P 2d 674.”Black’s Law Dictionary (4th Edition)
The Privy Council held that the gas mains laid under the streets of Toronto by a company acting under statutory authority fell within the definition of “land” (Toronto Corporation v Consumers’ Gas Company of Toronto  2 AC 618).
V. What is “Fixture”?
Fixture refers to “anything which has become so attached to the land as to form in law part of the land”.
The Federated Malay States Court of Appeal decided in Goh Chong Hin & Anor v Consolidated Malay Rubber Estates Ltd (1924) 5 FMSLR 86, that the English law relating to fixtures applies.
Perhaps the true rule is, that articles not otherwise attached to the land than by their own weight are not to be considered as part of the land, unless the circumstances are such as to show that they were intended to be part of the land, the onus of showing that they were so intended lying on those who assert that they have ceased to be chattels, and that, on the contrary, an article which is affixed to the land even slightly is to be considered as part of the land, unless the circumstances are such as to show that it was intended all along to continue a chattel, the onus lying on those who contend that it is a chattel.Blackburn J in Holland v Hodgson (1872) LR 7 CP 328 335
Applying this reasoning – alongside Lord Denning’s judgement in Shell-Mex & BP v Holyoak  1 All ER 391;  1 WLR 188 – the High Court found that the tanks were intended to remain in place for as long as the petrol station operates. Yes, there is a likelihood that it would be removed and replaced: when it’s necessary to increase storage capacity. For all practical purposes, the tanks are attached as permanently as the filling station buildings themselves. The tanks only become chattels or movable property once they are severed from the land.
Other analogies and anecdotes used by Ong J are:
- Bricks used to build a house become land until the house is demolished;
- Trees are part of the land though they are growing things and not earth.
Shell Company’s underground tanks are land within the definition of ‘land’ in the Land Code and as land they are rateable.
Thus, the appeal was dismissed with cost.