Socfin Co Ltd v Chairman, Klang Town Council comes a few months after the High Court’s decision in Shell Company of the Federation Malaya Ltd v Commissioner of the Federal Capital of Kuala Lumpur [1964] 1 MLJ 302. Check out this entry (link) which covers that decision.
Both cases involve storage tanks. One is buried underground; the other was above ground.
The parties in the case are:
- Appellant: Socfin Co Ltd
- Socfin Co Ltd (Wiki) is a French company that operated in Malaysia from c. 1909 – 2004 (link).
- Respondent: Chairman, Klang Town Council
On 8 July 1964, the High Court delivered its judgement. On the Bench was:
- Ong J.
- The learned judge also heard the 1964 Shell Case.
Facts of the Case
The Klang Town Council considered Socfin Co’s bulk storage tanks when it determined the annual value of the latter’s holdings.
These tanks stood above ground:
- Tanks
- Vertical cylinders resting on pre-cast concrete pillars
- Foundation made of reinforced concrete platform.
The tanks stored palm oil.
Socfin co Ltd contended that the tanks should not be rateable. They argue it was neither “land” nor “building”.
Court’s Decision for Socfin Co Ltd v Chairman Klang Town Council
The High Court dismissed the appeal with costs at a higher scale.
It held that the storage tanks:
- … were buildings, being structures connected with platforms and pillars and were accordingly rateable;
- … were annexed to the land for its better use and enjoyment and formed part of it and accordingly rateable;
- … enhanced the value of the holdings on which they stood and as they were not machinery used for industrial purposes under section 2 of the said Enactment they were accordingly rateable on this ground also.
The High Court’s Judgement
A. Shell Company of the Federation of Malaya Ltd v Commissioners of the Federal Capital of Kuala Lumpur [1964] MLJ 302 Distinguished
The learned judge distinguishes Socfin Co Ltd v Chairman Klang Town Council from the case he heard. Based on his remarks, there were no case laws on whether above-ground storage tanks are ratable.
B. What is a “Building”?
The meaning of “building” could vary based on whom you are speaking to – either be technical jargon or a common term. Ong J decided to apply the common term within the proper context.
In Socfin Co Ltd v Chairman Klang Town Council, “building” is already defined by the Town Board Enactment. It “includes “any house, hut, shed, or roofed enclosure, whether used for the purpose of a human habitation or otherwise, and also any wall, fence, platform, septic tank, staging, gate, post, pillar, paling, frame, hoarding, slip, dock, wharf, pier, jetty, landing-stage or bridge or any structure connected with the foregoing.”
Based on the definition, Socfin’s tanks are not “building” under the Enactment. So what is it?
C. What is a “Structure”?
His Lordship understands “structure” as “a thing constructed”.
“Not every structure is a building, though it may well be that every building is a structure.”
Lord Evershed MR (Wiki)
Ong J caught how the chartered surveyor worded his report:
The storage tanks are used for storing palm oil and they are vertical cylinders resting on pre-cast concrete pillars which stand freely on a reinforced concrete raft foundation. The tanks themselves consist of pre-cast bottom, side and roof steel plates which are assembled and riveted on site to form the bulk storage tanks. The raft foundation merely rests on prepared ground. Details of the sizes of the tanks which are identical, are as follows:
C.H. Williams’s Report to the Court
Using the Oxford English Dictionary, Ong J deduced that “raft” means “a flat structure of logs, inflated skins, etc., for the conveyance or support of persons or things on water.” A platform, on the other hand, means “a raised level surface formed with planks, boards or the like.”
The learned judge thought to himself:
“Is not platform a more appropriate word than raft? Why eschew the more proper and fitting word instead of another which, in its true sense, means something that floats on water?”
Ong J in Socfin Co Ltd v Chairman Klang Town Council [1964] 1 MLJ 325
“Platform” is included in the Enactment’s definition for building. Conversely, “raft” is not. So when the tanks are connected to a platform, it is part of the building under the Enactment. But when the tanks are connected to a raft, it is not likely part of the building.
That is why Ong J came to the conclusion that the tanks were part of the building: being structures connected with platforms and pillars.
D. Go Beyond “Building”
The Klang Town Council went a step further. The Socfin tanks are rateable as land on top of being rateable as buildings.
When considering the purpose of why a chattel is introduced onto the land, the Court needs to ascertain whether it’s there to “improve the freehold”. In other words, when an item is brought onto – and attached to – the land, was it purely so the item can be enjoyed, or was it to improve the land? When in the latter, the item becomes a fixture.
Socfin’s tanks are sited on the land for both the land’s better use and the enjoyment of the land.
So, the High Court in Malaya found that “these storage tanks are annexed to the land so as to form part of the land, and fall to be rated on that ground also.”
E. Rating Assessments based on Annual Value
The Town Boards Enactment defines “annual value” as “the estimated gross annual rent at which the holding might reasonably be expected to let from year to year.”
Industrial machinery is exempted from this evaluation by s. 2 of the Town Boards Enactment. While the tanks improve the value of the holding, it is not “machinery”.
The High Court turned to the principles of valuation. The learned judge agrees that the value should reflect how it is – not based on its future value. Both intrinsic qualities and circumstances which push that value up or down needs to be considered.
Additional Thoughts
Ong J referred to The Torrens System in Malaya by S.K. Das. I insert the relevant quote here:
,Barton J in Reid v Smith [1906] 3 CLR 656 672 warned against the danger of losing sight of the distinction between the wide word ‘annexation’ and the more restricted word ‘affixation’, for the degree of annexation may depend largely on the weight of the articles originally annexed. Physical attachment, beyond mere gravitation fixing the contested building to the freehold is not necessarily a condition precedent of the question whether the building itself has become part of the soil. The fact that a house erected by a lessee rests by its own weight upon piers or piles fixed into the ground and is not otherwise affixed to the freehold does not necessarily constitute it a chattel removable at the will of the lessee: in determining whether such building does or does not form part of the freehold regard must be had to the object, as well as the degree, of annexation.
S.K. Das in The Torrens System in Malaya
For me what stood out were the use of the terms “annexation” and “affixation”. Until I read this passage, I never gave it much thought. To me, like any layperson, they are the same thing. The latter is more restricted compared to the latter.
It certainly is something to read more on.
