The imposition of improved value rates on electrical structures/machineries is unlawful as they do not qualify under land or building definitions of the Local Government Act 1976.

Mohd Zawawi Salleh FCJ:

Introduction

[1] The central issue in this appeal is whether the High Court erred in law in affirming the decision of the respondent, Majlis Daerah Segamat ("MDS") dated 26 April 2017 that the electrical structures/machineries must be considered together with the land and the building in assessing the improved value rate payable by the appellant, Tenaga Nasional Berhad ("TNB") for the four (4) main intake substations (Pencawang Masuk Utama) ("PMUs") located within the respondent's jurisdiction pursuant to Part XI of the Local Government Act 1976 (Act 171) ("LGA 1976").

[2] For the reasons set out in the later part of this judgment, we would allow the appellant's appeal with costs and set aside the decision of the High Court.

Factual Background

[3] The facts giving rise to this appeal may be shortly stated in chronological order as follows-

24 November 2014

The appellant received a notice dated 13 November 2014 from the respondent informing them that the respondent had prepared a new valuation list of the appellant's holdings pursuant to s 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 November 2014

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

12 October 2015

The appellant received a notice dated 17 August 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 November 2014.

28 October 2015

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

23 May 2017

The appellant received a notice dated 16 May 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 s 2 of the LGA 1976?

6 June 2017

Dissatisfid with the decision of the respondent, the appellant fied an appeal in the High Court by way of Originating Motion pursuant to s 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 offie and store building.

16 October 2017

The respondent raised a preliminary objection on the ground that the Originating Motion was fied outside the 14-day timeline prescribed by s 145(1) of the LGA 1976.

28 November 2017

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

12 December 2017

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

8 May 2018

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

25 June 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? including the cross examination of the respondent's valuation report dated 5 September 2014 (prepared by Mohd Nor & Partners (Johor) Sdn Bhd) and appellant's valuation reports dated 22 August 2017 (prepared by MacReal International Sdn Bhd).

During the proceedings, the appellant called 2 witnesses; SP1 wh