Haidar Mohd Noor CJ (Malaya):

On 27 October 2003, this court allowed the application for leave to appeal on the following questions of law:

(a) whether " electricity " is an article for the purpose of determining the annual value of a power station in accordance with the definition of " annual value " in s. 2 of the Local Government Act 1976 (Act 171);

(b) 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); and

(c) 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.

This appeal against the judgment of the High Court directly to this court is by virtue of s. 145(5) of the Local Government Act 1976 (Act 171) ('LGA') which provides that either party may appeal but only on questions of law. Hence leave was granted by this court on the questions of law as framed above.

The appeal to this court is in respect of such part of the judgment of the High Court that decides that:

(i) electricity is an article for the purposes of determining the annual value in accordance with the definition of " annual value " in s. 2 of the LGA;

(ii) all machinery for the production of electricity as an article at the Seberang Prai Power Station, including steam engines, boilers or other motive power belonging to such machinery, is to be excluded from the computation of the annual value; and

(iii) the Notice of Assessment dated 11 November 1995 and the decision of the Rating Appeal Committee given on 3 October 1996 be set aside.

According to the learned judge the parties agreed that the State Authority has determined the imposition of rates based upon the annual value of the holdings. The issue whether the appellant ought to use the improved value of the holdings does not arise, (see s. 130 of the LGA).

Question (a)

In order to determine whether " electricity " is an article we need to consider the definition of " annual value " in s. 2 of the LGA which reads:

2. Interpretation.

In this Act unless the context otherwise requires:

" 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;

(ii) the altering, repairing, ornamenting or finishing of any article;

(iii) the adapting for sale of any article,

the enhanced value given to the holding from the presence of such machinery shall not be taken into consideration, and for the purposes of this paragraph " machinery " includes steam engines, boilers or other motive power belonging to such machinery;

(c) ...

(d) ...

The word " article " is not defined in the LGA though the said word is in the definition of " annual value " in the proviso thereof.

The learned judge in considering briefly the Electricity Supply Act 1990 and the need for the amendment of the definition of " electricity " by the Electricity Supply (Amendment) Act 2001 stated at p. 9:

16. Returning to the Electricity Supply Act 1990, the need for the 2001 amendment would in my view support the reasoning that prior to the amendment, the understanding is that electricity is an article, and that is the meaning that was understood and intended when the LGA was enacted. The amendment cannot be intended to or, have the effect of amending the meaning in the LGA when it was enacted and as applicable on th