Wan Hamzah SCJ:

The respondent company owns a rubber estate called the Bukit Jalil Estate, which consists of four lots of land, i.e. lots 1706, 1171, 3418 and 1986, each held under a separate title.

All of the lots are situated in the Federal Territory of Kuala Lumpur.

The Local Government Act 1976 has come into force in the Federal Territory of Kuala Lumpur since 1 January 1977 by order of the Minister made pursuant to s. 1(3) of the Act. Pursuant to s. 137, Valuation List of holdings not exempted from the payment of rates is maintained in respect of the Federal Territory of Kuala Lumpur, containing inter alia, the names of owner or occupier and the annual value of each holding. Pursuant to s. 141, the Datuk Bandar of Kuala Lumpur issued a notice of the Valuation List showing a total annual value of RM2,134,000 in respect of the lots comprising the Bukit Jalil Estate. Being aggrieved the respondent company raised objection to the Datuk Bander under s. 142 on the ground that the lots were valued beyond their rateable value, but the objection was turned down. The respondent company appealed to the High Court under s. 145 and the High Court allowed the appeal and ordered that the amount of RM2,134,000 be substituted with RM277,832 which is the estimated gross annual rent. The present appeal before the Supreme Court is brought by the Datuk Bandar against that order of the High Court.

The dispute between the appellant and the respondent arises from the interpretation of certain words contained in the definition of "annual value" in s. 2. The relevant part of the definition is reproduced below:

"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)

(c) in the case of any land -

(i) which is partially occupied or partially built upon; or

(ii) which is vacant, unoccupied or not built upon;

(iii)

(iv)

the annual value shall be, in the case of subparagraph (i), either the annual value as herein before defined or ten per centum of the open market value thereof at the absolute discretion of the Valuation Officer, and in the case of subparagraph (ii) the annual value shall be ten per centum of the open market value thereof ...

The Director of the Valuation and Estates Department of the Dewan Bandar Raya stated in his affidavit that lots 1706, 1171 and 3418 were vacant, unoccupied and not built upon and therefore they must necessarily be assessed on the basis of ten per centum of the open market value. Evidently he applied proviso (c)(ii) to those lots. He also stated in his affidavit that lot 1986 was a very large lot with an area of 1082 acres, but the staff bungalows, labour lines and factories only occupy approximately 11 acres of the lot, and it was thus, partially built upon and can also be considered to be partially occupied, and therefore he exercised his absolute discretion to assess it on the same basis. Evidently he applied proviso (c)(i) to lot 1986.

The secretary of the respondent company affirmed in his affidavit that the estate has been in full operation and has been replanted to a large extent, and in 1976 the respondent company expended a sum of RM86,532 on the replanting. The respondent company has so far not intended to cease operating the estate, and employs a labour force of about 180 persons, the majority of whom live on the estate in quarters provided for them. The estate is managed by a manager and three others of the staff, all living on the estate. The estate area is not zoned under the comprehensive developments plan. In another affidavit filed on behalf of the respondent company it is stated that all the four lots are planted with rubber trees of high yielding varieties. All of these facts were not refuted by the appellant. In fact the Director of the Valuation and Estates Department admitted in his a