Chief Assessor, Singapore v National Shipbreakers Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 05 September 1980
• Date: 05 September 1980
• Docket Number: Originating Motion No 60 of 1979
• Court: High Court (Singapore)

Chief Assessor

Plaintiff

and

National Shipbreakers Pte Ltd

Defendant

[1980] SGHC 19

F A Chua J

Originating Motion No 60 of 1979

High Court

Revenue Law–Property tax–Appeals–Annual value–Method of valuation–Contractor's basis–Whether contractor's basis embodied in s 2 (b) (i) Property Tax Act (Cap 144, 1970 Rev Ed)–Application of contractor's basis in determining annual value–Section 2 (b) (i) Property Tax Act (Cap 144, 1970 Rev Ed)

The Chief Assessor appealed against the decision of the Valuation Review Board (“the Board”) in respect of its determination of the annual value of the respondent's property for the years 1971 to 1973. The contractor's basis of valuation was applied to the property. The two main issues were: (a) whether s 2 (b) (i) of the Property Tax Act (Cap 144, 1970 Rev Ed) (“the Property Tax Act”) was the contractor's basis; and (b) how the contractor's basis should be applied.

Held, allowing the appeal:

(1) The Board was wrong to interpret s 2 (b) (i) of the Property Tax Act as the contractor's basis, as the provision was a last-resort formula to be applied when the methods based on the primary definition of annual value were not appropriate: at [32] and [33].

(2) Since the Board accepted the 6% interest rate applied by the Chief Assessor as a net rate, the Board should have also concluded that the result of applying this rate to the effective capital value would give a net value. The Board had erred in also ordering that the expenses of repairs, insurance, maintenance and property should not be added at all: at [41].

(3) The proper rate to apply was 36% of the annual value for property tax: at [44].

Cardiff City Council v Williams (Valuation Officer) [1973] RA 46 (refd)

Dawkins (Valuation Officer) v Royal Leamington Spa Corp and Warwickshire County Council (1961) 8 RRC 241 (folld)

R v Paddington Valuation Officer, ex parte Peachey Property Corp Ltd [1966] 1 QB 380; [1965] 2 All ER 836; [1965] 3 WLR 426 (folld)

Property Tax Act (Cap 144, 1970 Rev Ed) s 2 (b) (i) (consd); s 2

Lucy Hangchi (Inland Revenue) for the appellant

P Selvadurai (Rodyk and Davidson) for the respondent.

F A Chua J

1 This is an appeal against a decision of the Valuation Review Board (“the Board”) which ordered that the annual value of the subject property 23 Tanjong Kling Road for the years 1971 to 1973 be fixed at $69,360.

2 The undisputed facts regarding the subject property are as follows. It is a shipbreaking yard of the respondents and the only one of its kind in Singapore. It is an industrial property situated at Jurong Industrial Estate and stands on 337,370sq ft of land leased from the Jurong Town Corp. Annual ground rent for the land is calculated at 6% of the land value of $2.50 per square foot. It has a water frontage of 976ft leased for $9 per foot run per annum, a wharf, jetty and a mud dock.

3 This appeal has had a very long history. The subject property was first assessed for its annual value in 1971 by the Chief Assessor's valuer, Mr Shee Ping Yah, applying the contractor's test or contractor's basis of valuation. The respondents appealed against the Chief Assessor's valuation. In 1974 the Board heard the appeal for the first time and dismissed the appeal. On further appeal, the High Court allowed the appeal. On further appeal, the Court of Appeal remitted the matter back to the Board to rehear the whole case. The appeal came before the Board for a second time in 1977. Five witnesses gave evidence for the respondents. However the hearing could not be completed as the chairman of the Board was elevated to the bench. In July 1979 the appeal was heard afresh by the Board. By this time most of the issues in dispute at the previous hearing were either abandoned or agreed upon between the parties and the Chief Assessor had proposed that the annual value of $112,000 be ascribed to the subject property. The respondents maintained that it should be $57,800. Only one witness was called, the Chief Assessor's valuer Mr Shee Ping Yah. There was no dispute as to the application of the contractor's basis of valuation to the subject property. The Board was of the view that the annual value of the subject property for the years 1971, 1972 and 1973, ascertained under the contractor's basis was $69,360, this amount being 6% return on a capital value of $1,156,000 and directed that the valuation list for these years and for the ensuing ones be accordingly amended.

4 Two main issues are raised in this appeal. The first is how the contractor's basis should be applied. The second is whether s 2 (b) (i) of the Property Tax Act (Cap 144) is the contractor's basis.

5 The question is what is the real effect of the definition of “annual value” prescribed in s 2 of the Property Tax Act (Cap 144).

6“Annual value” is defined in s 2 thus:

'annual value', as used of a house or building or land or tenement, not being a wharf, pier, jetty or landing-stage, means the gross amount at which the same can reasonably be expected to be let from year to year, the landlord paying the expenses of repair, insurance, maintenance or upkeep and all taxes; and, as used of a wharf, pier, jetty or landing-stage, means the gross amount at which the same can reasonably be expected to be let from year to year, the tenant paying the expenses of repair, insurance, maintenance or upkeep.

7 One of the provisos to the above definition (hereinafter referred to as “the primary definition”) relevant to the present appeal stipulates as follows:

Provided that –

1. (a) …

2. (b) in assessing the annual value of any property the 'annual value' of such property shall, at the option of the Chief Assessor, be deemed to be the annual value as hereinbefore defined or the sum which is equivalent to the annual interest at five per cent –

   1. (i) on the estimated value of such property, including buildings, if any, thereon; or

   2. (ii) on the estimated value of the land as if it were vacant land with no buildings erected, or being erected, thereon;

8 In estimating the gross amount at which a property can reasonably be expected to be let from year to year, the process of arriving at annual value for rating in England has been described by Lord Denning MR in R v Paddington Valuation...