HSBC Institutional Trust Services (Singapore) Ltd (trustee of Capitaland Mall Trust) v Chief Assessor

• Jurisdiction: Singapore
• Judge: Andrew Phang Boon Leong JA
• Judgment Date: 25 February 2020
• Neutral Citation: [2020] SGCA 10
• Docket Number: Civil Appeal No 227 of 2018
• Date: 25 February 2020
• Published date: 28 February 2020
• Plaintiff Counsel: Ong Sim Ho, Keith Brendan Lam Xun-Yu and Gan Xin Ci Emma (Drew & Napier LLC)
• Defendant Counsel: Quek Hui Ling, Pang Mei Yu and Lau Sze Leng, Serene (Inland Revenue Authority of Singapore)
• Court: Court of Appeal (Singapore)
• Hearing Date: 25 February 2020
• Subject Matter: Revenue Law,Property tax,Annual value

Andrew Phang Boon Leong JA (delivering the judgment of the court ex tempore):

This is an appeal against the decision of the High Court judge (“the Judge”) to affirm the Chief Assessor’s 2008 assessment of the annual value of the subject property. The appellant is the trustee of CapitaLand Mall Trust, which acquired the shopping mall known as “Plaza Singapura” in 2004. The subject property (“the Property”) is the seventh floor of Plaza Singapura. It has been leased to Golden Village Multiplex Pte Ltd (“GV”) since 1999, when it was first leased as a “bare shell” with minimal finishes. GV spent over $7.8m on fitting-out works that included the installation of air-conditioning, cinema equipment and carpets, among other items. The final result was a fully operational 1,733-seat cinema complex as well as an office space and retail unit.

In 2008, the Chief Assessor determined the annual value of the Property to be $3,292,000. The appellant challenged that valuation before the Valuation Review Board (“the VRB”), the Judge and now challenges it before us. It argues that the Property should have been assessed in its bare shell state without GV’s fitting-out works. Although it raised four issues before the Judge, it now concedes that the Judge was correct on the first three issues, and takes issue with only her reasoning and finding on the fourth issue, which is whether the VRB had erred in accepting the Chief Assessor’s determination of annual value. Even then, the appellant has remodelled its arguments in the present appeal.

The appellant advances two arguments. First, though it concedes that the Judge was correct to find that some $7.37m worth of the fitting-out works (“the Works”) are fixtures, the appellant argues that under the rebus sic stantibus principle, the Works should nonetheless be excluded from assessment as GV is obliged to remove them at the end of the lease. This argument was not raised below and the appellant has applied for leave to argue this point pursuant to O 57 r 9A(4)(b) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed). The Chief Assessor objects to the appellant’s application because before the Judge, the appellant had argued that the Works are chattels and conceded that the fixtures are subject to tax.

We see no need to address this point in detail because even if we were to grant leave, we are not persuaded by the appellant’s argument. Under s 6(1) of the Property Tax Act (Cap 254, 2005 Rev Ed), property tax is payable upon the annual value of all houses, buildings, lands and tenements. The established common law position is that fixtures are part of the land. If the appellant concedes that the Works are fixtures, then they would be subject to assessment, unless they fall within the statutory exception in s 2(2) that need not concern us in the present case (see the Singapore High Court decision of Chief Assessor v HSBC Institutional Trust Services (Singapore) Limited [2012] 3 SLR 933 at [25]).

The rebus sic stantibus or “things as they stand” principle of valuation is a principle that the assessable entity should be valued according to its physical nature and condition as well as its usage when the assessment is made...