Neutral Citation No:  IEHC 32
THE HIGH COURT
PFIZER CHEMICAL CORPORATION
COMMISSIONER OF VALUATION
Judgment of Mr. Justice Costello delivered the 9th day of May, 1989.
These sixteen appeals, by way of Case Stated, are taken by the appellants in respect of a large factory premises at Ringaskiddy, County Cork, which they own and occupy and in which they manufacture (1) food chemicals and (2) bulk pharmaceuticals. Certain "installations" (to use a neutral term) on the appellants' land were valued for rating purposes by the Commissioner of Valuation and appeals against their rateability were taken to the Cork Circuit Court. As the premises were situated in two different townlands a separate appeal had to be taken in respect of each of the installations in each of the two townlands. The first two appeals were taken in the year 1973 and thereafter two sets of appeals were taken in each of the years 1975, 1976, 1979, 1980, 1981, 1982, and 1983. For reasons which have not been made clear, none of the sixteen appeals were heard until November 1983. Having reserved judgment the learned Circuit Court Judge on the 14th of December 1983 held that some of the installations the subject matter of the appeals were not rateable whilst others were. By notice of the 28th of February 1984 the appellants gave notice of dissatisfaction with that decision and required that a case be stated for the opinion of the High Court. For reasons which, again, have not been made clear the Case Stated was not signed until the 10th of October 1988. In the result, the first of these appeals relates to a valuation made nineteen years ago which, I imagine, must be some sort of record in the one hundred and fifty years history of our rating and valuation s.II code. The valuations of the disputed installations have been agreed between the appellants and the Commissioner and so the present dispute relates to a number of different types of installations which the appellants say the learned Circuit Court Judge wrongly decided were rateable. These installations were included in the relevant Valuation Lists under the column headed "Buildings". Briefly the issues for determination on these appeals are
(1) Whether certain of the installations are exempt from rateability because they are "machinery";
(2) Whether those that are not exempt were correctly designated as "buildings"; and
(3) If non exempt installations were incorrectly designated as "buildings" whether the Court has power to amend the Valuation Lists so that they can be valued in the miscellaneous column of the lists.
The Plant and Installations at-Ringaskiddy
The appellants' food chemical plant at Ringaskiddy produces food chemicals, almost entirely citric acids and its associated acids. These are produced from crude beet molasses by the process of fermentation. Fermentation produces citric acid which is then refined into dry crystals of citric acid. The basic raw material, beet molasses, is a black viscous semi-liquid material. It must be heated to reduce its viscosity so that it can be pumped through pipelines from the ship which delivers it at Ringaskiddy to five reception tanks and from the reception tanks through more pipelines to the fermentation tanks in the food chemical plant.
No. (1):Five tanks for the reception of molasses.
The first group of installations with which I will deal are the five tanks into which crude beet molasses is pumped from the ship delivering it at Ringaskiddy. Four of these tanks are seventy feet high by eighty feet in diameter with a capacity of 12,500 metric tonnes, whilst a fifth is seventy six feet high with a diameter of ninety six feet and with a capacity of 22,500 metric tonnes. Between them they are capable of holding one year's supply of molasses for the appellants' manufacturing requirements. They were all fabricated on site from pre-curved mild steel. There is an inter-tank blending system whereby molasses is extracted from one tank and pumped into another. After it is delivered molasses tends to settle in lairs. This is not desirable and accordingly the tanks have special facilities to ensure that the molasses is always available for the fermentation process. There are outflow heaters so that molasses will flow either to the fermentation tanks or into other tanks. In addition each tank has a circular pipe close to the bottom (called a "steam ring sparger") from which live high pressure steam from the boilerhouse can be forced into the molasses. By heating and agitating the molasses the mixing and blending of molasses is thereby facilitated. The facilities for inter-tank blending, the outflow heakters, the steam ring spargers (together with inlet and outlet pipes and a special type of gauge called a pnemercoator system which indicates the volume of the contents of each pipe) are specific to these five molasses tanks and are not to be found in other tankage systems which are used only for storage purposes.
No. (2):Two tanks for the reception of sulphuric acid Concentrated sulphuric acid is, along with molasses, the other essential raw material for the production of citric acid. It is delivered by sea and then pumped along the jetty to two tanks which are the subject matter of this appeal. These are cylindrical in shape, 35 feet high with 35 foot diameter. These tanks are used as storage only and sulphuric acid is pumped from the tanks to the plant elsewhere in the factory.
No. (3):Two heavy fuel oil tanks
These are cylindrical in shape, 42 feet high with a diameter of 48 feet. Each has an outflow heater to heat the oil near the outlet pipe so that it can be pumped through a heated insulated pipe to the boilerhouse. Heavy fuel oil is a viscous material and will not flow at or near ambient temperatures. Each tank is fitted with an internal circular steam heating coil to heat the oil to the desired temperature.
No. (4):Fifteen tanks for the reception of solvents.
The pharmaceutical plant (as distinct from the plant for the manufacture of food chemicals) in the factory produces six different finished bulk pharmaceuticals which are then dispatched abroad for tableting encapsulating and packaging into the form of finished pharmaceuticals. Manufacturing in the plant is carried on on a batch basis. It involves the chemical reaction of various raw materials in a solvent (such as alcohol). Each pharmaceutical is produced from its own particular raw material, solvents and acids. Solvents are delivered in bulk containers and then pumped into fifteen underground horizontal cylindrical steel tanks, each with a capacity of 5,000 gallons. Each tank is fitted with a self-priming pump used to recycle and mix the solvents in the tanks and also used to pump solvent into the factory plant for use in the chemicals processes.
No. (5):One tank for the reception of acid.
This is a four thousand gallon cyclindrical tank used as a storage vessel. Acid is delivered in bulk container and pumped into the tank. It is rubber lined and fitted with its own pump which is used to recycle and mix the contents in the tanks and to pump acid to the plants for use in chemical processing.
No. (6):One tank for the reception of caustic.
Caustic is delivered in a bulk container and is then pumped into this 4,000 gallon steel tank which is used as a storage vessel. It is fitted with an emersion type heater to keep the caustic from freezing and a pump to deliver it into the plant for chemical processing.
No. (7):One tank for the reception of lime.
Lime is delivered in a bulk container and pumped into this horizontal cylindrical tank which has a 4,000 gallon capacity. The tank is fitted with an agitator for the purpose of mixing the contents. The lime is used at the end of one of the manufacturing processes to neutralize acidic steam. The tank is used as a storage vessel.
No. (8):A city water tower/tank.
The County Council supplies treated water by an underground pipeline to this "city water tower". It is a reinforced concrete structure, the pedestal part of which houses the pipes leading to and from the tower and the storage tank. The tower is 107 feet high. The tank at its top is 20 feet high with a diameter of 50 feet and holds 250,000 gallons of water. Its sole function is as a storage vessel for the water. The water is continually pumped throughout the plants for cooling purposes and it is brought through two cooling towers.
No. (9):The Fire Water Tank.
This tank is cylindrical in shape, 16 feet high with a diameter of 80 feet and has a capacity of 250,000 gallons. It is open at the top. It is constructed of a special grade of ordinary steel. Its sole purpose is as a storage vessel for water to be used in the event of a fire in the factory.
On the jetty outside the factory site there are pipelines which are not the subject matter of this appeal. The pipelines to which it relates serve (1) the food chemical plant and (2) the bulk pharmaceutical plant. They carry raw materials (molasses and sulphuric acid) services (heavy fuel oil, steam, water and air), effluent (both weak and strong). The total length of the pipeline is over 40 miles. It is carried on pipe tracks throughout the site.
It will be recalled that the appellants claim that some of the installations I have mentioned are "machinery" and are exempt by virtue of Section 7 of the Valuation (Ireland) Act, 1860. I will deal with this submission later. They also claim that these installations are wrongly described as "buildings". Likewise I will deal with this submission later in this judgment. I postpone these issues so that I can firstly refer briefly to the statutory provisions by virtue of which these installations are "rateable hereditaments" and the principles on which they should be valued.
The Poor Relief (Ireland) Act, 1838.
Section 61 of this Act empowered the guardians of every Union to levy rates on occupiers of "rateable hereditaments". Section 63 set out a list of hereditaments which were to be "rateable hereditaments" for the purpose of the Act in the following way:
"the following Hereditaments shall be rateable Hereditaments under this Act; viz., all Lands, Buildings, and opened Mines; all Commons, and Rights of Commons, and all other Profits to be had, received, or taken out of any Land; all Rights of Fishery; all Canals, Navigations, and Rights of Navigation; and Rights of Way and other Rights or Easements over Land, and the Tolls levied in respect of such Rights and Easements, and all other Tolls:..."
It then went on to exempt certain classes of hereditaments – a provision which has no relevance for this case.
This Act also made provision as to how "rateable hereditaments" were to be valued. Section 64 provided that:
"every such Rate shall be a Poundage Rate made upon an Estimate of the net annual Value of the several Hereditaments rated thereunto; that is to say, of the Rent at which one Year with another the same might in their actual State be reasonably expected to let from Year to Year, the probable annual Average Cost of the Repairs, Insurance, and other Expences, if any, necessary to maintain the Hereditaments in their actual State, and all Rates, Taxes, and public Charges, if any, except Tithes, being paid by the Tenant".
Thus under the 1838 Act all "rateable hereditaments" would be valued on the same basis - a basis which has come to be called the "hypothetical rent" basis.
The Valuation (Ireland) Act, 1852.
A change in the method of valuation of certain
Rateable hereditaments was effected by this Act. The Commissioner of Valuation was required by Section 11 to value separately "every tenement or rateable hereditament hereinafter mentioned" and the section went on to provide that
"such Valuation in regard to the Land shall be made upon an Estimate of the net annual Value thereof with reference to the average Prices of the several Articles of agricultural Produce..."
which were set out in the section. The section also went on to provide that the valuation in regard to "houses and buildings" was to be the hypothetical rent basis which had been provided for in the 1838 Act.
The 1852 Act contemplated that valuations made under it might be revised every fourteen years should the Lord Lieutenant so decide but it also recognized the need to empower the Commissioner of Valuation to carry out annual revisions in certain circumstances. By Section 29 of the Act (later repealed and re-enacted) "property the annual value of which is liable to frequent alteration" was included amongst the hereditaments whose valuation can be annually revised. In an important decision on the construction of these sections (Roadstone Limited v. Commissioner of Valuation (1961) I.R. 239) the Supreme Court has decided that a dinstinction must be made between land which has preserved its agricultural or pastoral nature and land used for business, commercial or manufacturing purposes. Only land which is used for agricultural purposes is "land" for the purposes of Section 11 of the 1852 Act and so only such land is to be valued on the agricultural price basis provided for in that section, whilst land which is used for business, commercial or manufacturing purposes is property whose valuation is subject to frequent alteration is differently valued. This means that land used for business, commercial or manufacturing purposes does not fall to be valued under Section 11 of the 1852 Act it must be valued on the general principles applying to all rateable hereditaments (not subject to the Section 11 exception) which were contained in Section 64 of the of the hypothetical rent.
It follows, therefore, that any of the installations which I have above enumerated which do not qualify exemption on the ground that it is "machinery" but which cannot be described as "buildings" is nonetheless a "rateable hereditament" as land used for commercial purposes and as such would be valued on the hypothetical rent basis.This conclusion also applies,to the pipelines. It is accepted that these could be rateable as "easements" if laid over the land of other persons, but they are rateable as commercially used "land" if laid on the appellants' own property.
The Valuation (Ireland) Act, 1860.
I now come to deal with what I think is the principal contention on these appeals. Section 7 of the Act provides that in making the valuation of any "manufactory" or building erected or used for such purpose the commissioner of Valuation shall not take into account the "machinery" therein, save only such as shall have been erected and used for the purpose of motive power. The Appellants' case is that a number of these installations (which I will list in a moment) can properly be regarded as "machinery" within the meaning of this section and in support of this contention they refer to a number of decided cases to which I will now briefly refer.
Cement Limited -v- Commissioner of Valuation (1960)I.R. 268 was a case concerning two rotary kilns in a cement factory. In the course of his Judgment Davitt, P. referred to the possibility that these could be regarded as "machinery" and he pointed out (page 292):
"The words, "machine" and "machinery," are not defined in the Valuation Acts. A dictionary defines "machine" as meaning an apparatus for the application or modification of force to a specific purpose. In its technical sense it includes such simple appliances as the lever, pulley, and inclined plane. In its popular sense it clearly embraces a vast range of appliances among which sewing machines, typewriters, bicycles, printing presses, power-looms, spinning machines, and steel rolling mills readily come to mind. The word, "machinery," has to be interpreted accordingly. The ordinary concrete-mixer, which one frequently sees as work in connection with road-making or building operations, seems to me typically to come within the term, "machine," as defined. It includes a metal chamber in which cement, sand, and water are placed and thoroughly mixed to become mortar by means of a rotary motion of the chamber applied through suitable gear by power produced by an internal combustion engine. It is a simple example of the application of force to a specific purpose, e.g., mixing mortar. On the other hand, an ordinary kiln in which lime is burned or bricks are baked is clearly not a machine."
In J.H. Thompson and Son Limited –v- Commissioner of Valuation (1970) I.R. 264, the Court had to consider a travelling-hearth oven consisting of a large stationary component made of metal plate which heat was exuded and another component being an electrically driven metal plate which carried dough into and through the tunnel so that it was baked before it emerged at The Court held that the whole installation constituted a "machine". In United -v- Commissioner of Valuation (rating appeal, 29th of June 1972) a Court in Northern Ireland was concerned with premises used for the for the blending of crude molasses with water. The molasses were conveyed to three large steel cylindrical tanks and there blended with water. Blending was effected by means of compressed air which was carried by pipes situated both inside and outside the tanks. The Appeal Tribunal held that as each tank was so closely integrated into the units which were admitted to be "machinery" that it would be unreal to divorce the tanks from the concept and so they were regarded as "machinery".
In Beamish and Crawford Limited –v- The Commissioner of Valuation (1980) I.L.R.M. 149,the Supreme Court had to consider whether certain tanks and vessels known as "fermentation tanks" and "conditioning tanks" were "machinery" and so exempt from liability to be rated. The Supreme Court considered the design and the function of these vessels and concluded on the authorities that:
"the word "machine" within the section connotes apparatus by means of which force is applied, modified or used by mechanical means for a specific purpose,, whether such apparatus is moving or fixed, and that in determining whether the apparatus so qualifies as a machine or machinery the components should not merely be regarded separately or piecemeal but as integral parts of the process in which they are used."
Applying conditioning tanks the Chief Justice concluded that each of these installations could probably be regarded as "machinery". In Pfizer Chemical Corportion -v- Commissioner
Of Valuation (unreported) 31st of July 1984 I held that tanks "thickner tanks" which were part of the manufacturing process by which dolomite rock was converted into magnesium were "machinery" and in Siucre Eireann CPT -v- Commissioner of Valuation (unreported) the 5th of October 1988, Hamilton, P. held that heavy fuel oil tanks were "machinery" which were part of the process of manufacture in the plant with which the case was concerned.
The assistance obtained from previous Courts' decisions can, of course, only be of limited value, the issue raised by a claim to exemption under Section 7 being largely one of fact. When considering each installation in this case for which exemption is claimed it seems to me that I should presume that the word "machinery" was used in its ordinary sense and that I should be slow to hold that an installation was "machinery" if in my estimation ordinary people using that word in their ordinary lives would not so describe it.
No. (1): Five tanks for the reception of molasses.
Whilst it is true that crude beet molasses is an important raw material in the production of citric acid I do not think that the authorities to which I have referred require me to hold that every tank or receptacle in which a raw material used in the production of a final product in a factory is placed must be regarded as "machinery" for the purposes of Section 7 of the 1860 Act. It is true that the molasses in these five tanks is not just left in storage. What falls for consideration is whether the special features of the tanks to which I have referred mean that the tanks should be regarded as "machinery". I think so to hold would do violence at once to the English language and common sense. These receptacles are tanks - not machines. The fact that items of equipment are installed in them to allow the molasses to be agitated, to permit it to be heated, and to permit the molasses to be moved from one tank to another and subsequently to the manufacturing plant does not have the effect of altering their character.
No. (2): Two tanks for the reception of sulphuric acid.
No exemption is claimed for these tanks on the ground that they are "machinery".
No. (3): Two heavy fuel oil tanks.
In my view these fuel tanks are not "machinery" within the meaning of the section for reasons similar to those I have expressed in relation to installation No. (1). The fact that the tanks are fitted with equipment which enables the oil to be heated does not alter their character which predominantly is one for storage purposes.
No. (4): Fifteen tanks for the reception of solvents.
In my view these underground steel tanks are not "machinery". They store solvents which are pumped into the plant for use in the chemical processes. The fact that they are fitted with pumps and that the solvents may be recycled by means of these pumps into other tanks does not alter their character as "tanks".
No. (5): A tank for the reception of acid.
In my view this tank is not "machinery". For the reasons given above the fact that it has a pump does not alter its character.
No. (6): A tank for the reception of caustic.
My conclusion in relation to this tank is the same as for the previous tanks. The fact that it is fitted with a heater does not alter its character.
No. (7): A tank for the reception of lime.
Similar conclusions as stated above apply in relation to this installation. The existence of an agitator for mixing the contents does not alter the character of the tank.
Nos. (8) and (9): The city water tower and the fire water tank. It is not claimed that these installations are "machinery".
No. (10): Pipelines
These pipelines are used for the purposes of carrying raw material to the manufacturing plants, services and effluent. The fact that the manufacturing process could not be carried on without them does not alter their character - they are pipelines and not machinery. I should add for the sake of completeness that the problems posed by these appeals have been tackled and hopefully settled in relation to future cases by the Valuation Act, 1986 which declared certain categories of fixed property (including the type of installations in this case) to be rateable hereditaments.
Whether the installations are "buildings".
Having concluded that all these installations are "rateable hereditaments" and that none is entitled to exemption under Section 7 of the 1860 Act what next falls for consideration is whether they were correctly listed in the valuation lists as "buildings". Section 6 of the Annual Revision of Rateable Property (Ireland) Amendment Act, 1860 provides that the lists of valuation which the Commissioner of Valuation is required to make out and transmit to each local authority is to be in the form specified in the Schedule to the 1860 Act or in such other form as may be approved. The form annexed to the 1860 Act had a number of columns, one of which was headed "Total Valuation". Under these words there was a column headed by the word "Land" and another column headed with the word "Buildings". This scheduled form was later varied and the present form has now got four columns headed with the words "Rateable Annual Valuation" under which there is one column headed "Land", one column headed "Buildings", one column headed "Railways Fisheries Tolls Half-Rents etc." and a fourth headed "Total". The third column is now usually referred to as the "miscellaneous column". What has been submitted on the appellants' behalf in this case is that none of the installations with which we are concerned should have been listed in the column headed "Building". It is accepted, however, that they are rateable hereditaments and it is agreed that the amount at which they were valued could properly have been inserted in the "miscellaneous column".
In my view the appellants' submission is correct. Indeed, it was agreed by Counsel on behalf of the Commissioner that, with the possible exception of number (6) (the water tower) that none of these installations could be regarded as a "building". But, in my Judgment, the water tower cannot be so regarded. Again, applying the test of how this installation would be reffered to in ordinary speech it seems to me it would be inaccurate and inappropriate use of the English language to refer to it as a "building".
The Court's powers of amendment.
The appellants have argued that the Court has no power to amend the valuation lists and that the valuation inserted in the incorrect column invalidates the assessments made.
An appeal against an assessment is made in the first instance under Section 19 of the Valuation (Ireland) Act, 1852 to the Commissioner of Valuation. By Section 20 he may direct a valuer who had not previously been employed in making the original valuation to inspect the hereditament and investigate the complaint and report to him. If it appears to the Commissioner that
"the Valuation or Statement of the Area of the Tenement or rateable Hereditament referred to in any of such Notices requires Amendment, the Commissioner of Valuation shall have Power to alter and amend the Valuation or Statement of the Area of the Tenement or rateable Hereditament so appealed against."
It is accepted by the appellants that these very wide powers would enable the Commissioner of Valuation himself to amend a valuation list which had incorrectly included a hereditament in the "building" column and would enable him to transfer it to the "miscellaneous" column.
By Section 22 of the 1852 Act an appeal lay to Quarter Sessions. By section 23 the Court was
"empowered and required to hear and determine the Matter of such Appeal as stated in such Notice of Appeal ... and to make such Order therein as to such Court shall seem fit."
It seems to me quite clear that this section gave to a Court of Quarter Sessions a power to amend the valuation lists by transferring a hereditament incorrectly included in one column into the correct column.
By Section 10 of the Valuation (Ireland) Act, 1860 an appeal by way of Case Stated was granted to a person dissatisfied with the decision of the Court of Quarter Sessions. By Section 11 the Court to which the case is transmitted
"shall hear and determine the Question or Questions of Law arising thereon, and shall thereupon reverse, affirm, or amend the Decision in respect of which the Case has been stated, or remit the Matter to the Court of General or Quarter Sessions, with the Decision of such Superior Court thereon, or may make such other Order in relation to the Matter, and as to the Costs thereof, as to such Superior Court may seem fit."
The power conferred by this section could not have been wider. I am empowered by it to make such Order in relation to the matter before me as may seem fit to me. In my opinion I am empowered to amend the error in the valuation lists to which I have referred and I propose to do so. Thus, I find myself in agreement with the construction of the section adopted by
Mr. Justice Hamilton in the Siuicre Eireann case to which I have already referred.
I propose to answer the questions Stated as follows; the learned Circuit Court Judge was correct in holding that the rateable hereditaments reffered to therein were not "machinery" within Section 7 of the Annual Revision of Rateable Properties Ireland (Amendment) Act,1860 but was incorrect in holding that "buildings" within the meaning of Section 12 of the Act of 1852. The said rateable hereditaments should have been included in the miscellaneous column in the valuation lists and the Court will Order the amendment of each of the lists accordingly.
I cannot end this Judgment without making a supererogatory and which I apprehend may well be futile. The rating and valuation code is a confusing mosaic of partly repealed and imperfectly drafted Victorian Statutes encrusted with a century and a half's judicial decisions. It should long ago have been repealed and modernized. The failure to do this has come, I think, partly from a mistaken perception of the technical difficulties involved but more importantly from the belief in the wisdom of It seems to me that by a modern statute without encountering too many technical problems and of passage of the 1986 Act would indicate that public controversy might not be too aroused by a reforming measure which re-enacted existing principles and did not impose new liabilities.