Agripower Barraba Pty Ltd v Blomfield

Disputed Items

1. The primary Judge summarised (at [46]) the steps involved in the processing of diatomaceous earth at the facility in Lot 1: "…processing involved three stages, involving a receiving hopper for ore delivered by truck, a plate feeder for discharge of ore stored in the receiving hopper, feed conveyor, roll crusher for size reduction, a discharge conveyor for conveying primary crushed ore to the drying shed and another conveyor for distributing ore within the drying shed. The subsequent processing steps involved screening over a triple deck vibrating screen and two kason screens, and product was then elevated via belt feeders to distribution boxes where it was fed to hoppers above the bagging stations. Mr Prentice [a director of Agripower's ultimate holding company and, from June 2006 to October 2009, a director of ADEE] accepted, albeit somewhat reluctantly, that that processing area was functioning as a processing plant for diatomaceous earth mined elsewhere on the property and it would also be possible for it to function in the same way as a processing plant for other deposits in the area."
2. His Honour listed each of the Disputed Items, adopting the description of each contained in Schedule One to Agripower's Amended Statement of Claim. Items 1-8 in the list comprise plant and equipment located outside a substantial enclosed processing shed on Lot 1. The remaining seven items (Items 9-15) are located within the shed. The list is as follows:
3. Secondary Roll Crusher (small) "Fredrick Parker Machine PP22256, Type PF, 22 inch x 16 inch Twin Roll Chain Driven with 25kw Drive Motor Belt Drive, Year of Mfg 1950."
4. Primary Roll Crusher (large) "Unbranded Twin Roll, approx. 650 x 500mm diameter, Direct Drive powered by Twin Electric Motors, with Reduction Drive."
5. Dust Collection System to Fluid Bed Dryer "Comprising elevated extraction fan, overhead steel trunking, vertical welded steel wet air scrubber with bottom slurry discharge, overhead dust trunking, approx. 650mm diameter to extraction fan, approx. 1500mm diameter, powered by 160kw electric motor complete with exhaust stack to atmosphere (Lot)."
6. Fluid Bed Dryer "Svedala Pyrotherm, Job No C1169 Date of Mfg Dec 2000 Burner Type & Model Eclipse 3216 MVTA Fuel Type Butane Gas, Max Fuel Rate 17,000 MJ/H Purge Time 67.5 seconds Regulated Pressure 19KPA Swept Volume 42 M/3 Combustion Chamber Volume 3.215 M/3 S/No C1169-01 complete with Intake Fans, Svedala Pyrotherm Calciner Oven, S/No C1169-02 Burner Type/Model 3 off Eclipse TJ200 Medium Velocity, 4 Injectors Fuel Type Butane Gas, Max Fuel Rate 7200 MJ/H Purge Time 67.5 seconds Regulated Pressure 31 KPA Swept Volume 17.2m3 Combustion Chamber Volume 4.6m3, with Electric Controls to MCC Room."
7. Discharge Belt Conveyor "9m x 400mm approx., with Trough Base & Bottom Mounted Auger Conveyor, Electric Powered."
8. Vibrating Screen "3800 x 1100 Twin Deck with Electric Drive Motor on support structure (not serviceable - scrap value only)."
9. 2 Kason Vibra Rotary Screens "1200mm separated, Electric Powered with Support Structure to area (Lot)."
10. Vibrating Screen "Approx. 3.8 x 1000mm, 3 deck."
11. 2 Express Scales Bag Batch Filling and Weighing System "Model JM800GVD, Capacity 115lbs complete with Electronic Scales, Syntron Feeder, Pneumatic Bag Clamp, Belt Conveyor, x 2 x Saxon 5 Continuous Hot Air Bag Sealer, Overhead Hopper Bin (Note: 1 complete with Batch Coder) (Lot)."
12. Propac Automatic Batch Filling and Weighing Machine "Auto Plant Packaging Systems complete with Bag Sealing, Dereeling, Computer controlled, Air Electric Operated on Mobile Base, 8 Stainless Steel Formers, Overhead Production Hopper Compu-Weigh, Batch Coding System, Acer 17" Flat Screen Monitor."
13. General Packaging Equipment Semi-Automatic Form Fill Batch Weigh and Seal Machine "General Packing Equipment Semi-Automatic Form Fill Batch Weight & Seal Machine with Bag Dereeling, Feed Hopper Air Electric Operated."
14. Demag Electric Chain Hoist "125 Capacity, on Crawler Trolley, Hand Pendant Control."
15. Bulk Steel Hopper Bin "With Bucket Loan Conveyor, Twin Small Hopper Bins for Production Mixing, with Single Manual Bag Filler, 2 Sets Wedderburn Platform Scales, each 50kg (Lot)."
16. Electronic Platform Scales "CAS Model BI-100RB [freestanding unit]."
17. Packaged Air Compressor "Atlas Copco, Mode: GA90VSDFT … with 2 x vertical air receiving tanks and pipework throughout."

ADEE's Title

1. The primary Judge first considered whether ADEE owned the Disputed Items prior to any transfer of title to Agripower. His Honour observed (at [9]) that the evidence was incomplete on this issue. He rejected (at [16]) evidence Agripower sought to adduce from Mr Prentice that ADEE had acquired the assets of Supersorb on a "walk-in and walk-out" basis.
2. The primary Judge recorded (at [10]-[11]) Mr Blomfield's affidavit evidence that:

• ADM acquired the mining tenements and plant owned by its predecessor, West Australian Sands, in 1992;
• Supersorb acquired an interest in ADM in 1999 (which his Honour took to mean an interest in the company rather than an acquisition of its assets); and
• ADEE acquired the mining tenements and plant owned by Supersorb in 2005.

1. His Honour made the following finding (at [19]): "Had it been necessary to decide the point, I would have held, with some hesitation, that Agripower had established that ADEE was owner of the [D]isputed [I]tems, having regard to Mr Blomfield's evidence … and in the absence of any evidence of any challenge to ADEE's title to the equipment during the relevant period."
2. Mr Burton SC, who appeared with Mr Conde for Agripower, submitted that this finding is inconsistent with the later finding by the primary Judge that the Disputed Items were fixtures. This, however, is a misreading of the finding. His Honour merely found that ADEE was the owner of the Disputed Items that could not be regarded as fixtures.

Agripower's Title

1. Next, the primary Judge addressed whether Agripower acquired title to the Disputed Items from ADEE (again on the assumption that they were not fixtures). His Honour noted (at [20]) that the respondents accepted that St George had power under the security documents to convey to Agripower any title that ADEE had in the assets, assuming them to be chattels. His Honour held (at [21]) that the security documents conferred on St George as a secured creditor, a right of possession and the rights that could be exercised by a receiver. The security documents allowed St George to exercise rights over the secured property as though it was the owner, but did not in themselves transfer ownership in the secured property to St George.
2. The primary Judge considered (at [25]) that the St George Assignment Deed did not transfer the property mortgaged or charged by the securities, but St George's right, title and interest as secured creditor in that property. His Honour concluded (at [28]) as follows: "Had it been necessary to decide the point, I would have held that St George had not in fact transferred ownership, but only its rights as secured creditor, to Agripower. There may have been little practical significance in that difference, since Agripower could potentially have exercised those rights to transfer ownership of the disputed items, although there was no evidence that it had done so."

Fixtures

1. The primary Judge dealt at some length with the legal principles applicable to determining whether the Disputed Items were fixtures. Those principles are not in dispute on the appeal.
2. His Honour accepted (at [42]) the respondents' submission that there was no evidence as to which entity affixed the majority of the Disputed Items, or when the affixation occurred. Thus the intention of the affixer could only be inferred objectively, if at all. His Honour also accepted that neither the subjective intention of ADEE (with the exception of one or two items that may have been installed during the period the ADEE lease was in force) nor the subjective intention of Agripower could be relevant. This was because most of the Disputed Items had been brought on to Lot 1 well before ADEE commenced occupation.

Disputed Items Outside the Shed

1. The primary Judge then considered whether each of the eight Disputed Items located outside the shed was a fixture. He did so paying careful attention to the expert evidence given by Mr Atkinson, a mining engineer.
2. His Honour dealt with Items 1 and 2 (the secondary and primary roll crushers) together, as they raised similar issues. He concluded that both were fixtures: "[51] Mr Atkinson's evidence was that the secondary roll crusher is contained within a steel box frame that is part bolted and part welded to an assortment of steel 'I' beams which support the secondary roll crusher, walkway platforms surrounding and above this unit and the feed conveyor and feed chute, and the secondary roll crusher is physically affixed to the land by a complicated arrangement of bolted and welded steel I beam structures and by electric power cables extending partly underground from the fixed electrical control box with a minor connection by pipe work to the compressed air system. He noted that the secondary roll crusher is an integral component of the diatomite processing and bagging facility. His evidence was that its removal would require electrical isolation and modification of steel supporting structures, most likely by oxy-acetylene cutting, to free the unit from the supporting structure that it is welded to and from attaching items including feed and discharge chutes, surrounding walkways and pipe work. In my view, Mr Atkinson's evidence provides strong support for a conclusion that, prima facie, the secondary roll crusher is so closely annexed to the structures on the land that it should be treated as a fixture. [52] Mr Atkinson's evidence was that the primary roll crusher is partly welded and partly bolted onto a main steel base frame that is bolted to the same skid that supports the secondary roll crusher, and that steel frame supports the primary roll crusher, walkway platforms surrounding and above the unit and the feed conveyor and feed chute. He noted that this item is also physically affixed to the land by a complicated arrangement of bolted and welded steel structures and that the steel skid supporting the primary and second roll crushers is substantially buried below ground, and the primary roll crusher is also affixed by electric power cables extending partly underground and with a minor connection by pipe work to the compressed air system. Again, his evidence was that the primary roll crusher is an integral component of the diatomite processing and bagging facility. In my view, this evidence provides strong support for a conclusion that, prima facie, the primary roll crusher is also so closely affixed to the structures attached to the land as to be a fixture."
3. Item 3 (the dust collection system) was fixed to concrete pads and connected to the fluid bed dryer by welded pipework. The electric motor was wired to the power supply via an overhead cable tray that was in turn welded to the facility's infrastructure. Mr Atkinson's view was that this Item was pollution control equipment that formed an integral part of the diatomite processing and bagging facility. His Honour found (at [53]) that: "… the extent of connections with the relevant structures and the necessity of the item to the conduct of a diatomite processing and bagging facility support the characterisation of this item as also a fixture to the land."
4. Item 4 (the fluid bed dryer) was: "located within an 11 metre square open plant, concreted area, on an elevated steel platform with mesh walk way access, supported by eleven steel 'I' beam legs with some sitting and some bolted to a concrete floor. The calciner which forms part of it is bolted to a steel base framework and supported on 4 steel legs, and 3 fans are located on the concrete floor and bolted to it." His Honour accepted (at [54]) Mr Atkinson's opinion that the drying equipment was an integral component of the diatomite processing facility and that its purpose was to dry the ore used as raw material for processing. On this basis, the fluid bed dryer was a fixture.
5. Item 5 (the discharge belt conveyor) was approximately ten metres long and received the dried diatomite via pipeworks. It was fixed to the concrete flooring by a steel skid frame and the support structure was welded to sections of the bucket elevator at the discharge end. It would have to be unbolted from the trestle on which it was set. His Honour considered (at [55]) that the conveyor was integral to the processing operation. This fact and the "extent of connections with the relevant structures" supported characterisation of the conveyor as a fixture.
6. Item 6 (the vibrating screen) was in a different position because it had not been used as part of the most recent processing operation. Its electric motor had been disconnected and it could be removed "with some structural steel alterations". Although this item was no longer necessary for the operation of the processing facility, his Honour considered it a fixture (at [56]).
7. The two rotary screens comprising Item 7 were located in a large shed known as a screen house, approximately eleven metres above ground level. His Honour reasoned (at [57]) as follows: "…the screen house is a substantial structure including 3 to 4 elevated platforms supported on a structural steel base comprising 4 steel legs and bracing. The rotary screens are part bolted and part welded to the platform structure and mesh walkway supports and are wired into the processing and bagging facility electrical supply and control system. Mr Atkinson again expressed the view that these items are integral components of the diatomite processing and bagging facility and that they could not be removed easily, due to their elevated location and the complicated arrangement of surrounding structural steel work, auxiliary pipe work and chutes, and that roofing or side walls of the screen house might require removal to allow crane access to remove that item. In my view, the extent of connections with the relevant structures, and the necessity of the item to the conduct of a diatomite processing and bagging facility, support the characterisation of this item as also a fixture to the land."
8. The primary Judge reached the same conclusion (at [58]) as to Item 8 (the vibrating screen) for much the same reasons as applied to Item 7.
9. His Honour summarised (at [59]) the position concerning the first eight Disputed Items as follows: "the extent to which the eight disputed items … are annexed to the land seems to me to be a strong indicator of whether they are fixtures and of the parties' objective purpose, as was recognised by Jordan J in Australian Provincial Assurance Co Ltd v Coroneo [(1938) 38 SR (NSW) 700 at 712] and by Hill J in Lees & Leech Pty Ltd v Commissioner of Taxation [(1997) 73 FCR 136 at 148]. It seems to me that the first eight of the disputed items have been fixed to the land with a relatively high degree of annexation, and the fact that they have been partly welded in place and structures built around them which would have to be partly demolished to remove them, support a conclusion that prima facie they are fixtures."

Disputed Items within the Shed

1. The primary Judge then briefly described the components of each of the seven Disputed Items located within the shed and assessed whether they could be removed without causing damage to other structures, again relying primarily on the evidence of Mr Atkinson (at [60]-[66]).
2. Item 9 (the filling and weighing system) was the first of the seven Disputed Items contained within the processing shed referred to by the primary Judge. Mr Atkinson had pointed out that the pipework, flexible lose connections for the supply of compressed air were evident as part of the system and that dust extraction pipework was also fitted around the system. Nonetheless, his view was (at [60]) that the system: "could be removed with little or minor damage to existing bagging shed structures, although some oxy-acetylene cutting and disconnection of compressed air pipe work would be required."
3. Item 10 (the automatic weighing and filling machine) was mobile and could easily be removed with little or no damage to existing bagging shed structures (at [61]).
4. Item 11 (the weigh and seal machine) was a freestanding unit bolted to an overload feed hopper arrangement and connected to the shed facility's power supply. The lower part of the unit could be removed without damage to existing structures, but the overhead feed hopper arrangement would require oxy-acetylene cutting for removal (at [62]).
5. Item 12 (the electric chain hoist) was hung from a wheel trolley running along a steel "I" beam and was connected to the power supply. It could be easily detached without damage to the trolley (at [63]).
6. Item 13 (the steel hopper bin) could also be removed with little damage to other structures, although some oxy-acetylene cutting would be required (at [64]).
7. Item 14 (the electronic platform scales) was a freestanding unit that could be unplugged and the power adaptor attachment unit that could be unbolted (at [65]).
8. Item 15 (the air compressor) had been purchased and installed by ADEE to be used in addition to a smaller unit. The unit could be removed following electrical isolation and disconnection from the compressed air pipework, but it would have to be replaced for the facility to work (at [66]).
9. The primary Judge summarised the position concerning Items 9 to 15 as follows: "[67] … it has [not] been established that the ninth-fifteenth items, considered on their own as distinct from part of an integrated processing and bagging facility, would be a fixture. I am also conscious that … the operational ability of the plant could be restored after the disputed items were removed and was not dependent on the specific disputed items … [68] It seems to me that, notwithstanding that the ninth-fifteenth disputed items could be removed individually and could potentially be replaced, their structure and function, the extent of their integration with the premises and with each other and with the functioning of the processing and bagging facility, is consistent with the affixation of these items for the better use of the land as a processing and bagging facility, in circumstances that the parties leasing the land prior to ADEE had, so far as the evidence goes, long term leases of the property. … For this reason, and subject to the other relevant considerations addressed below, I would reach the prima facie view that these items are also fixtures."

Characterisation of the Disputed Items

1. His Honour took into account other matters relevant to the characterisation of the Disputed Items. These included the following:

• removal of the Disputed Items would not destroy them (at [69]);
• however, removal of the Disputed Items would involve a team of several people working over 10 to 12 days, with a further allowance of two or three days for delays (at [73]);
• the cost of removal of the Disputed Items (between $165,600 and $207,000 over the period of 12 to 15 days) was relatively high compared with the value of the Disputed Items (estimated by Mr Blomfield to be worth $281,700), although the primary Judge accepted that the cost of removal of Items 9 to 15 was likely to be less in relative terms (at [75]-[76]); and
• removal of the Disputed Items would occasion significant damage to Lot 1, in that it would be left littered with concrete bases and damaged metal structures that could not readily be used either as a processing and bagging facility or as grazing land (at [77]).

1. The primary Judge recognised (at [78]) that the intention of the person affixing an item to the land can be indicative of objective intention. The difficulty was that there was no direct evidence as to the intentions of ADEE's predecessors, who affixed all items other than the air compressor and possibly the secondary roll crusher. Except for the ADEE Lease, there was no evidence as to the terms of the various leases of Lot 1 (other than the nominal duration). Nor was there evidence as to how long the facility was intended to operate at the time the Disputed Items were affixed.
2. The terms of the ADEE Lease were of little assistance because nearly all of the Disputed Items were affixed before that Lease commenced (at [79]). Even if the terms of the ADEE Lease were relevant, they did not assist in determining whether the Disputed Items were to be characterised as fixtures (at [81]).
3. In his Honour's view (at [86]), to the extent that subjective intention was relevant, the evidence did not demonstrate a subjective intention that displaced a characterisation of all items as fixtures. Accordingly, his Honour concluded (at [87]) that all the Disputed Items were fixtures and Agripower's claim should be dismissed.

Agripower's Submissions

1. Agripower's written submissions raised a "threshold matter". If the Primary Judgment stood, so Agripower argued, the outcome would be "curious and anomalous". That was so because successive commercial tenants, a sophisticated lender (St George) and ADEE's receivers and managers all appeared to assume that title to the Disputed Items vested in each of the tenants and that the Disputed Items could be disposed of independently of the provisions in the various leases.
2. Mr Burton SC, who appeared with Mr Conde for Agripower, acknowledged that Agripower faced some evidentiary difficulties on the substantive issues. Unless Agripower's motion to adduce further evidence succeeded, none of the leases of Lot 1 other than the ADEE Lease, was in evidence. Nor was there any evidence that the mining leases over the Property extended to any part of Lot 1. Mr Burton accepted that, at best, the mining leases were over "contiguous land".
3. Nonetheless, Mr Burton submitted that this Court should infer that each of the lessees under the mining leases was obliged to remove mining equipment from the Property. Mr Burton also submitted that an inference should be drawn that all the leases over Lot 1 incorporated an obligation to reinstate the land in terms similar or identical to cl 18.2 of the ADEE Lease. These inferences, so Mr Burton argued, supported the conclusion that the Disputed Items, insofar as they were affixed to the land, were intended to be removed when each lease over Lot 1 ended or the processing operations ceased. In any event, cll 18.1 and 18.2 of the ADEE Lease, when read together, obliged ADEE to remove the Disputed Items on termination of that Lease. The provisions indicated that it was never intended that the Disputed Items should become fixtures.
4. Mr Burton next submitted that the primary Judge gave insufficient weight to the relative ease with which the Disputed Items could be removed from the land and to the minimal damage that would be caused to the Disputed Items themselves by the process of removal. Mr Burton accepted that the primary Judge had referred to these matters, but argued that his Honour had paid insufficient attention to the evidence that some of the Disputed Items were essentially freestanding and others were bolted or welded to a base or frame to provide stability. It was also significant that particular elements of certain Disputed Items might have had to be replaced from time to time.
5. On the issue of prior title to the Disputed Items, Mr Burton submitted that:

• the primary Judge was correct to infer that ADEE had title to the Disputed Items (assuming that they were not fixtures); and
• his Honour should have found that Agripower had obtained title to the Disputed Items by virtue of the St George Assignment Deed.

The Respondents' Submissions

1. Mr Parker SC, who appeared with Ms Castle for the respondents, supported the primary Judge's reasoning leading to the finding that the Disputed Items were fixtures. In particular, he submitted that Agripower was not entitled to rely on conduct after the date of affixation by parties other than those responsible for fixing the chattels to the land.
2. Mr Parker also contended that the machinery and equipment had all been installed for the better enjoyment of the land for processing diatomaceous earth. The Disputed Items (presumably) had been installed at much the same time, as had the supporting structures and foundations which were undoubtedly fixtures. As a result, Agripower was not entitled to pick and choose among the Disputed Items; either all were fixtures or none.
3. On the question of title to the Disputed Items, the respondents made no submissions in opposition to Agripower's contention that, if ADEE had title to the Disputed Items (assuming them not to be fixtures), Agripower had acquired title by virtue of the St George Assignment Deed. The respondents did support their notice of contention on the ground that Mr Blomfield's evidence, on which the primary Judge relied, was insufficient to justify a finding that title in the Disputed Items had been acquired by ADEE.

Motion to Adduce Further Evidence

1. Agripower's notice of appeal included Ground 10(b) as follows: "subject to a successful application for further evidence, [the primary Judge] should have found that the respondents were required as a condition of the environmental consent permitting mining and processing on their property to remove the [D]isputed [I]tems from their property on expiry of that consent."
2. In support of this ground of appeal, Agripower filed its notice of motion asking this Court to receive further evidence. The further evidence was an affidavit sworn by Mr Prentice, to which a number of very substantial documents were exhibited. These included an Environmental Impact Statement for the extraction and processing of diatomite on Kyooma prepared on behalf of ADM in September 1981; a "Mining, Rehabilitation and Environmental Management Plan for the Kyooma West Diatomite Mine" prepared on behalf of ADM in June 1993; a "Mining Operation Plan for the 'Kyooma West' Diatomite Mine" prepared on behalf of ADM in January 2001; and a letter from Barraba Shire Council notifying ADM that the Council had granted approval to extend for ten years the development consents of a number of mining leases.
3. At the conclusion of argument on the motion, the Court announced that the motion would be dismissed with costs and that reasons would be given in the judgment.
4. Sections 75A(7) of the SC Act permits the Court to receive further evidence. Where the appeal is from a judgment after a trial or a hearing on the merits, the Court is not to receive further evidence except on special grounds: s 75A(8).
5. In Akins v National Australia Bank (1994) 34 NSWLR 155, Clarke JA (Sheller JA agreeing) said (at 160) that: "Although it is not possible to formulate a test which should be applied in every case to determine whether or not special grounds exist there are well understood general principles upon which a determination is made. These principles require that, in general, three conditions need be met before fresh evidence can be admitted. These are: (1) It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) The evidence must be such that there must be a high degree of probability that there would be a different verdict; (3) The evidence must be credible."
6. While these principles are derived from the general law, the scope of the discretionary power conferred by s 75A(7) and (8) is not defined by reference to common law principles governing the admission of fresh evidence on a motion for a new trial: Tjiong v Tjiong [2012] NSWCA 201 at [167] per Meagher JA (Whealy and Barrett JJA agreeing). Moreover, while the three conditions referred to in Akins describe matters that often must be taken into account in determining whether there are "special grounds", they are not necessarily the only considerations that may be relevant. Nor is it always necessary for each of the three conditions to be satisfied. The circumstances of each case must be considered: Tjiong at [168] citing Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64 at [135]-[136].
7. Mr Burton said that the evidence Agripower wished to adduce was intended to show that mining leases were in force over the Property (although not necessarily over Lot 1) and that the leases imposed removal and rehabilitation conditions on the lessees. The conditions, so Mr Burton submitted, added weight to Agripower's argument that the lessee bringing the plant and equipment onto Lot 1 intended that they should remain chattels.
8. The application to adduce further evidence encountered two major difficulties. The first was that all the documents Agripower sought to tender were in Mr Prentice's possession prior to the trial. Mr Prentice acknowledged that he had received boxes of documents from ADEE's receivers in 2008 and that he had placed them in storage on his farm. The documents Agripower sought to tender were stored in those boxes.
9. Mr Prentice explained that he did not locate the documents prior to the trial, despite making various inquiries, because he simply did not recall that he had stored the documents himself. He said that reading the primary judgment prompted him to make further inquiries and to remember the existence of the stored boxes. This explanation falls far short of establishing that the further evidence could not have been obtained by Agripower exercising reasonable diligence. Forgetting that documents have been placed in storage is no doubt a commonplace occurrence. But a party to civil proceedings, or someone acting on behalf of that party, can be expected to recall in a timely manner that he or she has possession and control of documents that are relevant to the proceedings and helpful to that party's case.
10. The second major difficulty is that Mr Burton did not demonstrate that it was highly probable that the further evidence, if admitted would lead to a different verdict. Mr Burton accepted that, at best, the evidence would lend weight to the arguments advanced by Agripower at the trial. Even this was an optimistic assessment on the evidence because the evidence did not establish that the mining leases extended to Lot 1. Furthermore, some of the documentation which Agripower sought to adduce, particularly that showing the expected life of the mining and processing operations (which was apparently indefinite, being dependent on the life of the resource being mined), might actually be thought to strengthen the respondents' case, rather than Agripower's.
11. No other circumstances were identified that would justify the further evidence being received in the exercise of the Court's discretion under s 75A(7) of the SC Act. Accordingly, the Court dismissed the motion.

Principles

1. The law relating to fixtures is of ancient origin. The law reflects the maxim quicquid plantatur solo solo cedit (whatever is affixed to the ground belongs to the ground). The maxim is based, albeit somewhat loosely, on the Roman law of accessio: Wake v Hall (1883) 8 App Cas 195 at 203-204 (Lord Blackburn); at 206-207 (Lord Watson); at 210 (Lord Fitzgerald); NH Dunn Pty Ltd v LM Ericsson Pty Ltd (1979) 2 BPR 9241 at 9243 (Mahoney JA); R D Niles, "The Rationale of the Law of Fixtures: English Cases" (1933-1934) 11 NYULQR 560 at 560-564. The maxim, as modified by common law principles, has provided a doctrinal basis for determining whether the title to or an interest in chattels has been lost or altered by virtue of their physical annexation to land.
2. The law of fixtures is in some ways a relic of a period when greater emphasis was placed on physical acts, such as the annexation of chattels to land, than on whether there were good commercial or policy reasons for concluding that those acts should produce changes in title. As Lord Macnaghten observed as long ago as 1902, the relative importance originally attributed to the mode of annexation was a product of "ruder or simpler times": Leigh v Taylor [1902] AC 157 at 162. Moreover, those "ruder or simpler times" generated disputes of a kind that no longer arise, or at least now arise rarely. For example, in the leading case of Elwes v Maw (1802) 3 East 38; 102 ER 510, Lord Ellenborough CJ observed (at 50; 515) that questions respecting the rights to fixtures principally arose between three classes of persons. The first class comprised the heirs and the executors of a deceased person, while the second class comprised life tenants and remaindermen. (The third class comprised landlords and tenants).
3. In the face of changing circumstances, the law of fixtures has not stood still. It has been "adapted in order to suit the exigencies of modern life": M Haley, "The Law of Fixtures: An Unprincipled Metamorphosis?" [1998] 62 Conv 137 at 137. One form of adaptation has been the recognition of exceptions to the general principles which, on one view, have undermined the doctrine itself: L Griggs, "The Doctrine of Fixtures: Questionable Origin, Debatable History and a Future that is Past!" (2001) 9 Aust Prop LJ 1 at 3. Another form of adaptation has been to modify the emphasis on the degree of annexation of chattels to the land in favour of the more amorphous concept of the purpose or object of annexation. In Palumberi v Palumberi (1986) 4 BPR 9106, Kearney J, after considering the authorities, said (at 9110) that: "… there has been a perceptible decline in the comparative importance of the degree or mode of annexation, with a tendency to greater emphasis being placed upon the purpose or object of annexation, or, putting it another way, the intention with which the item is placed upon land. This shift has involved a greater reliance upon the individual surrounding circumstances of the case in question as distinct from any attempt to seek to apply some simple rule or some automatic solution." This observation reflects a recognition that the "statements of principle found in the many decided cases are not easily susceptible of reconciliation": Dunn v Ericsson at 9246 (Glass JA).
4. Whether or not the adaptation of the law of fixtures adequately meets modern conditions, the doctrine remains firmly embedded in Australian law. In TEC Desert Pty Ltd v Commissioner of State Revenue (Western Australia) [2010] HCA 49; 241 CLR 576 a unanimous High Court quoted with approval (at [24]) the statement by Conti J in National Australia Bank Ltd v Blacker [2000] FCA 1458; 104 FCR 288 at [10]: "There is a variety of general principles which should be considered in assessing whether an item of personal property has become attached to land in a manner designed to achieve a specific objective or a variety of objectives, such as to become a part of the realty and therefore, a fixture. Whether an item has become a fixture depends essentially upon the objective intention with which the item was put in place. The two considerations which are commonly regarded as relevant to determining the intention with which an item has been fixed to the land are first, the degree of annexation, and secondly, the object of annexation".
5. In NAB v Blacker, Conti J went on to quote (at [11]) a frequently cited passage from the judgment of Sir Frederick Jordan in Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 at 712: "The test of whether a chattel which has been to some extent fixed to land is a fixture is whether it has been fixed with the intention that it shall remain in position permanently or for an indefinite or substantial period, or whether it has been fixed with the intent that it shall remain in position only for some temporary purpose. In the former case, it is a fixture, whether it has been fixed for the better enjoyment of the land or building, or fixed merely to steady the thing itself, for the better use or enjoyment of the thing fixed. If it is proved to have been fixed merely for a temporary purpose it is not a fixture. The intention of the person fixing it must be gathered from the purpose for which and the time during which the user in the fixed position is contemplated. If a thing has been securely fixed, and in particular if it has been so fixed that it cannot be detached without substantial injury to the thing itself or to that to which it is attached, this supplies strong but not necessarily conclusive evidence that a permanent fixing was intended. On the other hand, the fact that the fixing is very slight helps to support an inference that it was not intended to be permanent. But each case depends on its own facts."
6. Conti J identified (at [13]) the factors that the courts generally ought to take into account in determining the purpose or object of annexation: "● Whether the attachment was for the better enjoyment of the property generally or for the better enjoyment of the land and/or buildings to which it was attached … ● The nature of the property the subject of affixation … ● Whether the item was to be in position either permanently or temporarily: Australian Provincial Assurance Co Ltd v Coroneo at 712-713. ● The function to be served by the annexation of the item: see, for example, Attorney-General (Cth) v RT Co Pty Ltd (No 2) (1957) 97 CLR 146 at 156-157 where printing presses were secured to a concrete foundation by nuts and bolts in order to keep the printing presses steady when in operation." (Some citations omitted.)
7. In determining the degree of annexation, Conti J identified (at [14]) the following factors that may be considered: "● Whether removal would cause damage to the land or buildings to which the item is attached. ● The mode and structure of annexation. ● Whether removal would destroy or damage the attached item of property. ● Whether the cost of renewal would exceed the value of the attached property." (Citations omitted.)
8. The factors identified by Conti J are useful guides, but, as his Honour indicated, they are neither exhaustive nor definitive. In Dunn v Ericsson, for example, Mahoney JA (at 9243-9244) said that he had difficulty in accepting that the question of whether an object had become a fixture could be tested simply by reference to whether the annexation to the realty is intended to be temporary or permanent. His Honour doubted whether such a principle is consistent with the reasoning in cases like Attorney-General v RT. Ultimately, as the authorities indicate, each case has to depend on its own circumstances: Leigh v Taylor at 162 (Lord Macnaghten); Palumberi at 9110.

A Threshold Issue

1. Agripower's "threshold" submission is that a holding that the Disputed Items are fixtures would produce anomalous results. One difficulty with this submission is that it is at odds with the primary Judge's findings. Agripower submitted that there was evidence that each tenant sold plant and equipment to the succeeding tenant, demonstrating that they did not regard the Disputed Items as fixtures. The primary Judge found (at [85]) that although Mr Blomfield referred in his affidavit to sales of plant and equipment from tenant to tenant, the basis for his understanding was not established in the evidence. Similarly, the primary Judge also found that little weight could be attached to the receivers advertising the Disputed Items for sale, as the Sales Agreement contained clear disclaimers as to title.
2. A second and more fundamental difficulty is that the contention overlooks the longstanding common law exception to the general rule that tenants may remove fixtures they have brought onto the land, provided the fixtures were installed for trade, domestic or ornamental purposes: P Butt, Land Law (6th ed 2010, Lawbook Co) at [15.248]. Mr Burton did not contest that the Disputed Items, if they were fixtures, were also tenant's fixtures. He also accepted that tenant's fixtures could have been removed by ADEE (or its receivers) during the currency of the ADEE Lease or within a reasonable time after its termination (otherwise than by forfeiture or surrender): see TEC Desert v Commissioner of State Revenue at [26] (per curiam); cf D'Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317 at 321-322 (Young J). However, Mr Burton accepted that ADEE (and its receivers) had lost any right of removal by the time Agripower commenced the proceedings against the respondents.
3. If each outgoing tenant of Lot 1 assigned its interest in the Disputed Items to its successor in a manner that bound the respondents as the lessors, then each incoming tenant would have had the right to remove the Disputed Items even if they were fixtures: P Butt supra at [15.248.1]. It follows that if ADEE had the right to remove the Disputed Items as tenant's fixtures, St George (contrary to Agripower's submissions) would not have taken a "worthless security" over those Items. I therefore do not accept Agripower's threshold submission that to dismiss the appeal would produce an anomalous result or (to repeat Agripower's hyperbole) turn the sales from tenant to tenant into something "like a Ponzi scheme".

The Mining Leases and the Leases of Lot 1

1. Agripower's reliance on what were said to be the terms of the mining leases over the Property was misplaced. Mr Burton accepted that since the mining leases were not in evidence, there was nothing to suggest that they extended to Lot 1. Nor was there evidence as to the terms of the mining leases, other than inferences that may be available from the length of time mining operations were conducted on the Property. In these circumstances, there is no evidentiary foundation for a finding that any of the mining lessees had a statutory right, such as that conferred by s 172 of the Mining Act 1973 (NSW), to remove mining plant located on Lot 1 (as distinct from mining plant on the land subject to the mining leases).
2. The ADEE Lease was in evidence, but none of the earlier leases of Lot 1 were. It appears that the primary Judge was not asked to infer that the earlier leases contained the same terms and conditions as the ADEE Lease, such as cl 18 (at [14] above). Mr Burton's invitation to this Court to draw that inference should not be accepted. In the absence of evidence, it is a matter of speculation as to whether the earlier leases included an equivalent to cl 18 of the ADEE Lease.
3. These conclusions are important because they show that two decisions on which Mr Burton relied are clearly distinguishable from the present case. In Pegasus Gold Australia Ltd v Metso Minerals (Australia) Ltd [2003] NTCA 3; 16 NTLR 54, the Northern Territory Court of Appeal held that heavy mining equipment bolted to concrete slabs embedded in the soil on a mining tenement were not fixtures within the meaning of the Workmen's Liens Act (NT). Thus the manufacturer of spare parts for the mining equipment was not entitled to a statutory lien over the interest of the mining lessee in the equipment. Mildren J (Martin CJ and Thomas J agreeing) regarded it as significant (at [21], [26]) that both the mining lease and the legislation required the lessee to remove all the equipment at the end of the lease.
4. In Agripower Australia Ltd v J & D Rigging Pty Ltd [2013] QSC 164, the issue was whether a contract for the dismantling and removal of certain plant and equipment on a mining lease was a contract for "construction work" within the meaning of the Building and Construction Industry Payments Act 2004 (Qld). The answer depended on whether the mining plant consisted of structures "forming part of the land". Wilson J held that the plant did not form part of the land, largely because (at [66]) under the relevant legislation the mining leases did not give rise to any estate or interest in the land and the leaseholder was required by statute to remove the mining plant from the land before the lease expired.

Application of Principles

1. Whether a chattel has become a fixture and therefore has become a part of the realty is a question of fact: Dunn v Ericsson at 9242 (Mahoney JA); at 9246 (Moffitt P); at 9246 (Glass JA). The orthodox view is that an appeal from a finding that objects are or are not fixtures attracts the principles of appellate review stated in Warren v Coombes [1979] HCA 9; 142 CLR 531 at 551-552 (Gibbs ACJ, Jacobs and Murphy JJ): Dunn v Ericsson at 9246 (Moffitt P). On this view, the appellate court is in as good a position as the trial judge to decide on the proper inferences from established facts, although the appellate court gives respect and weight to the opinion of the trial judge.
2. There was no debate on the appeal as to whether the findings of the primary Judge in the present case involved "elements of fact, degree, opinion or judgment" that might suggest caution before an appellate court is satisfied that error has been demonstrated: cf Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; 117 FCR 424 at [24] (Allsop J). Having regard to the way in which the modern law of fixtures is developed, there is much to be said for an affirmative answer to this question. This case is a good example of a trial judge enjoying advantages because of the detailed documentary and oral evidence about the nature and practical workings of the plant and machinery that were the subject of Agripower's claim. But I do not think it is necessary to explore further the precise scope of appellate review, as the outcome of the appeal is the same whatever view is taken.

The Disputed Items Outside the Shed

1. It is convenient to commence with the eight Disputed Items outside the shed. Mr Burton does not contend that the primary Judge misstated the governing principles or that his Honour overlooked any relevant matters in finding that each of these Disputed Items was a fixture. Nor does Mr Burton contest the finding (at [59]) that each of the eight Disputed Items was fixed to the land with "a relatively high degree of annexation", and thus prima facie constituted a fixture. In substance, Mr Burton's contention is that the primary Judge gave insufficient weight to certain matters, notably that at least some of the Disputed Items were affixed in order to provide stability to the machinery and that some of the plant or machinery could be replaced if necessary.
2. Apart from the degree of annexation, the most important consideration his Honour took into account in determining the purpose of the annexation was that each of the eight Disputed Items constituted an integrated component of a substantial diatomite processing and bagging facility, although he recognised that Item 6 (the vibrating screen) had not been used for some time. I think his Honour was correct to do so. Mr Prentice gave evidence that, in his opinion, some of the items, such as the secondary roll crusher, were affixed in order to stabilise them. However, the evidence, particularly that of Mr Atkinson, justified the primary Judge in concluding that the complex system of bolting and welding the plant and machinery to steel and concrete bases and metal frames was not merely for the purpose of stabilisation of individual items, but to enable the integrated processing operation to be conducted effectively on the land. This is not a case like Attorney-General v RT, where the two disused printing presses in issue were each essentially self-contained units that had to be held steady by being bolted to a concrete base in order to operate.
3. The primary Judge identified other matters that he took into account. These included the expense and difficulty of removing the eight Disputed Items and the inevitable damage that would be caused to the land in the course of removing them (a consequence acknowledged by Mr Prentice in his evidence). The evidence did not precisely apportion the expense and difficulty of removal between the eight Disputed Items located outside the shed and the remaining Disputed Items, but his Honour correctly inferred (at [76]) that the cost of removal, in proportion to the value of the plant and machinery, would be higher for the Disputed Items outside the shed than for the seven Disputed Items within the shed. These considerations also support his Honour's finding that the eight Disputed Items were fixtures.
4. The primary Judge proceeded on the basis that most of the Disputed Items were originally installed at about the time mining and processing operations commenced in 1984. It is likely that some elements of the machinery were replaced from time to time. For example, the description of Item 4 (the fluid bed dryer) suggests that one component was manufactured in 2000 and there was evidence that the rollers contained within the roller unit, which were readily removable, had been replaced. But the replacement of subsidiary parts in the ordinary operation of machinery does not ordinarily alter the characterisation of the object of annexing the plant to land.
5. The limited evidence suggests that the original lease of Lot 1 to West Australian Sands was probably for a term of about eight years. Two subsequent leases, each for a term of ten years, were granted before the ADEE Lease was entered into in 2006. Since the processing operations continued on Lot 1 for about 30 years, it can be inferred that the object of installing the plant and equipment at the outset was to establish a processing system that would operate for an indefinite period. At the time the plant and equipment were originally installed, the duration of operations would presumably have been thought to depend on the continuity of supply of diatomaceous earth, but there is nothing in the evidence to suggest that an expectation other than that the supply would continue for many years.
6. As his Honour explained (at [86]), there was no evidence of subjective intention that would counter the inferences as to the objective intention of annexation available from the matters his Honour took into account. In addition, for the reasons I have given, no weight can be accorded to the terms of the mining leases or of the ADEE Lease in determining the objective intention of annexing the eight Disputed Items to the land.
7. For these reasons, in my opinion, there was no error in his Honour's finding that the Disputed Items located outside the shed were fixtures.

The Remaining Seven Disputed Items

1. Although most of the seven Disputed Items located within the shed appear to have been installed at about the time the processing plant was established, their position is significantly different from that of the other eight Disputed Items. The principal differences are as follows:

• the primary Judge found (at [67]) that none of the seven Disputed Items within the shed, considered on their own, would be a fixture;
• a number of the Disputed Items, including Items 10, 11, 12 and 14, simply rested on their own weight, subject to some bolting or attachment to power services;
• all but one of the seven Disputed Items (Item 15, the air compressor) could be removed relatively easily, with little damage to the existing structure, although in several cases some oxy-acetylene cutting would be required;
• the cost of removing the seven Disputed Items relative to their value was less (and, so it can be inferred, considerably less) than the cost of removing the first Disputed Items outside the shed; and
• Item 15 had been purchased and installed by ADEE, the last of the lessees of Lot 1.

1. These differences are enough, in my opinion, even allowing for advantages enjoyed by the primary Judge, to justify concluding that the seven Disputed Items inside the shed should not be classified as fixtures. Had there been a greater degree of integration between the first eight Disputed Items and the remaining seven, the respondents' submissions that all the Disputed Items should be characterised in the same way would have had more force. It is true that the primary Judge found (at [68]) that although each of these Disputed Items could be removed individually and replaced, the extent of their integration with each other and in the functioning of the processing and bagging facility was consistent with affixation for the better use of the land. However, his Honour also found (at [67]) that even if these Disputed Items were removed, the operational ability of the plant could be restored and was not dependent on specific Disputed Items. Furthermore, although the Disputed Items within the shed were connected to the plant and equipment outside the shed, the two sections were essentially separate. In substance, the seven Disputed Items were located within the shed, and were physically separated from the plant outside the shed. The machinery within the shed was used for the last stage of the bagging process, namely the packaging of diatomite to meet customer requirements. Except for the air compressor, the machinery could be easily dismantled and removed at relatively little cost and, in any event, without seriously damaging the shed within which it was housed.
2. Item 15 (the air compressor) was installed by ADEE towards the end of the life of the mining operations on the Property and of the processing operations on Lot 1. The ADEE Lease was for a term of six years, a shorter period than the two leases that preceded it, suggesting that ADEE's tenure was not intended to be long term. Clause 18.2 of the ADEE Lease is not entirely clear in its application to the air compressor, but it suggests that the common intention of ADEE and the respondents was that the unit either should or could be removed by ADEE at the end of the Lease. This puts the air compressor into a different category from the eight Disputed Items outside the shed, which were installed by ADEE's predecessors whose leases were not in evidence. (There was some doubt about Item 1, but no finding was made that it had been installed by ADEE.) Even if Items 9 - 14 (the remaining Disputed Items within the shed) were found to be fixtures, it would be very difficult to conclude that the air compressor should also be characterised as a fixture.
3. Once it is accepted that the air compressor was not a fixture, the respondents' argument that all the Disputed Items should be treated in the same way loses much of its force. In my view, the factors I have identified justify concluding that the seven Disputed Items inside the shed should not be regarded as fixtures, notwithstanding that I have upheld the primary Judge's finding that the eight Disputed Items located outside the shed are fixtures.
4. This conclusion is not inconsistent with the decision of the High Court in Commissioner of Stamps (WA) v L Whiteman Ltd [1940] HCA 30; 64 CLR 407, on which Mr Parker relied. In that case, brickmaking machinery was bolted to concrete bases and used to manufacture bricks from clay found on the land. The High Court found (at 411) that the machinery was "essentially being used for the better enjoyment of the land". This finding rested on the fact that all machinery was bolted to the concrete bases and, although it was capable of being moved, would require the destruction of the sheds in which the machinery was housed. The decision provides some support for Agripower in relation to the eight Disputed Items (bearing in mind that each case depends on its own circumstances), but the facts of the case are different from the present insofar as it concerns the Disputed Items within the shed.
5. In my opinion, Agripower's appeal should succeed in relation to the seven Disputed Items.

Title to the Disputed Items as Chattels

1. It is not surprising that the respondents did not submit on the appeal that St George had not transferred a good title in the seven Disputed Items that I have found not to be fixtures. Before the primary Judge, they conceded that the charges executed by ADEE in favour of St George entitled St George, in the event of default, to assign to Agripower any title ADEE had in the assets. There was and is no dispute that ADEE was in default. Thus the St George Assignment Deed was effective to assign to Agripower ADEE's title to the seven Disputed Items.
2. The respondents' notice of contention challenges the primary Judge's finding (at [19]), relevantly, that ADEE was the owner of the seven Disputed Items. There can be no doubt that ADEE was the owner of Item 15, since it installed the air compressor in the shed. It can be inferred from ADEE taking possession of Lot 1 under the ADEE Lease and utilising the seven Disputed Items for the processing of diatomite without hindrance from any third party, is that it acquired ownership of these Items from one or more of the previous lessees of Lot 1. Mr Blomfield's evidence to this effect was not conclusive, but it was consistent with ADEE having acquired title. The primary Judge was correct so to find.
3. I should add that at the very least ADEE had a possessory title to the seven Disputed Items which St George could assign to Agripower. Agripower's title would therefore prevail against anyone other than the true owner. Since the respondents are not the true owners of the seven Disputed Items, Agripower's possessory title prevails against them.
4. Agripower has established that it has title to the seven Disputed Items.

Conclusion

1. Agripower's appeal should be allowed in part. A declaration should be made that Agripower is the owner of the seven Disputed Items located in the shed and is entitled to immediate possession thereof.
2. Agripower seeks an order requiring the respondents to grant access to such parts of the Property as will permit Agripower to remove the Disputed Items to which it has title. It also seeks damages from the respondents for "loss of use" of the Disputed Items. The matter should be remitted to the primary Judge to enable the outstanding issues to be resolved. Of course the parties may reach agreement on these issues and, if so, they are at liberty to file short minutes of order resolving them.
3. My view at present is that there should be no order for the costs of the appeal as each party has enjoyed some success. However, the parties will have the opportunity to make written submissions on costs within seven days if they wish to do so. In the absence of agreement between the parties, the costs of the trial should be for the primary Judge to determine.
4. I propose the following orders:
5. Appeal allowed in part.
6. Set aside the orders made by Black J on 13 November 2013.
7. In lieu thereof, make the following order: Declare that the appellant is the owner of the Items in the schedule to these orders.
8. Remit the proceedings to the primary Judge to determine outstanding issues, including the appropriate order for access to the respondents' property, damages and the costs of the trial.
9. Subject to Order 6, there be no order as to the costs of the appeal.
10. A party wishing to apply for a different order as to the costs of the appeal have liberty to file written submissions within seven days, the opposing party having a further seven days to respond in writing.
11. The parties have liberty to file agreed short minutes of order within fourteen days if they are able to reach agreement on outstanding issues.

SCHEDULE

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DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 March 2015