Right to use land
54 The dutiable instrument was the "Rail Access Agreement", originally executed on 1 July 1996 by the Respondent (then known as National Rail Corporation Ltd) and a predecessor of RIC, namely Rail Access Corporation (referred to in the agreement as "Rail Access"). The agreement was renewed on 1 July 1997, with amendments and it was the renewed agreement which was apparently in operation throughout the relevant period. The key operative clause in the agreement was clause 2.4 which provided as follows:
" 2.4 Grant of Access Rights
(a) Rail Access grants to National Rail the Access Rights on the terms of this Agreement.
(b) The Access Rights granted under clause 2.4(a):
(i) are non-exclusive contractual rights;
(ii) are for the rights set out in the Train Specification ( Schedule D ), as determined under clause 3.2(f) or agreed under clause 3.3; and
(iii) are for Train movements under clause 2.4(b)(ii) where those Train movements are running early or late relative to the Train Path.
(c) Rail Access will provide the Ancillary Services set out in Schedule L upon payment by National Rail to Rail Access of the relevant charges."
55 Nothing turned on the right to ancillary services, which may be disregarded. The term "Train Specification" referred to certain technical specifications of trains and their operation, and also to "the timetable maintained by or for Rail Access of all scheduled Train Paths of the Operator on the NSW Rail Network": see Dictionary of Terms and Interpretation, being Schedule 1 to the access agreement, at p 11. The term "Train Path" was defined to mean "the series of track segments over a particular time interval through which a train can travel and may include stopping points and intervals and fuelling stations and other set down or changeover points". The term "track" was also defined:
"' Track ' means the rails, ballast sleepers and all items used to fix the rails to the sleepers and to the ground underneath."
56 The Respondent was at pains to emphasise that RIC did not "own" the "ground underneath". Rather, that which was vested in it was that identified as "rail infrastructure facilities" which were affixed to the "ground". Thus, Schedule 6A, clause 2 of the Transport Administration Act relevantly provided at all material times (although the numbering of the sub-clauses varied):
"(2) RIC is the owner of all rail infrastructure facilities installed in or on land, in or on rivers and other waterways and in or on the beds of rivers and waterways by RIC and of all infrastructure facilities vested in or transferred to RIC (whether or not the place on which the facilities are situated is owned by RIC)."
57 The term "rail infrastructure facilities" was defined (either in s 19A or, later, in s 3 of the Transport Administration Act):
"(a) includes railway track, associated track structures, over track structures, cuttings, drainage works, track support earthworks and fences, tunnels, bridges, level crossings, service roads, signalling systems, train control systems, communication systems, overhead power supply systems, power and communication cables, and associated works, buildings, plant, machinery and equipment, but
(b) does not include any stations, platforms, rolling stock, rolling stock maintenance facilities, office buildings or housing, freight centres or depots, private sidings or spur lines connected to premises not vested in or owned by or managed or controlled by [RIC]."
58 It may be appreciated that most, if not all, of the matters described as railway infrastructure facilities, would normally constitute fixtures and would therefore fall within both the general law and statutory definitions of "land": see, eg, Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700, 712-713 (Jordan CJ, Davidson and Nicholas JJ agreeing), and the Law of Property Act 1925 (UK), s 205. Thus, in the agreement, there is express recognition that the "track" is fixed to the ground underneath and that all "items" used to affix the rails in that manner were part of the "track". To similar effect, the definition in Schedule 6A, clause 2 expressly recognises that infrastructure facilities are installed both "in" and "on" land. These features give rise to two questions, namely:
(a) do they confer on RIC some legal interest in the land to which the facilities are affixed, and
(b) even if the answer to (a) is no, are rail infrastructure facilities nevertheless, in part or in whole, "land" owned by RIC?
59 Answers to those questions were sought to be derived from two judgments of the High Court relating to gas mains and pipes, namely North Shore Gas Co Ltd v Commissioner of Stamp Duties (NSW) (1940) 63 CLR 52 and Commissioner of Main Roads v North Shore Gas Co Ltd (1967) 120 CLR 118. In the earlier case, the question was whether gas mains and pipes installed under roads, which were sold as part of the undertaking of a gas company, constituted chattels, so that to the extent they were separately valued as part of the agreement, that part was not subject to duty. The Court unanimously held they were not chattels. As explained by Dixon J at p 67:
"Ordinarily when the chattel elements by which a permanent system or apparatus is formed are assembled and embedded in the soil or established as part of a building they lose their independent nature and for the purpose of the law take on the character of land. Thus, if the land in which the mains were laid had belonged to the company for an estate in fee simple or for any less estate or interest and the company had not acted under its special statutory powers, the mains until removed would have formed part of the realty."
60 However, as his Honour further noted, the pipes and mains were not placed in land owned by the gas company, but in land owned by a third party, namely the road authority; nevertheless, property in the pipes and mains remained in the gas company as did the right to remove them from the land. Dixon J continued at pp 69-70:
"There is therefore no doubt about the purpose, the degree nor the enduring nature of fixation of the pipes or their identification with the soil. So much of the earth as the pipes displaced formed a space in the occupation of the company and that space constitutes land. The company's occupation of the space is as of right and is exclusive."
61 The Court held that the pipes and mains, whilst in situ, were not chattels or tangible moveables and were therefore not exempt from duty. The fact that, by statute, they remained the property of the company, so that ownership did not vest in the owner of the soil, did not mean that they retained their character as chattels. As Rich J explained at p 62:
"The statute prevents many of the consequences which would ensue from such a transition from the category of chattels personal to that of land, but it stops short of preventing the transition itself."
62 The later North Shore Gas case involved the acquisition of land, including land in which lay pipes owned by the gas company, for the Warringah Expressway; the issue was whether there had been an acquisition of an interest in land held by the gas company. The Court held that there had not and treated remarks in the judgments of Rich and Dixon JJ in the earlier case as both obiter and incorrect. The joint judgment (of Barwick CJ, McTiernan, Kitto and Taylor JJ), in casting doubt on the proposition that the gas company obtained some legal interest in the land in which the pipes lay, asked "why should it be assumed that the exercise of a specific statutory right to lay and maintain pipes, as in the present case, operates to vest in the donee of the power an interest in the land in which the pipes have been laid?" The judgment continued (p 127):
"The conclusion that it does seems to us to result from a lawyer's inherent tendency to assimilate such a right to some category known to the common law. It is, of course, a very special right."
63 Their Honours (at pp 127-128) preferred and adopted the reasoning of Evershed J in Newcastle-under-Lyme Corporation v Wolstanton Ltd [1947] Ch 92 where, in relation to a similar statutory right to lay pipes or cables, his Lordship reached the following conclusion (at p 104):
"It follows that, if I am right so far, the interest of the undertakers must be that of licensees without any title, legal or equitable, in the land itself."