L Hannon of counsel, instructed by Maddocks Lawyers

1. This proceeding is about the value of a small parcel of land containing a kiosk substation that facilitates the distribution of electricity.
2. AusNet Electricity Services Pty Ltd (AusNet) is one of five electricity distribution companies operating in Victoria for the purposes of the Electricity Industry Act 2000 and the National Electricity (Victoria) Act 2005. A distribution company, as the name implies, distributes electricity within its supply area. It does not generate electricity, nor is it responsible for bulk transmission from the point of generation.
3. As part of the electricity distribution network within its licensed supply area, AusNet maintains equipment that converts high/medium voltage electricity supplied through the distribution network (at approximately 22,000 volts) into low voltage electricity (at approximately 440 volts) that is safe for use by local consumers. There are many thousands of pieces of such component equipment across the distribution network, and the equipment takes various forms - sometimes pole mounted, and sometimes placed on the ground or in a building.
4. The equipment relevant to this proceeding is known as a kiosk substation. The kiosk substation at 12E Cullen Street, Epping is a ground-mounted substation that comprises three main pieces of equipment - the incoming medium voltage switchgear, the transformer, and the outgoing low voltage switchgear. The equipment sits on a concrete slab on the ground, with a locked metal casing. We will describe the equipment in more detail later. We understand that there are approximately 2,800 comparable ground-mounted kiosk substations operated by AusNet in Victoria.
5. The kiosk substation relevant to this case sits within a small 34-m² parcel of land (adjacent to a public recreation reserve) that vested in AusNet at the time the surrounding land was subdivided as a residential estate.
6. Whittlesea City Council (the Council) is the relevant valuation authority under the Valuation of Land Act 1960. Its initial assessment for the relevant valuation date of 1 January 2012 comprised a site value of $15,000, a capital improved value of $45,000 and a net annual value of $4,250.
7. AusNet contests all aspects of this valuation assessment, hence the review proceeding at VCAT. Some matters have now been agreed, and there are two main issues for resolution by VCAT:
   • what is the site value of the land, based on its highest and best use as an electricity substation?
   • does the whole of the kiosk substation form part of the capital improved value of the land? In determining this, is the substation a fixture or a chattel? (The answer to these questions will essentially determine the capital improved value and net annual value.)
8. We will address these questions in turn.
9. One of the matters now agreed between the parties and their expert valuers is that the land should be valued on the basis that its highest and best use is as an 'electricity substation'. As will become apparent in these reasons, we consider that this factor, albeit untested, is highly relevant to the outcome in this proceeding in relation to both the site value and capital improved value of the land. We have accepted this agreed approach as the basis for our determination, albeit with some misgivings that we deal with in our concluding remarks.

1. The site value is to be determined by reference to relevant matters under the Valuation of Land Act 1960, including (but not limited to) the definition of 'site value' in s 2(1) and the relevant factors set out in s 5A.
2. We note that, in ascertaining the 'site value', the definition in the Valuation of Land Act 1960 requires an assumption that any improvements to the land have not been made. For this purpose 'improvements' is also defined in s 2(1), and s 2(2) is relevant in estimating the value of improvements. The issue of whether the kiosk substation equipment is a fixture or a chattel, and/or whether it improves the land, is a hotly contested issue in ascertaining the capital improved value of the land. That issue is addressed separately, later in these reasons. For present purposes, even if the equipment is an improvement (as the Council contends), for the purpose of site value it is assumed not to have been made, and any work or materials or value in the equipment is therefore to be disregarded in the assessment of site value. Neither party contended otherwise.
3. As we have indicated, the kiosk substation relevant to this case sits within a small 34 m² parcel of land vested in AusNet. For the purposes of 'site value', none of the location, physical characteristics, title description, land area, or town planning attributes of the land is in dispute. However, the Council's initial assessment of a $15,000 site value was arbitrary in that we were told it had valued all 392 substation sites owned by AusNet in the municipality the same, regardless of the size or physical context of the particular land parcel.
4. The Council now concedes this, and contends for a site value of $4,600 for the land at 12E Cullen Street as at 1 January 2012 based on a valuation by Christopher Torr. AusNet however contends for a site value of $0 (i.e. a 'nil' value), based on a valuation by Brian Dudakov. Both are experienced valuers and the difference largely reflects a difference in instructions that has led to a disagreement on valuation methodology and principle.
5. A joint statement of the experts nonetheless indicates that:

Both valuers agree that the subject land's highest and best use is as an electricity substation and that it should be valued as part of a larger undertaking (viz s 13DC(9)).

With respect to site value ... Mr Torr agrees with the 'undertaking' approach, but only insofar as it extends to viewing the land as part of an electricity supply network and capable of development to its highest and best use as a substation site.

1. We note first that the valuers, and indeed the parties, are agreed that this land should be valued on the basis of an agreed 'highest and best use' as an electricity substation.
2. Secondly, despite the indirect reference by the valuers, in their joint statement, to s 13DC(9) of the Valuation of Land Act 1960, the Council contends (independently of Mr Torr) that this subsection does not apply to this valuation. The provision therefore warrants comment. Section 13DC(9) provides as follows:

(9) If land comprising one undertaking extends continuously beyond the boundaries of any municipal district the value, for the purposes of any rate, of so much of the land as is within any one municipal district, must be assessed as part of the value of the whole of the land.

1. Section 13DC(9) has been used in some cases, for example, to assist with the split valuation of a large farm that sits across a municipal boundary. It has also been used to value land occupied by linear infrastructure such as a railway line or pipeline that also extends continuously across one or more municipal boundaries[1].
2. In its written submission, AusNet argued that there was a clear 'undertaking' for the purpose of s 13DC(9) through the electricity network controlled by it in the eastern part of Victoria. The submission did not however refer to the words that the land in one undertaking 'extends continuously' that form a key operative part of the provision. When questioned at the hearing, AusNet contended that the electricity infrastructure 'extends continuously' by reason of the overhead or underground cabling that connects substations and other equipment along the network, and that the linear infrastructure analogy therefore applied.
3. We are not necessarily convinced that the railway line or pipeline analogy applies to electricity infrastructure as, in those cases, the provision is usually used to value the continuous land occupied by the rail lines and pipes themselves (analogous to the cables, here) rather than just the intermittent infrastructure they connect. However, under s 94(2) of the Electricity Industry Act 2000, land is not occupied for the purposes of the Local Government Act 1989 (and therefore for valuation and rating purposes) merely because a pole, wire or cable of a distribution company runs on, under or over that land. The 'continuous extent' of the occupation of land by an electricity distributor across municipalities is therefore debateable and, in any event, much more difficult to assess than a more discrete asset such as a railway line or pipeline. The land here is a separate parcel of land on a plan of subdivision, with unique title details and no other occupancy. Although part of a broader undertaking as part of the electricity distribution network, the land comprised in the undertaking does not extend continuously by reference to either ownership or occupation of the land.
4. We therefore have some sympathy for the Council position that s 13DC(9) does not apply here. However, we do not feel it necessary to finally decide this. Section 13DC(9) of the Valuation of Land Act 1960 is a subsection that indicates when a valuation must be undertaken on an 'undertaking' basis. It does not prevent an 'undertaking' valuation approach being used in other situations when it is appropriate to do so, as opposed to some other form of valuation methodology.
5. In saying this, it would only be appropriate to use an undertaking approach if that approach is consistent with other provisions of the Valuation of Land Act 1960. This might include an investigation, for example, of whether s 13DC(7A) applied so as to require a separate valuation of a separate occupancy. We have not undertaken that investigation here as that issue was not canvassed before us.
6. For better or worse, the valuers have agreed to use an undertaking approach in this case, and Mr Torr still agreed this approach under cross-examination. The additional problem for the Council is that, if the Council undermines the approach its own expert valuer has purported to use and/or agreed to use, it arguably has no alternative evidence to support its contended valuation.
7. This problem is exacerbated by the fact that, although the Council's valuer Mr Torr has purported to agree with valuing the substation kiosk as part of a larger undertaking, he does not appear to have actually done this. Nowhere in his separate valuation report or the joint statement is there an attempt by Mr Torr to value the broader distribution network undertaking, or all of the land used for similar substation infrastructure within that network, and to apportion a value to this kiosk substation land in this municipality as part of that larger undertaking. Indeed, it seems from Mr Torr's qualification to the undertaking approach in the joint statement of experts, set out above, that he has limited his acceptance of the 'undertaking' approach to an acknowledgement that the land forms part of an electricity supply network, to the extent that this informs the highest and best use as a substation site. Implicitly, he appears to take the view that the land still has a stand-alone value despite being part of an undertaking.
8. Despite his qualified acceptance of an 'undertaking' approach, Mr Torr has instead adopted a traditional 'comparative sales' approach. Whilst this perhaps accords with the Council's contention that an 'undertaking' approach (whether under s 13DC(9) or not) is inappropriate, we consider that the comparative sales approach of Mr Torr is also flawed in this case.
9. We will comment further on this, later. Before doing so, it is useful to refer to AusNet's valuation approach, which is on a very different basis.
10. Insofar as it purports to apply an 'undertaking' approach, AusNet looks at all of the infrastructure and property assets of AusNet in the context of the regulatory framework - specifically, the Electricity Industry Act 2000, the National Electricity (Victoria) Act 2005 and Chapter 6 of the National Electricity Rules. AusNet's valuer Mr Dudakov has relied upon his instructions about this regulatory framework to assess the site value at zero. Apart from Mr Dudakov's valuation report, we also received evidence about this regulatory framework, in particular from Thomas Hallam and Prudence Draper, and to a lesser extent from Edoardo Viel and Peter Dalia. Messrs Hallam, Viel and Dalia were also made available for cross-examination. In summary:
    • for land on which ground-mounted kiosk substations are located, and that AusNet owns, AusNet has been allocated the land and/or received a transfer at no cost. New sites vest in AusNet free of charge upon the registration of plans of subdivision that create a relevant electricity 'reserve', through the operation of the Subdivision Act 1988. AusNet also has several ground-mounted kiosk substations on land that it notionally occupies (but does not own) under agreements at a peppercorn rental, or with no formal agreement.
    • AusNet does not pay for the land it owns or occupies for kiosk substations, and there is no entry in AusNet's Financial Register for any of the land upon which kiosk substations are located, including the subject land. However, the equipment within the substation is recorded in this Register.
    • AusNet would not receive any financial consideration for the land component if it transferred a kiosk substation and the land to another electricity distributor.
    • as the land component has been acquired, transferred or vested without any capital outlay, it is not included in AusNet's 'Regulated Asset Base' under the regulatory framework. This is the position adopted across the network. The Regulated Asset Base does not attribute any value to the land on which a kiosk substation sits, including the subject land. AusNet derives no income from the land component, and is precluded from deriving income from it.
11. Although we do not claim to understand all of the intricacies of the regulated electricity industry, we are satisfied that AusNet has provided sufficient material to support these propositions in this case. The Council did not materially contest these propositions, but rather the extent to which they were relevant to the valuation.
12. It is on the basis of these aspects of the regulatory framework that Mr Dudakov assessed the site value at zero. If considered as part of a larger undertaking, his opinion is that the entire land portfolio of AusNet's kiosk substation network has no value, and the apportionment to this land at 12E Cullen Street is therefore also zero. Even if considered alone, his opinion appears to be that the land still has no value in that no financial consideration applies to its acquisition (or a like acquisition by another electricity distributor) and no financial consideration would apply if the land remained part of the regulated network and was transferred to another electricity distributor.
13. We also note that the actual and potential capacity of the land itself to yield a monetary return is one of the relevant factors for us to take into account in determining site value, by reference to s 5A(3)(f) of the Valuation of Land Act 1960. The effect of any Act or regulation which affects or may affect the use or development of the land is also a relevant factor, under s 5A(3)(b). As set out above, given the way in which the regulatory regime and Regulated Asset Base operate, AusNet is precluded from deriving income from the land component.
14. Mr Dudakov conceded that the land would have a nominal value if the land was freed from being part of the regulated network, and could be sold to an ordinary buyer. In his view, and by virtue of his instructions, this could not occur whilst the land was required as part of the network and the larger undertaking, and where its highest and best use was agreed as being for an electricity substation.
15. The Council contended that the site value should not be derived solely by reference to its accounting treatment by AusNet. As reflected in the joint statement of experts, Mr Torr had considered that the method of procurement of the land and the regulated pricing formula were contractual matters that must be ignored under the market value definitions in the Valuation of Land Act 1960. Under cross-examination, Mr Torr conceded that he could not point to any 'contractual' basis for these outcomes, and that they may have a statutory base. He agreed that a contractual arrangement was different to a regulatory or statutory arrangement (and that the latter may affect the valuation), but conceded that he was not completely familiar with the specific regulatory arrangements for electricity distribution such as the National Electricity Rules. Mr Torr also conceded that the hypothetical vendor and purchaser of the relevant site at 12E Cullen Street would be dealing with it subject to these statutory constraints, and the likely hypothetical purchaser would therefore be an electricity distributor. These concessions at the hearing add weight to an assessment of site value being constrained by the special regulatory regime affecting electricity distribution.
16. We have indicated that Mr Torr relied upon a comparative sales approach for his assessment of site value, and essentially undertook a stand-alone assessment of the land. However, in our view, none of the five sales that Mr Torr relies upon is directly comparable. We agree with the applicant that sales treated as comparable sales need to be 'truly' comparable. If of a different character, they may attract a different class of buyer, and are unlikely to provide a reliable indication of value[2].
17. Here, although all five sales relate to small land parcels ranging from 24 m² to 91 m², none have a highest and best use for an electricity substation, being the valuers' agreed highest and best use, and none are fettered by statutory constraints similar to the regulatory framework for electricity distribution. Three relate to road widening or laneways, and one to air rights, where the land in each case had a value that essentially related to the highest and best use or zoning of the adjoining land to which it was to be added to, or excised from - e.g. retail, industrial etc. Moreover, Mr Torr was not familiar with all of the terms of each sale. The first and main sale relied upon (for 5E Galloway Drive, Mernda) is for the site of a former kiosk substation, but it appears to have been valued on the basis that the land was no longer required for an electricity-related use. It was sold to an adjoining owner free of this constraint, and with an apparent highest and best use as part of the adjoining owner's shopping centre.
18. These comparative sales all appear to relate to an 'alternative use' scenario of a remnant land parcel. But here, as we have noted, the valuers have agreed a highest and best use as an electricity substation. The Council argued that the applicant's approach nonetheless misconstrues the statutory definition of 'site value', which envisages an open market transaction under which the applicant is not the assumed purchaser, and applies the actual transaction by which the applicant took the land. However, as we have indicated, Mr Torr conceded that a hypothetical purchaser of the relevant site at 12E Cullen Street would be purchasing it subject to its current undertaking as a kiosk substation as part of the regulated network (rather than just purchasing the remnant land), and would likely therefore be an electricity distributor.
19. Somewhat tellingly, Mr Torr conceded that, in seeking out comparative sales, he had not relied upon any actual acquisitions (for value) by AusNet or other electricity distribution companies, because he couldn't find any. He had not looked at any transfers of kiosk substation sites that may have occurred for no consideration (e.g. a vesting under the Subdivision Act 1988), as these would not be readily searchable. Similarly, the circumstances surrounding a transfer of the land as a 'gift' by a developer, or a 'quid pro quo' arrangement, were not investigated. Yet there are several thousand such sites used for kiosk substations across the state. Mr Torr conceded it was possible that all kiosk substation sites had been transferred or vested for a zero value.
20. The absence of any truly comparable sales undermines the use of such a valuation approach. Indeed, the prospect that all similar sites (under the same regulatory framework) may have been transferred for no value perhaps reinforces the argument that the subject land has no value (whilst subject to that regulatory framework) for the purposes of an assessment of site value under the Valuation of Land Act 1960. It reinforces the argument that, although the accounting methodology of the electricity regulatory framework may value the kiosk substation sites at zero, that zero figure may also represent the actual price at which such sites are, or would be, transferred as between a relevant hypothetical vendor and purchaser. (In saying this, we are of course putting to one side the separate issue of the status, for valuation purposes of the kiosk substation equipment on the land).
21. It will be apparent from all of the above that we do not agree with the Council that there is sufficient sales evidence to support Mr Torr's valuation of $4,600 on a stand-alone basis. We also do not agree that there is an analogy with the decision in VicGrain Assets Pty Ltd v Hindmarsh City Council[3]. The stand-alone valuations of VicGrain's five sites in that case are very different to the inter-related sites and regulatory regime that applies here. In VicGrain, it was found on the evidence that, although the whole VicGrain business was treated as a single entity for the purposes of its bulk sale by the government, it was difficult to sustain an argument that any given VicGrain site could operate only on the basis that it was inseparably interdependent with the other VicGrain sites. The sites were found to be capable of operating discretely in the business of the storage, handling and dealing in grain (albeit within a regulated business), and that a stand-alone valuation of each site was therefore appropriate. Here, however, a kiosk substation site is interdependent with the electricity distribution network of which it forms part. If its highest and best use is as an electricity substation, it has no stand-alone purpose whilst subject to that regulatory constraint.
22. The Council's approach (and Mr Torr's valuation) appears to proceed on the premise that all land must have some intrinsic value, and that no land can therefore have no value at all. Intuitively, that is the case. However, valuations under the Valuation of Land Act 1960, including site value, are a statutory construct based upon underlying assumptions about relevant factors. The Council's approach, as we have noted, seems to rely on some 'alternative use' potential as a remnant land parcel that is not part of the regulated electricity network, and is not consistent with the stated highest and best use.
23. Although the Council did not expressly refer to s 5A(3)(a) of the Valuation of Land Act 1960, a relevant factor in the assessment of site value is:

the use to which such land is being put at the relevant time, the highest and best use to which the land might reasonably be expected to be put at the relevant time and to any potential use.

1. The reference to 'any potential use' in s 5A(3)(a) perhaps opens the door to the Council's contended position. However, if taken to its logical extreme, it could equally be argued that all land could theoretically have potential for any use if all other constraints are ignored. The 'potential' to be considered has to have a proportionate and reasonable basis, bearing in mind that s 5A(3)(a) also requires consideration of existing use, and highest and best use, and s 5A(3)(b) also expressly include consideration of regulatory and planning scheme constraints. Moreover, it is generally accepted that the highest and best use represents the most profitable potential use to which the land can be put having regard to planning and like controls and the circumstances of the land[4], so the relevant potential use of land will usually be a corollary of its highest and best use.
2. For the purposes of s 5A(3)(a), the land at 12E Cullen Street was actually being used as an electricity substation at the relevant date of 1 January 2012. For better or worse, and also for the purposes of s 5A(3)(a), the parties and their valuers in this case have agreed the highest and best use of the land at that time as an electricity substation. This agreed approach, in our view, significantly reduces the weight that could be given to a potential alternative use of the land that proceeds on a very different basis and that ignores the existing and on-going regulatory undertaking. It reduces the weight that could be given, for example, to an alternative use for residential or municipal purposes in conjunction with the use of adjoining land in a residential zone. This is particularly the case given other concessions made by Mr Torr to which we have referred.
3. Given the concessions made by Mr Torr under cross-examination, the regulatory framework that applies (including the inability of AusNet to derive income from the land component), the common practice of transfers and vesting of substation sites for no value, and the agreed highest and best use, the zero site value contended for by AusNet is a logical and plausible outcome. We say this having regard to all of the factors we must consider under the Valuation of Land Act 1960, even though we have only mentioned some of these in these reasons. Conversely, for the reasons set out above, we consider the stand-alone comparable sales approach contended for by the Council to be flawed.
4. Accordingly, as between the contended valuations, we consider the site value of the land at 12E Cullen Street is zero.

1. We turn now to the capital improved value (CIV) and net annual value (NAV) of the land.
2. The CIV is to be determined by reference to relevant matters under the Valuation of Land Act 1960, including (but not limited to) the definition of 'capital improved value' in s 2(1) and the relevant factors set out in s 5A.
3. The Council's initial assessment of a CIV of $45,000 and a NAV of $4,250 was arbitrary across the 392 substation sites owned by AusNet in the municipality. We were told that these values were applied even to some vacant substation sites without any improvements.
4. The parties have now agreed the CIV and NAV for the subject land based on two alternative scenarios. By letter dated 12 November 2014, the parties advised VCAT that the following agreement had been reached in order to narrow the issues in dispute at the hearing:
   • (i) if the Tribunal determines that the whole of the kiosk substation on the subject land does not form part of the capital improved value and net annual value of the subject land, the capital improved value and net annual value of the subject land at the relevant date is $5,000 and $365 respectively.
   • (ii) if the Tribunal determines that the whole of the kiosk substation on the subject land does form part of the capital improved value and net annual value of the subject land, the capital improved value and net annual value of the subject land at the relevant date is $47,000 and $3,666 respectively.
5. By reference to the witness statements of Prudence Draper, the $47,000 broadly reflects the cost of the equipment, after adjustments. Although, given the parties' agreement, the valuers' differing valuations of the equipment are not strictly relevant, the $47,000 also broadly reflects those valuations, albeit arrived at by different adjustments and allowances.
6. The Council contends for the higher agreed figures on the basis that the whole kiosk substation is a fixture, and properly included as part of the capital improved value. AusNet contends for the lower agreed figures on the basis that:
   • the kiosk substation equipment is a chattel rather than a fixture, and does not therefore form part of the land nor part of its capital improved value; and
   • even if the kiosk substation equipment is a fixture, it does not benefit the land and cannot be considered an 'improvement' to the land.
7. For the purpose of our determination of the CIV and NAV, the parties and their valuers are still agreed that the highest and best use of the land is as an electricity substation. As will again be seen, this agreed position is highly relevant to the outcome.
8. However, beyond this, and based on the parties' agreement, we have not considered the individual contested valuation assessments or methodology in the valuers' reports. Indeed, Mr Torr has not assessed the 'chattel' scenario at all, based on his direct instructions. We have, as requested by the parties, simply determined the threshold questions remaining in dispute, and we have otherwise given effect to the agreed consequential outcome.

Is the kiosk substation a fixture or a chattel?

1. We understand that the kiosk substation at 12E Cullen Street was installed in about 2008 and facilitates the supply of electricity to about 66 nearby dwellings and 21 streetlights.
2. The actual components and physical configuration of the kiosk substation are not in dispute. The main equipment comprises:
   • the medium voltage switch gear, that connects to an incoming underground medium voltage cable from the distribution network;
   • the transformer, that transforms the medium voltage electricity to low voltage electricity; and
   • the low voltage switchgear, that connects to outgoing underground low voltage cables that supply electricity for domestic and related use within the catchment area.
3. The transformer is much larger and heavier than the switchgear on either side. The three components of equipment sit together within a locked metal casing (sometimes referred to as a cabinet) that is approximately 2.95 metres long, 1.77 metres wide, and 1.43 metres high. The equipment and metal casing rests upon its own weight on top of a concrete slab that is approximately 1.65 metres long and 2.10 metres wide. The slab sits perpendicular to the equipment, and the dimensions of the slab differ from the base of the equipment to allow for the incoming and outgoing underground cables at each end, underneath the switchgear to which they connect. These cables connect to the switchgear via removable plugs, rather than being permanently wired into place. Although the equipment is bolted to the frame of the casing, no part of the equipment or the metal casing or the frame is bolted to or affixed to the slab.
4. We note for the record that we undertook an inspection of the relevant kiosk substation (including its internal equipment), in the presence of a representative of each party, on the day following the hearing. That inspection confirmed the layout in the manner described by the parties, and assisted us in understanding their evidence and submissions.
5. The parties provided us with a number of legal authorities on the guiding principles that govern whether something is a fixture or a chattel. As these authorities note, the guiding principles themselves are reasonably clear, but their application in practice may be more problematic. Several of these authorities are usefully summarised in the relatively recent decision of Agripower Barraba Pty Ltd v Blomfield[5], to which we were referred by AusNet. Although Agripower is a NSW decision and the facts of that case are different to those here, the judgement refers to a number of matters of general principle, as well as some relevant decisions of general application. Given the way in which these matters are set in Agripower, under the heading "The legal principles applicable to determining whether the disputed items are fixtures", we do not feel it necessary to repeat them all here.
6. From these authorities, in determining whether an item is a fixture or a chattel, the guiding principle is the objective intention with which the item was brought onto and annexed to the land. This intention is to be determined primarily by reference to the degree of annexation and the object or purpose of annexation. These two matters are not exclusive of each other - the degree of annexation may inform the purpose of annexation. Each case will depend on its own circumstances. In addition to considering the degree and object of annexation, some more recent authorities have suggested that regard should also be had to other relevant surrounding circumstances[6].
7. It is useful to initially separate out the 'degree of annexation' for discussion purposes, although we have ultimately, as the authorities suggest, taken a holistic approach in our decision.
8. On the authorities referred to us, an object merely standing only by its own weight on the land will not ordinarily be a fixture, and is prima facie a chattel[7]. From our description above, it is apparent that the kiosk substation equipment is not bolted or affixed to the land. It rests on a concrete slab through its own weight. The plug-in cables that connect the switching gear to the underground network are necessary to facilitate the flow of electricity from and to other land, rather than to affix the equipment to the land, or to steady it in situ.
9. The prima facie view that an item not bolted or affixed to the land is a chattel is rebuttable. Heavy equipment, even if not permanently attached, may still be sufficiently annexed so as to constitute a fixture, especially if it expected that the equipment will remain on the land for a long period or is difficult to remove[8].
10. The Council referred to a number of factors it considered relevant. These included:
    • the long lifespan of the switchgear and transformer (up to 40 years), albeit with each component capable of separate repair;
    • the weight of the transformer (over 4,000 kg) requiring removal by a crane;
    • the need for a slab to accommodate and 'support' the equipment in situ, giving the substation a quality of permanence;
    • the significant cabling connections, and the importance of the connection to the network as a larger undertaking;
    • the fact that the removal of the equipment would be disruptive to the electricity supply to connected properties, and would require notice; and
    • the lack of likelihood that the kiosk substation will be removed in the foreseeable future.

Some of these matters also relate to the object of annexation.

1. Apart from the absence of formal fixing to the land, we were shown a video[9] indicating that a kiosk substation could be replaced within 2 to 4 hours, with no damage to its constituent components, or to the land. The replacement nonetheless required a crane and considerable labor. AusNet's evidence was that the costs of replacement were substantially less than the costs of the equipment itself.
2. AusNet also provided spreadsheets showing the extent of regular repair and/or movement of many kiosk substations, although we agree with the Council that, when closely analysed and when the multiple movements of some components are taken into account, the number of discrete movements are limited in any one year[10].
3. Considered in isolation, we are of the view that the limited degree of physical annexation favours AusNet's contention that the substation kiosk equipment is a chattel, but the degree of semi-permanence of in the placing of the equipment on the land favours the Council, such that no clear answer emerges on this issue alone. On the authorities, there is a clear indication that an item merely standing on its own weight on the land is prima facie not a fixture, and that the onus shifts to the person asserting otherwise[11]. Here, that would be the Council. Despite this, and consistently with the way review proceedings at VCAT are commonly approached, AusNet did not push for this proceeding to be decided on the basis alone of whether the Council bore a strict onus and had discharged it.
4. As we have indicated, the degree of annexation is not ultimately to be considered exclusively from the object of annexation. The degree of annexation may inform the purpose of annexation, and is a pointer to the relevant intention[12]. Moreover, in Commissioner of State Revenue v Uniqema Pty Ltd[13], it was held that even where the degree of annexation of the relevant chattels was 'not insubstantial', the distinguishing factor in the overall assessment may not be that extent of annexation, but rather any unusual circumstances in the purpose of annexation. In that case, the unusual circumstance was that the relevant co-generation equipment was used in a manner unrelated to the tenant's needs or enjoyment of the land, but rather to produce electricity solely for the landlord's benefit. Whilst those circumstances differ from the present case, we consider that there are unusual or special circumstances here, in relation to the object of annexation, that perhaps distinguishes this case from others.
5. In Metal Manufactures Ltd v Commissioner of Taxation[14], it was emphasised that the question of whether equipment was a fixture or a chattel is to be determined by objective circumstances, and not the subjective intention of those who annexed the equipment. Thus, the object and purpose of annexation at the time of annexation is relevant, and less weight ought to be accorded to individual opinions within AusNet, then or now, about the status AusNet gives to the equipment, except to the extent they assist with ascertaining the objective position.
6. In this regard, as noted in Metal Manufactures, the law of fixtures may operate harshly[15] where the objectively ascertained purpose of annexation does not match the intended outcome of a particular party. An example is in relation to land tenure. AusNet's evidence is that it owns several sites, such as the subject land, but that many of its kiosk substations are also located on land that it does not own - either land leased at a peppercorn rental, or licenced, or with no formal agreement. AusNet contended that it did not intend, and could not have reasonably intended, that its high-value kiosk substation equipment would become a fixture on land it did not own, and thereby become the property of the landowner as part of the land. Ipso facto, it contended, if not a fixture on land it did not own, the equipment could not be a fixture on land it did own.
7. We were also referred in Agripower[16] to an extract from Professor Butt's text 'Land Law' where the author indicates that an intention to permanently improve the realty is easier to discern when an absolute owner brings and item onto land than a tenant, as a tenant is unlikely to make a present of that item to the landlord.
8. Here, we might say, we are looking at a situation where AusNet is the absolute owner of both the land and the equipment, so the landlord/tenant analogy does not really apply. However, we consider it a relevant 'surrounding circumstance' that we have regard to how AusNet's equipment might be treated if on tenanted land, given many of AusNet's kiosk substations are located on land it does not own.
9. Ultimately, however, we do not consider that AusNet's argument based on land tenure survives closer scrutiny. In Metal Manufactures, the court noted the doctrine of 'tenant's fixtures', where a tenant has a right to remove items installed during its tenancy. It concluded that this doctrine does not reflect a tenant's intention that certain items remain chattels, but rather recognises that, despite the tenant's intention, the items may have in law become a fixture on land it did not own. The doctrine protects the tenant's interest notwithstanding the item has become a fixture, and thus ameliorates the harshness that the law of fixtures would otherwise create. The court thus found that the fact that equipment was installed on land belonging to a third party did not assist in a determination of the objective intention with which the items were placed on the land[17].
10. Similarly to the doctrine of tenant's fixtures, a lease or licence agreement may also expressly provide for the same outcome, or a regulatory regime for utility service providers might maintain its ownership of utility assets on land it does not own. (AusNet provided no evidence either way on whether its lease agreements or regulatory regime provide for this outcome and, as we have said, we are dealing in this case with land AusNet owns).
11. In Professor Butt's text referred to above, immediately after the passage quoted in Agripower, the opinion is also expressed that where a tenant brings an item onto land and the necessary criteria are satisfied for the item to become a fixture, the item becomes part of the realty[18]. Land tenure is not determinative to whether particular equipment remains a chattel or becomes a fixture.
12. Although less determinative on this specific issue, it is also worth noting that the definition of 'capital improved value' in s 2 of the Valuation of Land Act 1960 refers to land held '...for an estate in fee simple unencumbered by any lease, mortgage or other charge'. The fact of a lease is not directly relevant.
13. We therefore consider that land tenure, whilst indirectly relevant, is not the correct starting point or approach to adopt in considering whether equipment installed on land is a fixture. We therefore do not accept AusNet's contention that we should approach the matter in that way.
14. What then, to quote Professor Butt, are "the necessary criteria to be satisfied for the item to become a fixture"? As indicated, the guiding principles are the degree and object of annexation, leading to a finding as to the objective intention of annexation. Returning then to the purpose or object of annexation, the decision in Metal Manufactures sets out some relevant criteria. It was stated:
    1. Various considerations may be taken into account in determining the purpose of annexation. The considerations include the following:
       • whether removal would destroy the attached property;
       • whether the cost of removal would exceed the value of the attached property;
       • whether removal would occasion significant damage to the land or buildings to which the property is attached;
       • whether the attachment was for the better enjoyment of the property or for the better enjoyment of the land and buildings to which it was attached;
       • the nature of the property itself;
       • the contemplated use of the property;
       • period of time for which the property was to be in position;
       • function to be served by the annexation of the property.

No one of the above factors, of itself, will be conclusive.

1. The reference to 'property' in this quote is a reference to the equipment, rather than the land. It should be emphasised that this list is not exhaustive and no factor, of itself, is conclusive.
2. We have already discussed some of these matters. Some overlap with considerations as to the degree of annexation. Here, despite the absence of bolting or affixation, there is evidence of an objective intention that the equipment has been installed on the land on a semi-permanent basis, rather than temporarily. It is necessary to the long-term distribution of electricity within the catchment area. The equipment components each have a lifespan of 40 years or more. Absent any technological change that renders the equipment obsolete, and subject to repair and upgrading over time, we are satisfied that the kiosk substation equipment would be intended to remain in situ indefinitely.
3. One important factor from the matters listed in Metal Manufactures above is whether the annexation of the equipment was for the better enjoyment of the equipment itself, or for the better enjoyment of the land and buildings to which it was annexed. In several cases, the answer to this question has been very important to the outcome, and we consider a similar importance attaches to this factor in this case. In Professor Butt's text[19], to which we have already referred, the author stated:

If the affixer's intention was the better use or enjoyment of the land, in the sense of furthering the use to which the land is put, then the item is likely to be a fixture; but if the intention was the better use or enjoyment of the item itself (as distinct from the land), then the item is likely to be a chattel. Of course, the intentions may overlap; it then becomes a question of identifying the dominant intention.

1. Several authorities are cited for this proposition, including some of the cases referenced in the authorities to which we were referred by the parties. It is clear from Professor Butt's language (i.e. use of the term 'is likely to') that whether the annexation of the equipment was for the better use or enjoyment of the land, or only the equipment itself, is again presumptive of an outcome rather than determinative. We also find this to be situation where there may be overlapping intentions.
2. AusNet referred us to Anthony v Commonwealth[20], where the court held that telephone poles on land were not fixtures because they were not for the enjoyment of the land on which they were placed, but rather for the benefit of providing a line of communication that could just as effectively be maintained on other land. AusNet contended a similar situation here, with the kiosk substation providing a line of electricity distribution that could be maintained anywhere in the catchment area. However, the 'land' in Anthony was a much broader landholding used primarily as a road (indeed, part of the Stuart Highway), and the use of a 400 feet of it for the telephone poles and lines was essentially a minor or additional or ancillary use, and not the highest and best use for the land. To us, that is a relevant distinguishing factor. Here, the relevant land is only 34 m² in size, has separate title, and dedicated solely to its use as an electricity substation. It has no other purpose.
3. AusNet also referred us, in its written submissions, to a passage in Loiero (aka Lero) v Adel Sportswear Pty Ltd[21]. That passage, in turn, refers to an oft-quoted decision in Reid v Smith[22]. There, the court distinguished between whether the object of annexation was to 'improve the freehold' or 'the more complete and better enjoyment of the chattel itself'. The court considered that whether the land itself was improved was a 'very good' test of the object of annexation, and thus whether an item had become a fixture. It referred to a 'typical' example where machinery is not generally a fixture if attached or annexed to land for the more effective use of the machinery, rather than for the enjoyment of the land itself.
4. AusNet argued that, in applying these principles, a key factor in this case is that the kiosk substation equipment was placed on the land for the better enjoyment of the equipment as part of an electricity distribution network, as opposed to the better enjoyment of the particular parcel of land at 12E Cullen Street.
5. AusNet also sought, on a similar basis, to distinguish some of the cases relied upon by the Council where machinery had been found to be a fixture. For example, in VicGrain, a weighbridge resting by its own weight on the land was nonetheless found to be a fixture - in part, because it formed part of the broader business undertaking on the same land, and was essential to that operation (as a grain storage facility). In Snowy Hydro[23], gas turbine units were found to be fixtures given the way in which the turbine operated as part of an electricity generation plant on the land. AusNet contended that, in these cases, the whole undertaking was undertaken on the same land. AusNet termed these to be 'factory cases', where the whole or primary undertaking was on the same parcel of land. The machinery in these so-called factory cases improved the land in question because the equipment or machinery found to be a fixture was necessarily inter-related with other fixtures and processes on that land. AusNet contended that its kiosk substation equipment was not inter-related with other fixtures or processes on the subject land, and did not thereby improve the land, but was rather for the benefit of a broader undertaking (i.e. electricity distribution) not dependent on the land at all.
6. This issue was also discussed in Metal Manufactures[24], a decision referred to us by both parties. That decision also considered items that might be affixed for the better enjoyment of the items themselves, rather than for the better enjoyment of the land. The court then added:

However, there can be circumstances in which chattels may become affixed for the better enjoyment of land used for a particular use. Thus, a milk processing plant might constitute a fixture because it was annexed to the land for the better enjoyment or use of the land as a dairy processing plant - see National Dairies WA Ltd v Commissioner of State Revenue [1999] WASCA 152. Similarly, items of machinery in a factory plant may be fixtures because they were annexed for the better use and enjoyment of the land as a furniture factory - see Re Starline Furniture Pty Ltd (1982) 6 ACLR 312.

1. The bolded words in this quotation appear in the reported judgement itself, presumably for emphasis. What the court appears to be emphasising is that plant and equipment may be considered to be for the better enjoyment of the land, rather than just for the enjoyment of the equipment itself, when it is annexed for the particular use or purpose for which the land is used.
2. Accordingly, whilst we agree with AusNet that many of the so-called 'factory cases' can be distinguished where the whole undertaking is on the same parcel of land, that does not of itself negate the underlying principle that an item installed on land may improve that land, or facilitate the better enjoyment of that land, when it furthers the purpose for which that land is used. That underlying principle will perhaps be stronger where the purpose for which the land is used is also its highest and best use, as here.
3. Here, the Council contends in its written submission that the kiosk substation equipment was installed by AusNet for the better use and enjoyment of the land - namely, for the "electrical substation" purposes for which the land was reserved. The substation plays an integral, rather than ancillary, role in that dedicated use of the land.
4. Having considered the relevant authorities, we consider that this issue ultimately turns on these factors. AusNet made much of the reserved purpose of the subject land under its regulatory regime, and its agreed highest and best use as an electricity substation, in it arguments about 'site value'. Those same arguments are relevant to whether the substation is a fixture. The kiosk substation has been effectively 'purpose-built'. The kiosk substation equipment has been installed on the land at 12E Cullen Street that is reserved for an electricity substation, where the existing use is as an electricity substation, and where the highest and best use is agreed as an electricity substation. It is not an ancillary use. There is no other complementary or alternative use of the land, given the existing and agreed highest and best use as an electricity substation. The kiosk substation equipment has been installed on the land for the very (and only) purpose for which the land has been exclusively dedicated.
5. Considered in this way, the fact that the kiosk substation also forms part of a larger business undertaking, as part of the electricity distribution network across other land, is less relevant. This case therefore differs from cases such as Anthony, above, where the relevant utility infrastructure is an ancillary or lesser component of land used for other purposes. Whilst we acknowledge AusNet's contention that this land per se is not essential to the operation of its equipment within the distribution network, there is a benefit in AusNet having land upon which to locate its assets. Indeed, in this case, the circumstances are that there is a small separate parcel of land created to locate a kiosk substation, and upon which a substation is in fact located. More particularly, we reiterate that AusNet has agreed the highest and best use of this land is as an electricity substation, and the kiosk substation advances that use.
6. On this basis, we find that the kiosk substation equipment is for the better use and enjoyment of the land, for that particular purpose of an electricity substation, rather than being solely for the benefit and enjoyment of the equipment or the distribution network itself. We agree with the Council that this weighs heavily in favour of concluding that, objectively considered, the kiosk substation equipment was intended to be a fixture.
7. Taking this and all of the other relevant factors we have discussed into account, we consider on balance that the kiosk substation equipment on the land at 12E Cullen Street was objectively intended to become a fixture on the land. Despite the equipment resting by its own weight on the land, and its capacity to be removed without high cost or damage, we consider that the nature of the equipment, its function and use, the period of time it is to remain on the land, and its objective purpose for the better enjoyment of the land having regard to its particular use, all favour its characterisation as a fixture.

1. Given we have formed the view that the kiosk substation on the subject land in this case is a fixture, we must deal with AusNet's secondary argument that the substation is still not an 'improvement' to the land for the purposes determining CIV under the Valuation of Land Act 1960.
2. This is argued by AusNet on the basis that the kiosk substation does not actually benefit the land itself, nor involve work or materials that increases the value of the land per se, but rather benefits and adds value to other nearby land that is serviced with the supplied electricity. The wording in this argument draws directly from the definition of 'improvements' in s 2 of the Valuation of Land Act 1960, the relevant part of which means:

... all work actually done or material used on and for the benefit of the land, but in so far only as the effect of the work done or material used increases the value of the land and the benefit is unexhausted at the time of valuation ...

1. Interestingly, the definition of 'improvements' in s 2 only expressly refers to its purpose in ascertaining site value (rather than CIV), and there is no express reference to 'improvements' in the definition of CIV. For practical purposes, we think little turns on this. When one has regard to the definitions of 'site value' and 'capital improved value' in s 2, the only material difference is that the definition of site value requires an assumption '... that the improvements (if any) had not been made.' The definition of 'improvements' is therefore necessary to allow that adjustment in the assessment of site value. It is implicit then that the 'capital improved value', as the name implies, already includes these improvements. The definition of 'improvements' is therefore relevant to an assessment of 'capital improved value', even though that term is not expressly used in the definition. Moreover, s 5A(3)(e) of the Valuation of Land Act 1960 requires a valuer to take into account, as relevant, the extent condition and suitability of any improvements on the land.
2. AusNet relied in part upon the decision in United Energy Ltd v Kingston City Council[25] where VCAT considered the impact of overhead power lines forming part of the electricity distribution network, on the site value and CIV of land vested in United Energy. That case was unusual in that the overhead power lines crossed the land but there were no supporting poles on the land itself. United Energy had argued that, for the purpose of the definition of 'improvements', the increase in value had to be an increase in the value of the land for its highest and best use. It referred to Caltex Oil (Aust) Pty Ltd v Chief Executive Department of Lands[26] where a Queensland appeal court (applying similar legislation) had stated that it could not be said whether a structure on land amounts to an improvement in until it is known whether the structure advances or inhibits a particular use. This would ordinarily require the highest and best use of the land to be first determined. In United Energy, the highest and best use of the land was considered to be for residential use, and the overhead lines were an encumbrance or impediment to that use, and added no value. If this aspect of Caltex is followed, having agreed the highest and best use as an electricity substation, the kiosk substation can be said to add to the value of the land that highest and best use.
3. VCAT did not finally resolve this issue in United Energy. Whilst preferring the view in Caltex, it also referenced the decision in Commonwealth Custodial Services Ltd v Valuer- General for NSW[27]. In that case, a NSW court considered that a structure on land did not need to advance and add value to the highest and best use in order to be an improvement. It considered that it was sufficient if the structure added value to the land beyond its value in its natural state. This view in Commonwealth Custodial appears to have subsequently found some favour in Victoria, in Challenger Property Asset Management Pty Ltd v Stonnington City Council[28]. If the broader view in Commonwealth Custodial is followed, the kiosk substation adds value to the land in its natural state.
4. Thus, under either the approaches in either Caltex or Commonwealth Custodial (or for that matter United Energy), and assuming it is a fixture, the kiosk substation equipment would be an improvement to the land.
5. AusNet relied specifically on an observation by VCAT in United Energy[29] that the power lines in that case, which traverse the land but do not provide electricity to it, may not comprise works 'on and for the benefit of the land', or actually benefit the land in any way. The power lines indirectly benefit other land. Again, VCAT did not finally decide this issue in United Energy, but AusNet submitted that the principle is applicable here. The kiosk substation, and the cables to which it is attached, do not provide electricity to the land but facilitate the distribution of electricity to other land.
6. We do not agree with the analogy. Here, unlike the circumstances in United Energy, the materials and works comprised in the kiosk substation equipment are on the subject land. The substation on the land is an important piece of equipment in its own right, rather than overhead power lines traversing the land. Unlike poles, wires and cables that do not constitute an occupation of land (by virtue of s 94(2) of the Electricity Industry Act 2000), this land is clearly occupied as a small separate parcel of land by AusNet for its intended use as an electricity substation. It is true that the output of the kiosk substation is inter-dependent with other parts of the electricity distribution network and benefits other land. However, for the reasons discussed at some length earlier in these reasons, we consider that the kiosk substation equipment actually benefits the land, rather than merely the equipment itself - in particular by supporting and advancing the agreed highest and best use of the land as an electricity substation. The substation comprises work actually done or material used on and for the benefit of the land for this very purpose. The work and materials increases the value of the land(whether for its highest and best use or beyond its natural state), by the added value of the equipment as a fixture, and that benefit is unexhausted for so long as the land continues to be reserved and used for this purpose with that equipment in place. Based upon the agreed highest and best use, the kiosk substation equipment is an improvement to the land.
7. It follows that AusNet's secondary argument fails.
8. We make one additional observation about CIV that is relevant to the outcome we have reached. We noted, in relation to site value, that AusNet is unable to derive any income from the land component, as it does not form part of AusNet's approved Regulated Asset Base. That led, in part, to the assessment of the site value at zero. Conversely, from the affidavit of Thomas Hallam[30], we understand that the cost of the kiosk substation equipment is treated as capital expenditure, and is included in AusNet's overall Regulated Asset Base. It is therefore taken into account when calculating the revenue that AusNet can earn. This suggests that, although the income is ultimately derived from AusNet's broader undertaking and network, that undertaking takes into account the cumulative cost of capital equipment installed across individual sites.
9. Under s 5A(3)(f) of the Valuation of Land Act 1960, it is relevant to the assessment of CIV to consider the actual and potential capacity of the land to yield a monetary return. With the kiosk substation equipment annexed to the land as a fixture, the equipment provides a basis for the land to yield a return based upon its highest and best use for an electricity substation. It thus supports a CIV determination that reflects the value in the capital 'improvement' from which the return is derived. Although this monetary return is indirect, through the Regulated Asset Base, that is entirely consistent with the 'undertaking' valuation approach that the valuers ostensibly agreed - i.e. valuing the land as part of the broader undertaking, and apportioning an appropriate value to the relevant land in question. In this case, that is achieved through an approximation of the notional cost of the particular equipment on this land, after appropriate adjustments and allowances have been made.

1. On the basis of all of the above, we find that the kiosk substation is a fixture and forms part of the capital improved value of the land at 12E Cullen Street. Having regard to the parties' agreement, it follows that the CIV at the relevant date of 1 January 2012 is $47,000 and the NAV is $3,666.

1. The parties had indicated in preliminary proceedings that this case may be a 'test case', the outcome of which may assist with the valuation of other similar electricity assets across the state. That is for others to decide, but we caution against such an approach.
2. First, whilst reference was made by AusNet to its other kiosk substation sites in an endeavour to advance their position on various matters, each case necessarily turns on its own facts and circumstances. The facts and circumstances of other sites may differ, or are unknown.
3. Secondly, and more particularly, we note that there are some aspects of the valuations in this case that have been agreed by the parties, rather than decided by us. These include the agreed use of an undertaking approach to valuation, and an agreement as to highest and best use.
4. Indeed, it will be obvious to a reader of our decision that we have carefully tied many of our findings to the parties' agreement that the highest and best use of the land is as an electricity substation. That has been, in our view, an important determining factor in the outcomes for both site value and CIV.
5. Under the principles espoused in decisions such as ISPT Pty Ltd v Melbourne CC and Valuer-General Victoria[31], the courts have stressed the importance of the highest and best use to a valuation outcome. Circumstances have been noted where it is relevant to determine a single, precise highest and best use, and (as in ISPT itself) when the highest and best use might be ascertained in more general terms that allow for alternate or combined use scenarios.
6. Equally, the courts have expressed the principle that VCAT (even where constituted as an expert tribunal) should not attempt to itself value the land in question, or make its own assumptions about the land, but should decide the matter on the evidence and submissions before it. That is what we have done, albeit with some misgivings about the evidence and submissions presented to us. In this case, we are constrained by the agreement of the parties and their expert valuers that the highest and best use of the subject land is for an 'electricity substation'.
7. In cases such as United Energy, and in the comparative sales considered by Mr Torr that relate to a former substation site, the highest and best use was for an 'alternative' use in conjunction with its adjacent use or underlying zoning, and on the basis that the land was not 'encumbered' by its use as part of the electricity network. As we have indicated, in some cases, land may not have a single, precise highest and best use. If those same considerations are applied here (rather than an agreed fixed highest and best use as an electricity substation), the highest and best use of the subject land would conceivably be for a residential purpose, given that is the zoning of the subject land under the Whittlesea Planning Scheme, and that is the actual use of much of the adjacent land. In such event, the comparative sales of Mr Torr would have been more relevant, and this may have provided support for his assessed site value of $4,600. Similarly, if the highest and best use of the subject land was residential, it would be less arguable that the kiosk substation benefits the land for that particular residential purpose, as opposed to be for the better enjoyment of the equipment. This could conceivably 'tip the balance' in favour of the equipment being characterised as a chattel rather than a fixture, or in favour of the equipment not being an 'improvement' to the land having regard to that highest and best use. In turn, this may have then provided support for a capital improved value of $5,000. (The difference between the $4,600 site value and $5,000 CIV would then be the notional value of the slab.)
8. In postulating this alternative, we do not suggest that the outcome in this case would necessarily change. We have not considered this alternative in depth, nor was it argued before us. However, we make these observations in order to demonstrate the pivotal effect that the parties' agreement as to highest and best use may have in a case such as this, in circumstances where that agreed assumption was untested. We also make these observations lest it be thought that the outcome in this case is of some precedent value based upon an exhaustive analysis of all possible valuation outcomes for land upon which a kiosk substation is located. It is not.
9. Moreover, although the Valuer-General had a watching brief in the proceeding, and had a representative present throughout the hearing, there was no intervention by the Valuer-General on contested matters about the proper interpretation of the Valuation of Land Act 1960, or matters of valuation principle, or the agreed underlying assumptions such as the highest and best use of the land. This may have been useful if this was to be a 'test' case of broader application.

[1] See, for example, VicGrain Assets Pty Ltd v Hindmarsh City Council [1999] VSC 47 per Balmford J at [40].

[2] See Maurici v Chief Commissioner of State Revenue [2003] HCA 8; [2003] 212 CLR 111 (High Court_), Melwood Units Pty Ltd v Commissioner of Main Roads_ [1979] AC 426, and Sher v Commissioner for Main Roads (1975) 24 The Valuer 150.

[3] [1999] VSC 47

[4] ISPT Pty Ltd v Melbourne CC and Valuer-General Victoria [2008] VSCA 180 per Warren CJ, Kellam JA and Osborn AJA, at [38] and [41] - in the latter reference adopting and agreeing with the comments of the Tribunal at first instance.

[5] [2013] NSWSC 1598, particularly at [29]-[41]

[6] See generally, Australian Provincial Assurance Co Ltd v Coroneo [1938] NSWStRp 35; (1938) 38 SR(NSW) 700; Commissioner of Stamps (WA) V L Whiteman [1940] HCA 30; National Dairies WA Ltd v Commissioner of State Revenue [2001] WASCA 112; Re Starline Furniture Pty Ltd (in liquidation) (1982) 6 ACLR 312; Lees & Leech Pty Ltd v Commissioner of Taxation (1997) 73 FCR 136; Metal Manufacturers Ltd v Commissioner of Taxation [1999] FCA 1712; Snowy Hydro Limited v Commissioner of State Revenue [2010] VSC 221 and Commissioner of State Revenue v Uniqema Pty Ltd [2004] VSCA 82. On the latter issue of having regard to surrounding circumstances in addition to considering the degree and object of annexation, see Uniqema, op cit, at [47] per Ormiston J (with whom Phillips and Callaway JJA agreed).

[7] See, for example, Coroneo, op cit, at p 712

[8] See, for example, VicGrain, op cit, at [84], Snowy Hydro, op cit, at [20]-[22] and National Dairies, op cit, at [26].

[9] The DVD video was prepared on behalf of AusNet, but tendered in evidence by the Council.

[10] For example, on the Council's calculations, there were only 89 discrete transformer movements out of 2,878 kiosk substations within 60,356 network substations overall, in the nearly three years prior to the hearing for which AusNet data was provided.

[11] See, for example, Coroneo, op cit, at p 712, and Lees & Leech, op cit, at p 148

[13] [2004] VSCA 82., particularly at [47] per Ormiston J

[14] [1999] FCA 1712 at [164], following Hobson v Gorringe [1897] 1 Ch 182, 193. Several of the other authorities cited to us reinforce this principle.

[16] In Agripower , op cit, at [29]. The reference in 'Land Law' (Lawbook Co., 6th ed, 2010) is at [15 248]

[17] Metal Manufactures, op cit, at [179]

[18] Professor Peter Butt 'Land Law' (Lawbook Co., 6th ed, 2010) at [15 248]

[19] Professor Peter Butt 'Land Law' (Lawbook Co., 6th ed, 2010) at [3 03]

[20] (1973) 29 LGRA 61, particularly at pp 71-72 (High Court)

[21] [2010] NSWSC 1133 at [11]

[22] [1905] HCA 54; [1906] 3 CLR 656, particularly at pp 680-681 per O'Connor J (High Court)

[23] Snowy Hydro Limited v Commissioner of State Revenue [2010] VSC 22

[24] op cit, particularly at [177]. For the record, we note that the Council also relied separately upon the decision in National Dairies, referenced in this quotation.

[25] [2007] VCAT 1306.

[26] (1996) 16 QLCR 435 (Queensland Land Appeal Court).

[27] [2006] NSWLEC 400, particularly at [37]-[77]

[28] [2011] VSC 184, at [232]-[238] per Croft J. We note that this decision was not referred to us by the parties but, given AusNet's reference to United Energy, we think it important to note the Victorian Supreme Court's comment on the apparent inconsistency between United Energy and Commonwealth Custodial. There, as here, the differing approaches do not affect the outcome on this issue.

[31] [2008] VSCA 180 per Warren CJ, Kellam JA and Osborn AJA