Court of Appeal (WA)|2011-10-21|Before: Lure P, Buss JA, Murphy JA, Justice J

EPIC ENERGY (PILBARA PIPELINE) PTY LTD -v- COMMISSIONER OF STATE REVENUE [2011] WASCA 228 (21 October 2011)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : EPIC ENERGY (PILBARA PIPELINE) PTY LTD -v- COMMISSIONER OF STATE REVENUE [2011] WASCA 228

BETWEEN : EPIC ENERGY (PILBARA PIPELINE) PTY LTD

Jurisdiction : STATE ADMINISTRATIVE TRIBUNAL OF WESTERN AUSTRALIA

Citation : EPIC ENERGY (WA) ONE PTY LTD and COMMISSIONER OF STATE REVENUE [2010] WASAT 37

Taxes and duties - Stamp duty - Construction of s 76(1) and s 76AP(2) of the Stamp Act 1921 (WA) - Meaning of 'land' and 'land-holder' - Whether corporation must have a beneficial interest in the ground to which a thing is fixed before the thing may be brought to account, and if so to what extent, for the purposes of pt IIIBA - Whether corporation must be beneficially entitled to a thing fixed to land before that thing may be brought to account for the purposes of pt IIIBA - Whether definitions of 'land' and 'estate' in s 5 of the Interpretation Act 1984 (WA) applicable - Whether pipelines the subject of a licence under the Petroleum Pipelines Act 1969 (WA) constitute 'land' insofar as they are buried beneath the natural surface of the earth

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27

Alinta DEGP Pty Ltd v Wellington Shire Council [2005] VSC 307; (2005) 141 LGERA 187

Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568

Asciano Services Pty Ltd Chief Commission of State Revenue (NSW) [2008] HCA 46; (2008) 235 CLR 602

Bellinz v Commissioner of Taxation [1998] FCA 615; (1998) 84 FCR 154

Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325; (2007) 70 NSWLR 544

Clos Farming Estates Pty Ltd v Easton [2002] NSWCA 389

Commissioner of Main Roads v North Shore Gas Co Ltd [1967] HCA 41; (1967) 120 CLR 118

Commissioner of State Revenue (Victoria) v Pioneer Concrete (Vic) Pty Ltd [2002] HCA 43; (2002) 209 CLR 651

Commissioner of State Taxation v Nischu Pty Ltd (1991) 4 WAR 437

Commissioner of Taxation v Metal Manufactures Ltd [2001] FCA 365; (2001) 108 FCR 150

Downey v Trans Waste Pty Ltd [1991] HCA 11; (1991) 172 CLR 167

Eastern Nitrogen Ltd v Commissioner of Taxation [2001] FCA 366; (2001) 108 FCR 27

Emanuel (Rundle Mall) Pty Ltd v Commissioner of Stamps (1986) 41 SASR 122

Epic Energy (WA) One Pty Ltd and Commissioner of State Revenue [2010] WASAT 37

Gibb v Federal Commissioner of Taxation [1966] HCA 74; (1966) 118 CLR 628

Glentham Pty Ltd v City of Perth [1986] WAR 205

Grain Elevators Board (Vic) v Dunmunkle Corporation [1946] HCA 13; (1946) 73 CLR 70

Hook v Rolfe (1986) 7 NSWLR 40

Hunter Resources Ltd v Melville [1988] HCA 5; (1988) 164 CLR 234

Jennings Construction Ltd v Burgundy Royale Investments Ltd (No 2) [1987] HCA 10; (1987) 162 CLR 153

Joseph v Joseph [1967] Ch 78

Kalamunda Meat Wholesalers Pty Ltd v Reg Russell & Sons Pty Ltd [1994] FCA 1059; (1994) 51 FCR 446

Mabo v The State of Queensland (No 2) [1992] HCA 23; (1992) 175 CLR 1

Melluish (Inspector of Taxes) v BMI (No 3) Ltd [1996] AC 454

North Shore Gas Co Ltd v Commissioner of Stamp Duties [1940] HCA 7; (1940) 63 CLR 52

Origin Energy Power Ltd and Commissioner of State Revenue [2007] WASAT 302

Parramore v Duggan [1995] HCA 21; (1995) 183 CLR 633

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

Robinson v Local Board of Barton-Eccles (1883) 8 AC 798

Sherritt Gordon Mines Ltd v Federal Commissioner of Taxation [1977] VicRp 42; [1977] VR 342

Standard Portland Cement Co Pty Ltd v Good (1982) 2 NSWLR 668

Sterling Nicholas Duty Free Pty Ltd v The Commonwealth [1971] 1 NSWLR 353

Stevens v Colonial Sugar Refining Co Ltd [1920] HCA 74; (1920) 28 CLR 330

TEC Desert Pty Ltd v Commissioner of State Revenue [2010] HCA 49; (2010) 241 CLR 576

The Commonwealth v New South Wales [1923] HCA 23; (1923) 33 CLR 1

Travelex Ltd v Federal Commissioner of Taxation [2010] HCA 33; (2010) 241 CLR 510

Vopak Terminals Australia Pty Ltd v Commissioner of State Revenue [2004] VSCA 10; (2004) 12 VR 351

1 McLURE P: These appeals raise for determination the proper construction of the 'land rich' provisions in pt IIIBA of the Stamp Act 1921 (WA) (the Act). The central question is whether gas pipelines and associated infrastructure are 'land' for the purposes of s 76AP(2) of the Act.

2 The appellant in appeal CACV 36 of 2010, Epic Energy (Pilbara Pipeline) Pty Ltd (EEPP), is the owner of the Pilbara Energy Pipeline (PEP) and associated pipeline infrastructure, the Port Hedland Energy Pipeline (PHEP) and associated pipeline infrastructure and the Burrup Extension Pipeline (BEP) and associated pipeline infrastructure.

3 The appellant in CACV 37 of 2010, Epic Energy (WA) One Pty Ltd (EEWA), is the owner of the Wodgina Lateral Pipeline - Northern Section (WLPNS) and associated pipeline infrastructure.

4 On 2 June 2004, Epic Energy Pty Ltd acquired all of the issued shares in each of EEPP and EEWA from Epic Energy (WA) Investments Pty Ltd, an unrelated company.

5 On 9 August 2004, each appellant lodged a statement in the approved form with the respondent, the Commissioner of State Revenue, stating that the estimated unencumbered value of all 'land' in Western Australia to which it was entitled as at 2 June 2004 was 'nil', on the basis that the pipelines did not constitute land within the meaning of pt IIIBA of the Act.

6 On 24 July 2007, the respondent assessed the appellants' stamp duty in respect of the change in ownership of their shares on the basis that EEPP and EEWA were 'land-holders' within the meaning of pt IIIBA of the Act. EEPP was assessed for duty of $7,310,110 and EEWA was assessed for duty of $380,770. An objection to the assessments was disallowed and the appellants sought a review of the assessment in the State Administrative Tribunal (the Tribunal).

7 The Tribunal determined whether each of the appellants was a land-holder as a preliminary issue. The Tribunal concluded that where the appellants held an interest or estate in land and the pipeline was fixed to the land the subject of that interest, the pipeline was included in the land to which the appellants were beneficially entitled.

8 The PEP is approximately 214 km long and consists of sections of pipe welded together. The PEP is above ground in two places but is otherwise under the natural surface of the land.

9 With certain exceptions, the land upon which the PEP is located is the subject of easements granted under the Petroleum Pipelines Act 1969 (WA) (PP Act). The exceptions include Forrest Location 116, Forrest Location 266 and Forrest Location (now Lot) 255. Forrest Locations 116 and 266 subsequently formed part of Forrest Lot 399.

10 The BEP is situated on land the subject of an easement granted under the PP Act and on land the subject of an interest arising under the Dampier to Bunbury Pipeline Act 1997 (WA) (DBP Act) in relation to an area within what is known as the DBNGP Access Corridor.

11 The land on which the PHEP is installed is within 12 general purpose leases (GP leases) granted to a third party under the Mining Act 1978 (WA). EEPP holds a sublease of parts of the areas the subject of the GP leases. Part of the PHEP is also within Forrest Lot 255.

12 The land on which the WLPNS is located is within a miscellaneous licence granted to a third party under the Mining Act. EEWA holds a sub-licence and has the benefit of a trust of the miscellaneous licence.

13 Under the PP Act, the pipelines (and associated infrastructure) remain the property of the appellants, whether or not they are affixed to any land (s 57).

14 The Tribunal concluded that EEPP held an interest in land the subject of the easements, the sublease of areas within the GP leases and within the DBNGP Access Corridor, and that EEWA held an interest in land the subject of the miscellaneous licence. The Tribunal also concluded that EEPP did not hold an interest in Forrest Locations 255, 116 and 266. There is no challenge to these findings.

15 As a consequence of these findings, the Tribunal concluded that all the relevant pipelines and associated infrastructure constituted land to which the respective appellants were entitled within the meaning of s 76AP(2) of the Act with the exception of those parts of the PEP and PHEP and associated pipeline infrastructure in Forrest Locations 255, 116 and 266.

16 Part IIIBA is headed 'Duty on change of control of certain land-owning corporations'. It was accepted by the parties that the appellants were corporations to which div 3 of pt IIIBA applied, being corporations incorporated outside Western Australia.

17 Part IIIBA relevantly provides that the transfer of shares in a corporation which is a land-holder for the purpose of div 3 attracts duty on the dutiable statement calculated in accordance with the provisions of s 76AO.

18 A corporation is a land-holder if it satisfies two criteria, the first relating to the unencumbered value of land situated in Western Australia to which it is entitled and the second relating to the value of all land to which it is entitled, wherever situated. Section 76AP(2) provides:

A corporation is a land-holder for the purposes of this Division if at the time of a relevant acquisition -

(a) it is entitled to land situated in Western Australia and the unencumbered value of the land is not less than $1 000 000, or it is entitled to land situated in Western Australia as a co-owner of the freehold or of a lesser estate in the land and the value of the whole of the freehold or lesser estate is not less than $1 000 000; and

(b) the value of all land to which the corporation is entitled, whether situated in Western Australia or elsewhere, is 80% or more of the value of all property to which it is entitled, other than property directed to be excluded by subsection (3),

or if the Commissioner determines that paragraphs (a) and (b) would have applied to the corporation at the time of the relevant acquisition but for a transaction, or series of transactions, which in the Commissioner's opinion had as its purpose, or one of its purposes, the defeat of the object of this Division.

19 It was accepted by the parties that the share transaction on 2 June 2004 was a 'relevant acquisition' (see s 76AQ). Section 76(1) defines 'entitled' to mean 'beneficially entitled'. At the relevant time, land was defined in s 76(1) as follows:

'land' includes a mining tenement, and also includes -

(a) any estate or interest in land; and

(b) anything fixed to the land including anything that is, or purports to be, the subject of ownership separate from the ownership of the land.

20 Mining tenement is defined in s 76(1) as follows:

'mining tenement' means -

(a) a mining tenement held under the Mining Act 1978 being a mining tenement within the meaning of that Act or the Mining Act 1904;

(b) a mining tenement or right of occupancy continued in force by section 5 of the Mining Act 1978; and

(c) a tenement, right or interest that is -

(i) similar to a tenement or right referred to in paragraph (a) or (b); and

(ii) held under the law of another State, a Territory, the Commonwealth or another jurisdiction.

21 Part IIIBA was inserted into the Act by the Stamp Amendment Act 1987 (WA). It was aimed at eliminating stamp duty avoidance practices involving the placing of land in the name of a company and, in effect, selling the land by transferring the shares in the company, which attracted substantially less stamp duty than if the land itself had been transferred (Western Australia, Parliamentary Debates, Legislative Assembly, 11 June 1987, 2308 - 2309 (Mr Pearce, Leader of the House)).

22 For the sake of completeness it should be recorded that pt IIIBA was amended in 2008 by the Revenue Laws Amendment Act 2008 (WA) (the 2008 amendments). By that Act, par (b) of the definition of 'land' was amended by deleting 'of ownership' and inserting instead 'of an entitlement'. A new s 76(7A) was also inserted. It provides:

(7A) In determining the entitlement of an entity to land for the purposes of section 76AI, 76AL, 76AP, 76AS, 76ATB, 76ATE, 76ATI or 76ATL, if -

(a) the entity has an entitlement to something that is part of land as a fixture; and

(b) that entitlement is, or purports to be, separate from the ownership of the rest of the land,

the entity is to be regarded as having an entitlement to land to the extent of its entitlement to the fixture.

23 The pipelines owned by the appellants are the subject of pipeline licences under the PP Act. 'Pipeline' is defined in the PP Act as not only the pipe or system of pipes, but a range of other associated infrastructure related to the system of pipes. The 'associated pipeline infrastructure' referred to in the facts are accepted by the parties as comprising pipelines under the PP Act. Section 6 prohibits the construction and operation of a pipeline except pursuant to a licence.

24 Section 12 permits the granting of a licence subject to conditions. Section 12(3) provides:

Subject to subsection (4), the licence is subject to a condition that the licensee shall not commence or cause to be commenced the construction of the proposed pipeline specified therein over any part of the licence area unless he has first acquired all the lands in that part of the licence area or a lease, licence or other authority over the lands and acquired and registered all such easements over those lands as are necessary for him to lawfully construct that pipeline over those lands or part thereof and to have the right of access thereto.

25 Subsection (4) permits the Minister to consent to the construction of a proposed pipeline pending the registration of a relevant easement.

26 Under s 57 of the PP Act, an authorised pipeline remains the property of the licensee. It provides:

(1) Notwithstanding any Act or rule of law to the contrary, any pipeline constructed under the authority of this Act shall remain the property of the licensee whether or not the pipeline is affixed to any land and whether or not the licence granted in respect of the pipeline has been wholly or partly cancelled.

(2) The licensee, in maintaining or operating any pipeline in respect of which a licence is issued under this Act, shall do as little damage as is possible and shall make full compensation to the owner of, and any party having an interest in, land for any damage sustained by them in consequence of the exercise of any power by the licensee in maintaining or operating the pipeline, and the compensation shall in default of agreement between the licensee, the owner or other party, be determined by a court of competent jurisdiction.

27 At one point the PEP and BEP cross the DBNGP Access Corridor, which is a corridor of land 30 m wide in respect of which rights are conferred under the DBP Act.

(1) State corridor rights are an interest in land in the DBNGP corridor and the extent of the interest is such that, if State corridor rights are held in land, neither conferring rights under section 34 nor exercising any right conferred under that section would injuriously affect any right, title, or interest in the land.

(2) State corridor rights may be taken or acquired as described in section 29(2).

29 The relevant minister may acquire State corridor rights by agreement or compulsory acquisition (s 29(2)).

30 Section 34 of the DBP Act enables the Minister to confer rights in respect of land in the 'DBNGP corridor' for the purpose of constructing and operating any pipeline for transporting gas. The Tribunal concluded that the rights enjoyed by EEPP conferred under s 34 amounted to an interest in land. Section 40 of the DBP Act at the relevant time provided:

Anything that a holder of rights conferred under section 34 or a nominee places on land in the DBNGP corridor in accordance with those rights -

(a) does not become a part of the land, regardless of whether it is of the nature of a fixture;

(b) is capable of being assigned separately from the land; and

(c) may be removed from the land by, or with the authority of, the owner of that thing.

The Tribunal erred in law by misconstruing s 76AP(2) of the Act in that:

(a) the Tribunal wrongly held that, on its proper construction, the effect of that provision is that a corporation which holds a beneficial estate or interest in land to which a thing is affixed is to be regarded as having full ownership of the thing, regardless of whether or to what extent the beneficial interest in the land confers a beneficial interest in the thing; and

(b) the Tribunal should have held that, on the true effect of that provision, a beneficial interest in land only includes an interest in a thing attached to the land, if at all, where and to the extent that the beneficial interest in land itself confers a beneficial interest in the thing.

As a result of the error described in ground 1, the Tribunal erred in law in finding that the following were land to which EEPP was entitled, within the meaning of s 76AP(2)(a):

(a) the PEP and associated pipeline infrastructure in the area of the PEP easements;

(b) the PHEP and associated pipeline infrastructure in the subleased area of the GP leases;

(d) the PEP, BEP and associated pipeline infrastructure in the DBNGP Access Corridor.

32 Ground 1 is repeated in EEWA's appeal. Ground 2 is in terms that, as a result of the error in ground 1, the Tribunal erred in finding that the WLPNS and associated infrastructure in the area the subject of the miscellaneous licence was land to which the appellant was entitled within the meaning of s 76AP(2)(a) of the Act. Ground 3 in both appeals was abandoned at the hearing (ts 54).

33 The respondent contended that the Tribunal erred in law in that it wrongly held that the PEP, BEP, PHEP and WLPNS and associated pipeline infrastructure, to the extent they occupied physical space under the natural surface of the land the subject of the PEP easements, BEP easement, the sublease of the GP leases, miscellaneous licence and DBNGP Access Corridor, were not 'land' to which EEPP and EEWA were entitled within the meaning of s 76AP(2).

34 The respondent contends that, to the extent the specified pipelines and associated infrastructure occupied physical space under the natural surface of the land, they were land to which EEPP and EEWA were entitled within the meaning of s 76AP(2) regardless of whether they were fixed to any land to which EEPP and EEWA were entitled.

35 In his cross-appeal, the respondent contends the Tribunal erred in holding that the PEP and PHEP and associated pipeline infrastructure, to the extent that they occupied physical space under the natural surface of Forrest Lots 255 and 399, were not land to which EEPP was entitled within the meaning of s 76AP(2) of the Act. The respondent contends the pipelines and associated infrastructure under the natural surface of those Lots are land to which EEPP is entitled.

36 The parties between them advanced three alternative constructions of the definition of land in s 76(1) of the Act. It is appropriate to start with the matters upon which the parties agreed. They are, first, that the expression 'anything fixed to the land' in par (b) of the definition of land is not confined to things that would constitute a fixture under the general law (the first proposition). Under the general law, a 'fixture' is personal property that has become so attached to land as to form, in law, a part of the land. Whether personal property has become a fixture depends upon the degree of annexation and the object (purpose) of annexation: TEC Desert Pty Ltd v Commissioner of State Revenue [2010] HCA 49; (2010) 241 CLR 576 [24].

37 Secondly, anything fixed to the land only becomes land for the purpose of par (b) of the definition of land if the relevant corporation has an estate or interest in the land to which the thing is fixed (the second proposition). This is said to be the consequence of the use of the definite article in the statutory expression 'anything fixed to the land'.

38 The appellant's principal contention is that anything fixed to the land is only included in the definition of land where, and to the extent that, the corporation's beneficial interest in the land itself confers a beneficial interest in the thing. That result depends on the correctness of the second proposition. It also requires that any actual beneficial ownership of the thing be disregarded unless it derives solely from the interest or estate in the land to which it is fixed. Where, as in this case, the ownership of the thing is separate from the ownership of the land, the appellants contend that par (b) of the definition of land requires that the actual (beneficial) ownership of the thing be disregarded. The pipelines would only be within the definition if, disregarding the appellants' ownership thereof under s 57 of the PP Act, the appellants' estate or interest in the land would give rise to a corresponding estate or interest in the thing fixed to it.

39 The respondent relied on alternative constructions of the definition of land. His primary contention is that (1) anything fixed to land in which the corporation has an estate or interest, whether the thing is beneficially owned by the corporation or a third party, is land; and (2) the thing is deemed to be land to which the corporation is beneficially entitled even if that is not the case.

40 The respondent's fallback position is that anything fixed to land is land if the corporation is beneficially entitled to both the thing and the land to which it is fixed.

41 A further alternative construction not supported by any party (the fourth alternative construction) does not depend on the correctness of the second proposition. Under this alternative, par (b) is a separate, independent limb so that a thing fixed to land is itself land under the definition of land in s 76(1).

42 The function of a statutory definition is to provide an aid in construing the statute. The proper course is to read the words of the definition into the relevant provision and then construe the latter: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27; Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568 [12].

43 In this case, the definition of 'land' is to be transposed into the definition of 'land-holder', which is one of the gateway requirements for liability to duty under pt IIIBA of the Act. The transposition of the four alternative constructions in s 76AP(2)(a) are as follows. The words in brackets are the extended definition of 'land', with clarifications and additions thereto in italics.

The appellants' construction

A corporation is a land-holder for the purposes of this Division if at the time of a relevant acquisition -

(a) it is beneficially entitled to land [including a mining tenement or any estate or interest in land or any estate or interest in a mining tenement and anything fixed to the land the subject of the mining tenement or estate or interest, including anything that is, or purports to be, the subject of ownership separate from the ownership of the land where and to the extent that the beneficial interest in the land itself confers a beneficial interest in the thing] situated in Western Australia and the unencumbered value of the land is not less than $1 000 000 ...

The respondent's preferred construction

A corporation is a land-holder for the purposes of this Division if at the time of a relevant acquisition -

(a) it is beneficially entitled to land [including a mining tenement or any estate or interest in land or any estate or interest in a mining tenement and anything fixed to the land the subject of the mining tenement or estate or interest, including anything that is, or purports to be, the subject of ownership by the corporation or by another person separate from the ownership by the corporation of the land] situated in Western Australia and the unencumbered value of the land is not less than $1 000 000 ...

44 According to the respondent, this construction is intended to capture 'things' to which the corporation is not beneficially entitled, provided the thing is fixed to land owned by the corporation.

The respondent's fallback construction

A corporation is a land-holder for the purposes of this Division if at the time of a relevant acquisition -

(a) it is beneficially entitled to land [including a mining tenement or any estate or interest in land or any estate or interest in a mining tenement and anything fixed to the land the subject of the mining tenement or estate or interest including anything that is, or purports to be, the subject of ownership by the corporation separate from the ownership by the corporation of the land the subject of the mining tenement or estate or interest] situated in Western Australia and the unencumbered value is not less than $1 000 000 ...

The fourth alternative construction

A corporation is a land-holder for the purposes of this Division if at the time of the relevant acquisition -

(a) it is beneficially entitled to land [including a mining tenement or an estate or interest in land or any estate or interest in a mining tenement or anything fixed to land, including anything that is, or purports to be, the subject of ownership separate from the ownership of the land to which it is fixed] situated in Western Australia and the unencumbered value of the land is not less than $1000000.

The proper construction of 'land' and 'land-holder'

45 Against that background, I turn to the construction of the defined terms 'land' and 'land-holder'. The definition of 'land' in s 76(1) is inclusive, which is an indication that it is not intended to be exhaustive. The word 'includes' is generally used if it is intended to enlarge the ordinary meaning of the word. Land in its ordinary meaning refers to its tangible, material (corporeal) existence, being the surface of the earth, the soil beneath and the airspace above it.

46 The existence and content of the extensions to the definition of 'land' in s 76(1) of the Act support the view that the ordinary meaning of 'land' is intended rather than its general law meaning or the meaning given to the same term in s 5 of the Interpretation Act 1984 (WA). For instance, par (a) of the definition which includes the estates and interests, legal and equitable, that a person may own in land, captures part of the general law meaning of land.

47 Further, the incorporation of a definition of land specifically in and for pt IIIBA of the Act, and the different extensions of the ordinary meaning of 'land' in the Interpretation Act, lead me to conclude that the definition of land in the Act is intended to cover the field to the exclusion of the definition in the Interpretation Act. In that event, the definition of 'land' in the Interpretation Act has no application to pt IIIBA (s 3(1)). However, as there is no definition of 'estate' in the Act, the (wide) definition of that term in s 5 of the Interpretation Act applies.

48 The ordinary meaning of 'land' is extended in s 76(1) to include a 'mining tenement', as that term is defined in the Mining Act. Section 8 of the Mining Act defines 'mining tenement' to include both the relevant licences and leases granted under the Mining Act and the specified piece of land in respect of which the mining tenement is granted or acquired.

49 Paragraph (a) of the definition of land is intended to apply back to the opening words of the definition, that is, to land in its ordinary (corporeal) meaning and to a mining tenement.

50 As to par (b), the word 'fixed' is intended to refer to a physical connection between the thing and the land. Accordingly, land is used in par (b) in its ordinary (corporeal) meaning. The paragraph includes, but is not confined to, fixtures in the general law sense.

is par (b) a separate, independent (stand-alone) limb of the definition of land or ancillary, and if so, to what;
what is the scope and effect of the separate ownership inclusion in par (b), which in turn raises the meaning of the term 'ownership' in that paragraph;
does the scope of the separate ownership inclusion in par (b) have any material effect on the scope or application of s 76AP(2) of the Act.

52 These issues are interrelated. I propose to start with the second. Separate ownership prima facie includes 'different' ownership and 'different' owners. The term 'ownership' in par (b), in context, includes ownership of an estate or interest falling short of ownership of the 'thing' or the land to which it is fixed. A corporation that owns or has an interest in land can have an interest in a thing fixed to that land even if the thing is owned by a third party. The background to the introduction of pt IIIBA provides valuable insight into the legislative intent. Around the time of the insertion of pt IIIBA into the Act in 1987, it was not uncommon for parties to enter into transactions intended to separate ownership of fixtures from the ownership of the land. This was done by means of hire purchase transactions or transactions for the sale and lease back of fixtures: see Emanuel (Rundle Mall) Pty Ltd v Commissioner of Stamps (1986) 41 SASR 122; Commissioner of Taxation v Metal Manufactures Ltd [2001] FCA 365; (2001) 108 FCR 150 (transaction in 1988). However, there was at the time, and still is, doubt as to whether separate ownership of fixtures is legally possible: TEC Desert Pty Ltd v Commissioner of State Revenue [52].

53 The language of the separate ownership inclusion in par (b) is also wide enough to include a situation where ownership of the thing is completely separate from ownership of the land, in the sense that there is no relevant common owner of an interest in the thing and an interest in the land to which it is fixed. This is necessary for both the respondent's preferred construction (which captures all things fixed to land in which the corporation has an estate or interest even if it has no estate or interest in the thing itself) and the fourth construction alternative (which captures things owned by a corporation even if it has no estate or interest in the land to which it is fixed).

54 However, the separate ownership inclusion cannot be construed in isolation from the balance of par (b) of the definition of land and s 76AP(2). The first issue set out above raises the meaning of the definite article in the expression 'the land' where it first occurs in par (b).

55 The matters in pars (a) and (b) of the definition of land in s 76(1) are not conjunctive in form. Contrast subpars (i) and (ii) of par (b) of the definition of 'mining tenement' in s 76(1) of the Act. An estate or interest in land is 'land' whether or not anything is fixed to the land.

56 However, the parties contend that the use of the definite article before the word 'land' where it first appears in par (b) is an intended reference back to the land referred to in par (a) of the definition, with the consequence that par (b) is conjunctive with par (a).

57 The central question is whether the definite article is intended to have any real work to do. On one view the expression 'the land' may mean nothing more than anything fixed to the earth or the ground. If that is so, par (b) means 'anything fixed to land'. On this construction, the 'thing' itself is land, and the land itself and the thing fixed to it can be in completely different ownership. Thus, a 'thing' that is not land in its ordinary or general law meaning would be land under the definition in s 76(1) even if the corporation had no estate or interest in the land to which it is fixed. In that situation, the land to which the thing is fixed would be excluded from the calculation of value.

58 However, ordinarily the definite article is used to indicate a particular instance of a noun. In the context of the definition of land in s 76(1), that would in my view be a reference back to that which precedes it in the definition of land. Understood in that sense, the effect is that par (b) is not an independent, stand-alone limb of the definition but an add-on to the stand-alone limbs of the definition. The stand-alone limbs are (1) land (ordinary meaning); (2) mining tenement; and (3) any estate or interest in (1) or (2). Paragraph (b) is referring to a physical connection between the thing and the land in (1), (2) and (3).

- land (ordinary meaning) and anything fixed to the land;

- a mining tenement and anything fixed to the mining tenement;

- an estate or interest in land and anything fixed to the land;

- an estate or interest in a mining tenement and anything fixed to the mining tenement.

60 On the facts in this case, the relevant stand-alone limb is par (a) of the definition of land with the add-on in par (b) which, when transposed into s 76AP(2)(a), would read:

A corporation is a land-holder for the purposes of this Division if at the time of a relevant acquisition -

(a) it is beneficially entitled to an estate or interest in land and anything fixed to the land ...

61 In my view, that is the intended meaning of the expression 'the land' when it first appears in par (b) of the definition of 'land'. That construction of the text is consistent with the purpose of pt IIIBA in which the primary focus is on ownership of real property. This construction of par (b) as ancillary to the stand-alone limbs of the definition has the effect of excluding the fourth alternative construction.

62 The final issue is whether the requirement in s 76AP(2) for a 'beneficial entitlement' applies to the stand-alone limbs of the definition of land as well as anything fixed thereto. That is the clear implication of the text and purpose of the definition of land-holder. The scope of s 76AP(2) is not to be enlarged simply because of the potential width of the separate ownership inclusion in par (b) of the definition of land. That would be the tail wagging the dog. I address the issue further in the analysis of the respondent's preferred construction.

63 I turn now to the various construction alternatives. The construction contended for by the appellants finds no support in the text of the relevant provisions or their purpose. It requires that additional words be read into the definitions of land and land-holder. It is a contrived construction aimed at narrowing the scope of the 'land rich' provisions of the Act. There is no justification in the language or purpose of pt IIIBA for putting to one side and ignoring a corporation's actual separate beneficial ownership of a thing fixed to land which the corporation owns or in which it has an interest. Further, a beneficial interest in the land itself is only capable of conferring a beneficial interest in a thing fixed to it where the thing is a fixture under the general law. This practical limitation is inconsistent with the concession that par (b) is intended to have a wider operation than the general law.

64 I have concluded that the fourth alternative construction is not consistent with the text or purpose of the definitions of land and land-holder. I have reached that conclusion without reference to the 2008 amendments which inserted s 76(7A). However, if the fourth alternative construction is correct, it would not have been necessary to insert s 76(7A) in pt IIIBA. The court would then have to determine what if any reliance could be placed on the 2008 amendments in construing s 76AP(2) as at the time of the relevant acquisition in June 2004. As to which, see Grain Elevators Board (Vic) v Dunmunkle Corporation [1946] HCA 13; (1946) 73 CLR 70, 85 - 86; Hunter Resources Ltd v Melville [1988] HCA 5; (1988) 164 CLR 234, 253 - 255; Downey v Trans Waste Pty Ltd [1991] HCA 11; (1991) 172 CLR 167, 177 - 178; Commissioner of State Revenue (Victoria) v Pioneer Concrete (Vic) Pty Ltd [2002] HCA 43; (2002) 209 CLR 651 [52].

65 Under the respondent's preferred construction, a thing fixed to a corporation's land is taken into account in determining value even if the corporation has no beneficial entitlement to the thing. The respondent says the corporation is 'deemed' to have a beneficial entitlement in the thing fixed to the land. The implication of a deemed entitlement does not sit well with the presence of an express deeming provision in relation to entitlement in s 76AP(4) of the Act. Further, the requirement of a beneficial entitlement provides a necessary yardstick for assessing the value of the corporation's interest in the 'thing'. In this way there may be multiple, but not overlapping, interests in the same 'thing'. I am satisfied that the intention of s 76AP(2) is to determine value by bringing to account the value of the corporation's beneficial entitlement to land and things fixed thereto.

66 In my view, the respondent's fallback construction correctly captures the essence and intended effect of the definitions of land and land-holder in pt IIIBA of the Act. I would transpose the defined term 'land' slightly differently to reflect the reference in par (b) back to all stand-alone limbs, but with no different result. If a corporation has a beneficial entitlement to land and a beneficial entitlement to a thing fixed to that land, the value of the corporation's beneficial entitlement to the thing is included in the calculation of value under s 76AP(2) regardless of the basis or source of the beneficial entitlement to the thing. I would dismiss the appeal.

67 The notices of contention do not need to be determined as a result of the outcome of the appeals. However, they were fully argued and overlap with the cross-appeal.

68 The outcome of the contention and cross-appeal does not depend on whether or not the appellants had an estate or interest in the land itself. In essence, the respondent contends that pipelines under the natural surface of the land are 'land' in its ordinary meaning. No claim is made that the pipelines are an estate or interest in land.

69 The respondent claims this outcome is supported by authority, in particular the North Shore Gas Co Ltd v Commissioner of Stamp Duties [1940] HCA 7; (1940) 63 CLR 52 (First North Shore Gas case), and that this case is distinguishable from Commissioner of Main Roads v North Shore Gas Co Ltd [1967] HCA 41; (1967) 120 CLR 118 (Second North Shore Gas case) and Asciano Services Pty Ltd Chief Commission of State Revenue (NSW) [2008] HCA 46; (2008) 235 CLR 602. It is necessary to refer to the detail of these decisions.

70 The question in the First North Shore Gas case was whether an agreement for the sale of a gas company's assets as a going concern, so far as it related to the mains and service pipes, was an agreement for the sale of 'goods, wares, or merchandise' under the stamp duty legislation that applied at the time. Legislation authorised the gas company to place the pipes in the soil of public and private land, to remove them, to control them and to retain the ownership and possession of them. Rich J said:

Does this result in their continuing to belong to the legal category of personal chattels in which they fell before they were placed in the ground? On the whole I think that we should hold that they lost that character. They were dealt with in a fashion which, apart from specific legislative provision, would give them the same legal character as the soil in which they were placed for the purpose of the classification of things into chattels personal and realty. 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.

Every physical characteristic, therefore, tends to place the mains and service pipes in the same category as the soil from which, without disintegration or disconnection, they are inseparable. Two legal qualities belong to the pipes which ordinarily do not belong to part of the soil, viz, the existence of independent ownership in another person and removability. But these qualities arise from statutory provisions, and removability at all events is a well-known characteristic of tenants' fixtures, which until removal are considered part of the realty. I do not think that these statutory legal qualities are enough to put the buried apparatus out of the classification to which otherwise it would belong. The mains and service pipes are fixtures, and in my opinion are not chattels personal.

72 In the Second North Shore Gas case the question in issue was whether the respondent was entitled to compensation for the value of its mains and service pipes in land compulsorily taken by the appellant under public works legislation. The majority (Barwick CJ, McTiernan, Kitto and Taylor JJ) identified the relevant question as being whether the mains and pipes, or the space occupied by them 'constituted an interest in land' (125). The majority held that the answer to that question was determined solely by reference to the legislation regulating the gas company's rights, entitlements and powers. Under the legislation the mains and pipes were the property of the gas company. The majority held that the legislation was not intended to confer on the gas company any interest in the land in which the mains and pipes were embedded (128). Windeyer J noted that the question for determination in the First North Shore Gas case was entirely different than the question he was considering. He said it was not what description should be given to the mains and pipes in the ground but whether the respondent had an estate or interest in the land in which they were embedded. He accepted that the space of the earth occupied by a pipe when embedded in the soil (not the pipe) was land, but that did not mean that the gas company had an estate or interest in the land (132).

73 The First and Second North Shore Gas cases were considered by the High Court in Asciano Services. New South Wales legislation implemented a scheme for the commercial use of railway infrastructure previously the subject of a public monopoly. Rail infrastructure facilities (which included, inter alia, tunnels) were vested in a statutory corporation (RAC) and the land to which the facilities were attached was owned by a separate statutory authority. Some members of the court below had decided that some of the rail infrastructure facilities were land (Chief Commissioner of State Revenue v Pacific National (ACT) Ltd [2007] NSWCA 325; (2007) 70 NSWLR 544 [21] - [29]). The High Court said nothing was to be gained from a consideration of the rights of the owner of the rail infrastructure facilities by reference to principles relevant to land under the general law, relying with approval on the Second North Shore Gas case. The High Court said the gas company's claim for compensation in the Second North Shore Gas case failed 'because the pipes were held not to be land and its rights in them not an interest in land within the meaning of the statute authorising resumption and requiring the payment of compensation' [27]. The High Court continued:

The property owned and vested in RAC, and the rights it has with respect to land in connection with its functions, were provided by the [Act]. The Act disclosed no intention that the vesting of the rail infrastructure facilities in RAC was to carry with it rights or legal consequences other than those identified in the scheme of the Act [29].

74 The respondent claims the High Court in Asciano erred in its statement that the claim in the Second North Shore Gas case failed because the pipes were held not to be land. Although that was not identified by the High Court in the Second North Shore Gas case as an issue, that conclusion is implicit in its reasoning. Moreover, even assuming the correctness of the respondent's claim, it has no impact on the outcome of the notices of contention or cross-appeal.

75 The issue in s 76AP(2) of the Act is whether the appellants were 'beneficially entitled' to land as defined. The notion of 'beneficially entitled' requires that the corporation have beneficial ownership of, or an estate or interest in, the pipelines said to constitute land. Whether and if so what type of interest the appellants have in the pipelines is answerable solely by reference to the provisions of the PP Act. Section 57 of the PP Act deals with ownership of the pipelines (the 'thing'), not the land in which they are embedded. The general law cannot intrude to change the character of the pipelines from personal to real property. What is implicit in s 57 of the PP Act is made explicit in s 40(a) of the DBP Act. However, pt IIIBA of the Act can, and does, treat the pipelines as land when fixed to land in which the licensee has a beneficial entitlement.

76 I would dismiss the notice of contention and the cross-appeal.

77 BUSS JA: These appeals raise questions as to the proper construction of s 76AP(2) of the Stamp Act 1921 (WA) (the Act), as in force on 2 June 2004, read with the applicable definitions of 'entitled' and 'land' in s 76(1) of the Act.

78 The appellant in CACV 36 of 2010 (EEPP) is, and was at all material times, the owner of the Pilbara Energy Pipeline (PEP), the Port Hedland Extension Pipeline (PHEP) and the Burrup Extension Pipeline (BEP) and, in the case of each pipeline, associated pipeline infrastructure.

79 The appellant in CACV 37 of 2010 (EEWA) is, and was at all material times, the owner of the Wodgina Lateral Pipeline Northern Section (WLPNS) and associated pipeline infrastructure.

80 At all material times, EEPP and EEWA had property in the pipelines and associated infrastructure independently of any interests in the land to which those things were affixed. Property was conferred on or reserved to EEPP and EEWA by s 57(1) of the Petroleum Pipelines Act 1969 (WA) and s 40 of the Dampier to Bunbury Pipeline Act 1997 (WA).

81 At all material times, the appellants' relevant tenure was as follows:

(a) EEPP: easements with respect to the PEP and the BEP and, in each case, associated infrastructure;

(b) EEPP: sub-lease of parts of general purpose leases, granted under the Mining Act 1978 (WA), with respect to the PHEP and associated infrastructure; and

(c) EEWA: sub-licence of miscellaneous licence, and beneficial interest in miscellaneous licence, granted under the Mining Act, with respect to the WLPNS and associated infrastructure.

The acquisition of the issued share capital in each of EEPP and EEWA

82 On 2 June 2004, Epic Energy Pty Ltd acquired all of the issued share capital in each of EEPP and EEWA from Epic Energy (WA) Investments Pty Ltd, an unrelated corporation.

The statement under s 76AN of the Act, the stamp duty assessments, the objections and the review

83 On 9 August 2004, each appellant lodged a statement in the approved form with the respondent (the Commissioner) under s 76AN of the Act together with the relevant acquisition documents.

84 On 24 July 2007, the Commissioner assessed each of the appellants to stamp duty in respect of the change in ownership of their shares on the basis that each of them was a 'land-holder' within s 76AP(2) of the Act. EEPP was assessed for duty of $7,310,110 and EEWA for duty of $380,770.

85 On 4 October 2007, each appellant lodged an objection to the assessment. On 28 May 2008, the Commissioner disallowed the objections.

86 On 28 July 2008, each appellant lodged an application with the State Administrative Tribunal (the Tribunal) to review the Commissioner's objection decision.

87 The Tribunal determined, as a preliminary issue, whether each of the appellants was a 'land-holder'.

88 The Tribunal held that where an appellant had an interest in land, such as an easement, and the pipeline was fixed to the land the subject of that interest, the pipeline was 'included in the interest [in] land to which [the appellant was] beneficially entitled' [3]. The pipeline in question was, in these circumstances, 'land' to which the relevant provisions of pt IIIBA of the Act applied [3]. Where, however, an appellant had no 'identifiable interest' in the land to which a part of the pipeline was fixed, that part of the pipeline was not 'land' for the purposes of pt IIIBA [3].

The appeals, the notices of contention and the cross-appeal

89 The appellants have appealed to this court under s 43A of the Taxation Administration Act 2003 (WA) against the Tribunal's decision.

90 The Commissioner relies on a notice of contention in each appeal. The Commissioner has also cross-appealed to this court against the Tribunal's decision in relation to EEPP.

91 The applicable provisions of the Act are those in force on 2 June 2004, when Epic Energy Pty Ltd acquired the shares in question. I will set out the relevant provisions as in force on that date.

92 Part IIIBA of the Act is headed, 'Duty on change of control of certain land-owning corporations'.

93 Section 76 of the Act defines various terms used in pt IIIBA. By s 76(1), in pt IIIBA, unless the contrary intention appears, relevantly:

chattels means goods, wares or merchandise ... and includes an estate or interest in them;

...

entitled means beneficially entitled, and entitlement has a corresponding meaning;

land includes a mining tenement, and also includes -

(a) any estate or interest in land; and

(b) anything fixed to the land including anything that is, or purports to be, the subject of ownership separate from the ownership of the land;

...

mining tenement means -

(a) a mining tenement held under the Mining Act 1978 being a mining tenement within the meaning of that Act or the Mining Act 1904;

(b) a mining tenement or right of occupancy continued in force by section 5 of the Mining Act 1978; and

(c) a tenement, right or interest that is -

(i) similar to a tenement or right referred to in paragraph (a) or (b); and

(ii) held under the law of another State, a Territory, the Commonwealth or another jurisdiction.

94 Division 3 of pt IIIBA is headed, 'Corporations incorporated, or taken to be registered, outside Western Australia, and certain other companies not within Division 2'. Division 3 comprises s 76AN - s 76AS.

95 Each of EEPP and EEWA will be a corporation to which div 3 applies if, at the material time:

(a) it was registered outside Western Australia (s 76AP(1)(a)); and

(b) it was a 'land-holder' within s 76AP(2) (s 76AP(1)(c)).

96 It is not in dispute that EEPP and EEWA are, and were at all material times, registered in the Australian Capital Territory.

A corporation is a land-holder for the purposes of this Division if at the time of a relevant acquisition -

(a) it is entitled to land situated in Western Australia and the unencumbered value of the land is not less than $1 000 000, or it is entitled to land situated in Western Australia as a co-owner of the freehold or of a lesser estate in the land and the value of the whole of the freehold or lesser estate is not less than $1 000 000; and

(b) the value of all land to which the corporation is entitled, whether situated in Western Australia or elsewhere, is 60% or more of the value of all property to which it is entitled, other than property directed to be excluded by subsection (3),

or if the Commissioner determines that paragraphs (a) and (b) would have applied to the corporation at the time of the relevant acquisition but for a transaction, or series of transactions, which in the Commissioner's opinion had as its purpose, or one of its purposes, the defeat of the object of this Division.

98 By s 76AP(5), in determining the entitlement of an entity to land for the purposes of, relevantly, s 76AP:

(a) if the entity has contracted or agreed to acquire an interest in land, that contract or agreement is to be regarded as having been completed even if it has not yet been completed; and

(b) if the entity has contracted or agreed to dispose of an interest in land but that contract or agreement has not yet been completed, that contract or agreement is to be disregarded.

99 Section 76AU(1) makes provision for the reassessment of duty where, relevantly, a contract or agreement brought to account under s 76AP(5) is rescinded, annulled or otherwise terminated without being completed.

100 By s 76AN(1), where by a relevant acquisition a person acquires a majority interest or a further interest in, relevantly, a corporation to which div 3 applies, the corporation shall, within two months after the acquisition, lodge a statement with the Commissioner in respect of that acquisition.

101 As I have mentioned, on 2 June 2004 Epic Energy Pty Ltd acquired all of the issued share capital in each of EEPP and EEWA. Each of those acquisitions was a 'relevant acquisition' (see s 76AQ) because Epic Energy Pty Ltd thereby acquired a 'majority interest' (see s 76AR(2)) in EEPP or EEWA, as the case may be.

102 By s 76AO(1), a s 76AN statement is chargeable, in accordance with s 76AS, with duty at the rate provided for in item 4(1) of the Second Schedule to the Act, calculated on its 'dutiable value'.

103 In the present case, the relevant 'dutiable value' is determined under s 76AS(2): see s 76AO(1)(a). By s 76AS(1), 'dutiable value' is defined as the value, free of encumbrances, of 'the land and chattels situated in Western Australia to which the corporation is entitled'.

EPIC ENERGY (PILBARA PIPELINE) PTY LTD -v- COMMISSIONER OF STATE REVENUE [2011] WASCA 228 (21 October 2011)

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Judgment (471 paragraphs)

EPIC ENERGY (PILBARA PIPELINE) PTY LTD -v- COMMISSIONER OF STATE REVENUE [2011] WASCA 228 (21 October 2011)

Legislation Cited (6)

Cases Cited (32)