Stamp duty - Conveyance on sale of dairy processing factories, plant and equipment in factories - Whether exempted from duty as "goods, wares or merchandise" - Exemption was available because items of plant and equipment were fixtures rather than chattels - Principles discussed

Stamp Act 1921 (WA) s 16, Second Schedule, Third Schedule, Item 2(7)

Anthony v Commonwealth (1973) 47 ALJR 83

Commissioner of Stamps (WA) v L Whiteman Limited (1940) 64 CLR 307

Cottee Dairy Products Pty Ltd v Minad Pty Ltd (1997) 8 BPR 15,611

Council of the City of Goulburn v McIntosh, unreported; SCt of NSW; 12 April 1985

Craven v Geal [1932] VicLawRp 26; [1932] VLR 172

Geita Sebea v Territory of Papua [1941] HCA 37; (1941) 67 CLR 544

Hellawell v Eastwood [1855] EngR 819; (1851) 6 Ex 295; 20 LJ (Ex) 154

Leigh v Taylor [1902] UKHL 1; [1902] AC 157

Lyon & Co v London City & Midland Bank [1903] 2 KB 135

Mancetter Developments Ltd v Garmanson Ltd [1985] EWCA Civ 2; [1986] 1 QB 1212

Melluish v BMI (No 3) Ltd [1996] 1 AC 454

1 MURRAY J**:** This is an appeal against an assessment of stamp duty. It is brought under the Stamp Act 1921 (WA) s 33 following the decision of the respondent Commissioner to disallow the objection of the appellant to an amended assessment under s 32 of the Act. By s 33(4), if I conclude that the assessment to which the appeal relates is in error, I am to assess the duty chargeable under the Act and order the Commissioner to refund any excess of duty which has been paid. By s 33A if such an order is made the amount to be refunded carries interest at the prescribed rate from the date of payment of the duty.

2 The process of appeal is essentially simple. It is initiated by the dissatisfied taxpayer requesting the Commissioner to treat its objection as an appeal. The Commissioner then forwards that document to the Court together with such documents as the copy of the assessment, the notice of disallowance of the objection, and a statement by the Commissioner setting out the matters relevant to the determination of the appeal. In this case certain directions were given which governed the mode of appeal. In addition to the documents to which I have referred above supplied by the Commissioner as being relevant to the subject matter of the appeal and the Commissioner's statement of the facts and issues, there was a statement of agreed facts which conveniently summarised relevant factual material.

3 The appeal was heard on affidavit evidence, being an affidavit sworn by a Mr Martin, the General Manager of the appellant. He was formerly the regional General Manager in WA of the National Foods Group of Companies and he was General Manager of the company within the group which as I understand it became the appellant and which conducts the dairy processing business of the National Foods Group in WA. In accordance with the directions given, Mr Martin was made available for cross-examination by the respondent and that occurred by video-link to Brisbane where he is now based.

4 I mention that to place on record that the process seemed to me to be effective in that the interaction between the Court and counsel and the witness seemed to me to be as effective as if he had been physically located in the courtroom, given that he had before him the documents relevant to the process of giving evidence, particularly a series of photographs of the relevant plant and equipment with which the witness seemed to me to be entirely familiar. In addition the parties provided written submissions to which counsel spoke at the hearing of the appeal.

5 The appellant was originally called Masters Dairy Ltd. It was a wholly owned subsidiary of Wesfarmers Ltd. Mr Watson was General Manager, although before his employment by that company he had been employed in various capacities in an equivalent business in the National Foods Group. By an agreement dated 8 April 1994, Wesfarmers Ltd sold the Masters Dairy business to the appellant. The business was thereby incorporated into the National Foods Group. It was acquired as a going concern. Its main factory was, and remains, at Bentley, the location of most of the items of present interest in this appeal. Another factory is at Boyanup. Until recently there was a plant at Albany. Adding the two currently operating factories brings the total operated by the National Foods Group to eight. Whereas Masters Dairy only operated in WA, the linked businesses of the National Foods Group operate in four States.

6 The appellant agreed to purchase the land, factory premises and plant and equipment of the dairy business for $9,029,243. It is that conveyance with which the appeal is concerned, rather than the prior acquisition, not by way of written agreement, of the assets comprising the dairy business, or the transaction, also made on 8 April 1994, by which the appellant acquired from Wesfarmers Ltd the issued shares in another wholly owned subsidiary of Wesfarmers Ltd, Dairy Transport Ltd, which was the registered proprietor of the land and premises at Bentley.

7 The appellant is liable to pay duty upon the transaction in question pursuant to the provisions of the Stamp Act s 16(1) and the Second Schedule, subject to the exemptions set out in the Third Schedule: s 16(2). The relevant item in the Second Schedule, prior to its amendment by an act which came into operation on 1 July 1998 and therefore after the transaction in question, was Item 4 "Conveyance or transfer on sale of property" and specifically Item 4(1) which makes the appellant as purchaser liable to pay stamp duty on a sale, conveyance or transfer of land or any other property at the rates relevant where the amount or value of the consideration exceeds $500,000.

8 At the relevant time there was under Schedule 3, Item 2(7) an exemption from duty in respect of "a conveyance or transfer of any estate or interest ...in goods, wares or merchandise, ...". That exemption was deleted by an amendment to that Item which came into effect on 30 June 1998, but that is immaterial for present purposes.

9 On 3 June 1994 the relevant agreement was lodged for stamping. The respondent commenced his process of valuation and assessment. He issued requisitions. There was correspondence between the parties. Ultimately, on 29 August 1996 an amended assessment was issued for stamp duty in an amount of $363,350.25. On 14 November 1996 the appellant objected to the assessment to the extent of $227,372.70 in respect of pieces of plant and equipment which were valued at $5,455,240. Again there was an exchange of correspondence. The duty on conceded pieces was paid. Further pieces were conceded on 20 December 1996 and the duty with respect to them was paid. The objection was disallowed on 26 February 1997 for the reason given in the letter from the respondent that:

"It is considered that the items of plant and equipment have a sufficient degree of annexation to the premises and are intended to remain in position for an indefinite or substantial period of time integral to the business operation so as to constitute fixtures for the purpose of assessment under the Stamp Act."

10 The value of the items of plant and equipment which remain in contention in this way is $5,122,868. The duty thereon was paid on 12 March 1997 and this appeal was initiated by the request to treat the objection as an appeal made on 11 April 1997. It is unnecessary to set out the terms of the objection. It is sufficient to note that the issue raised by the appeal is whether, in respect of the disputed items, they are removed from the Second Schedule, Item 4 and are no longer to be treated as dutiable property upon the conveyance on sale because they fall within Item 2(7) of the Third Schedule in that they are "goods" within the meaning of that Item. It is accepted by the parties that that question is to be determined by giving to the term "goods" the meaning personal property or chattels so as to exclude pieces of property having the quality of fixtures to the land upon which they are situated so that they would be treated as real property.

11 In Northshore Gas Co Ltd v Commissioner of Stamp Duties (NSW) [1940] HCA 7; (1940) 63 CLR 52 at 63 Starke J said:

"The phrase 'goods, wares, and merchandise' comprehends all tangible movable property. And ... the exemption in the Stamp Act was for the purpose of protecting commerce and ought therefore to receive a liberal construction. But it is well enough settled that it does not include fixtures, nor scrip certificates, nor shares, and so forth."

In the same case at 67 Dixon J said that the phrase there in question, very similar to that in Item 2(7) of the Third Schedule to our Stamp Act, was derived from the Statute of Frauds, s 17 and so should receive the same interpretation that:

"The words were understood to include all tangible movables; that is to say, they covered all chattels personal not being chosen in action or indicia of title thereto."

12 What then is the test for determining whether a chattel placed on land has become a fixture to it so that it is to be treated as part of the land? The cases are many. They deal with a considerable variety of factual circumstances. The point is often made that the question posed above is one of fact to be decided upon the particular circumstances of the case before the court. Many of the cases are therefore merely examples of the application of the general tests to the particular circumstances of the case, as this case will be, rather than as laying down general principles which may be directly applied to the facts of the particular case before the court.

13 But an understanding of the general principles aids judgment in the particular case and I start therefore with what was said by Blackburn J in delivering the judgment of the Court of Exchequer Chamber in Holland v Hodgson (1872) LR 7 CP 328 at 334-5:

"There is no doubt that the general maxim of the law is, that what is annexed to the land becomes part of the land; but it is very difficult, if not impossible, to say with precision what constitutes an annexation sufficient for this purpose. It is a question which must depend on the circumstances of each case, and mainly on two circumstances, as indicating the intention, viz, the degree of annexation and the object of the annexation. When the article in question is no further attached to the land than by its own weight it is generally to be considered a mere chattel. But even in such a case, if the intention is apparent to make the articles part of the land, they do become part of the land. ... On the other hand, an article may be very firmly fixed to the land, and yet the circumstances may be such as to shew that it was never intended to be part of the land, and then it does not become part of the land. ... Perhaps the true rule is, that articles not otherwise attached to the land than by their own weight are not to be considered as part of the land, unless the circumstances are such as to shew that they were intended to be part of the land, the onus of shewing that they were so intended lying on those who assert that they have ceased to be chattels, and that, on the contrary, an article which is affixed to the land even slightly is to be considered as part of the land, unless the circumstances are such as to shew that it was intended all along to continue a chattel, the onus lying on those who contend that it is a chattel."

14 A similar statement of principle by an Australian Court which is very often cited and relied upon is that of Jordan CJ, with whom Davidson and Nicholas JJ agreed, in Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 at 712. After repeating the substance of the passages quoted above from Holland v Hodgson, his Honour continued:

"The test of whether a chattel which has been to some extent fixed to land is a fixture is whether it has been fixed with the intention that it shall remain in position permanently or for an indefinite or substantial period, or whether it has been fixed with the intent that it shall remain in position only for some temporary purpose. In the former case, it is a fixture, whether it has been fixed for the better enjoyment of the land or building, or fixed merely to steady the thing itself, for the better use or enjoyment of the thing fixed. If it is proved to have been fixed merely for a temporary purpose it is not a fixture. The intention of the person fixing it must be gathered from the purpose for which and the time during which the user in the fixed position is contemplated. If a thing has been securely fixed, and in particular if it has been so fixed that it cannot be detached without substantial injury to the thing itself or to that to which it is attached, this supplies strong but not necessarily conclusive evidence that a permanent fixing was intended. On the other hand, the fact that the fixing is very slight helps to support an inference that it was not intended to be permanent. But each case depends on its own facts."

15 Importantly, it is to be noted that the intention of fixation referred to is not the subjective intention of the person annexing the chattel to the land, but the objective intention to be gathered from the circumstances applicable at the time of annexation rather than at any later point of time. Further, it seems to me that the reference in the authorities to a party carrying an onus to establish that the purpose of annexation either was or was not such as to convert the chattel into a fixture is a reference to an evidentiary onus which may be imposed upon by the party, depending upon the persuasive power in the particular circumstances of the case of the degree of annexation to move the Court to the conclusion that the object in question either is, or is not, a fixture and thus part of the land. What is referred to is not a legal onus of proof.

16 Whilst all the circumstances must be considered, it is to be accepted, I think, that the crucial determinative factor will be the object, purpose or objective intention of the annexation of the thing in question to the land. The degree of annexation may of itself be a factor having a particular persuasive power in that regard, but it will never alone be sufficient. As Ipp J put it in Eon Metals NL v Commissioner of State Taxation (WA) (1991) 91 ATC 4841 at 4845:

"It is plain that while regard should be had to all relevant circumstances, no particular factor necessarily has primacy and every case depends on its own facts. Nevertheless there does appear to be a trend towards attaching particular significance to the intention with which the item is placed upon the land."

The decision of Ipp J was followed by White J in Sanwa Australia Finance Ltd v Commissioner of State Taxation (WA) (1993) 93 ATC 4194.

"As regards intention, while subjective intention may be relevant, it is objective intention that is of paramount significance. ... the ultimate fact to be proved is the objective intention that ought to be imputed or presumed from the circumstances of the case."

This touches upon the admissibility of evidence of subjective intention and, as there is an objection to the admission into evidence of certain paragraphs of Mr Martin's affidavit upon the ground that they refer to subjective intention and further, to the intention of the appellant rather than to the intention with which the initial annexation of the objects to the land was accompanied, I should say something upon this aspect.

18 In making the comment quoted above Ipp J referred to the decision of the Full Court of NSW in N H Dunn Pty Ltd v L M Ericsson Pty Ltd (1979) 2 BPR 9241 and particularly to the judgment of Mahoney JA at 9244-5 where his Honour said:

"Whatever be the correct formulation of the fact to be proved in such disputes, it is not whether the owner of the chattel or any other person subjectively intended that it should or should not become part of the realty. Therefore a statement of the intention as to that particular matter is not a statement tending, as such, to prove the fact to be proved. But that intention, as such, is not necessarily irrelevant. Whether the question of whether chattels have become part of the realty is a question of fact or a conclusion of law, various matters have been seen as of assistance in the final determination of it. The period of time for which the chattel was to be in position, the degree of its annexation to the land, what was to be done with it, and the function to be served by its annexation, are all matters which have been seen to be relevant for this purpose. In particular circumstances, statements made by the owner of the chattel or of the realty as to his intention that the chattel shall or shall not be part of the realty may, if appropriately proved and evidenced, be relevant as facts probative of such matters and therefore as relevant in the determination of the ultimate fact to be proved."

I would respectfully adopt that view and think it sufficient to say that the parts of the affidavit to which objection is taken on this ground are admissible for such persuasive power as they have as statements bearing upon the ultimate question in issue, the purpose or the objective intention of the original annexation.

19 With respect I found most useful in considering this matter the statement of principle by Hill J in Lees & Leech Pty Ltd v Commissioner of Taxation (1997) 73 FCR 136 at 148-9. Included in those reasons, as in many other cases, is a discussion of tenant's fixtures. I mention them only because for the respondent much reliance was placed upon the discussion of such matters by the House of Lords in Elitestone Ltd v Morris [1997] UKHL 15; [1997] 1 WLR 687, 691-3, 695-6, 698-9. See also, and I think to the same effect, the judgment of the Full Court of SA in Wincant Pty Ltd v SA [1997] SASC 6287; (1997) 69 SASR 126, 127, 142-3. Briefly put, a tenant's fixture is a chattel which the tenant annexes to the land for purposes of trade or domestic convenience or ornament in such a way that, applying the ordinary tests, the thing becomes a fixture and therefore loses its identity as a chattel and during the period of its annexation is properly to be regarded as part of the land. It will therefore be the property of the owner of the land, subject to the right which may be secured by agreement to the tenant to remove the chattel and thus sever its annexation to the land during or upon the expiration of the term, or within a reasonable time thereafter. That capacity has been developed by the law in mitigation of the strict application of the general rule that what becomes annexed to the land is a fixture to be treated as being part of the land and the property of the owner. The rule is to make severable and again a chattel that which would otherwise be part of the land and incapable of severance as a matter of law.

20 The issue of removability in that way, as a right afforded by the law which may again confer ownership of the chattel upon a tenant or other limited owner, is, of course, different from the question whether the original annexation of the chattel to the land was of the character sufficient in all the circumstances to make the chattel become part of the land. But it does not follow, and indeed I would think it to be wrong that, as the respondent argues, the physical and economic capacity to remove the object in question and the likelihood of that occurring to enable the object to be used elsewhere is irrelevant to the question whether the degree and purpose of annexation was such as to make it a fixture in the first place. Clearly such considerations will be relevant aspects of the circumstances concerning the degree and object of annexation and will have the capacity to provide the answer to the question whether the objective intention with which the annexation of the object to the land was accompanied was such as to make it a fixture or lead to the conclusion that it retained its character as a chattel. Such considerations are commonly adverted to in that regard.

21 I have already expressed the view that one needs to be careful in considering decided cases to avoid elevating to the status of statements of principle, cases which are in truth merely applications in particular factual circumstances of the general rules. But in this case I found it of interest to refer to the decision of Fullager J in Attorney-General (Cth) v R T Co Pty Ltd (No 2) [1957] HCA 29; (1957) 97 CLR 146. That case was concerned with a question of what in a building on land compulsorily acquired by the Commonwealth would be the subject of that acquisition. The particular case concerned two printing presses, each weighing about 45 tons, attached by nuts and bolts to the floor of the basement of the building. Fullager J held that the presses were not fixtures because the purpose of bolting them to the floor was to hold them steady when in operation and was therefore for their better use as presses, rather than for the better use of the land in question.

22 On the other hand in Re Starline Furniture Pty Ltd (1982) 6 ACLR 312 Neasey J was concerned with the status of various items of plant and equipment which had been part of the installation in a furniture factory. The liquidator of the company which owned the factory had purported to sell these items, but the land was mortgaged and the mortgagees claimed against the liquidator that various items of plant and equipment constituted fixtures and so formed a part of the land and part of the mortgaged premises. In my view the legal interests involved are not dissimilar from those arising as between the appellant and the respondent in this case, the appellant being the purchaser of the land and items of plant and equipment situated upon it and the liability to stamp duty being assessable as at the date of the conveyance.

23 The items in question in Re Starline Furniture were all machines and other equipment used in the furniture making process - joinery machines, a compressor, a hot spray unit, air lines, an air storage tank, an exhaust system and fan. Most of the machines were bolted to the floor or affixed to the walls of the factory, wired into the electrical system and connected by pipes to the dust extraction system. The machinery affixed by bolts was easily detachable without damage. Neasey J held all the items to be fixtures. His Honour reviewed various authorities, including A-G (Cth) v R T Co, which case his Honour distinguished. After adopting the "wide-ranging statement" of Jordan CJ in Coroneo to which I have referred above. Neasey J observed:

"The core principle has often been said to be that the relevant intention is to be gathered from the circumstances, including in particular the degree and object of annexation. All of the items in question here fall into the category of factory machinery and associated equipment installed for purposes of trade, which a strong line of authority in England classifies firmly as fixtures passing with the land when the issue is between mortgagor and mortgagee." (314)

24 At 320 his Honour expressed his conclusion as being that "this machinery and equipment was primarily installed and affixed for the better use and enjoyment of the land and premises as a furniture factory, and passed with the land." To quote that conclusion provides a convenient means to reinforce in my mind the fact that the answer to the question whether a particular item is a fixture or not as at the time of conveyance must be provided by having regard to the degree and object of annexation as at the time of its installation into the dairy processing plant in question.

25 As I understand it from Mr Watson's evidence, speaking generally, raw milk which arrives at a processing plant is pumped into a storage tank. It then goes through a pasteurising process where it is heated and then cooled rapidly. The treatment will vary, depending upon the type of milk which the end product will be. The next step in the process, generally speaking, is to homogenise the milk to break up concentrations of cream and disperse it evenly. Following that the milk is again pumped into one or more storage tanks. Thereafter there may be further processing required, or mixing of the milk with other ingredients if the end product is to be other than pure milk. Finally, the milk product will pass through filling machines which package it before it is ultimately transported for distribution through retailers or milk vendors.

26 By and large the items of property in question here are items of plant and equipment used in the processing of the milk. They are as I understand it all connected to a power supply and they are connected in the processing line by pipes fixed to ceilings of rooms in the processing plant or under floors and running through walls. By that means then, the items of equipment may be described as being fixed to the factory and thereby to the land. But, again speaking generally, they are not otherwise so fixed except by their own weight. Very few pieces of equipment, notably compressors and centrifuges, are bolted to the floor of the factory. Those that are are so fixed because that is required by law for safety reasons or otherwise to keep the machine steady and fixed in position during its operation. There are various ladders and raised platforms bolted to the floor and some of these are fixed to the machines, but that form of fixation is to provide a firm ladder or platform which will not move so as to endanger the user.

27 The plant and equipment in question was acquired and introduced into the relevant factory on many different dates between October 1984 and February 1994. That reflects the fact that for such milk processing plants to be operated successfully it is necessary that the processing equipment may be changed to be disposed of or transferred to another factory location and to be replaced by different or more modern pieces of equipment. By that means the factory owner and operator is enabled to respond in an efficient manner to market forces such as demand generated for a different milk product, or changes in regional consumer demand which may necessitate the upgrading of the capacity of a particular factory, perhaps at the expense of another. There may be, and have been, changes made to accommodate the different packaging of milk products. New technology may appear which will cause a modification of the processing plant to provide for processes of greater efficiency and capacity. All of this obviously has to do with the cost effectiveness of the processing plant to produce the milk product, whatever it may be, in such a manner that it may be marketed competitively.

28 So this is not a case where the degree of annexation of specific items of equipment will by itself be of much assistance in answering the question whether or not they are fixtures. The Court is much more concerned with the objective intention behind annexation in the form of the incorporation of the item into the processing plant, bearing in mind that I am looking to the character of particular pieces of plant and equipment which, whilst they continue to be incorporated into the processing plant, all play a part in an integrated system of milk processing, no matter how economically effective may be the capacity to remove them and replace them so as to change the nature of the processing plant. While they play their role they must do so as parts of a system which is an integrated whole.

29 Particular items of equipment of this kind include -

(1) Pasteurising and homogenising equipment. Two of the milk processing machines in this group were very valuable indeed being valued at over $750,000 and $870,000 respectively. They are machines which rest on the factory floor secured by their own weight, connected to the power system and bolted to the piping by which milk is brought to them and taken from them. They are also connected to the refrigeration piping system. Essentially these machines operate within the process by separating the cream from the milk, by heating and cooling the milk using a heat exchanger, and by homogenising the milk.

(2) There are various tanks or vats, some of which are as large as a 20,000 litre capacity. They are storage tanks. They rest on the factory floor or on a steel mezzanine, held in place by their own weight, but again, obviously connected to the pipe system. They are easily removable and on occasions are moved between factories.

(3) Blow moulders. These also are merely secured on the factory floor by their own weight. They are machines used to manufacture plastic bottles. They are connected to the power source of the factory and merely by chutes to the factory's conveyor system. Again they may be moved from factory to factory as demand fluctuates. Associated with them at the relevant time was a blow moulder recycling baling machine, a piece of equipment not bolted to the factory floor, but connected to the power source and used to recover and recycle imperfect plastic bottles or scrap plastic resulting from the operation of the blow moulders. As I understand it, the conveyor takes these plastic bottles to that part of the factory where they may be filled by a milk product which has concluded its processing through the hygienically separate processing room which accommodates the pasteurising and homogenising equipment. Associated with the blow moulders are annealing machines in which the plastic bottles produced by the blow moulders are heated to stabilise them to the appropriate size. These are relatively small units bolted to the conveyor system.

(4) There are various filling machines, including a glass bottle filler which has now been removed, sold and shipped overseas, and machines for filling plastic bottles and bulk milk containers, particularly for the sale of milk to various institutions. Again, these machines rest on the factory floor and are secured by their own weight, being connected to the factory's power source, its pipe system and conveyor system. The plastic bottle filler, acquired in May 1993, was valued at over $220,000. Associated with these machines at the end of the conveyor system is a bottle packer with the obvious task of packing plastic bottles into crates. This machine is bolted to the conveyor system and connected to the power source of the factory.

(5) Boilers. There are various items of this kind of varying size and positioned in different ways into the processing system. The main boiler, acquired in 1990, was valued in the contract of sale at over $209,000. Again, the boilers are annexed to the floor only by their own weight and are connected to the pipe system. They produce steam for various purposes including the pasteurisation process.

(6) There are two butter printers, as they are called, for printing codes on wrappers into which butter is packed. These machines stand alone on the factory floor connected to the factory's power source.

(7) An evaporator. Valued at the time of contract at nearly $100,000. Again, this is a free standing unit which may be moved within the factory or to another factory. The equipment is used to reduce the water content in a milk product to produce a concentrated milk product. As one would expect, it is connected to the power source of the factory and is bolted to the transmission pipe system.

(8) A separator. Valued at over $100,000 in the contract. Used to separate cream from unhomogenised milk to produce cream, sour cream and cheese products. The separator is bolted to the pipe system and connected to the power source. Because of its mode of operation it is bolted to the floor for stability. A separator has a centrifugal operation.

(9) An evaporative condenser. This piece of equipment is again bolted to the factory floor for stability. Its purpose is to cool compressed ammonia gas into liquid ammonia for purposes of refrigeration. It is therefore bolted to the refrigeration pipe system as well as being connected to the factory's power source.

(10) There is a hot water softener and water filtering machine. They are designed to soften and purify water before it is converted by the boiler into steam. Their effect is to reduce damage to the boilers and they are bolted into the water pipe system.

(11) Water cooling towers. As their name suggests these machines are used to cool milk in the pasteurisation process. They sit on frames outside the factory building. They are bolted to water pipes and pumps.

(12) Refrigeration compressor. This is the main refrigeration unit for the factory. It was valued in the contract at over $170,000. It had been acquired in November 1988. It is used to refrigerate water to cool the milk. Being a compressor the unit is required to be fixed in position for safety reasons. It is connected to pipes and any fracture of pipes might allow liquid ammonia to escape. It is therefore the case that the solid fixing of this unit is required by law, but the unit may be disconnected and removed.

(13) A gram wrap machine. This is an icecream packing machine for icecream products which are sold on sticks. Again, although this machine, valued in the contract at over $40,000, is merely secured to the floor by its own weight, it is connected to the power source for the factory and is bolted to the liquid ammonia refrigeration system. The purpose of the machine is to mould and freeze the icecream product.

30 As at the time the above items of equipment were respectively placed upon the land and incorporated into the dairy processing factory they were undoubtedly readily removable and might have been removed and transferred to another place, or sold, or otherwise disposed of as required, but in my opinion, they were items which were placed on the land for the purpose of their integration into the factory system into which they were firmly incorporated. They were not placed there for a temporary purpose, but for an indefinite period of time. They were interconnected and incorporated into the factory, although the degree of annexation was variable and generally not otherwise than by the weight of the units. Nonetheless, as photographs reveal, their operative use was in various quite complex ways a part of the way in which the factory was structured. I have no doubt that the items of equipment described above were annexed to the land for the purpose of its better enjoyment or use as a dairy processing plant. When they were sold with the land the sale was of a factory as a going concern. The items of property described above were in my opinion fixtures and not able to attract the exemption provided in the Third Schedule to the Act.

31 The appeal is not pursued with respect to a number of originally contested items, particularly airconditioners and a stainless steel steam line. A furnace is in contest, but the evidence tells me nothing about its use in the factory process. Similarly, that is the situation with respect to a PABX digital switchboard and a Simpson dishwasher. Although in the N H Dunn case a similarly described switchboard was held to be a chattel because it was concerned with office communication, the evidence in this case tells me nothing about the use to which the switchboard was put. For all I know it may be an essential part of communication between those responsible for various parts of the factory process. In my view the proper conclusion with respect to those items of equipment not covered by the evidence is that I am simply unable to find that the appeal is made out with respect to them.

32 In the final analysis therefore, the appeal is dismissed in its entirety.