Vopak Terminals Australia Pty Ltd v Commissioner of State Revenue [2004] VSCA 10

2. In this matter I have had the considerable benefit of the reasons in draft form of Ormiston, J.A. I agree with Ormiston, J.A. that the appeal should be allowed for the reasons he has stated and that the orders made below should be dealt with as his Honour proposes.

7. This appeal raises difficult questions relating to the construction of the former Stamps Act 1958 ("the Act") and the nature of fixtures.[1] The issues went not so much to the liability to pay stamp duty on the subject transfer of land but to the value of the land so transferred for the purposes of the Act. The dispute between the parties has demonstrated a very significant difference in value according to the opposing contentions. The appellant, Vopak Terminals Australia Pty. Ltd. ("Vopak"), seeks restoration of an assessment based on a valuation of only $340,000, being the value of the land effectively "unimproved" by certain fixtures, as determined on review by the Victorian Civil and Administrative Appeals Tribunal, whereas the Commissioner asserts that the dutiable value was in the order of $15,058,569, being the value of the land including various items of plant and equipment which had become affixed to the land assessed by the Commissioner at their written down value. On the other hand Hansen, J., from whom this appeal is brought, held[2] that the value of the land should take account of the fixtures affixed to it but that the Commissioner had oversimplified the process of assessment by merely adding the written down value of those fixtures, so that his Honour remitted the matter to the Tribunal for the purpose of establishing properly the market value of the property as conveyed by the transfer.

10. The fixtures in question, whose effect on the value of the estate transferred is

so critical to this appeal, consisted of about eight tanks, most of which were used for the purpose of storing petrol, oil and other petroleum products, together with certain related plant and equipment, such as pipes and pumps, which went to make up a petroleum storage terminal at Barclay Crescent, Hastings which was owned and operated by Whitemark Pty. Ltd. ("Whitemark") before the land was transferred into the name of the appellant. There was no dispute on the hearing of this appeal as to the fact that the various tanks and other structures had been properly held to be fixtures, inasmuch as, notwithstanding that they were all, with difficulty because of their size, capable of being detached from the land if somebody was entitled to exercise such a power, they were sufficiently connected to the land to have become an integral part of it. One relevant company, Wickland Oil Terminals Pty. Ltd. ("Wickland Terminals")[3] was said to have obtained a lease of the land and to be the lessee of the land at the time of the transfer and to have the right to remove about half (or thereabouts) of those fixtures as "tenant's fixtures", in particular pursuant to s.28(2) of the Landlord and Tenant Act 1958. Another company Whitemark Rollover Pty. Ltd. ("Whitemark Rollover") was said also to have certain rights (in equity) to detach and remove what were in effect the remaining half of the fixtures pursuant to a complicated transaction, to which reference will be made below, which had led to an assignment by Whitemark of those rights to Whitemark Rollover immediately before the land was transferred. Vopak contended that on a proper understanding of the relevant provisions, including heading VI to the Third Schedule and s.63 of the Act, and the recent High Court decision in Commissioner of State Revenue v. Pioneer Concrete (Vic.) Pty. Ltd.[4], the fixtures were not to be taken into account in assessing the value of the land transferred, although they were at the relevant time fixtures, whereas the Commissioner contended that the very fact that they were fixtures made them part of the estate for the purpose of valuation and, having regard also to the decision in Pioneer Concrete, the interests of Wickland Terminals and Whitemark Rollover should be disregarded for the purposes of assessment.

14. In order to explain how these various contentions should be dealt with and how the interests of the various parties should be taken into account, if at all, some statement of the relevant facts is necessary, although they are more than adequately set out in the succinct judgment of the learned judge.

17. The relevant transfer by Whitemark of "all its estate in fee simple" in the two relevant titles to Vopak[5] was dated 11 June 1998, that date coming to light when the transfer itself was produced on this appeal.[6] The relevant date for valuation purposes is, however, 8 May 1998 being the date of the relevant contract of sale, inasmuch as paragraph (B) of s.63(3)(b)(i) of the Act entitled the Commissioner to rely on "the amount for which the real property ... might reasonably have been sold ... in the open market on the date of sale ...". It is necessary, however, in order to understand the relationship between the various parties interested in the land and the fixtures to go back to at least 1995 and to trace through a number of transactions in the period before the sale.

20. In October 1995 Whitemark was the registered proprietor of the land which it had acquired for use as a terminal. On 20 October 1995 it entered into a complex agreement with Wickland Terminals[7], which consisted of an agreement to lease the land to Wickland Terminals from a date in the future when Whitemark had completed the construction of four storage tanks and other structures (which I shall call "Whitemark's fixtures") to be used for the purposes of the terminal, at which time Wickland Terminals would have the right to possession of the land as lessee for a term of two years. Among the covenants included was a right granted to Wickland Terminals to construct further tanks and equipment on the land up to a capacity of 700 million litres (to be called hereafter "Wickland's fixtures"), which Wickland Terminals was entitled[8] to remove, and was obliged to do so if required by Whitemark. Also included in the agreement was an option in favour of Wickland Terminals to purchase the terminal for $16.5m. The "terminal" was defined to mean the land together with "Whitemark's property", which in turn was defined to mean anything which was not "Wickland's property", likewise defined in turn as anything installed or placed in the terminal by Wickland Terminals, including "fixtures". The option was to be exercisable within 21 months of the taking of possession but in fact it was not exercised as such. It is not entirely clear when Whitemark completed the construction of the four tanks and other buildings making up Whitemark's fixtures, nor when Wickland Terminals took possession, although it was certainly before the next transaction occurred.

23. In accordance with its rights under the lease Wickland Terminals made further substantial improvements to the terminal. The works it performed included installing another four major storage tanks, as well as other tanks and equipment required for the purposes of the terminal, in all expending some $7.7m. to that end. These are the items described as Wickland's fixtures. In the meantime, the option to purchase was varied once on 18 October 1996, by expanding the option rights, and again by letter dated 10 February 1998 to which I shall turn in a moment. At about the same time the Wickland Oil Company as the holding company of Wickland Terminals sold its shares in the latter company to the appellant Vopak for some $100,000, subject to a number of presently irrelevant obligations.

26. Then by letter dated 10 February 1998 Whitemark and Wickland Terminals again varied the terms of the option in a way which contemplated that there would be three transactions entered into on 8 May 1998, including a sale of the land, but that, in default of suitable documentation being agreed upon, Wickland Terminals would exercise its option on a varied basis, the price being altered to $9,900,000 including $340,000 for the land and $9,560,000 for "the terminal" which was understood to comprehend Wickland's fixtures.

29. Even the last arrangement and variation of the option was not carried into effect as the parties and certain other companies entered into three separate transactions on 8 May 1998 in the order described below, that order not being challenged by the Commissioner.

32. The first of the three transactions on that day was a sale by Whitemark to Whitemark Rollover of certain "assets", including Whitemark's fixtures, together with a pipeline which extended onto a jetty at Crib Point and certain other plant and equipment used in connection therewith and situated outside the land in question. "Assets" was defined also to include "all other assets, properties and rights of every kind and character whether real or personal, tangible or intangible, wherever located and whenever located, owned by the vendor and used in connection with the assets and/or the terminal". It was accepted that the real property, the subject of the transfer later that day,[9]

was not comprehended by this definition, as noted by the learned judge[10], in part because it obviously was not intended and in part possibly because that real estate, though "owned" by Whitemark, was not then being "used" by that company but by Wickland Terminals at the relevant time. The consideration for the sale was a price of $9,560,000, but payment was to be satisfied by the issue of shares in Whitemark Rollover to be effectuated pursuant to the requirements of s.160ZZN of the Income Tax Assessment Act 1936. The learned member of the Tribunal held that those tanks, pumps and loading bays were all in law fixtures, rather than severed chattels[11], though that may hide a further issue. Of course, what the parties purported to do was to deal with the affixed former chattels constituting the tanks, pumps and loading bays in a manner which treated them as capable of severance or at least as the subject of rights separate from those owned by the holder of the realty, and to that issue it will be necessary to return. What Vopak contended was that, at least as between the parties to that transaction, equitable rights in those "fixtures" were separately granted to Whitemark Rollover and that the transferor of the real estate, Whitemark, had notice of the transaction and was affected and bound by those rights, so that Vopak as purchaser of the land was likewise bound and affected by them. Whatever its precise legal consequences the Commissioner has accepted that the transaction was effective according to its terms. A description of the plant and equipment in the schedule to the agreement makes clear that it comprehended only Whitemark's fixtures. Whitemark's fixtures were not severed or removed at the time, nor, to my knowledge, have they been severed or removed subsequently.

37. The second transaction on 8 May was entered into immediately after that referred to in the last paragraph. It was a sale by Whitemark to Wickland Terminals[12] of all Whitemark's shares in Whitemark Rollover for $9,560,002. Both the transfer of the shares and the payment of the cash price were to be effected on the same day, namely 8 May. Among a number of warranties was one which asserted that Whitemark owned plant and equipment at Hastings worth $9,560,000.

40. The third and final transaction on 8 May was a sale by Whitemark to the appellant[13] as purchaser of the subject land for the price of $340,000. Settlement was to be upon the date when the purchaser accepted title and paid the price. A transfer by Whitemark was apparently executed and handed over on that day to the purchaser and it seems likely that the consideration was also then paid, albeit that the signed transfer was dated 11 June 1998. As I have said, the Commissioner accepted the order of the transactions and that the sale of the land was the last of the three transactions on that day. It should be recalled that by that time the appellant was the holder of all the shares in the lessee Wickland Terminals, and that by reason of the sale it succeeded to Whitemark's rights and powers as lessor of the subject land.

43. It should also be noted that the one matter not directly addressed or made the subject of explicit agreement on 8 May 1998 were "Wickland's fixtures". They were not separately sold as were Whitemark's fixtures, nor was anything said about Wickland Terminals' rights as lessee. The natural conclusion would be that, inasmuch as they were in law fixtures, they passed as part of the realty to Vopak. It would also follow that, if and to the extent that they were tenant's fixtures, then Wickland Terminals had the right to sever and remove them effectively up to the time it gave up possession of the subject land. It is not directly made clear in any of the materials provided to this Court on appeal whether Wickland Terminals was still in possession as tenant under its lease from Whitemark, the difficulty being compounded by the fact that it nowhere appears, to my knowledge, when "practical completion" took place under the lease agreement with Whitemark, being the date fixed for the commencement of Wickland Terminals' right to obtain possession of the land. After the parties expressed a good deal of uncertainty and hesitation, I understood it to be conceded that at least up to the date of transfer Wickland Terminals remained in possession. Any other conclusion would seem surprising for its holding company Vopak would on these materials have had no right to take possession of the land until title was transferred to it and the lease surrendered, unless Wickland Terminals had previously assigned its rights to Vopak as its holding company, and of such an assignment there is no evidence. Thereafter, both lessor's and lessee's rights being vested in the same corporate group, different arrangements may have been undertaken but that is not relevant to considering the proper value of the land as transferred on 9 May 1998.

46. The transfer of 8 May to Vopak was submitted to the Commissioner later that month, so that it was stamped with duty at $16,060 based on the stated consideration of $340,000. However, on 18 February 2000 the Commissioner issued a default assessment in relation to the transfer assessing Vopak for additional stamp duty of $812,161 together with a penalty of $243,648.30 and interest of $77,893.92. The assessment stated that the land had now been assessed on the basis that the property had a market value at the time of sale of $15,058,569 which for the purpose of the assessment was calculated by taking the consideration for the land and adding to it $6,968,825 for Whitemark's fixtures and $7,749,744 for Wickland's fixtures. Consequently the total payable pursuant to the amended assessment was $1,133,703.22. It appears that the values placed on the two sets of fixtures were based on their written down value at the time of sale.

49. Vopak lodged an objection with the Commissioner against the amended assessment on 18 April 2000, but that objection was disallowed by the Commissioner by a decision dated 30 August 2000. Thereafter Vopak referred the objection to the Victorian Civil and Administrative Appeals Tribunal[14], the reference being heard by the learned member, Mr Geoffrey Gibson, on 10 May 2001. On the following day Mr Gibson published his decision in favour of the appellant, ordering that the assessment be varied by being reduced to duty assessable on a transfer to the value of $340,000. In consequence, the respondent Commissioner sought and was granted leave to appeal to the Supreme Court from that decision. Hansen, J. allowed the appeal upon the basis that Vopak had taken clear title to the land, including the fixtures, free from any other parties' interests in the fixtures, but he was dissatisfied with the method by which the Commissioner reached the valuation of $15,058,569, so that he remitted the matter to the Tribunal to determine the correct value of the land.

52. It is necessary again to mention briefly the fixtures, plant and equipment, the value of which formed the essential basis for difference between the two values asserted on each side. However, as neither party challenged the findings of the learned member of VCAT on this issue either at the hearing before Hansen, J. or on this appeal, relatively little need be said. Mr Gibson considered the fuel tanks, the other tanks, the pumps and the other loading bay equipment and concluded, having regard to the nature and structure of those items, their connection with the land itself, the cost of their installation, their comparative expense, the difficulty of removing them and finally the fact that they formed an integral part of the terminal, that they were put there to remain permanently on the site or at least for an indefinite or substantial period. He conceded that the tanks in particular rested on their own weight, though they were affixed in a sense by reason of their connection to the pipes attached to them. The fact that the fuel tanks, in particular, were so large meant that any removal from the site would be very difficult and expensive, though the evidence did indicate that similar items have been moved elsewhere in the world, either by rail, crane, modular trailer or by flotation, though the evidence made it clear that it was both a complex and extremely expensive exercise. It is sufficient to say that each of the tanks is between 32.5m. and 44m. in diameter and between 12 and 14.5m. in height. Obviously, the pumps and related pipes are not as bulky, but they would each require to be detached, at least in part, though in comparative terms that would not be so expensive. The learned member pointed out that the tanks had not been removed since their installation so that the plain inference he drew was that they were put there to be left for a very substantial time and so were an integral part of the terminal. In one way or another they were connected with the land so that they should be treated as fixtures rather than as chattels. I should add that it appears that four of the tanks, numbered 101 to 104, appear on the lists of both Whitemark's fixtures and Wickland's fixtures, but at different assessed values, and I can only assume, in the absence of any explanation in the materials to which we were taken, that those values reflect the respective interests of the two companies in those tanks. Neither party appeared to place any significance on this fact, so that I shall not deal with it further, although it would be unusual for two parties to make claims to be entitled to remove the same fixtures as chattels where those claims were based on two different rights.

56. By the time the case reached this Court on appeal the parties had refined to a considerable extent the issues on which they were in dispute, albeit that some of their propositions tended to hide other questions raised in the course of argument. This was the justification for allowing the appellant to amend extensively its notice of appeal. The original notice was, if I might say so, almost incomprehensible, whereas the amended notice, delivered on the second day of the hearing of the appeal, set out three relatively simple grounds. The first claimed that the judge erred by holding that, in calculating stamp duty on the transfer, the interests of Whitemark and/or Wickland Terminals in the fixtures "in which they had proprietary interests should be disregarded". Secondly, the appellant contended that in calculating the amount for which the property might reasonably have been sold free from encumbrances in the open market the interests of Wickland Terminals and/or Whitemark should have been taken into account so as to reduce what would have been the value of the property in the absence of those interests. Thirdly, it was said that the judge should have found that there was no "error in law" in VCAT's decision that the value of the estate transferred was $340,000. The third ground was not supported in argument before this Court and eventually it was conceded that it would not be pursued. However, it was also contended that the judge was wrong in remitting the matter to VCAT in order to reconsider the value of the subject property.

59. Even in its amended form the new ground (1) tends to obscure rather than make clear the primary point taken by the appellant which is better reflected in its new second ground of appeal. In truth the appellant did not wish Whitemark's and Wickland Terminals' "interests" in the fixtures to be ignored or "disregarded" in the calculation of the relevant stamp duty. Rather it said that, if those "fixtures" had become affixed to the land, as had been held below and was no longer disputed, those fixtures were of a kind which at the time of transfer entitled other parties, namely Whitemark's assignee and Wickland Terminals, to claim back and detach those affixed chattels, so that their "interests" should be taken into account only to the extent that it should be recognised that the fixtures were owned by those parties and consequently the value of those items should be excluded for the purpose of valuing Vopak's interest in the land pursuant to s.63(3)(b)(i)(B). Vopak asserted that Whitemark Rollover had an interest in Whitemark's fixtures which could be characterised as at least an equitable interest in the total value of all those particular fixtures and that Wickland Terminals had a tenant's right to detach and remove its fixtures pursuant to s.28(2) of the Landlord and Tenant Act 1958 for so long as it remained in possession of the land. In the latter case, whether or not those fixtures should be treated as truly affixed so as to form part of the realty, Wickland Terminals' rights should be treated as depriving the holder of the fee simple, the new transferee, of any rights in those affixed chattels, so that they should be entirely ignored for valuation purposes. The end result, according to Vopak's contentions, was that the original valuation by the learned member of VCAT was correct in that it valued the estate as if there were no fixtures on it or at least on the basis that they were irrelevant to valuing the transferred estate.

62. Counsel for the Commissioner, for their part, said that, although the fixtures were relevant in valuing the property, Whitemark Rollovers' and Wickland Terminals' interests in their respective fixtures should be ignored for they did not amount to any exception or reservation or to any other relevant outstanding proprietary interest which qualified the transferor's estate. Consistently with the High Court's decision in Pioneer Concrete, those were interests which were to be ignored in determining what was the estate which was transferred and the value to be placed upon it for stamp duty purposes. It had already been held, correctly, as was contended, that all the tanks and other plant and equipment relevant to this case had become affixed to the soil so as to form part of the vendor's interest which it transferred to Vopak. The existence of those very substantial fixtures on the land and their effective annexation to the property should result in the estate transferred having a value which took into account that those fixtures formed part of the estate. The respondent did not challenge the judge's order that the question of value should be remitted to VCAT and appeared not to dispute that, as the judge had held, the value placed on them by the Tribunal was excessive. Nevertheless, it said that the estate transferred was in the circumstances exceptionally valuable and far greater in value than it would have been in its unimproved condition.

Relevant provisions of the Stamps Act

66. Before dealing with the arguments further it is necessary to look at the principal statutory provisions in question. The general provisions of the Act were contained in ss.17, 17A and 18[15]. Section 17(1) contained the principal grant and levy of duty in that it provided that "subject to the exemptions contained in the Third Schedule ... there shall be charged for the use of Her Majesty upon the several instruments specified in the said Schedule the several duties and additional duties therein specified". By heading VI of the Third Schedule conveyances and transfers of land were rendered dutiable, and thereunder para.(B) brought land transfers to duty by stating that, if the value of the property was not less than the amount stipulated in the first column of the table subjoined thereto (effectively $20,000), then "the duty payable on ... every transfer of land ... is the amount determined to the nearest whole dollar ... in accordance with column 3" of that table. The Heading also contained provisions relating to a "conveyance of real property" dutiable in accordance with the same table, and contained a large number of exemptions, none of which are presently relevant. Counsel also took us to what appears to be a definition provision under that Heading as to what was "the value of real property", but, although the provision was similar to that in s.63(3), it was a mere shorthand for the latter sub-section and need not be further examined. The primary provision here under consideration was included in the definition section, s.63, which explicitly controlled the meaning of the terms used in Heading VI[16], and was contained in para.(b) of sub-s.(3). Section 63(3) read relevantly:

"Except as otherwise provided in this Act - ... (b) a reference in this subdivision or in the provisions of the Third Schedule under Heading VI to the value of real property or property is a reference - (i) in relation to a conveyance on sale of the real property or property - (A) to the sum of the consideration for the sale and the consideration for the transfer of chattels included in the real property or property by reason of paragraph (a); or (B) to the sum of the amount for which the real property or property and the amount for which such chattels might reasonably have been sold if they had been sold, free from encumbrances, in the open market on the day of the sale - whichever is the greater ...".

The reference to chattels is presently irrelevant for in para.(a) it was made clear that such chattels did not include fixtures. The definitions in s.63(1) also stated that "conveyance" "includes transfer" and that "real property" includes "any estate or interest in real property".

Tenant's fixtures - Effect of s.28(2) of the Landlord and Tenant Act 1958

72. The first practical issue is the extent to which the appellant Vopak can assert that the fixtures held to be attached to the subject land can be disregarded in valuing the estate which was transferred. Having regard to the concession, on both sides, that both tribunal and judge were correct in making the relevant finding, it seems that all the alleged fixtures, whether Whitemark's fixtures or Wickland's fixtures, were in fact sufficiently affixed to the soil to satisfy the conventional tests as to annexation so as to make them part of the land, subject only to the effect of s.28(2) of the Landlord and Tenant Act. There seems also little dispute, but for one matter, that Wickland's fixtures were capable of being removed by Wickland Terminals as tenant's fixtures. There was no agreement as to Whitemark's fixtures but that involves separate consideration.

75. The dispute as to removability of Wickland's fixtures rests on a contention by Vopak that those fixtures were removable from the land only by reason of the provisions of s.28(2) of the Landlord and Tenant Act and could not otherwise have been tenant's fixtures at common law. To a degree that was an artificial dispute for the section in question clearly involved a degree of codification, albeit that it would seem that Parliament's intention was to expand the class of tenant's fixtures in a more general way. The argument, however, depends upon the use of the expression "shall be the property of the tenant" appearing in the section which on its face would justify the conclusion that chattels affixed by tenants do not immediately become part of the realty or that, at the very least, as between landlord and tenant they remain chattels and cannot therefore be considered (as between them) as having been affixed to the realty, with all the necessary legal consequences which flow from that conclusion. It is necessary therefore to look at s.28(2) and to set it out in full to see what Parliament has intended:

"If any tenant holding lands by virtue of any lease or agreement executed or made after the 24th day of September 1907 at his own cost and expense erects any building either detached or otherwise or erects or puts in any building fence engine machinery or fixtures for any purpose whatever (which are not erected or put in in pursuance of some obligation in that behalf) then, unless there is a provision to the contrary in the lease or agreement constituting the tenancy, all such buildings fences engines machinery or fixtures shall be the property of the tenant and shall be removable by him during his tenancy or during such further period of possession by him as he holds the premises but not afterwards; notwithstanding the same consist of separate buildings or that the same or any part thereof may be built in or permanently fixed to the soil; so as the tenant making any such removal does not in any wise injure the land or buildings belonging to the landlord or otherwise puts the same in like plight and condition or in as good plight and condition as the same were in before the erection of anything so removed." (Emphasis added.)

79. The meaning of the emphasised words in the sub-section seems clear[17]. Nevertheless the reason for describing that wide class of fixtures as "the property" of the tenant is by no means so clear, for the section immediately states that those items are "removable" by the tenant during the tenancy or during subsequent holding of possession, there being nothing said explicitly as to the consequence of failing to remove that class of fixture. The assumption must be that a failure to remove during the statutory period will result in the items becoming attached permanently to the soil so as to form part of the realty thereafter. Significantly, perhaps, the expression used in sub-s.(2) is relevantly the same as is used in sub-s.(1) of s.28 in relation to agricultural fixtures, a section which can be traced back in almost identical terms to the United Kingdom statute 14 & 15 Victoria Chapter 25 s.3 and to s.47 of the Landlord and Tenant Statute 1864 of this State.

82. On the other hand, this meaning appears contrary to conventional rules relating to fixtures, so that it is necessary to examine the background to the passing of s.28(2). The view customarily accepted in most of the authorities is that expressed by Dixon, J. in North Shore Gas Co. Ltd. v. Commissioner of Stamp Duties (N.S.W.)[18]:

"Though removable tenants' fixtures may during the term be detached and become chattels belonging to the tenant, yet the better opinion appears to be that unless and until the tenant exercises his right of removal they form part of the realty[19] ... and for this reason, subject to the exercise of the tenant's right to convert them again into chattels, pass with the land."

His Honour's cautious statement derives[20] from the fact that in a number of authorities, especially at the turn of the century, a view was expressed that tenant's fixtures remained for the time being chattels owned by the tenant, although if the tenant failed to exercise the relevant rights of removal, then the fixtures would thereafter be treated as having been affixed permanently to the soil and forming part of the realty. Statements to this effect appear in particular in the judgment of Buckley, J. (later Lord Wrenbury) in Re Sir Edward Hulse[21] where there was a dispute as to certain heavy machinery brought by a tenant onto a mill. After describing a number of the authorities and referring to the classification of tenant's fixtures as being an exception to the general rule, his Lordship said[22]:

"It is not that the law allows the tenant for years to remove part of the freehold, but that the chattels have not become part of the freehold. The exception makes them not part of the freehold."

He therefore concluded that the machinery "never became part of the soil"[23].

89. That the latter view was not so exceptional as, perhaps, it might otherwise have appeared, is borne out by the decision only a few years later of the High Court in Registrar of Titles v. Spencer[24], where Re Hulse was expressly followed. The decision was the last of a well-known group of cases on valuation of land, and the issue was what value, if any, should be placed on tenant's fixtures placed on the subject land by the tenant for life. The issue was essential to a claim for compensation against the Registrar of Titles for Western Australia pursuant to s.207 of the Transfer of Land Act 1893 (W.A.) arising from the wrongful issue of a certificate of title by the Registrar. In reaching the conclusion that trade fixtures should effectively be ignored for this purpose the Court expressly followed Re Hulse. Griffith, C.J., after stating[25] that Re Hulse was "accepted as containing a correct statement of the law on the subject", proceeded to distinguish the case where buildings on land should be included in the value of that land for relevant purposes, as had been held earlier, by saying:

"But that is because buildings put on the land become (with some exceptions not here material) part of the land, whether put up by a tenant for life, tenant for years, or a trespasser; whereas trade fixtures put on land by tenants for life or years do not, or may not, become part of the land."[26]

Barton, J. likewise followed Re Hulse, setting out much of the reasoning in detail.[27] His Honour likewise distinguished the case of buildings on land saying[28]:

"They necessarily become part of the soil. Fixtures do not always become part of the soil, though they generally do so, and in such a case of trade fixtures as the present, I do not think they become part of it."

In reaching the same conclusion O'Connor, J. said[29] that it was unnecessary to go beyond Re Hulse "for a full and accurate statement of the law on this point". He therefore stated that the basic assumption must be "that the fixtures were placed on land by the tenant for life for the purpose of their use in trade and not for the purpose of making them a present to the freehold"[30], and thus were to be ignored in valuing the land.

96. What is significant about these passages is not that they represent the common law as it is presently understood, albeit that the High Court decision has never been overruled, but that it represents the views of four very eminent judges before and immediately after the passing in 1907 of the Act which amended the Landlord and Tenant Act by the insertion of what is now s.28(2) of the Landlord and Tenant Act 1958. That misconception, if so it may be called[31], may serve to explain what might seem to be the unusual language adopted in the part of the sub-section which appears to preserve a right of "property" in a tenant, at least until the time for permitted removal has expired. The other possible explanation for the language adopted is that the sub-section follows to a significant extent and identically, so far as the relevant words are concerned, the language of sub-s.(1) relating to agricultural fixtures, which were the subject of a provision passed some years earlier, to which I have already referred.

99. At least two other reported cases in the period immediately preceding the passing of what is now s.28(2) of the Landlord and Tenant Act may also help to explain the language of the sub-section. They involved interests in the estate of Madame De Falbe who, as tenant for life of the Luton Hoo estates, had attached a number of exceptionally valuable tapestries with some care to the walls of the drawing room of the mansion, such that on her death the remainderman claimed that they were fixtures. In Re De Falbe[32] the Court of Appeal held that the object of the annexation of the tapestries was the better enjoyment of them as chattels so that they did not pass with the freehold to the remainderman. This decision was affirmed on appeal by the House of Lords in Leigh v. Taylor[33]. A majority of the Court of Appeal (Rigby and Vaughan Williams, L.JJ.) and all but one of the members of the House of Lords appeared to accept two trends in the development of the law relating to fixtures, but then, with the greatest of respect, to overlook their consequences. The first, perhaps most authoritatively stated in Leigh v. Taylor itself, was the additional (and sometimes seen to be controversial) test requiring consideration of the object of annexation, though without examining actual intention, and the second was the expansion of exceptions to the absolute consequences of affixation, which had resulted in tenants for years and tenants for life being permitted during their possession as tenants to remove certain items attached by them which had become fixtures and thus part of the realty. In strictness the first development of the rule could lead only to a conclusion in any case, where the object points unequivocally to a lack of intent to affix, that there has been no sufficient annexation of a particular chattel and thus that it is not and could thereby never be a fixture, whereas the second development in the law assumes that the degree and purpose of annexation were sufficient to make the chattel a fixture, but that the tenant had subsidiary rights to remove the so-called fixture and effectively convert it back to its character as a chattel. The better view of the De Falbe decisions was and is that the tapestries never became fixtures because at all times Madame De Falbe attached them only for the purpose of better enjoying them as chattels. Unfortunately from time to time[34] it was said that the tapestries were each "a sort of ornamental fixture" (sic), though at the same time it was held that they were "not part of the house", so that they were removable as chattels. Likewise their Lordships in both the Court of Appeal and the House of Lords appeared, with respect, to treat the practical qualification of the law relating to fixtures as dependent upon the imposition of the secondary test as to purpose of affixation, whereas for many years the relevant qualification of the strictness of the law had been in the development of principles relating to what had been and are called tenant's fixtures, whether described as trade fixtures or ornamental fixtures, which principles, of course, assume that the chattels become fixtures over which there is a qualified right of removal remaining in the tenant.[35]

102. The decisions in De Falbe and Leigh v. Taylor had also been cited with approval by the High Court in the decision of Reid v. Smith[36] in 1905, in particular to show the necessity to look both at the degree and object of annexation of the allegedly affixed chattels, an element of each decision which has been accepted for many years, albeit that there have been some criticisms in recent times as to its precise application, which it is unnecessary here to examine. All that need be said here is that in 1907, when s.28(2) of the Landlord and Tenant Act was originally passed, there was considerable uncertainty, as expressed in courts of highest authority, as to the basic principles underlying the law of fixtures and more particularly as to the nature of tenant's rights to remove what had come to be known as "tenant's fixtures", which at common law included both trade fixtures and ornamental fixtures.

105. The uncertainty may have come about because of the language used in two of the early leading cases on tenant's fixtures. In Poole's Case[37], accepted as the basis for the subsequent law of tenant's fixtures, Lord Holt, C.J. said that the purpose of the rule was "during the term" to encourage trade, "but after the term they become a gift in law to [the lessor] in reversion" (emphasis added). The passage was cited with approval by Lord Ellanborough, C.J. in another leading case, Elwes v. Maws[38] in the course of a judgment which narrowed the rule relating to tenant's fixtures to a considerable degree, excluding any relaxation for agricultural tenants. This was the reason leading later to the passing of 14 & 15 Victoria c.25. It is, however, surprising that much weight could still be placed on this reasoning, for a Scottish court, having adopted language similar to that used later by Buckley, J., was roundly condemned by Lord Cairns, L.C. in Bain v. Brand[39]. Apart from the cases to which I have earlier referred there would seem to have been little basis in the later authorities for holding that the tenant retained property in attached fixtures.[40]

108. In my opinion, therefore, it would not be unsurprising if the Parliament of this State had taken the view that the law of tenant's fixtures at that time implicitly accepted that a tenant retained property in chattels which the tenant had affixed to the land in circumstances where they would be otherwise treated as fixtures and would thereafter be treated as fixtures, if the tenant did not exercise the relevant rights to remove those chattels at the end of the tenancy or during any consequential period of possession. On the other hand, if Parliament thought there was any uncertainty, they certainly seemed anxious to protect the rights of tenants, as will be seen.

111. I have suggested that the form of the provision then in operation relating to agricultural fixtures, derived from s.3 of the English 14 & 15 Vict. Chapter 25, had for many years made provision that, where an agricultural tenant erected or affixed buildings, engines, machinery, fencing and the like on leasehold land, then such building, engines, machinery, fencing and the like "shall be the property of and be removable by the tenant ... ": see s.47 of the Landlord and Tenant Act 1890. That section, in its various forms, seemed to have provided that the relevant buildings, machinery etc. would not be treated as affixed to the realty until the time for removal by the tenant had expired, although it did not spell out the latter consequence so explicitly. I have not been able to discover why the section relating to agricultural tenancies took that form from the outset but it seems to have been considered as having dealt with agricultural fixtures in a way different from the common law, although I can find no direct reported authority on the subject. For example, a well-known work of the time, Amos and Ferard: Law of Fixtures, (3rd ed., 1883) stated[41] that the provision "would seem to alter the common law rule (to which, ... the privilege of removal makes no exception), that a chattel by annexation to the soil becomes the property of the freeholder". Likewise Woodfall, Landlord and Tenant, (17th ed., 1902) said of a successor act in England, in terms closer to the Victorian section, that it gave "the tenant, subject to certain rights of pre-emption on the part of the landlord, the property in fixtures whether erected with the consent of the landlord or not", though landlords could contract out of it.[42] Although not relevant to Parliament's intention in 1907, that view has broadly prevailed, as may be seen by the comment in, e.g., Megarry and Wade: Law of Real Property, (3rd ed.) at p.721.

114. This then was the somewhat uncertain background to Parliament's enacting what is the direct predecessor of s.28(2) of the Landlord and Tenant Act. The section was passed, after a good deal of heat and confusion, as s.8 of the Real Property Act 1907 and in the first consolidation thereafter it became s.48 of the Landlord and Tenant Act 1915. It is unnecessary to set out the section as passed, for it was essentially the same as the present sub-s.(2) of s.28. As will be seen, although it is hard to be sure precisely what was in the mind of those who passed the section, it is probable that the provision[43] that agricultural "fixtures" should be "the property of the tenant" was known to those drafting the Act and those members of Parliament who were lawyers. Moreover, for reasons already stated, the latter may have thought such a principle to have been generally applicable to tenant's fixtures.

117. The new section started its life in the Legislative Assembly at about 3.15 a.m. on 22 December 1906 during the consideration[44] of what was then called the Limitation of Actions Bill. That bill had been passed nearly three months earlier by the Legislative Council and was primarily directed to amending certain provisions relating to limitations affecting real property. When consideration of the bill had resumed in the Assembly on 21 December 1906 Mr Mackey, the Minister for Housing, moved first of all that the citation of the Act be changed to the "Real Property Act" and then proposed a number of amendments by way of additional clauses. One of those clauses, clause (C), was substantially similar to what is now s.28(2), although a number of amendments were subsequently made before it was ultimately passed as s.8 of the Real Property Act 1907. Introducing the clause Mr Mackey said[45] only that its object was "simply to cure an anomaly in the existing law, and to allow tenants who had made improvements upon property to remove these improvements when it caused no damage whatever to the property of the owner". The clause was immediately agreed to without debate and within a few minutes the bill as amended was ordered to be returned to the Legislative Council.

120. Again within minutes the amended form of the bill was brought before the Council by the Attorney-General, the Hon. J.M. Davies. He recited the history of the bill, with a degree of irritation, but moved successfully agreement with a number of the amendments. However, when it came to clause (C) Mr Davies said that the Assembly had "inserted an entirely new clause" relating to the removal of fixtures, and continued: "This might be very desirable, and probably it was, but it should not have been tacked onto this bill at this particular stage". He therefore moved that the clause be disagreed with. That motion was passed, so that the bill was ordered to be returned to the Legislative Assembly with a message intimating the Council's decision. Again within minutes the bill came on again for consideration in the Assembly, with Mr Mackey observing that the Council had treated the Assembly "very fairly indeed", so that he sought to move that the House did not insist on its amendment relating to fixtures. He sought to explain[46] the Assembly's attitude in this way:

"A tenant at the present time had the right to remove any improvements or fixtures effected for the purpose of ornament, domestic use, or for trade, or even to remove agricultural fixtures. All that the amendment disagreed with by the Council proposed was that the tenant could remove the balance of improvements in the same way. He could remove the bulk of improvements at the present time. The amendment endeavoured to allow him to remove any shrubs, trees, or other things, as long as he did not injure the property."

The Opposition took a somewhat different view, saying that the Council could not pick and choose with their amendments. The motion was negatived and the amendment was insisted upon, the bill therefore being returned to the Council with a message to that effect. The Council in its turn insisted on its disagreement with the new Clause, so that it was returned yet again to the Assembly. Mr Mackey in the Assembly moved with regret that the amendment be not insisted on, but there was so much dispute as to who was in the wrong that he ultimately moved successfully that the bill be laid aside.[47]

125. This elaborate description of what occurred to the proposed clause (C) is set out only to explain what occurred when the Real Property Bill was reintroduced the following year.[48] The relevant clause 8 of the bill, which contained some presently irrelevant amendments to the former clause, was incorporated in the bill as introduced in the Council by the Attorney-General on behalf of the Government on 23 July 1907. The previous dispute provides a reason why the Minister did not find it necessary to explain the clause in his Second Reading Speech, except to observe that it was "the rock upon which the Houses split last session". Likewise, in response, the Hon. T.C. Harwood said little about the bill, although he noted the addition of the clause which he thought was "a very innocent one, merely providing for what many people contended should have been the law before now, viz., that if a tenant improved property by putting up any additional buildings, he should have the right to remove them". However, in committee there was further disputation, for in the first place it was pointed out that there was no time limit to the tenant's right of removal, but it was soon amended so as to add the words "during his tenancy but not afterwards" after the words "and shall be removable by him". Secondly some members seemed to think that the clause was rather more far-reaching than had been explained to them previously and debate was then adjourned so as to allow closer examination. When debate was resumed much concern was expressed by Council members as to various aspects of the proposed clause and certain amendments were made to it. What the Attorney-General did make clear in the course of debate was that he had adapted the clause put before the previous parliament after considering what was said to be a similar section passed by the English Parliament, although he was not specific about the section, while at least one other member acknowledged[49] that the clause was "evidently modelled on a section of the English Act", "which was passed to deal with agricultural properties". It may be assumed that this was thereby intended to be a reference to sections such as s.3 of 14 & 15 Victoria c.25 and at least to the provisions subsequently passed relating to agricultural tenancies expressed in not dissimilar terms.

128. The amended clause and bill having been passed by the Council, the Second Reading of the bill was moved in the Assembly on 21 August 1907. Mr Mackey again briefly described the relevant clause, stating that he merely wished to extend the existing law which applied to ornamental, trade or domestic fixtures and certain agricultural fixtures to fixtures attached by tenants generally. Apart from a further reference to the English Agricultural Holdings Act there is nothing in the extensive discussion in the Assembly or subsequently in the Council which is relevant for present purposes, except for some comments in the Assembly[50], where it was said that the clause should be amended so as to ensure that tenants did not lose their rights merely because their terms had expired, as had been held in cases such as the recent decision in Love v. Bloomfield[51].

131. The issue to which this excursus has been directed is whether Parliament intended, by using the expression "shall be the property of the tenant", that, notwithstanding the manner of annexure to the realty, the chattels described in the section should remain the property of the tenant in all senses and not form part of the realty, unless the tenant fails to exercise the right of removal thereby permitted. At one stage I thought that the expression was intended merely to be anticipatory in the sense that it expressed the proprietary right of the tenant only in circumstances where the chattel in fact should be removed. The latter view would accord more with general principles relating to fixtures under which, as I have already pointed out, the act of affixation is ordinarily treated as sufficient to deny an attached item's continued character as a chattel and to result in its merging in law with the realty, so as to become the property of the owner of that realty, subject only to the tenant's rights of removal and to claim back the affixed property, so that it would then revert to its character as a chattel.

134. With some hesitation, I have come to conclude that Parliament did wish to alter the consequences of the initial affixation of chattels by tenants in the circumstances described in s.28(2) of the Landlord and Tenant Act, notwithstanding that that might now be seen as a significant inroad into accepted principles relating to fixtures and the law of property. I have already pointed out why, in 1906 and 1907, it may have appeared to those responsible for passing the legislation and, for that matter, for those who drafted it, including Mr Mackey, that one should view such chattels as remaining the property of the tenant, as stated in 1905 by Buckley, J. in Re Hulse, which was later so firmly recognised by all members of the High Court in Spencer, albeit that those opinions were expressed a few years later.

137. In consequence it does not seem unreasonable that Mr Mackey and Parliament as a whole decided the following year to extend the principle then applicable to agricultural tenancies, already expressed in s.47 of the Landlord and Tenant Act 1890, to virtually all tenant's fixtures, whether or not they were agricultural, trade, ornamental or other fixtures, so as to ensure that while the tenant remained in possession the affixed chattels should continue to "be the property of the tenant and ... be removable by him during his tenancy or during such further period of possession by him as he holds the premises and not afterwards ..." No authority to my knowledge had suggested that the various provisions relating to agricultural tenancies should be construed differently and doubtless Parliament saw that it would be a good idea, as the debates indicated, that a tenant should continue to be able to claim any affixed items as chattels unless and until they could be seen to have been abandoned. It would also have the benefit of ensuring that the frequently awkward questions as to the degree and object of annexation could be deferred, in most cases, until the tenant gave up possession. Though the result may have unfortunate consequences in practice, Parliament's desire to protect tenants seems to have been predominant and it is for that body to correct it, if that appears desirable.

140. So construed s.28(2) is one which is unique in Australia and has been recognised as such.[52] There is therefore no need to read down the plain language of the section, as the Commissioner sought to do. It was his contention that the relevant fixtures should be treated as part of the realty and therefore as part of the estate to be valued for stamp duty purposes. If they remained Wickland Terminals' property and, in consequence, retained their character as chattels, then they must, as Spencer's case makes clear, be ignored for the purpose of valuing the subject land and the respondent's interest in it.

143. I would reiterate that it has only been necessary to look at the convoluted history of s.28(2) and the relevant common law rules in order to be satisfied that one may properly accept the plain meaning of its terms, despite their apparent conflict with general principle.

146. It would therefore follow that the Wickland's fixtures have not become part of the realty owned by Whitemark nor did it form part of the interest or estate therein sold and transferred by Whitemark to the appellant in the third and final transaction on 8 May 1998. If the property and thus the title to Wickland's fixtures remained in Wickland Terminals, then it could not have merged into or become part of the land sold by Whitemark. No doubt Whitemark, and thus the purchaser, might in due course have the right to assert that those chattel interests formed part of the realty, if and when Wickland Terminals' leasehold interest expired and any further period of possession by that tenant came to an end. That was merely an expectation, for, being tenant's fixtures of the kind described in s.28(2), Wickland Terminals had, and perhaps still has, the right to remove them while they remain chattels. As I have said, though it may have seemed surprising, having regard to the size and weight of the major items such as the tanks themselves, there were and are well recognised ways of removing such terminals which were described in detail in the evidence. Nevertheless, whatever the mutual rights were of landlord and tenant, at the relevant time the property remained in the tenant Wickland Terminals. No authority cited to us suggested that, if "property" remained in a tenant, there could at the same time be property rights or title in the landlord. The outcome may be thought to be curious, but only because in the ordinary case outside Victoria the law of fixtures accepts that on affixation property and title vests in the holder of the real property.

149. Moreover it does not automatically follow, from the fact that the tribunal and judge held that the items described as Wickland's fixtures were in fact fixtures, that at the relevant time they were part of the land and owned by the vendor. They were fixtures sub modo inasmuch as, when the time expired, they would be treated as affixed to the land and then part of the realty. As I have said, a curious feature of the section is that that result is not expressed, although it would appear to be the natural consequence of the provision. Moreover, there is no reason to read the word "property" as having some lesser signification or effect merely because the subject of the section is fixtures. For the reasons already stated Parliament has determined in this State that the property shall remain in the tenant but that it is entitled to exercise that proprietary right only until the end of the time specified, effectively the end of the tenant's period of possession.

152. I would add that there appears nothing in the Transfer of Land Act 1958 which would deny this consequence, although counsel for the Commissioner darkly suggested that it would have significant consequences, defeating the expectations of those who dealt with land under the Act upon the basis that it was in fact a system of title by registration, as has been held consistently now for many years. Merely because something, whether small or large, rests on land and is indeed attached to it, that does not automatically lead to the consequence that the item should be treated as part of the land. Perhaps at one time, before the first Torrens Act was passed in this State, the principles relating to fixtures might have been satisfied by observing the extent of annexation without regard to the parties' objects. These days no person dealing with land could safely act upon the assumption that something apparently affixed to land was a fixture and thus part of the realty without being satisfied as to all the relevant circumstances leading to the apparent affixation, including what are understood to be the objects of that annexation. The long and short of it is, therefore, that fixtures will only pass with the land and under Transfer of Land Act titles if they are affixed to the extent necessary to make them part of the real estate. There is no question of enquiring what happened later in this case after the transfer, for the issue here is as to the value of the estate transferred on 8 May 1998.

155. Consequently, if, as I have held, the property in Wickland's fixtures was retained by Wickland Terminals at the time of sale, then the value of the estate transferred could not include the value of those items, for at that time they did not form part of any estate or interest in the land held by the vendor.

Whitemark's fixtures - Effect of agreement to sell fixtures on estate and interest sold

159. The problem which is raised by the sale of Whitemark's fixtures to Whitemark Rollover is significantly different. These were not at any time tenant's fixtures and had in fact, pursuant to the 1995 agreement, become fixtures several years before their sale to Whitemark Rollover and before Wickland Terminals became a tenant in possession. The finding of fact by tribunal and judge that the items constituting Whitemark's fixtures were sufficiently affixed to the realty to have become fixtures cannot be gainsaid by any provision such as s.28(2) of the Landlord and Tenant Act. If they were to have lost the characteristic of fixtures, that could only have come about by the sale transaction which was the first dealing between the relevant parties on 8 May 1998. Moreover there is no question as to their having been removed either before or in consequence of the 8 May transaction, for the tanks and other items in issue remained firmly in place at the time the land was sold by the third transaction on 8 May. If they were to have lost their characteristic as fixtures, then that could not have come about in law but at most could have occurred in equity pursuant to principles laid down in cases such as Lysaght v. Edwards[53]. Whether or not that would also result in the items of property sold or assigned becoming subject to a constructive trust perhaps is of little consequence in that the real question is whether the true effect of such a sale or assignment of affixed chattels could thereby deny their existing characteristic as fixtures and in effect convert them again to chattels which no longer remained part of the realty owned by the vendor.

162. The alternative argument is that, whether or not Whitemark's fixtures remained part of the realty, any equitable rights to those fixtures, especially any right to detach them from the soil, affected the value of the estate or interest transferred by Whitemark to the respondent by the third transaction of 8 May 1998. This latter argument must depend on a proper understanding of what the High Court laid down in Pioneer Concrete and in particular whether the equitable right of Whitemark Rollover over the affixed chattels and the land, if so they may be described, was an interest which affected the value of the estate in fee simple for the purposes of s.63(3)(b)(i)(B) of the Act. According to the Commissioner's submissions, such a right or interest, being at best only equitable, could not affect the value of the estate sold which must therefore be valued by taking into account not merely the land value but also, at the least, the value for this purpose of Whitemark's fixtures.

165. I should say in the first place that I would have little doubt that pursuant to the first relevant transaction Whitemark Rollover had an equitable right to claim Whitemark's fixtures and to enforce that right against the vendor of the estate in the land, namely Whitemark, at the time of its sale of that estate or interest to the respondent. What Whitemark Rollover chose to do with those rights thereafter was, as I would understand the argument on both sides, of no consequence, though the potential power to exercise those rights against the holder of the estate in the land might bear upon, in the first place, the nature of those rights and secondly, the value of the estate or interest in the land transferred, that being, of course, primarily of significance in relation to the alternative argument. It was the latter two matters which were here in dispute.

168. As to the nature of the rights obtained by Whitemark Rollover there was considerable authority cited to the Court which would support the view that that company could exercise rights which would result in the detachment of all or any of Whitemark's fixtures and thus reduce them again to chattels. For certain purposes that would be sufficient. In the present case, however, those rights had not been exercised, the items had not been converted back to chattels and on the face of it, indeed by their very appearance, they remained fixtures attached to the soil when Whitemark sold the land later that day to the respondent.

171. I would find it difficult, I confess, to see why one should treat Whitemark's fixtures as effectively converted back to chattels in those circumstances when one is considering the nature and effect of a transfer such as the transfer of the estate here effected. That which was treated by law as affixed to the realty ought not to be treated as detached therefrom merely by reason of some agreement inter partes, unless there is a clear doctrine of law or equity which gives rise to that legal consequence.

174. The critical matter, however, is whether one can ignore Whitemark Rollover's right to remove its fixtures in reaching a proper value of the estate transferred for the purposes of sub-para.(B) of s.63(3)(b)(i). The latter requires the Commissioner and now the Court to have regard to "the amount for which the real property ... might reasonably have been sold if [it] had been sold, free from encumbrances, in the open market on the date of the sale ...". The sub-para.(B) calculation may be relied on by the Commissioner if it is "greater" than "the consideration for the sale", which is the other appropriate basis for ascertaining "the value of real property" for the purposes of heading VI of the Third Schedule to the Act. As I would understand it there is no dispute that, if the "fixtures" (in both categories) are to be ignored for valuation purposes, then the stated consideration of $340,000, i.e. the sub-para.(A) consideration, was the appropriate value.

177. The issue, nevertheless, is whether, in the light of the statutory scheme and in the light of binding authority on the Act and in particular the High Court decision in Pioneer Concrete, the value of the estate transferred should take account of Whitemark Rollover's interest. The latter case is relied on by the Commissioner to place a seemingly inflexible interpretation on the word "conveyance" and more particularly on the expression "any estate or interest in real property", which forms part of the definition of "real property" in s.63 of the Act. More particularly it is said that the language of the statute requires a restrictive approach to be taken to the process of valuation pursuant to sub-para.(B) in determining the amount for which the real property might reasonably have been sold free from encumbrances in the open market. It is then said that, not only does one ignore the effect and arguable diminution in value of the transferred property by reason of any obligations to repay and the like pursuant to any mortgage, charge or similar security over the land, but one further ignores the effect on the value of the land transferred of all other interests in the land held by a third party, unless they can be characterised as "exceptions" or "reservations" as defined by the High Court in para.[40] of Pioneer Concrete.[54] The High Court said that those definitions were consistent with the Victorian decision in Chirnside v. Registrar of Titles[55]. The consequence was, in the Commissioner's contention, that any equitable interest in Whitemark Rollover arising out of its right to reclaim Whitemark's fixtures was not an interest which should be recognised for the purposes of determining the value of the real property transferred. Counsel for the Commissioner seemed to concede only that certain legal interests in the estate, such as the leasehold interest held to reduce the value in Commissioner of State Revenue v. Bradney Pty. Ltd.[56], could be ignored, for it was argued that, whereas legal interests might be treated as having been "carved out" of the estate, equitable interests were merely "impressed upon" the interest of the holder of the estate being capable only of enforcement pursuant to the rules of equity.[57] So, it was said, the mere impressing of Whitemark Rollover's rights in the chattels on the appellant's interest in the land was not sufficient to deny the appellant's full interest in the estate in the land, such that it must be given its full value for the purpose of exacting duty on the transfer of it.

180. One might think that the logic of these contentions is both technical and arid in that value to the holder of an estate in fee simple in the land, at least with notice of the equitable interest, could never expect to realise its full value inasmuch as on requisition it would be obliged to reveal this qualification or "defect" in its title and thus could not expect to sell its estate in the land without accounting for the effective reduction in value resulting from the equitable interest. Moreover a concentration upon the "estate" which is transferred would deny recognition of the equally significant factor which lies behind the statutory requirement under heading VI, namely that the Commissioner, in assessing which is "the greater" of the sums under sub-paras.(A) and (B), must relevantly fix on the amount for which the real property might "reasonably" have been sold in the open market, free from encumbrances as at the date of sale. To rely upon the fact that the "tipping rights" considered in Pioneer Concrete were properly ignored by the reasoning of the High Court in that case would, at least at first blush, appear to overlook the significant characterisation of those rights by the High Court as "merely contractual rights" and thus rights enforceable against the parties to the contract, not against the holder of a particular estate in the land. It is necessary to look more carefully at what was said in Pioneer Concrete to ascertain whether the reasoning in that decision would, nevertheless, require the estate in the land sold to be valued without regard to Whitemark Rollover's equitable interests against the owner.

183. What was said in Pioneer Concrete is of importance in the present case, not because the particular issue there decided had any close resemblance to the present except that the very same sub-para.(B) was in issue, but because what the Court there said would appear to have had a considerably wider application so far as the Act then in force is concerned. Care must be taken, however, because the relevant provisions had not otherwise been looked at by the High Court for many years and indeed the general provisions of the Victorian Stamps Act themselves had only been occasionally considered by the High Court. The provisions in heading IX concerning settlements had been considered on a number of occasions, but it should be noted that in other jurisdictions, especially New South Wales, "settlements" were brought within the definition of "conveyance".[58] Moreover, although heading IX survives in Victoria, its significance is greatly attenuated since the repealing of the penal rates imposed on settlements up to the late 1970's. This case, of course, has nothing to do with settlements, but many of the authorities cited from other jurisdictions were directed to transactions which in one way or another had the effect of creating settlements or altering the beneficial interests under them.

186. Counsel for the respondent placed considerable weight on certain general principles stated by the High Court in Pioneer Concrete which were said to be not only fundamental to the decision in that case but to the correct answer to the questions posed in the present case. In the first place the Court said that the relevant provisions imposed "a duty on instruments, not on transactions"[59]. Secondly, counsel relied upon the statement that liability to duty arose because the relevant instrument "transfers an estate or interest in real property" in accordance with "the value of that which is transferred".[60] For this purpose the Court referred to the well-known statement of Mason, J. in DKLR Holding Co. (No. 2)[61] where his Honour stated that it was "a fundamental principle of the law relating to stamp duties" that duty is levied on instruments and "not on the underlying transactions to which they give effect". What was, however, significant in that statement was not so much the breadth of the proposition, as the rationale given for it, which appeared immediately thereafter and in the following paragraph[62], as succinctly expressed: "We cannot substitute for the issues prescribed by the statute a different issue having no foundation in the statutory provisions".

189. In broad and historical terms doubtless Mason, J. was correct as to the significance of instruments, and equally the High Court in Pioneer Concrete was doubtless intending to refer primarily to the provisions in the Act relating to heading VI and that subdivision dealing with the subject "Conveyance of Real Property and Land Transfer". Even at that time, however, many of the 25 or so former headings in the Third Schedule had been repealed - only ten had survived - and many stamp duties were being imposed either by the device of a "statement" or "return" of transactions which had itself to be stamped or with no pretence to the requirement of any document being stampable: see, for example, the provisions relating to the payment of stamp duty in respect of ordinary insurance business[63] and more particularly the duty on sales and purchases by brokers and on "certain SCH-regulated transfers".[64]

192. The concentration on the instrument in question, though an appropriate starting point for heading VI duty[65], was largely dictated by what occurred in Pioneer Concrete. There the Court of Appeal had placed great weight on the overall transaction which led to the transfer in order to assert that the value of the estate or interest transferred must be less than its open market value unaffected by the parties' arrangements, as the vendor was limited in its capacity to deal with the land by reason of the contractual stipulations contained in those agreements. The case, arguably, was clearer because, although such contractual conditions would obviously diminish the price between the parties[66], the tipping rights were held by the High Court not to amount to any interest in the land to which regard might be had for duty purposes. Moreover in Pioneer Concrete it was in effect one and the same transaction which resulted in the diminishment in value of the transferred estate and which led the Court to look at certain cases where that had been attempted. Nevertheless the principal distinction from the present case arises from the finding by the High Court[67] that "The tipping rights rested in contract". As they explained[68], upon transfer: "the contract of sale and the grant agreement subjected Pioneer Concrete to contractual obligations ... but they did not create any proprietary interest which qualified its title ...".

195. In the present case the issue is whether the equitable rights which Whitemark Rollover asserted against the proprietor of the land amounted to a "proprietary interest" which the Commissioner was obliged to recognise and which would result of necessity in a reduction in value for the purposes of sub-para.(B). The Commissioner sought to restrict the kind of proprietary interest to "exceptions" and "reservations" or, at the most, to any legal proprietary interest of a kind which is "carved out" of the legal estate. Counsel were not prepared to concede, indeed they strenuously objected to, the possibility that an equitable interest might also be recognised for this purpose.

198. The analysis of these matters had to range far and wide for, save over the last 20 years of its life, the question of "value" was largely irrelevant to conveyances on sale under heading VI. That was because, except in cases where there was fraud or some other attempt to avoid payment of duty[69], the basis for the payment of duty was a simple calculation related to the amount of consideration or the value of any consideration in kind.[70] It was only by the Stamps (Further Amendment) Act 1981, which came into operation on 1 January 1982, that the Commissioner was given the right to choose between the actual consideration and the value of the estate or interest, "whichever was the greater". To that extent the provision then grew closer in form and content to provisions in other jurisdictions, although by no means was it the same. This different legislative history means only that care should be taken in considering decisions given on the meaning of statutes in other jurisdictions. For example, whereas the definition of "conveyance" in s.63 formerly included every instrument etc. "whereby any real property or any estate or interest in any real property ... is transferred to or vested in" a purchaser, the relevant definition (after s.63 was amended in 1983) defined "conveyance" in merely inclusory terms as including "transfer", a word itself undefined, but "real property" was thereafter defined so as to include "any estate or interest in real property".[71] However, if anything be clear in the present case, it is that, by virtue of s.17 and heading VI, stamp duty is "charged" upon the "instruments" specified as conveyances of real property and land transfers, as described in paras.(A) and (B) of that schedule.

201. Nevertheless the concentration on instruments in this and other cases has been because, on so many occasions, as in Pioneer Concrete, those instruments formed part of, or sought to effectuate, a number of transactions over and above the conveyance or transfer of an estate or interest in land. It is necessary in the present case as in all others, to identify not merely the instrument of transfer, but also to identify its subject matter for the purposes of valuation. So in Pioneer Concrete the High Court held that the transaction granting certain tipping rights had to be separately contemplated, so that the contractual rights thereby given or retained could not be treated as reducing or otherwise affecting the value of the land in fact transferred.

204. It does not follow that one should ignore, for the purposes of the Stamps Act, the true value of the land transferred. It is the "statutory command", as Mason, J. described it, a description the Court in Pioneer Concrete accepted[72], which requires the ascertainment of "the amount for which the real property ... might reasonably have been sold ... on the open market" on the relevant date. That requirement demands consideration of what was comprehended by the estate or interest sold and of the relevant factors which must be taken into account. If sale in the open market is the test which the Court in Pioneer Concrete accepted as incorporating the principles stated in Spencer v. The Commonwealth[73], then those factors which legitimately might affect the not unwilling vendor and the not too anxious purchaser must all be relevant. On the face of it one should only exclude factors which are personal to vendor or purchaser or which do not relate to the actual subject matter of the sale.

207. That conclusion (which must be examined further) points, contrary to the Commissioner's contentions, to the necessity for Commissioner and Court on appeal "to look beyond a dutiable instrument to identify the property which the conveyor has available to convey"[74]; or, perhaps more generally, "in order to identify the property conveyed by the instrument".[75] For the purposes of the decision in Pioneer Concrete the Court then drew the following distinction[76]:

"It is one thing to have regard to matters not referred to in a dutiable instrument for the purpose of understanding the legal effect of the instrument; it is another thing to do so for the purpose of considering the net effect of the transaction pursuant to which the instrument was executed."

211. What was significant in Pioneer Concrete, however, was the nature of the extraneous rights there held to be irrelevant to the valuation of the transferred interest and the nature of those rights or interests. Why it was said to be impermissible to look to the so-called "tipping rights" in that case was, as was there held[77], because those rights "rested in contract". Moreover, as the High Court continued[78]:

"So long as the land was vested in Amatek, there were no separate tipping rights; they were merely an aspect or incident of Amatek's rights of ownership. When the land was transferred to Pioneer Concrete the provisions of the contract of sale and the grant agreement subjected Pioneer Concrete to contractual obligations to Amatek and Pioneer Waste, but they did not create any proprietary interest which qualified its title to the land. And they did not qualify Amatek's title to the land on the date of the sale, which is the time to which [sub-para.] (B) directs attention."

Thus it was the nature of the contractual rights retained by Amatek which were held not to amount to any "proprietary interest" and so were irrelevant to the valuation of the interest in land transferred to Pioneer Concrete.

216. To demonstrate the distinction between the case they were then considering and other cases where more than contractual rights had been considered, the Court gave a series of examples by way of comparison in which relevant interests had been created which might affect the value of estates or interests transferred. In the first place, on two occasions, their Honours referred to pre-existing leases which were said to "qualif[y] the nature and extent of the proprietary interest that was available to be transferred".[79] Secondly, they gave the example of a life interest, but only one which had "previously existed" and not one created pursuant to the instrument which was said to be dutiable.[80] Thirdly, again, they gave the example of "exceptions" and "reservations" from or out of an estate which is conveyed or transferred[81], although, because of the weight placed on these particular qualifications to title by the respondent, it will be necessary to discuss them further below. Again the Court gave the further and obvious example of an easement created by registered deed which would qualify the subsequently transferred interest in land.[82]

219. A further example of an interest which must be taken into account in assessing duty on conveyances or transfers was of particular significance having regard to the argument put forward on this appeal. Reiterating the acceptance of a need in some cases to look outside the instrument to identify what is conveyed, the Court referred to the recent decision in Commissioner of Stamp Duties (N.S.W.) v. Buckle[83]. What was there under consideration was the character as a "conveyance", having regard to the definition applicable in New South Wales, of a supplemental deed varying a deed of settlement containing a discretionary trust, and consequently the value to be placed upon the interests thereby vested in certain beneficiaries. One issue was what was, within the meaning of the relevant section, the "unencumbered value" of the interest thereby vested. What was raised as a matter of fact was the right of the trustee of the settlement to be reimbursed or exonerated in respect of liabilities properly incurred in the administration of the trust, such as the costs incurred in that litigation. If that right to reimbursement was properly characterised as a lien, then the argument sought to characterise that lien as an "encumbrance" which should be ignored, in the terms of the section, for the purpose of valuation in the sense that, as with encumbrances under the Victorian section, the potential diminution in value, by reason of the potential enforcement of such an encumbrance, was to be ignored.

222. The High Court in Buckle, after analysing the nature of the right in some detail,[84], held that the right to make such a claim was not strictly a lien or security interest, and was merely one which entitled a trustee to treat its claim in priority to those of the beneficiaries, so that its claim ought to be satisfied before the remaining funds were applied for the benefit of the beneficiaries.[85] It followed[86] that, until the right of reimbursement had been satisfied, it was impossible to say what was the extent of the trust fund and thus what was the amount of each beneficiary's entitlement. As summed up by the Court in Pioneer Concrete[87], "the trustee's right to be indemnified out of the assets bound by the trust was a right conferred by law and was a prior proprietary interest to that of the beneficiaries rather than an encumbrance upon that interest". When the Court in the later case referred to the right being one "conferred by law", it was not, however, referring to a right at common law as opposed to one in equity, for it may be seen from the discussion in Buckle that it was a right in equity, indeed, as may be thought to be obvious, it could only be enforced and characterised by reference to equitable principles.[88]

225. The conclusion thereafter reached by the Court in Pioneer Concrete, after considering these various rights and contrasting them with the contractual tipping rights there in issue, was stated in these terms[89]:

"Once it is accepted that the real property to be valued is an estate in fee simple in the land referred to in the relevant certificates of title, and qualified by any exception or reservation, or any other outstanding proprietary interest, then it follows that the exercise required by [sub-para.] (B) is a determination of the amount for which such an estate might reasonably have been sold if it had been sold, free from encumbrances, in the open market on the date of the sale."

(Emphasis added.)

The breadth of what was there said can only properly be comprehended from what preceded it and an understanding of the cases to which the Court referred. At one stage the respondent was inclined to argue that the only interests to which regard might properly be had were exceptions or reservations but in the end there seems little doubt that his contention was that one could not have regard to any interest unless it was a legal interest affecting the title to the estate the subject of the transfer in question. I do not accept that contention: in my opinion the words "other ... proprietary interest" were intended to cover a wide range of existing ("outstanding") interests affecting the right of the transferor to transfer the interest or estate in question. Undoubtedly one had to look at the nature of the instrument and the nature of the estate or interest which that instrument purported to convey or transfer, but at the end of the day, if that interest, whether legal or equitable, was capable of enforcement against the relevant estate or interest at the "date of sale", then, in determining the value of the subject estate or interest, i.e. the "amount" for which it might reasonably have been sold in the open market, any such interest which affected that value had to be taken into account in the process of valuation, both as a matter of logic and commonsense. It is necessary, however, to consider briefly some of the further arguments put forward on behalf of the appellant Commissioner.

230. The Commissioner's primary contention was that the only qualifications on the estate or interest transferred which could be looked at by commissioner or court for the purposes of s.63 were either exceptions or reservations, or legal proprietary interests which qualified the title. The argument seemed, fallaciously, in my opinion, to depend on twin foundations, one that stamp duty was imposed on instruments rather than transactions and secondly that the instrument here transferred only an unqualified estate in fee simple in the subject real property. The contrary, as posited by counsel, would have been a duty on transactions which might take account of the various personal rights of the parties to transactions, which the Act, so it was said, intended to eschew. One cannot doubt the emphasis in the authorities on transactions; indeed so far as heading VI is concerned, whatever be its possible inapplicability in relation to certain other heads of liability, such an emphasis is beyond argument on the authorities. It is the consequences which are more important. Counsel likewise emphasised that the relevant instrument expressed itself in terms of transferring merely the "estate in fee simple" in the described land. That, however, takes one very little further along the relevant path of enquiry. The language so used is required by the terms of the Transfer of Land Act 1958 and, in a sense, is a shorthand devised to allow the simple passing of interests in real estate from transferors to transferees, but it does not deny that under or pursuant to that act other interests not mentioned in the transfer may affect that which is transferred and that other interests which are incapable of registration may be enforced indirectly, in particular by the caveat procedure. In any event, although exceptions to the Torrens system may now be very few, titles and estates may be passed in other ways. Title itself under the general law applicable to unregistered land may still be conveyed and equitable interests in land may be transferred by any document to which equity will give recognition. All of these are equally the subject of heading VI and of the provisions relating thereto, the principal ones having already been described.

233. It therefore does not follow, as night the day, that instruments capable of being stamped under heading VI are to be confined to those which pass legal interests under Torrens system titles. The sections must be read so as to produce a consistent interpretation whatever be the subject of the relevant conveyance or transfer. Such instruments will not necessarily always pass an estate in fee simple, as here occurred, the nature of which formed a significant foundation of the appellant's argument.

236. As part of this argument considerable emphasis was placed upon the absence of any exceptions or reservations to the transferor's interest. Weight was placed on the observation in Pioneer Concrete that in that case "there was no reference in the transfer to any exception or reservation of any kind".[90] Some emphasis was placed upon the detailed definitions given of those two terms, in particular by referring to the observations of Hope, J.A. in DKLR Holding (No. 2), but also referring to the earlier Victorian decisions of Chirnside v. Registrar of Titles[91]. In my opinion, however, undue significance was given to this discussion. It was important in Pioneer Concrete because of the nature of the interests there under consideration and the way in which the case was argued. There the primary issue, as formulated by the trial judge, was whether the transfer was "to be treated as subject to the reservation to the vendor of tipping rights as specified in the contract of sale" (emphasis added). Thereafter on a number of occasions the High Court referred to the matter in terms of the allegation that there was a "reservation" and as to how the lower courts had dealt with that allegation. The trial judge's answer to that question was "No", but the Court of Appeal took the opposite approach, saying that the existence or otherwise of a reservation was irrelevant to the question of valuation.[92] The Court of Appeal therefore approached the matter on the basis that valuation of the vendor's interest was central to the question in the case, and the precise characterisation of the interests were irrelevant, "unless they amounted to an exception or reservation from the property transferred".[93] Although those matters were of significance to the resolution of Pioneer Concrete and thus were emphasised from time to time, the reasoning of the High Court was obviously wider, so that the detailed references to exceptions and reservations were merely part of their overall reasoning, but justifying, in terms of the history of the case, some more detailed examination.

239. Thus, although it could not be argued that the present interests claimed by Whitemark Rollover were exceptions or reservations, that clearly is not the end of the matter, nor was it contemplated by the High Court that it ordinarily would be. Their statement of the relevant question when they came to their conclusions on this issue was likewise expressed in wider terms, namely, whether the estate in the land was "unqualified by any exception or reservation, or any other outstanding proprietary interest".[94] The issue, therefore, in this case is whether there was any proprietary interest in the property transferred, "outstanding" in the sense that it existed at the time of the sale or transfer, and whether the equitable interest in the land resulting from the contractual right to remove the chattels affixed thereto was a relevant outstanding proprietary interest. No doubt was cast on the order in which the transactions took placed, the Commissioner conceding that they took place in the order stated. Whatever doubts one might otherwise have had, the interest of Whitemark Rollover in Whitemark's fixtures, therefore, was one which had come into existence before the sale and transfer of the land. It remains to consider the further arguments as to why this interest should not be recognised for the purposes of valuing the estate transferred.

242. The second principal argument addressed to the Court on this issue was based on an assertion that the interests in question, so described and intended by the High Court, were confined to legal proprietary interests of a kind which qualify title and so should be treated as excluding any equitable interests in or over real property. I find it difficult to accept that this argument is correct by reason of its artificiality, if nothing else, but significant weight was placed by counsel for the respondent on a number of observations in the authorities.

245. The first point of principle taken on behalf of the Commissioner was that the equitable rights in question were not "carved out" of the title, but were merely "impressed upon" it, as Brennan, J. observed in DKLR Holding (No. 2)[95]. The distinction, important though it is as a matter of legal theory, cannot control the outcome of the present case. One is here concerned with what the High Court generically described in Pioneer Concrete as "proprietary interests". There is good reason in this day and age why both legal and equitable interests of this kind, if they bind and affect property rights and are not "mere equities" or personal rights, should equally have a bearing on what the hypothetical purchaser would pay for an estate or interest so bound and affected, and there is no reason why they should not, but for some observations in certain cases to which I must refer in due course.

248. It may be accepted that an equitable interest strictly binds only the conscience of the holder of an estate or interest in land, but it is now too late to say that it does not constitute an "interest" enforceable in the courts or that it should be distinguished or ignored when making a valuation of an estate or interest for the purposes of heading VI. Counsel asserted that, where a conveyance or transfer was expressed to be of an "estate" (in fee simple) in land, equitable interests could not qualify that estate or have a bearing on its value, largely again because they are not "carved out" of the estate, so that the estate remains unimpaired for the purpose of valuation. But if both hypothetical vendor and purchaser could fairly take account of an equitable interest in fixing their price on sale, then surely it cannot be ignored because it is merely "impressed upon" the estate. Certainly, if it amounted only to a personal equity or an obligation peculiar to the vendor not amounting to an interest, it must be ignored, but if it is an equitable interest enforceable against any holder of the estate by action or by use of the caveat procedure under the Transfer of Land Act, then it ought to be taken into account for that purpose. As the Court emphasised in Pioneer, if interests are of a kind which would "reduce the amount for which the relevant real property, that is, the estate in fee simple in the land the subject of the certificates of title, might reasonably be sold free from encumbrances at the date of sale"[96], then they are fundamentally different from the personal contractual rights there considered. Although the High Court in the same paragraph said that the subsequent 1997 amendments, effected by the insertion of sub-ss.(3A), (3B) and (3C) of s.63,[97], being there discussed, were not decisively relevant to the construction of the provisions of the Act then under consideration, they were in force at the time of the present sale in 1998 and were therefore part of both the statute and in particular of s.63 at the relevant time. Those provisions would point, at the very least, to a broad rather than a narrow, meaning of s.63 and of sub-para.(B) of sub-s.(3)(b)(i) thereof.

251. Secondly, it was argued that the High Court in Pioneer Concrete intended there to refer to those proprietary interests "which qualified ... title to the land"[98] and thereby intended to confine the relevant interests to those created in law which could give rise to objections to the legal title of the plaintiff, not any lesser interests such as those arising in equity. I cannot accept such a narrow view, even assuming it accurately reflected a vendor's duty to make good title.

254. The cases upon which the respondent Commissioner relied are, upon proper analysis, directed either to different legislative schemes or to quite different transactions. Here I use the word "transactions" advisedly, bearing in mind that the issue concerns the value of the property transferred by the instrument, because many of the particular difficulties faced arose out of complicated transactions designed, on some occasions, to create new equitable interests, often in respect of the whole of the property, or to effectuate the transfer of the "bare legal estate", which often was in truth only part of a much wider transaction. That is why in DKLR Holding (No. 2) Mason, J. was so emphatic[99] in directing attention to instruments rather than transactions. That is why, also, in the same case Brennan, J. was so concerned with whether in the circumstances an interest had been "carved out" of the legal estate which was transferred. The estate and interests there considered both in the Court of Appeal by Hope, J.A. and later in the High Court were not interests which were in existence before the transfer or the related transactions. That is why, for example, Hope, J.A. emphasised[100] that it is always "permissible, in order to identify what property is conveyed by the conveyance, to look to see what the conveyor had to convey, even though it is necessary to go outside the terms of the conveyance to do this". The same concern was expressed by Gibbs, C.J. in the High Court when he said[101]:

"Before the transfer there had been no severance of the legal and equitable interests in the land. It was only when the declaration of trust took effect, which of course was immediately after the transfer, that there was a severance of the legal and equitable interests."

Moreover, DKLR Holding (No. 2) provides no support for the Commissioner's arguments in the present case, because of the particular rights and interests under consideration in that case, as may be seen both by its discussion and the reasoning several years later of the High Court in Buckle and in particular in the conclusion that the equitable interests there considered were not to be "disregarded" in valuing the interests conveyed by the instrument in question.[102]

259. Other cases relied upon by the respondent must similarly be seen in light of the legislation being there considered and the kind of instrument and its effect which the courts were then describing. For example the High Court made clear in DKLR Holding Co. (No. 2) that the New Zealand Court of Appeal decision in Farm Products Co-operative (Taranua) v. Commissioner of Inland Revenue[103] was decided on significantly different legislation, as Turner, J. himself conceded, so that I would not accept for purposes of the Stamps Act the distinction there drawn between a transfer of the legal estate in property as contrasted with a transfer of the same property subject to equitable interests vested in another. Furthermore, I do not consider that anything said in O'Sullivan v. Commissioner of Stamp Duties (Qld.)[104] or in Perpetual Trustee Co. Ltd. v. Commissioner of State Revenue[105] assists the respondent, particularly in light of the cautious and limited statements of Hansen, J. in the latter case.[106]

262. The critical question, as has been frequently stated, depends on the language of the statute itself and in this case the question posed by the sub-paragraph is what is the "amount" for which the property consisting of the estate or interest in real property, which is the subject of the conveyance or transfer, "might reasonably have been sold in the open market" at the time of sale. As I have said, it would be remarkable if a pre-existing equitable interest, so clearly now recognised as a property right regardless of its origins in equity, could be disregarded in fixing what is the proper value of the interest sold.

265. In my opinion, therefore, for the purposes of valuation under s.63 any equitable interest which affects the land must be taken into account, unless the statute provides to the contrary. No such contrary provision has been drawn to the Court's attention, the Commissioner's arguments depending on the view that equitable interests are entirely irrelevant in ascertaining the amount at which the property might be sold. No doubt some equitable interests may cause problems in valuation but that is a task which valuers face every day, whether the relevant interests are legal or equitable. For example, the significance of an easement in this process must depend on the likelihood of its being used or enforced, as well as the significance that the land affected has in relation to the servient property as a whole. In the present case there would doubtless be difficulties in assessing what effect the right to the fixtures had on the value. But it would be entirely artificial, unless the statute compelled it, for one to value the subject land in the present case without having regard to the enormous structures which formed Whitemark's fixtures and the effect that they and their potential removal might have on the usefulness of the land.

268. The final question is whether the first contract of 8 May relating to Whitemark's fixtures resulted in the creation of an equitable interest enforceable against the land. I have assumed that it did, largely because there was comparatively little argument put against that proposition. The crux of the respondent's case was the lack of relevance of such equity interests. A number of authorities were cited by the appellant in favour of the view that by the contract enforceable rights were created, not merely to remove the fixtures as chattels, a contradiction in terms in itself, but to the effect that any such right entitling a third party to claim and remove fixtures was in itself an interest in land enforceable against the owner for the time being, because, by definition, those items, which had been chattels and which might again be converted into chattels, were by virtue of the doctrine as fixtures part of the real property at the relevant time. A right to take away part of that which constitutes realty must be an interest in it, not an interest in some hypothetical chattels as they might thereafter become on enforcement of the right. For this or similar propositions the following cases were cited: Cottee Dairy Products Pty. Ltd. v. Minad Pty. Ltd.[107]; Kay's Leasing Corporation Pty. Ltd. v. CSR Provident Fund Nominees Pty. Ltd.[108]; Eastern Nitrogen Ltd. v. FCT[109]; FCT v. Metal Manufactures Ltd.[110]. The respondent in answer cited Emanuel (Randle Mall) Pty. Ltd. v. Commissioner of Stamps (S.A.)[111], but in my opinion the circumstances were significantly different in that at the relevant time the transferor had ownership both of the real property and so in what otherwise would have been chattels, namely the fixtures. On the contrary in the present case the owner of the land had already divested itself of its rights to the fixtures, at least in equity. Some reliance was placed by the respondent on Mills v. Stokman[112] but, in my opinion, not only was that a case about profits à prendre, but, insofar as it dealt with an analogous subject matter, it seemed to support the view that an agreement of the relevant kind was capable of creating "an interest in the land".[113] I am not persuaded that the interest here created was merely either a contractual interest or a personal right, so that I would conclude that there was an interest enforceable against the land and its owner for the time being. If that be so, then such an equitable right ought to be taken into account on assessing the amount for which the property might be sold.

272. For these reasons I would reverse the judgment of the learned trial judge as to the effect on the value of the land both of Wickman's fixtures and of Whitemark's fixtures though, as already explained, for differing reasons. Those rights should have been taken into account in valuing the land to ascertain the relevant amount under sub-para.(B) of s.63(3)(b)(i). The consequence of such findings will be somewhat different. As to Wickman's fixtures, I have held that they remain chattels so that their value can have no relevance to a valuation of the subject land. As to Whitemark's fixtures, I have held that they are fixtures, so forming part of the realty, but there was an interest in Whitemark Rollover in those fixtures in equity which had to be recognised for the purposes of valuing the land. To give effect to these

conclusions the order of the judge will therefore be maintained insofar as it requires the question of value to be remitted to the Tribunal, though, of course, that valuation will be on a significantly different basis than before.

276. Consequently the appeal should be allowed and the declaratory order (No. 3) as to the value of the subject land (as being "not $340,000") be set aside. Order 2 should not be set aside, although the reason for allowing the appeal from the Tribunal is quite different. Order 5 should be varied so as to add to that order for remitter to the Tribunal the words, "in accordance with the reasons of the Court of Appeal". Subject to argument, costs should be paid by the unsuccessful respondent.

281. I agree with Ormiston, J.A. that the appeal should be allowed for the reasons he has stated and that the orders made below should be dealt with as his Honour proposes.

[1] Fortunately the issues cannot arise under the Duties Act 2000, at least not in the same way.

[2] [2001] VSC 232.

[3] Which was a wholly owned subsidiary of the Wickland Oil Company, a corporation incorporated in the U.S.A.

[4] [2002] H.C.A. 43; 209 C.L.R. 651.

[5] Then known as Van Ommeren Tank Terminals Australia (Holdings) Pty. Ltd. The name is of significance only in that Wickland Terminals was from May 1997 to February 2000 called Van Ommeren Tank Terminals Australia (Hastings) Pty. Ltd. and seemingly was a subsidiary of Van Ommeren Tank Terminals Australia (Holdings) Pty. Ltd. The relationship between the companies was not relied upon by the respondent Commissioner and is significant only to the extent that it may provide some explanation for the complicated transactions entered into.

[6] Although the learned judge found that the transfer was "lodged" on 19 June 1998 [see [11] of his judgment], it appears from the document shown to this Court that the date of lodgment at the Titles Office was 5 November 1998, it having been first stamped on 19 June.

[7] In February 1996 the company changed its name to Wickland Terminals Australia Pty. Ltd. and then in May 1997 to Van Ommeren Tank Terminals Australia (Hastings) Pty. Ltd.

[8] Wickland Terminals' rights relating to these fixtures were said to be given by s.28(2) of the Landlord and Tenant Act 1958. The application of that section to the lease was not seriously challenged but the nature and effect of those rights were strongly disputed.

[9] The "third transaction": see para.[[] below.

10] See para.[10] fn.2 of his judgment.

[12] At the relevant time Wickland Terminals was called Van Ommeren Tank Terminals Australia (Hastings) Pty. Ltd., and it has subsequently undergone two name changes which are presently irrelevant.

[13] Then called Van Ommeren Tank Terminals Australia (Holdings) Pty. Ltd.

[15] For present purposes I shall ignore the provisions contained in s.21 and the following sections relating to the requirements that instruments should be written and that the stamping appear thereon.

[16] See the opening words of sub-ss.(1) and (2) and of paras.(a) and (b) of sub-s.(3).

[17] See Varveri v. Barba (Gillard, J., 13 October 1997, unreported) at 11.

[18] [1940] HCA 7; (1940) 63 C.L.R. 52 at 68.

[19] For this two authorities were cited: Halsbury's Laws of England, 2nd ed. vol.20 p.97 note o and Foa, Landlord and Tenant, 6th ed. (1924) p.771.

[20] See the discussion both in Halsbury (ibid) and in Foa, ibid, fnn.(x)-(y).

[21] [1905] 1 Ch. 406.

[23] At 412. The same view was expressed by Fletcher Moulton, L.J. in Howats Ltd. v. Hudson Bros Ltd. (1911) 105 L.T. 400 at 403, but Buckley, L.J. appears to have had by then a change of heart, at least in relation to tenant's fixtures: ibid. Perhaps what he said earlier should be confined to the rights of tenants for life, but his Lordship, as may be seen above, drew no distinction with tenants for years in re Hulse.

[24] [1909] HCA 69; (1909) 9 C.L.R. 641.

[31] See Butt on Land Law (4th ed.) para.15159.

[32] [1901] 1 Ch. 523.

[33] [1902] UKHL 1; [1902] A.C. 157.

[34] See, for example, per Lord Halsbury, L.C. at 161 in Leigh v. Taylor, with whom Lords Macnaghten, Shand, Brampton and Lindley agreed apparently in unqualified terms (on this issue). Lord Robertson more cautiously agreed only with Stirling, L.J. who had expressed the relevant principles in somewhat different terms in the Court of Appeal.

[35] It may be that I have oversimplified the development of the law relating to ornamental "fixtures". See esp. Amos and Ferard: Law of Fixtures (3rd ed.) Ch. II s.4, esp. at p.117 where it is said that the tenant's right of removal was "very different" from that applying to trade fixtures.

[36] [1905] HCA 54; (1905) 3 C.L.R. 656. See esp. at 662, 665, 677 and 680.

[37] (1703) 1 Salkeld 368: cf. Amos and Ferard pp.127-130.

[38] (1802) 3 East 38 at 52; 102 E.R. 510 at 516.

[39] (1876) 1 App.Cas.762 at 769-770. His Lordship said the English law was effectively the same. The other members of the House substantially agreed.

[40] See Amos and Ferard: Law of Fixtures (3rd ed.) pp.31-34, 40-42.

[43] Section 47 of the Landlord and Tenant Act 1890, now s.28(1) of the 1958 Act. Certain expressions in the new section were identical, especially those relating to "property".

[44] These matters are taken from the Debates of the Parliament of Victoria (Hansard) Vol. CXV (1906) at 4177-4178 (Council) and pp.4202-4232, passim (Assembly).

[47] During the course of speeches at the close of the session a further attempt was made by Mr Mackey to rescind the order laying aside the bill but that only produced more disputation, so that leave was refused to put the further motion.

[48] See Debates of the Victorian Parliament (Hansard) Vol. XCVI (1907) at pp.210-1072, passim.

[50] Where the amendment was first proposed and passed: see Hansard ibid. pp.811 and 909-910.

[51] [1906] VicLawRp 120; [1906] V.L.R. 723.

[52] Bradbrook and Croft: Commercial Tenancy Law in Australia (2nd ed.) para.10.5 p.178. Butt: Land Law (4th ed.) para.15158 fn.982; Wiseman: Landlord and Tenant in Victoria (1927) pp.127-128, esp. note (a); Bradbrook and Neave: Real Property Law in Australia (3rd ed.) pp.595-596 para.15.11.

[53] (1876) 2 Ch.D. 499.

[54] Those definitions were in fact taken, as there appears, from the judgment of Hope, J.A. in DKLR Holding Co. (No. 2) Pty. Ltd. v. Commissioner of Stamp Duties [1980] 1 N.S.W.L.R. 510 at 522.

[55] [1921] VicLawRp 71; [1921] V.L.R. 406.

[56] (1996) 34 A.T.R. 233.

[57] See per Brennan, J. in DKLR Holding Co. (No. 2) Pty. Ltd. v. Commissioner of Stamp Duties (N.S.W.) [1982] HCA 14; (1982) 149 C.L.R. 431 at 474.

[58] See s.65 of the Stamp Duties Act 1920 (N.S.W.).

[61] At 449, cited in Pioneer Concrete in para.[35].

[63] The last relevant provision, contained in s.97(2)(b), required the insurer to "pay in cash ... as stamp duty on the return an amount equal to 10% of the amount of all premiums chargeable with stamp duty" (emphasis added).

[64] See subdivisions (4AA) and (4AB) of division 3 of the Act.

[65] Even in its final form the Act required heading VI duty to be "paid" by "impressed" stamp: see s.70.

[69] See ss.71 and 73 of the Stamps Act before its amendment in 1981.

[70] See heading VI, again before the 1981 amendment.

[71] The New South Wales definition, contained in s.65 of its Act at times relevant to the decision in DKLR Holding Co. (No. 2) and subsequently, was expressed in terms so as to include "any transfer ... whereby any property in New South Wales is transferred to or vested in ... any person".

[72] At [35], citing from DKLR Holding (No. 2) at 449.

[73] [1907] HCA 82; (1907) 5 C.L.R. 418 at 432, as adopted in Pioneer Concrete at para.[44].

[74] See Pioneer Concrete at paras.[41] and [42], adapting with approval what was said by Hope, J.A. in DKLR Holding (No. 2) at 523.

[75] Again taken from the judgment of Hope, J.A. in DKLR Holding (No. 2) at 523, as referred to by the High Court in Pioneer Concrete at [41] and repeated at [42].

[79] At [49], referring to the decision in Commissioner of State Revenue v. Bradney Pty. Ltd. (1996) 34 A.T.R. 233. Although the Court had delphically stated in the preceding paragraph that the "correctness of that conclusion is presently irrelevant", the apparent caution was, I believe, directed to the issue whether it was an "encumbrance" within the meaning of the section.

[81] See para.[40] and in particular the reference to the definitions and the analysis by Hope, J.A. in DKLR Holding (No. 2) at 522.

[82] See para.[41], the Court again taking the example from the judgment of Hope, J.A. in DKLR Holding (No. 2) at 523.

[83] [1998] HCA 4; (1998) 192 C.L.R. 226.

[88] See Buckle esp. at 246, 247 para.[50].

[91] [1921] VicLawRp 71; [1921] V.L.R. 406.

[97] Inserted pursuant to the State Taxation (Amendment) Act 1997.

[102] See at 247, but also generally at 241-247 and, at 242-243, the discussion of Commissioner of Stamp Duties (N.S.W.) v. Perpetual Trustee Co. Ltd. (Quigley's case) (1926) 38 C.L.R. 272.

[103] [1969] N.Z.L.R. 874, especially at 883 per Turner, J.

[104] [1984] 1 Qd.R. 212.

[105] [2000] VSC 177.

[106] The same may also be said of Re Transphere Pty. Ltd. [1986] 5 N.S.W.L.R. 309 at 311.

[107] (1997) 8 B.P.R. 15,611 at 15,618.

[108] [1962] VicRp 62; [1962] V.R. 429 at 436-437.

[109] [2001] FCA 366; (2001) 108 F.C.R. 27 at para.[46].

[110] [2001] FCA 365; (2001) 108 F.C.R. 150 at para.[56].

[111] (1986) 39 S.A.S.R. 582; 41 S.A.S.R. 122 (F.C.).

[112] [1967] HCA 15; (1966) 116 C.L.R. 61 at [71]- [72], [77] and [79].

[113] At [71]-[72] per Barwick, C.J.