TEC Desert Pty Ltd & Anor v Commissioner of State Revenue [2010] HCATrans 266 (18 October 2010)

Last Updated: 21 October 2010

[2010] HCATrans 266

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Perth No P26 of 2010

B e t w e e n -

TEC DESERT PTY LTD

First Appellant

AGL POWER GENERATION (WA) PTY LTD

Second Appellant

and

COMMISSIONER OF STATE REVENUE

Respondent

FRENCH CJ
GUMMOW J
HEYDON J
CRENNAN J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON MONDAY, 18 OCTOBER 2010, AT 10.15 AM

Copyright in the High Court of Australia

MR J.W. DE WIJN, QC: If the Court pleases, I appear with MR B. DHARMANANDA for the appellants. (instructed by Mallesons Stephen Jaques)

MR G.T.W. TANNIN, SC: May it please the Court, with MR B.P. KING I appear for the respondent. (instructed by State Solicitor’s Office)

FRENCH CJ: Yes, Mr De Wijn.

MR DE WIJN: Can I take your Honours first to - - -

FRENCH CJ: Sorry, before you start, it might help us if early in the piece you could take us on a little voyage through the statutory territory that we have to cover, especially the Stamp Act and the Mining Act in - - -

MR DE WIJN: I was going to do that straightaway. Could I take your Honour to the statutory provisions dealing with the stamp duty issues? Probably the best place to see them is at annexure A to our written submissions, starting at page 5. Your Honours will be aware that traditionally in stamp duty matters what has been brought to stamp duty is a conveyance, sometimes a conveyance on sale, as in this legislation. Following the decision of the Court of Appeal in England in a case called Angus that I think your Honour Justice Gummow had occasion to consider in a case of Trust Company, which I will come back to in a moment, many of the stamp duty acts included provisions which deemed agreements for sale to be a conveyance, and at section 74 in the West Australian Act, or as it was at the time, your Honours will see the provision:

Every contract or agreement, howsoever executed, for the sale of any estate or interest in any property shall be charged with the same ad valorem duty to be paid by the purchaser as if it were an actual conveyance on sale of the estate, interest or property contracted or agreed to be sold.

That is the key provision that we are concerned with in this case. The contract that I will take your Honours to in a moment was certainly not a conveyance, and if it is dutiable it will only be dutiable by reference to section 74. If it is not within section 74, it is not liable to duty. The history of that provision, as I mentioned a little while ago, lays in the decision of the Court of Appeal in Angus. We have referred to that in our submissions, and in a decision of this Court in a case that we do not have in our bundle, but I will just - - -

GUMMOW J: What is the citation of Angus?

MR DE WIJN: The citation of Angus is (1889) 23 QBD 579. The Full Court of this Court had occasion to consider a similar provision to section 74 in the Queensland Act in a case called Trust Company of Australia. It is not reported in the Commonwealth Law Reports, but it is reported in the Australian Law Reports[2003] HCA 23; , 197 ALR 297, and the High Court citation is [2003] HCA 23. In that case, in the joint judgment of Justices Gummow and Hayne at paragraph [42], your Honours said:

Provisions such as s 54 –

That was the Queensland provision, and it was a more elaborate provision –

have a long history in revenue law. This appears to have begun in the United Kingdom with s 18 of the Customs and Inland Revenue Act 1889 (UK) . . . These provisions were introduced to remedy a perceived defect in s 70 of the Stamp Act 1870 (UK), which had been disclosed by the decision in Commissioners of Inland Revenue v G Angus & Co.

So section 74 is a deeming provision that deems certain contracts to be dutiable as if they were conveyances on sale. The next step in the statutory process is that one has to go to the schedule to find out the rate of duty - - -

GUMMOW J: How do chattels escape?

MR DE WIJN: I will come to that in a moment, your Honour. The next step is page 6 of our bundle, the schedule, item 4, “CONVEYANCE OR TRANSFER ON SALE OF PROPERTY”, and that is what the Commissioner contends is the relevant section. Then chattels escape by virtue of Schedule 3, (7c), page 9, but then, just as soon as chattels have escaped, they can come back in - - -

GUMMOW J: I am sorry, the third schedule.

MR DE WIJN: Item 2(7c).

FRENCH CJ: That goes back to section 16(2) of the Act, I think, does it not?

MR DE WIJN: Yes, section 16 is the one that imposes duty on instruments that are set out in the schedule. The exemption is in item 2(7c) at the bottom of page 9. Then there is a provision that brings chattels back in. Your Honours will see that at section 70 of the Act. If your Honours goes back to page 4 of our appendix your Honours will see a heading “Certain transfers of chattels dutiable” and in subsection (2) that the respondent relies upon:

If an instrument –

(a) transfers, or is or includes an agreement to transfer, or evidences the transfer of, a chattel and land –

That is the first test –

and

(b) is chargeable with duty in respect of the land,

the instrument is chargeable with duty in respect of the unencumbered value of the land plus the unencumbered value of the chattel.

So in order to get back into 70, in order to have the chattels included again the instrument itself, in this case the contract of sale, has to be “chargeable with duty in respect of the land”. That is the first, or it is probably the second test. The other test is that the instrument transfers – well, this instrument does not transfer anything:

or is or includes an agreement to transfer, or evidences the transfer of, a chattel; and –

land and then the term “transfer” is defined for the purposes of section 70, which is the chattels going back in provision. Your Honours will see that - the last definition in subsection (1):

“transfer” includes convey, exchange, partition, settle, give, vest, release and renounce -

we would say not words apposite to deal with rights to remove fixtures. First of all, the agreement needs to be dutiable as a:

contract or agreement, howsoever executed, for the sale of any estate or interest in any property –

under section 74. This case has been conducted from the outset that in this case for the respondent to win he needs to be able to show that the contract was a contract for the sale of any estate or interest in any land. That is the first question.

If we are successful in the argument that is contract is not a contract for the sale of any interest in land then that is the end of the matter. If we are unsuccessful in that one needs to go to section 70(2) to see whether any chattels can be included. Your Honours, that is the statutory scheme in relation to stamp duty. My learned junior has just reminded me, perhaps I should draw your Honours’ attention to the term “chargeable with duty” in section 70(1), and, of course, there is also a definition of “chattels”. If I could take your Honours next to the - - -

CRENNAN J: Are “exempt chattels” in the definition of “chattels” in section 70(1) - that is a reference back to (7c), is it?

MR DE WIJN: Yes, “exempt chattels”, no - - -

HEYDON J: It cannot be because - - -

MR DE WIJN: It is only 2(7), (7a) or (7b). We are not concerned with the term “exempt chattels” for the purpose of section 70. The process is – chattels are exempt to start with under (7) or (7a), (7b) or (7c). We rely on (7c). Then the question is do we have an agreement for the sale of an interest in land because if we did clearly it would be dutiable under section 70(4) as it if were a conveyance. The next question is if it is an agreement for the sale of an interest in land do you add back the chattels by reference to section 70(2).

For subsection (2) purposes all one is concerned with is whether it is “an instrument” that “includes an agreement to transfer” a chattel and land. That is the first question. Secondly, it has to be “chargeable with duty in respect of the land”. If those two tests are satisfied then the chattels get added to the land. What the Commissioner seeks to do in this case is use the land as a hook to get the chattels in and that is what the statute allows in certain circumstances.

GUMMOW J: The primary judge decided it on what footing?

MR DE WIJN: The primary judge decided that, as a matter of construction, the contract did not provide for an agreement to sell the land, only sold chattels.

GUMMOW J: And the Court of Appeal?

MR DE WIJN: There was a division of opinion in the Court of Appeal. Justice Wheeler, with whom Justice Newnes agreed, came effectively to two conclusions. First of all her Honour said the contract was a contract to sell fixtures, whatever that means and we will come to deal with that, that is a contract to sell fixtures in 1998. Justice McLure was with us on that point and agreed with Justice Simmonds, the primary judge, but Justice McLure decided against us because there was a provision in a licence agreement, which I will come to in a moment, which set out a regime of what was to occur at the end of the licence period.

Her Honour Justice McLure said that was the leading and principal object of the licence agreement. The licence agreement was not even assessed for duty, and that the leading and principal object of the licence agreement was to sell the fixtures at the end of the 15-year licence period. That is what we call the clause 17.5 argument. So essentially there is a division 2/2 on what the subject matter of the sale is. We say when we look at the contract it is clear it is just chattels. The next point is whether the provision in the licence agreement changes that and I will come to deal with that in a moment.

FRENCH CJ: Justice McLure’s position is encapsulated, I think, at paragraph 228, page 1197.

MR DE WIJN: Your Honour is right. Can I take your Honours now to the - - -

GUMMOW J: The Commissioner was directed to reassess, was he not, by the Court of Appeal? What is the foundation of that wrinkle?

MR DE WIJN: I am not sure that he was because the assessment was increased. The Court of Appeal increased the assessment.

GUMMOW J: Yes, that is right.

MR DE WIJN: Perhaps I could explain it as I take your Honour through the agreement because that is a curious part of the case. What happened was that originally the agreement was assessed – the Commissioner took a view that certain assets were fixtures and there was a disagreement about that. We say it does not matter whether it was a disagreement at all. He then assessed the contract as if it was an agreement to sell just those fixtures which he had identified.

When the matter got to court before Justice Simmonds, shortly before that the Commissioner raised a section 70 argument which had not been raised before - it was raised a week or two weeks before Justice Simmonds heard the case – and then sought to increase the assessment by a million dollars-odd, a little bit more because he sought to bring in the chattels and that was the reason the assessment was increased, partly as a result of bringing in the chattels and partly as a result of what we call the clause 17.5 argument where Justice Wheeler in the alternative held -remarkable, with respect – on the one hand her Honour said it was an agreement to sell fixtures in 1998 and then as an alternative her Honour said it was an agreement to sell the fixtures at the end of the term of the licence.

As a result of the second analysis – and that was the analysis that Justice McLure adopted – there was an increase in the assessment, partly as a result of the 17.5 argument and partly as a result of bringing in chattels which had not been included in the original assessment.

CRENNAN J: Her Honour looks at those cases like Metal Manufactures which talk about there being an equitable interest in land in respect of fixtures and then I think her Honour’s reasoning is encapsulated, I think, as the Chief Justice pointed out, at 227 and 228, to be found in 1197 of the appeal book. That is essentially the way her Honour reasoned it through.

MR DE WIJN: Essentially her Honour took a couple of, we say, leaps of faith. First of all her Honour misconstrued the agreement and her Honour said this was a contract for the sale of fixtures. When one looks at the - this is the 17.5 clause – it is not what it says at all; it says what the purchaser shall acquire is:

the Licensor’s right, title and interest –

in the fixtures, and that is a defined term, and defined by reference to the rights under the Mining Act and the various Acts which I will take your Honour to shortly. So there was a mistake in just construing the agreement and, secondly, we argued – we really put two arguments, first of all we said the right to remove fixtures was a statutory right under the Mining Act; effectively the mining leases were licences - this Court has looked at that in Ward - and that these were statutory rights to remove fixtures in certain circumstances.

CRENNAN J: So not rights as tenants, strictly speaking?

MR DE WIJN: Not rights as tenants; statutory rights. But even – and then we - - -

FRENCH CJ: Had the character of an obligation, did it not?

MR DE WIJN: Yes, the character of an obligation.

FRENCH CJ: You have to make good the land, as it were.

MR DE WIJN: Make good the land. Anyway, and I will take your Honours to the provisions of - the Land Administration Act, for example, has a specific provision in it that says the fixtures vest in the Crown. But we will come to those. Her Honour, we say, made that error by simply concluding 17.5 provided for an agreement to sell fixtures when that is not what it says at all. It was a defined term “Licensor’s right, title and interest” which I will take your Honours to shortly. Then we argued, really by analogy by reference to the tenants’ fixtures cases, we say - - -

FRENCH CJ: But it not really a tenants’ fixtures case, is it?

MR DE WIJN: No, it is not, because they are fixtures under mining tenements with statutory rights that we argued - - -

GUMMOW J: It is freehold as well, is it not?

MR DE WIJN: Sorry, there is some freehold, yes. So there is some freehold at Kalgoorlie and, of course, you cannot sell – we will come to the analysis and how their Honours dealt with that. Justice McLure was on our side in relation to freehold land because we said in relation to freehold land that at best what would happen is there would be a creation of an interest; there would not be a sale, and Justice McLure was with us on that. Justice Wheeler was against us on that point. Justice McLure was against us on the 17.5 point only in relation to the statutory rights and we then sought to argue really by analogy by reference to the landlord and tenants’ cases that even when you look at the landlord and tenants’ cases that the right of a tenant to remove fixtures is not an interest in the land. That is essentially - - -

CRENNAN J: What is it? How would you characterise it?

MR DE WIJN: It is just a chose in action. It is a right to go onto the land and remove the fixtures, and that is - - -

CRENNAN J: Does it give rise to any equity of any sort?

MR DE WIJN: You would not need equity. Certainly in our situation you would not need equity. In certain circumstances equity, as this Court said in Ward’s Case, could come to the assistance of protecting contractual right and protecting statutory rights, but - - -

CRENNAN J: That is just a right to equitable relief in certain circumstances.

MR DE WIJN: Exactly, and so if equity was called upon to assist in protecting the WMC’s rights, because what one has to do is look at what rights WMC had because they are the rights that are said to be transferred or sold, so just because WMC had rights that equity might assist in protecting, whether by way of injunction, does not elevate it with respect to an interest in land. That is essentially where we say the case went off track. To equate the fact that equity might would depend on all the circumstances and it would be hard to imagine in the case of a statutory right, such as a mining lease, you cannot imagine the Crown selling to a third party without notice. It is hard to imagine - - -

CRENNAN J: It may not matter but did the appellants have exclusive access to the fixtures?

MR DE WIJN: I think the answer is no and it is because the licensors were permitted to relocate the fixtures during the term of the licence. The fixtures certainly had to be used to produce power to be sold back to Western Mining under the sale agreement but when we go through the pro forma licence agreement we will see that Western Mining had considerable rights still in respect to the fixtures including the right to have them relocated because they might have been in the wrong spot where they might have wanted to dig or do something else. Certainly, in relation to the licence area, Western Mining obviously had rights to go on to the area to carry out some mining operations.

CRENNAN J: The fixtures we are talking about are two power stations and transmission lines, are they?

MR DE WIGN: There are a series of generators which are just referred to as power stations. They are power-generating facilities and they are transmission lines and they are situated on a mixture of land from some freehold land at Kalgoorlie, which was the subject of one of the nickel agreements, I think - I cannot remember which one at the moment. Some of the other power-generating equipment was situated upon mining leases and mining licences under the old Mining Act and some of the transmission lines were situated on mining leases and on some Crown leases under the Land Administration Act and there was even - some of the transmission assets on land that Western Mining had no title to at all, poles in the middle of the desert presumably that no one could find any title to.

FRENCH CJ: Not wanting to be distracted too much by that tenants’ fixtures analogy if one looks at 1142 that assumes that somebody is entitled to mining plant lawfully erected on the land which is the subject of the tenement. It does not actually have to be the holder and it does not make any assumption about whether such mining plant is a fixture or not.

GUMMOW J: A mining plant is defined so as to include what may or may not be fixtures?

MR DE WIJN: Mining plant is not limited to fixtures.

FRENCH CJ: So you have a statutory right of removal which is founded upon somebody’s entitlement. I suppose in the case of a fixture, what is the nature of that entitlement?

MR DE WIJN: That is a good question, your Honour. I have searched through the Mining Act and I cannot find any. I mean, it is a peculiar provision. The way in which I understand the Mining Act operates, under section 85, I think it is, that grants the mining lease, one of the rights granted is to do whatever is necessary to carry on the mining operations. Generally speaking, most operations and most constructions require the approval of the Crown and it is often through that approval process that permission is given to build a station or to build a nickel smelter or to do something else.

To answer the Chief Justice’s question, I could not find anything in the Act that talked about entitlement. I presumed that there is an assumption that if you have a mining lease and you are permitted under your mining plan to construct a smelter or to construct – to put a generator on the land then you are treated at the end of the term at least being permitted to remove it, or being, as your Honour said, obliged to remove it.

FRENCH CJ: Well, this almost operates as though the distinction between things which are fixtures and things which are not does not matter because the Minister can direct that they be sold and removed if the Minister thinks it is appropriate and so forth.

MR DE WIJN: It may be that in a strange sort of way they are all treated as chattels and probably not, but they are certainly not treated as tenant’s fixtures in the ordinary scheme of things. One needs to look at the statute to find your right of removal.

KIEFEL J: You are going to take us to the statute.

MR DE WIJN: I am going to take your Honours to the contract first, if I could. Could I take your Honours first to the power sale agreement which your Honours will find in court book 1. The agreement starts at page 13. Can I take your Honours first to page 20. The definition of “Power system assets” your Honours will see at about line 30:

“Power System Assets” means the Sale Assets –

that is a defined term –

and all Fixtures and improvements to the land the subject of the Northern System Site Licences and the Southern System Site Licences –

and then there are a number of generators and items set out. Then over at page 21 there is a definition of “sale assets”:

“Sale Assets” means, collectively, such part or parts of the following assets as are not Fixtures –

and I need to take your Honours back to the definition of “fixtures” which your Honours will find at page 16:

“Fixture” means an item of property affixed to land –

and no one could quibble about that. The second part of the definition is curious. It is really a conclusion of law –

and an estate or interest in which is therefore an estate or interest in land.

That probably does not matter but we would say that is probably a wrong conclusion of law. Then one goes to the subject matter of the sale which is at clause 2.1. This is at page 25, your Honours:

Subject to the terms and conditions of this Agreement, the Vendor will sell and the Purchaser will buy, on the Completion Date, all of the Vendor’s respective right, title and interest in and to the Sale Assets as at the Completion Date –

and the sale assets, of course, were defined expressly to exclude fixtures. Now, her Honour Justice Wheeler held that sale assets in clause 2.1 included fixtures and I will explain how she came to that conclusion, but that was the basis of the decision of the majority below. I will take your Honours now to page 28 of the appeal book, clause 3.2(a):

The Parties have proceeded under this Agreement and the Licence Agreements –

and I will show your Honours in a moment how we get to the licence agreements –

on the basis that:

(i) all of the Power System Assets which are a chattel, chose in action or other personal property are to be sold outright to the Purchaser under this Agreement; and

(ii) all of the Power System Assets which comprise Fixtures are not to be sold to the Purchaser under this Agreement, but are to be treated as Licensor’s Improvements under the Licence Agreements.

So we would say a pretty clear statement of intent. Then in (b) we have what is referred to as assumed sale assets. It explains:

(b) The Purchaser has classified items of Power System Assets as comprising either a chattel, chose in action or other personal property (in this clause 3 the “assumed Sale Assets”) –

Now, just pausing there, what the parties did, your Honours, is that having provided in an agreement for the sale of chattels and the licensing of fixtures, what the parties did is that they went through the list of, effectively, the asset register and put a tick next to those assets they thought were chattels in one column and put a tick next to other assets they thought were fixtures. So they proceeded on an assumption for the purpose of calculating a purchase price and for the purpose presumably for taxation laws and all sorts of things that required assets to be depreciated. So that is the assumption they proceed on, but that does not change, we say, what was agreed to be sold. Then the agreement says in paragraph (c):

On the basis of this classification, the Parties have agreed that:

(i) the Purchase Price is the sum of $190,363, 990 –

that is for the chattels –

(ii) the aggregate of the Licence Fees payable under all of the Licence Agreements for each Licence Year during the Licence Term will be $3,869,458-20 –

Then in (d) there is a provision for a prepayment. What the licence agreements provided for was annual payments over 15 years of the licence agreement with an ability to Western Mining to call for a prepayment of the licence fees according to a formula that gave a precise figure and on the basis of the list that they prepared, there was $39.8 million payable by way of prepayment. So that is the structure of the agreement. Then clause 3.4, which her Honour Justice Wheeler relied upon, provided for possible adjustments to the purchase price in certain circumstances and her Honour said it was that clause that led her to believe that what the parties intended to sell was chattels and fixtures despite, we would say, the clear words of the agreement.

Now, clause 3.4 we say is really irrelevant because it is not a clause that has been activated. It is only a clause that adjusts purchase price. It is not a clause that changes what is the subject matter of the sale. That is clearly provided for, we say, in clause 2.1. Clause 3.4 is perhaps a curious clause but it is a clause that might be adopted if, for example, the Commissioner of Taxation were to take a view of characterisation of the assets and the parties might just say, “I do not want to argue about it. I just want to accept that and move on and deal inter partes on that basis.”

FRENCH CJ: Governmental agency is defined very, very widely, so it is almost anybody official in Western Australia really.

MR DE WIJN: It is, your Honour. Presumably it would include the respondent.

FRENCH CJ: Anyway, there is no relevant determination in this case.

MR DE WIJN: There was no relevant determination and there was no relevant acceptance of it. There needs to be two things. There needs to be a determination and there needs to be an acceptance of it. Can I next take your Honours to 5.2 of the agreement at page 33 and this is where the obligation arises to execute various licence agreements. Clause 5.2(a)(iii) at about line 26 or so, it is an obligation of the purchaser:

unless executed prior to Completion, execute such instruments as are necessary to give effect to clause 5.2(b), including the Northern System Site Licences and the Southern System Site Licences and such other licences or other instruments as are specified in Schedule 7 in the form of the draft specified in Schedule 8 –

Then there is a corresponding obligation on the part of the purchaser at the bottom of that page (b)(i), purchaser has got to execute those licence agreements.

FRENCH CJ: That is the vendor, I think, is it not?

MR DE WIJN: Sorry, the vendor, sorry I said purchaser, so that is Western Mining. Then at 5.3 at page 35 there are clauses dealing with risk and title. Again we say it clearly indicates that there is a clear distinction drawn here between chattels and fixtures. Subclause (a) provides that:

Upon Completion, ownership of the Sale Assets will, as between the Parties, pass to and vest in the Purchaser –

so that is the sale assets as defined which we have already seen excludes fixtures, and (b):

Upon Completion, the risk of all Fixtures included in the Power System Assets will, as between the Parties, pass to and vest in the Purchaser - - -

FRENCH CJ: What does it mean to vest a risk?

MR DE WIJN: Well, it means it is responsible for insurance and things like that and if they get damaged, my clients have to replace them to be able to continue producing power. We say, significantly, it draws a distinction between ownership and risk. Then the next clause I wanted to take your Honours to was 8.1 dealing with the vendor’s warranties, 8.1(c), and this is an important clause. We will come back to it in relation to the licence agreement, but the warranty in relation to the freehold assets is in (i):

the Vendor has good title to the Power System Assets being:

(i) in the case of those Power System Assets that are Fixtures on freehold land owned by the Vendor, title as the owner thereof notwithstanding the affixation –

again a curious description, but we would say, if it matters, what that means that is the vendor would be the owner of those assets if they were severed. Obviously, as the owner of the freehold, we take that to be a warranty that if they are severed, the vendor would be the owner of them so there would not be a financier with an ability to sever them and remove them. Then (ii) is an important clause:

(ii) in the case of those Power System Assets that are Fixtures on land owned by the Crown or any person other than the Vendor –

well, we have not found any other person, it is only freehold land or Crown land –

and which land is the subject of mining tenements or special Crown leases held by the Vendor, such rights of ownership separate from the realty (if any) as are conferred by –

and there is a series of Acts referred to. We have included in our bundle what we have considered to be the relevant provisions of each of those Acts except for the last one, the Mining on Private Property Act 1898. We could not find anything in that Act that was remotely relevant, so we suspect is has gone in there as sort of belts and - - -

GUMMOW J: We have looked at the Mining Act. What about those other statutes?

MR DE WIJN: Yes, your Honour. The Land Administration Act section 92, we have that in our bundle of authorities at tab 1, section 92:

(1) When a lease or licence granted under this Part terminates, the property in any improvements made on the relevant Crown land vests in the Crown.

Then subsection (3) deals with termination:

On the termination of a lease to which subsection (1) applies, the former lessee may, with the permission of the Minister ––

(a) remove all fixtures from the relevant Crown land within a period of 3 months –

Section 281 is there because the Land Administration Act effectively took over from the Land Act so any - - -

GUMMOW J: Is there any definition of “improvements”?

MR DE WIJN: We do not think there is one. I will check on that. I do not think there is one.

FRENCH CJ: Are there any relevant leases for the purposes of section 92 in this case?

MR DE WIJN: There are. If I could take your Honour to page 98 of the court book, very much a.....case with transmission lines. The assets fall into two categories, the generating facilities or power stations and the transmission lines. In respect of transmission lines your Honour will see at page 98, in respect of the Leinster Nickel Operations, there is an airport lease under the Land Act, which is now, after the Land Administration Act, dealt with under the Land Administration Act. So obviously there were some power lines going over a bit of property near an airport somewhere. There were also some transmission lines under a townsite lease. Your Honour will see that at about line 41. Can your Honour see that?

FRENCH CJ: Yes.

MR DE WIJN: They are the only two that we could find that would be affected by the Land Administration Act. While I am on these mining statutes perhaps I could just take your Honours to the old Mining Act at tab 2, section 110. The only relevant section we could find is at page 44 and curiously, I think, included perhaps as a matter of interest, rather than anything else, section 273 of the old Mining Act. This is the Mining Act of 1904. Section 273 still expressly treated mining tenements as chattels. Then we have the 1978 Mining Act section 114 and the rights of the holder of a mining lease are set out in section 85.

Then there are two State agreements. They are at tabs 4 and 5. The 1974 agreement, I think the only relevant provision is clause 35, which your Honours will find at page 43 of the pages in the bottom right-hand corner. Under the 1968 State agreement, the relevant provisions on cessation and determination are in clause 11(b), which is at page 22 of that schedule. Do your Honours have those references?

FRENCH CJ: These agreements, what do they actually affect in the context of this case? The agreements themselves do not have the force of law; they are merely ratified, I think, by the Acts, are they not?

MR DE WIJN: Yes. The reason they are relevant in this case – these are various agreements that proceed on the basis that there will be some mining leases granted and in once case, I think, some freehold land granted, I think that is the Kalgoorlie land, and I think they provided for an option back to the Crown in relation to the agreements determined, but the relevance of the agreements is, if we go back to clause 8.1(c)(ii) of the sale agreement at page 39 of the court book, that what the warranty is and, when we come to the licence agreement, what the defined term vendor’s right, title and interest is, is that it is the vendor’s rights of ownership separate from the realty, if any, as are conferred by the two state agreements - - -

FRENCH CJ: Right, because actually they say by the Acts, but the Acts do not confer anything, I think. They simply approve the agreements.

MR DE WIJN: I think your Honour is right, but we have taken it to assume that if that is the case then – on that construction, then there are no rights, which may be the correct construction. We have assumed that the reference there is to the agreements that are ratified by the Act.

FRENCH CJ: There was a Government Agreements Act, I think, which gave certain statutory consequences but that I do not think was brought in until about 1979 and these were both sixty - - -

MR DE WIJN: They are early agreements.

FRENCH CJ: Yes.

MR DE WIJN: So if your Honour the Chief Justice is correct on that point, we are happy to take that as no rights, but even if one goes to the actual agreements - - -

FRENCH CJ: Subject to what happens by way of contract, I suppose.

MR DE WIJN: Yes. Then that is the limitation of the warranty in relation to the power system assets. I next need to take your Honours to Schedule 7, which your Honours will find at page 96 of the appeal book. This concerns the entry into the licence agreements and the application of what is referred to as permanent tenure, another curious term under the agreement. If I can take your Honour first to clause 1.1 of Schedule 7:

The Vendor shall (subject to all necessary approvals and consents) grant the Northern System Site Licences and the Southern System Site Licences in respect of the land described in the following tables.

There were in fact nine licence agreements entered into. Those licence agreements are in volume 2 of the court book. We say that are strictly irrelevant because the nature of the contract has to be determined at the time one executes it. So if anything is relevant, it is the pro forma licence agreement and the obligation under Schedule 7. There is then clause 1.5 that deals with permanent tenure. This point seems to have gone away a little bit because early on the respondent argued that in fact my clients had purchased the mining leases, and that is no longer a live issue, but it is perhaps important to try and understand what is mean by permanent tenure; Clause 1.5(a) provides that:

The Purchaser shall, as soon as practicable after Completion, apply for permanent tenure in the form of General Purpose Leases under the Mining Act 1978 (WA) or such other form of tenure as the Parties may agree in respect of the land (either under the Mining Act 1978 (WA) or the Land Administration Act 1997 (WA) on which the Power Stations are situated –

and then there is the proviso –

provided that the Purchaser will not apply for a General Purpose Lease or any other mining tenement under the Mining Act 1978 (WA) where the General Purpose Lease or other mining tenement cannot be granted immediately after the surrender of the Vendor’s mining tenure under the Mining Act 1978 (WA) or the Mining Act 1904 (WA) –

So that part of the clause dealing with the application for permanent tenure could only deal with Western Mining’s land that was subject to various mining tenements. It did not deal with the freehold land, and we will see where that is dealt with separately. Then 1.5 goes on and says:

For the avoidance of doubt, it is recorded that the Purchaser will have the responsibility for any matters concerning native title –

and then there is a separate provision –

In respect of the land on which the Transmission Systems are situated –

and your Honours will see –

the Purchaser shall either, as the Parties may agree, apply for such form of tenure as the Parties may agree –

So it is left well and truly up in the air as to what is to happen. It is no agreement to do anything other than to agree and that, of course - - -

CRENNAN J: So you regard it as an option, not an obligation?

MR DE WIJN: It is not even an option, because the parties have yet to agree on the form of tenure. It is a classic agreement to agree, and it may be that they have to use best endeavours to do something, but it is not a contract to do anything. It is just a contract to get together and try and agree on some form of tenure, bearing in mind that under the licence agreements, they effectively have sufficient rights to go in and produce the power. So this was not surprising that this permanent tenure was left up in the air to some extent.

The case was run below on the basis that if the respondent could not win in respect of the land where there were mining leases, he certainly could not win in respect of the land where there were transmission facilities. Sorry, I withdraw that – it was run on the basis that if he could not win in respect of the land where the generation facilities were situated, he could not win in respect of the transmission facilities.

The next part of the sale agreement that I need to take your Honours to is the pro forma licence agreement, because the structure of this agreement was that there was a sale of assets, as we have seen, an obligation to enter into some licence agreements. Those licence agreements were entered into at settlement, so in January 1999 – this contract was dated November 1998 – but the sale agreement included a pro forma which provided the general framework for the licence agreements. Your Honours will find that at page 109.

KIEFEL J: Just before you go to that, what were the options of the types of tenure under the Mining Act or the Land Administration Act? How many different types of tenure could have been applied in this case?

MR DE WIJN: Under the Land Administration Act, as I understand it - - -

KIEFEL J: That were applicable to this case, I mean, to the Land - - -

MR DE WIJN: I think it could only be a Crown lease under the Land Administration Act.

KIEFEL J: And under the Mining Act a general purpose lease or what else?

MR DE WIJN: Under the Mining Act it could be a general licence or it could be a general purpose lease, I think.

KIEFEL J: So they are the only choices?

MR DE WIJN: Or a mining lease, but I cannot imagine that they would have contemplated a mining lease. I would imagine it was a licence under the Mining Act.

FRENCH CJ: So far as the – sorry, did you want say something further to Justice Kiefel?

MR DE WIJN: I will just try and find those provisions dealing with general licences, your Honour.

FRENCH CJ: So far as that permanent tenure provision goes, 1.5, am I right in saying the conclusion in your favour by Justice McLure at 183, in other words, it did not involve the sale of anything. Putting to one side the whole question of whether it is an agreement to agree, it involved the creation of new interests, not the transfer of any existing interests from vendor to purchaser.

MR DE WIJN: At an early stage, the Commissioner has had a few different goes at how he has presented his case. I am not critical of that, but at an early stage, one of the arguments was that was what being sold was the mining tenement and clearly that was not being sold. If we could then move to the pro forma licence agreement at 109, your Honours will see from the italics at the top of the page, there has to be a bit of adjustment depending where the land is, and then the recitals, I will take your Honours to those:

The Licensor is the registered holder of the Head Lease.

It would appear, and certainly when one looks at the actual licence agreements, which I have just told your Honours you do not need to do, but certainly it appears that the reference to “head lease” is contemplated to be a reference to the mining tenement, or the Crown lease that is in existence, and obviously if there is freehold land, then that recital would not be there. Recital B:

The Licensor has agreed, subject to the satisfaction of certain conditions precedent, to sell the Chattels to the Licensee pursuant to the Power Assets Sale Agreement.

Again, a clear reference to the sale of chattels, and that term is defined in this agreement, and Recital C:

The Licensor has agreed to licence the Licensor’s Improvements and that part of the Head Lease comprising the Licence Area to the Licensee with immediate effect on Completion under the Power Assets Sale Agreement -

Then at page 110, there is a definition of “Chattels” at about line 20. Your Honours will see:

all Power System Assets other than the Licensor’s Improvements.

Then there is the same definition of “Fixture”. “Licensor’s Improvements” are defined at 111 at about line 35. It means:

all Power System Assets on the License Area which are Fixtures and includes all Fixtures added by the Licensor to the Power System Assets from time to time.

It is contemplated the Licensor could add further fixtures, and then the term “Licensor’s right title and interest in the Licensor’s Improvements” is defined to mean:

any and all of the Licensor’s interest (if any) in the Licensor’s Improvements as set out in clause 8.1(c) of the Power Assets Sale Agreement –

Your Honours, I have just taken your Honours to that. It is the one that expressly excludes the realty – it is at page 39 – such rights of ownership separate from the realty, if any, as are conferred by the various acts. Then at 112, there is a further “Option Period” of 15 years, but save for the extension by option, it is a 15-year licence. If I can take your Honours to page 115, clause 2.1, again an acknowledgement that the parties are selling chattels and licensing fixtures:

The parties acknowledge that:

(a) they have proceeded under the Power Assets Sale Agreement and this Licence on the basis that:

(i) all of the Power System Assets which are a chattel . . . are to be sold . . .

(ii) . . . Fixtures are not to be sold -

Then the grant of the licence is at 3.1, page 117. Then 5.1 deals with permanent tenure:

At any time and from time to time during the Term, the Licensee may elect to obtain Permanent Tenure -

That looks, wherever it goes from there, as if it is an option. Your Honour Justice Crennan’s observation before in relation to 5.1 is probably right that, insofar as it applies, there is an option - - -

KIEFEL J: It has to be read with 1.5(a) of the Sale Agreement.

MR DE WIJN: Yes. It does.

KIEFEL J: And that is an obligation.

MR DE WIJN: It is an obligation but only in relation to the mining tenements.

KIEFEL J: I see.

MR DE WIJN: If your Honour goes back to Schedule 7, the only obligation there is:

(a) The Purchaser shall, as soon as practicable after Completion, apply for permanent tenure in the form of General Purpose Leases -

and if your Honour goes down, it does not apply:

where the General Purpose lease or other mining tenement cannot be granted immediately after the surrender of the Vendor’s mining tenure –

So the first point of 1.5(a), as we construe it, only applies to tenements in respect of which there is a mining lease or a mining licence under one of the two Mining Acts.....in relation to freehold land or in relation to Crown leases you would not be able to surrender the tenure under the Mining Act and in relation to transmissions assets it is clearly an agreement to agree. Then 5.3 of the pro forma licence agreement at 119 deals with the procedure in relation to the land in respect of which there are mining leases and 5.5 deals with permanent tenure in relation to freehold land. That is at page 121. So no obligation in relation to freehold; there is merely an option.

FRENCH CJ: Characterisation of that, I think, by the trial judge as an agreement to agree was not challenged, was it?

MR DE WIJN: No. So, at 5.5:

Where the Licensee elects to obtain Permanent Tenure over any part of the Permanent Tenure Area, and where the form of Permanent Tenure contemplated by Schedule 7. . .consists of the granting of a leasehold interest over or a transfer of freehold interest in lands held in freehold by the Licensor, then the following provisions shall apply -

As your Honour the Chief Justice has said, there could only be an agreement to agree, and that has not been challenged because one option is a lease and one option is a transfer of freehold land and that is made clear in 5.5(a). Then effectively the rest of 5.5 says if there is going to be a lease, the terms of the lease will match the terms of the licence. That is a broad summary but that is effectively what the provisions provide for. Your Honours will see that in paragraph (e):

If applicable, in all other respects, the rights and obligations of the Licensor and the Licensee under the lease will be equivalent to their respective rights and obligations under this Licence with regard to the Permanent Tenure Area.

So that deals with permanent tenure. Clause 6.2 at 122 deals with the prepayment:

The Licensor may at any time by written notice to the Licensee require the Licensee to prepay (on the date specified in the notice) the Present Value of the Licence Fee –

There is a formula which I do not pretend to understand, but it works out what the present value is. Then 7.6, just in passing, deals with licensee’s fixtures.....with that. There is a restriction on assignment by the licensor in 8.2. The permitted uses of the area by the licensee are set out in 9.1, which I think answers your Honour Justice Crennan’s question. Clause 10 is important:

At the expiration of the Term or any period of holding over or extension pursuant to clause 4 . . . the Licensee must cease using the Licence Area and rehabilitate the Licence Area in accordance with the requirements of all laws, Environmental Laws and Authorisations -

So we would say it is abundantly clear under this agreement that once the licence ceases that any interest that my clients had in relation to the fixtures were interests to go in and sever them, remove them and rehabilitate the site - effectively an obligation. Obviously the parties could get together and agree on some other form of tenure, but under the terms of this agreement, the obligation is to get off and rehabilitate the site. Then 13A at page 127 provides that the licensor may require the relocation of power system assets and there are certain provisions in dealing with that.

Then 17.5, which is the alternative provision that Justice Wheeler relied upon and the provision that Justice McClure relied upon in relation to the items on Crown land, or the mining leases, provides:

Except in the event of a termination under clause 17.1(a), (b) or (c) or 17.4, on the termination of this Licence for any reason, the Licensee must acquire the Licensor’s right, title and interest in the Licensor’s Improvements -

Now, just pausing there, the term “Licensor’s right, title and interest in the Licensor’s Improvement” is a defined term. I have taken your Honours to the definition of that and it is defined by reference to what is said in clause 8.1(c) of the sale agreement, that is:

such rights of ownership separate from the realty (if any) as are conferred by –

the various Acts. So by its express terms and in a sense it probably would not matter because in any event what one has to look is what rights WMC had, but this Agreement puts it beyond doubt, we say, by applying . . . reference to particular statutory rights excluding an interest in the realty.

Then the consequences are that basically there is an adjustment of the prepayment, if there has been a prepayment – obviously if there was termination at the end of 15 years there would not be any adjustment because the agreement provided for licence fees to be paid over 15 years. If there was an option, there were no further licence fees. There was simply a dollar for the second 15-year period. So at the end of 15 years there would be no present value. Then 18A provides that the licensee can sever any of the licensor’s improvements and he does so as agent for the licensor. Your Honours will see that at 18A.2. I think they are the relevant provisions of the contracts that I - - -

KIEFEL J: How does 18(a) work if the licensee is supposed to be providing power from the - - -

MR DE WIJN: He might decide that he does not need a particular generator. He might decide he that he can put his own generator in. It might be that a generator needs to be replaced. There is a separate obligation under a separate agreement for the supply of power which is a separate contractual obligation, but the licensor might come to the conclusion, I do not know, the diesel generator is no good any more or does not need it - - -

KIEFEL J: But there is no reimbursement. This allows a straight out sale of what is otherwise WMC’s improvements.

MR DE WIJN: Sale of the chattel, a sale of the severed chattel. What it does is at 18A.1:

If the Licensee considers from time to time that any of the Licensor’s Improvements should be sold or removed, because they are not required or because they should be replaced or for any other reason, then subject to any necessary approvals –

presumably statutory approvals –

and to the extent that the Licensor may lawfully sever and remove the relevant item, the Licensee –

so it is to that extent –

shall be entitled to sever and remove the relevant item from the Licence Area and to sell the relevant item.

So what is contemplated is severance and then sale.

KIEFEL J: Yes, but it is the right to sever that is more interesting, is it not?

MR DE WIJN: It is the licensor’s right to sever. The licensee does it as agent for the licensor and, of course - - -

KIEFEL J: Did Justice McLure refer to this provision in relation to her view that the licence provisions were an interim measure?

MR DE WIJN: No. I do not think that 18A got a mention anywhere in the judgment.

KIEFEL J: No.

FRENCH CJ: A small detail, Mr De Wijn, going back for a moment to the definition of fixture, which I think is common both to the pro forma licence agreement and the asset sale agreement, you suggested that the closing words “an estate or interest in which is therefore an estate or interest in land” is conclusionary, but it may be that it makes more sense to read those words as words of characterisation, in other words, it is an item of property affixed for land and which is - - -

MR DE WIJN: Well, your Honour, the definition cannot change for the purpose of the Stamps Act whether you have got an interest in land or not.

FRENCH CJ: No, I am just looking to how one reads it sensibly. You are not saying that everything affixed to the land is therefore part of the land.

MR DE WIJN: No.

FRENCH CJ: You are saying that everything is a fixture which is affixed to the land and which is, in effect, part of the land.

MR DE WIJN: Well, taking it a step at a time. In relation to freehold land, subject to what Justice Wheeler said, which I will take your Honours to in a moment, it seems to be the accepted law that a tenant is not the owner of any fixtures and does not have an equitable interest in any fixtures. It might have a right to remove them at the end of the lease or some other time during the lease. The High Court in Melluish has made it plain that where the items are affixed to the land, they belong to the holder of the land.

That is a case about a financier. It held that a financier did not have an equitable interest in the land, was not the owner of the fixtures, so in those circumstances, one would not imagine that anyone would have an estate or interest in the fixtures. That deals with freehold land in relation to the mining tenements. This cause cannot change what the rights are under the Mining Act. If they are statutory rights, they are statutory rights and if by analogy one looks at the rights of tenants, if a tenant’s right to remove fixtures is not an interest in the land, following on from the Hallen v Runder line of authority, then this definition cannot make it one.

FRENCH CJ: Really what I was asking was whether it should be read as a conclusionary statement about affixation or whether it is a separate head of characterisation for the purposes of this definition - an attribute for the purposes of this definition.

MR DE WIJN: Your Honour might be right. It may be that - - -

FRENCH CJ: It has to have that legal character in order to meet the definition of “fixture”.

MR DE WIJN: I mean, that may well suit us because you would not find any fixtures that met that character.

FRENCH CJ: That may be so.

GUMMOW J: Just looking at 17.5(a) again for a minute, it says TEC and AGL:

must acquire [WMC’s] right, title and interest in the Licensor’s Improvements –

Would that include WMC’s rights under 114 of the Mining Act?

MR DE WIJN: I think it probably does, your Honour, because that is a defined term “Licensor’s right, title and interest”. That is defined at 111:

‘Licensor’s right title and interest in the Licensor’s Improvements’ means any and all of the Licensor’s interest (if any) in the Licensor’s Improvements as set out in clause 8.1(c) –

and if your Honour then goes back to 8.1(c) of the sale agreement which is at page 39, it is (ii) at about line 40:

in the case of those Power System Assets that are Fixtures on land owned by the Crown or any person other than the Vendor and which land is the subject of mining tenements or special Crown leases held by the Vendor, such rights of ownership separate from the realty (if any) as are conferred –

and there is a reference to the Mining Act 1978 which would probably include your 114 rights.

GUMMOW J: Is it not then a question whether a sale of a 114 interest, referring to the Mining Act, is caught up by the stamp duty provision of a transfer?

MR DE WIJN: There are a couple of questions. Your Honour is right, that is a question. The first question is, does 17.5 provide for a sale. That is one question. The second question is, if it does, is the interest under the Mining Act in respect of the fixtures an interest in land - - -

GUMMOW J: For the purposes of the Stamp Act.

MR DE WIJN: For the purpose of the Stamp Act, but there is not a broader definition that would include – mining tenements themselves are for certain purposes deemed to be interests in land, for example, for the land rich provisions, but for the purpose of this case I do not think there is any broader definition of land than one normally finds, “land” meaning any land or any estate or interest in land.

The last question, of course, then would be, even if we lost in relation to each of those points, is clause 17.5 of the licence agreement the principal and leading object of the sale agreement. Justice McLure of course held that it was a principal leading object of the licence agreement, but that has to be a wrong way of looking at it because the licence agreement was not - - -

GUMMOW J: Is there provision in the stamp legislation embodying this notion of principal objects?

MR DE WIJN: Yes. It is the “distinct” – 19(a), your Honour.

GUMMOW J: Section 19(a).

MR DE WIJN: The “distinct”. Your Honours Justice Gummow and Justice Hayne in the Trust Company Case that I mentioned a little while ago said that that provision:

restated the general principle that an instrument containing or relating to several distinct matters is to be separately and distinctly charged with duty in respect of each of them.

That is at paragraph [53] of the decision in Trust Company.

GUMMOW J: Section 19(a) can produce a result of distinct assessments, can it not?

MR DE WIJN: It could. You would have to issue two assessments. For example, if you had an agreement for the sale of land and for the sale of shares in the one agreement, obviously there would be two distinct matters, but the question here is whether – for the Commissioner to get home on this point he has to say that 17.5 because he has already assessed – if you look at the sale agreement, we would say the principal object of that is the sale of the chattels and providing for the execution of the licence agreements. The licence agreements have been separately stamped and no one has suggested that the licence agreement should be assessed as a conveyance. They were stamped under item 13 under the mortgage head because there was a covenant to pay.

So before 17.5 could come into play, one would have to conclude that 17.5 was a distinct matter or a separate leading and principal object of the sale agreement and, with respect, we say that is a really odd conclusion because just about every lease – perhaps not every lease, but it is very common in leases of land in this country to have provisions in it whereby tenants will be either obliged to remove tenant’s fixtures, may remove tenant’s fixtures, whether the landlord might retain the fixtures and pay compensation and, if her Honour Justice McLure is right in saying that the 17.5 obligation to deal with the fixtures at the end of the term is a principal and leading object, then just about every lease in this country would be charged for duty twice, once as a lease and, secondly, as a conveyance of land. Most of the States now have moved away from the concept of on-sale under the Duties Act, but they would be treated as a conveyance on-sale and that would be, with respect, a bizarre conclusion.

Similarly, assignments of leases, and they are dealt with under separate heads – duty – in most cases. Assignments of leases that had a provision in it dealing with tenant’s fixtures would be an assignment of an interest – would be a sale of an interest or a transfer of conveyance of an interest in land. So there is a number of steps that the Commission has to get through, we say, before we concede on the 17.5. That is all I wanted to say about the agreements. If I could now take your Honours to the provisions in the Mining Act 1978 (WA). Section 8 deals with general purpose leases and section 91(1) deals with miscellaneous licences. I hope that that answers your Honour Justice Kiefel’s question. Sorry it was a little while coming.

If I could turn now to the subject matter of the sale under clause 2.1. In our submission, Justice Wheeler and Justice Newnes were simply incorrect in concluding that the subject matter of the sale included fixtures. Similarly, with the matter of.....It is true the parties made an attempt to identify what they thought were chattels. That is not surprising. They referred to them as assumed sale assets. They prepared a schedule and put a tick in a couple of columns, but we say it is clear. Had the parties wanted to sell – whatever that means – when you are dealing with fixtures, had the parties wanted to sell the assumed sale assets as opposed to the assets that were in fact chattels, they would have said so. It would have been very easy to say so. It would have been very easy just to exhibit the agreement and say, “I am going to sell the items with a tick in the column and not the others.”

So instead, what the agreement provided for was a definition of sale assets which expressly excluded fixtures and expressly made provision for the fixtures to be the subject of the licence agreements. It probably does not matter but we say given the conceptual difficulties of selling fixtures, understanding what is in fact meant by the concept of selling fixtures whether on freehold land or on Crown land, and given the other uses what Western Mining obviously wanted to make of the land, the concept of having a licence was a perfectly sensible one.

KIEFEL J: Could we just return to section 114 of the Mining Act just briefly. It does not grant a right if you are referring to clause 8.1. It does not so much grant a right as perhaps recognise that the entitlement to the mining plant is in the holder of the mining tenement.

MR DE WIJN: I think your Honour is right and that might mean that - - -

KIEFEL J: So we might be in an area other than the normal area of fixtures.

MR DE WIJN: Your Honour could be right and if the Mining Act does not give a right of ownership in respect of fixtures, then it is not dealt with under 17.5 of the licence agreement.

KIEFEL J: When I say other than fixtures, I mean the law relating to it. But the Mining Act might itself have its own recognition of a right or interest, whether or not it is – which might be capable of being sold or conveyed?

MR DE WIJN: It may be, but - - -

KIEFEL J: It is not dependant upon land is what I am really saying.

MR DE WIJN: No, but if it is not an interest in land, we win because for the agreement to be dutiable it has got to be dutiable and this case has proceeded from day one in the statement that the Commissioner sent to the Court on the basis that the Commissioner contends that the sale agreement is an agreement for the sale of an interest or estate in land. It may be that some statutory right is capable of being assigned but it has got to be an interest in land that is assigned.

GUMMOW J: It may be as to some of the mining plant but not as to the other.

MR DE WIJN: Maybe.

GUMMOW J: Looking at 114(1), you see. The operation of 114(1) may be, when hooked up to the Stamp Act, that as to the mining plant which is affixed to the land the conveyance provisions do apply from the Stamp Act. Even though it is an interest in land, it has this statutory characteristic of entitlement to remove.

MR DE WIJN: To answer your Honour’s question, we will address your Honour’s observation. First of all, it needs to be an interest in land and we would say, just as in the second North Shore Gas Case where the statute provided a right to put pipes on someone else’s land, this Court held that that did not constitute an interest in land. It is true that was a different statute and you have got to look at each statute. I think in that case they refer to a case about undertakers and various statutory rights and whether that gave rise to an interest in land. It held that it is not. The normal principle is that when construing a statute, you do not give any broader right than is necessary for the purpose of giving effect to the statute.

So the first question is, under the Mining Act – and of course we are dealing with statutory licences, they might be called leases, but as this Court said, I think, in Ward, the normal concept of a mining tenement is a licence to go onto usually Crown land, not always, and do something that would otherwise be unlawful. So one does not have the normal indicia of a lease where one has got exclusive possession. One has a permission to go onto the land and do something that would otherwise be unlawful. So one starts with the proposition that one is dealing with a permission, an authority or a licence. One is not dealing with an interest in land, such as a lease.

GUMMOW J: But how is the Stamp Act taken to speak, if at all, to those mining interests?

MR DE WIJN: We say it does not in relation to – there are express provisions in the Stamp Act in relation to - - -

GUMMOW J: Land which - - -

MR DE WIJN: Yes – mining tenements. So it is not as if the draftsmen did not think about them. There are certain provisions that say mining tenements are interests in land. So that if you have got Western Mining, for example, that sells – shares in Western Mining were sold, one would have to go to the land rich provisions and do the calculations and see whether they are caught. So it is not as if the draftsmen at Parliament have not thought about mining leases, they clearly have because they are referred to. The grant of a mining lease is not subject to stamp duty. It is expressly excluded in the third schedule. So the Act expressly contemplates and makes provision for interest under mining leases.

It does not say anything about whether a right to remove fixtures or a right under section 114, however you characterise that, it does not say I will deem that to be an interest in land. Some of the States do say that. I think Queensland, from memory, does. I would need to check on that. But the Act does not do that. So to answer your Honour Justice Gummow’s question, you deal with this by simply saying, is the right conferred by section 114 an interest in land or is it just a statutory right of a licensee to remove chattels and some other items of plant that might be fixtures?

GUMMOW J: The statutory right would have some equitable underpinning, would it not?

MR DE WIJN: May well be, may well be, but just because a court of equity would come to the assistance of statutory rights, as it might with contractual rights, does not of itself mean that the right is an interest in land.

FRENCH CJ: Let us suppose you have erected a piece of mining plant on land in such a way that it answers the description of a fixture that it has become part of the land, that land being Crown land, in that circumstance which does seem to be contemplated by the definition of “mining plant” because it deals with anything affixed, what is the nature of the entitlement that is contemplated in subsection (2) which is the condition of the right to remove?

MR DE WIJN: It just allows you, as any other tenant would, and I know this is not a traditional land - - -

FRENCH CJ: You are getting back into tenant fixtures now?

MR DE WIJN: By analogy, but the right is simply a right to come onto the land and sever, but a right to come on to the land and sever is not an interest in land.

FRENCH CJ: No, I am assuming that you have a fixture, you put it on the land, it has become part of the land. What kind of entitlement do you then have in relation to it which is necessary in order to enliven the right to remove by statute?

MR DE WIJN: You walk on to the land with a spanner or - - -

FRENCH CJ:

is entitled to any mining plant –

you see?

MR DE WIJN: Yes, “to any mining plant lawfully erected”. So we are assuming at the moment that the mining plant - - -

FRENCH CJ: We are assuming it is part of the land. So what is the nature of your entitlement? You are not the landowner. You are just there under a mining lease.

MR DE WIJN: There probably is not any.

GUMMOW J: The statute seems to assume that if you lawfully brought this on to the land so that it became mining plant, you are entitled to it.

MR DE WIJN: It may be one of those cases such as - - -

GUMMOW J: That is the entitlement.

MR DE WIJN: It may be a sort of situation such as section 28(2) of the Landlord and Tenant Act (Vic), which is the odd provision in this country where property in tenants’ fixtures remains with the tenant. It might be some sort of concept such as that.

FRENCH CJ: It might be a very loose notion of entitlement, perhaps. If you brought it on the land and spent money on it - - -

MR DE WIJN: You are entitled to remove it. Either it is treated – perhaps one view and going back to an old-fashioned view of treating it as a chattel for all purposes under the statute or if we are just using sort of traditional common law views it can best be a right to come on with your spanner and undo the bolts and put it on a truck. It certainly could not be a right to use it in situ, so it would be a fairly limited right, we say.

GUMMOW J: I have the case of Lees v Leech 73 FCR 136 at 149C - a decision of Justice Hills. It may be that 114 of the Mining Act:

assumes that the items in question have become fixtures -

but that there is this right to come on and remove. I am just not sure.

MR DE WIJN: No.

CRENNAN J: Which Justice Hill calls:

a right in equity in the land, co-extensive with the right of the tenant to come upon the land after the expiration of the lease and remove the fixture.

MR DE WIJN: Well, with respect, in this case, you would not need equity to come and help you, you have a statute that tells you you can do it. Even if equity might assist by a grant of an injunction, for example, in Kay’s Leasing, a Victorian case, which is one of the cases my learned friends rely on because it is one of the mortgage cases and they are a peculiar sort of case, generally turning on the contractual provisions of the mortgagee or the financier, but the case there was a case where the mortgagee wanted to sever the fixtures and sell them. They had been financed by someone else, I think a sale on leaseback or a hire purchase agreement, or something like that. The financier sought an injunction restraining the severing and sale and for the purpose of getting the injunction, the case is an old case, the applicant had to establish he had an interest in the land.

Now, it was for the purpose of getting equitable remedies that the court said there is an interest in the fixture, I think they said, as opposed to the land but just because you have some sort of interest or some sort of standing that would enable equity to protect your interest by the grant of an injunction or estopping the vendor from – or one of the parties from denying your right to come onto the land, just because equity would come to the assistance does not give one an equitable estate or interest in the land.

KIEFEL J: I suppose the other way of looking at it is the owner’s rights in the land are subject to these statutory rights of others to come onto the land and remove the fixtures.

MR DE WIJN: It certainly is, but - - -

KIEFEL J: That is to say it is a fetter on the legal estate, or it bears some relationship to the legal estate, or the owner’s rights.

MR DE WIJN: With respect, I do not think that is the way it was perhaps considered in Melluish. The equitable interest the financier held in Melluish was certainly nebulous, contingent and pretty remote and what the House of Lords said was that the rights rested in contract; rights to come on and sever the interests. We do not think that just because equity might assist in protecting someone’s interest under a statutory right or a contract does not elevate that interest to an estate or interest in land.

GUMMOW J: Can these mining tenements be made the subject of securities? Can they be mortgaged? Is there any provision for that?

MR DE WIJN: I think there is. We will find the provision, your Honour. They are certainly assets that can be - - -

GUMMOW J: See, the other person in 114(2)(b) might be a mortgagee in possession or a receiver.

MR DE WIJN: Yes, your Honour, we will just find the provision but I am pretty sure they can be.

FRENCH CJ: There are caveat provisions as well - Part VI. In section 119A “Mining tenement may be mortgaged”, I think.

MR DE WIJN: Yes, 119A.

KIEFEL J: Could we just return to the first question arising under section 114 which is the nature of the entitlement it recognises? Could it be that section 114 proceeds on the basis that the nature of the mining plant is such that its affixation or placement on the land was for the enjoyment of the plant as such, and therefore it is recognising a type of tenant’s fixture - - -

MR DE WIJN: That never becomes a fixture?

KIEFEL J: Maybe that does not matter; maybe the question is more whether or not you need something in the nature of an equitable interest to be able to remove it because the statute itself grants it.

MR DE WIJN: We would say you do not, but that is the point. We would say you do not need any - - -

KIEFEL J: Nevertheless you have got some sort of interest. You might not need the aid of equity to remove it if the statute gives it, but there may still – there is something in the nature of an interest that you have which the Act recognises.

MR DE WIJN: Your Honour, in the second North Shore Gas Case the gas company could go onto the land – the roads, the Crown land – and remove the pipes, relocate them, repair them, move them if they did not want them, but this Court held that that did not give rise to an interest in land, so just because there is a statutory right to remove and, effectively, statutory concepts of ownership it does not give rise to an interest in land.

GUMMOW J: Is there not a later gas case?

MR DE WIJN: Yes, I am talking about the second one, your Honour. Perhaps it is convenient to deal with those now. I wanted to deal with those cases in the context of what Justice Wheeler said in relation to Standard Portland Cement. That case was really the foundation, I suppose, or part of the foundation of her Honour’s judgment. Her Honour relied on that case to say that someone other than the owner of the land could own fixtures. We say that case does not stand for that proposition at all. If we can go first to what her Honour said about the first gas case. Your Honours will find that at court book 4 at page 1164 and then I will take your Honours to the first North Shore Gas Case. At 1164 at paragraph 117 her Honour Justice Wheeler says:

As a matter of principle, however, the starting-point is that it is now to be accepted, in my view, that an interest in a fixture, held by a person other than the owner of the land, is an interest in land.

We say that that is wrong. Certainly the second sentence is wrong where her Honour says:

That is, I would accept the “better opinion” of Dixon J in North Shore Gas –

If your Honours have a look at what Justice Dixon said in that case. It is at tab 25 of our bundle of authorities. At page 68 at the middle of that stage the paragraph starting, “The primary consequence”, then the next sentence:

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 –

So what his Honour was doing there was dealing with the old view that was around at the turn of the last century that in some way tenant’s fixtures remain the property of the tenant. That is what his Honour was dealing with there. Her Honour Justice Wheeler’s characterisation of what Justice Dixon said in paragraph 117 of her judgment is, with respect, just wrong. His Honour Justice Dixon was not saying that the better opinion is that someone else can have an interest in the fixture. He was saying the better opinion is that the fixture forms part of the realty and the tenant does not have an interest.

His Honour then held, in the first case, that the North Short Gas Company had an interest in the pipes. That holding was overturned in the second North Shore Case. Your Honours will find that at tab 9. In the joint judgment the relevant passage is at page 126. At about point 6 of the page their Honours set out Justice Dixon’s passage from the first North Shore Gas Case and their Honours say:

We doubt whether it was strictly necessary for the purposes of that case to decide, not only that mains and service pipes were not “goods, wares and [chattels]”, but also that they, or the space which they occupied, constituted an interest in land and we also doubt the correctness of this final conclusion . . . In such circumstances why should it be assumed that the exercise of a specific statutory right to lay and maintain pipes, as in the present case, operates to vest in the donee of the power an interest in the land –

Then the undertakers’ case is referred to at the bottom of page 127 and 128. Then at about point 6 on 128 their Honours say:

To our minds it represents the view which we should adopt in the present case with the result, of course, that the contention of the respondent that it had an interest in the land in which the mains and pipes, the subject of the second head of the claim, were embedded, must be rejected.

So the Court rejected the view that there was an interest in land, and Justice Windeyer does the same in his judgment and, importantly, at page 130, and we say this is apposite to this case, at about point 7 Justice Windeyer says:

If the company’s claim to compensation for the loss of an estate or interest in land is to be sustained, some precision is necessary in defining that estate or interest before it can be brought within the above definition –

We say the same applies in this case.

GUMMOW J: What is important maybe is the passage at 127 of 120 CLR, about line 14:

In such circumstances why should it be assumed . . . The conclusion that it does seems to us to result from a lawyer’s inherent tendency to assimilate such a right to some category known to the common law. It is, of course, a very special right.

That may be true of section 114 of the Mining Act, may it not?

MR DE WIJN: Yes.

GUMMOW J: I do not know where that leads one in terms of result, but it is a caution.

MR DE WIJN: We do not disagree with that, but when one reads what I will call the undertakers’ case, if one reads the opening words of that at about point 8:

In these circumstances and bearing in mind the general rule that no greater rights or interests should be treated as conferred on the undertakers than are necessary for the fulfilment of the object of the statute –

the question is, you look at the statute and you say, do you need to confer an interest in land to protect the interests of Western Mining in this case? We say no. There is a statutory right to remove the special rules provided and you do not need to elevate that to an interest in land.

FRENCH CJ: One should bear in mind, I suppose, the policy of 114 seems to be, really, just to facilitate the removal of plant and tailings from the land and in that sense, a broad notion of the concept of entitlement, which we discussed earlier, be consistent with that.

MR DE WIJN: Your Honours, I see the time. I will move on a bit more quickly. I want to take your Honours to Melluish very quickly. It is at tab 23. It was one of a series of cases dealing with financiers. It was a tax case. The question there was whether the financier was the owner of the chattels that had been affixed to the land of the council and had been the subject of a lease to the financier, so it was a financing arrangement. Page 473, just between line E and F:

The terms expressly or implicitly agreed between the fixer of the chattel and the owner of the land cannot affect the determination of the question whether, in law, the chattel has become a fixture and therefore in law belongs to the owner of the soil. The terms of such agreement will regulate the contractual rights to sever the chattel –

we stress that –

from the land as between the parties to that contract and, where an equitable right is conferred by the contract, as against certain third parties. But such agreement cannot prevent the chattel, once fixed, becoming in law part of the land and as such owned by the owner of the land so long as it remains fixed.

That is traditional law in relation to fixtures and is entirely inconsistent with what her Honour Justice Wheeler understood the Privy Council to have said in Standard Portland Cement. Standard Portland Cement was not a case that said someone else owned the cement mill. It was simply a case where there had been a sale of some land and the parties had agreed that the vendor could remove the cement mill at some point in time and all the Privy Council said was, “Yes, you can come in and remove it.” The purchaser had said, “Bad luck, I have got a transfer. It is now part of the land.” That was not a case that said a person entitled to remove the land had an estate or interest in the land. It was just a case that said as a matter of contract law you can come in and remove it and if need be, the purchaser would be estopped from denying that right. At 474 in Melluish, Lord Browne-Wilkinson, just after line C, says:

The reality of the matter is that the parties were proceeding under a misapprehension as to the ownership of the equipment –

So this was an attempt to lease equipment that had already been affixed to the land of the council –

Despite such misapprehension, as between the local authority and the taxpayer company the contract is entirely effective to carry out the parties’ intentions because clause 3.10 would estop the local authority from denying the taxpayer company’s ownership of the equipment if and when it is severed from the land. Second, I am quite unable to define what is the subject matter of the alleged sale. Is it the equipment alone? If so, who owns the airspace –

So his Lordship is there grappling with the difficulty of this concept of selling fixtures. At 475 at about line G, his Lordship says:

The taxpayer company has never been the owner of the equipment –

so this is the financier –

whether in law or in equity; it became a fixture (and therefore the property of the local authority) before the lease was entered into. Unless and until the local authority is in default or decides not to renew the lease . . . Its only property right is a contingent right to become the owner at a future date.

That is not an interest in land. If one has got an interest in land which is the subject of a sale, one has got to clearly identify that interest. Over the page at 477 his Lordship described – he says at line C:

In contrast, in the present case the rights enjoyed by the taxpayer company –

that is the financier –

confer no immediate right of any kind to enjoyment of the property and only nebulous, contingent, future rights to do so.

So that sort of seems to us to deal with the financier cases. As I said, her Honour Justice Wheeler held that Standard Portland Cement stood as authority for the proposition that someone other than the owner could own fixtures and we have referred in our submission to the decision of the South Australian Full Court in the Emanuel (Rundle Mall) Case. That was a case where Myer sold land to the taxpayer and there was a sale on leaseback, effectively, and Myer tried to retain an interest in the lifts and certain fixtures and relied upon – the purchaser tried to argue that what had been sold was not the full legal estate, but a legal estate encumbered, effectively, – perhaps “encumbered” is not the right word – subject to Myer’s equitable interest in the fixtures, and that was rejected. Obviously the purchaser in that case relied upon Standard Portland Cement to say that someone else could own the fixtures other than the owner of the freehold and Justice Bollen said, well, if that is what Standard Portland Cement stood for, it is an unsatisfactory case and it is obviously counter to established authority.

The next question – and I will move quickly on this because we have dealt with it in our written submissions – is even if one construes the sale to be a sale of fixtures under 2.1 or an agreement dealing with fixtures, it needs to be a sale for the purposes of section 74 of the Stamp Act and the creation of a new interest in an asset is not a sale. We have dealt with this in our submissions. This Court came to that conclusion in Camphin. It is at tab 12 of our book of authorities. I will just take your Honours to it briefly. At the bottom of 133, Chief Justice Latham says:

He has created a term in the lessee, and the lessee owns a proprietary interest which he did not own before, but that interest has not been sold to him.

Then his Honour considers the situation of an option, at the bottom of the page –

The result of giving an option for value is that the person to whom the option is given acquires an equitable interest. But this equitable interest has not, in my opinion, been sold to him.

So even if one is talking about creating an interest in land, granting a right to remove fixtures, that is not a sale because you need to have a sale of an existing interest. That is dealt with in a stamp duty context in Littlewoods Mail Order Stores and the decision of the Full Court of the Western Australian Supreme Court in Balcatta Nominees. My learned friends, we say, make a remarkable submission here. They say, well, the word “sale” should not be given its ordinary meaning in a stamp duty context and they cite essentially two cases, the George Wimpey Case – and I will just take your Honours to that.

Each of the two cases they deal with are cases where there are specific deeming provisions which deem particular transactions which are not sales under ordinary concepts to be a sale. The George Wimpey Case is at tab 16 of our book of authorities and I only need to take your Honours to the decision of Sir John Pennycuick at page 1001. Your Honours will see at line B:

Apart from section 60 and apart from judicial decision, I should myself feel very great doubt as to whether section 54 –

that was the deeming provision concerned in that case –

was apt to embrace the creation of a right not before in existence. The essential attributes of a sale are concisely set out by Viscount Simonds in Littlewoods Mail Order Stores –

and then there is the quote from Benjamin on Sale and the reference to VGM Holdings, and his Honour says:

I should not myself have thought that the creation by one party to a contract of a new right in favour of the other party, although it involves the vesting of that right in the other party, could properly be said to represent such a vesting upon sale of the right, in the ordinary meaning of the word “sale”.

So George Wimpey was a case where there was a particular deeming provision that contemplated that new rights that were created could be treated to say it is for the purpose of the Act. We do not have that in - - -

GUMMOW J: Does not section 70 that you took us to define “transfer” as including vesting?

MR DE WIJN: It does, your Honour, but section 70 is not enough because section 70 only applies if the agreement is otherwise “chargeable with duty”. So your Honour will see section 70(2):

If an instrument ––

(a) transfers, or is or includes an agreement to transfer –

So it has to be an agreement to transfer and it has to vest an interest –

and is chargeable with duty in respect of the –

land. So it has to be otherwise chargeable with duty in respect of the land under the Act. The only provision under which it could be chargeable under the Act is section 74. So you have to get into 74 first. When you are in 74 then, depending on whether you satisfy the conditions in 70(2), you can bring in the chattels. Your Honours will see from the Commissioner’s statement when this matter was transmitted to the court, which is at 232, your Honours will see the basis upon which the assessment was issued at page 236, paragraph 15:

The Respondent assessed the Sale Agreement to conveyance duty of $9,140,280.25 . . . The assessment was made on the basis that the Sale Agreement was an agreement for the sale of property consisting in whole or in part of land or an interest in land –

Then the provisions relied upon are set out at 237, paragraph (e). So what the Commissioner first has to do is establish that it is dutiable under section 74. If he is successful there then there will be a question as to whether section 70 applies.

The second case my learned friends deal with is the Calthrop Case. Again, and we have dealt with this in detail in our written submissions in reply and will not take your Honours to it, but it is a case that dealt with another specific deeming provision in the Queensland Act where - - -

FRENCH CJ: This is [1983] 2 Qd R 662?

MR DE WIJN: Yes, your Honour. It is tab 8 of the book of authorities. Perhaps while I have it, it is convenient, for example, to look at Justice Sheahan’s decision at 674, the last paragraph. His Honour deals with the particular deeming provisions. This was a provision where there was no instrument produced and they had the device of making the memorandum and article of the company the instrument that was liable to duty when something was not produced. His Honour said four lines from the bottom:

I am driven to the conclusion that, having treated or deemed the acquisition –

So it was any acquisition –

of property of property as a sale –

That is the first deeming –

the subsection deems the memorandum of association to be the instrument of conveyance on that sale.

That is the deemed sale. So section 54(4) dealt with an acquisition of any property. It deemed that acquisition to be a sale. That was the first deeming it did. The second deeming that it did was that it deemed the “memorandum of association to be the instrument of conveyance”. So there were two deemings and it stood on its own.

Section 54(1) of that Act was, in fact, the predecessor of the provision that your Honour Justice Gummow and Justice Hayne considered in the Trust Case, it being subsequently amended. But 54(1) was the equivalent of 74 – it was in different terms, but it was broadly the equivalent of 74 that we are considering. But Justice Sheahan, for example - and each of the other judges came to similar conclusions - considered that 54(4), which was the deeming provision stood on its own. It did not relate back to the other provisions. So care needs to be taken, we would say, with these provisions to carefully look at the statutory provisions concerned.

Your Honour, we note that Justice McLure at 1180 in volume 4 - her Honour refers to George Wimpey. Your Honours will see that at about line 41 - but makes no reference to the special provision, the special terms of section 60, which Sir John Pennycuick relied upon as treating the word “sales” extending to the creation of new interests. So there is a reference to George Wimpey, but no reference to the statutory context of that case and the special provisions that were relied upon.

Similarly, while we are on that passage at the bottom of page 1180 in Justice McLure’s decision, her Honour makes a reference to Commissioner of Stamp Duties (NSW) v Henry. We do not have that in the bundle of authorities. There are two errors that she makes there. First of all the passage that her Honour is referring to is not the passage of Justice Kitto, it is the passage of Justice Taylor. When one looks at the passage of Justice Taylor at page 333 to 334 of that case, his Honour is considering a Stamp Duty Act which has two definitions, a definition of “conveyance” and a definition of “conveyance on sale” and the Act actually draws a distinction between the two and provides for different consequences, depending on whether you are a conveyance or a conveyance on sale.

With respect, how her Honour could say there is some support for this approach in the judgment of – let us assume her Honour is referring to Justice Taylor – is, with respect, amazing. His Honour is there dealing with two different concepts.

GUMMOW J: While we are looking at Justice McLure, does her Honour refer to section 19 of the Stamp Act at any stage?

MR DE WIJN: Her Honour says - I just have to find that - that the leading and principal object of the licence agreement is 17.5 – I will just get my learned junior to help find where she says that. Paragraph 200, I am told, and there is a reference to, as your Honour Justice Gummow asked, section 19 there.

GUMMOW J: But your point is one has to apply section 19 to the sale agreement which, true enough, has the schedule, not just the schedule divorced from the sale agreement?

MR DE WIJN: .....obligation under the sale agreement is to execute the licence agreement. We have seen that. But we have two points. First of all one sees you have to look at the sale agreement; that is being assessed to duty. What is the principal and leading object of the sale agreement? We say it is to make provision for the sale of assets and the execution of the licence agreements, but section 17.5 of the licence agreement could not be a principal and leading object of the sale agreement. We do not think it is even a principal and leading object of a licence agreement for the reasons I have given in relation to leases and dealing with tenants’ fixtures at the end of the term. But it is the sale agreement one has to look at.

GUMMOW J: But the sale agreement was dealing with two things. One was these chattels, then it was also dealing with these difficult entities called “fixtures”, was it not? In relation to the latter it set up this pricing structure through the licensing agreement of the $39 million.

MR DE WIJN: Yes and no. Strictly what it dealt with is the chattels. Strictly all it dealt with was the sale of the chattels. That is all it dealt with. There was an obligation provided in clause 5, I think it was, of the sale agreement that the licence agreements had to be executed - - -

GUMMOW J: Yes, you took us to that.

MR DE WIJN: But it is the licence agreements that provide for the licence fee and provide for the present payment. So it is the two separate agreements. You have consideration under the sale agreement, consideration under the – an annual payment under licence agreement. You can prepay it. The time they come together in the sale agreement is under the price adjustment clause in 3.4, and if that clause is triggered – and it was not – then there can be a change to the consideration for the sale of the chattels and a corresponding change to the present value. I think, strictly, that is the way it works.

I should also mention one of the curious things about Justice Wheeler’s conclusion about the subject of the sale including fixtures is that her Honour of course relied on 3.4. That was it. Clause 3.4 only works one way; it only operates if you have something that you have picked as a chattel in the assumed assets and it turns out that someone sees it is a fixture. It does not operate the other way so that if you have ticked the fixture box and it turns out that this diesel generator was a chattel because you could move it or whatever the tests are, it would not apply because it only works one way.

Her Honour’s conclusion leaves a lacuna in the agreement so what would happen if you had something that was assumed to be a fixture but it turned out to be a chattel, it would not be the subject of the sale, because on her Honour Justice Wheeler’s view all you are selling under 2.1 is the assumed assets – that is the ones that have a tick in the chattel box, not ones that were ticked to be fixtures, but actually chattels. When one goes back to the licence agreement it makes it plain that the only thing that is being dealt with are the fixtures, so any of those assets would be out of the picture.

Dealing with the 17.5 point, I have taken your Honours to the provisions of the various Acts. Just a couple of remaining points I wanted to make. Her Honour Justice McLure again mischaracterised the effect of clause 17.5 at 1189. At paragraph 198, line 40 her Honour says:

Further, the Purchaser/Licensee has an obligation under LA 17.5 to purchase the Licensor’s Improvements –

With respect, that is just loose language. The obligation under the agreement was to acquire, in certain circumstances, the right title and interest – the defined term – being the reference to the statutory rights, and Justice Wheeler seems to have made the same error at 1150 at paragraph 81.

We have said what we want to say in our written submissions about looking at the nature of the rights under the mining leases by analogy effectively to tenants’ rights and it has been long accepted in cases such as Thomas v Jennings and Hallen v Runder that the right of a tenant to remove fixtures is not an interest in land. It is just a chose in action and for Statute of Frauds purposes there was not required to be a memorandum in writing.

My learned friend says those cases are all different because they are concerned with waiver. Some of them are and, in fact, some of them are not, but that is not the point; the point is, waiver of what? You have to identify what the interest is if you are looking at a landlord and tenant situation. What are you waiving? If it is an interest in land you have would have had to have had a memorandum in writing under the Statute of Frauds.

It is not a question of saying you look at the contract and it is a waiver; here we are not talking about waiver. You have to say, waiver of what?

Then finally we say – we are now dealing with termination of the licence agreement – when one looks at what might happen on termination, one has to have regard to clause 10, which I have taken your Honours to, which says basically you have to get off the land and clean it up. So what is contemplated on termination, if anything, in relation to fixtures is that they be removed.

We know from the cases on fixtures that when it is contemplated that the fixtures be removed they are treated by the Goods Act as a sale of goods because what one is looking at is a contemplation of severing, and that is treated as a sale of goods. I have dealt with the distinct matter point. If your Honour pleases, they are our submissions. My learned junior tells me that there is no definition of “improvements” in the Land Administration Act.

FRENCH CJ: Thank you, Mr De Wijn. Yes, Mr Tannin.

MR TANNIN: May it please the Court, if I could just adjust this for my challenged height. Your Honours, this appeal involves the construction of a commercial agreement in order to determine whether it is liable for duty under the Stamp Act 1921. The starting point, we say, is as stated by Justice Rich in Hopkins, which is in the Court book at tab 10, page 366, that is to consider “the nature and operation of the document taken by itself”’. That is to construe the document. This document was executed in November of 1998. Its essential terms are summarised in detail and accurately in our submissions at paragraph 15. I will not read those to your Honours.

GUMMOW J: Where is the passage in Sir George Rich in Hopkins?

MR TANNIN: At page 366, about four-fifths of the way down. Now, the appellants have argued, at least in their written submissions at paragraph 16, that the respondent and, by implication, the Court of Appeal, has based its construction of the sale agreement on considerations of economic equivalence. That is just simply incorrect. The respondent’s case rests on the proper construction of the State agreement in accordance with the law and the references to the overall transaction are only made for the purposes of determining the true effect of the agreement.

Now, we rely on two aspects of the sale agreement. The first is that what was agreed to be sold on completion were the assumed sale assets and second, and in the alternative, that there was also an agreement to sell the vendor’s interests and its fixtures on termination of the licence. If it is the assumed sale assets that are sold on completion and one or more of those assumed sale assets is a fixture at common law, then the agreement operates, in our submission, as an agreement for the sale of those fixtures on completion.

GUMMOW J: Now, you started off with Sir George Rich - I still have not found the passage yet.

HEYDON J: It is the first sentence of the paragraph at the bottom of the page that runs on to 367. Is that so?

MR TANNIN: Yes, I am sorry, my note is wrong.

HEYDON J: Page 366, the last paragraph on the page, the first sentence.

MR TANNIN: Yes, I beg your pardon. It is at 366 and it is the first line of the final paragraph.

GUMMOW J: Well, that cannot be a satisfactory statement in this case because the parties were dealing with statutory rights and you have to know how the statutory system works, surely. It did not matter in Hopkins’ Case, obviously, but it matters a lot in this case.

MR TANNIN: We cite that only to point, really to rebut an argument against us. We are content to rely upon the agreement, as we must. Our construction of the agreement is that on its terms that its purpose and effect is for the sale of the assumed sale assets. For the purposes of the proceedings in the court at first instance and in the Court of Appeal it was assumed that one or more of those assumed sale assets were fixtures. If I could take your Honours to appeal book 4 - - -

GUMMOW J: But fixtures in what sense? .....that common law is to what is or is not included in a conveyance?

MR TANNIN: Well, can I just take your Honours to what was agreed and then I will take you to the definition.

FRENCH CJ: You need to bear in mind, of course, the definition of “fixture” in the agreement.

MR TANNIN: Yes, and again there was no dispute as to the accuracy of that definition. Again, that was accepted by each of the judges in the Court of Appeal. Now, the references in the judgment are relevantly in the judgment of her Honour Justice Wheeler at - - -

GUMMOW J: You may be right about all that but that does not necessarily convey the requisite persuasion having heard your opponents’ submissions.

CRENNAN J: One difficult question, I think, is this. Whether or not section 114 of the Mining Act indicates that in the special circumstances of mining tenements fixtures do not pass to the owner of the land, if you follow me. They are affixed to the land but the rights in them do not necessarily pass with the land.

MR TANNIN: I was going to come to the question of the statutory rights but I can deal with it now. The appellants argue that if the sale agreements and the licence agreements convey rights to fixtures, those rights are only statutory and therefore cannot be an interest in land. In our submission, any statutory rights in relation to fixtures on the land will only accrue to the appellants if they acquire those fixtures. Their argument ignores the critical step, that is, if the rights arise, they arise out of the acquisition of the property in the fixtures.

Referring now to section 114, the statutory right to remove the fixtures after the expiry of the mining tenement granted by section 114 only arises if the holder of the mining tenement has some interest in the fixture. Section 114(2) grants rights to any person including the holder of the mining tenement “who is entitled to any mining plant”. That means that the rights identified, for example, in clause 8.1(c)(iii) of the sale agreement, although including statutory rights, necessarily include proprietary rights to the fixtures for those statutory rights to attach to. The statutory rights of fixtures only arise, in our submission, if the holder of the relevant mining lease already owns the fixtures.

FRENCH CJ: Taking up the point that Justice Crennan put to you, the definition of “mining plant” in section 114 includes a plant affixed to land and then there is an unspecified entitlement, well, an undefined entitlement which conditions this statutory authority to remove in aid, it would seem, of a mechanism under which one can, as it were, make good. But I suppose it may be that what Justice Crennan’s question is suggesting is, is this section operating on the assumption that when you put mining plant down on a mining tenement in accordance with the terms of the tenement, even if it is affixed to the land, it does not become part of the land. In that case then the notion of an entitlement makes sense.

MR TANNIN: Well, in our submission, the basis of the entitlement making sense is that the person who has the interest is its owner. All section 114 does is provide a mechanism for rehabilitation. It provides a timing structure so that someone can go on to the mining lease, bearing in mind these are areas of Crown land where mining is extremely intrusive opportunity that is given and there is an obligation to repair the land, so you do not leave great casts of dalek-like structures there. That does not change the fact that the entitlement that is referred to must characteristically refer to an interest that is owned. His Honour Justice Gummow inquired whether or not the interest could be charged with some form of security, whether, for example - - -

GUMMOW J: Well, I think 114 has a history to it, too. Justice Crennan reminds me of section 273 of the old Mining Act which, I think, reflected the general law. Every mining tenement should be deemed to be a chattel – a chattel real. That is the idea, was it not?

CRENNAN J: Chattel interest.

GUMMOW J: A chattel interest.

CRENNAN J: At page 68 of North Shore No 1 raises a question about whether or not a particular statute possibly indicates the quality or character of a chattel is preserved, even though there is an affixture of it to land.

MR TANNIN: It might be that that provision is not continued in the Act.

CRENNAN J: No, it is just being put forward as part of the history of the current Act because what I have suggested to you before is that read a particular way it is possible that 114 gives an indication that fixtures on mining tenants are not in the position of ordinary fixtures at common law and they, in a sense, retain their character as chattels.

MR TANNIN: With respect, that cannot be read into 114. That 114 can operate on the basis that those who have the interest in the fixture owned that interest, or own an equitable aspect of it, they then have the obligations and entitlements in terms of the timing of entry onto the lease to remove this material and, indeed, you will see there is a scheme for the Minister if they do not do this, the Minister to remove the material and sell it, and then give back the money that is the proceeds of the sale. But none of that changes the question, that is, what is the character of the interest?

So looking at the nature of interests can I just, perhaps, go back to this? Our submission is that fixtures, whether on freehold or on mining leases, can be dealt with separately from the underlying land and the nature of the interests in those fixtures is an interest in land. That is supported in the cases that we have cited. There is clear authority in Lavery v Pursell, in the first North Shore Gas Case which is at the Court book 25, in Eon Metals and Eastern Nitrogen and Vopak Chemicals.

Can I deal firstly with freehold? The owner a fee simple estate, though having no separate interest in the fixtures, is still able to deal with those fixtures separately from the underlying land without first severing them and the appellants argue to the contrary. They rely on Rundle Mall and their reliance, in our respectful submission, overlooks the differences in the issues in that case as opposed to this case.

In Rundle Mall there was an attempt to deal with fixtures separately from the underlying land, and it was held to be effective, not because such dealing is impossible, but because the instrument before the Court, by its terms, had actually transferred the entire legal estate in fee simple without a reservation of the fixtures and Justice Bollen acknowledged that the fixtures could have been excluded by use of instruments other than those before the Court. Can I take your Honours to the Court book at 14, page 137. At the very bottom of the page at 137 in the context I have described his Honour then went to describe the fixtures, in the second line of the final paragraph:

These fixtures could have been “excluded out” by severing them from the building before the time for assessing stamp duty arrived. Perhaps they could have been excluded by the use of instruments other than those used here. But the Memoranda of Transfer each transferred in estate a fee simple in the land and relevant certificates of title . . . There was no attempt at retaining any equitable interest by Myer . . . there was no separation of legal and equitable estate or interests. There was no retaining of anything by Myer.

Similarly Justice Bollen’s reference at page 131 to Standard Portland Cement being an unsatisfactory case was in part, in our submission, because the purchaser of the land had not presented arguments to the court in that case meaning that the questions before Justice Bollen were incompletely dealt with in Standard Portland Cement. The reference to it being an unsatisfactory case should be taken to be a reference to it being unhelpful in the context, not in the way that my friends have put it. Now, in Kay’s Leasing, which is at 20 of the books, and which is referred to in our submissions, it was held that the mortgage - - -

FRENCH CJ: I think we should try and maintain the practice of actually giving the references citations when you are doing this. So it is [1962] VicRp 62; [1962] VR 429.

MR TANNIN: Yes. Sorry, I was going to say, I am referring to the agreed Court bundle.

FRENCH CJ: Yes, I know.

GUMMOW J: We know you are. We read the transcript, you see?

MR TANNIN: In Kay’s Leasing it was held that the mortgagee could not separately sell the fixtures on the land subject to the mortgage because of the terms of the mortgage and the Transfer of Land Act. But Justice Adam at 437, paragraph 25, observed:

I see no reason to doubt that the equitable interests of the plaintiffs created in the land under the hiring agreements by reason of the annexing of their plant and machinery thereto bound such interests in the land as the mortgagor had by reason of his being registered proprietor subject to encumbrances and any interests acquired by others in the land in so far as these by principles recognized by equity did not give priority.

It was accepted at 438, 26, and there is no numbering on that page in the bundle I have been provided, but if you go about halfway down the page, the sentence:

But does the power of the mortgagee to destroy any equitable interests of the plaintiffs in the land mean that pending the exercise of such powers, these equitable interests have ceased to exist? No authority was cited to me why this should be so, and on principle, I see no reason for it.

This appeal is not, as Kay’s Case was about, a contest of priority. Kay’s Leasing demonstrates that a person who owns chattels affixed to the land of another has an interest in the land. In respect of the question of remedies - - -

FRENCH CJ: What we might do at this point, Mr Tannin, is adjourn until 2.15.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.18 PM:

FRENCH CJ: Yes, Mr Tannin.

MR TANNIN: Thank you, your Honours. I might just indicate to the Court what I propose to do is go through the statutory scheme, then go to the sale agreement, then deal with the nature of the interests that are required under that agreement. In relation to the statutory scheme, for convenience it is set out in.....

GUMMOW J: What I think we are lacking at the moment is a reference to Adamson v Hayes in this Court in [1973] HCA 6; 130 CLR 276, particularly at 288 to 289 where Sir Garfield Barwick expresses some general propositions as to the nature of these rights under the Australian mining law system that we developed as not involving interest in the Crown lands.

MR TANNIN: The primary charging provision is section 16 of the Act that provides that duties are to be charged on or in respect of instruments specified in the second schedule, those duties specified by section 16(2) of the Act subject to exemptions specified in the third schedule. It is common ground that item 4 in the second schedule headed “Conveyance or Transfer on Sale of Property” is the relevant item. The term “conveyance” is not separately defined in the Act. Historically, only instruments that by their terms conveyed or transferred property, that is, themselves completed the sale without requiring any other document to be executed, were dutiable as conveyances on sale. Mere agreements to convey were not dutiable.

Now, section 74(1) of the Stamp Act altered that position by imposing ad valorem conveyancing duty on all instruments that affect a sale of property whether or not the instrument is subsequently followed by a separate conveyance or transfer. Section 63(1) is relevant because that defines conveyances of sale to include:

every instrument . . . whereby any property or any estate or interest in any property on the sale thereof is transferred to or vested in the purchaser.

An agreement for the sale of any interest in property is therefore to be treated as if it is an actual conveyance on the sale of interest in the property agreed to be sold. Section 63(1) extends the common law definition of sale and it is this provision that the respondent relies upon and it is this provision which my learned friends did not take the Court to, instead it is simply characterising our submission as somehow amazing.

GUMMOW J: We were taken to section 70 and section 74 - - -

MR TANNIN: But not 63 and 63(1) extends the definition of sale to include not just the transfer of interests but also the vesting of interests in the purchaser. The definition has been accepted to make dutiable instruments that create new rights rather than transferring existing rights and that is illustrated in the decision of Wimpey [1975] 1 WLR 995 at 998A. Now, in that case, an agreement that created an option to purchase land was considered dutiable as the agreement vested a newly created right in the option holder and so fell within the definition of a conveyance on sale in the Stamp Act of the UK, a definition that was exactly the same as section 63(1).

The appellants have submitted, and then they have asserted in their reply, that our reliance on George Wimpey is misplaced because the judges in that case relied upon section 60 of the Stamp Act (UK) which has no equivalent in this State. Now, it is only Sir John Pennycuick in that case who relied on section 60. Lord Justice Russell at 998A at the top noted:

The judge, quite rightly on authority, held that section 54 –

and section 54, if I might interpolate, is the same as our section 63 –

is applicable in an appropriate case though the instrument creates for the first time the property or the estate or interest in property; and, as a general proposition, that is not challenged.

At 1000 Lord Justice Stamp, paragraphs D through to E, noted:

In this connection, the passage in Brightman J’s judgment where he said that section 54 applies as much to the instrument which creates and vests an estate or interest in property de novo as to an instrument which transfers an estate or interest previously created is, in my judgment, well founded. Indeed . . . I think that if this was otherwise in doubt, that doubt is removed by section 60 –

But both judges clearly applied the equivalent of section 63(1) in that case and, in our submission, contrary to the appellants’ submission at paragraph 7 of their reply, although it is correct to observe that the Stamp Act (WA) has repealed the provision which is the equivalent of section 60, the redundancy of the provision is the basis of the repeal. That is set out in our submissions at paragraph 82 in the footnote there and see the Parliamentary debate references.

Now, the appellants also seek to distinguish our reliance on Charles Calthrop but we do not rely on that case for its ultimate finding but only by reference to Justice Macrossan’s reference to George Wimpey to explain that the word “sale” when used in a statute may have a wider meaning than at common law. That is the definition of conveyance on sale in section 63 of the Act. The sale agreement, though it may create a new interest in land by vesting the vendor’s interests in fixtures in the appellants, falls within the definition of sale or transfer for the purposes of the Act.

Now, the appellants rely on Littlewoods [1963] AC 135 at 152 and 156, which is at tab 19. They argue that the extended meaning of sale for which we purport is misconceived. In that case Viscount Simonds refused to extend the word “sale” in the Stamp Act to include, relevantly, an exchange of valuable goods or property where there was no payment of money – refer particularly to page 152. Viscount Simonds found because the Stamp Act did not explicitly allow for a price to be paid other than in money, the word “sale” could not be so extended. Lord Reid at 156 of the judgment found, however, that:

Then can this transaction be brought within the heading “conveyance or transfer on sale?” Undoubtedly the exchange of one thing for another is not for sale in the ordinary sense. But equally undoubtedly some transactions which are not sales in the ordinary sense are sales within the meaning of the Stamp Act.

So it is not remarkable, as my friend put it, to submit that the concept of sale is extended in this Act, the statute in section 63 does it. The appeal does not involve extending the word “sale” beyond what is required by the Stamp Act itself and under the Stamp Act, conveyance on sale includes the vesting of property in the purchaser on the sale thereof, that is, the vesting of newly created interests as well as the mere transfer of existing interests. The question in Littlewoods of whether a price can be paid other than moneys is not the question in this appeal.

Clause 17.5 of the licensing agreements clearly contemplate, in our submission, the payment of consideration in terms of money, prepaid or to be paid for by providing payment of consideration that links the licence fees that are already yet to be paid. How is the duty charged? Section 70 of the Stamp Act – my friend took you to it in part – allows duty to be charged on the value of chattels where the relevant instrument which by virtue of section 74(1) includes an agreement for sale involves either an agreement to transfer both chattels and land, which is section 70(2), or where the agreement to transfer the chattels is part of an arrangement that involves the transfer of land, and that is section 70(3), which my friend did not take you to which is again pertinent to the determination of this case.

Just relevantly, if you look at section 70 in its definitions it makes clear in the definition of an “estate or interest in land” that that “includes a mining tenement”. In either case, that is under section 70(2) or 70(3), the instrument charged with duties, the agreement that includes the transfer of chattels, and the assessment relies either on 70(2) on the basis of the sale agreement itself on its proper construction provides for the sale of the assumed sale assets and the fixtures or on section 70(3) in the event that the obligation to acquire the fixtures on termination is part of the arrangement including the licence agreements rather than residing exclusively in the sale agreement.

Conveyances of goods, wares and merchandise, that is chattels, are exempt except where section 70(2) or (3) apply. That provision requires there be an agreement for the sale or transfer of an interest in land in order for the value of the chattels to be included in a dutiable instrument. The question therefore becomes whether the agreement to sell the sale assets, assuming at least of them was a fixture, and/or the fixture is an agreement to sell an interest in land.

Can we now go to the agreement itself? The argument concerning the question of the assumed sale assets is set out in detail in our submissions at paragraphs 20 through to 25. The argument is based on the terms of the sale agreement. In essence, clause 2.1 of the sale agreement, which is appeal book 1, page 25, provides for the sale and purchase of the sale assets. What is significant, and we say this in response to our friend’s written submissions, is that clause 2.1 cannot be read in isolation. It provides expressly that it is subject to clauses 3, 3.2 and 3.4.

Clause 3.2 provides for the classification of the “Power System Assets”, essentially into chattels – that is the “assumed Sale Assets” or fixtures, and assigns a “Purchase Price” to the “assumed Sale Assets” and aggregated licence fees for the fixtures dealt with under the licence agreements. Clause 3.4 sets out a process for deeming certain sale assets to not to be included ab initio as sale assets for the purposes of a sale agreement, and to be reclassified as fixtures with corresponding adjustments to the purchase price.

Now, the clause is only operative if two conditions are met, that is a governmental agency, which is an extremely wide definition in the agreement which would probably include this Court, determines that one or more of the assumed sale assets is a fixture, and secondly, that the purchasers – that is, the appellants – accept the determination and advise the vendor, WMC, of that acceptance. That did not happen. But at the time of completion, unless both of those conditions are fulfilled, title to all of the assumed sale assets passes from WMC to the appellants, subject to the ability to later reclassify one or more of those assets ab initio and then readjust the accounting.

The second aspect of a sale agreement is its relationship to the licences and the obligation to obtain permanent tenure. We deal in detail with those issues at paragraphs 28 through to 33 of our submissions. In essence, the parties are obliged by clauses 5.2(a)(iii) and 5.2(b)(i) of the sale agreement to execute licences specified in Schedule 7 of the sale agreement in the form specified in the draft in Schedule 8.

Clause 1.5(a) of Schedule 7 expressly requires the appellants to apply for permanent tenure over land on which the power system assets are located as soon as practicable after completion. Clause 17.5 of the pro forma licence agreement in Schedule 8 provides that the appellants must acquire the vendor’s interests in the fixture on termination of the licence for any reason. Clause 1.5(a) of Schedule 7 and 17.5 oblige the appellants to acquire the fixtures on termination of the licences. They set out the calculation of consideration for that acquisition. No further consideration is paid. That was the finding of all of the judges who have considered this matter - in the Court of Appeal, appeal book 4, page 1142, paragraphs 51 and 54 of the majority judgment, at paragraphs 197 to 198 of the judgment of her Honour Justice McLure, and at first instance at paragraph 282.

Although the licence agreements were executed as separate instruments, they must be taken into account to properly construe the sale agreement, firstly because they exist only due to the sale agreement’s obligation to enter into the licence agreements and the pro forma arrangements in Schedule 8. In this case, and we set it out at paragraphs 20 through to 37 of our submissions, the sale agreement, read alone or in its context, gives the result that the appellant is liable to pay duty.

Now, in relation to the issue of the relevance of the remedies, the appellants assert that the cases involving financiers can be seen as cases where equity will intervene to enjoy interference with the financiers’ contractual rights, and that is correct, but it misses the point. The reason why equity will intervene is recognised by the cases is that interests in fixtures are equitable proprietary interests in land. We set out in our submissions the references to Lavery v Pursell. I will not deal with that now, but can I take your Honours to the case of Eastern Nitrogen [2001] FCA 366; (2001) 108 FCR 27, which is at tab 13.

The appellants argue that there was nothing definitive or relevantly definitive that was decided as to the precise nature of a person’s right to remove fixtures. Now, that mischaracterises the judgments. In the case of freehold land, which was the type of estate in consideration under those cases, the owner of the freehold clearly has the full panoply of rights in respect of fixtures on the land. Those cases do not concern the issue of the right to remove the plant in question but rather, the nature of the interest acquired by the bank in a sale and lease back. In Eastern Nitrogen the court concluded that the effect of the relevant agreement – and I quote from page 38 from the judgment of his Honour Justice Carr:

was to create and confer upon the financiers ownership in equity of the ammonia plant.

That is at paragraph 46. That was a fixture and therefore part of the land. As his Honour stated at paragraph 45:

What the appellant contracted to sell, and may well have sold, to the financiers was no mere “bundle of rights” (Melluish (Inspector of Taxes) v BMI (No 3) Ltd [1996] AC 454 at 475, it was full legal and beneficial ownership.

The appellants have also sought to discount reliance on Vopak Terminals and, in fact, have suggested that it was wrongly decided because it was factually distinguishable in their submission from the present appeal on the basis that it concerned the sale of fixtures intended to remain in situ, but that is the reason why Vopak is, in our respectful submission, factually relevant. The sale agreement in this case, and the licence agreements, clearly contemplated the fixtures would remain in situ and to be used to provide power under the power purchase agreement. That was the obligation. That never ceased.

In relation to the North Shore Gas Cases, we have dealt with the appellants’ submissions at paragraphs 54 and 55 of our submissions and I do not need to go further into that, although I do note that the case referred to by his Honour Justice Gummow, Lees & Leech, in a discussion by his Honour Justice Hill reflects the submission that we made even though we did not take your Honours to it. With respect to fixtures located on freehold land, the appellants assert that if the fixtures are sold it is as chattels because the parties contemplate they will be severed from the land after sale. Nothing in the licence agreement required that.

At the time of executing the sale agreement the parties executed the power purchase agreement. That requires the appellants to provide power for a period of time and that time expires a day after the licence agreement’s termination date. That reference is found at appeal book 3, page 739, clause 3 of the power purchase agreement. So in order to meet their obligations under the power purchase agreement the appellants must keep the fixtures attached to the land meaning that severance is not contemplated by the parties. The fixtures are agreed to be sold as such and should be so treated. That is, in our submission, an interest of land.

In respect of mining leases, what is asserted against us is that the vendor’s interest in a mining lease is a mere right to remove. That approach, in our respectful submission, misconstrues the issue and that is whether the vendor’s interest in the fixtures is an interest in land. The argument that the appellants make conflates the common law protection of the tenant’s rights to the fixtures with the nature of the very interest in the fixture itself. The right to remove is not a freestanding right. It is a consequence of the tenant’s property in the fixtures giving him the interest in land. There is no doubt, in our submission, that when a chattel is a - - -

GUMMOW J: Who is the tenant on this theory of the mining leases? I do not understand how tenants’ fixtures have anything to do with it, at the moment.

MR TANNIN: Well, it was the appellants who introduced the argument that these were mere - - -

GUMMOW J: I know. Western Mining held the mining tenements, I guess, from the State of Western Australia.

MR TANNIN: Yes.

GUMMOW J: What involvement is there of tenants’ fixtures under this arrangement?

MR TANNIN: We did not say that they were tenants’ fixtures. We were meeting an argument.

FRENCH CJ: The argument was then illogical according to Mr De Wijn.

MR TANNIN: Yes.

KIEFEL J: On one view, section 114, it has been approached in argument on the basis that there might be some analogy with tenants’ fixtures and that might be if one focuses entirely on subsections (1) and (2) and ask the question, what entitlement is being recognised and whether or not the legislature is perhaps recognising a need to give a right to remove, but that is perhaps without reading the subsequent subsections which seem to be concerned to make sure that the plant is removed. Subsection (3) allows the Minister to require the other person to show cause why it should not be removed and sold. Subsection (6) talks about rent being applied where it has remained in situ on the land, all of which suggest that it is perhaps not seen as a fixture but as some sort of encumbrance that the Minister wishes to be obliged to be removed. That is one view of those sections. It might not entirely deal with subsection (2).

GUMMOW J: All of that being designed to achieve a situation whereby the Crown gets its land back free from impedimenta left over by reason of it having granted and there now being exhausted the mining tenement.

MR TANNIN: Our essential submission is that section 114 does not codify what the entitlements are. It simply sets out a regime whereby Crown land that has been the subject of - - -

KIEFEL J: Can be cleared of the mining plant.

MR TANNIN: Can be rehabilitated and if there are remnants there, either the party who - - -

FRENCH CJ: What does it assume about the entitlements where you have got something affixed to the land?

MR TANNIN: The Court of Appeal’s approach was that there was not an answer to the issue of the entitlement. It was simply a codification - - -

KIEFEL J: Perhaps we are looking at entitlement in common law terms. If the statute’s primary focus is the removal of the mining plant, the entitlement might be the entitlement which arises on removal, that is, once it is severed from the land, it is the entitlement to take it away, which it then treats as the obligation. It equates to an obligation in the following subsections to take it away.

MR TANNIN: Sorry, I did not mean to cut you off, but our submission is that the entitlement is greater than that because section 114 is designed to operate at the expiry of the mining lease, that is, on its surrender. There is an entitlement that pre-dates that. That is what we are concerned about. There must be some possessory right.

KIEFEL J: But if you are looking at entitlement in statutory terms, you have to try to understand what feature it has in the statutory purpose.

CRENNAN J: It might just be possession except as against the Crown, you see. In other words, something rather different from what you would understand in an orthodox way by referring to a legal or equitable interest in land. In other words, it is a statutory mechanism of a very special kind.

MR TANNIN: Yes, but it is designed to operate at the expiry of the mining tenement in order to rehabilitate the land. It is not a codification of the nature of the primary entitlement which was, in our submission, sold - - -

FRENCH CJ: I think we are ad idem on that.

CRENNAN J: Yes, but where has the legal and equitable interest in land been whilst their possessing against everybody except the Crown? How would you put that? What does the holder of the mining tenement have?

MR TANNIN: The holder of the mining tenement has the rights to the fixtures. The argument that the appellant puts is that somehow the rights to the fixtures are subsumed into the various kinds of tenure, but that ignores, in our respectful submission, what is sold. It cannot be that, as in this case, there was a payment for the chattels in the sum of about $190 million, $39 million in terms of a licence fee which happened to be precisely the same figure for the value of what was licensed and at the end of that, no further consideration and where did the interest that they acquired evaporate to? Our respectful submission is that there must have been a purchase of an equitable interest in the sense of something owned. No, it is not with ease that you can precisely delineate it because it is a fixture on the land, but the question is, did they own it?

KIEFEL J: But one inference which might be drawn from section 114 is that it is not the statutory intention that these ever become fixtures. If the legislative intention is that they ought to be removed at the end of the tenement and cast an obligation on them to do so, that would not strongly suggest that at some other point earlier on that the mining legislation was to regard them as fixtures. It raises the question, fixtures for what purpose? They do not want them.

MR TANNIN: In our submission, the opposite is the case, that is, is precisely because they are fixtures that section 114 is present.

GUMMOW J: We have to start with 85, is that not the answer to Justice Crennan’s question? Section 85 tells you what the rights of a holder of a mining lease are and they are entirely consistent with what Sir Garfield was saying as a general proposition in Adamson, to work and mine the land, to take and remove minerals, et cetera, and to do all acts and things that are necessary to effectually carry out the mining operations. That would include putting the so-called fixtures in, I suppose, would it not?

MR TANNIN: Yes, but my answer - - -

GUMMOW J: That does not mean that the land is other than the Crown land and this whole notion of fixtures and affixed to the land is just the sort of thing the court was complaining about in the second North Shore Gas Case. People are pushing into this very particular statutory regime in mining law common law notions of fixtures and, even worse, then fixtures as between landlord and tenant.

MR TANNIN: We agree that this case specified fixtures as an interest in land.

GUMMOW J: It may. So?

FRENCH CJ: So maybe things affixed to the land pursuant to the permissions granted by a mining tenement never become part of the land.

GUMMOW J: But nevertheless under the Stamp Act there is that provision which says that mining tenements are to be treated as interest in land for the Stamp Act.

MR TANNIN: So we are back to applying - - -

FRENCH CJ: Which may not answer your question about fixtures though.

MR TANNIN: That is the extent of the argument. In relation to the argument put by the appellant at reply 18 that fixtures would have to removed on termination of the licence agreements because the appellants would have no right to enter the land, it simply does not recognise what the sale agreement’s purpose was. The sale agreement was in relation to the fixtures in situ. We set out that in our submission at 57. In relation to clause 10, I might note that in the appellants’ reply at paragraph 20 they refer to clause 10 and relied on clause 10 this morning as somehow determinative of the issues in this appeal.

That argument has not been raised before. It certainly was not raised in that way in the earlier proceedings and I do not know that it was the subject of special leave but, in any event, clause 10, in our submission, requires the purchaser to cease to use the licence area for the purpose of the agreement. It does not, on its terms, negate any interests in the fixtures which the appellants are obliged to require under clause 17.5 and that, in fact, was an observation made by the majority.

Could I take your Honours to appeal book 4. At paragraph 85 of the judgment of her Honour Justice Wheeler there is reference to clause 10. It does not appear, and I was not counsel at the appeal, that her Honour was dealing with the argument that was put by my friends today, but she does refer in the judgment to clause 10 and notes in that context that:

Although cl 10 of the Licence Agreements requires the Purchaser to “cease using” the Licence Area on termination of the agreement, this appears to be a reference to “using” the area for the purpose of the agreement, not directed to negating any interest which may result from ownership of the Fixtures.

GUMMOW J: While you are looking at paragraph 85, what does one do about paragraph 86?

I do not understand it to have been seriously in issue that a contract for the sale of a fixture, by the owner of the land –

and that is the problem –

gives rise to an interest in the land.

Her Honour might be right about the freehold where WMC did hold the freehold, but not correct where the State of Western Australia owned the land. It was burdened by these mining tenements and there were these improvements or impediments on the land to which 114 attached. Is it possible there will be a different outcome? What I am putting to you, I guess, is a different outcome from a revenue point of view as to the freehold land and the non-freehold land where there has been no separate distinct assessment. What will we do?

MR TANNIN: Under section 73, either way there is an assessment, so it is any part of the arrangement.

GUMMOW J: I am sorry, I do not follow that.

MR TANNIN: Under section 70(3) - it is in tab 7:

If –

(a) an instrument –

(i) transfers, or is or includes an agreement to transfer, or evidences the transfer of, a chattel; and

(ii) is one of 2 or more arrangements that together form, or arise from, substantially one transaction, or one series of transactions, relating to chattels and to other property;

and

(b) at least one of the other arrangements mentioned in paragraph (a)(ii) transfers, or is or includes an agreement to transfer, or evidences the transfer of, other property and is dutiable –

the instrument mentioned in paragraph (a) is chargeable with duty –

If I might just - - -

GUMMOW J: Wait a minute:

in respect of the unencumbered value of the other property plus the unencumbered value of the chattel.

MR TANNIN: Now, can I just perhaps - I do not know if it assists your Honour in relation to paragraph 86 of her Honour’s judgment, whilst it is clear that the Crown was the owner of the land that aspect of her Honour’s judgment is dealing with freehold. It is dealing under the heading of “Freehold” and that is apparent on the page before. So the judgment is split into consideration of the freehold and then the mineral leases.

GUMMOW J: Suppose she is right about the freehold, but wrong about the mining tenements. That is what I want to know what you say we then do.

MR TANNIN: We say that it is nevertheless taxable.

GUMMOW J: As to the full amount of the assessment. That seems a bit unfair.

MR TANNIN: That is the way 73 operates. So, in conclusion, fixtures are an interest in land. The sale agreement, in our submission, is an agreement for the sale of an interest in land. Duty is to be assessed by reference to either 70(2), that is on the basis that the agreement itself provides for the sale of the assumed sale assets and the fixtures, or by reference to section 70(3) on the basis that the sale agreement and the licence agreements together provided for the sale of the assumed sale assets and the fixtures. In either case, duty is payable on the value of the chattels and the value of the interests in land.

CRENNAN J: That argument you would say holds good despite the fact that section 85, which refers to the rights of the holder of a mining lease, does not necessarily convey an interest in land.

MR TANNIN: That is correct, because of the operation of the Stamp Act.

CRENNAN J: Yes, I see.

FRENCH CJ: That is because of the definition in section 70. Is that right?

MR TANNIN: Yes, and 63.

FRENCH CJ: Sorry, 63, yes. But 63 just goes to characterisation of the tenement.

MR TANNIN: Then 70 deals with the nature of the interests that are caught.

GUMMOW J: But there was no dealing with the mining tenement as such, was there?

MR TANNIN: No.

GUMMOW J: So what is the significance of the inclusion of the mining tenement as an estate or interest in land?

MR TANNIN: It is linked by reason of the fact that it is a fixture – a fixture being part of the land.

FRENCH CJ: That is the assumption that you have to make.

MR TANNIN: Yes.

FRENCH CJ: Where Western Mining erected these power plants and so forth, putting to one side the freehold land in respect of land the subject of the grant of mining tenements, I presume they were leases or - - -

MR TANNIN: Yes.

FRENCH CJ: Yes. That is done partly pursuant to, or at least pursuant to, the authority to work the land which the lease gives you.

MR TANNIN: Yes.

FRENCH CJ: Was there also some obligation condition of the lease or is that to be found somewhere in the agreements?

MR TANNIN: That would be found in the State agreements. There would be relevant State agreements. I think they are in the - - -

FRENCH CJ: But it is very much tied to the grant of the lease.

MR TANNIN: Yes.

FRENCH CJ: Something you can do and perhaps you had to do because of the detail imposed by the State agreements.

MR TANNIN: Yes. They are our submissions.

FRENCH CJ: Yes, Mr De Wijn.

MR DE WIJN: Your Honour, a couple of points in reply. The final point my learned friend dealt with in relation to the freehold land, there are two issues there. First of all that in relation to the freehold land it is necessary to characterise whether there would have been a sale in respect of freehold land. Your Honours will recall that in respect of freehold land the agreement was at best an agreement to agree. So in respect of freehold land there was no agreement to sell an interest in fixtures.

FRENCH CJ: That was the point that was not challenged below.

MR DE WIJN: That was the point that was not challenged. So it is true that you have to look at the different bits of land and characterise the interest. But in respect of the freehold land, at best there was an agreement to agree. It makes sense because the parties could possibly have arranged for a subdivision of freehold land and a transfer of part of it. Obviously in that circumstance stamp duty would have been paid on the transfer at the time that was agreed. Alternatively, one of the options was to grant a lease. The lease would have been assessable under the lease head.

GUMMOW J: What is this “agreement to agree” provision again that you took us to?

MR DE WIJN: Clause 5.5 in the pro forma agreement – 121 of court book 1:

Where the Licensee elects to obtain Permanent Tenure over any part of the Permanent Tenure Area, and where the form of Permanent Tenure contemplated by Schedule 7 –

because, of course, the only possible obligation to do anything under Schedule 7 was to apply for a general purpose lease or some other lease and that, of course, only applied to the areas covered by the Mining Acts. So Schedule 7 does not specifically deal with freehold land or leasehold land other than by reference to - - -

FRENCH CJ: This contemplates they might just enter into an ordinary lease agreement over, a lease back.

MR DE WIJN: Yes, might enter into an ordinary lease agreement. So 5.5, one of the options is a transfer of land in which case stamp duty be payable when such an agreement was entered into and alternatively a lease and in those circumstances the rights under the lease would more or less mirror the rights under the licence agreement. So in relation to freehold land you have at best an agreement to agree and in any event one has to characterise what the rights would be in relation to freehold land that are granted and if it is merely a right to remove the fixtures, or if it is a right under the lease, you would have to characterise that at the particular point in time and characterise whether that is a lease and dutiable as a lease, but if it is a creation of a right it is not going to be a sale – Littlewoods, Camphin – it would not be a sale.

My learned friends rely on section 63 of the Duties Act, but section 63 is, with respect, not relevant and even if it is it helps us. Section 63 defines a “conveyance on sale” as an instrument whereby any estate is vested. Your Honours will find that at annexure A to my learned friend’s submission. Now, we do not have a conveyance on sale in this case. We have a sale agreement. We do not have a conveyance on sale. We have an agreement for the sale of something. We have an agreement. Angus’ Case makes it plain that that is not a conveyance on sale because it is not an interest:

whereby any property or any estate or interest –

is vested. At best it is an agreement for the sale in the future so we do not have a conveyance on sale. The reason we are here is because section 74 deems certain agreements to be conveyances on sale. So, with respect, you have to go back to section 74. But even if one looked at section 63, it helps us, we say, because the only relevant definition could be in (a), and it refers to:

whereby any property or any estate or interest in any property on the sale thereof -

So again, it requires sale – (b) deals with another situation and (c) deals with something else, but (a) deals with a sale, so it has to be a conveyance on sale and the creation of a legal interest, even if my learned friends could get over the “agreement to agree” hurdle, might at best create an interest, but does not sell an interest.

The only other two points I wanted to make was my learned friend’s point about section 70 and the inclusion of mining tenement, but as your Honour Justice Gummow, I think, observed, the mining tenement was not sold. There was not an agreement to sell the mining tenement. In any event, the definition in section 70 is merely for the purpose of section 70. It does not extend more broadly to section 74.

The final thing I should mention – it is not strictly by way of reply, but it concerns the calculation of the duty. I think Justice Gummow asked me a question earlier this morning which I did not answer, because I forgot. The calculation of duty originally assessed can be seen from the Commissioner’s statement, and your Honours will find that in court book 1 at page 236, paragraph 15:

The assessment was made on the basis that the Sale Agreement was an agreement for the sale of property consisting in whole or in part of land . . . valued at $188,566,404 -

Then when it got to the Court of Appeal, the assessment was increased, and if your Honours turn to court book 4, page 1234, your Honours will see how that happened. By how it happened, I mean how the figures are put together. Paragraph 32 under “Conclusion”, do your Honours see that. There was the “Total value of assumed Sale Assets”, that is, chattels and fixtures, was increased to $190 million. There was then an exclusion for chattel for motor vehicles – I will explain to your Honours how that happens – and then added to that was the value of the items that the respondent conceded were fixtures and were the subject of the licence agreement, $39 million. The reason the motor vehicles comes out, if your Honours go back to page 1230, at the top of the page your Honours will see there is:

a concession made by the Commissioner in relation to motor vehicles –

and lest your Honours think that the Commissioner is being generous, the reason for that concession in section 70, if your Honours go to annexure A to our submissions at page 4 under the heading “exempt chattels”. Your Honours have that, 70(1), page 4 in our annexure, “exempt chattels” and it is (b):

a motor vehicle the transfer of the licence of which is chargeable –

under some other provision. So it is not that my learned friends are being generous. It is just that the motor vehicles are being charged under another provision. If your Honours please.

FRENCH CJ: Yes, thank you, Mr de Wijn. The Court will reserve its decision. The Court adjourns until 10.15 tomorrow morning.

AT 3.09 PM THE MATTER WAS ADJOURNED