The NSW Supreme Court has made a significant decision regarding landholder duty under Chapter 4 of the Duties Act 1997 (NSW). In the case of Conexa Sydney Holdings Pty Ltd v Chief Commissioner of State Revenue (NSW) 2024 ATC ¶20-912; [2024] NSWSC 628, the court ruled that an underground pipeline is dutiable as "goods" for assessment purposes under Section 155 of the Act.
Background of the Case
This decision involves the acquisition of shares in SGSP Rosehill Network Pty Ltd (Rosehill) by Conexa Sydney Holdings Pty Ltd. Rosehill owned land with an underground pipeline used to distribute recycled water from a recycling plant. The acquisition occurred in September 2019, prior to the introduction of Section 147A of the Act on 24 June 2020. This section clarified that "land" includes anything fixed to it, regardless of legal distinctions or separate ownership.
Legal Context
Rosehill held a network operator’s license under the Water Industry Competition Act 2006 (the "Water Act"). Section 64 of the Water Act states that water industry infrastructure is owned by the person who constructs or installs it, or any subsequent titleholder, irrespective of land ownership. The taxpayer argued that Section 64 did not create an interest in land but prevented common law rules about fixtures from applying to water infrastructure.
Court's Findings
The court agreed that the pipeline was not an interest in land. However, it found that Section 64 of the Water Act meant that water industry infrastructure remains chattels (personal property) even when attached to land. Thus, under the laws at the time, the pipeline was dutiable as an interest in goods. Its unencumbered value, for duty purposes, was determined based on its use in the business as a going concern.
Implications
This ruling clarifies the treatment of underground pipelines and similar infrastructure for landholder duty assessments in NSW. It highlights the importance of understanding how legislative definitions and provisions can affect property and transaction valuations.
For those dealing with land and infrastructure transactions in NSW, it’s crucial to stay informed about such legal interpretations to ensure compliance and proper valuation for duty purposes.
Source: Conexa Sydney Holdings Pty Ltd v Chief Commissioner of State Revenue (NSW) 2024 ATC ¶20-912; [2024] NSWSC 628, 24 May 2024.
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