Commissioner of State Revenue v WestNet Rail Holdings No 1 Pty Ltd

[2013] WASCA 110

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT  :   THE COURT OF APPEAL (WA)

CITATION:   COMMISSIONER OF STATE REVENUE -v- WESTNET RAIL HOLDINGS NO 1 PTY LTD [2013] WASCA 110

CORAM:   McLURE P

PULLIN JA
NEWNES JA

HEARD:   7 NOVEMBER 2012

DELIVERED          :   26 APRIL 2013

FILE NO/S:   CACV 22 of 2012

BETWEEN:   COMMISSIONER OF STATE REVENUE

Appellant

AND

WESTNET RAIL HOLDINGS NO 1 PTY LTD
First Respondent

WESTNET WA RAIL PTY LTD
Second Respondent

ON APPEAL FROM:

Jurisdiction              :  STATE ADMINISTRATIVE TRIBUNAL OF WESTERN AUSTRALIA

Coram  :JUSTICE J A CHANEY (PRESIDENT)

Citation  :WESTNET RAIL HOLDINGS NO 1 PTY LTD and COMMISSIONER OF STATE REVENUE [2012] WASAT 45

File No  :CC 1605 of 2010

Catchwords:

Taxes and duties - Stamp duty - Meaning of 'land' in s 76(1) and s 76AP(2) of the Stamp Act 1921 (WA) - Whether rights granted by Rail Corridor Minister to corporation under Rail Freight System Act 2000 (WA) to use and occupy rail corridor land and railway infrastructure are 'land' under s 76(1) of the Stamp Act - Whether Minister's power under s 42(1)(a) of the Rail Freight System Act to 'dispose of' an interest in corridor land includes granting contractual rights in relation to corridor land - Relationship between Minister's powers under s 42(1)(a), s 42(1)(c) and s 42(4) of the Rail Freight System Act - Whether definitions of 'land' and 'estate' in s 5 of the Interpretation Act 1984 (WA) applicable - Whether railway track infrastructure fixed to land for the purposes of s 76(1) of the Stamp Act

Legislation:

Acquisition of Land Act 1967 (Qld)
Acts Interpretation Act 1931 (Tas)
Government Railways Act 1904 (WA), s 2, s 61
Interpretation Act 1984 (WA), s 3, s 5
Mining Act 1904 (WA)
Property Law Act 1969 (WA), s 7
Public Transport Authority Act 2003 (WA), s 13
Rail Freight System Act 2000 (WA), s 3, s 4, s 5, s 6, s 7, s 8, s 11, s 12, s 13, s 14, s 16, s 22, s 23, s 24, s 31, s 32, s 34, s 35, s 36, s 42, s 43, s 44, s 47, s 48, s 58
Stamp Act 1921 (WA), s 76(1)(b), s 76AP(2)

Result:

Appeal dismissed

Category:    A

Representation:

Counsel:

Appellant:     Mr R M Mitchell SC & Mr S J Wright

First Respondent           :     Mr C L Zelestis QC & Mr S J Davis

Second Respondent       :     Mr C L Zelestis QC & Mr S J Davis

Solicitors:

Appellant:     State Solicitor for Western Australia

First Respondent           :     Herbert Smith Freehills

Second Respondent       :     Herbert Smith Freehills

Case(s) referred to in judgment(s):

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

Bacon v O'Dea (1989) 25 FCR 495

Epic Energy (Pilbara Pipeline) Pty Ltd v Commissioner of State Revenue [2011] WASCA 228

Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216

Henty House Pty Ltd v Federal Commissioner of Taxation (1953) 88 CLR 141

Hornsby Council v Roads and Traffic Authority of NSW (1997) 41 NSWLR 151

Marshall v Smith [1907] HCA 33; (1907) 4 CLR 1617

Mullane v Mullane [1983] HCA 4; (1983) 158 CLR 436

National Provincial Bank Ltd v Ainsworth [1965] AC 1175

Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209

Sorrento Medical Service Pty Ltd v Chief Executive, Department of Main Roads [2007] QCA 73; [2007] 2 Qd R 373

Stow v Mineral Holdings (Australia) Pty Ltd [1979] HCA 30; (1979) 180 CLR 295

The Queen v Toohey; Ex parte Meneling Station Pty Ltd [1982] HCA 69; (1982) 158 CLR 327

The State of Western Australia v Ward [2002] HCA 28; (2002) 213 CLR 1

WestNet Rail Holdings No 1 Pty Ltd and Commissioner of State Revenue [2012] WASAT 45

Yanner v Eaton [1999] HCA 53; (1999) 201 CLR 351

1. McLURE P:  This appeal concerns the application of the 'landholder' provisions in pt IIIBA of the Stamp Act 1921 (WA) to a transfer of shares in the first respondent, WestNet Rail Holdings No 1 Pty Ltd (WestNet) to the second respondent, WestNet WA Rail Pty Ltd (WWR). Part IIIBA provides for the imposition of stamp duty on the sale of shares in a company which is a 'landholder' because it owns land in Western Australia with an unencumbered value of not less than $1 million which represents 60% or more of the value of all property to which it is entitled.

2. The transaction in issue is connected with the disposal of the rail freight business of the Western Australian Government Railways Commission (the Commission) and things associated with that business.

3. At the material time the railway network in Western Australia comprised 3,800 kms of narrow gauge rail (the Narrow Gauge Network) and 1,500 kms of standard gauge (the Standard Gauge Network).  Up to 27 October 2000 the Narrow Gauge Network and the Standard Gauge Network, and other railway‑related assets, were vested in the Minister for Western Australian Government Railways (WAGR) who was constituted as a body corporate under the Government Railways Act 1904 (WA) (WAGR Act). The administration of the WAGR Act was at all material times vested in the Commission.

4. On 8 June 2000, the Rail Freight System Act 2000 (WA) (RFS Act) came into effect. Its principal purposes were to provide for the disposal of the Commission's rail freight business and the identification of railway land corridors.

5. By s 32 of the RFS Act, the Rail Corridor Minister was constituted as a body corporate. By s 34 of the RFS Act, a different legal entity, the Minister responsible for the administration of the RFS Act (defined in s 31 as the 'Act Minister') could, by order published in the Government Gazette, designate land that was part of a government railway within s 2 of the WAGR Act, or other land used by or under the control of the Commission, as 'corridor land'.

6. On 27 October 2000 the Act Minister published an order under s 34 of the RFS Act entitled 'Rail Freight System (Corridor Land) Order 2000' (the Corridor Land Designation Order). The Narrow Gauge Network and the Standard Gauge Network were on land included within that order (the Corridor Land).

7. On 30 October 2000 the Act Minister, the Commission, the State Treasurer and another entered into an agreement with AWR Holdings WA Pty Ltd and Australian Western Railroad Pty Ltd as purchasers, WestNet Standard Gauge Pty Ltd (WestNet SG) and WestNet Narrow Gauge Pty Ltd (WestNet NG) as Network Lessees and others for the sale of certain assets, and the assumption of certain liabilities, of the business of carrying goods by rail and road conducted by the Commission under the WAGR Act (the Business Sale Agreement or BSA).

8. Contemporaneously with the Business Sale Agreement, the Rail Corridor Minister, the Commission and the State Treasurer entered into two 'Land Use Agreements' being a Rail Freight Corridor Land Use Agreement (Narrow Gauge) and Railway Infrastructure Lease (the Narrow Gauge Agreement) with, inter alia, WestNet NG and a Rail Freight Corridor Land Use Agreement (Standard Gauge) and Railway Infrastructure Lease (the Standard Gauge Agreement) with, inter alia, WestNet SG.

9. By the Business Sale Agreement, the Act Minister and the Commission agreed to sell certain goodwill, plant, equipment and other property but did not agree to sell or otherwise deal with the Corridor Land or 'Leased Railway Infrastructure' as defined in the Land Use Agreements.  However, completion of the Business Sale Agreement was conditional on the execution of the Land Use Agreements substantially in the form in which they were annexed to the Business Sale Agreement.

10. By each of the Land Use Agreements, the Rail Corridor Minister granted the respective Network Lessee a right to use and occupy the Corridor Land for a period of 49 years from completion under the Business Sale Agreement.  The Commission and the Rail Corridor Minister also granted the respective Network Lessee a lease of the Leased Railway Infrastructure.

11. The parties agreed that neither Land Use Agreement conferred on the Network Lessee or any other person a right to exclusive possession of the Corridor Land or any part of it and did not create a lease at common law of the Corridor Land.

12. Leased Railway Infrastructure included, among other things, railway track, ballast and sleepers (Track Infrastructure).  The Track Infrastructure is substantially located on the Corridor Land.

13. WestNet (formerly Australian Railway Group Pty Ltd) was the parent company of WestNet NG and WestNet SG.  The holders of all the shares in the issued capital of WestNet sold those shares to WWR (formerly Babcock & Brown WA Rail Pty Ltd) pursuant to a share sale agreement dated 14 February 2006 (Share Sale Agreement). 

14. On 30 August 2010, the Commissioner of State Revenue (Revenue Commissioner) disallowed an objection dated 1 March 2010 by WestNet and WWR to a duty assessment notice in the sum of $71,345,520 (the assessment) relating to the transaction the subject of the Share Sale Agreement.  The respondents applied to the State Administrative Tribunal (Tribunal) for a review of the Revenue Commissioner's decision.  The Tribunal concluded that the decision to disallow the objection should be set aside.

15. It is only if three components of the property of WestNet SG and WestNet NG (both wholly owned subsidiaries of WestNet) constituted 'land' that WestNet will have been a 'landholder' under Pt IIIBA.  The three components and their agreed values are:

    (1)the rights of WestNet SG and WestNet NG under the Land Use Agreements to use the Corridor Land (value - $200,000,000);

    (2)that part of the Leased Railway Infrastructure leased to WestNet SG and WestNet NG under the Land Use Agreements that constituted Track Infrastructure (value - $458,333,000); and

    (3)the balance of the Leased Railway Infrastructure leased to WestNet SG and WestNet NG under the Land Use Agreements that did not constitute Track Infrastructure (value - $263,425,000).

16. It was accepted by the parties that whether or not the Network Lessees had a proprietary interest in the Corridor Land depended upon the proper construction of the Land Use Agreements and that the RFS Act was relevant factual context in the contractual construction exercise.

17. The appellant claimed below and in the appeal that the Network Lessees had a proprietary interest in the Corridor Land under the Land Use Agreements on two alternative bases.  The first basis involves the following three steps (the first proposition):

    (1)the Land Use Agreements were entered into in the exercise of statutory authority under RFS Act;

    (2)the RFS Act did not authorise the Rail Corridor Minister to grant merely contractual rights to use and occupy Corridor Land, the only available power being one to dispose of an interest in land; and

    (3)against that statutory background, the rights under the Land Use Agreements in relation to the Corridor Land (Corridor Land rights) are to be construed as a proprietary interest in the Corridor Land.

18. The appellant accepts that if the statutory context is ignored, the Land Use Agreements would, on their proper construction, give rise to a contractual licence over the Corridor Land.

19. The appellant's second, and alternative, basis is that even if the Land Use Agreements give rise to a contractual licence over the Corridor Land, those rights are an 'estate' in relation to land within the extended definition in s 5 of the Interpretation Act 1984 (WA) (the second proposition).

20. Finally, the appellant contends that if the Corridor Land rights are 'land' (under basis one or two) the Leased Railway Infrastructure is fixed to the land in a manner falling within the definition of land in s 76(1)(b) of the Stamp Act (the third proposition).

21. For the purposes of step 2 of the appellant's first proposition, all parties in the Tribunal agreed that the relevant issue was whether s 42 of the RFS Act empowered the Rail Corridor Minister to grant a contractual licence over Corridor Land [60]. The Tribunal held that (1) s 42(1)(a) is concerned with the disposal of proprietary interests in land [67]; (2) it was open to the Rail Corridor Minister, utilising the power in s 42(1)(c) or s 42(4) of the RFS Act, to grant rights in respect of corridor land falling short of a proprietary interest [69], [73]; and (3) the Land Use Agreements gave rise to a contractual licence over the Corridor Land [88]. The Tribunal did not consider the appellant's second and third propositions.

22. The respondents seek to uphold the Tribunal's decision on the additional basis that the statutory expression 'dispose of' in s 42(1)(a) has a wide meaning which includes the conferral of a contractual licence over the Corridor Land. They also contend that the Track Infrastructure is not 'fixed' to land for the purpose of the definition of land in s 76(1)(b) of the Stamp Act. 

23. In the appeal, the parties maintained their position that s 42 of the RFS Act is the sole source of the power to dispose of rights and interests over corridor land. It is necessary to set out the legislative scheme in some detail.

The statutory scheme - RFS Act and Interpretation Act

1. We are here concerned with the RFS Act as it stood at 30 October 2000. The Act's objectives are identified as being to provide for ‑

   •the disposal of the rail freight business of the [Commission] and things associated with that business and the assignment of things to give effect to a disposal;

   •the identification of railway land corridors and the creation of a State agency that is a body corporate to manage them.

2. The expression 'Commission's rail freight business' is defined in s 3 to mean:

   [T]he business and operations of the Commission involved in the carriage of freight by rail and the provision and maintenance of facilities for the operation of railways for the carriage of freight, and it includes the carriage of freight by road and other activities of the Commission that the business and operations involve.

3. The term 'corridor land' means land that is designated as corridor land under pt 3 (s 3).

4. A reference in the Act to any land or thing 'belonging to the State' includes a reference to any land or thing held by the WAGR, the Commission and any other State agency (s 4).

5. Section 5 explains what references to 'disposal of things belonging to the State' includes. It provides:

   For the purposes of this Act, requiring any land or thing belonging to the State to be conveyed to a different holder in such a way that it would still belong to the State is to be regarded as disposing of it, and accordingly a power to dispose of any land or thing belonging to the State includes a power to give the holder of the land or thing a requirement of that kind.

6. The definition is not exhaustive.  Relevantly, a power to dispose of any land or thing belonging to the State includes a power to give the holder of the land or thing a requirement that it would still belong to the State.  In substance, any land or thing belonging to the State may be disposed of even if the State retains ownership (title) of the land or thing.

7. Section 7 alters the common law of fixtures.  It provides (when read with s 6):

   Anything that is [placed in, on, or over, or is buried in,] land which, or an interest in which, is capable of being disposed of under Part 2 or any other corridor land ‑ 

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

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

   (c)is capable of being removed from the land by, or with the authority of, the owner of that thing.

8. Section 8 featured prominently in the construction argument. It relevantly provides:

   (1)If anything that is part of a Government railway is disposed of under Part 2, it ceases to be part of a Government railway when the right to occupy or possess it passes.

   (2)If land that becomes corridor land or anything on it is part of a Government railway the land or thing ceases to be part of a Government railway upon the land becoming corridor land unless the Minister orders otherwise under subsection (3).

   (3)Before land becomes corridor land, the Minister may, in writing, order that anything described in the order that is on the land does not cease to be part of a Government railway because of the land becoming corridor land.

   (4) ‑ (6)  … 

   (7)Despite subsections (1) and (2), section 62 of the [WAGR Act] applies to the leasing of any corridor land … 

9. The construction issue is whether corridor land can remain a Government railway to which s 8(1) applies. The answer is no. The exception in s 8(2) is confined to the scope of the power in s 8(3) which relates to 'things' on corridor land.

10. Part 2 of the RFS Act (s 11 ‑ s 30) is headed 'Disposal and related matters'. Sections 11, 12 and 13 are central to the construction exercise. The RFS Act separately empowers the Act Minister and the Rail Corridor Minister. At the material time, the then Minister for Transport was both the Act Minister and the Rail Corridor Minister.

11. Section 11 relevantly provides:

    (1)The [Act] Minister may prepare and submit to the Treasurer a proposal to dispose of the Commission's rail freight business, and anything associated with that business, in whole or in part.

    (2)The power given by subsection (1) extends to ‑ 

    (a)any of the Commission's rail freight business that was not included in an earlier proposal under that subsection, whether or not it was established after the earlier proposal was made;

    (b)anything associated with any business to which the power extends; and

    (c)anything associated with any business that has been disposed of in accordance with an earlier proposal under that subsection.

    (3)The power given by subsection (1) is limited to things belonging to the State.

12. The text of s 11(3) suggests that the power in subs (1) does not extend to land. However the broader context, in particular s 12, s 13(2) and s 35, unequivocally negatives that suggestion.

13. Section 12 relevantly provides:

    (1)A proposal to dispose of land cannot be approved by the Treasurer until a corridor land order has been published in the Gazette under Part 3.

    (2)A proposal to dispose of land that is, or is to be, corridor land cannot be approved if the interest to be disposed of is greater than a leasehold interest.

14. Section 12 is not the (or a) source of power to dispose of land but a limitation on the scope and exercise of the power to do so. Moreover, s 12 imposes other limitations on the scope of the power. A proposal to dispose of standard gauge corridor land to a person can be approved only if the person satisfies the conditions in s 12(3)(a) ‑ (c). In broad terms, the person's main business must be the operation of railways and the person must not be involved in providing 'train services' as defined.

15. Further, proposals to dispose of standard gauge corridor land between nominated points in the network must ensure specified improvements to the railway track on that land (s 12(6) and s 12(7)).

16. Section 13 of the RFS Act provides:

    (1)The Minister may enter into any agreement on behalf of the State to give effect to a proposal under section 11 that is approved by the Treasurer.

    (2)If the agreement is for the disposal to a person of standard gauge corridor land as defined in section 12, it is to contain provisions to ensure that ‑

    (a)while holding the land the person continues to be a person in respect of whom approval could be given under section 12(3) (in this subsection called 'an eligible company'); and

    (b)any person holding the land as the person's successor or assignee is, and while holding the land continues to be, an eligible company.

17. An agreement under s 13 may deal with, inter alia, anything necessary for, or associated with, the operation of a railway for the carriage of freight (s 14(a)).  That must include agreement for the 'disposal of' corridor land, non‑corridor land or a thing. 

18. Sections 11 to 14 together provide the source and extent of the Act Minister's power to take the first step towards the disposal of property (land and things) relevantly connected with the Commission's rail freight business.  The first step is the entry into an agreement under s 13.

1. The nature and extent of the Act Minister's disposal powers have to be gleaned largely by implication.  This is unsatisfactory, but we work with what we are given (contrast the Public Transport Authority Act 2003 (WA), s 13). Having regard to the nature and wide variety of property encompassed within the Commission's rail freight business, the statutory intent must be that the disposal power in pt 2 of the RFS Act has a wide and flexible operation.

2. The functions of the Commission are detailed in s 16. The Commission has the power to enter into an agreement in order to provide for the Commission or any other person to have access to anything disposed of under the RFS Act or for the sharing of facilities or the joint use of services to enable the Commission to effectively perform its functions under the WAGR Act and to enable another party to the agreement to effectively operate freight services as the agreement contemplates (s 16(2)(a), (c)).

3. Division 2 of pt 2 of the RFS Act deals with (part of) the second step in the disposal process, being the assignments necessary to give effect to an agreement under s 13. By s 23, the Act Minister is given the power to make 'transfer orders' in relation to assets and liabilities as defined in s 22. The term 'assets' is very widely defined to include all types of property, including (non‑corridor) land and choses in action. A transfer order under s 23 has the consequences provided for in s 24. However, s 23 and s 24 have no application to corridor land. The power to give effect to a disposal of corridor land the subject of a s 13 agreement is in pt 3 of the RFS Act

4. Part 3 of the RFS Act (s 31 to s 57) deals with 'Railway corridors'. The expression 'government railway land' is defined in s 31 to mean land that is, or is part of, a government railway as defined in s 2 of the WAGR Act (which includes 'all land belonging to Her Majesty upon which [a] railway is constructed') or other land that is used by or under the control of the Commission.

5. By s 34, the Act Minister may, by order published in the Gazette, designate government railway land identified by the order as corridor land or land other than corridor land. Thus all land included in a s 11 proposal must be designated as either corridor land or non‑corridor land. I infer that when government railway land ceases to be such on becoming corridor land (see s 8(2)) the land ceases to be vested in the WAGR but remains in State ownership.

6. For the purpose of assisting the Act Minister to prepare a proposal under s 11 that includes a proposal to dispose of land, the Commission is to give to the Act Minister a description of the land sufficient to identify it (s 35(1)). If any of the land is not land in respect of which a corridor land order has been published in the Gazette under pt 3, the Act Minister, by order published in the Gazette, is to designate the land as corridor land or land other than corridor land (s 35(2)). Thus s 35(2) enlarges the power of the Act Minister to designate land as corridor land or land other than corridor land. The criterion of the exercise of the power is a proposal under s 11 to dispose of land, even if it is not government railway land.

7. Section 36 provides that if the State makes any land that is not government railway land available to be corridor land, the Rail Corridor Minister may, by order published in the Gazette, designate the land as corridor land. Section 36 would apply in circumstances where the Act Minister is not in the course of preparing a proposal under s 11 that includes a proposal to dispose of land.

8. Division 3 of pt 3 is headed 'Dealing with corridor land and things on it'. Section 42 of the RFS Act relevantly provides:

   (1)The Rail Corridor Minister may, for the purposes of facilitating the use of corridor land for the carriage of freight by rail or for any other purpose that is compatible with that use ‑ 

   (a)dispose of an interest in corridor land that is no greater than a leasehold interest and, if it is for a term, is not for a term that is, or is capable of being, more than 50 years;

   (b) … 

   (c)generally manage, and do anything else in relation to ‑ 

   (i)corridor land … 

   (3)The powers given by subsection (1) apply to land and things belonging to the State even if they are not held by the Rail Corridor Minister … 

   (4)Without limiting what else the Rail Corridor Minister may do, the Rail Corridor Minister may do, in relation to former Government railway land or anything on it that is associated with the provision of a rail freight service and is not part of a Government railway for the purposes of the Government Railways Act 1904, anything that the Act Minister or the Commission could have done had the land not become corridor land.

9. Section 43 provides:

   The Rail Corridor Minister is to perform any function given by this Act as may be necessary to fulfil the State's obligations under an agreement under section 13.

10. Section 42 is the primary source of the Rail Corridor Minister's functions (powers) referred to in s 43. The Rail Corridor Minister also has the power to do anything necessary for, or incidental to, the performance of those functions (s 32(3)). Section 43 establishes beyond question that the disposal of corridor land can be the subject of a s 13 agreement. The power to implement such an agreement (the second step in the disposal process) is in pt 3 of the RFS Act. Section 42 will also apply to corridor land that is not part of a s 13 agreement. It is clear from the text and structure of s 42 that the limitations in s 42(1)(a) do not apply to the power in s 42(1)(c).

11. It is also significant that s 44, which supplements s 43, provides:

    The Commission or any other person holding anything disposed of, or anything an interest in which is disposed of, under this Part by the Rail Corridor Minister is to convey what it was that the Rail Corridor Minister disposed of.

12. Division 4 of pt 3 of the RFS Act deals with regulatory and other matters relating to Corridor Land. A person is not to construct anything on corridor land unless the Rail Corridor Minister has agreed in writing or the regulations state that the Rail Corridor Minister's agreement is not required (s 47(1)).

13. Section 48 details the restrictions on corridor land. They include that corridor land is not to be used in a way that is inconsistent with anything that is on, or is being done on, the land in accordance with rights conferred by the Rail Corridor Minister under pt 3 (s 48(2)(a)).

14. Under s 58(1), an agreement under s 13 or an instrument under which a person holds an interest in corridor land may provide for a civil penalty in respect of a breach of the agreement or instrument.

15. The term 'land' is not defined in the RFS Act. The definition in the Interpretation Act must apply (s 3). Land is relevantly defined in s 5 of the Interpretation Act to include 'any estate, interest, easement, servitude or right in or over land' and estate, in relation to land, includes any 'legal or equitable estate or interest, easement, right, title, claim, demand, charge, lien or encumbrance in, over, to, or in respect of the land'.

The Land Use Agreements

1. The Land Use Agreements are, relevantly, in the same terms.  References to 'the Minister' are to the Rail Corridor Minister.  Clause 2 grants the Network Lessee certain rights in relation to Corridor Land and a lease of the Leased Railway Infrastructure.  The clause relevantly provides:

   2.1The Minister grants the Network Lessee, and the Network Lessee accepts, a right to use and occupy the Corridor Land for the Term on the terms and conditions of this agreement.

   2.2Only to the extent that the Minister does not have power by reason of Native Title to provide the right to use contemplated by clause 2.1, the Commission grants the Network Lessee a lease of such part of the Corridor Land as is affected by Native Title on the terms and conditions of this agreement.

   2.3The Commission and the Minister grant the Network Lessee a lease of the Leased Railway Infrastructure on the terms and conditions of this agreement for the Term.

   2.4The Minister and the Commission reserve to themselves the rights in respect of the Corridor Land and Railway Infrastructure set out in this agreement.

2. Clause 5 provides that the agreement will continue for a term of 49 years from the commencement date.

3. With the agreement of the parties, the Tribunal proceeded on the assumption that the rights conferred under the Land Use Agreements were granted under cl 2.1 not cl 2.2.

4. Clause 4 identifies the rights and responsibilities of the Network Lessee.  It relevantly provides:

   4.1This agreement confers on the Network Lessee:

   (a)subject to the Country Passenger Access Agreement and clauses 8.5, 9, 10, 12, 14.2 and 23 and any other access agreement for passenger trains, the right to the exclusion of the State, the Commission and any other person to use the Corridor Land and Leased Railway Infrastructure for Permitted Uses and any Approved Additional Uses … 

   4.3Except to the extent that clause 2.2 applies, this agreement is not intended to create any proprietary interest in favour of the Network Lessee in the Corridor Land and the rights of the Network Lessee in respect of the Corridor Land are intended to be contractual only.

5. 'Permitted Use' is defined to mean any use of the Corridor Land or Leased Railway Infrastructure for or incidental to the operation of a railway.  A non‑exhaustive list of such matters is provided.  'Approved Additional Uses' are those approved by the Minister under cl 8.6.

6. The Network Lessee's rights in respect of Corridor Land are subject to existing third party interests (cl 4.10).  The third party interests are described in Schedule 3.  They include:

   1.All 'Property Rights', as listed in Schedule 13 of the [BSA], agreed to be given to the Purchaser over the Corridor Land under the [BSA].

7. That is a reference to 'Freight Terminals' and 'Staff Houses' which form part of the assets sold to the purchaser under the BSA.  Clause 16 of the BSA contemplated that the relevant land would be free‑holded and then transferred to the purchaser.  Until such time as freehold title was transferred or a lease granted under cl 16.4, the Minister, by cl 16.2, granted to the purchaser a licence to occupy the Freight Terminals and Staff Houses to the exclusion of the Commission.

8. By cl 8.1 of the Land Use Agreements, the Network Lessee agrees to use the Corridor Land and Leased Railway Infrastructure only for a Permitted Use or any Approved Additional Use.  By cl 8.2, the Minister and the Commission agree that the State will not use the Corridor Land and Leased Railway Infrastructure for a Permitted Use or any Approved Additional Use except as permitted by the Country Passenger Access Agreement, cls 8.5, 9, 10, 12, 14.2 and 23 and any other access agreement for passenger trains.

9. Clause 8.4 entitles the Network Lessee to grant third party rights to use or occupy Corridor Land or Leased Railway Infrastructure for a Permitted Use or any Approved Additional Use provided, inter alia, the Network Lessee does not provide any greater interest to the third party in the Corridor Land or Leased Railway Infrastructure than it has under the agreement.

10. Clause 8.11 permits the Minister to create any interest in land or right to use Corridor Land for a use other than a Permitted Use provided that such interest or right is not inconsistent with, and does not extinguish, defeat, remove or unreasonably interfere with the rights of the Network Lessee to use the Corridor Land and the Leased Railway Infrastructure for a Permitted Use or any Approved Additional Use.

11. I turn now to the specific provisions referred to in cl 4.1(a) and cl 8.2.  Clause 8.5 enables the Minister or the Commission, upon a request by the Network Lessee, to grant a right to a third party to use and occupy a part of the Corridor Land for a Permitted Use or any Approved Additional Use.

12. Clause 9 enables the Minister to build structures over or under Corridor Land, and to install and maintain services along or across Corridor Land, and upgrade, replace or construct Railway Infrastructure.

13. Clause 10 provides for the payment of compensation to the Network Lessee if the construction of works will unreasonably interfere with the Network Lessee's use of Corridor Land or Leased Railway Infrastructure for a Permitted Use or any Approved Additional Use.

14. Clause 12 permits the Minister to relocate railway lines and recognises the Minister's power under s 36 of the RFS Act to designate the land on which the new line is situated as Corridor Land. In that event, the terms of the Land Use Agreement apply to the land on which the new line is constructed and cease to apply to the land on which the old line was constructed.

15. Clause 14.2 enables the Minister to enter upon Corridor Land to exercise certain rights and powers without notice in an emergency or otherwise upon five days prior written notice.  Clause 23 is the default and termination clause.

16. The BSA and the Land Use Agreements are part of a package. As noted earlier, the Land Use Agreements were an annexure to the BSA and completion of the BSA was conditional on their execution. However, the BSA, which is the s 13 agreement giving effect to the approved proposal, does not itself dispose of Corridor Land or the Leased Railway Infrastructure. The Freight Terminals and Staff Houses referred to in Schedule 3 of the Land Use Agreements (and cl 16 of the BSA) are not part of the Corridor Land by virtue of s 7 of the RFS Act.

17. Whether or not the Rail Corridor Minister's entry into the Land Use Agreements was pursuant to s 43 of the RFS Act, it is clear enough that he was exercising his s 42 functions to effect the disposals in the Land Use Agreements.

The appellant's first proposition - scope of the disposal power in s 42

1. With one significant qualification, the appellant accepts that the Rail Corridor Minister has the power to confer a contractual licence of corridor land under s 42(1)(c) of the RFS Act. The qualification is that there is no power to confer a contractual licence of corridor land associated with a s 13 agreement giving effect to an approved proposal to dispose of the Commission's rail freight business.

2. The appellant also contends that the Rail Corridor Minister's power to dispose of an interest in corridor land under s 42(1)(a) is necessarily a sui generis statutory power because the Rail Corridor Minister is not the owner of the land. That is, the disposal of an interest in corridor land under s 42(1)(a) is not an interest of a kind known to the general law.

3. I am not persuaded of the correctness of that proposition. Unless s 44 applies, the Rail Corridor Minister has by virtue of s 42 and s 43 the power and authority on behalf of the owner of the relevant property (the State) to dispose of an interest in it under the general law. On any view, that includes the authority to grant a general law lease of corridor land (subject to the qualifications in s 42(1)(a)).

4. Under the general law, a mere contractual licence (in contrast to a licence coupled with a grant) does not give rise to or create a proprietary interest in the land the subject of the licence.  Accordingly, it does not bind third parties.  So for example, if the owner of land the subject of a contractual licence sells or leases the land to a third party, the new owner or lessee of the land takes it free of the rights of the contractual licensee.  The only relevant property owned by a contractual licensee is the contractual chose in action, only the benefits of which (not the burdens) can be assigned. 

5. I turn now to the meaning of the expression 'dispose of' which features prominently throughout the RFS Act. To 'dispose of' in its natural and ordinary meaning is to alienate, pass to another, get rid of by any means including sale, transfer, assignment, gift, novation or otherwise. That is clearly its primary meaning when used in connection with the legislative objective of the disposal of the Commission's rail freight business.

6. However, it is unequivocally clear, in particular from s 5, s 12(2) and s 42(1)(a) that 'dispose of' also includes the creation of an interest in property that involves the State remaining the owner of it. 

7. The statutory maximum extent of any interest in corridor land is a leasehold interest for a term of not more than 50 years. The central issue is whether there is a legislative intention requiring that a disposal under s 42(1)(a) be of a proprietary interest in corridor land as a statutory minimum.

8. The expression 'dispose of' is wide enough to include the creation of rights in respect of property, including contractual rights.  However, it would not include contractual rights for limited purposes such as, for example, repair or maintenance works.  It is unnecessary to identify its minimum scope for the determination of this appeal.  On any view, the Land Use Agreements effected a disposal of non‑proprietary contractual rights in corridor land.

9. The appellant contends that the terms and expressions in the RFS Act do not sit comfortably with the notion that a conferral of non‑proprietary contractual rights is the disposal of an 'interest'. Particular reliance is placed on:

   (i)the word 'interest' in the expressions 'interest in corridor land' and 'leasehold interest' in s 42(1)(a);

   (ii)the word 'interest' in the expression 'interest to be disposed of is greater than a leasehold interest' in s 12(2);

   (iii)the words 'conveyed' in s 5 and 'convey' in s 44;

   (iv)the expression 'holder of the land' in s 5 and s 12(6) and 'holding the land' in s 13(2);

   (v)the expressions 'interest in corridor land' in s 42(1)(a), s 49(1) and s 58(1).

10. It can be accepted that the language in question is ordinarily used in the context of land and a proprietary interest in land:  Mullane v Mullane (1983) 158 CLR 436, 445. However, the terms 'convey' and 'holder' are also used in the RFS Act to apply to the myriad of other forms of property included in the Commission's rail freight business. For example, the Commission was the holder of contractual access rights and those contracts were novated under the BSA.

11. The approach in the RFS Act is to use 'one size fits all' language to cover all types of property, including mere contractual rights. The clearest example of this is in s 5 in which the language is not intended to be used in any technical sense. The central issue is whether the words 'interest' and 'interest in' in relation to land are used in a technical sense.

12. The technical meaning of 'an interest in land' is a property right in land that is not an estate. That is inevitably the meaning of interest in the familiar compound statutory expression 'an estate or interest in land'. In the absence of a reference to 'estate' in s 42(1)(a) and s 12(2), the term 'interest' can have a wider non‑technical meaning. On balance, I am satisfied that in the RFS Act 'an interest in corridor land' is used in a non‑technical sense to include contractual as well as property rights in relation to land.

13. A non‑technical meaning of 'interest' is consistent with the purpose of the RFS Act. The manifest intention of the statute is that where the disposal of corridor land is for a fixed term (as distinct from terminable on notice) the full right, title and interest in the land reverts to the State at the expiration of 50 years. That intention would be defeated if a contractual licence for a fixed term was not a disposal of land under s 12 and a disposal of an interest in land under s 42(1)(a). As previously noted, the limitations in s 42(1)(a) do not apply to the exercise of the Rail Corridor Minister's power in s 42(1)(c) of the RFS Act. Moreover, if s 12(1) did not apply to the grant of a contractual licence the restrictions in s 12(3) ‑ (9) would be avoided.

1. The State contends that such obviously unintended outcomes are to be avoided by denying to the Act Minister and the Rail Corridor Minister the power or authority to enter into a contractual licence of corridor land, at least in connection with a proposal under pt 2 of the RFS Act. Such an outcome would constitute an unjustified and undesirable restriction on the scope of the pt 2 disposal power which, as I have previously noted, is intended to have a wide and flexible operation and is linked with the powers in pt 3.

2. Indeed, s 8(1) of the RFS Act expressly recognises that the conferral of a right to occupy or possess land can constitute a disposal. Thus, the disposal of rights falling short of a proprietary interest in relation to non‑corridor land is within the Act Minister's power in pt 2 of the RFS Act. The Act Minister also has the power under pt 2 to enter into an agreement under s 13 for the disposal of rights in relation to corridor land. That is made unequivocally clear in s 43. There is no restriction (minimum or maximum) on the scope of the disposal power in relation to land designated as non‑corridor land under s 12 and pt 3 of the Act. The imposition of a maximum limit on the scope of the disposal power in relation to corridor land does not justify the imposition of a minimum requirement of a proprietary interest. As is evident in the case law (Radaich v Smith (1959) 101 CLR 209) there can be significant grey areas involving fine judgment calls as to whether an instrument creates a lease or licence. A right to exclusive possession is the hallmark of a lease.

3. Moreover, the disposal of a proprietary interest is not necessary to meet the express purpose of the power in s 42(1) which is to facilitate the use of corridor land for the carriage of freight by rail and other compatible purposes. On the other hand, to confine the disposal of land in s 12(1) to the disposal of a proprietary interest in land would avoid the important restrictions in s 12 and s 13(2).

4. A further indication that the disposal of an interest in land includes contractual rights over corridor land is the fact that the RFS Act contemplates that there will be multiple users of corridor land (s 48(2)(a), s 11(2)(c)).

5. The obviously unintended outcomes referred to by the State can and should be avoided by construing the general powers in s 42(1)(c) and s 42(4) as subject to the specific power in s 42(1)(a). That is, s 42(1)(a) covers the field in relation to disposals within its scope. Accordingly, s 42(1)(a) is the sole source of the power to dispose of an interest in corridor land, contractual or proprietary. The appellant's first proposition must fail.

6. For these reasons, I would dismiss ground of appeal 1, 2(a), 2(b) and 2(c) and uphold the respondents' notice of contention 1(a).

The appellant's alternative basis - Interpretation Act

1. The alternative basis accepts that the Land Use Agreements only give rise to a contractual licence over the Corridor Land.

2. The term 'land' is defined in pt IIIBA of the Stamp Act, s 76 to include, relevantly, any estate or interest in land. As previously noted, s 5 of the Interpretation Act defines 'estate' in relation to land to include 'any legal or equitable estate or interest, easement, right, title, claim, demand, charge, lien, or encumbrance in, over, to, or in respect of the land'. 

3. The appellant contends that the contractual licensee rights under the Land Use Agreements are 'rights over or in respect of land'.  It is not suggested that the Land Use Agreements were a 'claim' or 'demand', those terms being consistent with the common law of dower which encompassed a wife's right in relation to lands owned or alienated by her husband during his lifetime which constituted a proprietary interest:  Marshall v Smith (1907) 4 CLR 1617.

4. In Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216, the court considered whether a temporary reserve under the Mining Act 1904 (WA) was an estate or interest in land. Reliance was placed on the extended definition in s 7 of the Property Law Act 1969 (WA) (PLA) which defines land to include 'an easement, right, privilege or benefit in, over or derived from the land'. The court said:

   [T]he words 'right, privilege or benefit' in the definition of land in the PLA are to be read ejusdem generis with the word 'easement'.  An easement, which is an interest in land at common law, is classically defined as 'a privilege … without profit' … Both easements and profits a prendre, which are also interests in land, are commonly described as 'rights' over another person's land such as rights of way, rights of light, rights of water and rights to dig gravel, cut turf and to take game or fish:  Harpum, Bridge & Dixon, Megarry and Wade:  The Law of Real Property (2008) [27-001].

   The expression 'right, privilege or benefit' in s 7 of the PLA should be construed narrowly to cover the myriad of rights that give rise to an interest in land at common law … The narrow construction is consistent with the approach to similar legislation in New South Wales (Hornsby Council v Roads and Traffic Authority of NSW (1997) 41 NSWLR 151, 155) and in England: Lewisham Borough Council v Maloney [1948] 1 KB 50, 57 ‑ 58; Shiloh Spinners Ltd v Harding [1973] AC 691, 720. See also CV Davidge, 'Equitable Easements' (1937) 53 Law Quarterly Review 259, 263 [70] ‑ [71].

5. The appellant distinguishes Hancock on the grounds that first, the definition in the Interpretation Act is materially different from the definition in the PLA; second, the definition was applied to the word land in the PLA itself; and thirdly, it is to be expected that the definition of land in the PLA would be confined to proprietary interests.

6. The appellant sought to support his construction by reference to three cases, Stow v Mineral Holdings (Australia) Pty Ltd (1979) 180 CLR 295, Hornsby Council v Roads and Traffic Authority of NSW (1997) 41 NSWLR 151, and Sorrento Medical Service Pty Ltd v Chief Executive, Department of Main Roads [2007] QCA 73; [2007] 2 Qd R 373.

7. The High Court in Stow considered the meaning of 'estate' in the Acts Interpretation Act 1931 (Tas) which is in the same terms as the Western Australian definition. Aickin J said:

   The word 'right' in that definition … means an individual right of a proprietary nature and I do not think that the word 'demand' in this context has any more extended meaning.  In my opinion the ordinary meaning of the compound expression 'estate or interest in land' is an estate or interest of a proprietary nature in the land.  This would include legal and equitable estates and interests, eg, a freehold or a leasehold estate, or incorporeal interests such as easements, profits a prendre, all such interests being held by persons in their individual capacity (311).

8. This construction was adopted by the High Court in The Queen v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327, 342, 351. On my reading of the passage in Stow, it is consistent with the narrow approach to construction taken in Hancock.  Hornsby is to similar effect. 

9. In Sorrento Medical Service, a majority of the Queensland Court of Appeal held that the holder of car parking rights under a contractual licence was entitled to claim compensation under the Acquisition of Land Act 1967 (Qld) because it was a 'right, power or privilege over, or in relation to, land'. That outcome is consistent with other cases construing legislation relating to compensation for the compulsory resumption of land or an interest in land. See Hancock [66] ‑ [68].

10. The function of a statutory definition, including those in the Interpretation Act, is to provide an aid in construing a statute. The proper course is to read the words of the definition into the relevant provision and then construe the latter:  Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27, Epic Energy (Pilbara Pipeline) Pty Ltd v Commissioner of State Revenue [2011] WASCA 228 [42]. That is, the meaning of the definitions in the Interpretation Act draw their content from the context of the statute into which they are inserted.

11. The Interpretation Act definition of 'estate', incorporated in and forming part of the definition of land in s 76 of the Stamp Act, is to be construed in the context of s 76AP(2) of the Stamp Act. Section 76AP(2) relevantly provides:

    (2)A corporation is a land‑holder for the purposes of this Division if at the time of a relevant acquisition ‑ 

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

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

12. The language of s 76AP(2), including 'land‑holder', 'land' in its corporeal sense, 'freehold' and 'lesser estate' strongly points to land and property rights in land. The context demands that the word 'estate' as defined be narrowly construed to require that the rights be proprietary in character. I would dismiss ground 2(d).

Whether the Leased Railway Infrastructure is fixed to the land

1. This issue does not arise for determination because both parties accept that a thing can only be 'fixed' if the land to which it is fixed is land to which the relevant corporation is beneficially entitled:  Epic Energy.  However, I will deal with it for the sake of completeness.  The only issue in dispute relates to Track Infrastructure.

2. At the material time, s 76(1) of the Stamp Act relevantly provided that land included:

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

3. The meaning of the word 'fixed' was not directly in issue in Epic Energy, the parties agreeing that the expression 'anything fixed to the land' was not confined to things that would constitute a fixture under the general law.

4. The Tribunal's findings relating to the Track Infrastructure include, relevantly:

   [F]astenings, and other components, used for the interface between the sleeper and the rail are collectively called 'jewellery'.  Those components include bolts, joint bars, clips and other devices to keep the rail secure.

   The sleepers are held in place by the ballast through friction applied due to their own weight, the rails' weight and the weight of the train on the bottom of the sleepers, and due to the ballast friction on the sides and ends of the sleeper.  The ballast sits on top of … capping [ie sub‑ballast] which in turn sits on top of the earthworks.  The sharp edges of the crushed rock ballast penetrate the surface of the sleeper and stop it moving.  For steel sleepers, the shape of the sleeper, and an inverted 'U', with ballast in the void, stops the sleeper from moving [116] ‑ [117].

5. The Tribunal concluded:

   The track infrastructure is attached to the land by its own weight, albeit that the ballast and fixing of rails to sleepers provides a firm connection between the infrastructure and the land [133].

6. The Tribunal found that the Track Infrastructure was not a 'fixture' at common law [136]. Although the appellant challenges that finding, it is not critical to the outcome of the case.

7. In its ordinary meaning 'fixed' means attached or placed so as to be immovable. That carries with it the notion of continuity or permanence as distinct from having a temporary or short‑term function. For the purpose of s 76AP(2), the focus is on the nature and extent of the physical connection between the thing and the relevant land.

1. The Track Infrastructure comprises ballast, sleepers and rails. Only the rails and sleepers are fastened to each other. However, together they constitute a railway line which, by virtue of the combined weight of its constituent parts is immovable and will remain so for the life of the railway line which is for an indefinite period. It must be immovable on the land on which it is placed in order to be suitable for its intended function and purpose which is to safely carry freight and passenger trains. The Track Infrastructure is fixed for the purpose of s 76AP(2) notwithstanding the fact that the Minister and Network Lessees have the power to move it if necessary. I would uphold ground 2(e).

Conclusion

1. The appeal should be dismissed.

2. PULLIN & NEWNES JJA:  This is an appeal which concerns a duty assessment notice issued by the appellant which required the respondents to pay stamp duty of approximately $71 million.  The respondents objected to the assessment.  The appellant disallowed the objection.

3. The respondents applied to the State Administrative Tribunal (Tribunal) seeking a review of the appellant's decision.  The Tribunal reviewed the decision and ordered that the appellant's decision should be set aside and the respondents' objection upheld.  The Tribunal made orders directing the appellant to issue a nil duty assessment and refund the duty which had been paid.

4. This is an appeal by the appellant against the Tribunal's decision.

Assessment in relation to Share Sale Agreement

1. The assessment of duty was made in relation to a Share Sale Agreement, whereby the then owners of the shares agreed to transfer all of the shares in the first respondent to the second respondent.

2. The assessment was made under s 76AP(2) of pt IIIBA of the Stamp Act 1921 (WA) (Stamp Act), which reads:

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

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

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

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

Assessment depended upon the first respondent being a landholder

1. Whether the stamp duty was payable depends on whether the first respondent was entitled to land for the purposes of s 76AP(2).

2. For the purposes of the proceedings the parties identified and agreed the property to which the first respondent was relevantly entitled and agreed its value. The parties were in dispute about three components of the property. As to the three components, if each was 'land' within the meaning of s 76AP(2), then the duty was payable. If any one of the three components was not 'land', then the value of all 'land' was less than 60% of the value of all property to which the first respondent was entitled and duty was not payable.

The value of all property and the components in dispute

1. The Tribunal in WestNet Rail Holdings No 1 Pty Ltd and Commissioner of State Revenue [2012] WASAT 45 said:

   As to the property to which WestNet was entitled as at the date of the acquisition, the parties agree that:

   •The total value of all relevant property was $1,479,791,427;

   •$448,221,427 of that total value relates to property that was not 'land';

   •$109,812,000 of that total value relates to 'land'; and

   •The remainder of the total value of property, to which WestNet was entitled, namely $921,758,000, is split between three components. The parties disagree as to whether these components constituted 'land' for the purposes of s 76(1).

   The three components in question and their agreed values are:

   •the rights of WestNet SG and WestNet NG (both wholly owned subsidiaries of WestNet) under the Land Use Agreements to use the Corridor Land - agreed value $200,000,000;

   •that part of the 'Leased Railway Infrastructure', leased to WestNet SG and WestNet NG under the Land Use Agreements, that constituted 'Track Infrastructure' (as defined in para 2.4(e) of the statement of agreed facts, issues and documents) - agreed value $458,333,000; and

   •the balance of the 'Leased Railway Infrastructure', leased to WestNet SG and WestNet NG under the Land Use Agreements, ie that which did not constitute 'Track Infrastructure' - agreed value $263,425,000.

   In light of the 60% requirement in s 76AP(2) and the agreed values described above, it is only if it is found that all three of these components constituted 'land' to which WestNet was entitled, that WestNet will have been a 'land-holder' and the applicants will be liable for the assessed stamp duty.

   In other words, if it is found that any one of the three components did not constitute 'land' to which WestNet was entitled, the assessed stamp duty is not payable.  So much is common ground [11] ‑ [14].

The background - the government decision to privatise the rail freight system

1. In the late 1800s, narrow gauge railways were constructed in Western Australia.  In the 1960s, a standard gauge railway was also constructed.  Up until 2000, the narrow gauge network, the standard gauge network and other railway related assets were vested in a minister of State as a body corporate.  The railway became part of the narrow gauge network or the standard gauge network upon being so declared by notice in the Government Gazette under the Government Railways Act 1904 (WA) (GR Act). Under the GR Act all government railways, which included all land on which the railway was constructed, vested in a minister as a body corporate. The GR Act provided for a Commission to have the management, maintenance and control of government railways. The effect of vesting of government railways land converted the Crown's radical title to full dominion over the land: The State of Western Australia v Ward [2002] HCA 28; (2002) 213 CLR 1, [384]. The administration of the GR Act was vested in the Commission.

2. In 2000, the government decided to privatise the railway freight system and did this via the Rail Freight System Act 2000 (WA).

Rail Freight System Act 2000 (WA) (RFS Act)

1. On 8 June 2000, the RFS Act came into effect.

2. The RFS Act in its preamble stated that the Act was to provide for:

   •the disposal of the rail freight business of the Commission and things associated with that business, and the assignment of things to give effect to a disposal; and

   •the identification of railway land corridors and the creation of a State agency to manage them.

3. The relevant provisions of the RFS Act are set out in the Tribunal's reasons and in the President's reasons.

4. What is evident from the RFS Act provisions is that various ministers and instrumentalities were involved in effecting the transfer or creation of property rights to a private owner. Two ministers who played important roles were the minister responsible for the administration of the RFS Act (the Act Minister) and the 'Rail Corridor Minister'. The Rail Corridor Minister was a minister appointed under s 32(1) of the RFS Act by the Governor. The Minister was to be a body corporate named the 'Rail Corridor Minister' with perpetual succession and a common seal. The Commission and various other relevant officials also had functions to perform to facilitate the privatisation process.

5. In broad terms, the RFS Act contemplated a process whereby the Act Minister was to prepare and submit to the Treasurer a proposal to dispose of the Commission's rail freight business and anything associated with that business in whole or in part (s 11(1)). The Treasurer was not authorised to approve a disposal of land until a 'corridor land order' had been published in the Government Gazette under pt 3 of the RFS Act (s 12(1)). Any proposal to dispose of land 'that is, or is to be, corridor land' could not be approved by the Treasurer if the interest to be disposed of was greater than a leasehold interest (s 12(2)). Once the proposal was approved by the Treasurer, the Act Minister was then authorised to enter into an agreement on behalf of the State to give effect to the proposal (s 13(1)).

1. Part 3 of the RFS Act related to railway corridors. Under this part, the Act Minister was authorised to, by order, notice of which was to be published in the Government Gazette, 'designate government railway land identified by the order as corridor land or land other than corridor land' (s 34).

2. Division 3 of pt 3 of the RFS Act was then concerned with dealings with corridor land and things on corridor land. By the functions stated in s 42(1), the Rail Corridor Minister was authorised, 'for the purposes of facilitating the use of corridor land for the carriage of freight by rail or for any other purpose that is compatible with that use', to 'dispose of an interest in corridor land' (s 42(1)(a)), to manage or do 'anything else in relation to corridor land' (s 42(1)(c)), and 'without limiting what else the Rail Corridor Minister may do', do 'anything' the Act Minister or the Commission could have done had the land not become corridor land (s 42(4)). Section 42 is set out in the President's reasons. The power to perform the functions in s 42 was conferred by s 43.

The steps taken to privatise

1. On 27 October 2000, the Rail Corridor Minister published an order under s 34 of the RFS Act which identified government railway land consisting of the narrow gauge network and the standard gauge network as corridor land.

2. On 30 October 2000, the Act Minister and other parties entered into an agreement with private companies, including the first respondent, for the sale of assets and the assumption of liabilities relating to the business of carrying goods by rail and road conducted by the Commission under the GR Act.  The relevant private companies were called the 'Network Lessees' and the agreement was called the 'Business Sale Agreement'.  The Business Sale Agreement involved the sale of goodwill, plant and equipment, and other property.

3. The Business Sale Agreement did not involve an agreement to sell or otherwise deal with the corridor land or the 'Leased Railway Infrastructure' as defined in the Land Use Agreements referred to in the next paragraph.  However, upon completion, the Hon Murray Criddle, who was both the Act Minister and the Rail Corridor Minister, agreed to deliver to the purchaser the Land Use Agreements (cl 4.2(a)(vi)).

4. Also on 30 October 2000, the Rail Corridor Minister and others entered into two 'Land Use Agreements' with subsidiaries of the first respondent.  The first was the Land Use Agreement relating to the narrow gauge network and the other was the Land Use Agreement relating to the standard gauge network.

5. The Land Use Agreements contained the following important clauses.

6. Clause 2.1 read:

   The [Rail Corridor] Minister grants the Network Lessee, and the Network Lessee accepts, a right to use and occupy the Corridor Land for [49 years] on the terms and conditions of this agreement.

7. Clause 4.1 read:

   This agreement confers on the Network Lessee:

   (a)… the right to the exclusion of the State, the Commission and any other person to use the Corridor Land and Leased Railway Infrastructure for Permitted Uses and any Approved Additional Uses …

8. Clause 4.3 read:

   …this agreement is not intended to create any proprietary interest in favour of the Network Lessee in the Corridor Land and the rights of the Network Lessee in respect of the Corridor Land are intended to be contractual only.

9. In view of cl 4.3, it is a little surprising that the appellant submits that the Land Use Agreements created a proprietary interest in favour of the subsidiaries and that rights in respect of the corridor land were not merely contractual rights.  However, that is the appellant's submission.

10. There were other clauses in the Land Use Agreements which made it clear that the Minister was authorised to build structures over the corridor land, and structures under the corridor land, to install and maintain services along, across or otherwise through the corridor land, and to construct new railway infrastructure on the corridor land, or to allow others to do so.  If there was interference with the Network Lessee's use of the land, there was a provision for payment of compensation.

The agreement that the Land Use Agreements were not leases

1. The parties agreed in this court that neither Land Use Agreement conferred on the Network Lessee, or any other person, a right to exclusive possession of the corridor land or any part of it, and did not create a lease at common law of the corridor land. The parties similarly agreed in those terms before the Tribunal. See the Tribunal's reasons [50].

2. If there were no proprietary interests created by the Land Use Agreements, then there is no doubt, subject to an argument by the appellant about the effect of the Interpretation Act 1984 (WA), that the right of the Network Lessee to use the corridor land was not 'land', which will mean that the first of the three components in dispute is not land, and the appeal must fail.

3. The appellant, in its appeal, rightly points out that the Land Use Agreements must be construed in the context of the RFS Act. In effect, the appellant argues that the RFS Act did not authorise the Rail Corridor Minister to grant a contractual licence to use the corridor land, and that the rights granted under the Land Use Agreements were sui generis proprietary rights, notwithstanding cl 4.3 of the Land Use Agreements.

The appellant's submissions in the Tribunal concerning the corridor land

1. The appellant submitted in the Tribunal that the Network Lessees had a proprietary interest in the corridor land as a result of the Land Use Agreements:  see [89] ‑ [90].

2. The parties in the Tribunal agreed that the issue was whether s 42 of the RFS Act authorised the Rail Corridor Minister to grant a contractual licence over the corridor land, such contractual licence being less than a proprietary interest in land: see [60] ‑ [61].

The Tribunal's decision regarding the corridor land

1. The Tribunal decided that s 42(1)(a) was 'concerned with the disposal of interests in land in the sense that that expression is usually understood; that is, the disposal of proprietary interests', but that s 42(1)(c) or s 42(4) of the RFS Act conferred power to grant contractual rights as opposed to proprietary rights in the corridor land. This was explained by the Tribunal in [67] ‑ [74], which read as follows:

   The applicants argue that s 42(1)(a) empowers the Minister to dispose of rights which fall short of a propriety [sic] interest. They argue that the word 'interest' is capable of a broad meaning, and refer to Commissioner of Stamp Duties (Q.) v Livingston (1964) 112 CLR 12 at 22 and Gartside v Inland Revenue Commissioners (1968) AC 553 at 617, both of which were referred to in the joint judgment in CPT Custodian Pty Ltd v Commissioner of State Revenue(Vic) (2005) 224 CLR 98 at [31]. In my view, however, those cases do not assist in properly construing s 42(1)(a) of the RFS Act. In my view, s 42(1)(a) is concerned with the disposal of interests in land in the sense that that expression is usually understood; that is, the disposal of propriety [sic] interests - see for example Mullane v Mullane (1983) 158 CLR 436 at 445.

   The applicants contend that a broader construction of s 42(1)(a) better serves attainment of the main purpose of the RFS Act, namely the disposal of the State's rail freight business. They submit that achievement of that purpose does not necessarily require the disposal of a propriety [sic] interest in Corridor Land. Furthermore, they note that s 8(1) of the RFS Act contemplates disposal of things which are part of a government railway, thus necessarily including things which are not land. Therefore, they argue, the use of the word 'dispose' in s 42(1)(a) should not be limited to disposal of an interest in land in the normal sense of that expression.

   I accept that the purpose of the RFS Act does not necessarily require the disposal of interests in land. In my view, however, the necessary flexibility is achieved through s 42(1)(c), and in particular it is open to the Minister, utilising the power conferred by that paragraph, to grant rights in respect of Corridor Land falling short of interests in Corridor Land.

   The respondent submits that the reference to 'anything else' found in s 42(1)(c)(i) means anything other than that which can be done under s 42(1)(a) or s 42(1)(b). He argues that, in circumstances where s 42(1)(a) confers a specific power to dispose of an interest in Corridor Land subject to specific limitations (i.e. the interest must be no greater than a leasehold interest and for no longer than 50 years), and s 42(1)(b) confers a specific power to dispose of an interest in things on Corridor Land, the general power in s 42(1)(c)(i) must by necessary implication be read down so as not to circumvent or deal with the same subject matter as s 42(1)(a) or s 42(1)(b). In support of that argument, the respondent refers to Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 at 678 where Mason J (with whom Barwick CJ and Aickin J agreed) observed that, when a statute confers both a general power, not subject to limitations and qualifications, and a special power, subject to limitations and qualifications, the general power cannot be exercised to do that which is the subject of the special power.

   The limitation to which the respondent refers is a limitation that prevents the grant of an interest in land greater than a leasehold interest for up to 50 years. In other words, s 42(1)(a) prescribes the maximum interest that might be granted in Corridor Land. There is no reason to read s 42(1)(a) as imposing a minimum limit on the grant of rights in relation to Corridor Land, namely that the rights must, at a minimum, constitute a proprietary interest. I accept that, in 'generally managing and doing anything else in relation to Corridor Land' it would not be open to the Minister to grant an interest in land which exceeded the limitation contained in s 42(1)(a). To 'do anything else in relation to Corridor Land' by granting purely contractual rights in respect to Corridor Land is, in my view, clearly within the power conferred by s 42(1)(c)(i). To do so in no way conflicts with the limitation on the extent of the interest in land which might be disposed of under s 42(1)(a).

   Nor is there any basis to read s 42(1)(a), or indeed any of the other provisions of the RFS Act which deal with or touch upon disposal of interests in land, as creating a requirement that, in disposing of the rail freight business, the Minister must dispose of interests in land.

   The applicants also contend that the power to grant contractual rights over Corridor Land is found in s 42(4) of the RFS Act. The respondent argued that s 42(4) is subject to the same limitation as s 42(1)(c)(i). For the same reason that the limitation against a maximum interest in Corridor Land does not limit the capacity to grant contractual rights pursuant to s 42(1)(c)(i), it does not limit the power of the Minister to grant contractual rights pursuant to s 42(4).

   The grant of contractual rights in relation to the Corridor Land, which do not amount to an interest in that land, is open to the Minister pursuant to either s 42(1)(c)(i) or s 42(4). Accordingly, the answer to sub­issue 5.2(a)(1) is yes.

The appellant's grounds of appeal concerning the Tribunal's decision about the corridor land

1. The appellant's grounds of appeal allege error by the Tribunal on the basis that the Tribunal erred in concluding that s 42(1)(c)(i) or s 42(4) authorised the Rail Corridor Minister to grant a contractual licence to use and occupy the corridor land.

The respondents' notice of contention concerning the corridor land

1. The respondents seek to uphold the Tribunal's orders by contending that the Tribunal erred in law in holding that s 42(1)(a) only empowered the Rail Corridor Minister to dispose of proprietary interests in the corridor land. The respondents contend that s 42(1)(a) did empower the Rail Corridor Minister to dispose of rights falling short of a proprietary interest. It is appropriate to deal with the notice of contention before turning to the appellant's grounds of appeal.

The respondents' submissions in support of the notice of contention

1. The respondents submit that the Tribunal erred in rejecting the submission they had made in the Tribunal that, on a proper construction of the RFS Act, s 42(1)(a) authorises the disposal of interests which are not of a proprietary character: see the Tribunal's reasons [67]. The respondents submitted that there were many reasons why, on a proper construction of s 42(1)(a), the disposal or conferral of contractual rights or interests in relation to corridor land was authorised.

2. The respondents' submissions run as follows:

   (a)section 42(1)(a) assumes that an interest in corridor land, other than a leasehold interest, may be disposed of. If the RFS Act intended that only a proprietary interest in land could be disposed of, and especially if it intended that a novel form of statutory interest could be disposed of, it is to be expected that this would have been expressly stated and the nature of the interest spelled out;

   (b)section 42(1)(a) imposes a limit as to the maximum interest in land which may be granted, but does not, in any respect, specify the minimum interest which may be granted;

   (c)neither the verb 'to dispose' nor the noun 'interest' necessarily manifests an intention to refer only to proprietary interests and, in relation to the verb 'to dispose', it is an expression apt to denote either an act of alienation or creation of a new interest in property:  Henty House Pty Ltd v Federal Commissioner of Taxation (1953) 88 CLR 141, 156;

   (d)the respondents accept (as does the appellant) that the word 'interest' will often mean a proprietary interest (Mullane v Mullane [1983] HCA 4; (1983) 158 CLR 436, 445), but say that the word must be considered and construed in the particular context in which it appears, taking due account of the text, context, subject matter and purpose of the relevant act;

   (e)the breadth of meaning of the reference to 'disposal' in s 42(1)(a) appears from s 8(1) and s 5;

   (f)there is considerable significance in the fact that the word 'interest' is not coupled with the word 'estate', which would colour the meaning of the word interest 'by association' and give it a 'proprietary connotation':  Stow v Mineral Holdings (Australia) Pty Ltd [1979] HCA 30; (1979) 180 CLR 295, 311 ‑ 312, The Queen v Toohey; Ex parte Meneling Station Pty Ltd [1982] HCA 69; (1982) 158 CLR 327, 342; Bacon v O'Dea (1989) 25 FCR 495, 507;

   (g)all of the powers conferred in s 42(1), including those in s 42(1)(a), are conferred for the purpose of facilitating the use of corridor land for the carriage of freight by rail or for any other purpose that is compatible with that use. It is not necessary to dispose of a proprietary interest in order to attain those purposes (a contractual licence will suffice);

   (h)even though s 42(1)(a) contemplates the disposal of a leasehold interest in corridor land, which confers exclusive possession, the permitted use or uses of the land available to a lessee are confined by the opening words of s 42(1). The limited nature of those specified uses is not consistent with an intention to permit only a conferral of exclusive possession or of some other proprietary right as the means of facilitating such uses.

The disposition of the notice of contention

1. It may be accepted, as the respondents submit, that the word 'interest' has a wide meaning, not always signifying a proprietary interest.  However, when the word 'interest' refers to and is coupled with the word 'land' ('dispose of an interest in corridor land') it means a right of a proprietary nature; that is, an interest in land (land being property).  In Mullane, Mason ACJ, Wilson, Brennan, Deane and Dawson JJ said (445):

   An interest in property is a right of a proprietary nature, not a mere personal right:  Stow v Mineral Holdings (Aust) Pty Ltd (1977) 51 ALJR 672, 679; R v Toohey; Ex parte Meneling StationPty Ltd(1982) 158 CLR 327, 343, 350 - 351.

2. Mason J said in Meneling Station (345) that there is 'no question' that the phrase 'estate or interest' in its ordinary and natural usage has a proprietary connotation, that no one who has a merely personal right in relation to land can be said to have an 'estate or interest' in that land, and that before a right or interest can be admitted into the category of property or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties and have some degree of permanence or stability:  National Provincial Bank Ltd v Ainsworth [1965] AC 1175, 1247 ‑ 1248. The word 'property' describes a relationship between owner and object by reference to the power of the owner to deal with the object to the exclusion of all others except a joint owner: Yanner v Eaton [1999] HCA 53; (1999) 201 CLR 351 [49]. A contractual licence does not have the attributes that qualify it to be described as an interest in land.

3. The respondents' submission that it was significant that the word 'interest in … land' was used and not the familiar phrase 'estate or interest', is without merit.  The word 'estate' has a definite meaning, and the word 'interest', when referring to an interest 'in' land, is referring, as indicated above, to a proprietary interest which is not an 'estate'.  The expression an 'interest in … land' is well understood in the law to mean an interest of a proprietary nature not amounting to an estate in land.  A contractual licence may give rise to an interest 'in respect of' land, but it cannot properly be described as an interest 'in' land.

4. Nor does any concentration on the verb 'to dispose' help the respondents.  The question is about the meaning of the expression 'interest in Corridor Land'. 

5. It may be accepted, as the respondents submit, that it is not necessary to dispose of a proprietary interest in order to attain the purposes for which s 42(1) powers are conferred. However, this does not overcome the fact that s 42(1)(a) confers only the power to dispose of an interest in corridor land. While a contractual licence may suffice to attain the purposes for which the powers are conferred, a contractual licence is not an interest 'in' land.

6. The respondents' reference to the opening words of s 42(1) does not assist the respondents to overcome the conclusion that s 42(1)(a) only authorises the disposal of interests in land of a proprietary nature.

7. The result is that the respondents' notice of contention must be dismissed. The Tribunal was correct to conclude that s 42(1)(a) only authorises the disposal of interests in land of a proprietary nature and not the creation or disposal of rights via a contractual licence to use corridor land.

The appellant's appeal

1. The appellant submits that the Tribunal erred in concluding that s 42(1)(c) or s 42(4) of the RFS Act authorised the Rail Corridor Minister to grant a contractual licence.

Section 42(1)(c) of the RFS Act

1. The appellant submits that s 42(1)(c) should not be construed as authorising the grant of a contractual licence, as this would 'allow … for the grant of an exclusive contractual licence in perpetuity in relation to the whole of the standard gauge and the narrow gauge network on the basis that neither s 12(2) nor s 42(1)(a) would be engaged': WAB 12 [23]. This submission must be rejected. The restriction on the term of the grant of any proprietary interest in the land to less than 50 years is understandable. The legislature did not want the title to the corridor land to be alienated or interests in it disposed of for periods of more than 50 years. It wanted the freehold to be retained by the State and did not want a proprietary interest (which was assignable) to be greater than a leasehold interest.

2. The grant of a contractual licence did not give rise to a need for restrictions, and left full freehold title to the land in the State. There is no reason to consider, as the appellant submits, that the State intended that there should be a 50 year limit on the term of a contractual licence. As will be seen below, s 42(4) and s 42(1)(c) make it clear there was no such intention. If s 42(1)(c), in conjunction with s 43, authorises the grant of a contractual licence by the Rail Corridor Minister, then there is no restriction on the grant of such a licence.

1. The appellant also submits that, if a contractual licence may be granted under s 42(1)(c), this would circumvent the 'qualifications and limitations' set out in s 12(3) ‑ (8): see WAB 12 ‑ 13 [24]. However, those restrictions relate to proposals to dispose of land, meaning the disposal of a proprietary interest in land. None of those restrictions apply to a contractual licence, which does not involve the disposal of any proprietary interest in the land.

2. Section 42(1)(c), which authorises the Rail Corridor Minister to not only manage the land, but to 'do anything else' in relation to the corridor land 'for the purposes of facilitating the use of corridor land for the carriage of freight by rail', is a very broad power. It does not authorise the disposal of an interest in the land, but it does authorise the grant of a contractual licence.

3. It was quite clear that the parties, by the Land Use Agreements, did not intend to dispose of a proprietary interest in the corridor land, and intended that a contractual licence be granted.  They expressly said so at cl 4.3 of the agreements.

4. The Tribunal's conclusion that s 42(1)(c) authorised the grant of a contractual licence for 49 years was correct, and the appellants ground of appeal contending that this was an error must be dismissed.

Section 42(4) of the RFS Act

1. The Tribunal concluded that s 42(4) also authorised the grant of a contractual licence [74]. That provision (relevantly) is as follows:

   Without limiting what else the Rail Corridor Minister may do, the Rail Corridor Minister may do, in relation to former Government railway land … anything that the Act Minister or the Commission could have done had the land not become corridor land.

2. There is no doubt that, if the Commission had the power to grant a contractual licence, Parliament intended that the Rail Corridor Minister could do likewise. It is clear that the Commission had the power to grant a contractual licence. At the relevant time, s 61 of the GR Act entitled the Commission to enter into an agreement to grant a contractual licence to use, or a lease of, railway land for a period not exceeding 21 years, with power to enter into another agreement when the first agreement came to an end: GR Act, s 61(1) and s 61(2). Therefore, the Rail Corridor Minister had the power under s 42(4) of the RFS Act to grant a contractual licence for 21 years and then renew it. The question is whether s 42(4) limits the term of any contractual licence to 21 years.

3. While s 42(1)(a) of the RFS Act provides that the Rail Corridor Minister may grant a proprietary interest in corridor land that is no greater than a leasehold interest for a term not exceeding 50 years, the RFS Act makes no express provision for the grant of a contractual licence to use corridor land. As described above, such a power falls within the terms of s 42(1)(c)(i), which enables the Rail Corridor Minister do to 'anything else' in relation to corridor land. That 'anything else' includes the power to grant a contractual licence without restriction on the length of the term.

4. Contrary to the submission of the appellant, s 42(4) does not have the effect of limiting the power of the Rail Corridor Minister to grant a contractual licence to the 21 year term permitted under s 61(2) of the GR Act. That submission would be correct if the power to grant a contractual licence was to be found only in s 42(4). It is not; the power to grant a contractual licence is also to be found in s 42(1)(c), and s 42(4) does not operate to limit the scope of s 42(1)(c). The opening words of s 42(4) accept that the words which follow do not limit 'what else' the Rail Corridor Minister may do in relation to former government railway land. The obvious purpose of s 42(4) is to expand the powers of the Rail Corridor Minister, not to limit them. Moreover, the effect of the appellant's submission, if accepted, would be that the Rail Corridor Minister would be entitled to grant a proprietary interest, by way of a leasehold interest, for a term of 50 years but a contractual licence for only 21 years. That could never have been intended by Parliament.

5. However, s 42(4) does not authorise the Rail Corridor Minister to grant a contractual licence for a 49 year term. To that extent, the Tribunal erred.

The appellant's submissions based on the Interpretation Act

1. This aspect of the appellant's submissions accepted for the purpose of argument that the Land Use Agreements only gave rise to a contractual licence over the corridor land. The appellant relied upon the definition of 'land', which appears in s 5 of the Interpretation Act.  The appellant's submission that the contractual licensee rights over the Land Use Agreements were 'rights in, over, to, or in respect of land' or an 'estate' (WAB 16 [39]), must be dismissed for the reasons given by the President.

Whether the leased railway infrastructure was fixed to the land

1. This issue does not arise for determination because both parties accepted that a thing can only be 'fixed' if the land to which it is fixed is land to which the relevant corporation was beneficially entitled. 

The result

1. The result of the Tribunal's correct conclusion that the Rail Corridor Minister was authorised to grant a contractual licence to use the corridor land means that the Land Use Agreements did not create any proprietary interest. The stated intention of the parties in cl 4.3 of the Land Use Agreements not to 'create any proprietary interest in favour of the Network Lessee in the Corridor Land', and that 'the rights of the Network Lessee in respect of the Corridor Land' were 'contractual only', were fulfilled. As a result, the rights of the two subsidiaries of the first respondent under the Land Use Agreements to use the corridor land, did not constitute 'land' within the meaning of 76AP(2) of the Stamp Act. This has the consequence that the value of all land directly or indirectly held by the first respondent was less than 60% of the value of all property held by the first respondent. The Tribunal's decision setting aside the Commissioner's decision, upholding the objection and determining that duty was not payable, was correct.

2. The appeal must be dismissed.