The New South Wales Court of Appeal has dismissed an appeal against a decision that a pipeline was dutiable for the purposes of the New South Wales landholder duty provisions in Conexa Sydney Holdings Pty Ltd v Chief Commissioner of State Revenue [2025] NSWCA 20. In doing so, the Court of Appeal held that the pipeline was an interest in land.
Legislation
New South Wales imposes landholder duty on the acquisition of interests in companies or unit trusts with land holdings valued at $2 million or more under section 146 of the Duties Act 1997 (NSW) (Duties Act).
If an acquisition is dutiable, duty applies at rates up to 5.5% on the value of the underlying land and goods in New South Wales.
A ‘land holding’ is an interest in land under section 147 of the Duties Act.
Background
SGSP Rosehill Network Pty Ltd owned freehold land, plant and equipment and an underground pipeline constructed to supply recycled water to south-west Sydney. It also held a network operator’s license under the Water Industry Competition Act 2006 (NSW) (the WIC Act).
On 30 September 2019, Conexa Sydney Holdings Pty Ltd acquired 100% of the shares in SGSP Rosehill Network Pty Ltd. On 21 March 2022, the Chief Commissioner assessed it to primary landholder duty of $3,326,497.
Original Decision
On 24 May 2024, the New South Wales Supreme Court held that landholder duty applied to the value of the pipeline in Conexa Sydney Holdings Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 628. Refer to our commentary on the decision here.
The primary judge Richmond J, despite finding that the pipeline was not land nor an interest in land due to statutory severance, held that the pipeline remained an interest in ‘goods’ for the purposes of section 155 of the Duties Act. Whether it was affixed to the land was not relevant as the transaction was prior to the introduction of the expansion of the meaning of land.
As there were sufficient other land assets, Conexa Sydney Holdings Pty Ltd was above the $2 million land value threshold and the share acquisition attracted landholder duty.
Appeal
The issue on appeal was whether the appellant’s interest in the pipeline was an interest in land or goods. Justice Payne JA held that the meaning of ‘land’ depends on the context and purpose of the legislation in which it appears.
He went on to determine that an interest in a pipeline was an interest in the land occupied by the pipeline under section 64(1) of the WIC Act and that this interest was captured by section 155 of the Duties Act. As such the pipeline was subject to landholder duty.
Payne JA therefore reached the same conclusion as Richmond J in the Supreme Court, but not because the pipeline was a ‘good’ (which Payne JA did not disagree with) but rather because the pipeline was an interest in land.
Key Takeaways
Subject to further appeal (if any) this case confirms that a wide variety of assets may be dutiable as interests in land. The actual outcome in any particular matter will turn on the nature of the relevant asset, the legislation governing the asset and the relevant entity’s interest in that asset.
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