Vicki Aron
Partner •
Sydney
Conexa Case: Is your infrastructure classified as land or goods, and why it matters
4 minutes
The judgment in Conexa has implications that have not yet been fully explored, but the conceptual framework it establishes is important to understand – it is likely to affect many aspects of property law beyond the specific facts of that case.
The rule relating to fixtures is well known. That is, an item that is permanently attached to land is:
owned by the person who owns the land to which the item is attached; and
itself classified as "land".
For example, a pipeline buried in land is deemed to be owned by the owner of the land in which it is buried and the pipeline is itself classified as land.
But what if a statute (or contract) provides for a different result? That is, what if a statute stipulates (or the parties agree) that the item is not owned by the owner of the land to which the item is attached, but instead is owned by another person, for example, the person who installed the item? Does the classification of the item as "land" then also change?
Those were the questions considered by five judges in the NSW Court of Appeal in Conexa Sydney Holdings Pty Ltd v Chief Commissioner of State Revenue [2025] NSWCA 20. The Court held that the classification of the item as "land" remains, even if the item is owned separately from the surrounding land. In making that decision, the Court laid out a conceptual framework for land which will have implications well beyond that case (which concerned stamp duty). It has income tax consequences for foreign residents and may also mean that third parties have greater protections for assets that they own on another person’s land.
Conexa v Chief Commissioner of State Revenue [2025] NSWCA 20
In Conexa, the Court considered whether a piece of infrastructure (in that case a pipeline) that is fixed to the land, but subject to separate ownership, was properly characterised as land or goods. The pipeline was subject to the Water Industry Competition Act 2006 (NSW) (WIC Act). Section 64 of the WIC Act specifies that the person who builds or installs water infrastructure, or anyone who later owns it, owns the infrastructure, even if they don’t own the land on which it is installed.
Section 64 is an example of a provision that is frequently referred to as a statutory severance provision. Such provisions "sever" ownership of an item that is fixed to land, so that the usual rule relating to fixtures does not apply and the owner of the item may be different to the owner of the land to which the item is affixed. There are similar statutory severance provisions in electricity, gas, telecommunications and rail legislation. In all these cases, the legislation provides that the person who installs the infrastructure is also its owner, notwithstanding the rule relating to fixtures.
Parties to a lease or a licence also commonly reach a similar agreement. That is, there is commonly a provision in such an agreement that the lessee or licensee owns the fixtures installed by them on the leased or licensed land (as "tenant's fixtures").
The Court’s reasoning relies on the specific wording of the WIC Act, but more importantly it invoked general law concepts that are applicable beyond the WIC Act.
The Court explained that, under the general law, any item permanently fixed to land is itself "land". However, land is notionally divisible into separate parts and those parts may be owned by separate entities. Strata lots are one example. Therefore, the Court reasoned, infrastructure does not lose its quality as land merely because it is in separate ownership from the land to which it is attached.
This analysis represents a significant departure from recent judgments of Australian courts, which have frequently found that such infrastructure is "goods". For example, in Chief Commissioner of State Revenue v Shell Energy Operations No 2 Pty Ltd [2023] NSWCA 113, the NSW Court of Appeal held that power stations that were vested in the tenant were goods, not land. A different result would now arise in the light of Conexa.
The answer to this abstract question about whether the pipeline was land had stamp duty consequences. Conexa had purchased a company that owned the pipeline. Duty was payable on the value of the pipeline if it was land or goods (but not if it was something else). The Court’s finding that the pipeline was land meant that over $3m in duty was payable. Accordingly, the Chief Commissioner was successful and Conexa was required to pay the duty.
Implications of Conexa
The implications of the Court of Appeal’s judgment in Conexa are not where one might expect.
Stamp duty: Although Conexa was concerned with stamp duty payable on the purchase of companies with large landholdings, the implications of Conexa in that area may be limited. That is because all states have now broadened the definition of "land" in the landholder duty provisions to include anything fixed to the land, regardless of who owns it. In NSW that definition was broadened with effect from 24 June 2020. The combined effect of Conexa and that legislative change is that the acquisition of companies with large holdings of infrastructure may be subject to landholder duty even if the transaction occurred before 24 June 2020 and even if the company did not own the land to which the infrastructure is attached.
Income tax: Justice Hmelnitsky of the NSW Supreme Court recently delivered a speech about the consequences of Conexa. His Honour is the Revenue List judge in the NSW Supreme Court and a former leading tax barrister. Justice Hmelnitsky explained that the judgment in Conexa has important implications for income tax. Under Division 855 of the Income Tax Assessment Act 1997 (Cth) a foreign resident is permitted to disregard a capital gain arising from a capital gains tax event (eg. the disposal of an asset) unless the asset is taxable Australian real property (amongst other things). The effect of Conexa is that foreign residents who own infrastructure but not the land to which the infrastructure is attached may now be required to pay tax on the sale of that infrastructure.
FIRB approval: The effect of Conexa could be that FIRB approval for the acquisition of an interest in Australian land may be required when foreign investors acquire infrastructure without acquiring the land to which the infrastructure is attached (depending upon the value of that infrastructure).
Rights of third parties: The conceptual analysis employed by this judgment may be used by third parties to argue that they have interests in land in circumstances not previously available. Typically, a person who owns an asset fixed to land, but has no other right with respect to the land (such as a lease, easement or mortgage of the land), has no right in the land. That position has now arguably changed. For example, if a landowner were to enter into a sale and leaseback arrangement of a factory to a third party (for example, a financier) without also selling the underlying land to the third party, that factory could be classified as "land" in the light of Conexa. Although, the third party could not be registered as the owner of the factory under the land register without a subdivision, it would seem that the third party would have an interest in the land that would give it the right to lodge a caveat to protect that interest.
The judgment in Conexa has implications that have not yet been fully explored, but the conceptual framework it establishes is important to understand – it is likely to affect many aspects of property law beyond the specific facts of that case.
Stefan Balafoutis SC represented the Chief Commissioner in Conexa.
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Rebecca Wilton
Senior Associate •
Sydney
Stefan Balafoutis SC
Sydney
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