In the recent decision of AWF Prop Co 2 Pty Ltd and Ararat Wind Farm Pty Ltd v Ararat Rural City Council and Valuer General Victoria [2020] VSC 853, the Supreme Court of Victoria ruled in favour of the wind farm owners and determined the various wind farm assets (such as wind turbines) to be chattels rather than fixtures.
The Court held that the wind farm assets were not attached to the land with the objective intention that they become part of it for the following reasons:
The planning permits under which the wind farm was built required the removal of these assets when the wind farm was decommissioned.
The AWF leases require the removal of the assets at the end of the lease.
The wind farm assets were all installed and owned by AWF and were used as security for the construction finance for the wind farm. There is no suggestion that any of the land owners asserts ownership of the assets on their land.
The wind farm assets were all designed in such a way that they could be removed without damaging the land or the assets themselves.
The design and working life of the assets was 25 years which lines up with the term of the leases.
The leases permit AWF to replace and remove the wind farm assets during the lease term.
If removed, the wind farm assets could be re-deployed at another wind farm site or sold on market for second-hand wind farm parts.
The Court noted it to be significant that the assets were on leased land. The parties intended the wind farm assets to remain the property of AWF, and would not become part of the land (fixtures) and hence the property of the land owners.
This is an important decision in relation to determining what is a chattel and what is a fixture. Here, it was relevant for the purpose of determining whether the value of the turbines was counted for land tax but it will also be important for the purpose of determining whether the transfer of an asset triggers, the recently introduced, fixture duty provisions.
To discuss or for further information please contact:
Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au
Laura Spencer
Senior Associate
M +61 436 436 718 | T +61 3 9611 0110
E lspencer@sladen.com.au
Lucy Liang
Lawyer
T +61 9611 0131
E lliang@sladen.com.au
