Land law notes

BAGUMA ISHA LLB 2

 

                    Fixtures

• Fixtures are items that have been attached to the land to become part of the land itself
• If land is sold, fixtures pass with the land
• Colegrave v Dias Santos
• If house mortgaged, fixtures are part of mortgagee’s security, whether attached before or after the mortgage
• Meux v Jacobs
• If land is leased or occupied by life tenant and possessor affixes something to the land the tenant will only have limited rights to remove it as it will be considered part of the landlord’s property
• Upon death, fixtures pass to those entitled to the land, not those entitled to the chattels
• Re Whaley

Difference between a chattel and a fixture

• Law used to be that if something was fixed by any means it was a fixture
• Degree of annexation from the land remains a factor, but no longer is as important as once was: Now used as determining intention
• Present rule

Two limbed Test:

1. Purpose of bringing item
2. Degree of annexation

• Holland v Hodgson (1872) LR 7 CP 328

• FACTS
• Owner of mill took out mortgage
• Heavy looms on property, needed to be tied down firmly while they were being used
• Had splayed feet with holes through which spikes were driven
• Although bolted down, easily movable
• Business defaulted on the mortgage, mortgageor claimed the looms
• HELD
• Held to be fixtures
• Brought onto land to enhance mill’s value and usefulness
• Court gave examples
• If landowner builds stone wall consisting merely of a few bricks resting on each other
• Although easily movable, it is a fixture
• If builder stacks a few bricks on top of each other in the shape of a wall until they are used
• Chattels

Whether an item is a fixture or a chattel will depend primarily upon the intention with which the item was put in place

• If item placed on the property for better enjoyment or use of the property then it is a fixture
• If thing was brought onto the property for the better enjoyment of use of the thing itself, then it will be regarded as a chattel
• Leigh v Taylor

Things to consider to determine fixture or chattel:

• Period of time intended to stay
• Indefinite time: probably a fixture
• Temporary purpose: probably chattel
• Degree of fixation
• Damage likely to be caused by removing item
• More damage means likely to be fixture
• Status of person bringing the item
• If short term tenant brings something onto land, likely to be chattel
• Australian Provincial Assurance Co Ltd v Coroneo [1938]
• FACTS
• Question whether chairs in cinema are chattels or fixtures
• Chairs on in place for temporary time
• HELD
• Chairs were chattels

Two prima facie rebuttable presumptions to help determine whether fixture or chattel

• Where the item is affixed to the land it is presumed to be a fixture
• Burden of proof lies with those who assert otherwise
• Where the item is not affixed to the land it is presumed to be a chattel
• Burden of proof lies with those who assert that it is
• Holland v Hodgson(1872) LR 7 CP 328

Rebuttable presumption that where the item is not affixed to the land it is presumed to be a chattel

• Reid v Smith[1906]
• FACTS
• In order to protect against white ants, timber house built so it rested on the surfact of the land without any foundations
• HELD
• Intention obviously that house should be a fixture
• Presumption rebutted

• Permanent Trustees v Esanda (1991)
• FACTS
• Prefabricated house transported in two halves to a nursery to provide accommodation for seasonal workers
• Property mortgaged and repayments defaulted
• HELD
• Chattel - House obviously meant to be transportable

Overall design of house may be relevant

• Gregory’s Case [1866]

·         FACTS

o   Person builds a grand manor house

o   Owner installs marble garden furniture and marble lions resting freely by their own weight

o   Sold property

·         HELD

o   Fixtures – part of the overall design of the house

• Berkley v Poullet (1976)
• FACTS
• Grand old English manor sold
• One room contained great old paintings of families ancestors which hung in recesses which had been crafted to accommodate them
• HELD
• Pictures chattels – not part of the overall design of the house

Relevant intention is Objectively Determined

• Although modern cases suggest looking to actual subjective intention to assist in determining the period of time the item intended to remain in position, and the function to be served by its annexation

Objective intention, gathered from facts that are ‘patent for all to see’

• Hobson v Gorringe [1897]
• FACTS
• Gas cylinder engine leased from a gas company by mill owner
• Gas company says at all times engine is to remain its property
• Mill owner gets mortgage from Gorringe who assumes engine is part of the mill
• Mill owner defaults, Gorringe demands engine
• HELD
• Gorringe gets engine
• Objectively, a reasonable man might presume that the engines were part of the realty

·         Kolim’s Case: Pan Australian Credits v Kolim

• FACTS:
• Owner builds large commercial building which leaves room for air conditioner plant
• Owner leases air conditioner plant
• Owner mortgages property and defaults
• Mortgager unaware that air conditioner not part of the property, and claims the air conditioner
• HELD
• Mortgagor has right to the air conditioner
• Objectively, reasonable man might presume that air conditioner was part of the realty

Right to remove fixtures

• Two categories in which may be a right for tenants to remove fixtures:

1.         Tenant and Landlord

• If tenant brings fixture onto landlord’s property
• Cannot remove items a previous tenant brought onto the land

2.         Life tenant and remainder

• If life tenant brings fixture onto property and affixes it, does it belong to tenant or remainder holder?

Three Stage Test

1. Is it a fixture?
• If not, it is a chattel: tenant always has ownership rights and can remove it anytime they wish
2. If so, how firmly fixed is the fixture

·         If so firmly fixed that it can not be removed without damaging either it or the property it is adjoined to, the fixture becomes a landlord’s fixture and cannot be removed by the tenant

3. If not landlord’s fixture, tenant can remove item if it falls into one of these categories:

·         Trade fixture

·         Domestic or ornamental fixture

·         Underlying policy reason is to encourage tenants to make full use of premises and improve them

Landlord’s Fixture

• Webb v Bevis (1941) All ER 247
• FACTS
• Tenant of field under short term lease built aircraft hanger
• Laid concrete floor and fixed a superstructure deliberately designed to be removable
• HELD
• Superstructure was trade fixture, and thus removable
• Concrete foundations found to be landlord’s fixture due to difficulty in removing them

• Weller v Everitt (1990) 25 VLR 683 (Victoria)
• FACTS
• Blacksmith took lease in house and built extension
• Wanted to remove extension when lease expired
• HELD
• Court refused to authories this as believed that removal would damage both it and the property to which it was attached

Trade fixture

• Webb v Bevis (1941) All ER 247
• FACTS
• Tenant of field under short term lease built aircraft hanger
• Laid concrete floor and fixed a superstructure deliberately designed to be removable
• HELD
• Superstructure was trade fixture, and thus removable
• Concrete foundations found to be landlord’s fixture due to difficulty in removing them

Domestic or Ornamental Fixtures

• Spyder v Phillipson (1931) 2 Ch
• FACTS
• Tenant had 21 year lease on flat in London
• Half-way through lease, tenant installed expensive oak panelling, installed ‘no more securely than necessary’
• HELD
• Could remove it at end of lease, as panelling was there to enhance the realty, and therefore was a chattel not a fixture
• Leigh v Taylor (1912) AC
• FACTS
• Life tenant installed valuable tapestries which are fixed, ‘but no more securely than is necessary’
• HELD
• Held in favour of life tenant’s estate (and against reversionary interest)
• Judges did not make it clear whether this was because they were chattels or ornamental fixtures

Conflict between competing interests:

Mortgagor v Lessor: Legal v Equitable

• Eg in Kolim’s case (Above)
• Lessor has equitable interest to enter land to collect air conditioner
• Mortgagor has legal interest taken for value without notice of lessor’s interest
• Legal interest wins over equitable interest

Protecting hirer:

Mortgagor v Lessor: Equitable v Equitable

• Re Samuel Allen & Sons Ltd [1907] 1 Ch 575
• FACTS
• Hiring arrangement with similar clause to Hobson (ie hired good remains property of hirer)
• However mortgage was only equitable (as opposed to legal)
• HELD:
• Owner (who hired it to the mortgagee) has an equitable interest based upon a contractual right, over the property being mortgaged
• Because later mortgage was only equitable, simple case of competing equitable rights
• First equitable interest prevailed
• Does not matter if the later equitable interest was taken for value and without notice
• Note:
• If under Torrens’ title, it would depend on who had registered the interest

Third Party Interests

Owners of chattels that have become fixtures via there method of attachment may have a right to enter and remove

• Proprietary interest in the land, and is caveatable
• Interest is extinguished upon sale of land to another party

If land has been mortgaged

• Right of removal not available against mortgagor even if fixture for trade, ornamental or domestic purposes
• Re The NSW Co-operative Ice and Cold Storage Co (1891)
• Hobson v Gorringe
• (ME) reason because equitable interest defeated by a later legal interest for value without notice

If landlord leases premises to another tenant after expiration of the lease, but before right to sever and remove fixtures has been exercised

• Former tenant can remove fixtures in two situations
• Right to sever and remove fixtures amounts to a grant of licence via deed (ME: as will be legal interest, first in time)
• Later tenant agrees

If person (B) with an interest in land brings onto land a chattel belonging to another (A), and places it in such a manner that it becomes a fixture

• And then later, the interest in land is passed to a third party (M) (Eg to mortgagee upon default)
• Can A prevent M from selling the item along with the land?
• Between A and B
• A has contractual right to enter and sever the item
• A has a type of equitable interest in the land entitling him to enter and sever
• Equitable interest only exists if the agreement between A and B confers express or implied right to enter
• If no provision, no equitable interest
• Re Samuel Allen
• A reservation of ownership provision does not imply a right to enter
• F & M Horwood v Mark Building Enterprises Pty Ltd (1981)
• Between A and M
• A’s right is not enforceable against M (due to privity of contract)
• Equitable interest will be enforceable if it has priority over M’s interest under general priority rules
• If M’s interest is legal or registered, then A has no power to deny Ms right to deal with the item

Time limits regarding removal of fixtures

• Used to be that had to remove before lease expired, but now:

Tenant entitled to remove fixtures for as long as the tenant remains in possession lawfully

• If tenant surrenders lease (as opposed to it expiring), look to terms of surrender to see if right to remove fixtures remains
• This applies even if lease may have expired, so long as possession is with Landlord’s consent, or under new lease of premises
• New Zealand Government Property Corporation v HM & S Ltd [1982] QB 1145
• Adopted in NSW in
• D’Arcy v Burelli Investments Pty Ltd (1987) NSWLR
• As long as tenant was there under a ‘genuine colour of right as a tenant’, right of removal remains

Qualifications to principle

• Lease itself may state that tenant must remove fixture before lease expires
• If tenant vacates premises before lease expires, tenant must remove fixtures before they leave, because by definition they are no longer in possession