Tenants may want to take their furnishings or business equipment to a new property. But they may be in for a nasty shock. By Del Williams.
The question of what amounts to a “fixture” can be of importance in the landlord and tenant sphere and especially so at rent review, lease renewal and in a dilapidations dispute. Guidance on what amounts to a fixture was recently provided by the House of Lords decision in Elitestone Ltd v Morris [7] 27 EG 116. This article reviews this latest guidance in the light of previous authority.
In Elitestone the plaintiffs were the freehold owners of the land which they acquired in 1989 for development purposes. The land in question was divided into 27 plots and the defendant had occupied a wooden bungalow on one of the plots which he had acquired in 1971 for £250.
In return for an annual fee, the agreement (which was described as a licence) permitted the defendant to enter on to the plot and “keep thereon a bungalow” and to reside in it. The main structure of the bungalow rested on concrete pillars in the ground. The annual “licence” fee increased up to £85 in 1989, but in 1990 the plaintiffs required a licence fee of £1,000.
When the plaintiffs commenced possession proceedings the defendants claimed Rent Act protection by virtue of a yearly tenancy. At first instance the assistant recorder held that the bungalow formed part of the realty, but the Court of Appeal held that the plaintiffs owned the land and that the bungalow was a chattel.
The House of Lords held that the nature of the structure was that it could not be taken down and reassembled elsewhere. When the bungalow was constructed the wood became part of the structure which itself became part of the land. The answer to the question of whether a structure had become part of the land depended upon the degree and the object of annexation to the land. While the degree of annexation varied, the answer would depend upon the use and purpose for which the chattel which was brought on to the land was created and designed.
Degree and object of annexation
In Berkley v Poulett [7] 1 EGLR 86 the Court of Appeal considered whether six pictures (which were firmly fixed into the recesses in the panelling of a room), a white marble statue of a Greek athlete weighing approximately one ton and a sundial were fixtures or fittings. A majority of the Court of Appeal held, inter alia, that the items were not fixtures. Scarman LJ was of the opinion that the degree of annexation, which at one time would be treated as conclusive, might now not be so. Where the purpose of the annexation was the better enjoyment of the object itself, it could remain a chattel notwithstanding a high degree of physical annexation.
In Hamp v Bygrave The Times January 6 1983 the plaintiff purchasers claimed that some garden urns and ornaments, a statue and patio lights were part of the freehold and should not have been removed by the vendor. On the question of the degree of annexation the court held that all the items rested on their own weight and were prima facie chattels. However, on the question of the purpose of the annexation the court held that the items formed part of the freehold as they had been expressly referred to as such in the particulars of sale and enquiries before contract.
In the Elitestone case, the House of Lords was of the opinion that many different tests have been suggested to determine the purpose of the annexation, such as whether the object which has been fixed to the property has been so fixed for the better enjoyment of the object as a chattel or whether it has been fixed with a view to effecting a permanent improvement of the freehold.
The House noted that this, and similar tests, are useful when one is considering an object such as a tapestry which may or may not be fixed to a house so as to become part of the freehold. However, these tests were less useful when considering the house itself, in which case it was as much a matter of commonsense as anything else.
A house which is constructed in such a way so as to be removable (whether as a unit or in sections) may well remain a chattel even though it is connected temporarily to mains services such as water and electricity. However, a house which is constructed in such a way that it cannot be removed at all, save by destruction, cannot have been intended to remain as a chattel and must have been intended to form part of the realty. It is clear that the intention of the parties is relevant only to the extent that it can be derived from the degree and object of the annexation, as the subjective intention of the parties cannot affect the question of whether the chattel has, in law, become part of the freehold.
In Holland v Hodgson (1872) LR 7 CP 328 certain looms in a mill were attached to the stone floors by means of nails driven through holes in the feet of the looms which were necessary for the purposes of keeping the looms stable. Removing the nails could be achieved easily without causing serious damage to the floor. Blackburn J held that the looms had become part of the realty.
In that case Blackburn J gave instances of the application of the rule discussed more recently in Elitestone. One example was of blocks of stone placed one on top of another without any mortar or cement for the purpose of forming a dry stone wall which would become part of the land though the same stones, when deposited in a builder’s yard, and for convenience sake stacked on the top of each other in the form of a wall, would remain chattels.
On the other hand, Blackburn J gave an example of a carpet nailed to the floor of a room whereby the nature of the thing sufficiently shows it is fastened as a chattel only temporarily and not affixed permanently as part of the land.
In Deen v Andrews [6] 1 EGLR 262 the question before Hirst J was whether a large greenhouse was a building or a chattel. In a dispute between the vendor and purchaser of a house the conveyance referred to the land in question “together with the farmhouse and other buildings erected thereon”. The greenhouse in question was very large, of pre-fabricated construction and bolted to large concrete plinths which rested on a concrete base. Hirst J held that, although it was a large structure, it was not affixed to the land but lay on it by its own weight and fell within the definition of chattel given by Blackburn J in Holland v Hodgson. In Elitestone Lord Lloyd of Beswick commented that it was obvious that a greenhouse which could be moved from site to site was a long way removed from a two-bedroom bungalow which could not be moved at all without being demolished.
In TSB Bank plc v Botham [6] EGCS 149 the bank was mortgagee of the flat and claimed that specified items were fixtures in the flat and as such were subject to the bank’s mortgage so that it could sell those items as mortgagee and give a good title thereto to a purchaser.1 It applied to the court for a declaration to that effect.
The disputed items included fitted carpets, light fittings, gas fires, curtains and blinds, towel rails, soap dishes, tap fittings and shower head mirrors attached to walls of fitted bathroom, kitchen units, sink, “white goods” (including oven, dish washer, extractor fan, hob and freezer). The High Court [5] EGCS 3 granted the declaration sought on the basis that all the items listed were fixtures.
The Court of Appeal held, inter alia, that in deciding whether items were fixtures, two prime factors had to be taken into account: (1) the method and degree of annexation; and (2) the object and purpose of the annexation. The issue of whether functional articles in a house or flat, such as those in this case, had become fixtures depended on the intention with which they were brought into the flat and fixed in position. If the article, viewed objectively, was intended to be permanent and to afford a lasting improvement to the building, the thing would have become a fixture. If the attachment was temporary and was no more than was necessary for the item to be used and enjoyed, then it would remain a chattel.
Intention
In Elitestone the House of Lords held that the intention of the parties is relevant only to the extent that it can be derived from the degree and object of the annexation because the subjective intention of the parties could not affect the question of whether the chattel had, in law, become part of the freehold.
In Climie v Wood [1861-73] All ER Rep 831 it was suggested that where a chattel was attached for its better enjoyment it was clearly not intended to become part of the freehold. In Re De Falbe; Ward v Taylor [1] 1 Ch 523 some tapestries said to be of a large value had been affixed to the walls of a drawing room of a mansion house and the question before the court was whether they formed part of the freehold. The court held that the tapestries had been affixed for the purpose of ornamentation and the better enjoyment of them as chattels, and so could be removed.
Further, in Derby v Harris [1] 1 QB 895 an action was brought for an alleged unlawful distress for rent, and among other acts complained of was that the defendants had taken down and carried away a kitchen range, register stove, copper and grates which were annexed to the freehold in the proper manner and which, it was contended, were tenant’s fixtures. Lord Denman CJ was in no doubt that the chattels distrained were tenant’s fixtures and so could be removed at the end of the term.
The intention of the tenant was also stressed in Spyer v Phillipson [0] All ER 457 where the defendants were the executors of the deceased tenant of a flat. The tenant had redecorated three rooms in his flat and, to this end, had purchased and installed over £2,000 worth of oak panelling. In determining whether this panelling could be removed on the termination of the lease Lord Hanworth MR stated, at p463:
We have got, therefore, a rule showing that the tenant’s right has been consistently . . . enlarged, that the quantum of attachment is a factor, but not more than a factor, and not always the most important factor for decision. Then one considers what are the other factors I think one must consider: Why was the article or ornament even brought into the flat at all? Was it for the permanent enhancement of the building itself, or was it for the enjoyment of the ornament itself?
Degree of annexation
It was recognised in Elitestone that the importance of the degree of annexation will vary from object to object. In Re De Falbe the court noted that it does not have to inquire whether the screws which fixed an object to a wall are 1in, 2 or 3ins long or whether there were half a dozen or a dozen of them, or whether they did or did not penetrate the plaster. In Young v Dalgety plc [7] 1 EGLR 1162 the main question before the Court of Appeal was whether certain items were landlord’s fixtures which should be taken into account in the determination of the open market rent under the rent review clause or whether they were tenant’s fixtures which should not be. Mervyn Davies J (at first instance) held that the following items were tenant’s fixtures, namely (i) light fittings in the form of fluorescent tubes contained in glass boxes fixed securely to the plaster of the ceiling; and (ii) floor coverings in the form of carpeting fixed to the floor with gripper rods. The Court of Appeal held that the judge at first instance had reached the correct conclusion.
Trade fixtures
In Poole‘s case (1703) 1 Salk 368 an underlessee had set up trade as a soap boiler and had then wished to remove his vats and equipment when he left the premises. It was stated that the tenant could remove any fixtures which he had affixed to the property for the purposes of his trade, the reason being in favour of trade and to encourage industry.
This case was applied in a modern context in Smith v City Petroleum Co Ltd [0] 1 All ER 260, where petrol pumps were affixed to the freehold by four bolts which were embedded in concrete, but one was clamped down with a nut and such pumps were further connected to the freehold by a pipe. Stable J was of the opinion that such pumps affixed to tanks embedded in the ground are tenant’s fixtures and are removable within a reasonable time after the determination of the term.
Right to remove fixtures
In New Zealand Government Property Corporation v HM&S Ltd [2] 1 EGLR 52, a theatre was occupied for the purpose of a business and therefore benefited from the protection of Part II of the Landlord and Tenant Act 1954, so that, before the old lease came to an end, the lessees applied for a new lease under the Act. The negotiation lasted for three years, but the new lease was backdated to the date of termination of the original lease. On rent review in 1977 the landlords argued that the tenant’s fixtures had become a gift to them and the new rent was to be on the basis that they belonged to the landlords.
The Court of Appeal held that when an existing lease expires or is surrendered and is followed immediately by another, to the same tenant remaining in possession, the tenant does not lose his right to remove tenant’s fixtures and is entitled to remove them at the end of his new tenancy.
In Mancetter Developments Ltd v Garmanson Ltd [6] 1 EGLR 240 the respondents let industrial premises to P who installed pipes and extractor fans which involved piercing holes in the outside walls of the demised premises.
When P suffered financial difficulties its assets were transferred to G, who also fell into financial difficulties. Before leaving the premises they removed the pipes and extractor fans without filling up or making good the holes in the walls left by the removal. The Court of Appeal held, inter alia, that where fixtures are removed the premises must be made good to the extent of being left in a reasonable condition.
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References 1,2 See also “Conveyancing: Yours or mine?” by Martin Codd, Estates Gazette, October 19, p146. |
Del W Williams BA MCD LLB MRTPI ACIArb is professor of estate management at the School of the Built Environment, Liverpool John Moores University.
