English and Hong Kong land law distinguish between fixtures and chattels. A fixture is an item that has been brought onto the land but is treated as forming a part of the land. A chattel is an item that has been brought onto the land but which is not so treated. The practical effect is that a transfer (or any other type of dealing with land) will take fixtures with it. Title to the fixture passes automatically with title to the land. Title to a chattel, by contrast, does not pass with a transfer of title to the land; it remains in the same ownership as before.
Thus, if an air-conditioning unit is a fixture then ownership of it will pass with ownership of the land to which it is affixed. If not, the seller of the land is free to remove it after sale of the land for it remains the property of the seller. Similarly, if it is a fixture then it will be subject to any mortgage that might have been granted over the land.
One would expect the law in this area to be settled and to yield simple and clear-cut answers to the question as to whether or not a particular item is part of the land or not. After all, the question has recurred hundreds or thousands of times a day for centuries and is of clear practical importance. This, however, is not the case. It is still not always possible to say with certainty whether or not an item brought onto the land is part of the land. This essay explains the relevant tests and some of the uncertainties surrounding them.
The tests in this area seek to identify the objective intention of the party who brought the object onto the land. There are two tests. The first of these looks at the degree of annexation of the object to the land while the second looks at the purpose of annexation. Each test can play a part but the current tendency is to give greater importance to the purpose of annexation.
The degree of annexation test looks at the physical connection to the land or to something else attached to the land that was undoubtedly a fixture. If the item in question is attached to the land in a particularly permanent way then it would be held to be a fixture. So, for example, if removing the item was likely to cause physical damage to the ground or the fixture to which the item in question was attached then it was likely to be found to be a fixture. It is not necessary, however, that the item should be affixed to the land before it can be considered a fixture; if the item is exceptionally heavy so that it is held very firmly in place by gravity alone then it might be a fixture.
The purpose of annexation test asks a different question. It considers whether the item was brought onto the land for the better enjoyment of the land (in which case it is a fixture) or whether it was brought onto the land to be enjoyed in its own right (in which case it is a chattel).
How the two tests interact with each other
The purpose of annexation test complements the degree of annexation test: it does not supplant it or render it obsolete. The tests are used as indicators of the underlying intention of the party who brought the item onto the land. That intention is a very important factor when deciding whether or not something is a fixture or a mere chattel. It is not necessarily determinative, however; the item and its interaction with the land must be inherently capable of being a fixture. Both the intention and the nature of the item and its degree of annexation have their part to play.
The degree of annexation test may be insufficient on its own but it supplies the objective dimension of the test. Without it, the law would not have the tools to deal with a landowner’s claim that a piece of furniture, such as a sofa, is to be treated as a fixture since that was his intention. The intention is an ‘objective intention’. Haley argues that it is useful both because a complete lack of annexation would be decisive and because the purpose of annexation is sometimes unclear.
The rationale underpinning the tests: the objective intention of the parties
It has been suggested that something like the officious bystander test supplies the rationale for the two tests just outlined. Thus, the ultimate test would be whether the parties to a transaction ( a sale or a mortgage, for example) when asked whether something was a fixture would have replied, ‘of course’. This approach reflects the fact that the question often arises in a sale and purchase situation. It is unsatisfactory, however, in that it suggests that the objective status of a chattel (fixture or not) is undetermined until some kind of transaction has taken place.
Criticism of the tests
Even in modern times, there can be uncertainty as to whether or not quite common items are chattels or part of the land. This fact suggests that there is something unsatisfactory about the present state of the law. Haley argues that, despite a ‘veneer of principle’, the law lacks coherence and certainty. It is hard to disagree with him on this. The problem lies in finding a satisfactory alternative approach.
The law in this area was surveyed and clarified in the House of Lords decision in Elitestone Ltd v Morris . This case concerned a bungalow resting on concrete pillars which were attached to the ground. The bungalow was only attached to the pillars by gravity. The House of Lords confirmed that there were cases in which the search for the objective intention of the person who brought an item onto the land using the degree of annexation and purpose of annexation tests would be valid. Indeed, Lord Lloyd of Berwick framed his judgment using the traditional degree and purpose of annexation terminology.
Lord Clyde, however, indicated that sometimes the physical nature of the object and its relationship to the land, rather than intention, becomes the dominant question. Physical inspection of the item (here the bungalow) and its relationship with the land becomes important. He said:
‘An unusual, although by no means unique feature of the present case is that the alleged chattel is the building itself. This invites the approach of asking whether it is real property in its own right. Apart from the considerations which I already mentioned it seems to me that it is proper to have regard to the genus of the alleged chattel.’
The Recorder at first instance and the judges in the House of Lords were impressed by the fact that a visual inspection that the bungalow was not a temporary structure intended to be removed but was definitely there to stay. This impression was confirmed by the fact that you would destroy the bungalow if you tried to remove it. This was a strong indicator that it was not a chattel.
So it seems that there are two alternative routes by which an item can become part of the land. It can either be part and parcel of the land or it can become part of the land when this accords with the ‘objective intention’ of the person who brought the item onto the land. In either event, their Lordships indicated that the word ‘fixtures’ was now used in such different ways that it was better to avoid it.
Lord Clyde offered an attempt to understand the idea of ‘objective intention’:
‘Indeed it may be that the use of the word intention is misleading. It is the purpose which the object is serving which has to be regarded, not the purpose of the person who put it there. The question is whether the object is designed (emphasis added) for the use or enjoyment of the land or for the more complete or convenient use or enjoyment of the thing itself.’
Lord Clyde’s judgment is also noteworthy in that it draws attention to the fact that the law in this area has tended to conflate two separate questions into just one question. Whether an item has become part of the land (the doctrine of accretion) is a separate question from whether or not the person who put it there can remove it when they leave the land (as is the case with tenants’ fixtures, for example). Failing to appreciate that these are separate issues has been a potent source of confusion. Luther makes the same point.
The law in this area is dominated by the degree and purpose of annexation tests outlined in Holland v Hodgson. Elitestone suggests that in some cases a physical survey of the item and its relationship with the land will yield a common-sense answer. The law is imprecise in a number of ways. First, what is the relationship between the degree and purpose of annexation tests. Second, what role does the ‘objective intention’ of the person who brought the item onto the land play (and, anyway, what is ‘objective intention’)? Third, in practice the tests fail to answer the everyday questions of lawyers and their clients. The problem is that there is no obviously superior legal rule that could be applied. As a result, lawyers will need to be alive to the problem and ensure that it is dealt with contractually.
Posted in Essays, Fixtures, Fundamental principles, Land Law | 4 Comments »
Land includes land of any tenure, and mines and minerals, whether or not held apart from the surface, buildings or parts of buildings (whether the division is horizontal, vertical or made in any other way) and other corporeal hereditaments; also a manor, an advowson, and a rent and other incorporeal hereditaments, and an easement, right, privilege, or benefit in, over, or derived from the land Law of Property Act 1925 s.62
A conveyance of land shall be deemed to include and shall by virtue of this Act operate to convey, with the land, all buildings, erections, fixtures, commons, hedges, ditches, fences, ways, waters, water-courses, liberties privileges, easements, rights, and advantages whatsoever, appertaining or reputed to appertain to the land, or any part thereof, or, at the time of conveyance, demised, occupied, or enjoyed with, or reputed or known as part or parcel of or appurtenant to the land or any part thereof.
'He who owns the land owns everything up to the sky and down to the depths' Unrealistic in modern times – pipes underground, aircraft above etc. Bernstein v Skyviews & General Ltd 1978 QB: Establishes that a landowner doesn't have unqualified rights over the airspace of his land.
Fixtures and Fittings Law of Property Act 1926 s.62 'Whatever is fixed to the land becomes part of the land' Holland v Hodgson 1872 LR 7CP 328: Looms were fixtures as they were attached to the floor by nails, not just their own weight. If an article is annexed to the land by something more than its own weight, it's a fixture, therefore part of the land. Elitestone v Morris 1997: Bungalow couldn't be removed without its destruction. An objective test to determine whether the object was intended for the use or enjoyment of the land, or for the more convenient use of the object itself.
General principle: whether an object is part of the land is determined by... a) The physical degree of annexation Chelsea Yacht & Boat Co v Pope 2000 1WLR 1941: Boat on a river was a chattel not a fixture b) The purpose of the annexation: for better enjoyment of the land or for the better enjoyment of the chattel? Leigh v Taylor 1902 AC 157: These tapestries were works of art, but could be removed without causing structural damage. Therefore they were chattels not fixtures. Re Whaley 1908 1Ch 615: These tapestries were hung as to create the effect of an Elizabethan dwelling house, therefore they were fixtures.
Relevance? Buyer: Taylor v Hamer 2002 EWCA Civ 1130: The Court decided that the flagstones were fixtures, and suggested that a seller is not allowed to remove fixtures without informing the buyer if there is a possibility that the buyer expects the fixtures to be included in the sale. Mortgage lender:
Botham v TSB 1996 EGCS 149: The bank applied to the High Court to decide if certain everyday articles in the borrower's flat were 'fixtures' and therefore were subject to the bank's mortgage, so it could sell them as mortgagee. Taxation:
Melluish v BMI 1996 AC 454 Landlord and tenant: A tenant has the right to remove 'tenants fixtures and fittings' at the end of the tenancy: Young v Dalgety 1987 1 EGLR 116: A better definition of a tenant's fixture is any item which is properly legally identifiable as a fixture and which was installed and continues to be removable by the tenant, is a tenant's fixture. Spyer v Phillipson 1929 2 Ch 183:
So long as the chattel could be removed without doing irreparable damage to the demised premises, neither the method of attachment nor the degree of annexation, nor the quantum of damage that would be done either to the chattel itself or to the demised premises by the removal, had any bearing on the right of the tenant to remove it. Wessex Reserve Forces and Cadets Association v White 2005 EWHC 983: landlord’s intention here to ‘demolish’ the premises only led to its aspirations of regaining possession being ‘flattened’ when the court held that (objectively) the landlord’s (subjective) intention could not be implemented and that, in any event, the landlord would not require possession of the premises to carry out the proposed works.
Ownership of things found on the land. Parker v British Airways Board 1982 QB 1004: court decided that the finder of a gold bracelet in a public area of British Airways was entitled to possess it against the whole world save the true owner. An occupier of a building has rights superior to those of a finder over chattels on or in, but not attached to, that building if, before the chattel is found, he has manifested an intention to exercise control over the building and the things which may be on or in it. Bridges v Hawkesworth 1851: The finder of a lost article is entitled to it as against all but the true owner.
Waverley BC v Fletcher 1996 QB 334: owner or lawful possessor of land owned all that was in or attached to it. Local authority which owned a public open space had a right SUPERIOR to Finder to things found in the ground of that open space and was entitled to possess them against all but the rightful owner.
Buried Treasure Treasure Act 1996 s.1(1) Defines what treasure is s.4(1) When treasure is found, it vests, subject to prior interest and rights...in the Crown... s.8(1) A person who finds an object which he believes or has reasonable grounds for believing is treasure must notify the coroner for the district in which the object was found (within 14 days) s.8(3) Any person who fails to comply with subsection (1) is guilty of an offence... s.10 Payment of rewards