Distinction Between Fixtures and Chattels

Question.

Distinguished fixtures and Chattels and examine the following statement using cases to illustrate the rule and any exemption there to.

“Perhaps the true rule is that articles not otherwise attached to the land than by their own might are not to be considered as part of the land, unless the circumstances are such as to show that they were intended to be part of the land, the onus of showing that they were so intended lying on those who assert that they have ceased to be chattels, and that, on the contrary, an articles affixed to the land even slightly is to be considered as part of the land, unless the circumstances are such as to show that it was intended all along to continue a chattel, the onus lying on those who contend that it is a chattel.”

Introduction to Fixtures and Chattels

Fixtures in effect can be defined or viewed as “An article which was once a chattel but which has now become a part of land.” [1] It is a legal concept in law, which is used to define a “permanently attached or fixed to real property.” [2] In the event of sale of land, fixture are usually sold as a part of land, except otherwise stated in a conveyance report. It is however, the practice in some jurisdiction, the purchaser automatically owns the fixtures as part of the purchase. Exception is made when clear terms are stated in a sales contract. A fixture becomes more apparent when it is attach to land to enhance the use or increase its value. A building which a foundation rested directly on land is an obvious and typical example of a fixture.

Chattels can be described as any property except freehold land. These are usually moveable items of property that are neither land nor permanently attached to land or a building, either directly or vicariously through attachment to real property. Chattels are said to retain their independent character as personality despite close association with the realty. [3] Chattels which are affixed in any form to make a permanent improvement of land, are retained by a mortgagee unless otherwise stated in a sales contract or intentional left out in conveyance report.

The distinction between fixtures and chattels is made by, one, the physical degree of annexation to land. A less irreversible and a more permanently object affixed to land, is more likely to be defined as a fixture and become a part of land, the was clearly outline in Holland v Hodgson (1872).

Held: Blackburn J “Walmsley v Milne was was decided in 1859. This case and that of Wiltshear v Cottrell (1853) 1 E & B 674 seem authorities for this principle, that where an article is fixed by the owner of the fee, though only affixed by bolts and screws, it is to be considered a part of the land, in all events where the object of setting up articles is to enhance the value of the premises to which it is annexed for the purposes to which those premises are applied. The threshing machine in Wiltshear v Cottrell was affixed by the owner of the fee to the barn as an adjunct to the barn, and to improve its usefulness as a barn, in much the same way as the hay cutter in Walmsley v Milne was affixed to the stable as an adjunct to it, and to improve its usefulness as a stable. And it seems difficult to say that the machine in Mather v Fraser was not as much affixed to the mill as an adjunct to it and to improve the usefulness of the mill as such, as either the threshing machine or hay cutter.” [4]

It was held in Hulme v Bingham (1943) KB 152, heavy machinery unattached to land was considered a chattel. Any object that rests merely on land due to their own weight was the key feature of the gravity test. This test was also used in Botham v TSB Bank PLC (1996), it was held that appliances remaining in position by their own weight and are affixed electrically, would likely be a chattel. In Gray v Gray, the position mentioned above was challenge, and an objective view was taken. A degree of annexation was the key point of the argument. If an object as been attach no matter the degree of which it was affixed, the intent for that object to be permanently affixed to enhance the use and enjoyment of land is fair to be called a fixture. Example, An installation of a home cinema complete with a cooking range would be an improvement to realty.

The test of the degree of annexation would be on a object by object basis. In Rex v. Otley (1830) 1 B. & Ad. 161 for example , a wooden mill have been held not to form a part of realty, a wooden barn in Wansborough v. Matson (1836), was held not to a part of realty. However, in Snedeker v. Warring, 2 Kernan 178 Parker J. said: “A thing may be as firmly fixed to the land by gravitation as by clamps or cement. Its character may depend upon the object of its erection.”

A number of tests have been use to differentiate between fixtures and chattels, but a matter of precise analysis have to used as a determinant. Blackburn J. in Holland v. Hodgson, L.R.7 C.P.P. 328, 335, sums it up as;

“Thus blocks of stone placed one on the top of another without any mortar or cement for the purpose of forming a dry stone wall would become part of the land, though the same stones, if 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.”

Differences between chattels and Fixtures

‘Fixtures’ are those material things which are physically attached to land so that they become part of the realty and the property of the landowner. An object which becomes a fixture merges, so to speak, with the land and accordingly passes automatically with all subsequent conveyances of the land unless lawfully severed from it.

A chattel on the other hand is a physical object which never becomes attached to the land even though placed in some close relation with it and so does not pass with conveyances of the land.

Quicquid planatur solo cedit

In property law, the law of fixtures is founded on the maxim ‘quicquid plantatur solo cedit’. That is, whatever is attached to the land becomes a part thereof. Chattels that are so affixed to the land as to become apart of it, loses its character as chattel and passes with the ownership of the land. Chattels are therefore of a temporary nature while fixtures are permanent.

The maxim was invoked to prevent the economic waste involved in giving the land to the heir and the severed chattel to the personal representative. In other words, to avoid destruction involved in the severance from the freehold. The principle of this doctrine has been unduly stretched to govern matters between landlord and tenant and mortgagor and mortgagee, who stand to lose their investment by the application of the maxim.

The above definitions highlighting the difference between fixtures and chattels are not considered adequate or straightforward to apply in every instant when a determination has to be made as to the existence of them both. The question of whether a chattel is a fixture is a question of law for the judge and the circumstances of the case and can be difficult to answer. A decision in one case will not necessarily be a guide to another case.

Tests for determining fixtures and chattels

At common law, there are two tests for determining whether an object is a fixture or a chattel. That is, when does a chattel that has been on land loses its characteristic as a chattel and become a fixture? The criteria for determining whether the chattel is affixed to the land and became a fixture was stated by Wooding C.J. in Mitchell v Cowie (1964) 7 WIR 118. They are:

A house maybe a chattel or a fixture depending on whether it was intended to be part of the land on which it stands. But the intention is to be determined objectively rather than subjectively.

To distinguish whether it is a chattel or fixture, consideration whether the house is affixed to the land or not must be taken into account.

If the house is not affixed to the land but rather rests on its own weight then is will be generally deemed to be a chattel unless it can be proven that it was intended to be part of the land.

If it is affixed to the land then it will generally be held to be a chattel unless it can be proven that it was intended to be a chattel for the remainder of its existence.

Cases such a Teaff v Hewitt (1853) 1 Ohio St. 511 among others established that the guiding principle is the intention which the object is affixed to the realty. Factors to consider are:

The relation of the land of the party making the annexation

The degree of annexation

Purpose of annexation

Damage to the land and the chattel on removal

Custom and usage

The guidelines formulated by Wooding CJ in Mitchell v. Cowie (1964) 7 WIR 118 is considered to be the standard in the Commonwealth Caribbean for the determination of fixtures and chattels. In his formulation, Wooding CJ clearly establishes the intention criterion as the controlling and guiding principle with which the object is affixed to the realty. He propounds that a house may be a chattel or a fixture depending on whether it was intended to form part of the land and that this intention is to be determined objectively rather than subjectively. Other factors such as: degree of annexation, purpose of annexation, the relation to the land of the party making the annexation, damage to the land and the chattel upon removal, and custom and usage are also used to ascertain intention.

Annexor relationship to the land

A person who attaches a chattel to his own land is usually assumed to have done so for permanently and meant it to become part of the land. As related to tenancy, the case of O’ Brien Loans Limited v. Missick (1977) 1 BLR 40, Georges J.A stated, that in the case that a yearly tenant erects a wooden house to a column anchored in the ground, there would be no reason why it would lose its characteristic as a chattel and become a fixture, however a long term lease holder who erects such a structure would be reasonably held to have done so for the purpose of improving the land.

The degree of annexation

According to the degree of annexation test, an article is a fixture if it is attached to land or a building in a substantial manner, such as by nails or screws. The more firmly or irreversibly the object is affixed to the earth or a building, the more likely it is to be classified as a fixture. There must be a physical connection with the land or with something that is part of the land and object.

Lord Blackburn’s dictum in Holland Hodgson [1872] LR 7 CP, has often been cited in establishing the rule with regard to chattels and fixtures. He suggests that, if there is no attachment, one can assume it is a chattel. He observed that,

‘…when the article in question is no further attached to the land by its own weight, it is generally considered to be a mere chattel’.

The burden of proof is on anyone contending the existence of a fixture. If it is attached to the land even slightly, it is considered to be a fixture, the burden shifting to the person who contends that it is a chattel.

In Berkley v Poulett [1977] 1 EGLR 86, Scarman LJ stated,

‘…if an object cannot be removed without serious damage to, or destruction of some part of the realty, the case for its having become a fixture is a strong one’.

According to Cheshire and Burn, under the test of degree of annexation, the general rule is that a chattel is not deemed to be a fixture unless it is actually fastened or connected to the land or building. Mere juxtaposition or lying of an article, however heavy, does not prima facie make it a fixture. Under object of annexation, the test is to ascertain whether the chattel has been fixed for its use as a chattel or for the more convenient use of the land or building.

The case of Elitestone Ltd v. Morris [1997] 1 W.L.R. 687 , where the defendant bought a bungalow on the 27 plots of land owned by the plaintiffs, the plaintiffs sought possession of the premises for redevelopment, the defendant resisted on the grounds of protection under the Rent Act 1977, the plaintiffs claimed that the protection did not cover chattels. According to the HoL the bungalow was part of the land, and could not be removed without destroying it. Lloyd observed that the bungalow is not removable in one piece, nor is demountable for re erection elsewhere. However, in Billing v Pill (1953) 2 All ER 1061, where the courts had to consider whether an army hut resting on a concrete foundation and secured by bolts onto the concrete was a fixture or not. It could be dismantled and removed easily without damaging it. The courts held that the hut was temporary used to provide sleeping accommodation for soldiers etc. and that it could be removed without damaging the freehold and is thusly a chattel.

If a tenant for a one year lease or less places a structure on the land of his landlord and so secures it to withstand the forces of nature during the one year period then it would not become a permanent asset to the landlord.

Damage to the chattel on removal

Where the circumstances, the situation and the nature of a structure placed on land are such that the removal of the article would lead to its destruction, the obvious inference is that it was not intended to be removed from the site, and was intended to permanently remain on the property. In this instance, it ranks as a fixture.

The opposite of this is not followed. That is, even it can be removed without destruction it does not mean that it is a chattel. However, the question arises about the intention, whether it was intended to be part of the land.

The purpose of annexation

The determination of the status of an item is not conclusively determined by the degree of annexation. If the circumstances show that the object was intended to form part of the landscaping or architectural design of the premises and is resting by their own weight, then they can be regarded as fixtures.

Items attached to the land for the purpose of enjoyment are regarded as chattels. In Leigh v Taylor [1902] AC 157, Madame de Falbe was a life tenant. She hung in the drawing room of her mansion-house valuable tapestries, which belonged to her. Strips of wood were placed over the wallpaper on the walls and were fastened by nails to the walls. Canvas was stretched over the strips of wood and nailed to them. The tapestries were stretched over the canvas and fastened by tacks to the canvas and the pieces of wood.

The House of Lords held that these tapestries were chattels, which were affixed to the walls for their own better enjoyment as tapestries. Lord Halsbury, with whom the other members of the House of Lords agreed, observed:

“Where it is something which, although it may be attached … to the walls of the house, yet, having regard to the nature of the thing itself, and the purpose of its being placed there, is not intended to form part of the realty, but is only a mode of enjoyment of the thing, while the person is temporarily there, and is there for the purpose of his or her enjoyment then it is removable and goes to the executor (of the life tenant) … (at 158)

The broad principle is that, unless it has become part of the house in any intelligible sense, it is not a thing, which passes to the air. I am of opinion that this tapestry has not become part of the house, and was never intended in any way to become part of the house.” (at 161)

The nature of the premises is also a factor. For example, the carpets is a residential home would be considered a chattel as opposed to wall-to-wall carpeting in on the floor of a hotel that would be considered a fixture since the attachment in the hotel was for the better use of the building rather than the better use of carpeting.

In Berkley v Poulett [1977] 1 EGLR 86, pictures were fixed in the recesses of paneling of two rooms of the estate of the defendant and there was a heavy statue of a Greek athlete. The estate had been purchased by the plaintiff, and the defendant removed the items. The plaintiff sued for compensation or delivery of the items. Scarman LJ viewed that the pictures and the statue was much to the taste of the occupier of the estate at that time and were not fixtures which passed to the purchaser of a house but chattels that the vendor could remove.

Also it can be argued that a tenant erects a structure on the land, he does not do so for the enjoyment of the land of another person, but for the accommodation that the chattel provides. This point is made clear in O’ Brien v Missick, where Georges JA explains, that in many parts of the West Indies yearly tenants build houses on plots of land, the purpose of such is for proper enjoyment of the land. Even if there is minimal attachment which will make the house less liable for stormy weather, there is no intention to benefit the landlord by adding value to the land. The tenant subjectively did not intend to cause benefit to the landlord, but objectively it must the intention must come from the method it was annexed to the land which aims at making the attachment minimal.

Adaptation

If an article is constructed and adapted for an attachment to the realty and there is intention to make it part of it, it will be classified as a fixture. On the other hand, if an article has no special or peculiar adaption to the realty then it would retain its chattel characteristic. Examples of chattels would include domestic animals and equipment on a farm.

Circumstances giving rise to a distinction between fixtures and chattels

There are three circumstances in which it is necessary to determine whether a chattel remains a chattel or alternatively has become a fixture. They are:

1. a dispute between a vendor and a purchaser;
2. a dispute between a mortgagor and a mortgagee, where the mortgagee will wish to argue that certain chattels have become part of the land and, as a result, are part of the mortgage security;
3. a dispute between a beneficiary under a will of personal property, on the one hand, and a beneficiary of real property, on the other hand.

EXAMINATION OF THE RULES

The basic common law rules utilized to determine if an item is a fixture were set out in the follows:

(1) That articles not otherwise attached to the land than by their own weight are not to be considered as part of the land, unless the circumstances are such as to show that they were intended to be part of the land. In the final analysis, what constitutes a fixture is a question to be determined by the facts in each case. An item fixed solely by its own weight generally remains a chattel; and an item molded into a scheme of ornamentation, so that the scheme would be wholly inadequate without it, usually becomes a fixture. However, both these propositions may be reversed if that would lend better credence to the predetermination of the parties. Thus, items fixed purely for domestic ornamentation may be removed before the end of a lease, or prior to an unconditional contact of sale, without notice to the landlord or prospective purchaser, but trees and plants are an essential part of the land and should not be removed without prior agreement.

(2) That articles affixed to the land even slightly are to be considered part of the land unless the circumstances are such as to show that they were intended to continue chattels.

(3) That the circumstances necessary to be shown to alter the prima facie character of the articles are circumstances which show the degree of annexation and object of such annexation, which are patent to all to see.

(4) That the intention of the person affixing the article to the soil is material only in so far as it can be presumed from the degree and object of the annexation.”

Prima facie, a chattel will become a fixture when it is physically attached, or annexed to the land. In Holland v Hodgson the owner of a mill installed looms which were attached to the stone floor by means of nails driven through holes in their feet.

Therefore in summary the rules are:

1) if the item is not attached, it is presumed to be a chattel,

2) if the item is attached, it is presumed to be a fixture,

3) the presumption of the item being either a chattel or a fixture can be rebutted, if on visible inspection it may be seen:

a) the degree of annexation, and

b) the object of annexation.

4) the intention of the affixing party is not material, unless such intention can be determined, presumed or inferred simply by examination of the item itself.

That means if it’s attached, it’s probably a fixture. If it’s not attached, it’s probably a chattel. If the party placing the item upon the property was doing so to improve the property, then this item is a fixture. If there were no intention to improve the property, but the item was indeed affixed, then this item is still a chattel. Intention is to be inferred from examination of the item. And, there are two factors here: the degree (or amount) of annexation, and the object or purpose of the annexation.

You are not permitted to call outside evidence of intention. The real intention of the party is not relevant. The determination is to be made objectively on the basis of examination of the item.

Those are the actual common law rules. Beyond that, legal practitioners will have to apply those rules and arrive at a determination based upon the application of the rules to the facts in a particular case.

Exemptions to the rule

The basic rule is that anything annexed to land is land. However the court have long accepted that something which is affixed merely to facilitate its display, or in order to steady it, is not to be regarded as becoming part of the land. Thus in Leigh v Taylor [1902] AC 157, a tapestry tacked to strips of wood, which were then affixed to the wall, was not regarded as being part of the land. The degree of annexation in this case was merely that which was necessary for the display of the tapestry.

In rare circumstances something which is not actually fixed to the land but which appears to form an integral part of it, may be regarded as forming part of the land for legal purposes. This best example of this is D’Eyncourt v Gregory (1866) LR 3 Eq 382, in which stone statues, seat and garden vases were held to be part of the land, even though they were free standing as were certain tapestries and picture hanging upon the walls. The basis of the decision is that the ornaments formed an integral part of the architectural design of the house on the property. Thus it appears that the existence of a master a “master plan” concerning the property may render items part of the land, even though there is no real annexation. Another illustration was supplied by Blackburn J in Holland v Hodgson (1878) LR 7 CP 328, when he explained that a pile of stones lying in a builder’s yard would obviously not form part of the land upon which it lay. However, were the same stones to be constructed into a drystone wall (which use no mortar and no method of fixing the wall to the ground) on a farm, the wall obviously would form part of the land of the farm.

It is the general rule that fixtures must not be removed (whatever has been affixed to the land, goes with the land). The maxim quicquid plantatur solo, solo cedit however is subject to three exceptions:

1. Trade fixtures, for example, machinery essential to a factory
2. Agricultural fixtures, for example, a greenhouse
3. Domestic and ornamental fixtures, for example, tapestry or mirror blinds.

Trade fixtures are those items which have been affixed for the purpose of carrying on a particular trade. They encompass those items that merchants annex to the premises to facilitate the storage, handling, and display of their stock such as booths, bars, display cases and lights. It has long been recognized by the Poole’s Case (1703) 91 ER 320, that a tenant is entitled to remove fixtures installed during the term of his lease for the purpose of carrying on his business. For example, in Smith v City Petroleum [1940] 1 All ER 260, it was held that a tenant could remove petrol pumps from the land because they were trade fixtures and could easily removed since they were only bolted to the land. However, it was held that the petrol tanks could not be removed because they have become an integral part of the land and could not easily detached. Also in Young v Dalgety Plc [1987] 1 EGLR 116, a tenant had installed light fittings and a carpet which had become fixtures by virtue of their attachment to land, but the Court of Appeal held that they were trade fixtures and removable because they were attached to render the premises convenient for the tenant’s business use.

Agricultural fixtures are articles that are annexed for the purpose of farming. It can be also viewed as trade fixtures. Historically, in the case of Elwes v Maw (1802), established a principle on which a tenant is allowed to remove fixtures annexed by him for purposes of trade cannot be extended so as to allow him to remove fixtures annexed for agricultural purposes. However, there are statutes that was established to allow an agricultural tenant to remove fixtures during the term or otherwise stated.

Domestic and ornamental fixtures consist of objects that a tenant has affixed to the land for the purpose to render it more convenient. Stoves, shelves, and lighting equipment are types of domestic fixtures. Ornamental fixtures include curtains, blinds, and beds fastened to walls. The tenant is allowed to remove any ornament and domestic fixtures provided that there is no substantial injury to the landlord’s premises. In the case of Spyer v. Phillipson, it was held that the panelling, the chimney pieces and the fireplaces installed by the late Mr. Philipson, the one to whom the plaintiff served as executor, were regarded as chattel.

Fixtures of these kind are usually attached to rented premises for the tenant’s benefit without any intention of increasing the attraction of the landlord’s property. Generally the parties may enter into an agreement within regard to the character of an item to be affixed to the land. Statutes confer this right within Jamaica are subject to regulation by the Rent Act and the Jamaica Rent Board. When no agreement exists between the parties, articles annexed by the tenant may be detached by the tenant, during the possession of the tenancy, provided such can be done lacking damaging the premises.

In the determination of leases, it is essential however that the fixture can be removed without being entirely demolished or losing its essential character or value. This principle was recognised by the Court of Appeal in Mancetter Development Ltd v Garmanson Ltd where the tenants who had remove the extractor fan had fail to fill in the holes left in the wall. Dillon L.J. states:

“The analysis of the liability at common law is, in my judgement, that the liability to make good the damage is a condition of the tenant’s right to remove tenant’s fixtures: Therefore removal of the fixtures without making good the damage, being in excess of the tenant’s right of removal, is waste, actionable in tort, just as much as removal by the tenant of a landlord’s fixture which the tenant has no right to remove is waste.”

At common law, a tenant usually may remove a fixture before the end of the lease term if the fixture was installed for the purposes of trade, agricultural, ornament, or domestic use and if it can be removed without damage to the premises. Otherwise the fixtures become a gift to the landlord. However the tenant who fails to make good damage to the land occasioned by the legitimate removal of fixture will therefore be liable to compensate the landlord for the damage occurred.