Fixtures and Chattels Lecture

Exam questions in this area almost invariably are about one issue: is the object a fixture or a chattel? The reason this is the issue is because the answer to that question will lead you to discover whether the item is part of the land, and thus passes with it.

Throughout this guide, you will see questions (highlighted in red text for convenience). These questions are ones you may well ask as you go through the guide, and they are intended to help develop and broaden your understanding of different categories within the case law.

The guide is split into four parts. The first part is an outline on the subject. The second part introduces the (very important!) two-stage test and introduces surrounding matters that are relevant to the question of annexation. The third part addresses the issue of the physical degree of annexation. A recap will follow part three. The fourth part discusses purposes of annexation, and shows how the second stage of the two-stage test can be more decisive than the first stage. A second recap concludes the fourth part. A case glossary follows the fourth part, which you can use to quickly revise which case represents which principle. Because this area of law is very fact-specific, it is very helpful to remember which cases are, for example, about light bulbs or kitchen appliances. Finally, you will find a (very brief!) statute glossary.

Introduction

Outline

As aforementioned, it is important to establish what on land, constitutes a fixture and a chattel. Fixtures are those goods which belong as part of the land. Chattels are the personal effects of their owner. A chattel can be removed at any time by their owners, whereas fixtures might or might not be removed from the land depending on who it is that wishes to remove them.

Apart from s.62 of the Law of Property Act 1925, all guidance comes from case law. So it is important to know which cases represent which principles. The two most important cases are Elitestone Ltd v Morris [1997] and Hellawell v Eastwood(1851)155 E.R. 554 as these both discuss the two-stage test.

What are fixtures and chattels?

A fixture is any item that is included as part of a conveyance of land (that is, where land is given from one party to another, and such an exchange includes all of the rights and obligations over that land) according to s.62 of the Law of Property Act 1925. This means that when a portion of land is sold and there is something defined as a fixture within the confines of that land, then that fixture will be owned by the person who takes ownership of the land as a whole.

By contrast, a chattel is a physical object which is separate from the land, and thus its ownership is independent of who owns the land. It does not change hands upon a conveyance of land.

The Test and Miscellaneous Issues

Two-Stage Test

The central question comes down to a two-fold test, as devised in Hellawell v Eastwood (1851)155 E.R. 554. In this test, the court must consider:

1. the degree of annexation: the extent to which the item has been attached or annexed to the property, and
2. the purpose of annexation: the purpose for which the item was attached to the property.

The same test was reiterated and put forward in Elitestone Ltd v Morris [1997] 1 W.L.R. 687 by Lord Lloyd of Berwick.

In looking at stage 1), we can say that the greater the degree of attachment or annexing is to the property, the more likely the item is considered to be a fixture. Another way of expressing this point, as was made clear in Elitestone Ltd v Morris [1997], is that the physical object is a fixture if it merges with the land.

The result of an item being a fixture is that the person who owns it is whomever owns the land. Thus, a fixture can have a former owner; that is, someone who used to own the land (and thus the fixture), but now does not own the land, and therefore does not own the fixture. This is such an abiding principle of fixtures that former owners are prevented from retaining ownership even if they take active steps to do so: for example, in Aircool Installations v British Telecommunications [1995] C.L.Y. 821, if the former owner inserts a retention of title clause into the conveyance of a fixture, such a clause is null and void.

“Can the owner of the land decide to no longer own the fixture?”

Academic Commentary:

Michael Haley, ‘The law of fixtures: an unprincipled metamorphosis?’ (1998) Conv. Mar/Apr 137.

In reference to that phrase quicquid plantatur solo, solo cedit, Haley argues that actually the phrase carries little meaning nowadays. Because the court has had to adapt the case law (such as the case of Hellawell v Eastwood from the 19^th century) to modern circumstances rather than apply a modern statute, Haley says the case law is a ‘mixed bag of tests and evidentiary presumptions.’ There is, argues Haley, a lack of coherence and certainty. Haley says ‘the interaction between the degree and purpose rules… is unsatisfactory, unclear and unduly cumbersome.’

Haley therefore recommends that the ‘ancient principles’ ought to be abandoned, and a new statutory regime be introduced, just as there is for agricultural tenancies. Because otherwise, as in the case of Botham v TSB Bank plc (1997) 73 P. & C.R. D1, ‘it is… a sad commentary of the present law that it requires the Court of Appeal to decide whether mundane, household items, such as a sink or cooker, are fixtures and chattels.’

“Is the owner of the land entitled to the chattel(s) on it?”

Buyers

It used to be that the distinction between fixtures and chattels had to be settled by means of express agreement. Expressed differently, unless an object was defined as a chattel explicitly in the contract for the sale of Blacklodge, all physical objects in and around Blacklodge would belong to the party purchasing the property at the point of sale. The buyer may even have been entitled to ownership of those physical objects at the moment the offer of purchase is made and the land is inspected by potential buyers (Taylor v Hamer [2002] EWCA Civ 1130 per Sedley LJ). However, in modern conveyancing, ‘tick lists’ of items, described as fixtures or chattels, are retained by the seller of Blacklodge. This tends, in most cases, to clarify the position.

Mortgagees

It is more often the case that the distinction between fixtures and chattels is not a dispute around the sale of a property. Instead, it is more likely to form part of a dispute between lenders (mortgagees) and borrowers (mortgagors) after the borrower has missed payments on their mortgage. Here, the lender is considering whether they can sell the property along with certain items in the property, such as household appliances. These sorts of items are certainly open to question, though there is no single rule for today’s appliances. Instead, these disputes will be decided on a case-by-case basis by reference to the two-stage test (Botham v TSB Bank plc).

What is the ‘land’?

Though this question holds only a limited scope for dispute, the precise definition of land can be nevertheless an issue for the purposes of taxation (Melluish (Inspector of Taxes) v BMI (No 3) Ltd [1996] AC 454, HL) or for environmental and conservation purposes (R v Secretary of State for Wales, ex parte Kennedy [1996] 1 PLR 97).

Physical Annexation

Physical Degree of Annexation

Given there is almost no statute in this area, and in each case the status of physical objects have been determined on the facts of those particular cases, there is no single means of assessing whether the physical object has been annexed to the land.

There is a kind of gravity test (though to be clear, you won’t find that term used in the case law!) which suggests that an object is a chattel if it rests upon the land merely by the force of its own weight. Applying this rule of thumb to an example, a chair that is not fixed to the floor would be a chattel.

So between two cases, where the objects are the same or of a similar type, yet they are set down in different methods, there will be a different result. In Hulme v Brigham [1943] K.B. 152, heavy printing machinery that were unattached to the floor were held to be chattels, whereas in Holland v Hodgson (1871-72) L.R. 7 C.P. 328 the spinning looms were bolted to the floor of a mill and so were held to be fixtures.

For other examples, in Aircool Installations v British Telecommunications [1995] air conditioning equipment was bolted on to, and cut in to, the walls of a building, and they were held to be fixtures. By contrast, in Botham v TSB Bank plc kitchen appliances that rested on the floor of the kitchen merely by their own weight and without any means of bolting to the floor were held to be chattels, even though they were connected electronically and were integrated into the kitchen.

RECAP

We have so far learned the following:

• Exam problem questions are concerned with whether an object (or objects) in question is (are) a fixture or a chattel (or fixtures vs chattels).
• This question is important because if we know if an object is a fixture or a chattel, we know to whom the object belongs. Fixtures = freeholder; chattel = purchaser of the object.
• Whenever we attempt to resolve this question, we always make reference to the two-stage test of Hellaway v Eastwood and Elitestone Ltd v Morris.
• The first stage of the test asks about the extent to which the property has been affixed or annexed to the land. The fact that this is posed as an ‘extent’ question is deliberate: the greater the degree to which the object has been affixed to the land, the more likely it is that the court would deem the object to be a fixture. Another way of expressing this is that the object has “merged with the land.”
• Ordinarily, there is a kind of gravity test to assess the degree of annexation of a given object. If an object simply sits on a surface by gravity alone, meaning it is not bolted down, nailed down, or attached to the land with any other object, then the object in question is likely to be a chattel. Conversely, if an item is affixed to the land, then it is more likely to be a fixture according to this part of the two-stage test.
• There is more likely to be a great degree of annexation to the property if removal of the object would cause damage to either the object itself and/or to the surrounding land.
• Other relevant matters include whether the party seeking to have the item declared as a fixture is a mortgagee or a buyer of the property. In either case, they would have an interest in having a particular object (such as air conditioning equipment, per Aircool Installations v British Telecommunications).
• Finally, though it is unlikely to be of primary consideration in a question surrounding fixtures or chattels, the status of the land itself may be disputed.

Purpose

Deemed purpose of Annexation

Despite everything that is said above, it is not necessarily the case that an item which is bolted down is intended to be a fixture, and depending on the intention, it may be that the item was not intended to be a fixture, and such a lack of intention would mean the item was not a fixture (Potton Developments Ltd v Thompson [1998] NPC 49, ChD). Intention will usually be gauged by inference, and communication between the parties.

What is clear is that this intention must be made known between the parties. Lord Cockburn observed in Dixon v Fisher (1843) 5 D 775 that no person ‘can make his property real [ie belonging to the land] or personal [belonging to himself] by merely thinking it so.’ The question is whether the installation of the object would in ordinary circumstances have been intended to be a permanent accretion to, or improvement of, the land or if it is only a temporary addition to the building or landscape (Botham v TSB Bank plc).

Academic Commentary:

Peter Luther, ‘Fixtures and chattels: A question of more or less’ (2004) O.J.L.S. 4 597.

Luther has criticised the decision in D’Eyncourt v Gregory. In Gregory, the court referred to millstones as objects which are ‘a thing for the benefit of the common-wealth.’ This means that the object in question, if conferring an aesthetic benefit to the general public (for example, passers-by), then there is a case for what Luther calls a ‘constructive annexation’, because by being connected to the land, the object both acquires a benefit by its location and likewise confers an aesthetic benefit on its location.

Luther criticised the decision in D’Eyncourt because the objects in question were ornaments, and Luther’s argument is that ornaments are not comparable to a millstone. Further, the property was a private property, therefore the land could not be said to be accessible to the general public.

Marta Iljadica, ‘Is a sculpture “land”?’ (2016) Conv. 3 242:

Iljadica examines the case of Tower Hamlets LBC v Bromley LBC [2015] EWHC 1954 (Ch), in which the court was asked to consider the classification of an ornamental object that was resting by its own weight. [Note that this was one statue, as opposed to a collection of statues as we saw in D’Eyncourt v Gregory.] The court declared the statute to be a chattel, because ‘it is an entire object in itself. It rested on its own weight upon the ground and could be (and was) removed without damage and without damaging its inherent beauty.’

Iljadica notes the court regarded how the statute could be enjoyed. The court declared that the statue would not lose its ‘aesthetic power’ if it were removed from the land. Iljadica therefore notes there is something relevant about the relationship between the location and the object: namely, the object may depend to an extent on its location for its aesthetic, in which case it is more likely a fixture, or its aesthetic may be independent of and unconnected from its location, which would make it a chattel.

Referring to Luther’s article, Iljadica argues that the existing case-law is not suited to issues of fixtures/chattels in public spaces. As she says, ‘The questions of enjoyment and improvement remain unstable especially regarding who is enjoying the object and what it means for a property to be improved when the improvement is ornamental rather than utilitarian.’ In other words, there is a lack of certainty of how the concepts of ‘improving the property’ and ‘enjoyment’ should apply in a public space context.

Overriding Purpose

We have seen that an object can be deemed to be a fixture, despite it not being affixed to a surface, if there is an intention to have the object function as a permanent improvement to the land. Equally, intentions can render an object a chattel: if an item is affixed to a surface, yet the intention of the party who installed it was merely to facilitate enjoyment of the object (rather than to have the object provide value to the land). If use of the object was unnecessary for the use of the land, and the use of the object was simply to enjoy using the object, then the item may be deemed a chattel (Elitestone Ltd v Morris).

Tenant’s Fixtures

Generally, the only party which is entitled to remove a fixture is the freeholder, so if anyone is in occupation or possession of the property, they cannot remove it except with the consent of the freeholder (Elitestone Ltd v Morris).

However, over time, the court has come to recognise an exception to this rule and to allow a certain group the right to remove fixtures. This right to remove fixtures is extended to tenants. It is recognised that tenants will want to install items on their property and would use those items, but that item is intended to be used by the tenant for, among other reasons, their trade. Therefore, the court has come to recognise that there is a difference between ordinary fixtures and “tenant’s fixtures.”

If a tenant installs an object therefore, the question is whether the object was to be used for a specific purpose. Therefore, the question becomes whether the item annexed to the land is present on the property for the purposes of the tenant’s trade or is for ornamentation or utility. If the item can be removed without it losing its usefulness, then it will be defined as a chattel. If however the property has to be installed on the land in order for it to be used (meaning it is useless without being installed), then it will be a fixture (Webb v Frank Bevis [1940] 1 All ER 247). Examples of items which would be fixtures are doors, windows, and chimney pieces. This is so even if the tenant installed them.

Tenants and Right to Remove

Tenants have the right to remove fixtures during the course of their lease. They may even be required to do so, such as in the case of redundant equipment. Failing to do so may expose the tenant to a breach of the conditions of their agreement with the freeholder. The terms of the lease can also modify or exclude this right to remove fixtures.

If a lease is intended to restrict the right of a tenant to remove the tenant’s fixtures, then the lease must make that intention clear: the court must be confident that the language of the lease is unambiguous and express about that intention, otherwise the court will not uphold a term which excludes the right to remove fixtures (Peel Land and Property (Ports No 3) Ltd v TS Sheemess Steel Ltd [2014] EWCA Civ 100).

Agricultural Fixtures

Unlike in other case law, in agricultural fixtures comprehensive guidance is found in the Agricultural Holdings Act 1986 and the Agricultural Tenancies Act 1995. These statutes are primarily concerned with the rights of tenants of agricultural lands to remove fixtures and buildings. These statutes recognise that fixtures of farm land can be of immense value to the owner

FINAL RECAP

Good job, we’re almost there! Let’s recap this final part of the guide on chattels and fixtures:

• Although we have seen that the degree of physical annexation of an object to land is a relevant concern, it is not decisive. If an object is affixed to land, such affixing may mean it is a fixture, but not necessarily. Equally, if an object is not fixed to the land, it is likely but not necessarily a chattel.
• A party can intend an item to be a fixture, and this will be inferred from the surrounding circumstances of a case. A court will look to see how items are ordinarily used, and this idea of ordinary use can to an extent displaces the idea of physical annexation.
• An item can be unfixed and a chattel if single and isolated; but if it is part of a wider grouping of objects, such that the method of placing the individual objects enhances the value of the property, then those items are taken by the court to be intended as fixtures even if they are not affixed to the land in any way and simply sit on it.
• Conversely, an item or selection of items are taken to be chattels if they are affixed to the land simply because such affixing is the only way that such items can be enjoyed.
• There is usually a presumption that only the freeholder has the right to remove fixtures, however there are exceptions for tenants when they can show the item is for ornamentation and decoration or for use in their own trade. There are additional statutory exceptions for agricultural fixtures.

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