Fixture And Chattel: Determining The Boundaries On Land Ownership

What is a Fixture

Question:

Discuss about the  Australian Property Law Determination of Fixtures and Chattels.

A fixture can be defined as something or an attached object to the land rendering it to be considered part of land. Alternatively, a fixture therefore can be said to be anything previously considered a chattel and has since become land by operation of the law[1]. Therefore, the title to land passes along with fixtures once sold (Luther, 2004).

A chattel can be defined a personal property that can be moved and includes furniture and household goods. The chattels must thus be expressly included as moving in a contract or sale of land for the buyer to acquire right over them (Butt, 1996).

The above discussion shows that determination of what is a fixture is very important since it has a bearing on the right of parties to a land. For instance, an affixation by the tenant entitles the tenant to remove fixtures for the duration of a lease during the continuance of the tenancy. The determination of the chattels and fixtures is also relevant as it helps in mortgage agreements as the mortgagee can only enforce securities rights against the land which includes the fixtures. This makes unenforceable any security based on a security which at the time of registration was thought to be a fixture but has been adjudged a fixture. This applies to other transactions such as leases.

A question as to what amounts to fixture or a chattel is one of wholesome examination of circumstances as there are many considerations which need to be taken into account in a determination as to whether a thing is a chattel or a fixture. The question is not always easy or straightforward as disputes regarding whether an object is a chattel or a fixture are usually complex. Therefore, the complexity makes the dual test of degree of annexing and the nature of object annexed very superficial tests for trying to distinguish concept of fixture from a chattel.

The traditional approach in distinguishing between a chattel and a fixture has been the testing is the object of the annexation and the degree of annexation. The operating general rule is that if chattel is substantially affixed to land, courts will feel that it should form part of the fixtures.

The object or intention of annexing an object to land is a subjective test that focuses on the object of the affixing person (Butt, 1996). Usually, the purpose of the annexing an object reveals the possible intention of the affixer. The test in answering the question whether a chattel has become a fixture is whether the affixing is of great permanence in positioning and time of affixing it[2]. This determination involves taking into account of several factors which are objectively apparent. One of the factors is nature of the chattel involved. This is the nature which determines the mode of installation.

Another important consideration for determining the intention of the affixer is the status of the affixing person. The affixers can the owner of the land, or a non-owner. This however, is a presumption only and care ought to be taken in examining this matter since the owner of a land may in certain cases attach a chattel without the intention of ever making it a fixture. The test is that the intention to convert a chattel to a fixture by the affixer should be clear. There involves an examination of all prevailing circumstances to assist in drawing clear conclusions that the property was intended to become part of the land((Hazard, 1962).

What is a Chattel

This test depends on the object which is annexed with the focus on the permanence of the affixation and the possible damage that it can cause to the land or building if the property is to be removed.

In broad terms, if property can be easily moved from the land to which it is attached without leading to substantial change in the nature of the land to the land or the affixed property, a persuasive argument automatically follows the object can be a chattel. However, if no substantial change would be caused to the land or the affixed property, the argument that follows is that the object be considered a fixture.

Courts in exercise of their judicial role have delved in unraveling the difficulty in ascertaining the answer of distinguishing fixtures from chattels. This is best explained in the Australian case of Australian Provincial Assurance Co Ltd v Coroneo[3]. The subject matter was the seats. The seats were affixed to the floor using bolts in a room. Supreme Court had to decide what the seats were (Magielnicki, 1969)

Supreme Court noted that to answer the above question, it had to independently examine the mode, objective and the method of attaching the seats. The judges further found that if that they on the extent of attaching, it is imperative to find if the object is resting and supported by own weight. From the wording of the judges, the burden shall squarely rest on the person alleging that the resting of the seats or any property is more than by the pressure exerted.  Meaning, the weight principle as opined here is only presumed in favor of the existence of chattels (Stephen, 2014).

Continuous circle of prima facie presumption on the test as adopted by the court in Australian Provincial Assurance[4]here just shows how difficult the question of whether a property is a chattel or a fixture can become. It shows it is not settled and that it depends on particular circumstances on which a particular parties base their cases. Indeed this is how it played out in the instant case ultimately informing the court’s decision that the seats were chattels.

The court decision in Belgrave Nominees Pty Ltd v Barlin-Scott Air Conditioning Pty Ltd[5]also shows that there is much to do with object of annexation above the requirement of the subjective intent of the affixer. The court opined the need to consider the other factors such as the nature of the property involved in determining the intention of the affixation of a property. The subject matter was the air-conditioners placed on each unit on separate platforms resting on their weights. The sub-contractor went into liquidation and before the new subcontractor would commence work, the defendant removed the air conditioners.

In determining an application for a mandatory injunction for the defendant to re-install the air conditioners the court had to consider if the air conditioners were fixtures or not. In holding that the conditioners had become fixtures, the court had a particular focus on the purpose of annexation with special regard to the nature of the plants. The units were connected to the main reticulation system of the building. The court held that such an annexation generally resulted to the affixation made the conditioners to become fixtures.

Importance of Determining Fixture or Chattel

That the affixer is the owner of the land or not seems not to be a settled factor pointing to the intention of making a chattel is a fixture. The case of Palumberi v Palumberi[6] best exemplifies this. The issue was whether some personal property and household goods had become fixtures. The building was self-contained divided into two with the plaintiff and the defendants being tenants in common (Grady, 1876). There was an agreement to sell the property without including chattels. Defendant claimed that certain things had become chattels. They were: spotlight, timer light, fittings, portable heater, and carpets among other things. The court found that the rest of the things were chattels save for the carpets and the stove.

That a person who has attached a chattel is not the owner of the land but only possess the land will therefore not prevent a chattel affixed by such a person with a possessory right becoming a fixture. This was the position of court in Kay Leasing Corp Pty Ltd v Provident Fund Nominees Pty Ltd[7]. The point can be summarized that to hold a property as a fixture, the intention to make it a fixture must be clear. Though roof of ownership is a strong pointer to the intention, it is not almost always the case.

The court downplayed the ownership factor and instead held that the intention of annexation ought to be held over and above the degree of annexation (Clarke, 2005). In finding that the stove and the carpets were fixtures, the court considered that they enhanced the value of the house. The case to a very large extent underscored the test of degree of annexation as a test and held that it is inferior to the test of intention of the affixer. Similar position is underscored in Geelong City Building Pty Ltd v Bennett[8]where it was held that a contract of sale which transfers chattels does not means that the said chattel transferred cannot become a fixture.  

The position of the agricultural chattels however seems to be guided by the common law. Courts have tried to remove the agricultural fixtures from the regulation of the tenants’ rules[9]. This means that the common law right of removal and doctrine of waste is now crystallized in legislation to makes provision for agricultural produce. Section 14 of New South Wales Legislation does not confer any actual title to an agricultural fixture. The legislation however allows the tenant to remove fixtures or to receive a compensation that is fair from the owner.                                                                            

Conclusion

Evidently, it can be said that the traditional tests of intention and degree of annexation have undergone tremendous expansion and modification over time with more focus shifting on the object of annexation whose analysis considers so many circumstances and factors like the nature of the object affixed and the relationship between the affixer and the object that is affixed in terms of ownership and possession. Therefore, a strict following of the traditional rules is in total disregard to the reality and current situation.

References

Bradbook. (n.d.). Australian PrpertyLaw: Casesand Materials. LBCP.

Bruce, Z. (2006). Principles of Property Law (4th ed.). Toronto: Caswell.

Butt, P. (1996). Land Law. LBCP.

Clarke, A., & Kohler, P. (2005). Property law: commentary and materials. Cambridge University Press.

Grady, S. (1876). The Law of Fixtures: With Reference to Real Property and Chattels of a Personal Nature: to which is Added the Law of Dilapidations, Ecclesiastical and Lay. Wildy.

Gray, K. (1991). Property In Thin Air. LJ.

Hazard, H. (1962). Theevolution of Coomon LawWrits. American Journal of Legal History, 6.

Lower, M. (2011). A brief explanation and evaluation of the law on fixtures.

Luther, P. (2004). Fixtures and Chattels: A Question of More or Less. OJLS, 24, 597.

Magielnicki, R. (1969). Toward a Satisfactory Fixture Definition for the Uniform Commercial Code. Cornell Laaw Review, 55, 477.

Merrick, H. (1933). Recent Cases: Bulk Sales." Other Goods and Chattels of the Vendor's Business. University of Chicago Law Review, 1(2), 15.

Ridgeworth. (2008). Sackville and Neave'sProperty Law Cases and Materials (8th ed.). Lexis Nexis.

Stephen, H. (2014). Australian Property Law, Cases,Materials and Analysis (3rd ed.).

William, TC (1967). Vendor and Purchaser (4th ed.). LBCP.

See the case of Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR(NSW)700 for more insight The test is whether the affixing shall take a predetermined  term or it is temporary period

1938) 38 SR(NSW)700

1938) 38 SR(NSW)700

Belgrave Nominees Pty Ltd v Barlin-Scott Air Conditioning Pty Ltd (1984) VR 947

(1986) NSW Conv R55-287

(1962) VR 429

(1928) VLR 214

Elwes v Maw (1802) 3 East 38