R E S E A R C H

RICS Research Conference

ROOTS �99

T h e l e g a l f r a m e w o r k o f t h e r u r a l s e c t o r .

L a n d l a w : f i x t u r e s a n d f i t t i n g s - a q u e s t i o n o f g r a v i t y

M i c h a e l G a r r a t t , R o y a l A g r i c u l t u r a l C o l l e g e

I S B N 0 - 8 5 4 0 6 - 9 4 5- 3

‘LAND LAW: FIXTURES AND FITTINGS – A QUESTION OF GRAVITY’.

A paper presented to the RICS ROOTS ’99 Conference.

Author: Mr Michael Garratt, LLB, Solicitor, Royal Agricultural College, Cirencester,Gloucestershire GL7 6JS

ABSTRACT

The area of law involving whether a particular item of property is either a fixture or a fitting hasbecome extremely detailed and complicated. Decided cases go back to at least 1703, andthere has been a steady stream of disputes and cases since then. There has been a number ofrecent cases in the High Court and the Court of Appeal, including an important House of Lordsdecision in 1997, which has gone some way towards reconciling earlier seemingly inconsistentprinciples of law.

The paper will attempt to tread a logical path through many cases in this area. Some casesappear on the face of them to directly contradict the decisions arrived at in others. The aim ofthe paper is to shed light on a confusing but important area of rural practice which can involvelarge sums of money. The cases involve a large variety of types of property, ranging from aconservatory to dutch barns, light fittings to a clock, a kitchen range to theatre seats, tapestriesto a residential chalet, and statues to white goods.

The different scenarios involve buyers and sellers of freehold property, landlords and tenants ofagricultural, residential and commercial leasehold property, tenants for life and remaindermen,devisees and personal representatives, mortgagors and mortagees and owners of listedproperty.

The paper discusses the judgements of the judges over the years and attempts to reconciletheir thinking with that of the authors of both leading works on property law and learned articlesin ‘The Conveyancer and Property Lawyer’.

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One might think that a fixture by definition requires to be fixed to something in order to be alegal fixture. Well according to a recent House of Lords decision that is not necessarily thecase!

The recent decision is Elitestone Ltd v. Morris and Another [1997] 2 All ER 513 HL. The factsare that Elitestone Ltd, the plaintiffs, were the freehold owners of a parcel of land at Holt’s Field,Murton, Swansea, which before 1945 was divided into 27 lots. The defendants occupied atimber chalet or bungalow on Lot 6 as their residence under an annual licence, for which theypaid an annual fee. They bought their chalet in 1971 for £250.

The plaintiffs bought the land in 1989 and wished to redevelop it. The licence fee was £3 in1971 and by 1989 it was £85. In 1990 the plaintiffs demanded a £1,000 licence fee. Thedefendants refused to pay and the plaintiffs claimed possession. The defendants claimed theywere tenants from year to year protected by the Rent Act 1997. The chalet rested on concretefoundation blocks in the ground and consisted of two bedrooms, a living room, kitchen andbathroom. It had been built before 1945, when the land was divided into lots.

The plaintiffs claimed that the chalet was not a fixture but a chattel (i.e. goods or a fitting) andthat the premises demised under the tenancy consisted only of the site without the chalet.Therefore, they contended, the defendants could not be protected by the Rent Act, must removethe chalet and vacate the site.

At first instance the Assistant Recorder held that the chalet had become annexed to and part ofthe realty or land and that the defendants were statutory tenants.

The Court of Appeal reversed this decision and allowed the plaintiffs appeal. They held that thechalet was a chattel, because it merely rested on the concrete foundation blocks and was notattached to them. The chalet was therefore not included in the tenancy of Lot 6.

The House of Lords then reversed the Court of Appeal decision. The Assistant Recorder hadseen the property in dispute. The Court of Appeal had neither seen it nor the photographs of it,which the House of Lords did see. The Lords held that where a house was constructed in sucha way that it could only be removed by demolishing it it could not have been intended to remaina chattel and must have been intended to form part of the land. On the other hand where ahouse was constructed in such a way as to be removable, whether as a unit or in sections (e.g.a Portakabin or mobile home) it might remain a chattel, even though it was connectedtemporarily to mains services such as water and electricity.

Applying common sense, when the defendants’ chalet was built it became part and parcel of theland and the absence of any physical attachment to the land was irrelevant. The appeal wasallowed.

Lord Lloyd said that a distinction simply between ‘chattels’ and ‘fixtures’ can be confusing. It isbetter to have a third category, i.e. that an object can also be ‘part and parcel of the land itself’.One would not call a building a ‘fixture’. A ‘fixture’ is something fixed to property. Or a ‘fixture’can be a tenant’s fixture and thus part of the land but nevertheless removable by the tenant atthe end of a lease. Thus in this case one must distinguish between whether the chalet is a‘chattel’ or part and parcel of the land itself.

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The practical implications of this case for land law are that things which rest on the land merelyby their own weight can now be classified as being part and parcel of the land. If when buyingor selling rural land items of property are not dealt with in the ‘Fixtures and Fittings’ form, as partof the conveyancing process, then disputes could arise as to whether the following items areincluded with the sale/purchase property or not. Such items which could not be considered topass with the land as being part of it are poultry sheds, food bins, milking machinery, fanmachinery in a grain dryer, bulk storage tanks, pig houses, timber stables and grain hoppers.

I will return to the Elitestone case after examining the other areas of fixtures law referred to inmy abstract.

Conservation Areas and Fixtures.

The Elitestone scenario was also the subject of a court decision in 1993: Swansea City Council,ex parte Elitestone [1993] J.P.L. 1019. The question was whether the chalets were ‘buildings’within planning law. If they were buildings (or structures or erections) then Conservation Areaconsent was required to demolish them before redeveloping the site. If the chalets were notbuildings but were chattels, then they could be removed without the need for consent. Thecourt had to have regard to planning precedents concerning the degree of permanence ofstructures and erections, for example cases concerning a mobile coal hopper (Cheshire CountyCouncil v. Woodward [1962] 1 All ER 517) and a large crane running on rails set in concrete(Barvis Ltd v. Secretary of State for the Environment [1971] 22 P & CR 710).

The Court of Appeal held that the chalets were ‘buildings’. It could be assumed they wereerected with a prospect of permanence, they had survived many years, and they had affectedthe physical quality of the land. Conservation Area consent was therefore required before theycould be demolished.

Listed Buildings and Fixtures

Another recent case shows that the law of fixtures and fittings applies equally to listed buildings.In Kennedy v. Secretary of State for Wales and Another [1996] E.G.C.S. 17, an enforcementnotice was issued against the removal from Leighton Hall, Welshpool, of a carrillon clock withoutlisted building consent. The clock was situated on the second floor of the entrance tower and itscase rested on its own colossal weight. The tower was a Grade II listed building. The questionfor the court was whether the clock was a fixture and thus part of the tower. In this case listedbuilding consent would be required for its removal. Alternatively was the clock a chattelbecause it was not fixed to the tower and only rested on its weight? In this case the clock wouldnot be a fixture and thus listed building consent would not be required.

The High Court held:

1. The clock was a fixture and listed building consent was required for its removal. A dualtest was to be applied: (i) the degree to which it was annexed to the building; and (ii) thepurpose for which it was put there see Berkley v. Poulett [1977] E.G.L.R. 86, whereScarman L.J. said that the question was also one of fact.

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2. The fact that the clock was freestanding was not of itself conclusive that it was not afixture, Leigh v. Taylor [1902] A.C. 157.

One might wonder how this case can be reconciled with Berkley v. Poulett (above) wheregarden ornaments and a statue of a Greek athlete weighing 10 cwt were held to be chattels andnot fixtures as in the Kennedy case. The answer may come in three points:

1. The question is one of fact for the court to decide – see Scarman L.J. above.

2. The clock was part of the original design of the tower and thus a fixture, as in D’Eyncourtv. Gregory (1866) LR 3 Eq 382. In that case a tapestry, pictures in panels, carvedstatutes, sculptured vases, stone lions and stone garden seats were held to be fixturesbecause they were part of the overall architectural design of the house.

3. The fact that the clock was freestanding did not mean conclusively that it was not afixture, Leigh v. Taylor (above).

It is submitted that today such a case as this would be bound by the House of Lords Elitestonedecision, i.e. that gravity is sufficient to make something a fixture, provided there is the intentionfor it to be a fixture and not a chattel, and that it is also intended to be there permanently.

Mortgaged Property and Fixtures.

A further recent case had to decide about a list of items in a flat at 2 Mores Garden, 90 CheyneWalk, London SW3. This was TSB Bank plc v. Botham [1997] 73 P & CR D1. The facts arethat the bank was mortgagee of this flat. It claimed that certain items were fixtures and thussubject to the mortgage, meaning that it could sell the items as being part of its security for themortgage.

It asked the court for a declaration to that effect. The Court of Appeal held:

1. That the usual two tests had to be applied, (a) the method and degree of annexation and(b) the object and purpose of annexation.

2. The issue whether items such as these had become fixtures depended on the intentionwith which they were brought into the flat and fixed in position.

3. If the item, viewed objectively, was intended to be permanent and a lasting improvementto the building, the item would have become a fixture. Whereas if the attachment wastemporary and no more than necessary for it to be used and enjoyed, then it wouldremain a chattel. The court then decided regarding each item in the flat.

4. Fitted carpets and curtains: carpets, whether fitted or not, and curtains lacked thepermanence expected by law to become part of the land. They were chattels.

5. Light fittings: there was no evidence here to justify a conclusion that these had becomefixtures. They were therefore chattels.

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6. Gas fires: nothing secured these other than their own weight and a gas pipe. The latterwas essential for their use and enjoyment, and so they were chattels.

7. Fitted bathroom fittings (towel rails, soap dishes, taps, a shower head, mirrors attachedto the walls, bath): where these had been fitted or built into a bathroom they all becamefixtures.

8. Fitted kitchen units: the photographs and common knowledge of the nature of such unitsmeant they had become fixtures.

9. White goods (oven, dishwasher, extractor fan, hob and freezer): here the degree ofannexation was slight, no more than was needed to allow normal use. They could bebought separately, by instalment, when ownership did not pass at once. They could bedisconnected without damage to the building. There was no intention to make apermanent improvement to the building. They were chattels. They might have beenfixtures if they had been permanently installed as part of a completely fitted kitchen with,for example, matching doors where appropriate.

Applying this case to rural, mortgaged or unmortgaged property, including farms, the followingtests need to be borne in mind:

1. The method and degree of annexation of, for example, bulk storage tanks, bolted downmotors, the machinery of grain dryers, etc.

2. The purpose of the annexation.

3. The intention, when fixing items to property.

4. Is or was the article intended to make a permanent improvement to the land or building?

5. Is or was the attachment temporary and no more than needed for the article to be usedor enjoyed?

The Law of Property Acts and Fixtures

The significance of the distribution between a fixture and a fitting or chattel is further seen whenthese statutes are examined.

By section 62(1), law of Property Act, 1925, a conveyance or transfer of land operates to passto the purchaser the vendor’s land including fixtures and natural fruits, but not fittings norindustrial fruits.

Secondly, a contract for the sale of land, (which includes fixtures), must be in writing under theLaw of Property (Miscellaneous Provisions) Act, 1989. However this does not apply to chattels,fittings nor industrial fruits, although this may be wise so as to have evidence of a sale of them.

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Stamp Duty and Fixtures

If an item in a property is a fixture then of course the value of that property is increased and maybecome subject to the newly increased levels of stamp duty. These are 1% for properties over£60,000, 2½% for properties over £250,000, and 3½% for properties over £500,000 with effectfrom 16th March 1999.

If however the item is a chattel, then the property may be reduced in value and escape liabilityto one of the new bands of stamp duty. One will not be able to avoid stamp duty by making anagreement with the other party that a particular item is a chattel, when in law it is a fixture, andthe recent cases on this distinction therefore become of importance in this respect also.

The law on fixtures and fittings with regard to landlords and tenants, tenants for life andremaindermen and devisees and personal representatives does not appear to have changedrecently, and so I will not discuss those areas.

However I did say that I would return to the Elitestone case. There are some comments in thejudgements which are useful for future guidance. First some points from Lloyd’s judgement:

1. He stated, “if a structure can only be enjoyed in situ and such that it cannot be removedin whole or in sections to another site, there is at least a strong inference that thepurpose of placing the structure on the original site was that it should form part of therealty at that site, and therefore cease to be a chattel”.

2. Since the Court of Appeal judgement, the House of Lords gave judgement in Melluish(Inspector of Taxes) v. BMI (no. 3) Ltd [1995] 4 All ER 453, where the senior law lord,Lord Browne-Wilkinson said, “The terms expressly or implicitly agreed between the fixerof the chattel and the owner of the land cannot affect the determination of the questionwhether, in law, the chattel has become a fixture and therefore in law belongs to theowner of the soil…”

Lord Lloyd comments, “If an express agreement cannot prevent a chattel from becomingpart of the land, so long as it is fixed to the land, it is obvious that a common assumptioncannot have that effect…”

Therefore Mr Morris was not estopped by convention from denying that the chalet was achattel. The convention here was that the chalets were owned separately from the land,since each occupier bought his chalet from the previous owner and paid an annuallicence fee to the freeholders. This was the common assumption.

The point here is (as with Stamp Duty) that one cannot agree with someone that anobject is a chattel when in law it is a fixture.

3. Lord Clyde stated, “as the law has developed it has become easy to neglect the originalprinciple from which the consequences of attachment of a chattel to realty derive. Thatis the principle of accession, from which the more particular example has beenformulated, inaedificatum solo solo credit. A clear distinction has to be drawn betweenthe principle of accession and the rules of removability….”

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Conclusions.

The conclusion from both the Elitestone cases, concerning the chalet and the conservationarea, is that if a ‘building’

1. is of residential design and construction,

2. is, regarded objectively, intended to be permanent (as opposed to a mobile home orPortakabin),

3. is attached to the land only by its weight, i.e. by gravity,

4. would need to be demolished in order to remove it,

then the building is part of the land itself and not a chattel or a fitting nor merely a fixture.

The conclusion from the Kennedy case is similar, is that an item secured simply by its ownweight, i.e. by gravity, is capable of being a fixture and therefore part of a listed building,requiring listed building consent for its removal or alteration.

The conclusion from the T.S.B. case is that household items can become fixtures if it wasobjectively intended that the item be permanently part of the property.

The distinction between what is a chattel and what is a fixture or part and parcel of the land is inaddition vital both in order to know what one is getting when buying real property, and as to howmuch Stamp Duty one is going to have to pay. It often boils down to a question of gravity.