Contract law cases: Dahlia v Four Millbank Nominees (1978)

In Dahlia v Four Millbank Nominees (1978) the plaintiff had agreed to purchase some property from the defendant and the defendant agreed to keep the option open if the plaintiff arranged for a bank draft to be delivered to the defendant within a certain time and date. The plaintiff complied with the defendant’s request but the defendant refused to proceed with the sale.

It was held that there was a contract in place and that the acceptance was similar to an acceptance in a unilateral contract. Once the offeree has started performing the act, the offeror must not stop or prevent the condition or the stipulation from being satisfied.

Copyright © 2019 by Dyarne Jessica Ward

Continue Reading

Land Law – ownership – above and below the surface I

Historically an owner in fee simple held the rights not only to what was on the surface of the land but also to what was above the land i.e. airspace, and to what was below the surface for example minerals, in line with the Latin maxim cuius est solum, eius est usque ad coelum et ad inferos which means “…. whoever owns the soil, holds title all the way up to the heavens and down to the depths of the earth ….”

S. 205 1 (ix) of the Law of Property Act 1925 gives us a more contemporary definition. The subsection reads as follows: –

“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 land; . . . and “mines and minerals” include any strata or seam of minerals or substances in or under any land, and powers of working and getting the same . . .; and “manor” includes a lordship, and reputed manor or lordship; and “hereditament” means any real property which on an intestacy occurring before the commencement of this Act might have devolved upon an heir;

Copyright © 2019 by Dyarne Jessica Ward

Continue Reading

Contract law cases: Routledge v Grant (1828)

In Routledge v Grant (1828) the defendant offered to take up a lease on the plaintiff’s premises and gave the plaintiff 6 weeks to make up his mind. 3 weeks later the defendant withdrew his offer and the plaintiff sued for a breach of contract. It was held that there was no breach of contract and that the defendant was free to withdraw his offer i.e. either party could either withdraw or reject the offer within the 6 weeks.

Copyright © 2019 by Dyarne Jessica Ward

Continue Reading

Land Law – Fixtures and Chattels (Summary)

Fixtures and Chattels

When it comes to land law it is important to distinguish between fixtures and chattels. While they may both look like a permanent feature of the land, they may vary with regards to ownership. A fixture will always belong to the owner of the land while a chattel may not necessarily belong to the owner of the land and may belong to someone else.

Another way of looking at it would be to regard a fixture as permanent property that is always attached to the land and a chattel as property that is not affixed to the land. A chattel may also be defined as an asset which is tangible and moveable and a chattel may become a fixture.

As per section 62 (1) of the law of Property Act 1925, a conveyance (sale or transfer) of land will include any fixtures on it. Section 62 (1) of the Law of Property Act 1925 reads as follows: –

“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”

In Holland v Hodgson (1872) the owner of a mill purchased some looms to be used in his mill and the looms were affixed to the floor with nails, giving them some degree of permanency. The owner then mortgaged the land and defaulted on the repayments. The mortgagee (the lender in a mortgage) sought to repossess the land and sought to take control of not only the mill, but also of the looms. The mortgagee could do so if the looms were a fixture and the question before the court was whether the looms were a fixture or a chattel.

The general rule is that what is annexed (affixed) to the land becomes part of the land and because the looms were attached to the land, they had become part of the land and were regarded as fixtures. Therefore, the mortgagee was entitled to them.

Any item that is affixed to the land is to be regarded as a permanent feature of the land unless it has been regarded all along as a chattel and was never intended to become a permanent feature of the land.

Whether an item is to be regarded as a fixture or a chattel depends on the facts of each case, and in deciding whether an item is a fixture or a chattel, we have to take into account two factors: –

1) The degree of annexation

2) The object of annexation

An item that is attached to the land by no more than its own weight is normally regarded as a chattel say for example a block of stone that has just been left in the backyard as opposed to an item that is affixed to the land by some devise or mechanism, i.e. if the same block of stone was cemented to the land in the backyard than it would become a fixture but even then it is difficult to say with any degree of certainty without looking into the facts of the case if an item is a fixture or a chattel and we also have to take into account the intentions of the mortgagor when the item was first brought on to the land.

If the mortgagor intended the item to be a chattel it is best that he maintains that intention from the start and conveys that intention to the mortgagee.

Hobson v Gorringe (1897) gives us a practical example of how a chattel can become a fixture. The freeholder of a sawmill or an owner in fee simple (a fee simple means absolute ownership of land or a landowner whose interests in the land cannot be disputed) went on to purchase a gas engine under a hire purchase agreement and as per the agreement the gas engine was to remain a chattel until the final instalment was paid, and affixed the gas engine to the land with bolts.

The hirer then mortgaged the land to a third party and defaulted on the hire purchase agreement. A dispute arose between the owner (a person who has sold goods under a hire purchase agreement and the mortgagee).

If the gas engine was a still a chattel, as per the hire purchase agreement, then the owner was entitled to take it back. However, if the gas engine had become a fixture, then it had become a part of the land and the owner cannot take it back without the consent of the mortgagee.

The court of appeal, taking into account the decision in Holland v Hodgson (1872), decided that there had been sufficient annexation to make the gas engine a permanent feature of the land and hence the gas engine had ceased to remain a chattel and had become a fixture.

In Monti v Barnes (1901) we look into whether fixtures, when they are taken out and replaced, by something that is different but serves the same purpose, remain as fixtures or if they are to be regarded as chattels.

According to the facts of the case the mortgagor removed from the house a number of ordinary fixed grates and replaced them with dog grates which were considerably lighter which were not in any way affixed to the freehold and the question before the court was whether the new dog grates were to be regarded as fixtures or as chattels.

In coming to a decision, the court decided that it needed to look into the intention of the mortgagor at the time he replaced the grates or substituted the grates and it was obvious that “he could not have intended for the house to be without grates”.

The question that had to be asked was, having regard to the character of the articles (grates) and the circumstances of the case, whether the articles were intended to be annexed to the freehold or if they were intended to continue as chattels and the court decided that it was the former i.e. that the articles had become a permanent feature of the freehold and were to be regarded as fixtures.

In Reynolds v Ashby and Son Limited (1903) the lessee of a property (a 99 year lease or a leasehold property, there are usually two types of properties, freehold and leasehold (properties than are leased for 99 years, normally from the time of construction) erected a factory on the property and purchased some machines under a hire purchase agreement. He had the machines affixed to the floor of the factory with bolts.

There was evidence to suggest that the machines would have worked even if they were not affixed to the floor but it was better to have the machines bolted to prevent movement caused by vibration.

The lessee then mortgaged the property and defaulted on the mortgage. The question before the courts was whether the machines were fixtures, in which case the mortgagee was entitled to them or if they remained as chattels as per the hire purchase agreement, in which case the owner could take them back.

It was held that the machines had become fixtures. Lord Lindley – “The purpose for which the machines were obtained and fixed seems to me unmistakable; it was to complete and use the building as a factory. It is true that the machines could be removed if necessary, but the concrete beds and bolts prepared for them negative any idea of treating the machines when fixed as movable chattels.”

In Crossley Brothers Limited v Lee (1908) it was held that the relationship between a tenant and a landlord is similar to the relationship between a mortgagor and a mortgagee.

The tenant purchased an engine which was affixed to the floor with bolts and then defaulted on the rent. The landlord took his property back and the question that arose was whether the engine was a fixture or a chattel. If the engine had become a fixture it was a permanent feature of the property and the landlord was entitled to it.

The Divisional Court held that the engine had become a fixture and could not be removed from the property and added that the tenant-landlord relationship is similar to the mortgagor-mortgagee relationship.

The decision may have been made in light of the fact that there may have been an arrears and to allow the landlord to recover some of his losses.

In Horwich v Symond (1915) it was established that before a chattel can become a fixture there must be some degree of permanency and that degree of permanency is sometimes measured by the passage of time.

The tenant at a chemist’s shop brought in a display unit, counter, show case and a bottle rack and had them affixed to the floor of the shop with plastic nails. The question arose whether the articles were to be regarded as chattels or as fixtures and the trial judge decided that the items were not fixtures.

On appeal, the court of appeal upheld the decision of the trial judge and added that whether an article or an item is regarded as a chattel or a fixture is a question of fact i.e we have to look at the facts of each case as opposed to just the law or in other words we have to look into the substance rather than just the form.

It could also be a question of fact and law or of both substance and form but we can’t get away from what was said in Holland v Hodgson (1872) in that, the courts have to look into the facts of each case before they can decide if an article or an item is a chattel or a fixture.

In Pole-Carew v Western Counties and General Manure Co (1920) the defendant set up an artificial manure manufacturing factory on a plot of land that he’d lease. The lease had been renewed three times, and at the time of the first lease, or when he’d initially leased the property, the factory was not set up and was without any chattels.

By the time of the third lease however there was a complete factory, that was fully operational and most of the setting-up was done after the defendant had initially leased the property and from all accounts by the time of the first renewal or the second lease the factory was in place.

During the third lease, there was a fire that destroyed most of the equipment in the factory and the landlord claimed damages for the tenant’s or the defendant’s breach of repair, reinstatement and insurance agreements (covenants) and the defendant argued that the factory and equipment were chattels or “tenant fixtures” (the tenant has a right to remove certain fixtures and these fixtures are known as tenant fixtures. At law tenant fixtures belong to the landlord until the tenant exercises the right to remove them) and that being the case the factory and the equipment fell outside the scope of the agreements (covenants).

It was decided that the entire structure and everything in it or everything that was attached to it formed one single unit and therefore neither the factory nor the equipment could be regarded as chattels. The unit was firmly embedded to the land and that being the case it could not be a tenant fixture and must be regarded as something that was permanently annexed to the freehold or the land i.e., a fixture.

In Vaudeville Electric Cinema v Muriset (1923), the mortgagor owned and operated a cinema which he’d mortgaged to a bank and he subsequently defaulted on the repayments, and the bank sought to repossess the cinema in lieu of the arrears or the outstanding payments. The issue before the courts was whether four items were to be regarded as chattels or fixtures. The items were: –

  • The cinema screen which was fixed by blocks to the wall
  • Two oil paintings that were on the walls of the hall
  • Four advertising boards fastened outside the walls and attached with screws to the hall post, and
  • 477 plush cushioned, tip-up seats, attached to the floor

It was held that all the items, though removable were to be regarded as permanent features of the building and were part of the ordinary equipment of the building for the purpose which the building was used and therefore were permanent fixtures.

The cinema must have a screen in which to project images on, the paintings form part of the decoration, and the advertising boards outside were attached to the building and form part of the permanent structure. As for the seats, though it is possible to hire them for a short twelve-week period, the seats in question had been in the cinema for a lot longer than that.

In Never-Stop Railway (Wembley) Ltd v British Empire Exhibitions (1924), British Empire Exhibitions entered into an agreement with Never-Stop railway to occupy as much land as might be reasonable for the purposes of constructing, erecting and operating, a railway line, on the exhibition grounds. Once the exhibition was over British Empire Exhibitions required Never-Stop railway to remove the structures, but the requirement to do so was never stipulated in the agreement. British Empire Exhibitions argued that the requirement to do so was implied.

It was held that when a tenant erects a building or a facility on the land, the building or facility, upon the demise of the lease becomes the property of the landlord, and in such instances and in the absence of any agreement which stipulates to the contrary and if the building or the facility is not erected in contravention of some stipulation in the lease, the tenant is under no obligation to remove the building or the facility upon the completion of the lease.

In Boswell v Crucible Steel Co. (1925) the tenant covenanted with the landlord to repair the interior of a demised property which by design and construction were made largely of glass. The question arose whether the plate glass windows were the landlord’s fixtures within the meaning of the repairing covenant (agreement) – fixtures are things that form part and parcel of the land.

Atkin LJ “. . . I am quite satisfied that they are not landlord’s fixtures, and for the simple reason that they are not fixtures at all in the sense in which that term is generally understood. A fixture, as that term is used in connection with the house, means something which has been affixed to the freehold as accessory to the house. It does not include things which were made part of the house itself in the course of its construction.”

In Spyer v Phillipson (1931) Upon the dead of the lessee (a tenant or someone who holds the lease to a property), his executors claimed the right to remove the paneling, the chimney pieces and the fireplaces installed by the lessee. The lessor (landlord) counter claimed that the removal of the items would cause damage to the property and the question before the courts was whether the items were: –

1) Chattels and

2) If the items could be removed.

It was held that the items installed by the lessee were chattels, and that they could be removed as long as the removal did not cause any damage to the property. If any damage was done to the property during the removal then either the lessee or his executors must repair the damage.

In Webb v Frank Bevis (1940) which was with regards to the removal of a shed constructed with corrugated iron supported by timber posts and iron straps that were bolted to the posts, it was decided that whether an item could be removed or otherwise, (it could be removed if it was a chattel) depended on the usefulness of the item. If it was merely ornamental it would be regarded as a tenant’s fixture or a chattel that could be removed.

However, if the item is regarded as a landlord’s fixture or a permanent part of the freehold then it would not be possible to remove the item.

In deciding whether the item in question is a chattel or a fixture or a tenant fixture (chattel) or a landlord fixture (fixture per se) the court will look into the degree of annexation i.e. how attached the item is to the property and one way of determining the degree of annexation is to look at the type or extent of damage it would cause to the property if removed and quantify that in monetary terms.

In Jordan v May (1947) the matter before the court was whether an electric motor and batteries were to be regarded as fixtures or chattels and while the were both normally regarded as a single unit and it was necessary for both items to be in place for the motor to work or fulfil its purpose, it was possible to look at the items separately in order to identify whether they were fixtures or chattels.

It was held that because the motor was sunk into the concrete and held firmly in place or was held in place in a manner that made it difficult to remove or it could not be removed without causing some damage to the property, it was a fixture and because the batteries were resting on their own weight and could be removed easily without causing any damage to the property they were chattels.

In Berkley v Poulett (1976) the owner of an estate had agreed to sell part of his property (Hinton House) at an auction and the new owner intended to purchase the property intact because he wanted to turn it into a tourist attraction. The arrangement was concluded but the sale was delayed for a couple of years during which time the original owner had removed some paintings that were attached to a wood paneling, a sundial and an antique statute of a Greek athlete. Both the paintings, the sundial and the sculpture were of some value and the new owner brought an action against the original owner claiming that the paintings, sundial and sculpture were fixtures and therefore they could not be removed.

It was held that the paintings, the sundial and the sculpture were chattels and therefore they could be removed prior to the property changing hands. Once again, we have to look at the degree of annexation i.e. how attached the items were to the property and if the removal of the items would cause any damage to the property and if so try and quantity that damage in monetary terms.

In N H Dunn Pty Ltd v L M Ericsson Pty Ltd (1980) a PABX system rented by a tenant via a third party (a telephony service provider) was held not to be a fixture despite the fact that the PABX system was affixed to the premises/land and cabled through several rooms. The tenant had a ten-year lease on the premises/land with an option for renewal.

The degree of annexation was small i.e. the extent the system and its components were attached to the premises/land was minor and therefore they could not be regarded as fixtures.

In New Zealand Government Property Corp. v HM & S Ltd (1982) a tenant occupied a theater under a lease. The lease was granted in 1896 and the tenant had made the necessary renovations to make the premises suitable for the purpose it was leased. When the tenant vacated, the tenant removed the tenant fixtures.

The matter was brought before a judge and it was decided that where a tenant remains in possession of the items with the landlord’s consent or pursuant to a statutory provision, the tenant retains the right to remove the items when the tenant vacates.

Dunn L.J. – “If a tenant surrenders his lease and vacates the premises without removing the tenant’s fixtures, then he is held to have abandoned them. But if he surrenders his lease, either expressly or by operation of law, and remains in possession under a new lease, it is a question of construction of the instrument of surrender whether or not he has also given up his right to remove his fixtures. If nothing is said, then the common law rule applies, and he retains his right to remove the fixtures so long as he is in possession as a tenant”.

In Short v Kirkpatrick (1982) (High Court of Wellington) the tenants at a lawyer’s office had partitions installed that were affixed to the floor with ramjet pins and attached to the ceiling with nails. The partitions were removable partitions, and it was possible to remove the partitions without causing any damage to the premises.

The matter was brought before a judge and the question that was to be decided was whether the partitions were permanently affixed to the premises or were landlord fixtures or fixtures per se or whether the partitions were tenant fixtures (chattels). It was held that the partitions were tenant fixtures (chattels).

In Mancetter Developments Ltd v Garmanson Ltd (1986) the director of a tenant company was held accountable when the company removed industrial machinery from a leased premises without making good on the damage that was done.

In this instance the damage was holes in the walls that were drilled for the installation of pipes and fittings and the court reaffirmed the decision in Spyer v Phillipson (1931).

In Palumberi v Palumberi (1986) two brothers had equal share in two self-contained flats which they held as tenants in common (an arrangement where two or more people hold an ownership interest in a property). One brother agreed to sell his share to the other and prior to the property changing hands the brother who had sold his shares striped the property, and removed among other things, a stove and the carpets. The question before the courts was whether the items that had been removed were fixtures or chattels.

As per the rule in Holland v Hodgson (1872) whether an item is to be regarded as a fixture or a chattel depends on the facts of each case. It was held that the stove and the carpets were fixtures but all other items were chattels.

S. 10 of the Agricultural Holdings Act 1986 sheds more light on a tenant’s right to remove fixtures and buildings.

(1) Subject to the provisions of this section—

(a) any engine, machinery, fencing or other fixture (of whatever description) affixed, whether for the purposes of agriculture or not, to an agricultural holding by the tenant, and

(b) any building erected by him on the holding,shall be removable by the tenant at any time during the continuance of the tenancy or before the expiry of two months from its termination, and shall remain his property so long as he may remove it by virtue of this subsection.

(2) Subsection (1) above shall not apply—

(a) to a fixture affixed or a building erected in pursuance of some obligation,

(b) to a fixture affixed or a building erected instead of some fixture or building belonging to the landlord,

(c) to a building in respect of which the tenant is entitled to compensation under this Act or otherwise, or

(d)  to a fixture affixed or a building erected before 1st January 1884.

(3) The right conferred by subsection (1) above shall not be exercisable in relation to a fixture or building unless the tenant—

(a) has paid all rent owing by him and has performed or satisfied all his other obligations to the landlord in respect of the holding, and

(b) has, at least one month before both the exercise of the right and the termination of the tenancy, given to the landlord notice in writing of his intention to remove the fixture or building.

(4) If, before the expiry of the notice mentioned in subsection (3) above, the landlord gives to the tenant a counter-notice in writing electing to purchase a fixture or building comprised in the notice, subsection (1) above shall cease to apply to that fixture or building, but the landlord shall be liable to pay to the tenant the fair value of that fixture or building to an incoming tenant of the holding.

(5) In the removal of a fixture or building by virtue of subsection (1) above, the tenant shall not do any avoidable damage to any other building or other part of the holding, and immediately after the removal shall make good all damage so done that is occasioned by the removal.

(6) Any dispute between the landlord and the tenant with respect to the amount payable by the landlord under subsection (4) above in respect of any fixture or building shall be determined by arbitration under this Act.

((6A) Notwithstanding subsection (6) above, the landlord and tenant may instead refer for third party determination under this Act the dispute that has arisen with respect to the amount payable by the landlord under subsection (4).)

(7) This section shall apply to a fixture or building acquired by a tenant as it applies to a fixture or building affixed or erected by him.

(8) This section shall not be taken as prejudicing any right to remove a fixture that subsists otherwise than by virtue of this section.

In Young v Dalgety (1987) the landlord entered into an agreement with the tenant to lease his property and as per the agreement, the tenant was to install the fittings for the lighting and to do the flooring. Both the fittings for the lightings and the flooring were firmly affixed to the property and when the rent was reviewed as per the provisions of the lease (rent review is done at specified intervals) the landlord argued that the fixtures were landlord fixtures or fixtures per se while the tenant claimed that they were tenant fixtures or chattels.

The matter was taken to court and it was decided that the lighting fixtures and the flooring were tenant fixtures and could be removed. In most instances’ fixtures attached to a property by tenants to conduct their trade or business as the tenant had asserted are to be regarded as tenant fixtures or chattels.

It is however also relevant to consider the extent of the damage, if any, the removal of the fixtures will cause to the property, and if the landlord is adequately compensated.

Copyright © 2019 by Dyarne Jessica Ward

Continue Reading

Contract law cases: Payne and Cave (1789)

In Payne and Cave (1789) the defendant made an offer at an auction but withdrew his offer prior to fall of the auctioneer’s hammer. It was held that the defendant was free to withdraw his offer at any time prior to the fall of the hammer.

Items at an auction are invitations to treat and it is up to any interested party to step up and make an offer which the auctioneer can either accept or reject.

Copyright © 2019 by Dyarne Jessica Ward

Continue Reading

Land Law XXIII – Fixtures and Chattels

In Scottish Mutual Assurance Society Ltd v British Telecommunications plc (1999) it was held that should a lessor (landlord or a person who rents out his property) require that his property be reinstated to its original layout and design or the way it was prior to the lessee (tenant or someone who rents a property) moving in, he should give the tenant enough time to do so.

A notice was served 6 days prior to the expiration of the lease and when the matter was taken to court it was held that 6 days was not sufficient notice and that the lessor is required to give the tenant reasonable time to make any changes or alterations that are necessary.

Copyright © 2019 by Dyarne Jessica Ward

Continue Reading

Contract law cases: Stevenson, Jacques & Co. v McLean (1880)

In Stevenson, Jacques & Co. v McLean (1880) the defendant wrote to the plaintiff offering to sell a specific quantity of iron, cash, and left the offer open until Monday. On Monday morning, the plaintiff wrote to the defendant asking if the defendant would accept delivery over 2 months or otherwise the longest time permissible. The defendant did not reply but sold the iron instead to a third party.

The plaintiff not having heard from the defendant, later on the same day sent a telegram stating that he’d accepted the defendant’s offer. It was held that there was a valid contract in place because the plaintiff’s initial telegram did not amount to a counter proposal and that it was a mere inquiry.

Copyright © 2019 by Dyarne Jessica Ward

Continue Reading

Contract law cases: Northland Airliners Ltd v Dennis Ferranti Meters Ltd (1970)

In Northland Airliners Ltd v Dennis Ferranti Meters Ltd (1970) the seller negotiated with the buyer for the sale of an aircraft. The seller then sent a telegram stating that the sale was confirmed and asked the buyer to remit the specified amount. The buyer remitted the said amount, with the condition that it was to be held in trust until the delivery of the aircraft and added that the delivery was to be made by a third party and within a specific date.

The seller did not reply but sold the aircraft to another buyer for a higher price. The Court of Appeal held that there was no contract between the parties. The buyer’s reply introduced two new terms with regards to payment and delivery.

Copyright © 2019 by Dyarne Jessica Ward

Continue Reading

Contract law cases: Hyde v Wrench (1840)

In Hyde v Wrench (1840) the defendant wrote to the plaintiff offering to sell his farm for a £1,000 to which the plaintiff replied that he was willing to buy it for £950.

The defendant refused to sell the property for £950 and a few days later the plaintiff wrote to the defendant stating that he was willing to purchase the property for £1,000. It was held that the plaintiff’s counter offer was a rejection of the defendant’s offer and that the original offer could not be revived.

Copyright © 2019 by Dyarne Jessica Ward

Continue Reading

Contract law cases: Felthouse v Bindley (1862)

In Felthouse v Bindley (1862) a man wrote to his nephew informing him of his intention to purchase his nephew’s horse. He further stated that if he hears no more about the horse he’ll considered that the horse is his. The nephew did not reply to his uncle but he did instruct the auctioneer not to sell his horse along with his other farming stock. The auctioneer forgot and sold the horse.

The court held that despite the fact that the nephew may have intended to sell the horse to his uncle by instructing the auctioneer not to sell the horse along with his other farming stock, his intention was never communicated to his uncle and therefore there was no contract. As a general rule silence, does not constitute the acceptance of an offer.

Copyright © 2019 by Dyarne Jessica Ward

Continue Reading
1 2 3 55