DEFINITION OF LAND

What is covered1. Definition of ‘land’ under NLC2. English Law of Fixtures: Holland v Hodgson3. Degree of Annexation Test4. Purpose of Annexation Test5. Applicability in Malaysia: Goh Chong Hin v Consolidated

Malay Rubber Estate6. Effect of a Retention of Title clause7. Exceptions to the law of fixtures

Definition of ‘land’ under NLC• S 5 NLC:

Land includes:a) The surface of the earth and all substances forming that

surface;b) The earth below the surface and all substances therein;c) All vegetation and other natural products, whether or not

requiring the periodical application of labour to their production and whether on or below the surface;

d) All things attached to the earth or permanently fastened to anything attached to the earth, whether on or below the surface; and

e) Land covered by water.

• 1st limb• (d) all things attached to the earth or permanently

fastened to anything attached to the earth, whether on or below the surface;

• 2nd limb• (d) all things attached to the earth or permanently

fastened to anything attached to the earth, whether on or below the surface;

• whether on or below the surface

Importance of defining what constitutes land

1. To determine the right of a purchaser on certain items in a sale and purchase transaction of a piece of land.Example• Mr A is the registered proprietor of a piece of land with a

house built on it. He wishes to sell the land to Mr B. Who has the right over all the items attached to the house on the land?

2. To determine the right of chargee banks over the land charged to them as security.Example• Mr A is the registered owner of a piece of land. He applies

for loan from a bank. As security for the loan, he charges the land to the bank. Therefore, if Mr A defaults in payment, the bank can sell the land. Who has the right over all the items attached to the house on the land?

Legal maxim on fixtures• Quicquid plantatur solo, solo cedit• "whatever is affixed to the soil belongs to the soil”• This legal principle means that something that is or

becomes affixed to the land becomes part of the land; therefore, title to the fixture is a part of and passes with title to the land and consequently whosoever owns that piece of land will also own the things attached.

Fixtures and Chattels

FIXTURE• a fixture is an item that is attached to the land and immovable.

• shall form part of land

CHATTEL• a chattel is an item even if attached to the land, it is removable.

• shall not form part of land

The English law of fixturesLaid down in Holland v. Hodgson• (1872) L.R. 7 C.P. 328• The owner of a mill purchased some looms for use in his

mill. They were attached to the stone floor by nails driven into wooden beams. They could quite easily be removed. The owner then mortgaged the mill and failed to keep up the payments and the mill was repossessed. The question for the court was whether the looms were fixtures forming part of the land or whether they remained chattels.

• Held: The looms had become fixtures and thus formed part of the land mortgaged.

• Blackburn J introduced the degree and object of annexation test:

“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. On the other hand, an article may be very firmly fixed to the land, and yet the circumstances may be such as to show that it was never intended to be part of the land, and then it does not become part of the land.”

• He continued:“…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 shew that they were intended to be part of the land, the onus of shewing that they were so intended lying on those who assert that they have ceased to be chattels, and that, on the contrary, an article which is affixed to the land even slightly is to be considered as part of the land, unless the circumstances are such as to shew that it was intended all along to continue a chattel, the onus lying on those who contend that it is a chattel."

English Law of Fixtures• Two tests to determine if an article is a fixture or a chattel:

1. Degree of annexation test2. Purpose/object of annexation test

• BOTH tests must be applied

Degree of annexation test• An objective test on the physical attachment of the article.• Raises a prima facie finding of fact by looking at the

degree to which an article is affixed to the land.• (Raises a PRESUMPTION which can be rebutted by the

Purpose Test)

1. If an article is affixed to the land even slightly the presumption is that it is a fixture.

2. If an article is attached to the land by its own weight remains a chattel.

The Damage Factor

1. If the removal of the article would result in damage to the article the presumption is that it is a fixture.

2. If the removal of the article does not result in damage to the article cannot presume that it is a chattel but to look at the purpose

Purpose of annexation test• The prima facie finding in the Degree Test may be

strengthened or rebutted by the Purpose Test.

• Applying the degree test, if there is no physical attachment to the land the presumption is that it is a chattel.

• However, Blackburn J. in Holland v. Hodgson : "But even in such a case, if the intention is apparent to make the articles part of the land, they do become part of the land.“

• Intention in this context is to be assessed objectively and not subjectively.

• It is the purpose which the object is serving which has to be regarded, not the purpose of the person who put it there.

• The question is whether the object is designed:

• To enhance the value and utility of the land / for the improvement or more complete enjoyment of the land / for the use or enjoyment of the land

• Or, for the more complete use or enjoyment of the thing itself.

• If an article is attached to the land for the better enjoyment of the land as a whole so as to improve its usefulness and value strengthens the presumption that it is a fixture.

• If an article is attached to the land merely for the more complete enjoyment and use of the item as a chattel rebuts the presumption that it is a fixture.

Mather v Fraser• “where and article is affixed by the owner of

the fee, though only affixed by bolts and screws, it is to be considered part of the

land, at all events when the object of setting up the articles is to enhance the

value of the premises to which it is annexed for the purpose to which those premises

are applied”.

Leigh v Taylor [1902] AC 157

• Madame de Falbe was the tenant for life of a mansion. She had placed some valuable tapestries in the mansion which were stretched on to hard match board and affixed to the walls by nails. They could be removed with slight disturbance to the walls. On Madame de Falbe’s death, the court were required to determine whether the tapestries had become fixtures belonging to the mansion or whether they remained chattels.

• Held:• The tapestries remained chattels and did not form part of

the mansion.

• Earl of Halsbury LC:• “It never was intended to remain a part of the house; the

contrary is evident from the very nature of the attachment, the extent and degree of which was as slight as the nature of the thing attached would admit of. Therefore, I come to the conclusion that this thing, put up for ornamentation and for the enjoyment of the person while occupying the house, is not under such circumstances as these part of the house. That is the problem one has to solve in each of these cases. If it is not part of the house, it falls under the rule now laid down for some centuries, that it is a sort of ornamental fixture, and can be removed by whoever has the right to the chattel - whose it was when it was originally put up.”

D'Eyncourt v Gregory (1866) LR 3 Eq 382

• The court was required to determine if some tapestries, some ornamental statues of lions in the hall, staircase and gardens, some vases resting in nitches and stone garden seats were fixtures or chattels.

• Held:• The tapestries were fixtures as they were integral to the

decoration of the room where they attached as wallpaper or frescos. The statue of lions, the garden seats and vases were also fixtures as they formed part of the overall architectural design.

• Lord Romilly MR:•  "I think it does not depend on whether any cement is

used for fixing these articles, or whether they rest on their own weight, but upon this--whether they are strictly and properly part of the architectural design for the hall and staircase itself and put in there as such, as distinguished from mere ornaments to be afterwards added."

Berkley v Poulett [1976] EWCA Civ 1  Court of Appeal• Lord Poulett sold his estate at auction on 2nd August 1968 to Effold

Ltd. Effold Ltd had agreed to sell part of the estate, consisting of Hinton House, to Mr Berkley should they succeed in purchasing the house at auction. Mr Berkley wished to turn the house into a tourist attraction and wanted to keep as many of the original features of the property. The completion of the sale was delayed and did not take place until Nov 1968. During this period, Lord Poulett had sold several items which Mr Berkley claimed were fixtures and thus title had passed to him under the contract of sale. The disputed items consisted of several valuable paintings which were set into oak panelling, a large marble statue of a greek athlete which weighed half a tonne and rested on its own weight on a stone plinth on the west lawn and a large sundial also resting on its own weight outside the south wing.

• Held:• The items were chattels. Scarman LJ indicated that the

object of annexation has greater significance than the degree of annexation. The paintings were affixed for the better enjoyment of them as paintings and the statue and sundials were also placed for the better enjoyment as chattels.

• Scarman LJ:• “a degree of annexation which in earlier times the law would have

treated as conclusive may now prove nothing. If the purpose of the annexation be for the better enjoyment of the object itself, it may remain a chattel, notwithstanding a high degree of physical annexation. Clearly, however, it remains significant to discover the extent of physical disturbance of the building or the land involved in the removal of the object. 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. The relationship of the two tests to each other requires consideration. If there is no physical annexation there is no fixture. Quicquid plantatur solo solo cedit. Nevertheless an object, resting on the ground by its own weight alone, can be a fixture, if it be so heavy that there is no need to tie it into a foundation, and if it were put in place to improve the realty. Prima facie, however, an object resting on the ground by its own weight alone is not a fixture.

• Conversely, an object affixed to realty but capable of being removed without much difficulty may yet be a fixture, if, for example, the purpose of its affixing be that 'of creating a beautiful room as a whole' (Neville J in In Re Whaley [1908] 1 Ch 615 at p 619). Today so great are the technical skills of affixing and removing objects to land or buildings that the second test is more likely than the first to be decisive. Perhaps the enduring significance of the first test is a reminder that there must be some degree of physical annexation before a chattel can be treated as part of the realty.”

• Stamp LJ• “I find it impossible to conclude that on the setting up of the panelling

around them they lost their character as chattels and became part of Hinton House. They were still enjoyed as theretofore as pictures albeit in a different setting and removed with little more difficulty than any large framed portrait fastened to a wall by mirror plates. …That statue was no doubt sited at a key point in the most advantageous position in the grounds; and just as a picture is placed in a room not merely for the purpose of its enjoyment as a picture but also to embellish and beautify the room in which it is placed and may be positioned for that purpose, so no doubt was the Greek athlete statue sited. This particular statue if fixed at all to the plinth on which it stood was removed with minimal damage and in my judgment it did not lose its character as a chattel to be enjoyed as such by reason of being so fixed. Similar considerations in my judgment apply to the sundial, which was removed and was removed without any damage at all.”

Botham v TSB Bank (1996) 7 P & C R D 1  Court of Appeal• Mr and Mrs Botham defaulted on their mortgage and

removed various items before the bank took possession of the house. The Court of Appeal were required to consider whether various household items were fixtures or chattels.

• Held:• The bath, lavatory and bathroom fittings were fixtures in

addition to the kitchen sink and units. The curtains, carpets, light fittings, kitchen appliances such as washing machines, dishwashers, cookers were chattels.

• Roch LJ:• “If the item viewed objectively, is intended to be

permanent and to afford a lasting improvement to the building, the thing will have become a fixture. If the attachment is temporary and is no more than necessary for the item to be used and enjoyed, then it will remain a chattel.”

The degree and object of annexation test can give different results even if the articles are the same

Lyon & Co v London City and Midland Bank [1903] 2 KB 135• The claimants hired out some seating to Mr Brammall for use in

his cinema for a period of 12 weeks. The terms of the contract granted an option to purchase the chairs but this option was never exercised.  The local authority required the seating in the cinema to be fastened to the floor and therefore Mr Brammall fixed the chairs to the floor with screws.  Mr Brammall then mortgaged the cinema to the defendant bank and defaulted on payments. The defendants took possession of the cinema and the claimant brought an action for delivery up of the seating and damages for their wrongful detention. The defendants argued that the seating had become fixtures and therefore title had passed to them.

• Held:• The chairs were chattels

• Joyce J:• “No doubt a chattel on being attached to the soil or to a

building prima facie becomes a fixture, but the presumption may be rebutted by showing that the annexation is incomplete, so that the chattel can be easily removed without injury to itself or to the premises to which it is attached, and that the annexation is merely for a temporary purpose and for the more complete enjoyment and use of the chattel as a chattel…. These chairs did not cease to be chattels on being screwed to the floor and the property in them did not pass to the defendants.”

Vaudeville Electric Cinema v Muriset [1923] 2 Ch 74• Cinema chairs attached to the floor of the cinema by

screws were held to constitute fixtures despite the fact they could be easily removed without too much damage. They had been affixed in order to become a permanent feature and to enable the building to be better enjoyed as a cinema. Ownership of the chairs thus passed to the bank when the claimant defaulted on their mortgage payments.

The subjective intention of the parties will not affect the question of whether a chattel has become a fixture:

• Re De Falbe [1901] 1 Ch 523• Vaughan Williams LJ said that there was not to be an

inquiry into the motive of the person who annexed the articles, "but a consideration of the object and purpose of the annexation as it is to be inferred from the circumstances of the case.“

• Dixon v Fisher (1843) 5 D 775•  Lord Cockburn:•  "no man can make his property real or personal by

merely thinking it so." The matter has to be viewed objectively.”

Elitestone v Morris [1997] 1 WLR 687  House of Lords• Elitestone purchased the freehold to the land on which Mr

Morris’s bungalow (and 26 others)was situated. Elitesone wished to demolish the properties on the land with a view to redevelopment. Elitestone brought proceeding against all the residence seeking possession of the land. Mr Morris defended the action claiming protection under the Rent Acts. The Rent Act would only protect Mr Morris if the bungalow formed part of the realty. Elitestone argued that the bungalow was separate from the land since it rested on its own weight on concrete pillars and was not physically attached to the land.

• Held:• Considering both the degree of annexation and object of

annexation (Holland v Hodgson) the bungalow formed part of the realty.

• Lord Lloyd:• “In the case of the house the answer is as much a matter of

common sense as precise analysis. A house which is constructed in such a way so as to be removable, whether as a unit, or in sections, may well remain a chattel, even though it is connected temporarily to mains services such as water and electricity. But a house which is constructed in such a way that it cannot be removed at all, save by destruction, cannot have been intended to remain as a chattel. It must have been intended to form part of the realty…. I do not doubt that when Mr. Morris' bungalow was built, and as each of the timber frame walls were placed in position, they all became part of the structure, which was itself part and parcel of the land. The object of bringing the individual bits of wood onto the site seems to be so clear that the absence of any attachment to the soil (save by gravity) becomes an irrelevance.”

Application to Malaysia• The English law of fixtures applies to Malaysia• Goh Chong Hin v. Consolidated Malay Rubber (1924)

5 FMSLR 86:

Goh Chong Hin v ConsolidatedApril 1921 - Goh Chong Hin charged his land including buildings and factory to SRMS Lechman Chetty (chargee).

There were machinery in the factory. Annexed by nuts and bolts to concrete foundations sunk in the soil.

June 1921 – Goh Chong Hin executed Bill of Sale over the machinery in the factory to Consolidated Malay Rubber Estates Ltd (grantee)

October 1923 – The chargee by the consent of Goh Chong Hin took possession of the land and the factory.

December 1923 - The grantee applied for order to seize and sell the machinery by virtue of the Bill of Sale.

land machinery

Goh Chong Hin(LANDOWNER)

CHARGEE GRANTEE (Respondent)

Item in dispute:Machinery in the factory. Annexed by nuts and bolts to

concrete foundations sunk in the soil.

• Chargee: They are fixtures!!!

• Grantee/Respondent: They are chattels!!!

the court held…

• Trial judge held in favour of grantee/respondent• The machinery chattel.

• On appeal, held:• English law of fixtures applies.• Applied the test laid down in Holland v Hodgson• The machinery fixture.

• Reason for decision:• Based on the Degree Test, the presumption is that the

machinery were fixtures and applying the Purpose Test, the machinery were attached to enhance the value and utility of the land for a rubber estate. This strengthens the presumption that the machinery were fixtures.

• (Note: The respondent/grantee had failed to rebut the presumption that the machinery were fixtures.)

Points from Goh Chong Hin1. The first case in Malaysia where the court applied the English

Law of Fixtures.Sproule CJC:

“ I have no doubt that we are to apply in this country the ordinary English law of fixtures”

2. In relationships between chargor and chargee, all fixtures whether attached before or after the date of the charge, pass to the chargee unless otherwise provided for in the charge agreement.

3. The Degree Test raises a presumption that the machinery was a fixture. So the onus of proof was on the grantee (who contended that they were chattels) to rebut the presumption.

The Shell Company v Commissioner• Underground tanks at petrol station buried two feet below

ground level, turfed over and covered with concrete.• The manner of their removal, if it has to be done, shows how

firmly the tanks are embedded in the earth:• To remove the tanks, the turf, concrete or tarmacadam is

taken up, the earth excavated, the concrete manhole boxes removed, all pipe connections unbolted and the tank, with its concrete sinker weights can then be raised with blocks and tackle.

• The tanks, when placed underground, were intended to remain there.

• Court: They are fixtures.

Effect of Retention of Title Clause• Also called the Romalpa Clause

• Title to the goods remains vested in the seller until fully paid by the buyer.

• Usually found in a hire-purchase agreement.

Owner of article under hire-purchase agreement / Lessor

chargee

Landowner / Chargor / Lessee

Wiggins Teape (M) Sdn Bhd v Bahagia Trading Sdn Bhd• Issue:

• Whether a printing machine affixed by bolts to the floor and ground of the defendants’ premises on a land charged to the chargee has become a fixture despite the existence of a hire-purchase agreement by which the owner of the printing machine had retained the title until full payment?

• There was a ‘retention of title’ clause.

• e.g. “the hirer is the absolute owner of the hired item until full payment of the purchase price”

Court held…

The machine has become a fixture and passes to the chargee notwithstanding the retention

of title clause.

Sungei Way Leasing v Lian Seng Properties

• The defendant, owner of KL Plaza had took up a loan and charged the building.

• Later, a ‘custom-made’ air conditioning unit bought under a hire-purchase agreement, was affixed to the building.

• Clause 11 of the HP Agreement provided that the lessor was to remain as the owner of the unit and the lessee had no right to pass title of the air-cond. to any third party

land air-cond. unit

LANDOWNER(Chargor/Lessee)

CHARGOR LESSOR

Dispute:

• Lessor sought to remove the air-cond. unit from the building.

• The chargee bank objected

Held:Although the air-cond. unit was in the nature of a fixture as it was ‘custom-made’ for the building, the court must give effect to the intention of the parties arising from the hire purchase agreement. Thus, the lessor had a better right to the air-cond. unit.

“The chargee was not entitled to the equipment affixed to the land as there was a retention of title clause in favour of the plaintiffs”

MBF Finance v Global PacificTextiles S/B & Anor. [1993]• Issue:

• Whether 2 sets of dyeing machines obtained under an ‘equipment rental’ agreement and affixed to the land are considered part of the land?

• There was a retention of title clause.• Defendant defaulted in paying the rental for the equipment

and the lessor terminated the agreement and sought to remove the machines from the land.

• Defendant and chargee objected claiming the machines had become part of the land.

Held:

The retention of title clause rendered the machines to continue as chattels although attached to the land.

Since the machines were installed in the factory temporarily, their removal would not cause material injury to the land.

Exceptions to the law of fixtures• There are several exceptions to the law of fixtures:

1. Custom, e.g. Malay wooden house

2. Tenants fixtures • Trade fixtures• Agricultural fixtures• Domestic fixtures

1. Custom• An exception to the law of fixtures based on custom. E.g. a Malay

wooden house by custom is moveable property even when the usual Malay plank house is built upon bricks and pillars with foundations let into the soil, the house is nevertheless a chattel.

Re Tiambi bt Ma’amin (1904) Innes 285A Malay wooden house is moveable property and thus, a chattel and can be removed.

 Kiah v Som [1953]A Malay traditional wooden house built on stilts are regarded as personalty by proved custom and not subject to the English law of fixtures.

2. Tenant’s fixtures• Things which are annexed to the land for the purpose of

trade or of domestic convenience or ornament in so permanent a manner as to become part of the land and yet the tenant who has erected them is entitled to remove them during his term or within a reasonable time after its expiration.

• The law will presume that they were only put up with the intention of being severed from the land and removed by the tenant, and not for the purpose of improving the reversionary interest of the landlord.

• Note that this exception only applies to tenants (in tenant-landlord relationships), and not to landowners (chargor-chargee).

• For landowners, the law is strict to presume intention of permanent annexation.

• Mather v Fraser: “where and article is affixed by the owner of the fee, though only affixed by bolts and screws, it is to be considered part of the land, at all events when the object of setting up the articles is to enhance the value of the premises to which it is annexed for the purpose to which those premises are applied”.

• Spyer v Phillipson [1931]Held:A tenant has the right to remove his fixtures provided no substantial damage was done to the premises.

• Smith v City Petroleum [1940] 1 All ER 260, Held:A tenant could remove petrol pumps from the land because they were trade fixtures and could be 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 be easily detached.