The law on fixtures

An explanation and critical evaluation of the law on fixtures


Introduction
English and Hong Kong land law distinguish between fixtures and chattels. A fixture is an item that has been brought onto the land but is treated as forming a part of the land. A chattel is an item that has been brought onto the land but which is not so treated. The practical effect is that a transfer (or any other type of dealing with land) will take fixtures with it. Title to the fixture passes automatically with title to the land. Title to a chattel, by contrast, does not pass with a transfer of title to the land; it remains in the same ownership as before.

Thus, if an air-conditioning unit is a fixture then ownership of it will pass with ownership of the land to which it is affixed. If not, the seller of the land is free to remove it after sale of the land for it remains the property of the seller. Similarly, if it is a fixture then it will be subject to any mortgage that might have been granted over the land.

One would expect the law in this area to be settled and to yield simple and clear-cut answers to the question as to whether or not a particular item is part of the land or not. After all, the question has recurred hundreds or thousands of times a day for centuries and is of clear practical importance. This, however, is not the case. It is still not always possible to say with certainty whether or not an item brought onto the land is part of the land. This essay explains the relevant tests and some of the uncertainties surrounding them.

The tests
The tests in this area seek to identify the objective intention of the party who brought the object onto the land. There are two tests. The first of these looks at the degree of annexation of the object to the land while the second looks at the purpose of annexation. Each test can play a part but the current tendency is to give greater importance to the purpose of annexation.

The degree of annexation test looks at the physical connection to the land or to something else attached to the land that was undoubtedly a fixture. If the item in question is attached to the land in a particularly permanent way then it would be held to be a fixture. So, for example, if removing the item was likely to cause physical damage to the ground or the fixture to which the item in question was attached then it was likely to be found to be a fixture. It is not necessary, however, that the item should be affixed to the land before it can be considered a fixture; if the item is exceptionally heavy so that it is held very firmly in place by gravity alone then it might be a fixture.

The purpose of annexation test asks a different question. It considers whether the item was brought onto the land for the better enjoyment of the land (in which case it is a fixture) or whether it was brought onto the land to be enjoyed in its own right (in which case it is a chattel).


How the two tests interact with each other
The purpose of annexation test complements the degree of annexation test: it does not supplant it or render it obsolete. The tests are used as indicators of the underlying intention of the party who brought the item onto the land. That intention is a very important factor when deciding whether or not something is a fixture or a mere chattel. It is not necessarily determinative, however; the item and its interaction with the land must be inherently capable of being a fixture. Both the intention and the nature of the item and its degree of annexation have their part to play.

The degree of annexation test may be insufficient on its own but it supplies the objective dimension of the test. Without it, the law would not have the tools to deal with a landowner’s claim that a piece of furniture, such as a sofa, is to be treated as a fixture since that was his intention. The intention is an ‘objective intention’. Haley argues that it is useful both because a complete lack of annexation would be decisive and because the purpose of annexation is sometimes unclear.


The rationale underpinning the tests: the objective intention of the parties
It has been suggested that something like the officious bystander test supplies the rationale for the two tests just outlined. Thus, the ultimate test would be whether the parties to a transaction ( a sale or a mortgage, for example) when asked whether something was a fixture would have replied, ‘of course’. This approach reflects the fact that the question often arises in a sale and purchase situation. It is unsatisfactory, however, in that it suggests that the objective status of a chattel (fixture or not) is undetermined until some kind of transaction has taken place.


Criticism of the tests
Even in modern times, there can be uncertainty as to whether or not quite common items are chattels or part of the land. This fact suggests that there is something unsatisfactory about the present state of the law. Haley argues that, despite a ‘veneer of principle’, the law lacks coherence and certainty. It is hard to disagree with him on this. The problem lies in finding a satisfactory alternative approach.


Elitestone
The law in this area was surveyed and clarified in the House of Lords decision in Elitestone Ltd v Morris . This case concerned a bungalow resting on concrete pillars which were attached to the ground. The bungalow was only attached to the pillars by gravity. The House of Lords confirmed that there were cases in which the search for the objective intention of the person who brought an item onto the land using the degree of annexation and purpose of annexation tests would be valid. Indeed, Lord Lloyd of Berwick framed his judgment using the traditional degree and purpose of annexation terminology.

Lord Clyde, however, indicated that sometimes the physical nature of the object and its relationship to the land, rather than intention, becomes the dominant question. Physical inspection of the item (here the bungalow) and its relationship with the land becomes important. He said:

‘An unusual, although by no means unique feature of the present case is that the alleged chattel is the building itself. This invites the approach of asking whether it is real property in its own right. Apart from the considerations which I already mentioned it seems to me that it is proper to have regard to the genus of the alleged chattel.’

The Recorder at first instance and the judges in the House of Lords were impressed by the fact that a visual inspection that the bungalow was not a temporary structure intended to be removed but was definitely there to stay. This impression was confirmed by the fact that you would destroy the bungalow if you tried to remove it. This was a strong indicator that it was not a chattel.

So it seems that there are two alternative routes by which an item can become part of the land. It can either be part and parcel of the land or it can become part of the land when this accords with the ‘objective intention’ of the person who brought the item onto the land. In either event, their Lordships indicated that the word ‘fixtures’ was now used in such different ways that it was better to avoid it.

Lord Clyde offered an attempt to understand the idea of ‘objective intention’:

‘Indeed it may be that the use of the word intention is misleading. 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 (emphasis added) for the use or enjoyment of the land or for the more complete or convenient use or enjoyment of the thing itself.’

Lord Clyde’s judgment is also noteworthy in that it draws attention to the fact that the law in this area has tended to conflate two separate questions into just one question. Whether an item has become part of the land (the doctrine of accretion) is a separate question from whether or not the person who put it there can remove it when they leave the land (as is the case with tenants’ fixtures, for example). Failing to appreciate that these are separate issues has been a potent source of confusion. Luther makes the same point.



Conclusion
The law in this area is dominated by the degree and purpose of annexation tests outlined in Holland v Hodgson. Elitestone suggests that in some cases a physical survey of the item and its relationship with the land will yield a common-sense answer. The law is imprecise in a number of ways. First, what is the relationship between the degree and purpose of annexation tests. Second, what role does the ‘objective intention’ of the person who brought the item onto the land play (and, anyway, what is ‘objective intention’)? Third, in practice the tests fail to answer the everyday questions of lawyers and their clients. The problem is that there is no obviously superior legal rule that could be applied. As a result, lawyers will need to be alive to the problem and ensure that it is dealt with contractually.