Chattels and fixtures
Chattels or fixtures – lease or licence
Gilpin v Legg
 EWHC 3220
The owners of beach huts were annual periodic tenants and the huts themselves were chattels as there was either no, or only very slight, annexation.
The claimants were the owners of five out of 71 beach huts sited on land owned by the defendant. Each of the huts had been erected at a different time, some prior to the defendant’s ownership of the land. Some had been erected before planning permission was required, others with the benefit of planning permission. There was very little documentation, but none of the claimants was the original owner, and each of them paid an annual sum to the defendant for the huts to be sited on the plot. None of the huts constituted a dwelling (and where there was planning permission it prohibited overnight occupation of the hut) and none was designed or built with the intention of being mobile.
- Were the huts fixtures or chattels?
- Were the hut owner’s licensees or periodic tenants?
On the question of whether the huts fixtures or chattels the court ruled that they were chattels.
Although none of the huts was designed to be moved and "the factual evidence at trial of the ability to remove or dismantle huts [was] limited", there was evidence before the court that some of the huts could be removed without much damage, beyond the removal of a lean-to /locker. However, there was also evidence at least one of the huts had been changed over time so that its removal could only be by dismantling it which would cause such damage that it could not be reconstructed.
Distinguishing the case of Elitestone Ltd v Morris  1 WLR 687 (which held that wooden bungalows which sat by virtue of their own weight on concrete pillars attached to the ground were fixtures using the tests of degree and object of annexation), the judge held that on the evidence, it was an implied term of the agreement that the huts would be removed at the end of the agreement and they were chattels:
- "This is not because it was clearly the intention of the parties that the huts should not form part of the land (although it was), but rather because there was either no annexation at all or only a very slight degree of annexation (and that in order to protect against movement by the wind), and the huts were when they were first placed there capable of being moved without risk of substantial damage."
On the question of whether the hut owners were licensees or periodic tenants the court ruled that they were annual periodic tenants. The court looked to the test laid down by Lord Templeman in Street v Mountford  AC 809:
- "To constitute a tenancy the occupier must be granted exclusive possession for a fixed or periodic term certain in consideration of a premium or periodical payments. The grant may be express or may be inferred where the owner accepts weekly or other periodical payments from the occupier."
As to ‘exclusive possession’, the court concluded:
- “in practice [the huts] occupy the same space throughout the whole time that they are in use. That means that the land which they sit on is not available for occupation or any other use by the landowner, who is therefore excluded. Accordingly, where a landowner grants the right to another person to site a hut or chalet of this kind, movable in practice only on the termination of the right, on his land, he is in substance granting a right to exclusive possession. Whilst that right subsists and is being enjoyed, the landowner cannot possibly use or exploit the land in any other way.”
As to ‘term’, the evidence showed the term was originally from year to year and so these were annual periodic tenancies. A query was raised as to whether the term became uncertain when the defendant told some of the hut owners that they could stay there for as long as they liked if they paid their rent and behaved properly. HHJ Matthews held that these assurances were undoubtedly made, but that they were personal to the hut owners and made after the agreements. Accordingly, Berrisford v Mexfield Housing Co-operative  UKSC 52 was not applicable.
There was, potentially, one further problem: if the agreements were yearly tenancies, their oral grant would have been effective under s 54(2) of the Law of Property Act 1925, but their assignments could only be made by deed: Crago v Julian  1 WLR 372. HHJ Matthews’ approach was to by-pass this rule because the landowner accepted the assignee of the lease (usually in return for a commission on the sale):
- “Whether that amounts strictly to surrender and re-grant of a periodic tenancy, or whether it is an assignment in equity for value which is good at least between the new hut owner and the landowner (even though it might not bind a good faith purchaser from the landowner) is probably not important. At any rate, before me it was certainly not argued so to be”
When fixture becomes landlord’s fixture
Heavy bulky objects
 EWHC 1658 (Ch)
A tenant has a right to remove its fixtures, even though they may be heavy and bulky and removal would be complicated. There is a need for clear wording in the lease if the landlord wishes to restrict the tenant’s ability to do so.
In 1971 a tenant took a 125-year lease of a site, and under the lease was obliged to build and erect “a fully equipped steel making plant and rolling mill, capable of producing not less than 50,000 tons of steel products per annum”. This the tenant did. In 2012, the steelworks ceased trading and the lease was assigned to the current tenant (T). T wanted to remove large parts of the plant installed by the original tenant. L brought proceedings seeking, inter alia, a declaration as to ownership of this plant.
As to whether the items were fixtures or chattels, the High Court reviewed a number of cases on the distinction, including Elitestone Ltd v Morris  1 WLR 687. It held that it is the degree and purpose of annexation that is to be taken into account in order to distinguish a chattel from a fixture. Morgan J stated (at para 69) that the right way to approach the issues in the case was to ask the following questions:
- “(1) are any of the disputed items chattels?
- (2) in relation to the disputed items which are not chattels, do they meet the established requirements as to removability? This second question will involve some or all of the following further questions:
- (3) for the purposes of answering the following questions, what is the physical extent of the item to be considered?
- (4) in relation to the item to be considered, was it installed for the purpose of the trade of the tenant under the leases?
- (5) can the item be physically severed and, if so, with what degree of difficulty?
- (6) what is the effect of severance of the item on the premises which remain and is that effect remediable?
- (7) what is the effect of severance of the item on the item itself and is that effect remediable?
- (8) does the item when severed retain its essential character and utility?
- (9) if the item would otherwise be a removable tenant’s or trade fixture, do the terms of the lease (in particular clause 2(6)) override the tenant’s right of removal?”
The judge held that a number of items brought on to the site by the original tenant were not annexed to the land and so remained tenant’s chattels and were removable by T. These included cranes and transformers that were not attached to the land and had not become part of the structure or fabric of the building.
Looking at the items T sought to remove (other than the chattels) the court found all items, save for one furnace (which, the court held, was too integrated into the building) were tenant’s fixtures and therefore removable. These included a bar mill weighing over 800 tonnes (even though it would leave an undulating floor behind) and a continuous casting machine weighing over 500 tonnes (and even though it was near the end of its useful life and had little commercial value).
L argued that the lease, and in particular the covenant against alterations, prevented T from removing any fixtures (unless in connection with the use of the premises for steel making). The court disagreed. Very clear words would be necessary to restrict a tenant’s rights to remove its fixtures; it was not possible to imply such a restriction simply from the obligation of the tenant to construct the steelworks. The court considered that there was a considerable commercial difference between a landlord letting a fully constructed and equipped building, and a lease that imposed such obligations on the tenant. It could not be said that the clause against alterations could be read, in the context of the lease as a whole, as preventing T from removing its fixtures.
This case demonstrates nicely that it is not the size and weight of an object that determines whether or not it is a fixture. It is the degree and purpose of annexation that must be considered. As was said in the case, even if the timescale for removal is long, the costs very high and the item old or of little use, if the item is a tenant’s fixture it may be removed. The questions taken from the judgment which are set out above provide a useful way of analysing any similar situation.