Judgments - Elitestone Ltd. v. Morris and Another continued |
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LORD NOLAN
My Lords,
I have had the advantage of reading in draft the speeches prepared by my noble and learned friends, Lord Lloyd of Berwick and Lord Clyde. For the reasons which they give I too would allow the appeal and restore the order of the assistant recorder.
LORD NICHOLLS OF BIRKENHEAD
My Lords,
I have had the advantage of reading a draft of the speech of my noble and learned friends, Lord Lloyd of Berwick and Lord Clyde. For the reasons they give I too would allow this appeal.
LORD CLYDE
My Lords,
It is not now disputed that Mr. Morris, the first
appellant, is the tenant of Lot No. 6 in the area of land known as Holt's Field, which is owned
by the plaintiffs. He and the second appellant have been living in the bungalow on that site
which was erected more than half a century ago. The problem then arises whether the
bungalow is part of the land so as to be included in his tenancy. An issue arose whether an
estoppel by convention had arisen preventing the contention that the bungalow was part of the
realty. It has been held that no such estoppel has arisen and that issue is not now argued.
The only question left in the case is whether the bungalow is or is not a chattel. The assistant
recorder held that it had become annexed to and part of the realty. The Court of Appeal held
that it was a chattel and so was not included in the tenancy of Lot No. 6. It is necessary at the outset to define what the
bungalow comprises. It seems from the facts in the present case as if some form of actual
attachment of the bungalow to realty might exist, in the connection with the main electric
supply cable and certain drain pipes. But these matters have not been explored in the facts
and we are required to proceed on the basis that the bungalow is not physically attached to
the land. The next consideration is whether the foundations form part of the bungalow. These
are sunk into the ground and if they were to be treated as part of the bungalow would clearly
be an element of physical connection with the ground. But it does not appear that there is any
particular adaptation of the foundations to the structure above nor any adaptation of the
structure to suit the foundations. The main structural elements of the bungalow simply rest on
the concrete blocks. The bungalow and the foundations are severable from each other and it
is not appropriate to treat the whole as a unum quid so as to conclude that the bungalow is
built into the ground. It is with the wooden structure alone that the case is concerned. That
was the view on which the Court of Appeal proceeded and on the facts available in this case I
consider it correct to proceed on that basis. The question posed by the parties in their
agreed statement of facts and issues is: "Whether the bungalow erected at Unit 6, Holt's
Field was a chattel or a fixture." I entirely share the unease which has been expressed
by my noble and learned friend, Lord Lloyd of Berwick on the use of the word fixture. The
ambiguity is illustrated by a passage in the judgment of Rigby L.J. in In re De Falbe
[1901] 1 Ch. 523, 530 where having referred to an originally unbending rule that everything
affixed to the freehold was held to go with the freehold his Lordship stated:
Later in his judgment he stated, at p. 533:
In Boyd v. Shorrock (1867) L.R. 5 Eq. 72 Sir W. Page Wood V.-C. regarded as
conclusive of the case before him a definition given in Ex parte Barclay (1855) 5 De G.
M. & G. 403, 410:
As the law has developed it has become easy
to neglect the original principle from which the consequences of attachment of a chattel to
realty derive. That is the principle of accession, from which the more particular example has
been formulated, inaedificatum solo solo cedit. A clear distinction has to be draw between the
principle of accession and the rules of removability.
My Lords, the distinction between these two
matters was pointed out long ago by Lord Cairns L.C. in Bain v. Brand (1876) 1
App.Cas. 762. In that case it was declared that the law as to fixtures is the same in Scotland
as in England. His Lordship stated, at p. 767, that there were two general rules under the
comprehensive term of fixtures:
It would be right to add that the exception has
been developed so as to extend beyond the purposes of trade. By the end of the 19th century
it was clearly established that the exception included objects which had been affixed to the
freehold by way of ornament: In re De Falbe [1901] 1 Ch. 523, 539. This reflected not a
change in the law but, as Lord Macnaghten put it in Leigh v. Taylor [1902] A.C. 157,
162, a change "in our habits and mode of life." No doubt the category of
exceptions may continue to change. The present case, however, is concerned with
the first of the two rules and not the second. But it is not altogether clear that the distinction
between the two rules was clearly put before the Court of Appeal in the present case. If the
distinction is not noticed there is a danger that the true issue may become confused by
questions truly relating to removability. The Court of Appeal found assistance in the decision
in Webb v. Frank Bevis Ltd. [1940] 1 All E.R. 247, regarding the bungalow as no more
annexed to the land and just as much a chattel as the large shed in that case. But the court in
the Webb case held that the large shed was a fixture but was removable by the tenant.
I should add that the second rule may involve particular consideration of the various
relationships between the interested parties which may play a part in the matter of
removability, such as landlord and tenant, or mortgagor and mortgagee. But those differences
play only a subordinate role in relation to the first rule. The answer to that question is to be found by a
consideration of the particular facts and circumstances. In the generality there are a number
of considerations to which resort may be had to solve the problem. But each case in this
matter has to turn on its own facts. Comparable cases are useful for guidance in respect of
the considerations employed but can only rarely provide conclusive answers. It has not been
suggested that if the bungalow is real property it can be regarded as distinct from the site so
as to be excluded from the property let to Mr. Morris. The question then can be simply asked
whether the bungalow is a chattel or realty. On that wider approach a useful starting point can
be found in the words of the old commentator Heineccius (Elementa Iuris Civilis secundum
ordinem Pandectarum, Lib.I. Tit VIII. Sec.199) where, in classifying things as moveable or
immoveable he describes the latter as being things "quae vel salvae moveri nequeunt, ut
fundus, aedes, ager . . . vel usus perpetui causa iunguntur immobilibus, aut horum usui
destinantur." The first of these factors may serve both to
identify an item as being real property in its own right and to indicate a case of accession. But
account has also to be taken of the degree of physical attachment and the possibility or
impossibility of restoring the article from its constituent parts after dissolution. In one early
Scottish case large leaden vessels which were not fastened to the building in any way but
simply rested by their own weight were held to be heritable since they had had to be taken to
pieces in order to be removed and had then been sold as old lead: Niven v. Pitcairn
(1823) 2 S. 270. In Hellawell v. Eastwood (1851) 6 Exch. 295, 312, Parke B., in
considering the mode and extent of annexation of the articles in that case, referred to the
consideration whether the object in question "can easily be removed, integré,
salvé, et commodé, or not, without injury to itself or the fabric of the building."
It is agreed in the present case that as matter of fact that "the bungalow is not removable
in one piece; nor is it demountable for re-erection elsewhere". That agreed finding is in
my view one powerful indication that it is not of the nature of a chattel. In many cases the problem of accession arises
in relation to some article or articles which have been placed in or affixed to a building. 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 simply 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. That approach was adopted in the
Australian case, Reid v. Smith (1905) 3 C.L.R. 656. At p. 668 Griffith C.J. said under
reference to the decision in the lower court:
O'Connor J. put the point more strongly, at p. 679:
In several cases before the Lands Valuation
Appeal Court in Scotland where the issue has arisen whether particular subjects are heritable
or moveable for the purposes of valuation for local taxation the test has been applied by
asking the question whether the particular subjects belong to a genus which is prima facie of a
heritable character and, if they are, whether there are any special facts to deprive them of that
character. This approach was recognised in Assessor for the City of Glasgow v.
Gilmartin, 1920 S.C. 488 and in John Menzies & Co. Ltd. v. Assessor for
Edinburgh, 1937 S.C. 784. It was later applied to such subjects as residential chalets:
Assessor for Renfrewshire v. Mitchell 1966 S.L.T. 53, contractors' huts: Assessor
for Dunbarton v. L.K. McKenzie and Partners 1968 S.L.T. 82 and static caravans:
Redgate Caravan Parks Ltd. v. Assessor for Ayrshire 1973 S.L.T. 52. Beyond
question Mr. Morris' bungalow is of the genus "dwelling-house" and dwelling
houses are generally of the nature of real property. While it is situated in a rural setting it
evidently forms part of a development of a number of other houses whose positions are even
noted on the ordnance survey map. I find no factors which would justify taking it out of the
category of dwelling-houses. On the contrary there are powerful indications that it and its
constituent parts do not possess the character of a chattel. It seems to me to be real
property. If the problem is approached as one of
accession it has to be noted that in the present case the bungalow is not attached or secured
to any realty. It is not joined by any physical link which would require to be severed for it to be
detached. But accession can operate even where there is only a juxtaposition without any
physical bond between the article and the freehold. Thus the sculptures in D'Eyncourt v.
Gregory (1866) L.R. 3 Eq. 382 which simply rested by their own weight were held to form
part of the architectural design for the hall in which they were placed and so fell to be treated
as part of the freehold. The reasoning in such a case where there is no physical attachment
was identified by Blackburn J. in Holland v. Hodgson (1872) L.R. 7 C.P. 328, 335:
"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." He continued with the following instructive
observations:
It is important to observe that intention in this
context is to be assessed objectively and not subjectively. 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 for the use or enjoyment of the land or for the more complete or convenient use or
enjoyment of the thing itself. As the foregoing passage from the judgment of Blackburn J.
makes clear, the intention has to be shown from the circumstances. That point was taken up
by A.L. Smith L.J. in Hobson v. Goringe [1897] 1 Ch. 182, 193, a decision approved by
this House in Reynolds v. Ashby & Son [1904] A.C. 466, where he observes that
Blackburn J.,
Regard may not be paid to the actual intention
of the person who has caused the annexation to be made. In In re De Falbe [1901] 1
Ch. 523, 535, Vaughan Williams L.J. 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." As Lord
Cockburn put it in Dixon v. Fisher (1843) 5 D. 775, 793 "no man can make his
property real or personal by merely thinking it so." The matter has to be viewed
objectively. If one considers the object or purpose which the
structure serves by being placed where it is, it was clearly placed there to enable the amenity
of Holt's Field to be enjoyed through the establishment of a residence. The bungalow was
built there in order that people could live in what is represented as being an idyllic rural
environment. The Court of Appeal, however, had regard to the belief of Mr. Morris that he
owned the bungalow as evidence of his intention. But his belief cannot control the operation
of the law in relation to accession and the matter of intention has to be judged objectively.
Indeed the fact that the freeholders may have believed and reminded the occupants that their
rights to remain could be terminated, which was also a factor on which the Court of Appeal
relied, cannot affect the operation of the law. Accession also involves a degree of
permanence, as opposed to some merely temporary provision. This is not simply a matter of
counting the years for which the structure has stood where it is, but again of appraising the
whole circumstances. The bungalow has been standing on its site for about half a century
and has been used for many years as the residence of Mr. Morris and his family. That the
bungalow was constructed where it is for the purpose of a residence and that it cannot be
removed and re-erected elsewhere point in my view to the conclusion that it is intended to
serve a permanent purpose. If it was designed and constructed in a way that would enable it
to be taken down and rebuilt elsewhere, that might well point to the possibility that it still
retained its character of a chattel. That the integrity of this chalet depends upon it remaining
where it is provides that element of permanence which points to its having acceded to the
ground. The Court of Appeal took the view that the bungalow was no more annexed to the
land and just as much a chattel as the greenhouse in Deen v. Andrews [1986] 1
E.G.L.R. 262 (or, as I have already mentioned, the large shed in Webb v. Frank Bevis
Ltd.). But there is a critical distinction between Deen v. Andrews and the present
case in the fact that the greenhouse was demountable while the bungalow is not. I prefer the
conclusion reached by the learned assistant recorder after hearing the evidence and visiting
the site to form his own impression of the situation. As he observed towards the end of his
judgment, a judgment which deserves commendation for the detail and care which has gone
into it:
In my view the conclusion reached on this matter by the assistant recorder was correct. The appeal should be allowed and the order made by him relating to Unit 6 should be restored.
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