Judgments - Elitestone Ltd. v. Morris and Another  continued

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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.


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.


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:

     "But in modern times there have come to be important exceptions to this rule, one being in favour of trade fixtures and entitling a person who has put up what are now called 'fixtures' (which means removable fixed things) for the purposes of trade to remove them."

Later in his judgment he stated, at p. 533:

     "But the question is, whether they were not made 'fixtures,' meaning thereby objects fixed to the wall which might be removed at the will of the person who had fixed them."

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:

     "By 'fixtures' we understand such things as are ordinarily affixed to the freehold for the convenience of the occupier, and which may be removed without material injury to the freehold, such will be machinery, using a generic term; and in houses, grates, cupboards, and other like things."

      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:

     "One of these rules is the general well-known rule that whatever is fixed to the freehold of land becomes part of the freehold or inheritance. The other is quite a different and separate rule;--whatever once becomes part of the inheritance cannot be severed by a limited owner, whether he be owner for life or for years, without the commission of that which, in the law of England, is called waste, and which, according to the law of both England and Scotland, is undoubtedly an offence which can be restrained. Those, my Lords, are two rules, not one by way of exception to the other, but two rules standing consistently together. My Lords, an exception indeed, and a very important exception, has been made, not to the first of these rules, but to the second. To the first rule which I have stated to your Lordships there is, so far as I am aware, no exception whatever. That which is fixed to the inheritance becomes a part of the inheritance at the present day as much as it did in the earliest times. But to the second rule, namely, the irremovability of things fixed to the inheritance, there is undoubtedly ground for a very important exception. That exception has been established in favour of fixtures which have been attached to the inheritance for the purposes of trade, and perhaps in a minor degree for the purpose of agriculture. Under that exception a tenant who has fixed to the inheritance things for the purpose of trade has a certain power of severance and removal during the tenancy. . . "

      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:

     "I differ from the learned judge in thinking that it is not sufficient to show that the thing in question is a dwelling-house -- an ordinary dwelling-house, on a town allotment, in an inhabited town. In the case of a similar building in another part of the country, erected under entirely different circumstances, a different conclusion might be drawn."

O'Connor J. put the point more strongly, at p. 679:

     "It would I think be stretching the rules of the common law to a point at which they cease to be rules of common sense, if it were to be laid down as a general rule that, except in very exceptional cases, wooden houses, resting by their own weight on land, could ever be regarded as mere chattels, removable at the will of the owner of the timber of which they are built."

      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:

     "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. The anchor of a large ship must be very firmly fixed in the ground in order to bear the strain of the cable, yet no one could suppose that it became part of the land, even though it should chance that shipowner was also the owner of the fee of the spot where the anchor was dropped. An anchor similarly fixed in the soil for the purpose of bearing the strain of the chain of a suspension bridge would be part of the land. Perhaps the true rule is, that 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."

      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.,

     "was contemplating and referring to circumstances which shewed the degree of annexation and the object of such annexation which were patent for all to see, and not to the circumstances of a chance agreement that might or might not exist between the owner of a chattel and a hirer thereof."

      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:

     ". . . it seems to me clear that at least by 1985 and probably before, it would have been clear to anybody that this was a structure which was not meant to be enjoyed as a chattel to be picked up and moved in due course but that it should be a long-term feature of the realty albeit that, because of its construction, it would plainly need more regular maintenance."

      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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