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Home , Possession (law)

Topic 2.1 Possession and

Ø Meaning Ø Scope Ø Enforceability

(1) Possession

• Possession is notoriously difficult to define (Toohey J, Mabo 2) • Possession is the physical concept referring to occupation of land or control over an object or a thing for oneself • Components of possession: 1. Factual control and; 2. Intention to possess.

• Example: o A bought a book. A gives B a book to read. B is reading. X takes book from B and doesn’t want to give it back. A is the owner of the book. A can get the book back by claiming damages. B has a right of possession but may/may not have a remedy.

Control • Appropriate level of control is required o In the sense that possessor must be able to exclude others • Absolute power of control to the exclusion of others rather than temporary or fleeting control • Some degree of permanence or some form of control is required for the factual element of possession • Degree of control required depend upon nature of object and circumstances (dwelling, land, chattels) o Full control over small objects in your pocket o Explore control for larger objects: § House = access to house and have the key to it equals possession. § Farm = different form might be required, should be able to exclude others and assert control even if you leave and return. § It depends on the facts of every case Consent • Possession may arise by consensual or non-consensual way: o Consensual: possession is consented to and limited or temporal in nature (/) coupled with right to reclaim the goods § Enter into lease and acquire possession. Expiry of lease you must return possession § Bailment looking after something and may exercise control over a period of time o Non-consensual: more enduring possession without consent of owner § Without consent of the owner

Summary • Summary of methods to acquire possession: o Consensual possession: sale, lease, or bequest etc. o Misplaced/lost goods (finder) § Finder finds the object and exercises control (factual control with intention to possess) o Goods never previously possessed (discovery) § For example picking up a shell and exercising control and acquire possession and even . o Stolen goods - even wrongful possession is protected § Control exercised by thief is still recognised as possession and may also have consequences

(1A) Legal Consequences of Possession • Upon acquisition of control with the necessary intention possession has legal consequences: • Possession confers a legal title upon a holder and a recognizable enforceable right in English common o Entitled to defend your possession as a possessor with a right but plays out against the hierarchy of rights § Example: A owns the book and has a superior claim against B and X by virtue of ownership. B’s control over the book is a title, which is enforceable against the whole world except against the true owner. § The proprietary title is stronger than possessionary title.

• (i) Hierarchy of title: o True owner has a proprietary title o Possessor has a possessory title o True owner has a superior claim to object than possessor o Possessor’s title is enforceable against the whole world, except owner o Owner can always claim it back from you o Proprietary title is stronger than possessory title

• Possessor may acquire title which is almost as good as ownership because it is enforceable against the whole world, except owner • Possession may be subject to contractual duties

(ii) Absence of Owner (Finder’s Cases) Possessory title is important when goods are found in absence of owner • Hannah v Peel o Hannah found a brooch in a remote part of house (which belonged to Peel) The house was used by the military during the war (Peel never moved into the house which he bought) o Hannah handed brooch to Police who gave it to Peel (who sold it) o Hannah sued to regain possession of the brooch or its value o Peel asserted that he had superior title because the brooch was found on his property o Held: Finder of brooch was held to be in possession despite the fact that the house did not belong to finder and the true owner of brooch could not be located o Act of finding and retaining brooch constituted physical act of possession and thereby conferred possessory title upon finder § Her title was superior to the title of the owner of the house, ownership of the house is not in question but the lost property within it. o Finder has superior title to lost property

• The Tubantia o The act of diving to investigate a shipwreck in deep sea and employing divers for salvage work for consistent periods of time constituted possession § Acquire possession of wreck despite not being there 24 hours a day

(1B) Scope of Possessory Title • Confers a title which is good against all the world, except for the true owner o E.g. if true owner of brooch was discovered and that person would be able to claim it back, but Peel was not a subsequent possessor. • Lost wallet example (CB 70) o Possession is nine-tenths of law o If you lose your wallet and someone acquires control, he has possession before giving it to the police.

Looking at ‘Possession’ in Definition • Two aspects: o Factual aspect: physical possession (choate right): confers a present enforceable right upon possessor § If you have physical possession you can defend it against the rest of the world outside it o Legal aspect: legal title which such possession gives to holder § You have control but if subsequently losing control over it (not physical control anymore) in an unlawful manner then you can claim it back. Right to control and a dormant right that, if losing possession, you can claim it back. Thus despite subsequent loss the title is maintained § Prior possessory title (inchoate aspect) confers a dormant right to enforce possession if prior possessor has been wrongfully dispossessed

• Dual nature of possessory title: contains a present enforceable right upon possessor in physical control and dormant right to enforce possession if wrongfully dispossessed (prior possessory title) o Can claim it back despite someone else being in possession of it now. o Prior possessory title is an enforceable title against someone else • Possessory title cannot be acquired over something which cannot be owned (human life\corpse) o Ownership over a corpse is not recognised, the executor must deal with the corpse.

Doodeward v Spence (CB 71) • The police seized the body of a two headed still born baby which had been preserved in a bottle from an exhibitor showing it at exhibitions. o Wanted to claim it back. • Griffiths CJ: if corpse is changed (dissecting/preserving), it gains another quality and thus it can be owned. Upon exercise of work or skill a human body acquired some attributes differentiating it from a mere corpse a right to retain possession may be acquired. An order was made for its return the flask with baby. Important Possession Principles in Dissenting: • Higgins J (dissenting): If property in corpse was possible, property of plaintiff o It is enough that plaintiff was in possession of the corpse and the defendant took it having no better title than the plaintiff o Mere possessor is treated by law as having property in goods against one who takes it from him wrongfully o The law treats the right of mere possessor as against someone who takes it from him as ‘special property’ o Basis for recovery of possession is irrefutable presumption against the wrongdoer that possessor is owner o A mere possessor can recover full value of chattel o Possessory title cannot arise over something which cannot be owned o If no property in corpse – no special property in corpse o No action for trover/detinue for thing which cannot be owned (corpse) • Important Principle: to be able to claim possession, it must be capable of ownership.

(1C) Possessory Title of • Physical possession of personal property is of title: person in possession is treated as owner save against someone with a better right to title • Dispossessed holder has a right to recover chattel • Dispossessed holder must prove a right to recover chattel from possessor • Problem where chattel is lost and later found by stranger

• Armory v Delamirie Example of finder’s case illustrating that the finder can acquire possessory title despite no consent from true owner. o Boy of chimney sweeper found a ring with jewel; took it to goldsmith for an appraisal who refused to hand back the removed jewel o Boy sued successfully for damages for the value of the jewel o Court held that a finder of a chattel, though he does not acquire ownership, has sufficient title to sue a stranger o Boy’s right to possession is better than goldsmith’s actual possession o Boy’s title is superior to anyone except owner – because the boy discovered it and found it prior to possession of goldsmith o Finder’s prior possession enable him to hold it against all but the rightful owner • Summary o Boy had possession, was wrongfully deprived of possession and so he had title to sue as he has a prior possessory right. The boy’s possession was superior than the goldsmith’s possession as he discovered it, but the boys possession would not be superior than the true owner.

Finders Keepers Rule (CB 2.12) à LOOK AT FINDERS PRINCIPLE at bottom of topic • A person that acquires possession of goods can claim possession to enable him to keep it against all but the owner with a better right (Armory v Delamirie) o The owner only has the right to recover goods from possessor • The owner out of possession who seeks to recover possession, must show an absolute right • If lost property is found the finder will acquire title • Finder of lost property supersedes all claims except that of prior possessor or true owner Object Integrated into Land • Where the object becomes part of the land the owner of land is, however, awarded the object over the finder because he owns the land and had prior possession o E.g. broach lost for years integrated into the soil, then the owner of the land becomes owner of lost thing despite X discovering it. § Doctrine of • If goods are discovered on land belonging to a third party the finder can only acquire possession (and, therefore title,) if the owner of the land did not manifest a clear intention to control all goods discovered on the land

Waverley Borough Council v Fletcher o People using metal detectors over council/public land found a broach – council argued it belong to them • Collision of two notions of English law : “finders keepers” and doctrine of fixtures • Raises two questions: (a) Who as between the owner and finder of an article in or attached to land, is entitled to the article? (b) How is the answer in (a) affected if land is public open space? • Where an article is found in or attached to land, as between owner of land and finder of the article, the owner of the land has the better title o Because of doctrine of fixtures. • Where an article is found unattached to land, as between the two, the owner has a better title than finder only if the owner exercised such manifest control over land as to indicate an intention to control land and everything that may be found on it. o How to show this intention? Court showed that council had some intention to control the land.

Control over Land Waverley Borough Council v Fletcher • Same principles apply to land which is a public open space • Council had ‘manifest control’ over the land: o Council employed a ranger to patrol park o Declared policy to prohibit metal detectors (Notices) o Notices pulled down but ranger still apprehended those using detectors o Detecting, digging and removal of property in land was prohibited • Digging and removal of brooch was not permitted under the terms council held land • Digging and removal were acts of trespass • The council had the better right to the brooch • As it had been found within or attached to the land, rather than on the surface, it belonged to the person who owned the soil o Doctrine of fixtures o But if lying loose, the finder can acquire possessory title unless owner indicates control over the area and the land

(1D) Enforceability of possessory title • In disputes between parties over land the courts focused on who had better right of possession • Possessory title (owner’s right enforceable against the whole world but the true owner) differs from proprietary title (wallet owner example as his right is always enforceable against everyone) o Possessory as wide or extensive as proprietary title unless comes into play as a defence against a claim against the owner. • The primary difference between proprietary title and possessory title thus lies in the scope of enforceability: o Proprietary title is enforceable against all the world (in rem) o Possessory title is enforceable against the whole world except for the true owner o Possessory title is a relative concept in the sense that its scope of enforceability is not as wide as proprietary title • In any competition between possessory and proprietary title, the owner will always defeat the possessor (unless the possessory title has acquired additional statutory protection (limitations of action)): possessory title is transformed into adverse possession

(1E) Competition between possessory title holders • A distinction is made between legal, prior possessory title and factual, current possessory title o A has first title and thief X has second title. Dispute as to who can claim book because both acquired legally enforceable possessory title. o One right will be stronger than the other. • Disputes may occur between prior possessory title holder and current possessory title holder o Both persons acquire legally recognised and enforceable title

• The right of the prior possessor over land will defeat those of subsequent, physical possessor. o Don’t want breach of peace in the community if thieves can acquire better possession over previous owner.

• Asher v Whitlock: Prior legal possession receives priority over subsequent factual possession o Williamson living in land, enclosed part of land of manor belonging to the lord of manor o Built a cottage on the land despite no ownership o He devised his interest to his wife until her death or remarriage and then to his daughter in his will o When he died – idea was that she got possession as long as she didn’t marry etc. Then goes to the daughter o Widow married Whitlock and lived on with actual possession o Widow and daughter died o Whitlock remained in (actual) possession o Daughter’s heir (Asher) claimed possession of land Issue: o Can a squatter acquires rights which would entitle him to bring an action against a dispossessor? Can these rights pass by a will? § Actual possession or Acquired possession o Decided that Asher had a better right to possession than Whitlock o Possessory title confers a range of rights including the right to alienate (sell, bequest or devise under will) o Possessory title is capable of being inherited o Found: Williamsons right of possession passed to his wife upon his death then to daughter (on wife’s remarriage) and then to Asher when daughter died o Which possessory title was created first? § Prior possessory title arose long before Whitlock's title o Asher’s inherited prior possessory title defeated subsequent possessory title of Whitlock o Proof that 3rd party (owner of land) had better title will not affect enforceability of prior possessory title o If possessory title had been devised by will it will unfair if interest of beneficiary is defeated by possessory interest of subsequent possessor o Possession is a good title against all (but the owner) who cannot show a prior and, therefore, better right to possession o Reason of the court – it would be unfair if you have a will, and someone divides his possessory title to wife, daughter then grandchild, if someone like Whitlock could come into play and defeat the will • SO – who can show a prior and therefore better right to possession? o Grandchild could show a prior title which was created long before • What about the lord of the manor? o Lord of the manor has a proprietary title, yes you may have inherited the possessory title and prior possessory title as a matter of fact, but there is someone else with ownership. o Jus tertii defense

Perry v Clissold PC (CB 81) • Facts? o Clissold was in control and possession of land for a long period but unclear who true owner was. Government wanted the land and acquired it by compulsory acquisition (expropriation). o In this case it wasn’t clear who the owner was for entitlement to compensation, and C said he was a possessor and entitled to compensation due to possessory right. Govt argued he was a trespasser despite exercising intention. • Issue: whether holder of possessory title has a claim for compensation upon compulsory acquisition • General Principles: o Possessor has a good title against all the world except rightful owner o Possessor can acquire absolute title by adverse possession o Upon compulsory acquisition of land the Minister acquires titles of owner and possessor o Compensation is payable to every person deprived of land that is resumed for public purposes o If land is compulsory acquired the holder of possessory title is entitled to obtain compensation • Court said that the minister cannot take advantage of infirmity of title of C being only a possessor in order to acquire land for nothing • If possession confers a good title, enforceable against all the world, except for the true owner, such title should be compensated where it is compulsory acquired o Clissold must be compensated as if ownership of the land itself. • Jus tertii defense unavailable to the Crown: cannot argue that another third party/someone else that is the owner has a better title and pay compensation to the unclear owner. o This defence is unavailable

(1F) Prior possessory title and native title (Mabo 2) • Toohey J – tried to find an answer in the principles of possession • : o Prior possessory title holders can defend title against subsequent possessory title holder § In UK if you had possession over land, then ownership was vested in you. o From proof of possession law presumes that possessory holder is seised of freehold and presumption is not displaced by subsequent disposition • By parity of reason Toohey J decided in Mabo: o When Meriam people became British subjects upon colonisation, the law presumed from proof of possession that they were seized of a over the land § Seized of property interest and dispossessed of their title, against the whole world and the government. They had prior possessory title before British colony. o Enforceable against rest of the world except person with better claim o Subsequent physical dispossession could not displace the validity of prior possessory title o Prior possession is a better right • Prior possessory title, thus protected indigenous people against the Crown’s assumption of ownership

High Court Majority Differs: • However, not accepted by majority of High Court who refused to endorse the validity of indigenous possessory title

(1G) Bailment (not that important in our context) • If goods/chattels entrusted in someone (courier/postman), the person acquires bailment. o Acquisition of possession with express consent of owner is regulated by or tortious principle of bailment o Entering into of the relationship must have been intended • Upon delivery of possession of goods for limited duration of time by the owner, the possessor acquires bailment in property • Delivery takes place upon the express term that goods will be redelivered to the bailor (owner) • Consent cannot be withdrawn by original owner during term on the pretense of repudiation • Bailee (possessor) is entitled to retain goods during term of bailment • Bailee is entitled during term of bailment to bring an action to recover the value of the goods

The Winkfield: PMG (bailee) could sue stranger for full value of lost goods (mail) and to account for value to his bailor • Facts? o Postmaster entrusted mail to Mexican ship that collided with Winkfield and mail was lost. o Postmaster sued successfully for full value on basis of bailment. PRINCIPLES: • Baillee must exercise reasonable care in looking after the goods • Bailor (owner) has a legally enforceable right to regain possession • Terms of bailment can be changed by contract

(1H) Jus Tertii Defence (right of third party) • It is a defence which permits the defendant to argue that, although the plaintiff’s right to possession may be better than that of defendant, an ownership still exists in a third party (the tertius). o Example: if A has got possession and deprived by B, then the dispute must be resolved by A and B. B cant raise defence that yes, A has prior possession • You can’t defend the fact that you have deprived someone of possession by saying yes, but a third party is actually the owner and has a proprietary title. However: • Defendant’s interference with plaintiff’s right remains wrong • Defendant must defend on basis of some title of his own and not the weakness of the prior possessor's title • Can be raised to say that the prior possessor’s title is defective because the actual possessor has acquired possession from a third party with better right (see ex CB 97) • Cannot be claimed in an action for possession of land • Not raised in Asher but impliedly rejected: proof of ownership of the Lord of manor will not affect the enforceability of prior possessory title • Use of plea of jus tertii in relation to land rejected (and probably abolished) in Perry v Clissold Continued: • Proof that third party (owner) may have a better title will not preclude the prior possessory title from defeating the subsequent possessory title: o Court must decide which of parties before court has the better right and not the best possible right. Ahser v Whitlock – who has the better right? o Therefore, not a defence to claim that third party has better right • May be raised in possessory title dispute relation to personal property unless the possessory title holder has committed a civil or criminal wrong • By showing a legitimate title in another person, a jus tertii argument implies that the present possessor’s interest is illegitimate or that the present possessor is a thief

Costello v Chief Constable of Derbyshire Constabulary • Costello was in control of a stolen car; he was in possession of it. He did not have title to this car. The police seized the car, and investigated the matter, and couldn’t find the owner. • Police raised jus tertii defence by claiming that a third party (owner) had a better title o They could have said: yes it is a stolen car, and out there there is a true owner of the car, you are the possessor, you haven’t stolen the car but actually there is a true owner – a jus tertii – who has a better right than you Mr. Costello. o COURT SAID NO • Possession is protected in the same way even if acquired by theft o Even if Costello was proven to be a thief (which wasn’t proven), his possession is also protected. • In case of theft possessory title is frail and of limited value but remains a title protected by law • Principle: if you acquire possession, even if you’re a thief, it is recognised for purpose of private law, for , as a possessory title

• Could have used jus tertii defence if facts were the following: o If stolen property is seized by the police and pursuant to statutory authority possession is transferred to a transferee (but not otherwise), the transferee obtains possessory title in defeasance of thief. (If a thief is lawfully divested of possession and possession is vested in another, his prior possession will not avail him to recover possession (jus tertii doctrine)) • In the absence of such a transfer, the prior possessory title of Costello was enforceable against the police and the jus tertii defence could not be raised • “…even if it is clear that there is a third party somewhere with a superior right, that jus tertii is of no moment in the possessory battle of plaintiff and defendant” (Atiyah CB 96)

‘Seisin’ • Historically it meant a person held ownership of freehold estate as apposed to bare possession • Person holding possession also held freehold estate • Historically tenant held possession but not title: not seised of land • Only those who could utilise real actions were regarded as seised of land • The availability of writ of ejectment to tenants as well, diminished importance of distinction between freehold (seisen) and leasehold • Seisin replaced by registered title • Seisen as used today means possession

Importance of possession • Possession is a physical concept o Involves a physical aspect – exercising control with a certain intention • Possession has legal consequences o Because if you have possession, you have a right or a title (Asher v Whitlock) • Possession is a title/right • Possession itself is property (other members of societ y may not interfere with right) • Possession gives rise to rights: to o (a) defend possession; o (b) sell possession; o (3) devise possession; and o (4) to be compensated upon compulsory acquisition thereof • Possession generates a second right, namely a right to possession (prior possession is protected against subsequent possession) • Possession provides evidence of ownership • Possession over time may become ownership • Possession is a root of title (Asher v Whitlock)

Questions

Q2.1: • In what sense would your title be relative? o The guy who married Whitlock – why would we say his title is relative? How can you illustrate the relativity of his title? § Was it enforceable against everybody else? YES § Was it enforceable against the owner? NO • Was it enforceable against the holder of proprietary possessory title? NO o So relativity of title means that it operates against the whole world, except the true owner and someone with a prior possessory title o It is relative in two senses: § Whitlock – the guy was in actual possession. His title operated against the rest of the world. § Relativity also refers to the fact that you cannot enforce this title against someone with prior possessory title

Q2.10 • Developer who is bankrupt, the company that supplied the houses that were erected on the land, and a bank that wants to sell the land as the land is the object of a security interest of the bank. • If you act on behalf of lakeview properties (the company that supplied), what would you like to establish? o You would argue that the houses weren’t fixtures – because if they weren’t fixtures then they would be personal property – chattels § If they were personal property, the owner of the property would be the client (Lakeview properties) – and they would say well it is chattels, goods, personal property and therefore belongs to us. The fact that the owner of the land is bankrupt is not my problem, I want my property back. § You would argue that it is still owned by lakeview and they will remove the houses • If you were the bank what would you argue? o You would say that the object of security is not just the vacant land there § You would apply the degree of annexation – look at integrated, bolted, removable, or cause damage § Aspect that needs to be taken into account – • Were the houses delivered at the land and erected before or after the mortgage was registered? • How would you protect lakeview properties if they were your client (prior to all this happening)? o Clause in agreement – that you would have reserved the right to take it back, and also the right of ownership until you have paid for it and you have the right to go and remove it § is that a property right in terms of common law? • It is an equitable interest that is created

FINDERS PRINCIPLE

PRIVATE Land Possession on private land assumed OWNED by land owner BOTH outdoors Object on top of land and indoors BUT outdoor presumption STRENGTHENED if show MORE control: Parker as cited in WBC v Fletcher

Armory v Delamirie (1722) 96 ER 664: That the finder of a jewel though he does not by such finding acquire an absolute property or ownership, yet he has such a property as will enable him to keep it against all but the rightful owner and consequently may maintain trover

NOTE: Demonstrating intention to control is not as imperative here

Where an article is found in or attached to the land the owner or lawful Object in or attached to land possessor of that land has better title: WBC v Fletcher

Elwes v Brigg Gas Co (1886) 33 Ch D 562 as cited in WBC: Issue: - Whether the lessor had better possessory title than the lessee over a ancient boat that was buried under the surface of the land Held: - He was in possession of the ground, not merely of the surface, but of everything that lay beneath the surface down to the center of the earth, and consequently in possession of the boat.

Public Land If ‘on’ the land in public space, the possessor of the land does not control them Object on top of land thus NEED to demonstrate express or implied manifest intention to control before chattel is found: WBC v Fletcher EXAMPLE: signs, searches

Bridge v Hawkesworth (1851) 21 LJQB 75: That the finder of bank notes dropped by someone unknown accidentally on the floor of a shop had a better claim to them than the shop-owner who, until the finder drew his attention to them, did not know they were there

Parker v British Airways Board [1982] QB 1003: An occupier of a building has rights superior to those of a finder over chattels upon or in, but not attached to, that building if, but only if, before the chattel is found, he has manifested an intention to exercise control over the building and the things which may be upon it or in it. THUS finder entitled to bracelet as there was no sufficient manifestation of any intention of the defendant to exercise control over lost property before it was found which would otherwise give the defendants a right superior to that of the plaintiff or indeed any right over the bracelet

Where an article is found in or attached to the land the owner or lawful Object in or attached to land possessor of that land has better title: WBC v Fletcher

For objects under the ground WBC did NOT need to show CONTROL

- Whether the lessor had better possessory title than the lessee over a ancient boat that was buried under the surface of the land Held: - He was in possession of the ground, not merely of the surface, but of everything that lay beneath the surface down to the center of the earth, and consequently in possession of the boat.

Topic 2.2 Fixtures

Ø Meaning Ø Tests

Fixtures • ‘Land’ includes fixtures o A fixture is a chattel/good that has become part of a land because it is fixed/next to/integrated to the land in such a manner that it has lost its own identity. § Desk integrated into the building, lost its identity of being wood but now forms part of the lecture theatre – forms part of the land. o Includes corporeal (physical) and incorporeal (not physical) distinction useful as it is possible to possess land or goods, but when it is incorporeal, these rights cannot be possessed.

• Principle: quicquid plantatus solo, solo cedit: whatever is annexed to the soil becomes part of the soil o Everything you plant on land becomes part of land.

• Fixtures are attached to land with the intention that they become part of the land • If there is a contract between parties, ownership of fixtures is determined in accordance with express terms of the contract; in the absence of a contract, the doctrine of fixtures applies o But if there is not contract or term with reference to annexure, then the property law principles finds application à in other words “there’s the property rule. If you don’t like it, then change it by contract.” • Upon annexation the fixture forms part of the land • Fixtures loose their independent identity • Legal title of owner of chattel is extinguished o For example, if you are a hiring company leasing out an air conditioner you have installed in your office and building, then it is the property of the owner of the building, not you (as you lease) or the company (loses ownership). o When does annexure take place?

Relevance of the Rule Can be important in different relationships • Relevant in the following relationships: o Vendor and purchaser § Vendor sells the house and if the CT is not detailed enough of what is included, after the sale questions arise. § For example, the equipment used to clean the pool form part of the sale? § Curtains/antennae’s etc. § Does it form part of the building – does it form part of the sell? o and tenant § Relevant if landlord acquires ownership or if tenant has right to remove it. o Mortgagor and mortgagee § Mortgagee borrows money from the bank and enters into a CT to buy and build land. Whatever is built on the land forms part of the land. If there is no re-payment the bank may exercise right of security, then in selling the property, if there is a house/improvements on the and then it forms part of the object of security of the bank. o Life tenants and remaindermen o Duties on land /chattels • Dispute may arise as to ownership of chattel o Chattel or forming part of the land for tax purposes?

Two Tests • To determine whether a chattel had been annexed to the land two tests are used (Holland v Hodgson)(traditional approach): Holland v Hodgson o Owner owned a mill land, bought some heavy-duty equipment to use. It was nailed to the floor. o When mortgagor wanted to exercise right of Security due to no repayment, there was a question as to whether the equipment nailed to the floor was fixed to the land or whether it belonged to the tenant. If it belonged to the tenant then the value of the land would be reduced. o Judge stated two tests: 1. Degree of annexation o To what extent have you integrated/fitted the chattel? o Did you use nails, did you use screws? Was it built into the building o Logical and factual question 2. Object of annexation o You must have the objective intention to attach the chattel there permanently. o What must have been the intention when this was installed? • Use one or two tests? o Historically, UK used the test put emphasis on the first one and found agriculture machinery to form part of it. After the industrial evolution there is now more emphasis placed on the second test in finding an objective intention. A more holistic approach: o In a modern approach, you look at both tests and take into account a range of factors, not only if it can be easily removed. It will go by a case-by-case basis. § There has been a decline in the comparative importance of the degree of attachment § Greater emphasis is being placed upon the purpose or object of annexation. § The object of annexation is the primary test for determining whether a chattel has become a fixture • Circumstances and intention are more important rather than an automatic application of a presumption under test 1. • Modern approach: o No single test: All the circumstances of the case are examined. o Annexation is determined by a range of factors (NAB v Blacker) o Holistic approach o Each case depends on its own facts o A “question of more or less” • Criticism: Tests are ambiguous and intertwined

(1) Degree of Annexation (starting point) • Looks to manner in which the chattel is attached to land • Ask whether and to what extent the chattel has been affixed to the land • Application of a simple rule which provides an automatic solution • Two presumptions apply which assist in providing an answer (apportions burden of proof): o If chattel is attached to land (other than by its own weight) it is presumed to be a fixture and the burden of proof will lie on those who are asserting it is not a fixture o If the chattel is only attached by its own weight it is presumed that it is not a fixture and the burden of proof will lie on those who assert it is a fixture (NAB v Blacker) • The greater and stronger the annexation the more likely the chattels will have become fixtures • Even if chattels are attached slightly these chattels are presumed to be fixtures • Purely physical matter/question to answer • Sub Test within test o Degree of damage that will be caused by removing structure is relevant factor: substantial damage pointer towards annexation • Degree of annexation should be used as a starting point

Factors determining degree of attachment • An overall assessment of the circumstances surrounding the attachment must take place • The following factors could be considered in determining degree of annexation: o The mode and structure of annexation o Whether removal of fixture would cause damage to land or buildings to which it is affixed § Much damage caused to walls/floors or none? o Whether removal would destroy or damage the fixture itself § Anything damaged in the removal process? o Whether the cost of removal would exceed the value of the fixture • No single factor should, however, be determinative - look at all factors.

(2) Object of Annexation The objective intention when the article was being installed • Examines the objective intention with which the item was put in place: permanently to benefit the estate or temporarily to display chattel (separate existence) • This test was added by the courts as an additional consideration • Objective intention of affixer to be gathered from circumstances at the time of annexation o Look at all of the facts to draw an inference of intention. • Once it is clear that attachment or annexation has taken place the object underlying attachment must be considered • Object of annexation has become primary test o E.g. Chairs installed to serve the function of a lecture venue.

Factors determining degree of objectivity • A range of factors are considered in a broad assessment: o Nature of chattel § Some chattels can only be used by attachment o E.g. circus tent is a chattel removed two weeks later but now we find we can live in luxurious tents in the city now with electricity and a hotel might argue it forms part of the land. § Some chattels by nature remains independent o E.g. bridges structured to carry weaponry across lands for a few hours but others like Westgate bridge is not the same. Object of Annexation • Manner in which chattel can be effectively used • Title of affixer o University owns land/building and one would focus on the question that is the owner of the land doing certain things. • Intention of affixer o Intention of the university to create a lecture venue used for lectures. • Intention that it should be affixed permanently /indefinitely or for a substantial period or for temporary purpose o University’s intention to use the lectures for a long time • Broad aims of affixer in attaching chattel to land o Unviersity aims to offer a teaching venue • Relationship of affixer vis-a-vis owner

Standard social or architectural practices in relation to use of chattels may form part of circumstances which indicate object of annexation: o Air condition system common feature of modern high rise buildings o Stove and carpets are fixtures whereas antenna is regarded as a chattel

Factors • The following factors can be considered to determine the purpose of annexation: o Whether attachment was for the better enjoyment of the land and building or the fixture § Desk is installed for lecturing purposes § Coffee machine installed for the better use of a restaurant o Nature of property which is the subject of affixation § Intended for a permanent or short period of time o Whether the fixture was to be in the position either permanently/indefinitely or temporarily o The function to be served by annexation of fixture o Subjective intention of the affixer § Not to confuse with the intention (objective determined by looking all of the facts) but evidence given by the affixer is subjective intention.

Nature of chattel • Some chattels are of such a character that they could only be effectively utilised where they are attached to land and should not be treated as having an independent operation o Look at the nature of the chattel • Some chattels will retain an independent identity to that of the land, the purpose of annexation being to maximise their operation.

Examples (nature of chattel) Sometimes when you apply relevant factors, you may still arrive at contrary conclusions • Leigh v Taylor o Life tenant attached valuable tapestries by mounting them on wooden frames which were nailed to the wall o HL held that the object of annexation was to enjoy chattels as chattels (ornamentation), not to annex them to realty o Could be removed without damage o Not expected of life tenant to make such improvements o Attached to be effectively viewed (admired etc.) • In opposite: Re Whaley o Tapestry (and painting) affixed by owner were held to be fixtures o Affixed by owner (presumed an owner wants to improve land) o Tapestries were designed to enhance the Elizabethan character of room rather than tapestries as independent object • Norton v Dashwood o Tapestries were held to be fixtures o Could not be removed without damage: brickwork, tearing fabric and leaving the room maimed and disfigured

Answering an Exam Question: • Set out relevant principles, apply to facts and come to conclusion. Intention • State of mind of person who has done affixing • It may be appropriate to take into account subjective intention but usually the relevant test is to determine objectively from the facts what the intention was • In many instances subjective intention is not available • Court has to rely on the objective circumstances to determine intention: o Capacity to remove chattel without damage o Economic consequence of holding that chattel has become a fixture • Objective intention is relevant

Elitestone Ltd v Morris (HL) UK • Issue: whether bungalow becomes part and parcel of land. • Elitestone argued that the bungalow of Morris was separate from the land since it rested on its own weight on concrete pillars (which were themselves attached to land); bungalow not physically attached to land. o Morris & Other inhabitants of bungalows were upset because landlord waned to demolish bungalows, so Morris had to show that the bungalows formed part of the land. § If part of land, immovable property and bungalows are attachment and rely on protection of Act. § If not part of land, remained goods and chattels they could not rely on the protection of the Act • Avoid use of term fixture: (1) one thinks of a fixture as being something fixed to a building rather than the building itself; and (2) term fixtures is misunderstood in light due to term “tenant’s fixtures” which are fixtures that may be removed during and at end of tenancy. • Rather use the classification: (a) chattel; (b) fixture; and (c) part and parcel of land.

Depends on circumstances of the case and mainly two factors: 1. Degree of attachment • Importance of degree of attachment varies from object to object: o Large object such as house - affixation goes without saying • Aus case: Reid v Smith (house resting on stumps): court treated this as question of common sense: o Absence of attachment did not prevent house from being part of realty o A thing may be affixed by mere gravitation as firmly as by cement and clamps o Accepted by gravitational forces that something can form part of the land. If the weight is of such a nature heavy there is sometimes no dispute in forming part of the land. 2. Purpose of annexation • Court said many tests are used o Fixed for better enjoyment of chattel; or o Fixed with view of effecting a permanent improvement of freehold • These tests are useful at times only (tapestries) – not in case of house itself (rather common sense) • House Example: o House which is constructed in such a way as to be removable may remain a chattel, even though connected temporarily to mains services o House which is constructed so that it cannot be removed at all, save by destruction, no longer intended to be chattel. It must have been intended to form part of realty (degree of damage relevant factor)

Elitestone Ltd v Morris (HL) cont. • Court applied a “Common sense” approach that such house has become fixture • The court held that the bungalow (by analogy with dry stone wall) became part of land: Court used an analogy with this example for its finding that this bungalow was part of the land: o Blocks of stone placed upon top of another without mortar or cement for the purpose of forming a dry wall would become part of the land o The same stones if deposited in a builders yard and for convenience sake stacked on top of each other in the form of a wall would remain chattels • Timber frames become part of structure (part of the land) • The object of bringing the individual woods on the site seems so clear that the absence of attachment (save by gravity) becomes irrelevant • Intention of parties is only important to the extent that it can be derived from the degree and object of annexation • Subjective intention of the parties cannot affect the question whether chattel has become part of realty • Not possible to remove bungalow without destruction – became fixture

Tenant’s right to remove • General Principle: All fixtures belong to landlord unless “tenants fixtures”. o Tenant may remove certain fixtures if they are tenant fixtures. • Tenant (valid lease) has a common law right to remove trade, domestic or ornamental chattels that have become fixtures during of lease o Must have taken place during the currency of the lease! • Right of removal did not include agricultural fixtures o Tenant leasing farm for agricultural purposes, unless stated in CT, cannot remove it. • Right does not apply to fixtures attached before commencement or after expiry of lease o Critical period is that fixtures must be attached during currency of the lease. • If you want to remove tenancy fixtures, you must remove it before expiry of the lease or else it becomes ownership of the landlord. o Only upon exercise of power and severance of “fixture” title is acquired by tenant o If right of removal is not exercised a chattel remains a fixture • If a fixture cannot be removed without damage to fixture or premise it will remain fixture o If it cannot be removed without total damage this is relevant to explore.

Tenant’s right to remove cont. • Damage caused by removal must be repaired and premise must be left in reasonable condition • Upon expiry of lease the right of removal expires • Right of removal is an equitable right and transferable • S 154A PLA 1958 (Vic) o Gives tenant right to remove all fixtures o Gives tenant right to remove “renovations, alterations or additions” § If only it is such things e.g. renovation o Tenant has obligation to restore to position prior to removal of fixtures o Alternatively tenant may need to pay restoration cost • Other: Holder of mining right has right to remove a mining plant brought on land during currency of mining lease of within 3 months of expiry of mining tenement (Mininh Act 1978, s 114 (WA)) o Meaning of “mining plant” not determined by law relating to fixtures – determine statutory meaning

Third parties • Example: o Joe working as solicitor. an office from a landlord. Building is not nice so Joe must install air conditioner system. It is portable but must be integrated into the building with pipes etc. Installed. His intention when installed is to remove the air conditioner upon expiry of lease. However, he is not the owner of the machine, but pays the company who supplied it. They are concerned that they will lose ownership if integrated into the building. They have the right that if Joe hasn’t paid, they can enter the building and remove the system. Before expiry of lease, the building is sold to the new landlord. NL argues the aircon forms part of the building, Joe argues contrary. He stops payment. Outside company suppliers want to sue him for outstanding money or enter and remove aircon system. NL argues it is a fixture. o To resolve this dispute, the TP may acquire a contractual right to remove a fixture. Company has this right If a chattel is hired/leased or purchased like this example, and the possessor (Joe) affixes it to the land in such a manner it becomes a fixture, then competing interests are created. o Apply Common law property principles. If it is a fixture, it becomes part of the land. o Equity also creates rights. § Softens consequences of the CL system. The true owner will have an equitable right to enter premises, and seize the object on the breach of the CT. § So this is an equitable property interest, it is not an interest by virtue of the common law, it doesn’t form part of an ownership • Third party may acquire a (contractual) right to remove a fixture • Example: a chattel is hired or leased out and the possessory title holder (ex hirer or lessee) affixes a chattel to land of another so that it becomes a fixture • Common law: chattel has become part of land • Equity: True owner will hold equitable right to remove the chattel if owner has a contractual right to enter and sever (right to seize on breach)

Enforceability • Equitable proprietary interest – not a fee simple interest and is sourced in contractual right to retain title and reclaim possession on default • Equitable interest is enforceable against land (object) (property interest) but not against bona fide purchaser for value without notice. o Illustrating the principle: § Right of company to enter and remove it is remained a chattel HOWEVER § Not operatable against subsequent new owner who acted in good faith and didn’t know about this.

• Right endures for a specific purpose and can only be exercised within a reasonable period • Equitable right may arise if a contract is entered whereby: (a) ownership of unsevered chattels is transferred with retention of ownership of land (b) ownership of land is transferred subject to retention of ownership of unsevered chattels (retention of title clause)

Two examples where you can have an equitable right – Example One • Owner of farm, situated on it is windmill. Sell windmill despite being integrated onto land. Owner remains owner but purchaser acquires right over windmill. o I remain the owner of the farm, but you acquire the right to enter and remove the mill, and take it with you. In that case you have an equitable right, and I maintain my ownership of the farm. • Then owner sells farm to next person not knowing about the above CT, and he paid for farm. He is not bound by equitable right.

Example Two (a converse example) • Owner sells farm to you, situated on it is windmill. Sells farm however owner reserves the right to enter as he pleases and dismantle windmill. • Owner has equitable right over windmill; you become owner of the farm and windmill.

Example Three • University. Lecturer leases room and installs chairs nailed into the floor etc. It is now a fixture of the university à go through tests. Lecturer also borrowed money from bank and they have a CT with monthly repayments. If there is non-payment the Bank only has equitable interest and not ownership over the goods the lecturer pays for. If Deakin sells building to Fort and they paid and acted in good faith and didnt know about CT, the Bank cannot enforce their equitable interest.

Metal Manufacturer Ltd v FCT – a right to property that is recognised under the equity jurisdiction • MMT (the taxpayer) securely affixed heavy plant and equipment (cables, tubes and lines) in factories erected on the land of ABM. Plant and equipment were sold to bank and leased back in return for payment of rentals. Bank would have right to repossess, dismantle and remove plant and equipment. Federal Commissioner of Taxation claimed rentals were not deductions because plant and equipment constituted fixtures. MMT argued that Bank acquired an equitable title despite becoming fixtures • Fixture issue: In determining whether plant and equipment became fixtures the court looked at the following factors pertaining to plant and equipment: o Weight – very heavy o Not likely to become redundant o Were attached to steady it and for safety reasons o Degree of integration with land o Attached for better enjoyment of plant and equipment o Was possible to remove - time consuming and difficult task o Removal would require jack-hammering o Land was modified for better use of plant and equipment o Degree of integration (important factor) • Court found with reference to all relevant factors that plant and equipment were intended to became part of land to which attached • Law of fixtures in common law may operate harshly o Doctrine of tenant’s fixtures ameliorates that harshness

• Interest of Bank issue: Interest of bank cannot be a legal interest in terms of the common law (fixtures form part of land), because in terms of the common law, a fixture forms part of the land. • But the court said: this Credit purchase agreement (between taxpayer and bank) vested an equitable interest in the bank with respect to plant and equipment o Interest would be available to the bank if there is non-payment, and they could enter the premise and remove the equipment – that interest was expressly granted in the agreement. o If the factory gets sold to another person, that equitable interest of the bank wouldn’t be enforceable against a new owner of the property à however in this case the owner remained the same, so the court recognised an equitable interest in favour of the bank. So the bank could reserve the right irrespective of the nature of the contract, to enter the premise upon non payment and remove it. o The common law doesn’t give you this right, the common law tells you if you affix it to the land – it becomes a fixture and property of the owner of the land. So the harshness of the common law principle is ameliorated or softened by recognising equitable interest. o Interest would be defeated by bona fide possessor for value without notice o If a third party acquired equitable interest: priority dispute

• Transfer of ownership to bank was intended by delivery with retention of “dominion, possession and custody” over plant and equipment o Constitutum possessorium in terms of Roman law o I sell something to you and you acquire ownership, and I maintain possession of the article. o Constructive delivery in common law: change of possession without change of custody o If the plant and equipment were fixtures, ownership did not pass by constitutum possessorium as contemplated in the agreement • An equitable interest in the nature of property created in favour of Bank • Our interest is the Bank, somehow in their agreement, retained an equitable right over the heavy machinery.

Statutory protection • Chattels Securities Act 1987 (Vic) • S 6: goods subject to a security interest shall not become fixtures for purposes of the security holder’s right to take possession, remove or sell the goods. • Protection for goods subject to security interest is attached to a building belonging to a landlord then it is not a fixture for purposes of security holders right of possession to sell the goods. • If you buy an air con system from A for 3 years, and if there is non payment, A can take back the equipment and if it is attached to the building, the rules of fixtures do not come into play and property law principle is overruled by this statute. • Thus if a fixture happens there is a property rule (owner of article attached to land becomes owner of chattel as well with exception of tenants that remove some tenants fixtures), TP may have rights (Banks leasing to you with equitable interest in the object).

Fixtures Exercise 2.1

Ø Air Rights / Transfer development rights Ø Carbon Sequestration rights

Question 1 Exercise: is a mine dump/mineral tailing a fixture or chattel? Explain whether you regard dump as part of land or chattel. Ø Under land you find fixtures so some may end up forming part of the land due to doctrine of fixtures. If one day removed, it can become a chattel once again. Ø The mining dump may be considered land as it seems quite immoveable. o Nature and Degree of Annexation? o Integration into land? § Trees growing on the dump and trees forms part of the land o Damage Test? § Will land be damaged in removing the dump? Perhaps the land would be better off in removing the dump? § This test does not work in this case. o Object of Annexation Test? § Whose intention to be determined objectively? The Mining Company. § Don’t focus on what CEO tells us subjectively but all circumstances to arrive at objective intention. § Intention of mining company would be to mine it one day again. Ø In the South African decision of De Beers Consolidated Mines Ltd v Ataqua Mining (Pty) Ltd it was held, with reference to criteria for , that tailings dumps are to be considered as movables (chattels). Ø Simmer and Jack Mines v GF Industrial Property – did not make out that mine dump was immovable (chattels) Ø Australia R v Parker [1989] WAR 233 (mineral tailings (or mine dumps) are chattels, unless spread and mingled with the earth so as to loose their separateness – it might in terms of this principle be regarded as forming a part of the land) Ø Mining Act 1992 (NSW) S 11 mineral tailings remain property of miner and do not become part of the land upon which situated (unless the mineral lease or claim ceases, in which case they become part of the land on which they are situated).