LAWS3112 Lecture 2

Ownership and Title to Real Property

Fixtures: Things attached to the surface of the land.

• Quicquid plantatur solo, solo credit: Whatever is attached to the land becomes part of the land.
• Fixtures are objects or artificial structures attached physically to the land or to a building on the land, and are regarded in law as part of the land.
• Under the doctrine of fixtures a chattel, because of its annexation, becomes realty.

In what circumstances does the issue of whether an item is a fixture or chattel arise?

• Between:
  • A vendor and the purchaser of land.
    • NB: generally the contract of sale deals with this question e.g. REIQ contract.
    • Vendor loses right to fixtures at the date the contract is signed
  • A beneficiary under a will and the personal representative of a deceased person’s estate.
    • (The devisee is the beneficiary of the realty.)
    • Devisee – person entitled to the realty under the will
  • A landlord and a tenant.
    • Look at lease first – if the lease is silent, then the tenant has a right of removal at certain times.
  • A mortgagor of land and the owner of chattels
    • (NB: a mortgagor has no security over chattels in or on mortgaged land.)
    • The mortgage includes all fixtures at the date of the mortgage.
    • Any fixtures are fixed during the term of the mortgage
  • A life tenant and a remainder person.
    • Lease for life
    • Remainder person – person who’s entitled to the land when the life tenant dies
    • Rule: if the life tenant affixes chattels so that they become fixtures, then these fixtures will pass to the remainder person.
  • A lessor and a lessee of chattels. (See also hire purchase agreements.)
• As well as in relation to taxation issues.

Fixture Tests

• The basic rule to determine whether something is a fixture is whether it is physically attached to the land in some way and if so for what purpose.
• Consider the facts and circumstances of the case including:

1. The degree of annexation, and
2. The object/purpose of annexation.

• See Holland v Hodgson - classic statements on the law of fixtures.

Holland v Hodgson (1872) LR 7 CP 328

Mason owned land on which a wool mill had been built. Mason mortgaged the land and the mill and fixtures to the plaintiff (mortgagee). Mason defaults and becomes bankrupt. Assets are transferred to the administrator of the bankrupt estate. The administrator removes 400 looms and sells the machinery. Mortgagee sues the administrator ‘cause he wanted to sell a working mill. Argues the looms are fixtures. The mortgagee is entitled to the looms if they’re fixtures.

• Court determines the looms are fixtures and belong to the mortgagee.
• Blackburn J at 334:
  • “There is no doubt that the general maxim of the law is, that what is annexed to the land becomes part of the land; but it is very difficult, if not impossible, to say with precision what constitutes an annexation sufficient for this purpose.
  • It is a question which must depend on the circumstances of each case, and mainly on two circumstances, as indicating the intention, viz., the degree of annexation and the object of annexation.”
• Blackburn J at 334-5:
  • “When the article in question is no further attached to the land [than] by its own weight, it is generally considered a mere chattel… 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.
  • 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.”
• The question is: what is the intention with which the object was affixed?

1. Degree of Annexation

(a) Connection with land?

• Presumptions:
  • Things not attached to the land other than by their own weight are prima facie chattels. The onus of proving the contrary is on those who assert that they are fixtures.
  • Things attached to the land are prima facie fixtures. The onus of proving the contrary is on those who assert that they are chattels.
    • These are both Rebuttable presumptions.

(b) Mode of annexation?

• Can this object be easily removed without destruction to itself or the fabric of the building?

2. Object/Purpose of Annexation

• Object means the purpose of something on the land.
• What was the intention with which the item was affixed?
• Consider:
  • (a) What is the intended time/duration of the annexation?
    • What is the status of the person installing the item?
  • (b) Is the annexation for the better use of object as an object or for the better use of the land as land?
    • What is the function to be served by the annexation?
      • If the intention is for the better use of the land the item is more likely to be a fixture
      • If the intention is for the better use of the item itself, then the item is likely to be a chattel.
    • What is the nature of the item and what is to be done with the item?
    • What are the economic consequences of finding a chattel has become a fixture.

Object of Annexation: An objective test of intention?

• The test is one of “objective purpose” (not subjective purpose).
• The object of annexation is not to be determined by the subjective intention of a person bringing something onto the land, but objectively how the thing appears to others.
• Would a reasonable person looking at the item consider that the item was intended to be a fixture or remain a chattel?
• See Hobson v Gorringe.

Hobson v Gorringe [1897] 1 Ch 182

Hobson owned an engine and hired to King under a hire purchase agreement. The hirer pays the instalment payments and at the end property is transferred. The item is a chattel of the owner until the last instalment is paid. King puts it into his sawmill and installs it with bolts and plates (into cement). Hobson could remove the engine from the sawmill if King defaults. King goes bankrupt and defaults. Gorringe is the mortgagee and he takes possession of the sawmill. Hobson claims that he is the owner under the hire-purchase agreement and can repossess the item. Hobson argues chattel, not fixture because of the agreement.

• Issues:

(a) was the engine a fixture?
(b) priority between competing interests.

• Hobson:
  • the owner of engine,
  • with an equitable right of removal of engine,
  • the subject of a hire purchase agreement.
• King:
  • original owner of fee simple, and
  • hirer of engine, and
  • mortgagor.
• Gorringe:
  • mortgagee (under old system title), and
  • holder of a legal interest in fee simple. (NB: a mortgage of old system land includes all fixtures and the engine was a fixture.)
• Priority Issue:
  • A prior equitable interest will be defeated by the holder of a bona fide legal estate for value and without notice.
  • Hobson’s equitable right of removal of the engine was defeated by the legal interest of Gorringe as mortgagee.
• Fixture Issue:
  • The engine was a fixture because of the degree and object of annexation. The engine was therefore subject to the mortgage.
  • The Court rejected the view that the terms of the hire purchase agreement allowed the engine to remain a chattel.
  • An objective test of intention must be applied. Intention is to be inferred from the facts.
• Court of Appeal at 193:
  • “When Lord Blackburn in Holland v Hodgson was dealing with “circumstances to show intention” he was contemplating a referring to circumstances which showed the degree of annexation and the object of annexation which were patent for all to see, and not to circumstances of a chance agreement that might or might not exist between an owner of a chattel and a hirer thereof….”
• Can the actual (that is subjective) intention of the affixer ever be relevant?
  • Some authorities suggest that the subjective intention of the fixer, may be relevant in indicating the matters such as the period of time the object is intended to remain in position and the purpose/function of its annexation.
    • This view is not generally accepted.
• However, see:
  • May v Ceedive Pty Ltd (2006) 12 BPR 24,147, S &N 8th ed at 68 – referring to Butt on Land Law at footnote 27.
  • Ball-Guymer v Livantes (1990) 102 FLR 327.
  • Eon Metals NL v Commissioner of State Taxation (WA) (1991) 91 ATC 4841.
  • Better view: recourse to subjective intention would not be permitted to prejudice the rights of third parties who would be unaware of such intentions. See Butt, Land Law, at 44-45.

Object of Annexation: Emphasis of tests?

• Originally, the degree of annexation of a chattel to land was the dominant test.
• However, greater emphasis is now placed on the intention with which the item is placed upon land.
• Consider - what emphasis should be given to the different aspects of the fixture tests?
  • Australian Provincial Assurance Company v Coroneo.
  • National Australia Bank v Blacker.
• Australian Provincial Assurance Company v Coroneo (1938) 38 SR NSW 700
  • Coroneo is the owner of a picture theatre that has seats, moving picture equipment, switchboard and generating machinery. Coroneo has a mortgage and defaults on it. The mortgagee wants to sell the property and the fixtures. Is the mortgagee entitled to all the fixtures on the property? Yes. The court determined that the switchboard and generating machinery were fixtures – intended to remain in place permanently. The chairs were not fixtures ‘cause they were moveable.
  • Jordan CJ at 712:
    • “If an item is fixed by any means other than its own weight, then prima facie it is a fixture and burden of proof is on anyone who asserts otherwise to establish that it is not a fixture. If an item is not affixed, then prima facie it is not a fixture and the burden of proof is on anyone who asserts that it is.
    • If an item is affixed, the test of whether or not it is a fixture is whether it has been fixed with the intention that it remain in position permanently or for an indefinite or substantial period of time or only for some temporary purpose.”
    • “If it is fixed with the former intention it is a fixture whether it is fixed for the better enjoyment of the land or building or fixed merely to steady the thing itself or for the better use or enjoyment of the thing affixed. On the other hand if it is fixed for a temporary purpose it is not a fixture.” The intention of the parties affixing the object must be gathered from the purpose for which and the time during which user in the fixed position is contemplated.
    • If the item is securely affixed and, in particular, if so affixed that it cannot be detached without doing substantial damage, there is strong evidence that a permanent fixture was intended. Light fixing helps to support an inference that it was not intended to be permanent. However, each case depends on its own facts.”
    • Talks about the time of annexation.
    • Saying that the tests are reflective – the degree of annexation is to some extent a reflection of the object of annexation.
    • So look at how securely the item is fixed.
  • See also Kay’s Leasing Case pp 432-3.
• Intention
  • To determine intention it is necessary to look at both the degree and object of annexation.
  • No single test will be adequate.
• National Australia Bank v Blacker (2000) 179 ALR 97 @104.
  • Conti J: “There is no single test which is sufficient to determine whether an item of property is a chattel or a fixture. It is clear that the court ought to have regard to all the circumstances of the case in making its determination… No particular factor has primacy and each case depends on its own facts.”
• Application of Fixture Tests – Cases
  • Reid v Smith
    • This case involved a high set Queenslander. House wasn’t affixed to land – tenant did this. Wanted to take the house with them. The owner objects.
    • The intention was that the house was always temporary. The court determines that the house was a fixture. The court should also take into account the prevailing community practice, and the taste and fashions of the day (Griffith CJ, page 666). The prevailing practice was that the houses weren’t attached to the stumps ‘cause of the white ant issue.
  • Belgrave Nominees v Barlin-Scott Air-conditioning
    • Facts: the plaintiffs owned a building and entered into a contract with X for renovation work. X subcontracts for someone to install an air-con system. The air-con is on the roof of the building, there’s a platform that’s constructed that holds the chiller. The chiller is attached to the water articulation system – very slight affixing. X goes bankrupt and the defendant subcontractor removes the air-con system. Is this item a fixture?
    • Court says the air-con plant was intended to be a fixture, despite the small degree of annexation and the intention was that this item would be permanently affixed (because of attaching to water system)
  • Hawkins v Farley
    • Dishwasher is built into a kitchen bench. The floor underneath it is not tiled and the dishwasher is connected via plumbing and electrical connections. A shed was erected on the same land as the dwelling. Bolted into concrete pylons buried into the ground. The plaintiff owned the house – left realty to the kids, the husband is entitled to the residue of the estate. Husband takes the dishwasher and the shed. Kids say that the items are fixtures and they’re entitled to them.
    • Court: The dishwasher is lightly connected and easy to remove. The removal will create an unsightly gap. The entire fixture into which the dishwasher was built was intended to be integrated into the kitchen design. Court also noted that this view accords with general community standards. The shed was so substantial that it was a fixture. The court said that the size and relative permanence leads to the notion that it is a fixture. The ease of disconnection is irrelevant unless the structure was light and easily portable. This structure wasn’t fabricated for easy transportation.
  • Palumberi v Palumberi
    • Deals with a number of household items
    • NSW case
    • Particular set of circumstances – siblings arguing about fixtures.
  • AG Cth v RT Co
    • The item in issue were two printing presses weighing 45 tonnes each. The items were attached by bolts to a concrete floor. Court says these are not fixtures. Court applies the ‘better use’ test. Determines that the purpose of the annexation is to hold the presses steady when in operation. Fixed for the more efficient use of the presses as printing presses.
  • Anthony v Cth
    • Court had to consider whether telephone poles and power lines are fixtures. The court noted that these items are intended to remain in position for a substantial amount of time, but the court finds that they are not fixtures. The court says that there was no intention to benefit the owner of the land.
    • Land in NT and the Cth govt resumed the land and the owner wanted additional compensation.
  • Wellsmore v Ratford
  • D’Enycourt v Gregory
    • Court said that marble seats and 3 foot tall marble lions in a garden are regarded as fixtures. Integral to the architectural design.
  • Pan Australia Credits v Kolim
  • Kay’s Leasing v CSR Provident
  • Leigh v Taylor
• Court has found that a relocatable house is a chattel.
• A house that was built on a site that was being cleared was also a chattel.

Summary of Fixture Tests

• Consider: All the facts and circumstances of the case including:
  • 1. The degree of annexation,
    • Tests: Connection with land and Mode of annexation.
  • 2. The object/purpose of annexation. (Reflexive test.)
    • Test : would a reasonable person looking at the item consider that the item was a intended to be a fixture or remain a chattel?
    • Permanent or temporary improvement?
    • Ascertain the purpose of annexation – better use of object or better use of building.
    • Consider also the nature of the item.
  • 3. The prevailing community standard – social context: Reid v Smith.

Removal of Fixtures

• All fixtures become part of the owner’s realty (land).
• A fixture cannot be removed without the consent of the landowner.
• Exception: ‘tenant’s fixtures’.

Removal of Tenant’s Fixtures

• General rule: All fixtures attached by the tenant become part of the landlord’s realty.
• Right of Removal of “tenant’s fixtures”:
  • (a) Refer to the terms of the lease to ascertain any contractual right of removal of fixtures.
  • (b) A tenant has a right to remove “tenant’s fixtures” which were attached for the following purposes:
    • Trade,
    • Ornament, or
    • Domestic purposes. See Holland v Hodgson at 333.
  • (c) The right of removal is enforceable against the owner of the land.
  • (d) A tenant cannot remove “lessor’s fixtures” (fixtures which become part of the structure): Sebea v Territory of Papua.
    • Crown reclaimed land in territory of Papua
    • Tenant built airport, runways, etc on land
    • Are these items removable?
    • Some items are removable, others weren’t
    • Page 553: whether or not their fixtures depends on the facts of the case.
  • (e) Removal must occur prior to the term of the lease ending or while the tenant remains lawfully in possession. (In periodic tenancies the tenant has a reasonable time after the tenancy has terminated in which to remove the tenant’s fixtures.)
• See generally:
  • Spyer v Phillipson
    • English case from 1931. The tenant dies and the issue is the valuable oak panelling – whether it’s a fixture. Also a question about a fireplace and the chimney. The court noted that these could be easily removed without structural damage. The court said that these items are not fixtures.
  • Leigh v Taylor
    • Old English case. A tenant for life affixed valuable tapestries to the walls. The tapestries were attached to canvas by tacks. The canvas was nailed to wooden supports and the supports were nailed to the wall. The life tenant dies and the remainder person claims the tapestries.
    • Court: the tapestries were not fixtures – retained character of chattels and thus part of the estate of the life tenant. Court found that affixing the tapestries to the wall was the only way they could be enjoyed as tapestries. Given their ornamental character they could not be more lightly affixed. Court also noted that they were easily removable without causing damage to the structure of the wall. Nothing in the attachment to show that it was permanent.
• Exceptions to the above: Agricultural tenants, retail shop tenants, residential tenants.

Agricultural Tenant’s Fixtures Part 8 Div6 PLA

• At common law a tenant had no right to remove agricultural fixtures: Elwes v Maw.
• The common law was changed by PLA Pt 8 Div 6.

Mistake of Title and Encroachment of Buildings

PLA Part 11 Div 1 and 2

• Improvements made under a MISTAKE OF TITLE

PLA Part 11 Division 2 ss 195-198.

Common Law:

• Generally no remedy where a house is constructed on the wrong lot of land. (This is an application of the law of fixtures.)
• Brand v Chris Building Society.

Mistake of Title

• s 196: When can an application be made to the Supreme Court for relief under Part 11 Division 2?
• Where a person makes a lasting improvement on land owned by another in the genuine but mistaken belief that:
  • (a) such land is the person’s property; or
  • (b) such land is the property of a person on whose behalf the improvement is made or intended to be made;
  • application may be made to the court for relief under this division.
• Therefore application may be made for relief if:
  • “lasting improvement” is made to land owned by another, &
  • the improvement is made under “the genuine but mistaken belief” that the improver owned the land or was doing the work for the owner”.
  • Ex parte Karynette Pty Ltd [1984] 2 Qd R 211.

• s 198 Who may apply for relief to the Supreme Court?
• An application for relief may be made by:
  • (a) any person who made or who is in possession of the improvement;
  • (b) any person having an estate or interest in the land upon which the improvement was made;
  • (c) any person claiming to be a party to or entitled to the benefit of any contract or instrument relating to the land or improvement;
  • (d) the successor in title to a mortgagee or lessee of any person upon whose land the improvement was made; and
  • (e) the local government within whose area the land or improvement is situated.
• Therefore, an application for relief can be made by:
  • Improver/possessor of improvement.
  • An interested party;
  • Owner of or person claiming an interest in the land on which the improvement was made.
  • Local authority.

• Nature of Relief:
• s 197 The orders that the court may make include:
  • (a) vesting in any person the whole or part of the land on which the improvement has been made.
  • (b) ordering the removal of the improvement either partially or completely;
  • (c) ordering the payment of compensation in respect of land, any improvements, or any damage caused or likely to be caused by the improvement;
  • (d) ordering that possession of the land or improvements be given upon such terms and conditions as the court might specify.
• The Court has a discretion to give a broad range of orders if the court considers that it is just and equitable to do so. Therefore the Court could order:
  • Vesting (transferring) an interest in land.
  • Removal of the Improvement.
  • Compensation.
  • Granting possession of land/improvement on terms.
• Re Verdugo (1990) Q Conv R 54-347.
• Encroachment of Buildings

Encroachment

PLA Part 11 Div 1 ss182-194.

• s 184 Application may be made to the Supreme Court for relief by an:
  • adjacent owner; or
  • encroaching owner;
• in respect of any encroachment.
• s 182 Definitions:
  • “encroachment” by a building - includes overhang or intrusion beneath the soil.
  • “building” - means a substantial building of a permanent character.
  • “adjacent owner”, “encroaching owner”, “owner”.

• s 185 Nature of Relief:
  • (1) Court has a discretion to give a broad range of orders “as it may deem just”:
    • Compensation.
    • Conveyance or transfer of an interest in the subject land.
      • Tallon v The Proprietors Metropolitan Towers.
    • Removal of encroachment.
  • (2) Note the matters the court may consider.

• s 186 Determination of Compensation:
  • (1) Minimum compensation - increased for intentional or negligent encroachment.
  • (2) Note the matters court must have regard to in determining whether compensation shall exceed the minimum.

Tenure

• The Doctrine of Tenure
• Classification of Tenures

(a) Free Tenure

• Seisin and access to the Royal Courts.
• Lay
• Knight Service
• Serjeanty
• Socage
• Spiritual
• Frankalmoign
• Divine Service

(b) Unfree Tenure

• No seisin.
• Villeinage/copyhold

Historical Tenure

Statute of Quia Emptores 1290

• The creation of new tenures in fee simple was prohibited except by a grant of the Crown.
• This statute abolished subinfeudation.

Tenures Abolition Act 1660

• Most tenures were converted into free and common socage.

The Doctrine of Escheat:

• Escheat was the reversion of land to the feudal lord from whom it was held when either:
  • A tenant died without heirs, or
  • Where a tenant committed a felony.

Property Law Act and Tenure

• All lands granted by the Crown in fee simple are granted in free and common socage - freehold tenure.
• Freehold tenure is without any incidents or obligations for the benefit of the Crown.
• No liability for quit rent.
• Escheat is abolished.
• A fee simple may be transferred without licence or fine and the new owner holds from the Crown in the same manner as the previous tenant held from the Crown.
• See PLA ss 20 & 21
• PLA ss 20 & 21
• s 20 (1) PLA All tenures created by the Crown upon any grant of an estate in fee simple made after the commencement of this Act shall be taken to be in free and common socage without any incident of tenure for the benefit of the Crown.
• s 20(2) Where any quit rent issues to the Crown out of any land … such land is released from quit rent.
• s 20(3) In respect of property of any person dying intestate on or after 16 April 1968:
  • Escheat is abolished, and
  • All such property … shall be distributed … as provided by the Succession Act 1981.
• s 21 Land held of the Crown in fee simple may be assured in fee simple without licence and without fine and the person taking under the assurance shall hold the land of the Crown in the same manner as the land was held before the assurance took effect.

Tenure in Australia: The doctrine of tenure has been regarded as the foundation of the Land Law in Australia.

The Adoption of Tenure in Australia

• Sovereignty, in 18th Century International Law, could be acquired by one of three means:
  • Settlement;
  • Conquest;
  • Treaty (Cession).
  • Ceded territories are those acquired by cession that is by treaty (eg New Zealand) or by purchase. (No treaties were signed in Australia.)
• Conquered territories are those acquired through conquest (ie war).
• In both ceded and conquered territories the pre-existing law continues because these territories have their own law which remains in force until altered. (Referred to as the doctrine of continuity.)
• Settled Territories are those acquired through peaceful settlement where the land is terra nullius or unoccupied.
• Historically Australia was regarded as a settled territory.
• In a settled territory all the laws of the settling country, in so far as they were applicable to the colony, would be immediately in force at the time of settlement. The theory was that there was no local law in existence.
• This meant that the doctrine of tenure was imported to Australia.
• Prior to Mabo the Crown was regarded as the absolute and beneficial owner of all the land (AG v Brown and Milirrpum v Nabalco).

Mabo

• In determining whether the rights of native title could be recognised by the common law, the High Court in Mabo re-examined several legal theories which were at the foundation of Australian land law.
• The Murray Islanders claimed rights to their traditional lands according to:
  • their local custom,
  • their traditional title, and
  • their actual use and possession of their lands.
  • Mabo v Queensland (No.1) (1988) 166 CLR 186.
    • High Court finds Queensland Coast Islands Declaratory Act 1985 invalid because it discriminated against the Murray Islanders.
    • The Queensland Act was inconsistent with s10 of the Racial Discrimination Act 1975 (Cth).
    • This legislation was therefore invalid by reason of s 109 of the Constitution.
  • Mabo v Queensland (No 2) (1992) 175 CLR 1
    • The High Court of Australia found in a 6:1 decision:
      • Native title, being the rights of the indigenous inhabitants, in accordance with their laws and customs, is recognized by the common law of Australia.
      • The Murray Islanders were entitled, as against the whole world, to the occupation, use and enjoyment of the lands of the Murray Islands (except for the operation of Crown leases and certain land set aside for administrative purposes).
      • The title of the Murray Islanders was stated to be subject to the Queensland government's power to validly extinguish that title.
      • Any extinguishment would be subject to the Racial Discrimination Act 1975 (Cth).

Next week – Lecture 3

1. Tenure and Mabo
2. State Land under the Land Act 1994
3. Native Title

Reading:

• Stephenson: “Native Title” in Property Law B Learning Guide.