Elitestone Ltd v Morris and another

Owner of land seeking possession – Occupier of bungalow on land resisting on grounds of tenancy from year to year and protection under Rent Act 1977 – Judge deciding bungalow formed part of realty – Court of Appeal disagreed – Occupier of bungalow appealing – Nature of structure of bungalow – Whether bungalow had become part of land or whether remained a chattel – Appeal allowed The plaintiffs were the freehold owners of land known as Holt’s Field, Murton, near Swansea. The land was divided into 27 lots and the defendant had been the occupier of a chalet, or bungalow, on Lot 6 since 1971. The bungalow had been built on the land at some time before 1945. It rested on concrete pillars which were attached to the ground. The plaintiffs acquired the freehold in 1989 with a view to redevelopment . On April 30 1991 they issued proceedings in Swansea County Court claiming possession against all 27 occupiers. Five lead actions were selected and were heard in November 1994. The defendant contended that he was a tenant from year to year, that he occupied the premises as his residence and was therefore entitled to the protection of the Rent Act 1977, and he claimed a declaration to that effect. The judge held that the question in the defendant’s case depended upon whether the bungalow formed part of the realty and, having visited the site, decided that the bungalow had been intended to be a long-term feature of the realty. The defendant was granted the declaration he sought. The plaintiff appealed and the Court of Appeal disagreed and held that it was to be inferred that the common intention of the parties was that the occupiers should acquire the ownership of their bungalows, but ownership of the sites should remain in the freeholders. On that footing the defendant’s bungalow was to be regarded as a chattel which had never been annexed to the soil and so never became part of the realty. It followed that the tenancy did not include the bungalow and the defendant was not therefore a protected tenant. The defendant appealed. Held The appeal was allowed. 1. The word “fixture” was often misunderstood because of the existence of the category of so-called “tenants’ fixtures” which, although fixtures in the full sense of the word and therefore part of the realty, might be removed by the tenant. The threefold classification of chattel, fixture or an object which was part and parcel of the land itself, was preferable to a simple distinction between chattels and fixtures: see Woodfall on Landlord and Tenants, release 36(1994), vol 1, pp13/83, para13.131. 2. The bungalow had become part and parcel of the land itself and was not therefore a chattel. The component parts of the bungalow, although chattels when they were brought on to the site, ceased to be chattels when they were built into the composite structure. The degree of annexation to the land depended upon the circumstances in each case and an absence of any attachment did not prevent a house forming part of the realty: see Reid v Smith [1905] 3 CLR 656, Aus HC. The bungalow, which had been constructed in such a way that it could not be removed at all, save by destruction, could not have been intended to remain as a chattel but must have been intended to form part of the realty. Paul Morgan QC and Stephen Cottle (instructed by Smith Llewelyn Partnership, of Swansea) appeared for Mr Morris; James Thom (instructed by TG Jones & Associates, of Swansea) appeared for Elitestone Ltd.