PP 2013/112

Items that are bulky, awkward, complex and costly to remove can still qualify as tenant’s fixtures The legal tests used to distinguish chattels from fixtures, and fixtures that are removable from those that are not, were laid down in cases dating back to the 19th century. Peel Land and Property (Ports No 3) Ltd v TS Sheerness Steel Ltd [2013] EWHC 1658 (Ch); [2013] PLSCS 139 will give the textbooks a more contemporary feel. The case concerned the Sheerness Steel Works in Kent. The tenant had complied with its covenants to erect and equip the building as a steel making plant and rolling mill, but now wished to know whether it was entitled to remove the plant and machinery that it had installed. The landlord laid claim to the equipment and sought an order restraining the tenant from selling or removing it from the building. The parties agreed that it would take six to eight weeks to prepare an estimate and sequence the engineering work required to remove some of the items, given their size, bulk and the complexity of the work required. They also agreed that it would take 12-18 months to remove certain items, at a cost running into several million pounds. The landlord tried to persuade the court to approach the case in the way that it would have done, had the landlord constructed and equipped the building before letting it. Alternatively, it claimed that the equipment had become an integral part of the steel making building and relied on the tenant’s covenant not to alter the premises. The judge rejected both arguments and dismissed the landlord’s claim. Objects brought on to land fall into one of three categories. They may be chattels, or fixtures, or may become part of the land itself. Chattels can be removed easily, without damage to themselves or to the fabric of the property, and are generally fixed to the property temporarily to be enjoyed as chattels, and not as permanent improvements. They remain the property of tenants who can deal with them as they please. Fixtures fall into one of two categories. They may be landlord’s fixtures, which must be left behind at the end of the lease, or tenant’s fixtures. Items in this last category comprise chattels that the tenant has attached to property for the purposes of its trade, or as ornaments for convenience, which can be removed without losing their essential utility or causing substantial damage to the land. Tenants are entitled to remove such fixtures, unless their lease expressly prohibits them from doing so (but need not do so unless their lease states otherwise), and must make good any damage resulting from their removal. The court applied these tests to cranes, tracks, furnaces, tundishes, casting machines, mills, regulators and transformers, cooling towers and dust extraction equipment, and concluded that most were tenant’s fixtures or chattels, even though their removal would, in some cases, deprive part, or the whole, of the steel works of their functionality or render their operation unlawful. The obligation to construct and equip the steel works did not mean that the fixtures belonged to the landlord and the provisions of the lease were insufficiently clear to regulate or override the tenant’s right to remove its trade fixtures whenever it chose. Allyson Colby is a property law consultant