2. What is covered
1. Definition of „land‟ under NLC
2. English Law of Fixtures: Holland v Hodgson
3. Degree of Annexation Test
4. Purpose of Annexation Test
5. Applicability in Malaysia: Goh Chong Hin v
Consolidated Malay Rubber Estate
6. Effect of a Retention of Title clause
7. Exceptions to the law of fixtures
3. Definition of ‘land’ under NLC
• S 5 NLC:
Land includes:
a) The surface of the earth and all substances forming that
surface;
b) The earth below the surface and all substances therein;
c)
All vegetation and other natural products, whether or not
requiring the periodical application of labour to their production
and whether on or below the surface;
d) All things attached to the earth or permanently fastened to
anything attached to the earth, whether on or below the
surface; and
e) Land covered by water.
4. • 1st limb
• (d) all things attached to the earth or permanently
fastened to anything attached to the earth, whether on or
below the surface;
5. • 2nd limb
• (d) all things attached to the earth or permanently
fastened to anything attached to the earth, whether
on or below the surface;
• whether on or below the surface
6. Importance of defining what constitutes
land
1. To determine the right of a purchaser on certain items in
a sale and purchase transaction of a piece of land.
Example
• Mr A is the registered proprietor of a piece of land with a
house built on it. He wishes to sell the land to Mr B. Who
has the right over all the items attached to the house on
the land?
7. 2. To determine the right of chargee banks over the land
charged to them as security.
Example
• Mr A is the registered owner of a piece of land. He applies
for loan from a bank. As security for the loan, he charges
the land to the bank. Therefore, if Mr A defaults in
payment, the bank can sell the land. Who has the right
over all the items attached to the house on the land?
8. Legal maxim on fixtures
• Quicquid plantatur solo, solo cedit
• "whatever is affixed to the soil belongs to the soil”
• This legal principle means that something that is or
becomes affixed to the land becomes part of the land;
therefore, title to the fixture is a part of and passes with
title to the land and consequently whosoever owns that
piece of land will also own the things attached.
9. Fixtures and Chattels
FIXTURE
• a fixture is an item
that is attached to
the land and
immovable.
• shall form part of
land
CHATTEL
• a chattel is an item
even if attached to
the land, it is
removable.
• shall not form part of
land
10. The English law of fixtures
Laid down in Holland v. Hodgson
• (1872) L.R. 7 C.P. 328
• The owner of a mill purchased some looms for use in his
mill. They were attached to the stone floor by nails driven
into wooden beams. They could quite easily be removed.
The owner then mortgaged the mill and failed to keep up
the payments and the mill was repossessed. The question
for the court was whether the looms were fixtures forming
part of the land or whether they remained chattels.
• Held: The looms had become fixtures and thus formed
part of the land mortgaged.
11. • Blackburn
J introduced the degree and object of
annexation test:
“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.”
12. • He continued:
“…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."
13. English Law of Fixtures
• Two tests to determine if an article is a fixture or a chattel:
1. Degree of annexation test
2. Purpose/object of annexation test
• BOTH tests must be applied
14. Degree of annexation test
• An objective test on the physical attachment of the article.
• Raises a prima facie finding of fact by looking at the
degree to which an article is affixed to the land.
• (Raises a PRESUMPTION which can be rebutted by the
Purpose Test)
1. If an article is affixed to the land even slightly the
presumption is that it is a fixture.
2. If an article is attached to the land by its own weight
remains a chattel.
15. The Damage Factor
1. If the removal of the article would result in damage to
the article the presumption is that it is a fixture.
2. If the removal of the article does not result in damage to
the article cannot presume that it is a chattel but to
look at the purpose
16. Purpose of annexation test
• The prima facie finding in the Degree Test may be
strengthened or rebutted by the Purpose Test.
• Applying the degree test, if there is no physical attachment to
the land the presumption is that it is a chattel.
• However, Blackburn J. in Holland v. Hodgson : "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.“
• Intention in this context is to be assessed objectively and not
subjectively.
• It is the purpose which the object is serving which has to be
regarded, not the purpose of the person who put it there.
17. • The question is whether the object is
designed:
• To enhance the value and utility of the land
/ for the improvement or more complete
enjoyment of the land / for the use or
enjoyment of the land
• Or, for the more complete use or enjoyment
of the thing itself.
18. • If an article is attached to the land for the
better enjoyment of the land as a whole
so as to improve its usefulness and
value strengthens the presumption that
it is a fixture.
• If an article is attached to the land merely
for the more complete enjoyment and
use of the item as a chattel rebuts the
presumption that it is a fixture.
19. Mather v Fraser
• “where and article is affixed by the owner of
the fee, though only affixed by bolts and
screws, it is to be considered part of the
land, at all events when the object of
setting up the articles is to enhance the
value of the premises to which it is annexed
for the purpose to which those premises
are applied”.
20. Application to Malaysia
• The English law of fixtures applies to Malaysia
• Goh Chong Hin v. Consolidated Malay Rubber (1924)
5 FMSLR 86:
21. Goh Chong Hin v Consolidated
April 1921 - Goh Chong Hin charged his land including buildings
and factory to SRMS Lechman Chetty (chargee).
There were machinery in the factory. Annexed by nuts and bolts
to concrete foundations sunk in the soil.
June 1921 – Goh Chong Hin executed Bill of Sale over the
machinery in the factory to Consolidated Malay Rubber Estates
Ltd (grantee)
October 1923 – The chargee by the consent of Goh Chong Hin
took possession of the land and the factory.
December 1923 - The grantee applied for order to seize and sell
the machinery by virtue of the Bill of Sale.
23. Item in dispute:
Machinery in the factory. Annexed by nuts and bolts to
concrete foundations sunk in the soil.
• Chargee: They are fixtures!!!
• Grantee/Respondent: They are chattels!!!
24. the court held…
• Trial judge held in favour of grantee/respondent
• The machinery chattel.
• On appeal, held:
• English law of fixtures applies.
• Applied the test laid down in Holland v Hodgson
• The machinery fixture.
25. • Reason for decision:
• Based on the Degree Test, the presumption is that the
machinery were fixtures and applying the Purpose Test,
the machinery were attached to enhance the value and
utility of the land for a rubber estate. This strengthens
the presumption that the machinery were fixtures.
• (Note: The respondent/grantee had failed to rebut the
presumption that the machinery were fixtures.)
•
26. Points from Goh Chong Hin
1.
The first case in Malaysia where the court applied the
English Law of Fixtures.
Sproule CJC:
“ I have no doubt that we are to apply in this
country the ordinary English law of fixtures”
2.
In relationships between chargor and chargee, all fixtures
whether attached before or after the date of the charge,
pass to the chargee unless otherwise provided for in the
charge agreement.
3.
The Degree Test raises a presumption that the machinery
was a fixture. So the onus of proof was on the grantee (who
contended that they were chattels) to rebut the presumption.
27. The Shell Company v Commissioner
• Underground tanks at petrol station buried two feet below
ground level, turfed over and covered with concrete.
• The manner of their removal, if it has to be done, shows
how firmly the tanks are embedded in the earth:
• To remove the tanks, the turf, concrete or tarmacadam is
taken up, the earth excavated, the concrete manhole
boxes removed, all pipe connections unbolted and the
tank, with its concrete sinker weights can then be raised
with blocks and tackle.
• The tanks, when placed underground, were intended to
remain there.
• Court: They are fixtures.
28. Effect of Retention of Title Clause
• Also called the Romalpa Clause
• Title to the goods remains vested in the seller
until fully paid by the buyer.
• Usually found in a hire-purchase agreement.
29. Landowner / Chargor
/ Lessee
Owner of article
under hire-purchase
agreement / Lessor
chargee
30. Wiggins Teape (M) Sdn Bhd v Bahagia
Trading Sdn Bhd
• Issue:
• Whether a printing machine affixed by bolts to the
floor and ground of the defendants‟ premises on a
land charged to the chargee has become a fixture
despite the existence of a hire-purchase
agreement by which the owner of the printing
machine had retained the title until full payment?
31. • There was a „retention of title‟ clause.
• e.g. “the hirer is the absolute owner of the hired
item until full payment of the purchase price”
32. Court held…
The machine has become a fixture and passes to
the chargee notwithstanding the retention
of title clause.
33. Sungei Way Leasing v Lian Seng
Properties
• The defendant, owner of KL Plaza had took up a loan and
charged the building.
• Later, a „custom-made‟ air conditioning unit bought under
a hire-purchase agreement, was affixed to the building.
• Clause 11 of the HP Agreement provided that the lessor
was to remain as the owner of the unit and the lessee had
no right to pass title of the air-cond. to any third party
35. Dispute:
• Lessor sought to remove the air-cond. unit from the
building.
• The chargee bank objected
36. Held:
Although the air-cond. unit was in the nature of a fixture as
it was „custom-made‟ for the building, the court must give
effect to the intention of the parties arising from the
hire purchase agreement. Thus, the lessor had a better
right to the air-cond. unit.
“The chargee was not entitled to the equipment affixed to
the land as there was a retention of title clause in favour of
the plaintiffs”
37. MBF Finance v Global PacificTextiles S/B
& Anor. [1993]
• Issue:
• Whether 2 sets of dyeing machines obtained under an
„equipment rental‟ agreement and affixed to the land are
considered part of the land?
• There was a retention of title clause.
• Defendant defaulted in paying the rental for the
equipment and the lessor terminated the agreement and
sought to remove the machines from the land.
• Defendant and chargee objected claiming the machines
had become part of the land.
38. Held:
The retention of title clause rendered the machines to
continue as chattels although attached to the land.
Since the machines were installed in the factory
temporarily, their removal would not cause material injury to
the land.
39. Exceptions to the law of fixtures
• There are several exceptions to the law of fixtures:
1. Custom, e.g. Malay wooden house
2. Tenants fixtures
• Trade fixtures
• Agricultural fixtures
• Domestic fixtures
40. 1. Custom
• An exception to the law of fixtures based on custom. E.g. a
Malay wooden house by custom is moveable property even
when the usual Malay plank house is built upon bricks and
pillars with foundations let into the soil, the house is
nevertheless a chattel.
Re Tiambi bt Ma’amin (1904) Innes 285
A Malay wooden house is moveable property and thus, a chattel
and can be removed.
Kiah v Som [1953]
A Malay traditional wooden house built on stilts are regarded as
personalty by proved custom and not subject to the English law
of fixtures.
41. 2. Tenant‟s fixtures
• Things which are annexed to the land for the purpose of
trade or of domestic convenience or ornament in so
permanent a manner as to become part of the land and
yet the tenant who has erected them is entitled to remove
them during his term or within a reasonable time after its
expiration.
• The law will presume that they were only put up with the
intention of being severed from the land and removed by
the tenant, and not for the purpose of improving the
reversionary interest of the landlord.
42. • Note that this exception only applies to tenants (in tenant-
landlord relationships), and not to landowners (chargorchargee).
• For landowners, the law is strict to presume intention of
permanent annexation.
• Mather v Fraser: “where and article is affixed by the
owner of the fee, though only affixed by bolts and screws,
it is to be considered part of the land, at all events when
the object of setting up the articles is to enhance the value
of the premises to which it is annexed for the purpose to
which those premises are applied”.
43. • Spyer v Phillipson [1931]
Held:
A tenant has the right to remove his fixtures provided no
substantial damage was done to the premises.
• Smith v City Petroleum [1940] 1 All ER 260,
Held:
A tenant could remove petrol pumps from the land because
they were trade fixtures and could be easily removed since
they were only bolted to the land. However, it was held that
the petrol tanks could not be removed because they have
become an integral part of the land and could not be easily
detached.
