Elitestone Ltd v Morris and Another

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLORD BROWNE-WILKINSON,LORD LLOYD OF BERWICK,LORD NOLAN,LORD NICHOLLS OF BIRKENHEAD,LORD CLYDE
Judgment Date01 May 1997
Judgment citation (vLex)[1997] UKHL J0501-1

[1997] UKHL J0501-1

HOUSE OF LORDS

Lord Browne-Wilkinson

Lord Lloyd of Berwick

Lord Nolan

Lord Nicholls of Birkenhead

Lord Clyde

Elitestone Limited
(Respondents)
and
Morris

and Another (A.P.)

(Appellants)
LORD BROWNE-WILKINSON

My Lords,

1

I have had the advantage of reading in draft the speeches of my noble and learned friends, Lord Lloyd of Berwick and Lord Clyde. For the reasons which they give I would allow the appeal and restore the order of the assistant recorder.

LORD LLOYD OF BERWICK

My Lords,

2

The plaintiffs, Elitestone Ltd., are the freehold owners of land known as Holt's Field, Murton, Near Swansea. The land is divided into 27 lots. The defendant, Mr. Morris, is the occupier of a chalet or bungalow on Lot No. 6. It is not known for certain when the chalet was built. But it seems likely that it was before 1945. Mr. Morris has lived there since 1971.

3

The plaintiffs acquired the freehold in 1989 with a view to redevelopment. On 30 April 1991 they issued proceedings in the Swansea County Court claiming possession against all 27 occupiers. Five lead actions were selected, including that in which Mr. Morris was defendant. They came on for trial before Mr. Assistant Recorder Bidder in November 1994. The assistant recorder had a number of issues to decide. He dealt with them in a most impressive manner. So far as Mr. Morris is concerned, his defence was that he is a tenant from year-to-year, that he occupies the premises as his residence, and is therefore entitled to the protection of the Rent Act 1977. He claims a declaration to that effect.

4

The assistant recorder held, correctly, at the end of what was necessarily a very lengthy judgment that the question in Mr. Morris's case turned on whether or not the bungalow formed part of the realty. If it did, then Mr. Morris was entitled to his declaration.

5

Having visited the site, the assistant recorder had this to say:

"While the house rested on the concrete pillars which were themselves attached to the ground, it seems to me clear that at least by 1985 and probably before, it would have been clear to anybody that this was a structure that was not meant to be enjoyed as a chattel to be picked up and moved in due course but that it should be a long-term feature of the realty albeit that, because of its construction, it would plainly need more regular maintenance."

6

The Court of Appeal disagreed (unreported), 28 July 1995, Court of Appeal (Civil Division) Transcript No. 1025 of 1995. Aldous L.J., who gave the leading judgment, was much influenced by the fact that the bungalow was resting by its own weight on concrete pillars, without any attachment. He was also influenced by the uncertainty of Mr. Morris' tenure. Although Mr. Morris had been in occupation since 1971, he was required to obtain an annual "licence." At first the licence fee was £3 a year. It rose to £10 in 1984, then to £52 in 1985, and finally to £85 in 1989. In 1990 the plaintiffs required a licence fee of £1,000: but Mr. Morris, and the other occupiers declined to pay.

7

On these facts Aldous L.J. inferred that it was the common intention of the parties that the occupiers should acquire the ownership of their bungalows, but the ownership of the sites should remain in the freeholders. On that footing Mr. Morris' bungalow was to be regarded as a chattel. It was never annexed to the soil, so it never became part of the realty. It followed that the tenancy did not include the bungalow, and Mr. Morris was not a protected tenant.

8

Unlike the judge, the Court of Appeal did not have the advantage of having seen the bungalow. Nor were they shown any of the photographs, some of which were put before your Lordships. These photographs were taken only very recently. Like all photographs they can be deceptive. But if the Court of Appeal had seen the photographs, it is at least possible that they would have taken a different view. For the photographs show very clearly what the bungalow is, and especially what it is not. It is not like a Portakabin, or mobile home. The nature of the structure is such that it could not be taken down and re-erected elsewhere. It could only be removed by a process of demolition. This, as will appear later, is a factor of great importance in the present case. If a structure can only be enjoyed in situ, and is such that it cannot be removed in whole or in sections to another site, there is at least a strong inference that the purpose of placing the structure on the original site was that it should form part of the realty at that site, and therefore cease to be a chattel.

9

There were a number of other issues in the Court of Appeal. I need only mention one. This was an argument by the plaintiffs that Mr. Morris was estopped by convention from denying that the bungalow was a chattel. There was, so it was said, a common assumption that the chalets were owned separately from the land, since each occupier purchased his own chalet from the previous occupier (Mr. Morris paid £250 for No. 6 in 1971), and each occupier paid an annual licence fee to the freeholders. Since the Court of Appeal held that the bungalow was a chattel, they did not find it necessary to deal with the estoppel argument. The plaintiffs might have renewed the argument before your Lordships. But in the meantime the House had given judgment in Melluish v. B.M.I. (No. 3) Ltd. [1996] A.C. 454. In that case Lord Browne-Wilkinson said, at p. 473:

"The terms expressly or implicitly agreed between the fixer of the chattel and the owner of the land cannot affect the determination of the question whether, in law, the chattel has become a fixture and therefore in law belongs to the owner of the soil: … The terms of such agreement will regulate the contractual rights to sever the chattel from the land as between the parties to that contract and, where an equitable right is conferred by the contract, as against certain third parties. But such agreement cannot prevent the chattel, once fixed, becoming in law part of the land and as such owned by the owner of the land so long as it remains fixed."

10

If an express agreement cannot prevent a chattel from becoming part of the land, so long as it is fixed to the land, it is obvious that a common assumption cannot have that effect. It is not surprising, therefore, that Mr. Thom abandoned his estoppel argument.

11

Thus the sole remaining issue for your Lordships is whether Mr. Morris' bungalow did indeed become part of the land, or whether it has remained a chattel ever since it was first constructed before 1945.

12

It will be noticed that in framing the issue for decision I have avoided the use of the word "fixture." There are two reasons for this. The first is that "fixture", though a hallowed term in this branch of the law, does not always bear the same meaning in law as it does in everyday life. In ordinary language one thinks of a fixture as being something fixed to a building. One would not ordinarily think of the building itself as a fixture. Thus in Boswell v. Crucible Steel Co. [1925] 1 K.B. 119 the question was whether plate glass windows which formed part of the wall of a warehouse were landlord's fixtures within the meaning of a repairing covenant. Atkin L.J. said, at p. 123:

"… I am quite satisfied that they are not landlord's fixtures, and for the simple reason that they are not fixtures at all in the sense in which that term is generally understood. A fixture, as that term is used in connection with the house, means something which has been affixed to the freehold as accessory to the house. It does not include things which were made part of the house itself in the course of its construction."

13

Yet in Billing v. Pill [1954] 1 Q.B. 70, 75 Lord Goddard C.J. said:

"What is a fixture? The commonest fixture is a house which is built into the land, so that in law it is regarded as part of the land. The house and the land are one thing."

14

There is another reason. The term fixture is apt to be a source of misunderstanding owing to the existence of the category of so called "tenants' fixtures", (a term used to cover both trade fixtures and ornamental fixtures) which are fixtures in the full sense of the word (and therefore part of the realty) but which may nevertheless be removed by the tenant in the course of or at the end of his tenancy. Such fixtures are sometimes confused with chattels which have never become fixtures at all. Indeed the confusion arose in this very case. In the course of his judgment Aldous L.J. quoted at length from the judgment of Scott L.J. in Webb v. Frank Bevis Ltd. [1940] 1 A.E.R. 247. The case concerned a shed which was 135 feet long and 50 feet wide. The shed was built on a concrete floor to which it was attached by iron straps. Having referred to Webb v. Frank Bevis Ltd. and a decision of Hirst J. in Deen v. Andrews [1986] 1 E.G.L.R. 262 Aldous L.J. continued:

"In the present case we are concerned with a chalet which rests on concrete pillars and I believe falls to be considered as a unit which is not annexed to the land. It was no more annexed to the land than the greenhouse in Deen v. Andrews or the large shed in Webb v. Frank Bevis Ltd. Prima facie, the chalet is a chattel and not a fixture."

15

A little later he said: "Unit 6 was just as much a chattel as the very large shed was in the Webb case and the greenhouse in Deen v. Andrews."

16

But when one looks at Scott L.J's. judgment in Webb v. Frank Bevis Ltd. it is clear that the shed in question was not a chattel. It was annexed to the land, and was held to form part of the realty. But it could be severed from the land and removed by the tenant at the end of his tenancy because it was in the nature of a tenant's fixture, having been erected by the tenant for use in his trade. It follows...

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    ...principles by which to test whether a chattel has become part of the land have recently been considered by the House of Lords in Elitestone Limited v Morris [1997] 1 WLR 687. In that case the question was whether a chalet resting only by its own weight on concrete pillars set into the groun......
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  • Broken Covenants - How To Ensure A Break Is Valid
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