Peel Land and Property (ports No.3) Ltd v Ts Sheerness Steel Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 14 June 2013 |
| Neutral Citation | [2013] EWHC 1658 (Ch) |
| Docket Number | Case No: HC12DO2023 |
| Court | Chancery Division |
| Date | 14 June 2013 |
[2013] EWHC 1658 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, London, EC4A 1NL
Mr Justice Morgan
Case No: HC12DO2023
Mr Jonathan Seitler QC (instructed by Gordons) for the Claimant
Mr Kirk Reynolds QC and Mr Greville Healey (instructed by McGuire Woods London LLP) for the Defendant
Hearing dates: 10th, 11th, 15th and 16th April 2013
Judgment
Mr Justice Morgan| Heading | Paragraph number |
| Introduction | 1 |
| The 1971 lease | 5 |
| The 1973 lease | 21 |
| The previous litigation | 22 |
| The 1992 deed of variation | 23 |
| Other background matters | 26 |
| The proceedings | 28 |
| The submissions | 29 |
| My approach | 34 |
| The law | 36 |
| The expert evidence | 70 |
| A general description of the plant | 76 |
| The disputed items | 78 |
| Chattels | 79 |
| The cranes | 84 |
| Fixtures | 103 |
| Items that do not need a decision | 151 |
| The effect of the terms of the lease | 152 |
| The overall result | 170 |
Introduction
1. In 1971, the land on which the Sheerness steel works was later built was demised for a term of 125 years from 1st September 1968. By the lease, the tenant agreed to erect a new building consisting of a fully equipped steel making plant and rolling mill, capable of producing not less than 50,000 tons of steel products per annum. The tenant created the Sheerness steel works by duly erecting a building and equipping it as a steel making plant. The steel works were later extended. The Claimant is the landlord under the 1971 lease and the Defendant is the tenant under that lease.
2. The Defendant now wishes to know if it is entitled to remove large parts of the plant which has been installed on, or brought onto, the demised premises. The Defendant says that it is entitled to remove that plant either because the plant consists of removable tenant's fixtures or even, in some cases, of chattels. The Claimant asserts on various grounds that the Defendant has no right to remove any of the plant or will only be entitled to remove plant in the future as and when further conditions are satisfied. The Claimant contends that the express terms of the lease provide the answer in this case. The Defendant contends that the express terms of the lease do not override whatever is the Defendant's entitlement under the general law to remove chattels and tenant's fixtures. If the terms of the lease do not provide the answer, then it is necessary to examine a large number of items of plant to determine whether the item is a chattel or a tenant's fixture, or neither of these. The parties have divided the plant into 131 items (although in truth there are only 126 items). They have argued about the majority, if not all, of these items. The court is asked to consider each item and determine the dispute. The plant in dispute consists of most of the plant in a very large steel works. Many of the items of plant are bulky and complex.
3. The legal tests which apply to distinguish a chattel from a fixture and a removable fixture from a non-removable fixture are the subject of a large number of cases decided over the centuries. It has been said that it is not possible to reconcile all of the decisions. Further, whilst there are many illustrations in cases in the 19th century, and earlier, of these principles being applied, there are rather fewer illustrations in the 20th or even the 21st century. Further, the bulk and complexity of the plant in issue in this case has meant that there are no obvious illustrations in the decided cases as to how the established principles are to be applied to such plant.
4. Mr Seitler QC appeared on behalf of the Claimant and Mr Reynolds QC and Mr Healey appeared on behalf of the Defendant.
The 1971 lease
5. The 1971 lease was made between The Medway Ports Authority, the predecessor in title of the Claimant, as "the Lessors", and Sheerness Iron & Steel Ltd, the predecessor in title of the Defendant, as "the Tenant". The lease was expressed to be granted: "in consideration of the expense to be incurred by the Tenant in the construction of certain works and the building hereinafter mentioned" and in consideration of the Tenant's covenants.
6. The premises demised by the 1971 lease were described as follows:
"All that piece or parcel of land situate at Sheerness in the County of Kent shown on the plan annexed hereto and thereon edged red (hereinafter called "the Site") Together with the Buildings erected thereon or on some part or parts thereof (hereinafter called "the said premises")"
7. The 1971 lease demised these premises for a term of 125 years from the 1st September 1968 at an initial rent of £22,000 subject to rent review every 21 years during the term. The rent review provisions referred to the rent payable from each rent review date as "the ascertained rent", or the rent previously payable, whichever should be the greater. "Ascertained rent" was defined to be:
" … the amount which shall represent a fair yearly rent for the Site having regard to the rental values then current for property let for One hundred and twenty five years from the date of the valuation without a premium with vacant possession for industrial purposes with an obligation for the Tenant to construct thereon such buildings as may at the time of such valuation be situate thereon and otherwise on the terms and conditions of this Lease (other than the rent hereby reserved) provided that in determining such rent no account shall be taken of
(i) any effect on rent of the fact that the Tenant has been in occupation of the said premises and
(ii) any goodwill attached to the said premises by reason of the business then carried on thereat by the Tenant
(iii) the value attributable to any buildings actually standing on the premises"
8. The 1971 lease reserved a second rent which would be payable by the Tenant in respect of "any alterations or additions to the demised premises made from time to time by the Lessors at the request of the Tenant". There was no evidence before me that this clause had ever come into effect.
9. Clause 1 of the 1971 lease contained an important covenant obliging the Tenant to carry out extensive works to the demised premises. The Tenant was to begin these works by 1st January 1970 (subject to a possible revision of that date) and thereafter was to:
" … proceed expeditiously to erect and complete by the Thirty first day of December One Thousand nine hundred and seventy three a new building consisting of a fully equipped steelmaking plant and rolling mill capable of producing not less than Fifty thousand tons of steel products per annum (hereinafter called "the Works") "
10. Clause 1(2) of the 1971 lease contained further provisions as to "the Works", as follows:
"(2) The Works shall be carried out in all respects in a substantial and workmanlike manner and to the reasonable satisfaction of the Lessors' Surveyor or Architect (whose fees shall be borne by the Tenant) and in accordance with:
(a) detailed plans elevations sections specifications and materials based thereon to be previously submitted to and approved in writing from time to time by the Lessors Surveyor or Architect (whose approval shall not be unreasonably withheld or delayed) (whose fees shall be paid by the Tenant) … "
11. Clause 1(2) referred to the Tenant being required to submit to the Lessors, for their approval, detailed plans, elevations, sections and specifications of the intended Works. I was told that neither party to this dispute has any documents of that kind which show the original Works which were carried out.
12. Clause 2 of the 1971 lease contained a number of covenants to be performed by the Tenant. The covenants which are of particular relevance for present purposes were those contained in sub-clauses (6), (7), (8), (11), (13), (14), (18) and (21).
13. By clause 2(6), the Tenant covenanted:
"(6) Not at any time during the said term to erect make or maintain or suffer to be erected made or maintained any building erection alterations or improvements nor to make or suffer to be made any change or addition whatsoever in or to the said premises save in connection with the use of the said premises for the purposes of steel making steel rolling and operations ancillary thereto"
14. By clause 2(7), the Tenant covenanted:
"(7) To keep the said premises and all other buildings erected on the said premises or on some part or parts thereof the fixtures and fittings and all additions thereto in good and substantial repair and condition and to paint such parts of the exterior thereof as are normally painted not less than once in every seven years."
15. Clause 2(8) required the Tenant to take steps to ensure that the operation of the steel works and rolling mill should comply with the Clean Air Act 1956.
16. By clause 2(11), the Tenant covenanted:
"(11) At the end or sooner determination of the said term to yield up the said premises so repaired and maintained amended and kept as aforesaid together with all additions and improvements made thereto in the meantime and all fixtures and fittings of every kind in or upon the said premises or which during the said term may be affixed or fastened to or upon the same except tenants or trade fixtures"
17. By clause 2(13), the Lessors were entitled to enter the demised premises to view the progress and state of the Works, to take inventories of "the Landlord's fixtures therein" and to give notice of defects, wants of repair and removal of fixtures.
18. By clause 2(14), the Tenant covenanted:
"(14) Not to use or occupy the said premises other than for the purposes of steel making steel rolling and operations ancillary thereto or for such other purposes as may from time to time be approved by the...
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