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Chattel or Fixture

The sale of property frequently gives rise to disputes concerning ownership of items on the land removed by a seller.

In determining this question, the Courts consider the issue of whether the disputed items are characterised as a chattel or a fixture.

In many cases, the value of such items are such as to make it uneconomical to dispute ownership and the parties resolve to settle the issues; weighing up the cost of litigation.

However, occasionally the value of disputed items makes it worthwhile.

In Agripower Barraba Pty Ltd v Blomfield [2015] NSWCA 30 the Court was concerned with  competing claims to fifteen items of mineral processing plant and equipment (Disputed Items) sold by receivers with mining lands.

The Court examined the leases which had been in existence prior to receivership as to removal and rehabilitation provisions as well as the history of the specific disputed items.

In this case, there was mining and processing equipment inside a large shed and other items outside of the shed.

The Court approved Conti J in NAB v Blacker in setting out the factors that the Courts generally ought to take into account in determining the purpose or object of annexation:

  • "Whether the attachment was for the better enjoyment of the property generally or for the better enjoyment of the land and/or buildings to which it was attached …
  • The nature of the property the subject of affixation …
  • Whether the item was to be in position either permanently or temporarily:Australian Provincial Assurance Co Ltd v Coroneo at 712-713.
  • The function to be served by the annexation of the item: see, for example,Attorney-General (Cth) v RT Co Pty Ltd (No 2) (1957) 97 CLR 146 at 156-157 where printing presses were secured to a concrete foundation by nuts and bolts in order to keep the printing presses steady when in operation.”

In determining the degree of annexation, Conti J identified (at [14]) the following factors that may be considered:

  • “Whether removal would cause damage to the land or buildings to which the item is attached.
  • The mode and structure of annexation.
  • Whether removal would destroy or damage the attached item of property.
  • Whether the cost of renewal would exceed the value of the attached property.” (Citations omitted.)

These factors identified by Conti J are useful guides, but are neither exhaustive nor definitive.

The Court also referred to the longstanding common law exception to the general rule that tenants may remove fixtures they have brought onto the land, provided the fixtures were installed for trade, domestic or ornamental purposes

In this case, there were two distinct categories of disputed items and there were different findings made in respect of those items.

This decision highlights that each case will be decided on its own particular facts and the general principles while well settled can be difficult to apply especially in relation to specific items involving mining and processing.

If you have any disputes concerning the characterisation of goods as chattels or fixtures contact us for advice.

Michael Sing
Special Counsel

supervising partners

Gavin McInnes

Partner
Office 07 3009 8444
Email g.mcinnes@rclaw.com.au

lawyers

Michael Sing

Special Counsel
Office 07 3009 8444
Email m.sing@rclaw.com.au