Topic 2 - Real & Personal Property, Jus Tertii defence, The Doctrine of Fixtures, Fixtures and Third Parties PDF

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• Summary Week 2 Lecture 2 - Jus Tertii defence, The Doctrine of Fixtures, Fixtures and Third Parties

Classification of Personal Property  pp. 2-3 • • •

Personal Property – all property interests that aren’t land Corporeal forms: Goods/Chattels/Choses in possession Incorporeal forms: chose in action – legally enforceable right against personal property eg debt, shares, bank account • Personal Property also includes intangible rights associated with the land such as easements or profits.

Personal Property sub-divided into  1. Chattels real (leasehold interests) & 2. Chattels personal (all other forms of personal property).

Ownership, Title, Possession  p. 4 • •

Ownership: fullest rights to control the “thing” Title: – (1) entitlement to the “thing” – (2) documentary evidence of ownership  Eg Torrens Land, bill of sale, deeds Possession: “the root of title” (Asher v Whitlock)

• Obtaining Possession

– Consensual: possession is consented to and limited or temporal in nature (lease/bailment) – Non-consensual: more enduring possession without consent of owner

Acquiring Possession • •

By consent & Without consent  see detail p. ?? Key Concept  RULE: possessory title (control that an individual has over the object) (even as a wrongdoer) is enforceable against all the world except for the true owner.

Possessory Title For Personal Property •

Possession at Law: – (1) Physical control of the land or thing – (2) An intention to hold and use the land or thing as one's own (animus possidendi)

Jus tertii defence  a person who has possession of personal property will have a better title than a third party who is not in possession and a third party out of possession cannot raise jus tertii (i.e. the right of a third person) as a defence to their claim. A third party’s right to possession will only be relevant if it demonstrates that the claimant has no right to possession.  pp. 5-6 1

Actual possessor Uses 3rd party to defend himself against prior possessor  Only for personal goods, not for land. Costello v Chief Constable of Derbyshire Constabulary [2001] 1 WLR 1437 (registered stolen car, 3rd party not found).  pp. 5-6 • • •

As soon as the police find someone with better title, then the possessor/thief’s title is destroyed Police jus tertii defence failed (Police did not have legally right to retain the car, thief retained car). “…even if it is clear that there is a third party somewhere with a superior right, that jus tertii is of no moment in the possessory battle of plaintiff and defendant” (Atiyah) (CB 99)

Fixtures are chattels which have become affixed to the land to such an extent that they are no longer regarded as having a separate identity to that land.

Limb 1: Degree of Annexation  p. 7  “If a chattel is actually fixed to land to any extent, by any means other than its own weight, then prima facie it is a fixture;

 if it is not otherwise fixed but is kept in position by its own weight, then prima facie it is not a fixture; and the burden of proof is on anyone who asserts that it is” (Holland v Hodgson cited by as per Jordan CJ in Australian Provincial Assurance Co v Coroneo (1938) SR (NSW) 700 at 712 ). Goods merely resting on the land are not attached and t/f not fixtures eg fountain not screwed in then it is a chattel Citing Reid v Smith [1905]  Held: the absence of any attachment (to land) did not prevent the house forming part of the realty. A wooden building, resting on land by its own weight but brought there for the purpose of being permanently used as a dwelling house is a fixture. TEST: has the object been fixed for the better enjoyment of the object as a chattel, or … has been fixed with a view to effecting a permanent improvement of the freehold? Elitestone v Morris [1997] 1 WLR 687 per Lord Lloyd of Berwick  HELD the purpose of bringing in the chattels – the timber frame walls was to improve the freehold, not to enjoy those objects as chattels.

Limb 2: Purpose/Object of Annexation (Intent) Fixed to improve the realty? Or Fixed to enjoy / use the chattel?  p. 7-8 Pegasus Gold Australia Ltd v Mesto Mineral s(Australia Ltd [2002] NTCA 203. (spare parts – repair mining equipment) • HELD: could be removed without damage 2

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HELD: selling and relocating the parts was common practice and implied by the lease and Mining Act HELD: the purpose of the annexation was NOT to enjoy the mineral lease, fixation was to prevent vibration  ore was separated so it is a chattel

B. Nature of the chattel: Leigh v Taylor [1902] AC 157 vs Re Whaley 1908 1 Ch 615 (tapestries attached to the wall for proper viewing)  Per Halsbury LC: “it never was intended to remain part of the house; the contrary is evident from the very nature of the attachment, the extent and degree of which was slight. This was put up for ornamentation and the enjoyment of the person occupying the house not as part of the house. Mr. Levett could of removed it at any time  so chattel!!”

Re Whaley [1908] 1 Ch 615 (tapestry attached to enhance historical character Elizabethan) •

Tapestry was always intended to become a part of the house as it was hung to enhance the Elizabethan character  tapestry’s were realty benefit for the land  so fixtures

Elitestone v Morris [1997] 1 WLR 687 per Lord Lloyd of Berwick (Wooden bungalows resting on concrete pillars attached to the ground) • Court of appeal held they were chattels because of the common intention of the landowners and occupants that occupants retain possession of bungalows/chalets while landowner held the freehold  House of Lords overruled and said the bungalows were fixtures (part of land) Fixtures and Third Parties A third party may acquire a right to remove a chattel which has become a fixture  see detail/diagram pp. 8-9 Metal Manufacturers Limited v Federal Commissioner of Taxation [1999] FCA 1712  p. 9 • •

Court found with reference to all relevant factors that plant and equipment became part of land The equitable interest in the fixtures was sufficient to support a lease.

Main Notes Topic 2 - Jus Tertii defence, The Doctrine of Fixtures, Fixtures and Third Parties THE DIFFERENCE BETWEEN REAL AND PERSONAL PROPERTY Seisin (possession) and Land • • • • • •

Person holding possession also held freehold estate Historically tenant held possession but not title: not seised of land Only those who could utilise real actions were regarded as seised of land The availability of writ of ejectment to tenants as well, diminished importance of distinction between freehold (seisen) and leasehold Seisin replaced by registered title Seisen as used today means possession

Classification • •

Personal Property – all property interests that aren’t land Corporeal forms: Goods/Chattels/Choses in possession 3

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Incorporeal forms: chose in action – legally enforceable right against personal property eg debt, shares, bank account

Remedies •

Land: Real actions replaced by statute • see Common Law Procedure Act 1852(UK) followed in Australia see Supreme Court Act 1986(Vic) Division 4—Proceeding for recovery of land • Personal Property: • Remedies in tort – trespass on goods, conversion, detinue (protect possession) • Remedies in contract • Statute • Equity (constructive trust), injunction – When damages are inadequate, equitable principles apply

Personal Property Actions •

Concept: A person in possession of goods (even if he or she is not the true owner of the goods) can take action for recovery of the goods or for the interference with the goods. – Trespass to goods: intentional direct interference with possession of goods. – Conversion/Trover: intentional and unjustifiable dealings with goods in a manner inconsistent with the owner’s possession or immediate right to possession. – Detinue: wrongful detention of goods after the plaintiff has lawfully requested their return.

Possession Ownership, Title, Possession • •

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Ownership: fullest rights to control the “thing” – Hard to define Title: – (1) entitlement to the “thing” – (2) documentary evidence of ownership • Eg Torrens Land, bill of sale, deeds Possession: “the root of title” (Asher v Whitlock) – historically the heart of property law – why? – Relevance to personal property?

Obtaining Possession •

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Possession may arise by consensual or non-consensual way: – Consensual: possession is consented to and limited or temporal in nature (lease/bailment) – Non-consensual: more enduring possession without consent of owner Summary of methods to acquire possession: – Consensual possession: sale, lease, gift or bequest etc – Misplaced/lost goods (finder) – Goods never previously possessed (discovery) – Stolen goods (theft) - Even wrongful possession is protected

Acquiring Possession •

By consent – Purchased, gift, lease, borrowed – Permanent eg purchase – Temporary eg borrow from library (Bailment) 4

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Without consent – Taking possession of something never possessed before (discover) – Finding something someone has lost – Taking without consent – by accident or by theft Key Concept  RULE: possessory title (even as a wrongdoer) is enforceable against all the world except for the true owner.

Possessory Title For Personal Property •

Possession at Law: – (1) Physical control of the land or thing – (2) An intention to hold and use the land or thing as one's own (animus possidendi)

Possession: Control • • • • • •

Control = factual possession Control = control over access to the “thing” Land: sufficient steps to use or otherwise limit access to the land Goods: manual control or placement where we have control eg desk space eg bag Controlling a space allows people to control the smaller things within it eg home ISSUE: public spaces

Jus Tertii •

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Cannot be claimed in action for possession of land – Not raised in Asher but impliedly rejected – Use of plea of jus tertii rejected in Perry v Clissold Personal property: Can be raised to say that the prior possessor’s title is defective because the actual possessor has acquired possession from a third party with better right

Actual possessor Uses 3rd party to defend himself against prior possessor  Only for personal goods, not for land. Costello v Chief Constable of Derbyshire Constabulary [2001] 1 WLR 1437 • • •

FACTS: Costello registered a stolen car (ringed) Third party true owner could not be found Car seized by police 5

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Costello filed for prior possession to get car back and damages for wrongful detention

• HELD: [possession] “…vests in the possessor a possessory title which is good against the world save as against anyone setting up or claiming under a better title. • In the case of a theft the title is frail, and of likely limited value (see eg Rowland) but nonetheless remains title to which the law affords protection.” per Lightman J • As soon as the police find someone with better title, then the possessor/thief’s title is destroyed • Police jus tertii defence failed (Police did not have legally right to retain the car, thief retained car). • “…even if it is clear that there is a third party somewhere with a superior right, that jus tertii is of no moment in the possessory battle of plaintiff and defendant” (Atiyah) (CB 99) 

Fixtures • •

Def: Fixtures are chattels which have been annexed to land such that they lose their independent identity as a good and become a part of the land. Principle: quicuid plantatus sol, solo credit – whatever is affixed to the soil becomes part of the soil. Is the fountain affixed to the house???

General EG’s of Fixtures • •

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Natural affixed resources Fixtures physically attached for the purpose of benefiting the land – Eg Residential – dwellings, carpets, blinds – Eg Commercial – machinery, pipes But no set rules Test of degree and object of annexation BUT ultimately a holistic examination of all the circumstances. 6

Tests for Fixture or Channel? • 1. Contract or Statute? • 2. General Law (Common Law) – 1. Degree of Annexation – 2. Purpose / Intent/ Object of Annexation (most important) • Modern approach: No single test: All the circumstances of the case are examined. Annexation is determined by a range of factors (NAB v Blacker)

Limb 1: Degree of Annexation • •

“If a chattel is actually fixed to land to any extent, by any means other than its own weight, then prima facie it is a fixture; and the burden of proof is upon anyone who asserts that it is not; if it is not otherwise fixed but is kept in position by its own weight, then prima facie it is not a fixture; and the burden of proof is on anyone who asserts that it is” ( Holland v Hodgson cited by as per Jordan CJ in Australian Provincial Assurance Co v Coroneo (1938) SR (NSW) 700 at 712 ).

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Goods merely resting on the land are not attached and t/f not fixtures eg fountain not screwed in then it is a chattel

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The following factors could be considered in determining degree of annexation: – The mode and structure of annexation – Whether removal of fixture would cause damage to land or buildings to which it is affixed – Whether removal would destroy or damage the fixture `itself – Whether the cost of removal would exceed the value of the fixture

Limb 2: Purpose of Annexation (Intent) • •

Objective test: What would a reasonable person consider to be the reason for the attachment? A. Purpose for fixation: – Fixed to improve the realty? or – Fixed to enjoy / use the chattel?

Example cases – intention • Pegasus Gold Australia Ltd v Mesto Mineral s(Australia Ltd [2002] NTCA 203. • • • • •

FACTS: spare parts used to repair mining equipment – chattels of fixtures HELD, where common intention not clear, courts must rely on the objective circumstances surrounding annexation HELD: could be removed without damage HELD: selling and relocating the parts was common practice and implied by the lease and Mining Act HELD: the purpose of the annexation was NOT to enjoy the mineral lease, fixation was to prevent vibration

• B. Nature of the chattel: Is it something you would typically call a fixture? Or a chattel? Eg caravan Is it fixed to enjoy the chattel and/or realty?  Leigh v Taylor [1902] AC 157 vs Re Whaley 1908 1 Ch 615  FACTS: expensive tapestries attached to the wall for proper viewing

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Per Halsbury LC: “it never was intended to remain part of the house; the contrary is evident from the very nature of the attachment, the extent and degree of which was slight. This was put up for ornamentation and the enjoyment of the person occupying the house not as part of the house.”

• Re Whaley [1908] 1 Ch 615 • • •

FACTS: valuable tapestry attached to enhance historical character of an Elizabethan room Tapestry was cut so a door could be used. Implied it wasn’t fixed for proper display as per Leigh  tapestry’s were realty benefit for the land  so fixtures  Held: need to determine what the objective intention is from the circumstances at the time of annexation

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C. Relationship between affixer and freehold D. Consider standard social or architectural practices E. Intention of the parties

Elitestone v Morris [1997] 1 WLR 687 per Lord Lloyd of Berwick • •

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FACTS: Wooden bungalows resting on concrete pillars attached to the ground Court of appeal held they were chattels because of the common intention of the landowners and occupants that occupants retain possession of bungalows/chalets while landowner held the freehold House of Lords overruled and said the bungalows were fixtures (part of land) 

Limb 1: degree of annexation • Citing Reid v Smith [1905] 3 CLR 656, 659, Griffith CJ stated the question as follows “The short

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point raised in this case is whether an ordinary dwelling house erected upon an ordinary town allotment in a large town, but not fastened to the soil remains a chattel or becomes part of the freehold “ Held: the absence of any attachment (to land) did not prevent the house forming part of the realty TEST: has the object been fixed for the better enjoyment of the object as a chattel, or … has been fixed with a view to effecting a permanent improvement of the freehold? Elitestone v Morris [1997] 1 WLR 687 per Lord Lloyd of Berwick What were the chattels brought into the land? HELD the purpose of bringing in the chattels – the timber frame walls was to improve the freehold, not to enjoy those objects as chattels.

Fixtures and Third Parties • • •

A third party may acquire a right to remove a chattel which has become a fixture Ie 3rd party has a contractual right with respect to unsevered chattel. For example in hire purchase or a lease. Equitable interest is enforceable except against a bona fide purchaser for value without notice (BFPWoN)

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Concept: A chattel owner has an equitable right of re-entry against the landowner arising from the contractual right between the lessee and the chattel owner. This entitles the chattel owner to enter and sever the chattels which have become fixtures

Metal Manufacturers Limited v Federal Commissioner of Taxation [1999] FCA 1712

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Court found with reference to all relevant factors that plant and equipment became part of land

Equitable Interest? • HELD: “It is beyond question that the Taxpayer was intending to vest legal ownership in the Bank. It agreed to do everything that was necessary to do so. If it has not achieved that stated object, it 9

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remained subject to a continuing obligation to do so. A court of equity would treat as having been done that which ought to have been done. I consider that the Credit Purchase Agreement was effective to vest in the Bank an interest in the nature of property which should be characterised as equitable.” per Emmett J The equitable interest in the fixtures was sufficient to support a lease.

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