DEFINITION OF LAND: PART TWO

bySharifah Zubaidah Aljunid

(2011/2012)

The Lecture Today:

1) Recap. From previous lecture on topic. 2) Frequently Asked Questions (FAQs) 3) Selected Case Law

Let’s Recap.

The English Law of Fixtures is applied by the court to help determine whether an article/item has become part of land.

The English Law of Fixtures consists of 2 tests:

- The Degree of Annexation Test - The Purpose of Annexation Test We must apply BOTH tests starting with the

Degree test and followed by the Purpose test.

F.A.Q.s

Why can’t we just apply the Degree test to determine the issue?

Answer: Because the Degree Test merely raises a

PRESUMPTION that can either be strengthened or rebutted.

It is the Purpose test which is the DECISIVE test.

Another Q.:

What if there is a conflict between the result of applying the Degree test and result after applying the Purpose test?

Answer: A conflict would reflect the ability of the

presumption under the Degree test to be rebutted by applying the Purpose test. The Purpose test will prevail.

Case Law:

Case law indicates that conflicting claims on the issue of fixtures and chattels usually arise from two or more transactions involving the land and the chattel.

There would usually be a charge transaction with regard to the land and another transaction where the landowner buys the chattel and attaches the chattel to the land.

The conflicting claims would be between the chargee and the owner of the chattel.

What happened in Goh Chong Hin’s case?

Who were the parties? What was the claim? What was the item in dispute? Which party wanted to argue that the item was a

fixture? Which party wanted to argue that the item was a

chattel? What did the court decide? Why is this case important?

Goh Chong Hin [1924-1925]

Parties:

‘chargor’ ‘grantor’ (of machinery) (of land)

GCH(landowner)

‘CHARGEE’‘GRANTEE’

(RESPONDENT)

The Claim:

The respondent/ grantee applied for an order of seizure and sale of the machinery which was in

the possession of the chargee.

Items in dispute:

Machinery in a factory in a rubber estate affixed to the floor of the factory by bolts and

nuts.

Party arguing that machinery was a fixture?

The Chargee.

Party arguing that the machinery were chattels?

The respondents/grantee who had purchased the machinery under a Bill of Sale.

Court decided?

In the lower court, the trial judge found in favour of the respondent/ grantee. (CHATTEL)

However, on appeal, the judge found in favour of the chargee. (FIXTURE)

Basis of 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.)

Why is this case important?

First case in Malaysia where the court accepted 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”

Wiggins Teape’s case [1980]

Issue: Whether or not 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?

‘Retention of Title Clause’

Also called the ‘Romalpa Clause’e.g.“the hirer is the absolute owner of the hired item

until full payment of the purchase price”

Held:

The machine has become a fixture and passes to the chargee notwithstanding the retention of title clause.

Sungei Way Leasing S/B v Lian Seng Properties S/B & Ors. [1989]

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.

The Parties:

Land Owner(Chargor& Lessee)

ChargeeBank Lessor

Sungei Way’s case: A dispute arose between the lessor and lessee where

the lessor sought to remove the air-cond. unit from the building.

The chargee bank objected. 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.

MBF Finance v Global Pacific Textiles 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?

Facts show that 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.

MBF Finance’s case:

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.

Note: This case shows parties may contract out of the general rule in section 5(d) NLC.

Exceptions:

1) Malay Wooden House Case: Re Tiambi bt Ma’amin (1904) Innes 285 A Malay wooden house is moveable property and

thus, a chattel and can be removed. Case: 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.

Exceptions:

2) Tenant’s Fixtures

Spyer v Phillipson [1931] Held: A tenant has the right to remove his fixtures

provided no substantial damage was done to the premises.

More on tenant’s fixtures:

The tenant must exercise his right to remove his fixtures during the tenancy period or a resonable time after the tenancy ends, otherwise the fixtures may become part of the land and belongs to the landlord.

(Smith v City Petroleum Co. Ltd. [1940])

See article:

Hunud Abia Kadouf; “ The Legal Conception of ‘Land’ Under

Malaysian Land Law: A Comparative Appraisal”

(2005) 13 IIUMLJ 103