Kyle Fahkrurazzi

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Issues

1. Whether brick house, dormitory, air-conditioner system installed to the dormitory, shoe factory and processing machine annexed to the floor of the factory are regarded as fixture or chattel?

2. What is the legal position of the purported fixtures/chattel when the land is to be forfeited by the State Authority?

Law/Authority

1. Alienation

State Authority may dispose State land by granting ownership rights on the land to persons or bodies in perpetuity or for a term of years not exceeding 99 years, in considering of the payment of an annual rent and premium subject to a category of land use, conditions and restrictions that may be imposed.

Section 76(aa) State Authority may alienate land in perpetuity where the Federal Government requires the State Authority to cause a grant in perpetuity to be made to the Federal Government, where the State Authority is satisfied that the land is to be used for public purposes for example, a public hospital or school or where the State Authority is satisfied that there are special circumstances which render it appropriate to do so.

Section 118 provides that, with respect to agricultural land alienated under qualified title, no building other than a temporary one shall be erected thereon without the approval of the Land Administrator

2. Forfeiture

Forfeiture is a power of the State Authority to take back alienated land from the registered proprietor due to either, non-payment of rent (Section 100) or breach of conditions (Section 127(1)(a) ). The power to forfeit the land arises out of the registered proprietor’s non-compliance of the duties and obligation imposed on him, to pay the annual rent or to comply with the conditions attached to the title. When land is forfeited, the land goes back to the State Authority and the registered proprietor not entitled to compensation.

Section 115(1)(a) provides that no building shall be erected on the land other than a building or buildings to be used for one or more of the purposes specified or referred to in sub-section (4). Section 115(1)(e) that the said area shall be continuously cultivated.

Section 115(4) The purposes referred to in a paragraph (a) of sub-section (1) are the following –

a) the purpose of a dwelling-house for the proprietor of the land or any other person lawfully in occupation thereof, or for the servant of, or any persons employed for agricultural purposes by, the proprietor or any other such person...

b) the purposes of agriculture.

Section 131 deal with effects of forfeiture and clause (b) there shall also vest in the State Authority, to the extent specified in the Section 47 and without payment of compensation, any buildings the existing on the land, and clause (c) any item of land revenue then due to the State Authority in respect of the land shall be extinguished.

Halsbury’s Laws f England explain ‘whether a chattel has been affixed to the premises so as to become a fixtures is a question of fact which principally depends first on the mode and extent of the annexation, and especially on whether the chattel can easily be removed without injury to itself or to the premises and secondly on the object and purpose of the annexation, that is whether it was for the permanent and substantial improvement of the premises or merely for a temporary purpose or for the more complete enjoyment and use of the chattel as a chattel. The mode of annexation is therefore only one of the circumstances to be considered may not be the most important consideration.’

Application/Conclusion

First issue

1. Brick house

Yeop built a brick house on the said alienated land to store the fertilizer which he needed for his crops and for sale. The building of the brick house in line with Section 115(1)(a) and Section 115(4) where it is for the purposes of agriculture.

The factual situation of the brick house is that it is so annexed to the land and its removal would result a serious apparent damage to the premises and the land. However in Australian Provincial Assurance Co Ltd v Coroneo, the decision appear to state that the extent of annexation is not the decisive test and the degree of annexation must be considered vis-a-vis the intention and following the principle laid down by Halsbury’s Laws f England, the brick house was not intended to lie permanently on the alienated land nor function as substantial improvement of the land but only merely for a temporary purpose and complete enjoyment and use of the chattel as a chattel. It would be a little surprising if Yeop were to spend thousand in constructing the brick house and he would only enjoy it for a period not exceeding 99 years or even much shorter, and at the end of that time he would lose all interest in it, and it would belong to a complete stranger, i.e., the State Authority. The ratio demonstrate by Ong J in the case of The Shell Company of The Federation of Malaya Ltd. v. Commissioner of The Federal Capital of Kuala Lumpur where the his lordship said “the tank, when placed underground, were intended to remain in situ for as long as the filling-stations continue in operation,” can’t be applied to the situation in hand since ‘as long as the filling-stations continue in operation’ connote an ambiguous state of time and the limitation period of alienation for the present situation is certain; not to exceed 99 years (or even more shorter). Therefore the brick house ceases to be a fixture.

2. Dormitory and air-conditioner

The same principle also is to be applied to the dormitory and air-conditioner system installed to the dormitory. The building of the dormitory is also in line with Section 115(1)(a) and Section 115(4)(b) where it is for the purposes of the workers engaged by Yeop for agricultural purpose. It functions for the temporary and complete enjoyment of the dormitory and air-conditioner as a chattel.

3. Shoe factory and two units of processing machines installed in the factory

The building of shoe factory has nothing to do with the purpose in which the land was alienated. It’s not for the purpose of agricultural and therefore its construction was not in line with Section 115(1)(a) and Section 115(4). This give rise to breach of implied condition affecting land subject to the category agriculture.

The purpose of the factory and processing machines installed within it was not intended to be permanent due to the fact that the land was alienated not for permanent but only for specific period of time. They are also annexed to the land not for substantial improvement of the land but only for temporary enjoyment as factory and processing machines.

Second issue

By virtue of Section 131(c) any item of land revenue then due to the State Authority in respect of the land shall be extinguished. When land is forfeited, the land goes back to the State Authority and the registered proprietor not entitled to compensation.

Conclusion

Since all the building and item is to be regarded as chattel, they are not form part of the land. However, it is absurd to state that the buildings involved can by any mean be removed. It’s settled law that there are items though kept in position not by its own weight, nevertheless were regarded as chattel. Perhaps the only item that Yeop could recover from the forfeiture is the air-conditioner.

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Is Method of Annexation Test, per se, Sufficient?

1. The general rule is that ‘whatever is attached to the soil becomes part of the soil’. This give rise, the more damage the object is likely to cause upon its removal the more likely that the object or purpose of the annexation was that it was intended to form a permanent part of the land. However, there has been no interpretation nor legal definition to what extent the phrase ‘damage’ means since damage can be divided into two types whether physical damage or conceptual damage. There is certain item although it could be remove easily without any apparent damage yet the object into which it was affixed would cease to perform the purpose it was made for. For examples, door and windows of a house may be pulled out from their hinges without damaging the building. Nevertheless, the building could hardly be called a house without doors and windows. In the case of Vaudeville Electric Cinema, Limited v. Muriset, a cinema would cease to perform the purpose it was made for, although the seats and screen, contended to be chattel by the plaintiff, can easily be removed without causing any serious physical damage.
2. In the case of Australian Provincial Assurance Co Ltd v. Coroneo it was held that the extent of annexation is not the decisive test and the degree of annexation must be considered vis-a-vis the intention. Jordan CJ pointed out that the test of whether a chattel which has been to some extent, fixed to the land is a fixture is whether it has been fixed with the intention that it shall remain in position permanently or for an indefinite or substantial period, or whether it has been fixed with the intent that it shall remain in position only for some temporary purpose. In the case of Holland v. Hodgson, Blackburn J gave an analogy that blocks of stone placed one on the top of another without any mortar or cement for the purpose of forming a dry stone wall would become part of the land, though the same stones, if deposited in a builder’s yard and for convenience sake stacked on the top of each other in the form of a wall, would remain chattels. On the other hand, an article may be very firmly fixed to the land, and yet the circumstances may be such as to show that it was never intended to be part of the land, and then it does not become part of the land.
3. Halsbury’s Laws of England explained the mode of annexation is only one of the circumstances to be considered and may not be the most important consideration. There is a second test so called object and purpose of annexation which regard the degree of annexation as evidence of purpose; whether the item concerned was for the permanent and substantial improvement of the premises or merely for the more complete enjoyment and use of the chattel as chattel.
4. There are several items in some cases though kept in position by its own weight, nevertheless, were regarded as fixtures. In the case of D’Eyncourt v. Gregory it was held that, amongst other things, statues, figures, vases and stone garden seats resting by their own weight were held to be fixtures on the ground that they were part of the architectural design of the house as distinguished from mere ornament. In Monti v. Barnes, ‘dog grates’ which were of considerable weight but were not physically attached to the structure of the house, rested by their own weight, was held being fixtures due to the fact that that the dog grates were placed in the house for the improvement of the inheritance and with the intention that they should become part of the freehold.
5. The decision in the case of Northern Press and Engineering Co v. Shepherd appears to have thrown a new dimension to the law of the chattel and fixtures where the nature of the item seems to be one of the determining factors. Though the dispute machine in the case was a composite machine, and the agreement of hire-purchase agreement comprise the fixed driving mechanism as well as the patented machine, and the driving apparatus was admittedly affixed to the freehold, the court held that was not cease in character to be chattel. The learned judge observed that the machine is complete in itself for the purpose for which it was designed and the driving mechanism is not part of the machine. Besides, not one of the direct attachments really operates to assist the machine in discharging its functions or is necessary for its stability.
6. In the case of Goh Chong Hin & Anor v. The Consolidated Malay Rubber Estates, Sproule CJC pointed out that proved custom can displace the presumption of intention of permanent intention. Unlike ordinary house, constructed and fastened to the land, a Malay traditional house built on stilts, was held in the case of Kiah Hanapiah v. Som Hanapiah, is to be regarded as personalty in which ownership may be separated from ownership of the soil.
7. The Common Law exempts items affixed by the tenant, or things attached to land as being essential for trading or business purposes, or that for agricultural purposes or put by the owner as domestic fixtures or as ornaments. The tenant is allowed to remove them provided that there is no substantial injury to the landlord’s premises. In the case of Spyer v. Phillipson, it was held that the panelling, the chimney pieces and the fireplaces installed by the late Mr. Philipson, the one to whom the plaintiff served as executor, were regarded as chattel. Luxmoore J pointed out that In the case of landlord and tenant from the earliest times relaxations of the strict rule have been recognized, and these relaxations have been wider with the advance of time and the change of fashion.
8. Though a machine, in mortgagee and mortgagor relationship (or charge and chargor in Malaysian context), fastened to the freehold will remain with the freehold and the title over it will pass to the whomever becomes a proprietor, the test is in applicable if contrary was provided for in the contract such as provision clearly specified the limitations imposed on the ownership of the said fixtures. (The MBF case)

If you find it useful and/or there are some mistakes (be it in theory, in practice or technically) please leave comments as a small token of your appreciation for my work done. Your feedback is so important for the continuation of my carrier as a new-generation-blogger.