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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.

  1. 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.

  1. 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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