DEFINITION OF LAND UNDER NLC
DEFINITION OF LAND
S 5 NLC:
Land includes:
a) The surface of
the earth and all substances forming that surface;
b) The earth below
the surface and all substances therein;
c) All vegetation
and other natural products, whether or not requiring the periodical application
of labour to their production and whether on or below the surface;
d) All things
attached to the earth or permanently fastened to anything attached to the
earth, whether on or below the surface; and
e) Land covered by
water.
The use of the word ‘includes’ in the
definition given in section 5 indicates that the definition of land so given is
not exclusive.
1. To determine the right of a
purchaser on certain items in a sale and purchase transaction of a piece of
land.
2. To determine the right of chargee
banks over the land charged to them as security.
Cases often arise under paragraph (d)
on the issue whether it is a fixture or chattel. If the item is a fixture it
will form part of the land.
Legal maxim on fixtures
Quicquid plantatur solo, solo cedit "whatever is affixed to the soil belongs
to the soil”
This legal principle means that
something that is or becomes affixed to the land becomes part of the land;
therefore, title to the fixture is a part of and passes with title to
the land and consequently whosoever owns that piece of land will also own the
things attached
Fixtures and Chattels
Fixtures
|
Chattel
|
- an item that is
attached to the land and immovable.
- shall form part of
land
|
- an item even if
attached to the land, it is removable.
- shall not form part
of land
|
The English
law of fixtures Laid down in Holland v. Hodgson (1872) L.R. 7 C.P. 328
The owner of a mill purchased some
looms for use in his mill. They were attached to the stone floor by nails
driven into wooden beams. They could quite easily be removed. The owner then
mortgaged the mill and failed to keep up the payments and the mill was
repossessed. The question for the court was whether the looms were fixtures
forming part of the land or whether they remained chattels.
Held: The looms had become fixtures
and thus formed part of the land mortgaged.
Blackburn J introduced the degree and object
of annexation test:
“Thus 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.”
He continued:
“…articles not otherwise attached to
the land than by their own weight are not to be considered as part of the land,
unless the circumstances are such as to shew that they were intended to be part
of the land, the onus of shewing that they were so intended lying on those who
assert that they have ceased to be chattels, and that, on the contrary, an
article which is affixed to the land even slightly is to be considered as part
of the land, unless the circumstances are such as to shew that it was intended
all along to continue a chattel, the onus lying on those who contend that it is
a chattel."
English Law of Fixtures
Two tests to determine if an article
is a fixture or a chattel:
• Degree of annexation test
• Purpose/object of annexation test
BOTH tests must be applied
Degree of annexation test
It is an objective
test on the physical attachment of the article. Raises a prima facie finding
of fact by looking at the degree to which an article is affixed to the land.
(Raises a PRESUMPTION which can
be rebutted by the Purpose Test)
- If
an article is affixed to the land even slightly à the presumption is that it is a fixture.
- If
an article is attached to the land by its own weight à remains a chattel.
The Damage Factor
- If
the removal of the article would result in damage to the article à the presumption is that it is a fixture.
- If
the removal of the article does not result in damage to the article à cannot presume that it is a
chattel but to look at the purpose
Purpose of annexation test
The prima facie finding in the Degree
Test may be strengthened or rebutted by the Purpose Test. Applying
the degree test, if there is no physical attachment to the land à the presumption is that it is a
chattel.
However, Blackburn J. in Holland
v. Hodgson : "But even in such a case, if the intention is
apparent to make the articles part of the land, they do become part of the
land.“
Intention in this context is to be
assessed objectively and not subjectively. It is the purpose which the
object is serving which has to be regarded, not the purpose of the person
who put it there.
The question is whether the object is
designed:
• To enhance the
value and utility of the land / for the improvement or more complete enjoyment
of the land / for the use or enjoyment of the land
• Or, for the more
complete use or enjoyment of the thing itself.
If an article is attached to the land for
the better enjoyment of the land as a whole so as to improve its usefulness and
value à strengthens
the presumption that it is a fixture.
If an article is attached to the land merely
for the more complete enjoyment and use of the item as a chattel à rebuts the presumption that it
is a fixture.
Mather v Fraser
“where and article is affixed by the
owner of the fee, though only affixed by bolts and screws, it is to be
considered part of the land, at all events when the object of setting up the
articles is to enhance the value of the premises to which it is annexed for the
purpose to which those premises are applied”.
Application in Malaysia
The English law of fixtures applies to
Malaysia in the case of GOH CHONG HIN v. CONSOLIDATED MALAY RUBBER
(1924) 5 FMSLR 86:
April 1921 - Goh Chong Hin charged his
land including buildings and factory to SRMS Lechman Chetty (chargee).There
were machinery in the factory. Annexed by nuts and bolts to concrete
foundations sunk in the soil.
June 1921 – Goh Chong Hin executed
Bill of Sale over the machinery in the factory to Consolidated Malay Rubber
Estates Ltd (grantee)
October 1923 – The chargee by the
consent of Goh Chong Hin took possession of the land and the factory.
December 1923 - The grantee applied
for order to seize and sell the machinery by virtue of the Bill of Sale. The
charge in possession opposed the application.
The trial judge decided in the
respondent’s favour and the charge then appealed.
Held:
1. The ordinary English law of
fixtures applies in this country
2. It is well settled by that law that
prima facie machinery affixed to earth becomes fixture and part of the land
3. Even if the machinery was set up
after the date of the charge, it nevertheless accrued to the land and became
part of the chargee’s security.
THE SHELL COMPANY OF THE FEDERATION OF
MALAYA LTD v COMMISSIONER OF THE FEDERAL CAPITAL OF KUALA LUMPUR [1964] 30 MLJ
302
Underground tanks at petrol station
buried two feet below ground level, turfed over and covered with concrete. The
manner of their removal, if it has to be done, shows how firmly the tanks are
embedded in the earth:To remove the tanks, the turf, concrete or tarmacadam is
taken up, the earth excavated, the concrete manhole boxes removed, all pipe
connections unbolted and the tank, with its concrete sinker weights can then be
raised with blocks and tackle.
The tanks, when placed underground,
were intended to remain there.
Held : The underground tanks are
fixtures and therefore are land within the definition of land under NLC
SOCFIN CO LTD v CHAIRMAN, KLANG TOWN COUNCIL
[1964] 1 MLJ 325
The respondent in determining the annual value of the appellant's holdings for rating took into
account the bulk storage
tanks standing thereon.
The storage tanks were used for storing palm oil & they were vertical cylinders resting
on pre-cast concrete pillars which stood freely on a reinforced concrete platform foundation. The tanks themselves
consisted of pre-cast bottom, side & roof steel plates which were assembled & riveted on site to form the bulk
storage tanks. The platform foundation rested on prepared ground.
The appellant's contended that the tanks were not rateable since they were neither
"land" nor "building'.
HELD:
(1) The storage tanks were buildings, being structures connected with
platforms & pillars & were accordingly rateable;
(2) The storage tanks were annexed to the land for its better use &enjoyment &formed part of it & accordingly rateable;
(3) The storage tanks enhanced the value of the holdings on which they
stood & as they were not machinery used for industrial purposes under
Sec.2 of Town Board Enactment they
were accordingly rateable on this ground also.
Court says structure is a something we build it. So, storage tanks
is a building & structure are acceptable for this permit.
Effect of Retention of Title Clause
It is also called the Romalpa Clause.
The clause provides that the title to the goods remains vested in the seller
until fully paid by the buyer. Usually this clause is found in a hire-purchase
agreement.
WIGGINS TEAPE (M) SDN BHD v BAHAGIA TRADING
SDN BHD
Issue:
Whether 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?
There was a ‘retention of title’
clause.
e.g. “the hirer is the absolute owner
of the hired item until full payment of the purchase price”
Court held: The machine has become a
fixture and passes to the chargee notwithstanding the retention
of title clause.
SUNGEI WAY LEASING v LIAN SENG
PROPERTIES
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
Issue:
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.
“The chargee was not entitled to the equipment affixed to the land as there was a retention of title clause in favour of the plaintiffs”
MBF FINANCE v GLOBAL PACIFICTEXTILES
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? 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.
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.
Exceptions to the law of fixtures
There are several exceptions to the
law of fixtures:
1. Custom, e.g.
Malay wooden house
2. Tenants fixtures
a. Trade fixtures
b. Agricultural
fixtures
c. Domestic fixtures
1. Custom
An exception to the law of fixtures
based on custom. E.g. a Malay wooden house by custom is moveable property even
when the usual Malay plank house is built upon bricks and pillars with
foundations let into the soil, the house is nevertheless a chattel.
RE TIAMBI BT MA’AMIN (1904) Innes 285
A Malay wooden house is moveable
property and thus, a chattel and can be removed.
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.
2. Tenant’s fixtures
Things which are annexed to the land
for the purpose of trade or of domestic convenience or ornament in so permanent
a manner as to become part of the land and yet the tenant who has erected them
is entitled to remove them during his term or within a reasonable time after
its expiration.
The law will presume that they were
only put up with the intention of being severed from the land and removed by
the tenant, and not for the purpose of improving the reversionary interest of
the landlord.
This exception only applies to tenants
(in tenant-landlord relationships), and not to landowners (chargor-chargee). For
landowners, the law is strict to presume intention of permanent annexation.
Mather v Fraser: “where, and, article is affixed by the
owner of the fee, though only affixed by bolts and screws, it is to be
considered part of the land, at all events when the object of setting up the
articles is to enhance the value of the premises to which it is annexed for the
purpose to which those premises are applied”.
SPYER v PHILLIPSON [1931]
Held:
A tenant has the right to remove his
fixtures provided no substantial damage was done to the premises.
SMITH v CITY PETROLEUM [1940] 1 All ER
260,
Held:
A tenant could remove petrol pumps
from the land because they were trade fixtures and could be easily removed
since they were only bolted to the land. However, it was held that the petrol
tanks could not be removed because they have become an integral part of the
land and could not be easily detached.
DEFINITION OF LAND UNDER NLC
Reviewed by Kamaruddin Mahmood
on
10:32:00 PTG
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