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Betty Joyce's address is in the Address box.
Greetings, Joyce
keeping the shed on your rented property
As a consequence of our meeting with you on September 28, 2017, we are writing you this letter.
a succinct overview
We are writing to provide our knowledgeable advice regarding your legal position as a tenant to keep the shed on your leased property. After carefully examining the relevant provisions of the law that would apply in your particular circumstance and reviewed past cases related to your situation, we have come up with an informed legal view of the case. The question at hand is whether your shed can be regarded as a chattel or whether it is a fixture. It is our opinion that you are fully entitled to keep your shed even with the change in ownership of the land. It would, therefore, be feasible to pursue the matter in order to protect your interests legally.
Your advice to us
During our meeting, you let us know that you entered a leasehold agreement with the initial owner of the land in 1965 which was to run for 60 years. The land which leased has a shed which has been in place since 1942 which is where you live. The shed though initially designed so that it could be demountable can now not be moved without getting destroyed. You observed that the new owners have to respect the lease that you signed with the initial owner of the land.
Due to urban growth and improvement of highways from the urban centers to Baldivis where your shed is located, the new owner, Turnbull Development Pty Ltd, intends to build a residential estate targeting commuters to the city on the land surrounding your leased land which the company also owns. In this regard, the company finds the shed on your leased land which they now own not to be in line with the general look intended for the estate they are developing hence they claim that your shed is interfering with their development plans. For this reason, the company plans to do away with your shed and continue with their development.
They have based their intentions on the idea that your shed is not part of your leased land or in other words; they claim that your shed is a chattel and therefore they have a right to remove it as the owners of the property. The situation is further complicated by the leaser statement which you signed. On the lease, you acknowledged that "The shed presently on the lot is a chattel, and may be removed by the owner or his assigns at will."
As you do not want to lose your shed, a situation that would arise if Turnbull Development Pty Ltd were to get rid of the shed, you have asked for our advice on the legal chance you have to retain your shed in the face of the company's plans to remove the shed. Our opinion is based on both existing laws and past rulings made in similar cases.
Chattel Or Fixture
A critical aspect of settling this case is determining whether the shed on the leased land is a chattel or a fixture. By definition, a chattel should be movable property while a fixture should be immovable and affixed to the ground. If it is a fixture, the argument would be that the shed is indeed part of the land and hence was leased together with the farm. This case is based on an ancient principle: quicquid plantatur solo, solo credit meaning that whatever is attached to the soil becomes part of it. This argument would solidly be in your favor since it would invalidate any claim Turnbull that the shed is just a chattel. However, the determination of whether an article is a chattel or a fixture has proved to be quite complicated, and different judgments have been made over the course of history. The determination must depend on the circumstances of each case. This is determined by employing a test to establish whether a chattel has become a fixture and hence a part of the freehold. The test inquires what the article in question is and for what purpose it is attached to the freehold. If it is just for the enjoyment of the chattel itself, then it is still a chattel. If it is for the greater enjoyment of the land, then the chattel has lost its property of being a chattel and should, therefore, be considered as a fixture. This test was applied in Reid v Smith, which led to the ruling that the houses resting by their weight on piers but not permanently attached to the ground were indeed fixtures. This argument diverts from the old view of determining whether an article was a fixture by merely considering its degree and nature of attachment to the ground. This case would hold water in your situation since the shed, just like the houses, is also of significant weight and rests on its weight on the concrete piers though not permanently attached to the land. The shed, just like the houses would, therefore, still qualify as a fixture and thus would be considered as being part of the leased property.
The issue of whether a building is a chattel or a fixture was again observed in the case of Elitestone v Morris [1997]. In this case, Elitestone wished to repossess the land which he had purchased a freehold. He argued that the Mr. Morris' bungalow, as well as the other twenty-six on the land, was a chattel since they were not attached to the land but instead lay on concrete pillars. Elitestone, therefore, wished to demolish these bungalows in order to repossess his land and redevelop it. However, the House of Lords ruled in favor of Mr. Morris that the Bungalows were fixtures and therefore formed part of the reality. This would, thus, put Mr. Morris under the protection of the Rents act which would effectively prevent Elitestone from demolishing the bungalows in the guise of repossessing his purchased land. Their judgment in determining whether the bungalows were fixtures fully considered both their degree of annexation and the fact that they were houses after all.
The idea of the degree of annexation of a chattel has been used to determine several other land cases. A classic example of this was in Holland v Hodgson (1872) whereby the owner of a mill had purchased looms for use in the mill. The looms were attached to the concrete floor of the mill by nails on wooden beams. The looms could, therefore, be easily removed. The owner of the mill happened to mortgage the mill and defaulted which led to the mill being repossessed. However, it was not clear whether the looms were chattels or were fixtures hence formed part of the land. The court in its presiding determined that the looms due to their fixation to the mill were effectively fixtures and were, therefore, part of the land that had been mortgaged and could, therefore, be repossessed.
This argument on the degree of annexation does not seem directly related to the situation with the shed, but in reality, it is. The shed in its nature is a house, and this goes a long way in making it qualify as a fixture. On top of that, the shed, having been located on the land since 1942, brings a sense of permanence or annexation that can be directly associated with a fixture. For this reason, a reasonable court would be inclined to consider the shed as being a fixture, hence a part of the land which you have leased. This would then invalidate the claims that the shed is just a chattel and can, therefore, be destroyed by the owner of the land without infringing on your rights as a leaseholder.
Moreover, we can look at the situation with the shed from a different angle. As you reported, the shed was initially designed to be movable as it was not permanently affixed to the house. However, its current condition means that if the shed were to be moved, it would have to be destroyed. By definition, fixtures cannot be moved from their location without being damaged. This was also restated in the case of Elitestone v Morris [1997]. In its governing, the House of Lords stated that a house that cannot be moved in any other way except by way of damaging it cannot be considered as a chattel. This scenario is very much similar to your situation with the shed. Since the shed cannot be moved in any way which does not involve damaging it, then the shed is indeed a fixture, part of the leased land.
The Legality Of Removing The Shed
Apart from just considering whether the shed is a chattel or a fixture, another determinant of this case would be whether the action by Turnbull Pty Ltd to get rid of the shed can be considered legal or not. We will consider the shed to be a fixture since this is what the cases we have reviewed suggest. Now the question we need to answer is; does Turnbull have the right to remove the shed which is a fixture? To determine this, we looked at the existing law on the tenancy.
According to the law, it is obvious that a lessor cannot affix a new fixture, make alterations or renovations to existing fixtures without the consent of the tenant or leaseholder. In this regard, it is clear that Turnbull Pty. Ltd as the owners of the land do not have your approval as the leaseholder to make alterations to the shed yet it is a fixture on the land you have leased. For this reason, we are genuinely convinced that the Company cannot remove the shed. You would have to give them consent first as your interests as a tenant are protected in the Residential Tenancies Act [1987].
What is unclear in this whole situation is your acknowledgment of the shed as chattel in the lease agreement signed. This complicates the case a little. Such a matter is not clearly defined by legislation and would be dependent on the own wisdom of a judge and the philosophy employed by the court. Although there are some specific issues that would invalidate a lease agreement, the fact that you acknowledged a nonfactual clause (that the shed is a chattel) cannot necessarily invalidate the lease agreement.
Moreover, you cannot be forgiven for not going through the lease agreement carefully. However, the court would still consider the current situation, the applicability of that specific clause, and its legality. It is our view that the clause is not legal as it directly contradicts the Residential And Tenancies Act [1987] which requires that a leaseholder or a client must give the property owner their consent for them to renovate or make changes to an existing fixture. Considering this, your case would, therefore, still be strong enough.
Summary
It is our belief that you are fully protected by the law in your quest to retain the shed. Turnbull Pty Ltd cannot, therefore, just remove the shed if that is not your wish. This conclusion has been reached after keenly reviewing similar cases that have been ruled in the past as well as available property law.
Further Action
We highly recommend that you reach us in order to make arrangements for the legal action that we shall take on Turnbull Pty Ltd to stop them from going ahead with their planned removal of your shed. You should also remember to come with a copy of the lease agreement you made with the original owner so that we can review it further. If you need, you can also call us to make these arrangements.
Yours Sincerely
Bibliography
Cases
Holland v Hodgson (1872) LR 7 CP 328
Reid v Smith (1905) HCA 54;3 CLR 656.
Elitestone v Morris [1997] 1 WLR 687 House of Lords
Legislation
Residential Tenancies Act (1987)
