Peel Land and Property (Ports No.3) Ltd v TS Sheerness Steel Ltd

In 1971, the land on which the Sheerness steel works was later built was demised for a term of 125 years from 1^st September 1968. By the lease, the tenant agreed to erect a new building consisting of a fully equipped steel making plant and rolling mill, capable of producing not less than 50,000 tons of steel products per annum. The tenant created the Sheerness steel works by duly erecting a building and equipping it as a steel making plant. The steel works were later extended. The Claimant is the landlord under the 1971 lease and the Defendant is the tenant under that lease.

The Defendant now wishes to know if it is entitled to remove large parts of the plant which has been installed on, or brought onto, the demised premises. The Defendant says that it is entitled to remove that plant either because the plant consists of removable tenant’s fixtures or even, in some cases, of chattels. The Claimant asserts on various grounds that the Defendant has no right to remove any of the plant or will only be entitled to remove plant in the future as and when further conditions are satisfied. The Claimant contends that the express terms of the lease provide the answer in this case. The Defendant contends that the express terms of the lease do not override whatever is the Defendant’s entitlement under the general law to remove chattels and tenant’s fixtures. If the terms of the lease do not provide the answer, then it is necessary to examine a large number of items of plant to determine whether the item is a chattel or a tenant’s fixture, or neither of these. The parties have divided the plant into 131 items (although in truth there are only 126 items). They have argued about the majority, if not all, of these items. The court is asked to consider each item and determine the dispute. The plant in dispute consists of most of the plant in a very large steel works. Many of the items of plant are bulky and complex.

The legal tests which apply to distinguish a chattel from a fixture and a removable fixture from a non-removable fixture are the subject of a large number of cases decided over the centuries. It has been said that it is not possible to reconcile all of the decisions. Further, whilst there are many illustrations in cases in the 19^th century, and earlier, of these principles being applied, there are rather fewer illustrations in the 20^th or even the 21^st century. Further, the bulk and complexity of the plant in issue in this case has meant that there are no obvious illustrations in the decided cases as to how the established principles are to be applied to such plant.

Mr Seitler QC appeared on behalf of the Claimant and Mr Reynolds QC and Mr Healey appeared on behalf of the Defendant.

The 1971 lease was made between The Medway Ports Authority, the predecessor in title of the Claimant, as “the Lessors”, and Sheerness Iron & Steel Ltd, the predecessor in title of the Defendant, as “the Tenant”. The lease was expressed to be granted: “in consideration of the expense to be incurred by the Tenant in the construction of certain works and the building hereinafter mentioned” and in consideration of the Tenant’s covenants.

The premises demised by the 1971 lease were described as follows:

“All that piece or parcel of land situate at Sheerness in the County of Kent shown on the plan annexed hereto and thereon edged red (hereinafter called “the Site”) Together with the Buildings erected thereon or on some part or parts thereof (hereinafter called “the said premises”)”

The 1971 lease demised these premises for a term of 125 years from the 1^st September 1968 at an initial rent of £22,000 subject to rent review every 21 years during the term. The rent review provisions referred to the rent payable from each rent review date as “the ascertained rent”, or the rent previously payable, whichever should be the greater. “Ascertained rent” was defined to be:

“ … the amount which shall represent a fair yearly rent for the Site having regard to the rental values then current for property let for One hundred and twenty five years from the date of the valuation without a premium with vacant possession for industrial purposes with an obligation for the Tenant to construct thereon such buildings as may at the time of such valuation be situate thereon and otherwise on the terms and conditions of this Lease (other than the rent hereby reserved) provided that in determining such rent no account shall be taken of

(i)

any effect on rent of the fact that the Tenant has been in occupation of the said premises and

(ii)

any goodwill attached to the said premises by reason of the business then carried on thereat by the Tenant

(iii)

the value attributable to any buildings actually standing on the premises”

The 1971 lease reserved a second rent which would be payable by the Tenant in respect of “any alterations or additions to the demised premises made from time to time by the Lessors at the request of the Tenant”. There was no evidence before me that this clause had ever come into effect.

Clause 1 of the 1971 lease contained an important covenant obliging the Tenant to carry out extensive works to the demised premises. The Tenant was to begin these works by 1^st January 1970 (subject to a possible revision of that date) and thereafter was to:

“ … proceed expeditiously to erect and complete by the Thirty first day of December One Thousand nine hundred and seventy three a new building consisting of a fully equipped steelmaking plant and rolling mill capable of producing not less than Fifty thousand tons of steel products per annum (hereinafter called “the Works”) ”

Clause 1(2) of the 1971 lease contained further provisions as to “the Works”, as follows:

“(2)

The Works shall be carried out in all respects in a substantial and workmanlike manner and to the reasonable satisfaction of the Lessors’ Surveyor or Architect (whose fees shall be borne by the Tenant) and in accordance with:

(a)

detailed plans elevations sections specifications and materials based thereon to be previously submitted to and approved in writing from time to time by the Lessors Surveyor or Architect (whose approval shall not be unreasonably withheld or delayed) (whose fees shall be paid by the Tenant) … ”

Clause 1(2) referred to the Tenant being required to submit to the Lessors, for their approval, detailed plans, elevations, sections and specifications of the intended Works. I was told that neither party to this dispute has any documents of that kind which show the original Works which were carried out.

Clause 2 of the 1971 lease contained a number of covenants to be performed by the Tenant. The covenants which are of particular relevance for present purposes were those contained in sub-clauses (6), (7), (8), (11), (13), (14), (18) and (21).

By clause 2(6), the Tenant covenanted:

“(6)

Not at any time during the said term to erect make or maintain or suffer to be erected made or maintained any building erection alterations or improvements nor to make or suffer to be made any change or addition whatsoever in or to the said premises save in connection with the use of the said premises for the purposes of steel making steel rolling and operations ancillary thereto”

By clause 2(7), the Tenant covenanted:

“(7)

To keep the said premises and all other buildings erected on the said premises or on some part or parts thereof the fixtures and fittings and all additions thereto in good and substantial repair and condition and to paint such parts of the exterior thereof as are normally painted not less than once in every seven years.”

Clause 2(8) required the Tenant to take steps to ensure that the operation of the steel works and rolling mill should comply with the Clean Air Act 1956.

By clause 2(11), the Tenant covenanted:

“(11)

At the end or sooner determination of the said term to yield up the said premises so repaired and maintained amended and kept as aforesaid together with all additions and improvements made thereto in the meantime and all fixtures and fittings of every kind in or upon the said premises or which during the said term may be affixed or fastened to or upon the same except tenants or trade fixtures”

By clause 2(13), the Lessors were entitled to enter the demised premises to view the progress and state of the Works, to take inventories of “the Landlord’s fixtures therein” and to give notice of defects, wants of repair and removal of fixtures.

By clause 2(14), the Tenant covenanted:

“(14)

Not to use or occupy the said premises other than for the purposes of steel making steel rolling and operations ancillary thereto or for such other purposes as may from time to time be approved by the Lessors (such approval may not be unreasonably withheld) and to retain the premises in the occupation of one person or one company or one group of companies each being a subsidiary of one company within the meaning of Section 143 of the Companies Act 1948 only”

By clause 2(18), the Tenant was required to obtain any necessary planning permission for any operation or change of use which amounted to development in planning law and the Tenant covenanted not to make any application for planning permission without the previous written consent of the Lessors, such consent not to be unreasonably withheld. Further, the Tenant was not to implement any planning permission without the approval of the Lessors, not to be unreasonably withheld.

By clause 2(21), the Tenant covenanted to insure the buildings on the demised premises including “the Lessors’ fixtures therein” and in the event of damage by an insured risk, the Tenant was to rebuild or reinstate the premises in the same form as before or such other form as was approved by the Lessors, such approval not to be unreasonably withheld.

The 1973 lease was made between the same parties as under the 1971 lease. By the 1973 lease, an area of land extending to some 0.896 acres, adjoining the premises demised by the 1971 lease, together with a building erected on that land, was demised for the same term of years as under the 1971 lease for an initial yearly rent of £2,688 subject to review in accordance with the rent review provisions in the 1971 lease. The 1973 lease was otherwise on the same terms as those contained in the 1971 lease.

The 1971 lease and the 1973 lease provided for the rent payable thereunder to be reviewed with effect from 1^st September 1989. There was a dispute as to the basis for determining the reviewed rent which resulted in litigation in the Chancery Division, followed by an appeal to the Court of Appeal. The decision of the Court of Appeal is reported at [1992] 1 EGLR 133. That decision recited some matters of fact, to which I will refer. It recited that the area of land demised by the 1971 lease was between 52 and 53 acres. It recited that the Tenant had complied with its covenant to erect a fully equipped steelmaking plant and rolling mill capable of producing not less than 50,000 tons of steel products per annum but it had gone further and had erected further buildings resulting in a productive capacity of the order of 850,000 tons per annum. The Court of Appeal answered a number of questions which were argued before it, as follows:

Following the decision of the Court of Appeal, as referred to above, the parties entered into a deed of variation of the 1971 and the 1973 leases, essentially to give effect to the decision of the Court of Appeal but also to vary clause 2(6) of the 1971 lease. As varied, clause 2(6) of the 1971 lease (also incorporated into the 1973 lease) was a covenant by the Tenant:

“(6)

Not at any time during the said term to erect make or maintain or suffer to be erected made or maintained any building erection alterations or improvements nor to make or suffer to be made any change or addition whatsoever in or to the said premises save in connection with the use of the said premises for such industrial purpose as may from time to time be approved by the Lessors under clause 2(14)”

The deed of variation also replaced the original definition of Ascertained Rent with a new definition which provided that Ascertained Rent:

“means the amount which shall represent a fair yearly rent for the Site in its state and condition at the relevant Review Date but cleared of any building plant or machinery or other contents of any building from time to time situated on the Site having regard:-

(a)

to the rental values then current for property let for one hundred and twenty five years from the relevant Review Date without a premium with vacant possession:-

(i)

with an obligation for the Tenant to construct thereon such buildings as may at the relevant Review date be situate thereon (but with no obligation to provide or install Plant) such obligation to be performed within a reasonable time having regard to the terms and conditions of the Amended Lease and the circumstances existing at the relevant Review Date,

(ii)

with the user provisions in clause 2(14) of the Amended Lease modified so as to permit use for industrial purposes or for such other purposes as might from time to time be approved by the Lessors (such approval not to be unreasonably withheld) but still requiring occupation by one company or group of companies as in clause 2(14) of the Amended Lease, and

(iii)

otherwise on the terms and conditions of the Amended Lease other than the rent thereby reserved but including provisions for rent review on the Notional Lease Review Dates,

provided that in determining such rent no account shall be taken of:-

1.

any effect on rent of the fact that the Tenant has been in occupation of the said premises,

2.

any goodwill attached to the said premises by reason of the business then being carried on thereat by the Tenant, and

3.

the value attributable to any buildings or any plant or machinery therein actually standing on the premises, and

(b)

not only to matters specifically mentioned in the Amended Lease but to all matters which are properly to be taken into account in seeking to agree or determine the valuation which the Amended Lease requires to be agreed or determined”.

In the above definition of “Ascertained Rent”: (1) the reference to the “Amended Lease” was to the 1971 and the 1973 leases as varied by the deed of variation; (2) the reference to the “Notional Lease Review Dates” was to every 21^st anniversary of the commencement of the term of 125 years; and (3) the reference to “Plant” was to “plant, equipment and machinery affixed to the land and tenant’s and trade fixtures and fittings”.

The Claimant acquired the reversion on the 1971 and the 1973 leases on 16^th July 2008. The terms of the two leases were assigned to the Defendant on 7^th June 2012. The rent currently payable under the two leases is £386,350 per annum.

It is not necessary to describe the communications between the parties which have led to this litigation. It is sufficient to say that the Defendant now contends that it is entitled to remove the items of plant which have been identified in this case and that the Claimant contends that the Defendant is not entitled to remove that plant, or at any rate, not entitled to remove the vast majority of it.

The Claimant brought the present proceedings on 15^th May 2012. The Claimant claimed a declaration that it was the owner of the legal and equitable interest in “the Plant” which was essentially all of the plant and machinery in the demised premises. The Claimant also sought an order restraining the Defendant from selling, disposing of or interfering with or otherwise dealing with any legal or equitable title to the plant. As was pointed out by the Defendant, these claims were not particularly apt to raise the real issues which there were between the parties and which the court has to decide. The real issues were as to whether the plant and machinery had acceded to the realty and, if so, whether the Defendant was entitled to sever that plant and machinery and take it away. As regards the claim not to dispose of the plant and machinery, the Claimant relied upon clauses 1, 2(11) and 2(13)(c) of the 1971 lease. In answer to a question from the court at an early point in the Claimant’s opening, the Claimant disclaimed reliance on clause 2(6) of the 1971 lease; the Claimant accepted that, if under the general law the plant and machinery fell within the category of removable tenant’s or trade fixtures, then the removal of such plant and machinery was not an “alteration” to the demised premises contrary to clause 2(6). However, on the third day of the hearing, the Claimant changed its stance in relation to clause 2(6) and applied to amend its Particulars of Claim to rely expressly on clause 2(6), contending that the removal of the plant and machinery, where the removal was not in connection with the use of the premises for the purposes of steel making or the use of the premises for an industrial purpose which had been approved by the Claimant, would be contrary to clause 2(6). The Defendant did not oppose the grant of permission to amend the Particulars of Claim and I granted permission to amend accordingly. The Defendant contends that, with the exception of some items which are in law chattels, all of the plant and machinery which is in dispute in this case amounts to removable tenant’s or trade fixtures. Further, it is submitted that the removal of such chattels and fixtures is not contrary to clause 2(6).

The Claimant made an overarching submission which relied on the fact that the 1971 lease contained a covenant binding the tenant to carry out the Works. It was emphasised that the tenant was not only obliged to erect a building but was in addition obliged to introduce plant and equipment to provide a steel making plant and rolling mill capable of producing not less than 50,000 tons of steel products per annum. The Claimant submitted that as a matter of commercial reality the position was the same as if the landlord had constructed a fully equipped steel making plant and rolling mill to the tenant’s specification, using a third party contractor. In such a case, the buildings and the plant and equipment would belong to the landlord and would be let to the tenant; the tenant would not have been able to remove parts of the plant and machinery. It was submitted that the 1971 lease produced the same commercial result and the court should reach the same legal result as in a case where the landlord constructed and equipped and then let the building to the tenant.

The Claimant further submitted that in relation to items which were fixtures, the issue of removability at common law by the tenant required the court to answer these three questions: (1) what is the extent of the fixture, both by reference to the physical circumstances and by reference to the function of the fixture; (2) what is involved in the physical process of severing the fixture; and (3) what damage results from severance, the relevant damage being damage to the fixture and/or to what remains after severance and so that damage is assessed both in physical terms and in terms of the function of the fixture.

In relation to the first of the three questions identified above, the Claimant sought to submit that items which were discussed separately by the expert witnesses were not in truth separate fixtures but were only parts of larger fixtures. It was then submitted that if a part of the larger fixture identified in this way could not be removed or would be damaged by severance of another part or would lose functionality, then no part of the identified larger fixture could be removed. After some discussion, the Claimant accepted that it might be relevant to ask whether a part of an item was merely accessory to another part of that item. However, the Claimant submitted that if the accessory part could not be removed or would be damaged by the severance of the other part of the item, then no part of that item was in law removable. Again, as regards the third of the three questions identified above, the Claimant submitted that if an item were removed and that produced the result that the functioning of other items was impaired, then the first item was not in law a removable fixture. Conversely, the Claimant accepted that when considering whether an item when severed had retained its essential character and identity, questions as to the saleability of such an item were not conclusive so that an item which retained its essential character and identity following severance could in law be a removable fixture even if there would be no market for such an item.

Following the amendment of its claim, the Claimant submitted that at the present time the removal by the Defendant of fixed plant and machinery would be a breach of clause 2(6) of the lease. This was because the fixed plant and machinery were fixtures and were a part of the premises and by clause 2(6), the Defendant was obliged not to alter or change the premises. The removal of fixtures would be an alteration of or a change in or to the premises. The wording of clause 2(6) was quite clear in this respect. Clause 2(6) was subject to a qualification so that it did not apply where the alteration or the change was in connection with the use of the premises for such industrial purpose as might be approved by the landlord under clause 2(14). In this case, steel making was an approved industrial purpose but the Defendant’s intended removal of fixtures was not in connection with the use of the premises for steel making. The Defendant had not applied for approval for any other industrial purpose and no other industrial purpose had been approved and the intended removal was not in connection with any such industrial purpose. The Claimant accepted that, as an alternative to the Defendant bringing itself within the qualification to clause 2(6), the Defendant could seek to invoke section 3 of the Landlord and Tenant Act 1927 but the Defendant had not so far done so.

In its submissions, the Defendant identified the established legal tests to be applied to distinguish chattels from fixtures and to determine which fixtures were removable tenant’s or trade fixtures. The Defendant submitted, applying those tests, that some of the items in dispute were chattels although most of the items were fixtures. However, those fixtures satisfied the established legal tests as to removability by a tenant, during or at the end of the term. The fact that the tenant was obliged pursuant to clause 1 of the 1971 lease to construct a fully equipped steelmaking plant and rolling mill did not have any impact on the application of the established tests, as earlier cases had shown. If the tenant removed a fixture leaving behind items such as redundant cabling or ducting, the fact that such items would remain following severance of the fixture would not prevent the tenant removing the fixture but could conceivably, depending on the circumstances, oblige the tenant to tidy up or even remove the redundant cabling or ducting pursuant to the covenant to repair or pursuant to the obligation to make good damage to the demised premises caused by the removal of the fixture. As to clause 2(6), it was submitted that the law required the use of clear words in order to override a tenant’s right to remove tenant’s or trade fixtures and the words of clause 2(6) were not sufficiently clear for this purpose.

If I accepted the Claimant’s first submission that the questions in this case were all answered by a consideration of the express terms of the lease (in particular, clause 1 thereof) then it might strictly not be necessary to consider whether the items in dispute were chattels or removable fixtures or neither of these. I could therefore take the course of considering first the submission based on clause 1 of the lease and then, if necessary, consider questions as to chattels and fixtures, finally considering the case based on clause 2(6) of the lease. However, that would mean that I would consider the terms of the lease at two stages during this judgment, first in relation to the case which is principally founded on clause 1 and then, later, in relation to the case based on clause 2(6). That is undesirable. I would prefer to consider at the same time all of the implications of all of the terms of the lease. Further, I have reached the conclusion that I am unable to accept the Claimant’s case based on clause 1 of the lease and so I will have to deal, in any event, with the arguments about chattels and fixtures. In those circumstances, I will deal with those arguments first and then turn to consider the effect of the terms of the lease on whatever conclusions would otherwise be appropriate.

Accordingly, I need to consider the law as to the distinction between chattels and fixtures and as to the removability of tenant’s or trade fixtures. If an item is a fixture but is not within the class of removable tenant’s or trade fixtures, then the tenant is not entitled to remove it and the terms of the lease do not impact on that conclusion. If the item would otherwise be removable, either because it is a chattel or a tenant’s or trade fixture, then I need to consider whether the terms of the lease override the tenant’s right of removal.

As explained above, this case requires me to determine whether certain items in dispute are chattels or fixtures. A chattel is personal property. A fixture is something which was formerly a chattel but which has become real property because it has “acceded to the realty”, to which it is considered to be annexed. If an item is held to be a fixture and therefore real property, that is not necessarily the end of story. Some fixtures can be detached, whereupon they cease to be real property and become personal property again. The general law allows some persons in some circumstances to detach a fixture in this way. This particularly applies in the law of landlord and tenant where a tenant is sometimes able to detach a fixture and restore to it its chattel status, with the result that the chattel is then owned outright by the tenant.

The test to distinguish between a chattel and a fixture, and the separate test to determine when a fixture is in law removable by a tenant, have been considered in a large number of cases over the centuries. However, Lord Lindley was constrained to say in Reynolds v Ashby & Son [1904] AC 466 at 473:

“… I do not profess to be able to reconcile all the cases on fixtures, still less all that has been said about them.”

More recently, in Elitestone Ltd v Morris [1997] 1 WLR 687, Lord Lloyd of Berwick pointed out, at 691, that the two tests to which I have referred had often been confused so that removable fixtures were confused with chattels. In truth, the two tests are quite separate, as was further explained by Lord Clyde in Elitestone at 695. Further, some of the older cases referred to the intention of the person who placed or affixed the chattel on the land and asked: did that person intend the item to become part of the realty? or did that person intend that the item should or should not be removable? It is now clear, and restated by the House of Lords in both Mellhuish v BMI (No. 3) Ltd [1996] AC 454 and Elitestone, that any question as to that person’s intentions is to be judged objectively from the circumstances of the case. In particular, in relation to the question whether the item is a chattel or a fixture, the relevant objective circumstances relate to the mode of annexation and the purpose (objectively considered) of the annexation.

It will be necessary in the course of this judgment to refer to some of the cases which have been decided in relation to chattels and fixtures. However, to a large extent, counsel for both parties were content to take the law from the relevant textbooks and, in particular, from Woodfall on Landlord and Tenant, Looseleaf Edition. I am happy to follow their example. Woodfall very helpfully digests the many cases on this subject and gives a large number of examples of how the principles have been applied. I consider it is appropriate to quote from a number of paragraphs in Woodfall to bring out the various points that need to be considered but in this way it will not be necessary for me to attempt my own statement of the relevant principles.

Although in legal terms, there is a twofold distinction between a chattel (personal property) and a fixture (real property), it is sometimes useful when analysing individual items to adopt a threefold classification as the following passage from Woodfall, para. 13.131 explains:

“13.131

An object which is brought onto land may be classified under one of three broad heads. It may be

a chattel;

a fixture; or

part and parcel of the land itself.

Objects in categories (b) and (c) are treated as being part of the land. In the law of landlord and tenant, although not in all branches of the law, the category of fixtures is further divided into landlord’s fixtures, which must be left by the tenant at the expiry of his lease, and tenant’s fixtures which the tenant is permitted to remove. This threefold classification, in contrast to the more traditional twofold classification, has been approved by the House of Lords. It is important to differentiate between the question whether an article is a fixture or a chattel, and the question whether, if an article is a fixture, it is nevertheless removable. This distinction is not always clearly borne in mind in the cases, and the language used is sometimes confused. It is a question of fact whether a particular object falls within one of these categories; and consequently caution must be exercised when considering previous authorities.”

The test for distinguishing between a chattel and a fixture is explained in Woodfall at para. 13.133 as follows:

“13.133

The maxim of the common law was quicquid solo plantatur, solo cedit. Thus whatever was attached to the land became part of the land. Whether there has been a sufficient annexation to the land is a question of fact in each case. It depends on all the circumstances of the case, and in particular the degree of annexation and the object of the annexation. In considering the degree of annexation, the question is whether the article “can easily be removed, integre, salve et commode, or not, without injury to itself or the fabric of the building.” In considering the purpose of the annexation, all the circumstances are to be considered, the question being whether the article was affixed “for the permanent and substantial improvement of the dwelling” or “merely for a temporary purpose, or the more complete enjoyment and use of it as a chattel”. The early law attached great importance to the first test, namely the degree of annexation. It proved harsh and unjust both to limited owners who had affixed valuable chattels of their own to settled land and to tenants for years. The second test was evolved to take care primarily of the limited owner, for example a tenant for life. So a degree of annexation which in earlier times the law would have treated as conclusive may now prove nothing. Today so great are the technical skills of affixing and removing objects to and from land that the second test is more likely than the first to be decisive. The intention of the parties as to the ownership of a chattel fixed to land is only material so far as such intention can be presumed from the degree and purpose of the annexation. The intention is therefore to be objectively ascertained. The terms agreed between the fixer of the chattel and the owner of the land cannot affect the question whether, in law, the chattel has become a fixture and therefore in law belongs to the owner of the soil.”

The test as to the purpose of annexation is further explained in Woodfall at para. 13.135, as follows:

“13.135

Although the early law attached great importance to the degree of annexation of any particular article, the modern law attaches more importance to the purpose of the annexation. If the purpose of the annexation was the better enjoyment of the chattel as a chattel, then it will not normally be held to be a fixture. The rise in the importance of this test was the perceived injustice to limited owners, such as tenants for life or tenants for years. The test is whether the article has been affixed to the property for a temporary purpose and the better enjoyment of it as a chattel or with a view to effecting a permanent improvement of the property.

“Thus blocks of stone placed on the top of one another without any mortar or cement for the purpose of forming a dry stone wall would become part of the land, although 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.”

…

The purpose of the annexation is not to be ascertained by “an inquiry into the motive” of the person who annexed the article in question, but by “a consideration of the object and purpose of the annexation as it is to be inferred from the circumstances of the case.”

…

The third category of items, referred to in the threefold classification explained in Woodfall at para. 13.131, consists of items which have become part and parcel of the land itself. This category is further explained in Woodfall at para. 13.136, as follows:

“13.136

All structures are constructed out of materials which were originally chattels, such as the bricks used to build a wall. Where an article which was originally a chattel is built into the structure of a building, it will not usually be regarded as a fixture but as part of the building itself. Thus “things may be made so completely a part of the land, as being essential to its convenient use, that even a tenant could not remove them. An example of this class of chattel may be found in doors or windows.” Further examples of this class of chattel include fixed plate glass windows forming the exterior of a building; skylights; and hearths and chimney pieces installed to complete a house.”

Problems can arise in determining the physical extent of a fixture. On this point Woodfall at para. 13.138 states:

“13.138

Where an article is a fixture, any other article which is an integral part of it will also be part of the fixture. One article may be part of another if it is essential to its functioning. So where a pump was a fixture, the pump handle, though readily removable, was held to be a fixture. So also where a machine was a fixture, the leather driving belts connecting it to its power source were held to be part of the fixture. Similarly an anvil, though not itself fixed, was held to form part of a steam hammer. The ancillary article need not be itself attached to the machine. A millstone removed for repair is one example of an article which remains part of the fixture even though temporarily removed. But not all ancillary apparatus will be held to be part of a fixture. A machine which is not itself a fixture will not become a fixture simply by being temporarily attached to a source of motive power. So a printing machine connected by a driving belt to a fixed source of power was held not to be a fixture; and where a machine which was a fixture was powered by storage batteries to which it was connected only by wires, the batteries were held not to be fixtures. The same is true of appliances connected to a power source. Thus electric refrigerators and gas cookers will not usually be considered to be fixtures, and light bulbs fixed by bayonet fixings into lamp brackets were held not to be fixtures.”

In this context it is also useful to refer to an earlier passage (para. 13.134.1) in Woodfall which considered the case of articles temporarily removed from fixtures, as follows:

“13.134.1

If an article is temporarily removed from a fixture, for example in order to be repaired, it will nevertheless be considered to remain part of the fixture. Thus a millstone removed for repair will be treated as a fixture even though it is not for the time being attached to the land at all. However, spare parts which have never been fitted to a fixture, and which are themselves unattached to the land will remain chattels. Re Richards, ex p. Astbury, above.”

If the tenant has brought a chattel on to the land and the chattel has not lost its chattel status, then it remains the property of the tenant and the tenant can deal with it as he pleases. If the tenant has affixed the chattel to the land so that it has acceded to the realty, i.e. has become a fixture, then the tenant may be able to sever the item, and restore to it its chattel status and again become the owner of the chattel. A fixture which a tenant can sever in this way is conventionally called a “tenant’s fixture” and the legal position in relation to a tenant’s fixture is described in Woodfall at para. 13.141 and 13.142, as follows:

“13.141

A tenant’s fixture is a chattel which is:

annexed by a tenant to the land;

is so annexed either for the purposes of his trade or for mere ornament and convenience; and

physically capable of removal without causing substantial damage to the land and without losing its essential utility as a result of the removal.

The last of these requirements means that the fixture must, in effect, not have become part of the structure of the building. At common law a chattel annexed by the tenant for agricultural purposes in such circumstances as to become a fixture was incapable of removal by the tenant. However, this has now been remedied by statute. In the other cases mentioned above the tenant may remove tenant’s fixtures, but this right may be excluded either by the express terms of the lease or, in some cases, by a custom of the country to the contrary.

13.142

The policy of the law which led to the relaxation of the rule prohibiting the removal of trade fixtures is plain. It was evolved “in support of the interests of trade, which have become the pillar of the state.” Thus the courts considered that the commercial interests of the country might be advanced by the encouragement given to tenants to employ their capital in making improvements for carrying on trade, with the certainty of having the benefit of their expenditure secured for them at the end of their terms. In this sense the expression “tenant’s fixtures” is used to denote things affixed by the tenant. Articles which, though fixtures, were let by the landlord to the tenant as part of the demise, are not removable by the tenant even if they are of the same character as tenant’s fixtures. Where the landlord lets to the tenant a building containing a machine, subject to a covenant to keep it in repair, and during the tenancy the tenant replaces the machine, he is not entitled to remove the new machine, for it will be regarded as a substitute for the machine originally let to him.”

It is relevant when assessing whether a fixture is a removable tenant’s fixture to consider the effect of removal on the premises and on the fixture itself. The correct approach is explained in Woodfall at para. 13.146, as follows:

“13.146

It is of the essence of a tenant’s fixture that it is capable of removal without losing its essential utility and without causing serious damage to the property. Thus where a fixture can only be removed by being dismantled, it must, in theory at least, be capable of reassembly elsewhere. So, although a prefabricated building may in some circumstances be removable, a brick built building will not be, even though used as accessories to machinery which is removable. It is often difficult to determine whether a building is to be regarded as a composite unit with an irremovable base or sub-structure, or whether it is to be treated as capable of severance from it. It is a question of fact in each case.

In some cases it is said that the fixture must be capable of removal without causing “material” injury to the freehold, in other cases that the damage must not be “irreparable.” It is thought, however, that these adjectives should be understood as synonyms for “substantial,” especially having regard to the continuing relaxation of the law in favour of tenants. Trifling damage must be ignored. The damage which is relevant for this purpose is damage to the fabric or structure of the property, rather than damage to decorative finishes.”

When considering the relevance of damage to the premises caused by the severance of a fixture, one must also take into account the fact that a tenant removing a fixture will be obliged in law to make good consequential damage to the premises. This is explained in Woodfall at 13.147, as follows:

“13.147

Where a tenant removes fixtures he has an obligation to make good damage caused by the removal of the fixtures. The obligation extends not only to damage to the structure but also damage to decorations. In addition the tenant must make good damage caused to the property by the original installation of the fixtures. Thus he must fill holes in the walls made in order to instal exhaust fans, and replace skirting boards removed in order to allow the installation of ornamental panelling. But the structure need not be left in a perfect state; the state in which it is to be left is the state in which it would be most useful and beneficial to the landlords, or to those who might next take the property. This means that the premises must be left in a reasonable condition.”

Although not cited to me, I derive some assistance in the present case from the judgment of Kindersley V-C in Whitehead v Bennett (1858) 22 JP 257 where he dealt with the removability of large items of fixed plant in the following terms (at page 258):

“With respect to anything in the nature of machinery, engines or plant, or things substantial and solid, such as vats, utensils, etc these are all clearly within the right of removal as between landlord and tenant. All these things may either by taken away bodily, and are capable of being set up elsewhere; or if by reason of their bulk or complexity, it is necessary to take them to pieces, they can be put together in the same form in some other place, still retaining the general character of trade fixtures; about the right of the tenant to remove such fixtures there is no dispute. Take the case of a large steam engine, which it is impossible to remove in its integral condition, yet the right of removal will apply to it, notwithstanding that you must take it to pieces.”

Both parties referred to the case of Pole-Carew v Western Counties and General Manure Ltd [1920] 2 Ch 97. I need to consider that case in some detail. It concerned a series of leases of premises on which the lessee erected a building into which it installed some rather specialised industrial plant. The trial judge (Sargant J) and the Court of Appeal considered the relevant structures and erections in great detail. I can take the essential facts in that respect from a part of the headnote which reads as follows:

“Upon the premises the company, at their own expense, erected various ordinary buildings for the purposes of their manure manufacture, and also a complete set of sulphuric acid making plant on the "chamber process," consisting of pyrites burners, four reaction chambers, and two so-called "towers" usually known as a "Glover tower" and "Gay-Lussac tower." … Three of the chambers were of great size (approximately 140ft. long, 20ft. wide, and 14ft. high), and each consisted of a rectangular leaden vessel supported by and enclosed in a substantial wooden framework, the lowest part of which consisted of a series of beams resting mainly on but not fixed to stone walls and pillars, except in the case of one chamber, which rested almost entirely on unfixed iron columns. The fourth chamber was really an open tank standing on a wooden platform upon beams themselves rested on the stone walls and pillars. Each of the "towers" was in effect an upright "chamber" enclosed in a wooden framework and supported by four wooden posts having iron "shoes" and resting by their own weight on a necessary foundation. In 1916 a fire occurred on the premises, and shortly afterwards the defendant company determined their lease and removed all that was left of the materials of the chambers and towers.”

The lessor asserted that the condition of the premises at the end of the lease amounted to a breach by the lessee of its obligation to repair the premises. The lessee contended that the relevant items were chattels and were not within the covenant to repair, alternatively that they were removable tenant’s or trade fixtures and so the tenant was entitled to remove them, and had removed them. In relation to the acid chambers, Sargant J said that if one looked at the size, permanence, and general character of the structure, and observed the absence of any definite line of demarcation or division, and of any unity in the upper structure as distinguished from the lower, he was driven to the conclusion that the whole structure formed one single unit and was in the nature of a building; that it was not a chattel; that it was a fixture; and that the lower portion of this unit being embedded in the land by ordinary foundations, it could not be considered a tenant's fixture and must be considered from the beginning as being something permanently annexed to the freehold of the nature of a building. The towers were more in the nature of separate units, and were more easily separable from the foundation on which they rested than the acid chambers. They could hardly be described as chattels, but it seemed doubtful whether they were tenant's fixtures or not. The submission that the items were removable tenant’s fixtures gave rise to another argument arising from the fact that most of the items in dispute had been installed under an earlier lease which had then been surrendered when a new lease had been granted. Sargant J held that in the case of a surrender of a lease and the grant of a new lease there was prima facie a loss by the tenant of his right to remove the tenant's fixtures, a right which he might have had under the original lease. Having regard to the surrender and regrant of the lease in that case it appeared to fall within that rule. There was a further point that by the last of the leases which had been granted, "a plot of land .... with the manure manufactory and other buildings now standing and being thereon" was demised, and there was a covenant to keep the "buildings and erections" in repair and so to yield them up. On a fair construction of those words, they might be held to cover both the acid chambers and the towers.

The lessee appealed to the Court of Appeal. The submissions of counsel raised the questions whether the items were chattels, whether they were removable tenant’s fixtures, whether the right to remove a tenant’s fixture had been lost on the surrender of the lease and whether the items came within the repairing covenant in any event. Lord Sterndale MR first considered whether the items were chattels. He said at 117 (in relation to the items other than the towers):

“I wish to adopt the language of Sargant J. on this point: "If you look at the size and permanence and the general character of the structure and the absence of any definite line of demarcation or division, the absence of any unity in the upper structure as distinguished from the lower structure, I think one is driven to the conclusion that the whole structure forms one single unit and is of the nature of a building, that it is not a chattel, that it is a fixture, and that the lower portion of this unit being embedded in the land by ordinary foundations, it cannot be considered a tenant's fixture, and must be considered from the beginning as being something permanently annexed to the freehold of the nature of a building." ”

As regards the towers, Lord Sterndale thought that if they had not been connected to other parts of the plant, then there would have been a case for treating them as chattels. However, because they were connected by pipes with the burners and chambers, they were a necessary and integral part of a sulphuric acid plant and must be considered as a part of the whole structure, in the same way as movable parts of an engine are considered as part of the engine or detached mill stones are considered as an integral part of a mill. Accordingly, he held that none of the items was a chattel and, by inference from his approval of the decision of Sargant J, that none of the items was a removable tenant’s fixture. Lord Sterndale left open the question as to the effect of the surrender on a tenant’s right to remove fixtures as the point did not need to be decided.

Warrington LJ said at page 120:

“The defendants seek to separate the several structures, Nos. 1, 2, 3 and 4, into their component parts. They admit that the walls and the brick piers are attached to the inheritance, and I hold that the wall plates and the beams supporting Nos. 1, 2 and 3 are also so attached. But they contend that so much of each structure as merely rests by its own weight on that which supports it, whether the latter be the soil itself or something attached to the soil, constitutes a chattel. In my opinion the several structures cannot be thus separated; I think the entire series of structures must, for the purposes of this case, be regarded as one composite building, composed of four parts, each of which is also a building, and if that composite building or any one of the minor buildings composing it (treating the building in each case as a single whole) is attached to the inheritance then the whole of such building is so attached. In the case of Nos. 1, 2 and 3, the walls enclosing what is substantially a ground floor are clearly attached to the inheritance, and so is the whole structure in my opinion. No. 4, though it has no enclosing walls, derives its support from No. 3. and cannot be regarded otherwise than as an extension of the previously existing building, and therefore (with the lean-to) attached to the inheritance.”

As to the towers, Warrington LJ said at page 121:

“So far I have said nothing about the towers. Each of these stands on four legs and each leg is dropped into an iron shoe standing on a stone foundation fixed in the ground, each shoe is kept in position by a projecting boss dropped into a hole in the stone foundation. The shoes are in no way affixed to the stone. Looked at by themselves apart from the chambers and from the purposes which they are intended to serve, these towers would, I think, be properly held to be chattels. Like the barn and the granary on staddles, the mill resting on the ground, and the other mill resting on but not attached to a brick foundation, they are in no way affixed, and would be capable of being moved without disturbing the soil. But I think they cannot properly be regarded by themselves. They are an essential part of the apparatus, the chambers constituting the bulk of it would be useless without the towers, and the towers would be useless without them. The chambers and the towers are and must be connected together, and if, as I think is the case, the chambers have been so constructed that they cannot be regarded as chattels the same result must, in my opinion, follow in respect of the towers which are an accessory to the rest of the apparatus: Earl of Mansfield v. Blackburne.”

Warrington LJ therefore held that the items in dispute were not chattels. He separately, but shortly, considered whether they were removable tenant’s fixtures, as to which he said at page 121:

“The defendants, therefore, in my opinion, fail in their effort to establish that the structures in question or some parts of them are chattels. But they say if they are not chattels they are at all events tenants' fixtures which they had a right to remove. But, as I have said, I think they constitute a composite building not merely resting by its own weight on the soil or on a foundation but with its walls built into and thus forming part of the soil like the walls of any ordinary building. I can find no authority for holding that such a building can ever be regarded as a tenant's fixture; that is, something which, though attached to and passing with the inheritance, unless removed is removable by the tenant. There is one authority against such a view - namely, the judgment of Kindersley V.-C. in Whitehead v. Bennett. He there decided that buildings though erected for the purposes of trade could not be removed as trade fixtures. I think this is an authority we ought to follow, and to hold that the several structures in question are not and never were trade fixtures removable by the tenants.”

Finally, Warrington LJ held that the lessee would have lost any right to remove a tenant’s fixture because of the surrender of the lease following the installation of the fixture and without expressly reserving a right to remove the fixture. By way of an aside, I note that this view no longer represents the law: see New Zealand Government Property Corporation v H M & S Ltd [1982] QB 1145.

Younger LJ agreed with Lord Sterndale. As to the towers, he hesitated as to whether the towers could be regarded as “buildings” for the purposes of the repairing covenants but he concluded that the towers should be regarded as integral portions of buildings.

The Claimant relied on the approach and the decision in Pole-Carew and submitted that in the present case, items of plant were not to be considered separately but were to be considered as part of an integral whole, namely, a steel making plant. The Defendant submitted that Pole-Carew was essentially about whether the items in that case were chattels and it dealt only very briefly with the question whether they were removable tenant’s fixtures. Indeed, the lessee appeared to concentrate its argument on the chattels point possibly because of the legal difficulty caused by the surrender of the lease. The Defendant also submitted that that case turned on its unusual and detailed facts and the facts of the present case were different.

I can agree with the Defendant that Pole-Carew turned on its detailed facts. I also remind myself that Lord Clyde said in Elitestone at 696D:

“Comparable cases are useful for guidance in respect of the considerations employed but can only rarely provide conclusive answers.”

Nonetheless, the decision may be relevant when considering whether it is appropriate to regard particular plant as made up of separate components or to regard the composite plant which is formed of those components as having a single character. The decision may also be relevant when considering whether a building can be a removable tenant’s fixture, a topic to which I will later refer. The Court of Appeal’s assessment of the facts led them to the conclusion that the plant in that case had been so integrated into the building that it should be regarded as part of the building. As it appears to have been accepted that the building was not a chattel or a removable tenant’s fixture, the same result had to be reached in relation to the plant which had been integrated into the building. The built structure and the plant were together to be regarded as a composite building. I also note that the function of the plant was considered to be relevant by Warrington LJ in particular. When considering the position of the towers, he stated that the chambers would be useless without the towers and the towers would be useless without the chambers. He regarded this functional link as leading to the conclusion that the chambers and the towers should be treated in the same way so that both of them were to be regarded as a part of a composite building.

The second case which was discussed in the course of the argument before me was Webb v Frank Bevis Ltd [1940] 1 All ER 247. Mr Webb held a large area of land on a lease which permitted him to erect buildings of a temporary character only and which obliged him to remove all buildings at the end of the lease. He let Frank Bevis Ltd into possession as a tenant at will and that company did the following work, as described in the judgment of the court at page 249:

“On this land the appellant company erected a large shed for the purposes of housing their manufacturing machinery and of affording warehouse accommodation for plant and materials. They first levelled and consolidated the surface, and then laid on it a concrete floor 3 ins thick for the full dimensions of the shed, 135 ft by 50 ft. The roof and sides were of corrugated iron, both carried by a timber construction, but removable. The sides were capable of being taken down in panels. The weight of the roof was carried by wide timber girders, resting on solid timber posts, which in turn rested on the concrete floor, thickened to some depth to afford adequate support. To prevent lateral movement under wind pressure, each post was tied to its concrete base by wrought iron straps on the opposite sides, and the post and straps were held together by a bolt running horizontally through the post, while the straps were fastened tightly by a nut screwed on one end of the bolt. There was no other attachment to the soil. In the shed, there were three heavy pieces of machinery, which were similarly attached to the concrete floor. Once the roof and sides of the shed had been taken down, the posts could easily be removed by undoing the bolts, and, if need be, the up-standing straps left behind could be cut off level with the surface of the concrete floor. ”

There was evidence that Mr Webb had told his landlord that the building was a temporary storage shed. Mr Webb later gave the company notice to quit and sought an injunction restraining the company from removing the shed and the machinery. The court permitted the shed and the machinery to be removed and sold so that the argument as to the ownership of the shed and the machinery transferred to the proceeds of their sale. Farwell J held that the machines were tenant’s fixtures and there was no appeal against that finding. He also held that the shed was not a tenant’s fixture and the company successfully appealed that finding. Scott LJ giving the judgment of the Court of Appeal held that the concrete slab was obviously “part of the soil”; it was permanently attached to the ground and could not be detached except by being broken up and ceasing to exist either as a concrete floor or as the cement and rubble out of which it had been made. The court held that this did not prevent the superstructure being a tenant’s fixture. Once the upper parts and the walls had been taken down, what remained was easily detachable from the floor. The court stressed that the building was a temporary building and the company was only a tenant at will. The superstructure could be taken away piecemeal and re-erected elsewhere. Farwell J had been wrong to regard the floor and the superstructure as a single unit. The facts in Pole-Carew were “very different”: see at 250G.

The Court of Appeal found assistance in the statement of principle in the judgment of Luxmoore J in Spyer v Phillipson [1931] 2 Ch 183, approved by Romer LJ in the Court of Appeal in the same case, at 209-210. I note however that the statement of principle cited by Romer LJ came from Hellawell v Eastwood (1851) 6 Ex 295 which dealt with the test to be used to distinguish a chattel from a fixture whereas the issue in Spyer v Phillipson and in Webb v Frank Bevis Ltd was whether an admitted fixture was removable or not.

In Webb v Frank Bevis Ltd, the court stated at page 251H:

“The condition of the legal quality of removability—namely, that the subject-matter should not, by the process of removal, lose its essential character or value (see Fisher v Dixon)—was plainly satisfied … .”

Although Fisher v Dixon (1845) 12 Cl & Fin 312 is cited for this proposition, I am unable to find any such statement in that case which (as was stressed by the House of Lords in that case) did not concern any question as to removable tenant’s fixtures.

In Webb v Frank Bevis Ltd, the court stressed a number of matters which indicated that the building in question was a temporary building so that the court could infer that it was always envisaged that the building would be removed by the tenant. However, what perhaps matters more is the test which was used to distinguish between the concrete base which was not in law removable and the superstructure which was. The concrete base was not in law removable because it could only be detached by being broken up and ceasing to exist, either as a concrete floor or even as the original materials out of which it have been made. Conversely, the superstructure did not in the course of its detachment lose its essential character or value. Further, this case can be contrasted with the earlier decision in Pole-Carew. In Pole-Carew, the court’s reaction to the detailed facts was that the structure and the plant were a composite entity, a building. In Webb v Frank Bevis Ltd, conversely, the single building was regarded as severable into two parts, the floor and the susperstructure.

In the course of his submissions, counsel for the Claimant stressed that if this or that item of plant were removed then its removal would have an adverse impact on the ability of the rest of the plant to function as intended. No doubt, with many of the items in dispute in this case, that comment is justified. Does that mean that part of the plant cannot be removed if it would leave the remainder of the plant unable to function? I drew attention, when discussing Pole-Carew, to the reference by Warrington LJ in that case to the fact that the chambers would not function without the towers and vice versa. That comment supported his conclusion that the chambers and the towers were to be looked at as a composite, rather than as separate items of plant. I accept that the interconnected functions of items of plant may be relevant when assessing whether they should be regarded as a composite or as separate items. However, I do not consider that this remark by Warrington LJ, nor anything in any other case, lays down as a diagnostic test for removability the test of whether what is left will function as intended if the disputed item is removed by the tenant. The many cases which considered whether a tenant was entitled to remove machines or other plant from a factory do not appear to have applied such a test. Instead, the test which was applied in Webb v Frank Bevis Ltd focuses on the essential character and value of what is removed, not of what remains. As regards what remains, the test focuses on its physical condition (is there substantial irreparable damage?) rather than on its ability to function on its own, absent the removed item of plant.

The test for removability which was applied in Webb v Frank Bevis Ltd referred to the removed item retaining its “essential character and value”. Woodfall at para. 13.146 identifies the relevant test as requiring that the removed item does not lose “its essential utility”. I do not consider that the reference to “value” in Webb means that one has to ascertain the second hand value of the removed item and ask whether that value is greater or less than the market value of the item, sold as scrap. The question as to whether an item, when severed, will retain its essential utility and value should be given the same answer whether it is asked just after the item is annexed or many years later. An item which might be valuable if severed early on in its life may be much less valuable if severed later. Indeed, if the item is severed towards or at the end of its economic life, than the severed item may have little or no value. This indicates that the market value of the item when it is about to be severed cannot be the basis of the distinction between what is removable and what is not. Further, many of the items in dispute in the present case are metal. The scrap value of the metals involved will fluctuate with the movements in the metals market and will sometimes exceed the second hand value of the items and sometimes will be below that second hand value. In my judgment, the legal test as to the removability of fixtures does not turn on such fluctuating considerations.

I referred earlier to the threefold classification between chattels, fixtures and buildings. Does that classification mean that a building can never be a removable tenant’s fixture? I think that much depends on what is meant by a “building” in the present context. In other contexts, the word “building” has been given a wide meaning to cover a whole range of structures and erections. In the present context, there are decisions which have held that certain structures and erections which could be called “buildings” were removable tenant’s fixtures: see, for example, Penton v Robart (1801) 2 East 88, Mears v Callender [1901] 2 Ch 388 and Webb v Frank Bevis Ltd itself. Conversely, Warrington LJ in Pole-Carew cited Whitehead v Bennett (1858) 22 JP 257 as an authority which showed that a building was not a removable tenant’s fixture. That case concerned buildings which had been constructed of brick or stone, with substantial foundations. Kinderseley V-C accepted that bulky and complex items of machinery, engines or plant were removable even where they had to be taken apart and later re-assembled. However, he was not prepared to hold that a building which could be taken apart brick by brick was a removable tenant’s fixture. He distinguished between dismantling and re-assembling plant and taking down a building, brick by brick; he regarded the latter case as one of the removal of materials, rather than the severance of a fixture. I can well understand that approach and the actual decision in that case. Further, in Pole-Carew, where Whitehead v Bennett was applied, it was not argued that the basic buildings themselves were removable. However, I do not consider that the approach in Whitehead v Bennett can be applied slavishly to everything that can be called a “building”. This is particularly the case in relation to buildings which are prefabricated and then assembled on site and which can later be taken apart and re-erected elsewhere. Indeed, such buildings might be much easier to take apart and re-erect than the bulky and complex items of plant which were recognised in Whitehead v Bennett to be capable of being removable tenant’s fixtures.

For completeness at this point, I mention that the terms of the lease may override the position under the general law so that an item which would otherwise be removable is agreed not to be removable. I will consider this topic further, later in this judgment.

Accordingly, I consider that the right way to approach the issues in this case is to ask the following questions:

On 21^st September 2012, Master Price gave directions permitting the parties to rely on oral expert evidence in the field of surveying, limited to one expert on each side.

The Claimant served a report prepared by Mr Singleton MRICS, who is a director at Jones Lang LaSalle UK and who specialises in machinery and business assets sales and valuations. His report stated that he had been asked to provide an expert opinion on whether the items in dispute: (1) had become by accession part and parcel of the land; (2) could be classified as fixtures; and (3) were landlord’s fixtures or tenant’s fixtures. His report continued with a short description of the processes undertaken at the premises and then dealt with all of the items in dispute under 131 separate reference numbers. An example of the approach he adopted can be taken from his treatment of item 1. In relation to that item, he gave a very brief description of the item, he briefly described the manner of attachment of the item to the land, the purpose of the attachment and the tenant’s ability to remove the item. He then expressed his opinion on the question whether the item was a fixture and, if so, whether it was a landlord’s fixture or a tenant’s fixture. On reading that report, I had two immediate difficulties. The first was that the physical description of the item, the mode of attachment and what would be involved in a severance of the item was very brief. Further, to a large part, the report purported to express Mr Singleton’s opinions on matters of law.

The Defendant served a report prepared by Mr Gorringe, an engineer at McLellan and Partners, engineering consultants who specialised in the steel industry. Mr Gorringe is not a surveyor as permitted by the Master’s direction as to expert evidence but no point was taken as to that. Mr Gorringe explained that he had been asked to express his opinion on: (1) which items were fixed and which were movable/removable; and (2) what plant was required to comply with clause 1 of the 1971 lease. Mr Gorringe explained that, between 1997 and 1999, he had actually been employed by the company which operated the works in question in this case. He then addressed the items in dispute in this case and considered whether they could be considered to be fixed or movable/removable.

The Master’s order of 12^th September 2012 directed the experts to prepare and file a statement for the court showing the issues on which they were agreed and the issues on which they disagreed, with a summary of the reasons for the disagreement. By the first day of the hearing, there was no such statement from the experts. Nonetheless, the parties considered that the case should proceed, that I should hear evidence from each expert on the 131 different items in dispute and then determine all matters arising. I found this approach unacceptable. It would not have been possible to have conducted the necessary fact finding inquiry in that way within any reasonable period of time. Further, it seemed to me to be likely that if the experts were asked the right questions, which were properly within their fields of expertise, and they came together to agree the answers to those questions, then it was highly probable that they would be able to agree those answers. Accordingly, I indicated to counsel the questions of fact and technical opinion which I considered I might need to address in deciding the issues in this case. I suggested that the experts be asked to try to agree on the following matters:

The experts then left the court and proceeded to discuss the above questions. The trial continued in relation to other topics which could be addressed in advance of a joint report from the experts. As I had expected, the experts were able to make very good progress towards agreement in relation to many matters. After a day’s adjournment of the case and an intervening weekend, the experts were able to provide the court with a joint statement which sought to deal with the questions which had been identified. The joint statement then became the document of central importance when considering the factual matters relevant to the determination of the dispute.

When the experts returned to court, I directed that they should give their evidence concurrently, broadly in accordance with paragraph 11 of PD35 – Experts and Assessors and they did so. They were asked questions by counsel and by the court.

In his report, Mr Singleton described the steel making processes which had been carried on upon the premises and for which the fixed plant had been used. The processes used scrap steel which was melted in an electric arc furnace. The molten steel was then poured into a ladle and this steel was reheated, with additives, using one of two ladle furnaces. This prepared molten steel was poured through a tundish, a refractory lined vessel, into a continuous casting machine where it was formed into the desired shape and size of a billet. The semi-molten billets were cut to the required lengths and cooled. The billets were later re-heated and processed further through the bar and rod mills. The bar mill comprised an 18 stand rolling mill where the billets were rolled smaller and stretched to the desired profile. The bar product was then cut to length and cooled. Bars that required to be further reduced to rods were passed to a 10 stand rod mill by a sophisticated conveying system. All of the above plant was serviced by electrical equipment, cooling systems, dust extraction and by cranes and other engineering equipment. Although Mr Singleton referred to the plant by reference to the 131 headings in the schedule attached to the Particulars of Claim, he stated that these were the principal parts of an integrated steelmaking plant so that the separation into numbered items belied the fact that the plant formed an integral unit. If one took away a part of that unit, then what remained ceased to be a “steel recycling plant”.

Mr Gorringe expressed the view that all of the plant and equipment on the site with the exception of a concrete retaining wall and some of the older reinforced concrete and brick structure buildings were removable fixtures. As I understood it, this view extended to some buildings on the site even though the status of those buildings was not raised for decision in this case. He said that it was common practice in the steel industry to mount what he called equipment and building structures on prepared foundations. The equipment and steel framed buildings were bolted in position so that it would be possible to undo the bolts and remove the equipment (and by inference the buildings also). He said that this was typical practice as it enabled the operator of the plant to replace and renew plant and to relocate “the complete equipment”. He commented that steel industry equipment often was relocated to satisfy global demand for steel. He referred to examples of this occurring. He also stated that in the United Kingdom a number of companies were involved in dismantling and removing plant both for the purposes of relocation and for scrap.

In his report, Mr Singleton accepted that certain items were tenant’s fixtures. This comment applies to items 17, 18, 19, 20, 21, 23, 24, 29, 31, 52, 63, 69, 70 and 80. In a schedule prepared by counsel for the Defendant and supplied to the court at the beginning of the trial it was recorded that it was “common ground” that these items were tenant’s fixtures. I am not sure, however, that either party had thought through the implications of the case the Claimant was putting forward as to the effect of the terms of the lease. For example, did the Claimant mean to accept that all of these items were removable by the Defendant in any event or only to accept that they were removable under the general law but that general entitlement was overridden by reason of the terms of the lease, in particular, by clause 2(6) of the lease? Conversely, if clause 2(6) of the lease were construed so that it prevented the Defendant removing tenant’s fixtures, did the Defendant wish to argue that some of these items were chattels and not fixtures at all? In these circumstances, I will record my views as to whether the items were chattels or tenant’s fixtures and also consider the effect of the terms of the lease in relation to all of the items including these items.

I will first consider whether any of the items in dispute are chattels. I will not go through the items in numerical order but will refer to any items which I consider to be chattels.

Items 84 and 91 were included within the range of items 81 to 98 and I will consider the other items in that range later in this judgment. However, it transpired that items 84 and 91 had not been installed and were not affixed to the land but rested on it under their own weight. Item 84 is a regulator weighing about 50 tonnes and item 81 comprises two transformers, each weighing about 100 tonnes. It was agreed that these items were not installed as part of the electrical system at the property and they were essentially spare items of plant. Although they are large and heavy items, in my judgment, they never lost their chattel status. They were never annexed to the land in any sense. They were brought on to the property so that they could be installed if the need arose but it had not so far arisen.

Item 6 comprises ladles which are not affixed to the land. I will later explain, when I consider other items with which they are associated, why I determine that the ladles are chattels.

Item 7 comprises tundishes which are not affixed to the land. I will later explain, when I consider other items with which they are associated, why I determine that the tundishes are chattels.

The disputed items contain a large number of cranes. I consider that some of the cranes are chattels but some are not. Before I address the other items which are fixtures and consider whether they are removable fixtures, I will deal with all of the cranes together in the next ensuing section of this judgment.

There are a large number of cranes of various kinds upon the premises. I will refer to the detailed arrangements in relation to these cranes but, speaking generally, some of the cranes run on rails which are fixed to the buildings in various ways. It is accepted that the rails in question are fixtures. Counsel for the Defendant was initially prepared to accept that the cranes which ran on rails were also fixtures. However, in the course of his closing submissions, he suggested that they might be chattels. The cranes which run on rails are mobile although their mobility and the distance and direction of permitted travel is constrained by the position and extent of the rails. The question therefore arises whether the cranes which run on rails should be regarded as chattels in the same way as one would regard a train which runs on a railway track or whether the cranes are simply mobile parts of a larger machine which comprises the combination of the rail, the supports for the rails, and the crane together. It is convenient to deal with all of cranes together in this part of the judgment.

Item 1 was described in the experts’ joint statement as follows:

Although the above statement refers to the crane being “affixed” to the land via the rail track, the statement also makes clear that the crane is free to run on the track. To remove the crane, it is possible to lift the crane vertically off the track. The crane is in the open air and is not enclosed within a building. The crane could then be placed on other track elsewhere. If it was desired to move the crane to another location, it may be appropriate to divide the crane into smaller sections for ease of transportation. In the experts’ joint statement, the ability to remove the crane was placed in category B (which is explained in more detail later in this judgment). The crane runs on a track which is clipped to a concrete bed. It is relatively easy to remove the track from the concrete bed by twisting to the side the fixings which attach the track to the bed. The Claimant’s case is that it is appropriate to regard the concrete bed and the track and the crane as a single machine which is a fixture and because one could not remove the concrete bed without breaking it up the concrete bed and the track and the crane taken together are not a removable tenant’s fixture.

The first point therefore is to ask whether the concrete bed and the track and the crane are to be regarded as a single entity with a single character. I have seen photographs of the crane and of the concrete bed and the track. It seems to me much more natural to regard the mobile crane as the machine in question with the concrete bed and the track as being accessory items to enable the machine to operate. Further, the electrical connections to the magnets on the crane are, similarly, accessory to the functioning of the machine. Accordingly, I find it more natural to consider the character of the crane separately from the track and the concrete bed.

I therefore apply to the crane the conventional tests as to whether an item is a chattel or a fixture. The crane itself is not fixed to the land as it runs freely on the track. The crane can be lifted intact from the track. The purpose of the crane being placed on the track is to enable it to be more effectively used as a crane. All of these considerations point strongly to the crane being in law a chattel. If for any reason it was not appropriate to regard the crane as a chattel, then it easily satisfies the tests as to a removable tenant’s fixtures. It was brought on to the land for the purposes of the tenant’s trade and it can be removed, without undue difficulty, without damage to itself or to the land.

As to the track, I consider that it is not a chattel. It is affixed to the concrete bed in such a way that the degree and the purpose of annexation point to it being a fixture. However, I would regard it as being a removable tenant’s fixture. It can be removed, without undue difficulty, without damage to itself or to the land.

The concrete bed is neither a chattel nor a removable tenant’s fixture. No one suggested otherwise.

Items 22, 25, 28, 30, 68, 76 and 100 to 131 were described in the experts’ joint statement as follows:

These cranes consist of either a single beam or a double beam. The beam in question spans from one row of columns within a building to another row of columns within that building. The widths of the spans are given above. The widths vary considerably because some of the buildings are bigger than others and the greater widths may involve a beam spanning two bays in a multi-bay building. The beam is made of metal and it supports a carriage from which hangs a cable from which is suspended a magnet to be used in lifting metals. The magnet is connected to an electrical supply.

At each end of the beam there are wheels which run on a track or girder. The track or girder is supported by a number of columns. The track or girder is fixed at a high point on the columns. The length of the track or girder controls the distance of travel of the beam. In every case, the beam is within a building. It is possible to lift the beam vertically off the track or girder and lower it to ground level. However, because the beam is enclosed within a building, it will normally be necessary to remove the roof covering immediately above the line of the beam so that the lifting gear of an external crane can gain access to the beam which is to be lifted up. In the experts’ joint statement, the ability to remove the crane was placed in category B (which is explained in more detail later in this judgment).

The Claimant’s case in relation to these cranes is that it is not appropriate to regard the beam together with the carriage and the magnets as a separate item; it is said that the crane together with the track or girder and the columns are part of a composite entity with a single character. The columns in question are the main columns of the building so that the composite entity is a fixture and is not removable.

I consider that the first question which needs to be addressed is whether to regard the beam and the carriage and the magnet as a separate machine. The position in relation to these items is less clear than was the case in relation to the portal crane (Item 1). These cranes are internal. To remove a crane, it is necessary to remove a part of the roof covering. The span of a beam is bespoke and is chosen to span between the column supports. Conversely, the beam is mobile and the method of support could be regarded as accessory to the function of the beam and carriage and magnet as a moving crane. On balance, I consider that it is right to regard the beam and the carriage and the magnet as a separate item.

The next question is whether the beam and the carriage and the magnet comprise a chattel or a fixture. Again, the answer to this question is less clear than was the case with the portal crane (Item 1). As to the extent of annexation, the beam is not fixed to the track or girder or the columns but rests under its own weight. As to the purpose of placing the beam in the building, it can be said that the purpose is to use the crane as a moving machine. Conversely, it could be said that the purpose is to allow the building to be used for the purpose of moving heavy weights. Just on balance, I consider that the beam and the carriage and the magnets have retained their character as a chattel. If for any reason that is wrong, I consider it is clear that the beam and the carriage and the magnets are removable tenant’s fixtures. They were installed for the purposes of the tenant’s trade. They can be removed, without undue difficulty, without damage to themselves or to the land.

The track or girder is not a chattel. It is affixed to the columns in such a way that the degree and the purpose of annexation point to it being a fixture. I was not asked to make a finding as to whether it was a removable tenant’s fixture and I doubt if I would be able to do so on the evidence, which was not clear was to what would be involved in removing it from the columns.

The columns are not removable tenant’s fixtures. No one suggested otherwise.

Items 23, 29 and 80 were described in the experts’ joint statement as follows:

The Claimant conceded that these were removable. I consider, applying the established tests, that these items are not chattels but that they are removable tenant’s fixtures.

Items 26 and 31 were described in the experts’ joint statement as follows:

The Claimant has accepted that the cranes which are Item 31 are removable tenant’s fixtures but contends that the hoist which is Item 26 is a landlord’s fixture. As I have explained, the Defendant submitted that the cranes in Item 31 were agreed to be removable tenant’s fixtures. The oral evidence given by the experts was not always clear about the detailed physical arrangements in relation to these two cranes and the hoist. If the matter had been fully argued, and if the evidence had been clearer, I might have been prepared to hold that the beam and carriage and hoist part of the cranes were separate chattels although the supports were a fixture. However, in view of the fact that the Defendant has not argued that the cranes or parts of them were chattels and in view of the shortcomings of the evidence, I will accept the Defendant’s concession that the cranes are not chattels. As to Item 31, the Claimant concedes that the two cranes are removable tenant’s fixtures. As to Item 26, doing the best I can with the unclear evidence as to that Item, I am not able to distinguish Item 26 from Item 31. On the evidence before me, it appears to satisfy the established tests as to a removable tenant’s fixture.

Apart from some of the items already mentioned, it is not contended that any of the other disputed items are chattels. It is accepted that they are fixtures. Accordingly, the question is whether they satisfy the established tests for removable tenant’s fixtures. I have set out the established tests earlier in this judgment. There is no dispute that all of the disputed items were installed by the tenant for the purposes of its trade. Accordingly, the following matters need to be considered in relation to the remaining disputed items:

The experts’ joint statement contained the following agreed comments on the ease of removal of all of the items in dispute in this case:

“We consider that the Items can be separated into three categories of complexity of removal; we have referred to these as Category A, B and C.

We have separated into Category A, Item numbers 17 to 21; 23,24,29,32 to 45; 47 to 51; 53 to 58; 61 to 67; 70, 73 to 75; and 78 to 80. For these Items, the removal process is likely to be a relatively simple matter of the removal of some ground level floor bolts, simple electrical disconnection and removal to transport via a fork lift truck or crane as applicable. ‘Simple’, in this case means a job within the scope of, for example, a small team of (perhaps two) maintenance engineers with the use of appropriate hand tools and lifting equipment such as a forklift truck or workshop crane. ‘Simple’ does not imply that the ‘man [in] the street’ would be capable of undertaking the task. As an example, we consider that it would take an average of perhaps a day per item for these items to sever and remove them from site.

The likely cost would be in the order of an average of £1000 per item

The second category, ‘B’, is the Item numbers 1,22,25,26,28,30,31,68,76,82 to 98; 100 to 131 which comprise the overhead cranes and transformers, which, being single items, are not as complex as category C see below, but are in the nature of ‘heavy lift’ items requiring specialist cranes and lifting expertise and falling under specific lifting and dismantling procedures. We estimate that the time required to sever and remove a yard transformer would be 2 to 4 days depending on size – at a minimum likely cost of £10,000 per item. Some of the transformers are located within the body of the plant and the removal would be more complex. We estimate that the time required to sever and remove the ‘workshop’ crane travelling beams is 2 days and an estimated cost of £5000 each. The larger cranes which are directly involved in the process (Item numbers 110 to 113) are much more complex again and we estimate that at least 5 days per item would be needed and an estimated cost of at least £15 - 25,000 per crane

The third category ‘C’, is the Item numbers 2,3,4,6,7,8,10,11,13,14,15,16,27,46,52,59,60,69,71,72,77 (Process Plant) which are massively complicated and specialist engineering tasks which would be undertaken by specialist removers as noted in Mr Gorringe’s report. The issues in relation to the physical operation, the health and safety and environmental regulation are very complex and in the time available since receiving the Court’s detailed further requirements in this Joint Statement, we have not been able to set out the detail involved in these engineering tasks. Because the scope of works of such a removal exercise is so great, it is normal industry practice, as noted in Mr Gorringe’s report, to obtain tenders from such specialist contractors. They indeed would require perhaps 6 to 8 weeks even to prepare an estimate and sequence of works. Our estimate, based on our understanding of similar projects, would be that the removal of the process plant, if undertaken as a whole, would be a minimum of a 12 to 18 month contract at a cost of 3 – 4 million pounds. We are not able to estimate individual costs or timescales for each and every Item. In other words, there is a very detailed further layer of investigation required in order to establish how the items would be removed in respect of project costs timescales etc.”

The extent of the difficulty involved in severing a fixture may be material in a number of ways. First, the difficulty of severance may show that the item is not in truth to be regarded as a separate item but should be regarded as having become part of a larger composite item. Secondly, the difficulty involved in severance may result in damage to the item or to the premises. However, the fact that the item is bulky and awkward and that the exercise of severance is complex does not necessarily mean that the item cannot be, in law, a removable tenant’s fixture.

Item 2 was described in the experts’ joint statement as follows:

I was shown sketches of the arc furnace and the associated plant or parts of the structure. There was further evidence about the mezzanine floor. This is constructed on a steel frame and the floor covering is refractory concrete. Normal concrete would not survive the high temperatures generated by the furnace. An area of the floor extending to some 6 metres by 6 metres directly in front of the furnace needs to be replaced every year or so. The present furnace is not the original furnace. Originally, there were two furnaces. The present furnace was installed in 2006. As there is now only one furnace in this area, the mezzanine floor is larger than is needed. The furnace when new was said to have cost £15 million, although I was not told if that was the cost of the furnace itself or the cost of installing it. It would be possible to remove the furnace and associated items of plant, leaving the mezzanine floor and the concrete supports behind. The removal of the furnace was placed by the experts in category C. Mr Gorringe said that it would take some 3 to 4 months to remove the furnace at a likely cost of about £2 million.

I would not regard the concrete supports or even the mezzanine floor as removable tenant’s fixtures. The mezzanine floor is laid on steel supports which are fixed to the building columns. No doubt, the mezzanine floor could be dismantled but the work is more in the nature of demolition, piece by piece, of the floor rather than the removal of a fixture. The fact that a part of the floor is renewed every year does not indicate that the floor is a tenant’s fixture as that work is in the nature of a repair to a floor which is constantly deteriorating because of the high temperatures generated by the furnace. Conversely, it is possible to regard the furnace as removable plant which can be removed without the plant losing its essential utility and without damage to itself or to the remainder of the property. Indeed, the original furnaces were removed and replaced with the present furnace. I also have evidence that plant such as this furnace are removed and reused elsewhere.

The real question is whether I ought to regard the furnace as part of a composite which comprises the furnace itself and the floor and the concrete supports, and possibly any other parts of the structure which support these areas, or as a piece of fixed plant which is supported by concrete supports and accessed across a floor, where the function of the supports and of the floor are essentially accessory to the functioning of the furnace. I find the decision as to the status of the arc furnace to be somewhat on the borderline. I bear in mind the decision of the court in Pole-Carew but I also recall that that case turned on its own particular and different facts and the reasoning of the court is not very detailed on this present question. On balance, I consider that the right reaction to the rival arguments is to place the furnace and the associated fixed plant on the removable tenant’s fixture side of the line. I have expressed this conclusion in relation to what has been described as “the furnace”. I note that the agreed statement records that Item 2 includes numerous pieces of plant which are not properly itemised anywhere. In those circumstances, I am unable to make any useful comment on these other pieces of plant.

I will discuss Items 3 and 4 and 6 together. Items 3 and 4 were described in the experts’ joint statement as follows:

Item 6 was described in the experts’ joint statement as follows:

I was shown a sketch of the ladle furnace which showed the extent of the concrete supports and the ladle furnace floor. The joint statement placed Items 3 and 4 into category C. It is rather easier (than was the case with Item 1) to regard the items of plant as described by the experts under Items 3 and 4 as separate from the concrete supports and the floor rather than as part of a composite which included the plant, the concrete supports and the floor. Further, part of the plant consists of rails on which the ladle cars run and the ladles are picked up and moved by crane as part of the process which is involved. Applying the established tests, Items 3 and 4 are removable tenant’s fixtures. They can be removed without damage to themselves, without losing their essential utility and without damage to the premises. I might have been prepared to regard the ladle cars as chattels but I would have needed more information as to the electric drive system in relation to the ladle cars. The drive system was referred to in passing in the evidence but was not described. Further, it was not argued that the ladle cars were chattels.

I consider that, on balance, it is appropriate to regard the ladles themselves separately from the ladle furnace and the ladle cars. Although the process depends on the use of ladles, they are entirely unfixed and move as part of the process. I was told that their condition needs to be checked to see if they remain fit for use. The experts also agreed that two of the ladles were purchased in 2008 which suggests that the ladles are replaced from time to time.

Item 7 was described in the experts’ joint statement as follows:

The tundishes were described in various ways in the evidence. A tundish was described as a double coffin or, in lay terms, as a large bath with four holes in it. A tundish is made of steel with a refractory lining made up of four layers. As with the ladles, I consider that it is appropriate to regard the tundishes as separate from the remainder of the plant used in this part of the steel making process. So considered, they are chattels.

Item 8 was described in the experts’ joint statement as follows:

I was shown sketches and photographs of parts of these items. Mr Singleton, in particular, stressed the immense size of the plant involved in this item. The gases and particles which are ducted end up in dust collection bags which are enclosed in bag houses. There is a bag house for the C unit and a separate bag house for the old B unit. The bag houses are steel framed buildings with 6 mm steel cladding. The joint statement places this item in Category C. I have already concluded that the arc furnace and the ladle furnace can be considered separately and are to be regarded as removable tenant’s fixtures. Applying the established tests to the plant involved in Item 8, that plant consists of removable tenant’s fixtures. The items of plant can be removed without damage to themselves, without losing their essential utility and without damage to the premises. The bulk and complexity of the plant does not persuade me to take a different view.

I have separately considered the status of the two bag houses. Having regard to the immense scale of the ducting systems, the bag houses are accessory enclosures for the dust collection bags at the end of the system. The bag houses can be removed by unbolting the steel stanchions and the cladding. The bag houses can be described as buildings but in the context of this case, having regard to their function in connection with the ducting system, the fact that the bag houses can be unbolted and removed and the stanchions and cladding are reuseable, I consider that they also should be regarded as removable tenant’s fixtures.

Items 10 and 11 were described in the experts’ joint statement as follows:

I was shown a sketch and photographs of the continuous casting machine. The sketch showed the way in which the machine was supported on a concrete base and by a further concrete structure. The machine also appeared to take support from the building columns. The machine was some 36 feet high. The joint statement placed this Item in Category C. The Item was said to have a life expectancy of some 40 years and it was actually 40 years old. There was evidence as to whether there would be a purchaser for this item and what it would cost to remove the item and reinstall it elsewhere. Mr Singleton suggested it would cost perhaps £400,000 to remove the plant and £600,000 to re-install elsewhere so that a purchaser would not want to buy this item of plant. Mr Gorringe suggested that a purchaser would pay £1 million for this item of plant as well as bearing the cost of removal and reinstallation. The experts’ figures were very tentative and I do not think that I have to resolve the possible differences between them in this respect. The low value of the plant at the present time is due to the fact that it is old and possibly obsolete. However, the question whether the item should be considered in law to be a removable tenant’s fixture must receive the same answer the day after the item is first affixed as it does forty years later, and at all times in between. It cannot be right to hold that the item was a removable tenant’s fixtures many years ago but it has now ceased to be a removable tenant’s fixture because of its age and obsolescence.

As with other items, I have to decide whether to regard this item separately from the structures supporting it or whether it is a composite with the concrete base, the concrete supporting structure and the building columns. I consider that the right approach is to regard the item separately and, so considered, applying the established tests, it is a removable tenant’s fixture. It can be removed without damage to itself, without losing its essential utility and without damage to the premises.

Item 13 was described in the experts’ joint statement as follows:

I was shown sketches of Item 13 and photographs of some parts of it. The experts also clarified how much of this item would be destroyed in the process of its removal from the premises. On that evidence, I would not regard this item as a removable tenant’s fixture. The fact that the item would be substantially destroyed in the process of removal means that this item fails the established tests as to the removability of a fixture. Further, the fact that this item provides a roof for the basement below it suggests that it may be appropriate not to regard this item as a separate item, with a separate character, from the building in which it is placed. It was not argued that I should regard parts of this Item as separate items of plant which could, when considered separately, be regarded as removable tenant’s fixtures.

Item 14 was described in the experts’ joint statement as follows:

I was shown sketches and photographs of parts of this item. It is made up of a large number of components joined together to work in tandem. I consider that it is appropriate to regard this item as separate from the building itself, notwithstanding that the floor to which the item is affixed is described as being in “an undulating condition”. I do not think that the fact that the floor has been constructed in that way, in order to receive the mill on top of it, means that the mill is part of the building. Further, I consider it to be a single machine rather than, say, 18 machines. The joint statement places this item in Category C. Applying the established tests, this item is a removable tenant’s fixture. It can be removed without damage to itself, without losing its essential utility and without “damage” to the premises. The fact that it is large, bulky and complex does not justify holding otherwise. I do not regard the fact that the floor is in an undulating condition as amounting to damage. The Defendant suggested in argument, that if that condition of the floor was regarded as damage resulting from the removal of the mill, then the Defendant would be obliged to reinstate the floor but the resulting condition of the floor was not a reason for concluding that the item was not removable. It is not necessary for me to rule on whether the Defendant is obliged to carry out any remedial work in relation to the floor following the removal of the mill and I do not do so.

Items 15 and 16 were described in the experts’ joint statement as follows:

I was shown sketches and photographs of this item. The comments which I made in relation to Item 14 largely apply to Items 15 and 16 also. I conclude that Items 15 and 16 are removable tenant’s fixtures.

Items 17 to 21 and 24 was described in the experts’ joint statement as follows:

The Claimant has accepted that these are removable tenant’s fixtures. I agree that they are not chattels and I am prepared to proceed on the undisputed basis that they are removable tenant’s fixtures.

Item 27 was considered as part of Item 14.

Items 32 to 49 were described in the experts’ joint statement as follows:

As appears from the above description, most of the items in this list are items of plant which could be removed without real difficulty. The joint statement places these items in Category A with the important exception of Item 46, which is placed in Category C. I will discuss Item 46 separately in due course. I consider that it is appropriate to consider the other items in this list as separate pieces of plant. Applying the established tests, these are removable tenant’s fixtures. They can be removed without damage to themselves, without losing their essential utility and without damage to the premises. The listed items do not include the pipework which is part of the overall system. The Defendant did not assert an entitlement to remove this pipework. There was some discussion in the course of argument as to whether, if the Defendant removed the remainder of the system, it would be obliged to remove the pipework. It was suggested that, if one adopted the approach taken in Shortlands Investments Ltd v Cargill [1995] 1 EGLR 51, the Defendant might be required, under its obligation to keep the premises in repair, to remove redundant items such as the pipework. In the end, I was not asked to rule on this point and I do not do so.

I need to consider Item 46 separately. Item 46 consists of three cooling towers. I have seen a photograph of two of these towers. The cooling towers are steel clad enclosures for tanks and fins used in the cooling process. The water enters a receiving tank at the top of the tower. It then cascades down to the bottom, via fins. On the way, the water meets a current of air which causes the water to give up some of its heat. The water then passes into a receiving tank at the bottom of the tower. Having regard to the scale of the closed loop system, the cooling towers are essentially enclosures for the plant contained in them, which is the plant at the end of the system. The cooling towers can be removed by unbolting their framework and the cladding. It might be possible to describe the cooling towers as buildings but in the context of this case, having regard to their function in connection with the closed loop system, the fact that the cooling towers can be unbolted and removed and that the steelwork involved would appear to be reuseable, I consider that they also should be regarded as removable tenant’s fixtures.

Items 50 and 51 were described in the experts’ joint statement as follows:

Applying the established tests, these are removable tenant’s fixtures. They can be removed without damage to themselves, without losing their essential utility and without damage to the premises.

Items 52 and 69 were described in the experts’ joint statement as follows:

The Claimant accepted that these items were removable tenant’s fixtures. The Defendant said that this was common ground. I have no evidence as to these items apart from the agreed facts. The statement that the items are not affixed “except by a cable” might suggest that these items are chattels. However, in the absence of any further evidence and in view of the fact that the Defendant did not argue that these items were chattels, I will proceed on the basis that they are removable tenant’s fixtures.

Items 53 and 54 were described in the experts’ joint statement as follows:

On the limited evidence available, I am not able to conclude that these are chattels. If they are fixtures, then applying the established tests, these are removable tenant’s fixtures. They can be removed without damage to themselves, without losing their essential utility and without damage to the premises.

There are a large number of items of plant which comprised a number of open loop cooling systems. The experts’ joint statement grouped these items together into a number of groups. The items were grouped as items 55 to 59, 60 to 63, 64 to 67, 71 to 73 and 74, 75 and 77. I will consider these groups together as the same considerations apply to them.

Items 55 to 59 were described in the experts’ joint statement as follows:

Items 60 to 63 were described in the experts’ joint statement as follows:

Items 64 to 67 and 71 to 73 were described in the experts’ joint statement as follows:

Items 74, 75 and 77 were described in the experts’ joint statement as follows:

The experts agreed that all of the above items, which formed part of open loop cooling systems, gave rise to the same considerations as those discussed in relation to the items (32 to 49) which formed the closed loop cooling system. I consider that the conclusions in relation to the close loop system and the reasons for those conclusions which I expressed earlier in this judgment apply equally to the open loop systems. Accordingly, I hold that the items in the open loop systems, including the cooling towers, are removable tenant’s fixtures.

Item 70 is described as nine wall-mounted retractable hose units. From the limited evidence available, they do not appear to be chattels and I will proceed on the basis of the common ground that they are removable tenant’s fixtures.

Items 78 and 79 were described in the experts’ joint statement as follows:

Based on the above agreed description of the items and applying the established tests, these are removable tenant’s fixtures. They can be removed without damage to themselves, without losing their essential utility and without damage to the premises.

Items 81 to 98 were described in the experts’ joint statement as follows:

I have already held that items 84 and 91 are chattels because they had not been installed as part of the electrical system at the premises. The other items in this group had been installed as part of the electrical system and the Defendant does not contend that they remained chattels. Applying the established tests, these are removable tenant’s fixtures. They can be removed without damage to themselves, without losing their essential utility and without damage to the premises.

Item 5 does not exist and item 9 belongs to a third party. Items 12, 81 and 99 are headings and not separate items.

I have set out the terms of the 1971 lease earlier in this judgment. It is now necessary to consider the effect of those terms on the conclusions I have reached as to the classification of the various items of plant into: (1) chattels; (2) removable tenant’s fixtures; and (3) other items. As I understand it, the Claimant does not contend that the terms of the lease prevent the Defendant removing its chattels from the premises. Further, the Defendant is not entitled to remove the other items, which are not chattels and not removable tenant’s fixtures and the Defendant does not assert that the terms of the lease confer upon it a present entitlement to remove such items. It might be the case at some future time that the Defendant might wish to carry out alterations to the premises pursuant to clause 2(6) of the lease and as part of those alterations the Defendant might be able to remove buildings or fixtures which do not qualify as removable tenant’s fixtures. That possibility has not arisen at the present time and I will say no more about it. Equally, I will not discuss the question of the ownership of something which is not a chattel or a removable tenant’s fixture but which is severed from the premises as part of an alteration which the Defendant might become entitled to carry out pursuant to clause 2(6).

Accordingly, in this section of the judgment, I will consider the way in which the Claimant puts its case as to the terms of the lease overriding the entitlement which the Defendant would otherwise have had to remove tenant’s fixtures. In this regard, the Claimant made two distinct points as to the operation of the terms of the lease. First, the Claimant said that clause 1 of the lease, obliging the tenant to erect a building consisting of a fully equipped steelmaking plant and rolling mill capable of producing not less than 50,000 tons of steel products per annum, produced the result that the Defendant was not entitled to remove any part of that building or equipment. The Claimant’s submission did not distinguish between the original work which was carried out to comply with clause 1 of the lease and later work to increase the capacity of the plant and to introduce new production facilities. The second submission on the part of the Claimant was that clause 2(6) of the lease, as varied by the 1992 deed of variation, prevented the Defendant from altering or changing the premises, except in certain circumstances which did not apply here; the removal of a tenant’s fixture was an alteration or a change to the premises and was regulated by clause 2(6), with the result that the Defendant did not have a present entitlement to remove such a fixture.

Before considering these submissions in further detail, I will set out some general legal principles which may be relevant to these questions. There are a number of decisions which discuss the approach which a court should adopt to a term of the lease which, it is argued, has the effect of overriding what would otherwise be the tenant’s right to remove a tenant’s fixture. These cases are summarised in Woodfall at para. 13.153, as follows:

“13.153

Many leases contain express covenants by the tenant to yield up the property at the end of the term together with all fixtures, or some similar phrase. Whether the phrase in question is sufficient to exclude the tenant’s right to remove tenant’s fixtures will depend on the construction of the particular covenant in question. Two general principles may, however, be stated. First there is nothing unlawful in parties agreeing to modify or exclude the tenant’s right to remove fixtures. Second “if the landlord wishes to restrict his tenant’s ordinary right to remove trade machinery or fixtures attached to the demised premises … the landlord must say so in plain language. If the language used leaves matters doubtful, the ordinary right of the tenant to remove trade fixtures will not be affected.” So a covenant by the tenant to install fixtures does not in itself prevent the tenant from removing such of them as are tenant’s fixtures. … ”

The need for clear words in a provision which seeks to override a tenant’s entitlement to remove a tenant’s fixture was laid down in Lambourn v Mc Lellan [1903] 2 Ch 268 at 277. In that case, the words were not sufficiently clear to have the effect contended for by the landlord. In later cases, the courts have held that the words used have been sufficiently clear to override the right to remove a tenant’s fixture: see In re British Red Ash Collieries Ltd [1920] 1 Ch 326 and Herbert v British Railways Board, Court of Appeal, 15 October 1999, unreported.

The passage in para. 13.153 of Woodfall states that a covenant by the tenant to install fixtures does not in itself prevent the tenant from removing such of them as are tenant’s fixtures. This proposition is based on the decisions of the Court of Appeal in Mowats Ltd v Hudson Bros Ltd (1911) 105 LT 400 and Young v Dalgety plc [1987] 1 EGLR 116. In the first of these cases, the landlord let to the tenant unfinished shop premises and the tenant covenanted to complete and finish the premises with all necessary fittings for the carrying on of the trade of a provision merchant. The tenant complied with the covenant but at the end of the lease, the tenant removed some of the fixtures which he had installed. It was accepted that these fixtures were tenant’s fixtures, subject to the possible impact of the original covenant to finish the premises and to install fittings. It was held that the covenant made no reference to the fixtures becoming the property of anyone with the result that questions as to removability and property ownership fell to be dealt with by the ordinary legal rules. This decision was followed in Young v Dalgety plc. There the tenant of office premises covenanted at the commencement of the lease to install floor finishes and lighting. It was held, applying the general law, that the floor finishes and lighting were fixtures rather than chattels but that they were removable tenant’s fixtures. The landlord argued that the tenant’s covenant to install them meant that the tenant could not remove them as tenant’s fixtures shortly afterwards or, indeed, at any time. The Court of Appeal attached weight to the consideration that it was very likely in practice that the tenant would leave the floor finishes and the lighting in place so as to have the benefit of them. The decision in Mowats was followed and applied. The covenant to install the items had no impact on the tenant’s entitlement to remove items which were removable tenant’s fixtures under the general law.

As recorded above, the Claimant’s first submission as to the terms of the lease relied on clause 1 of the 1971 lease. It was argued that the tenant was obliged to construct a fully equipped steel making plant and it cannot have been intended that the very next day it should be permitted to remove parts of that plant on the basis that those parts were removable tenant’s fixtures. Put that way, the submission would appear to be contrary to the two decisions of the Court of Appeal in Mowats Ltd v Hudson Bros Ltd and Young v Dalgety plc. Nonetheless, the Claimant submitted clause 1 of the lease effectively meant that the result in this case should be the same result as would be produced in a case where the landlord had constructed and fully equipped a building at its own expense, to the tenant’s specification. In such a case, the tenant would plainly not be entitled to remove the fixed plant and claim that it owned the resulting chattels. This submission was based on what was said to be the commercial reality of the case, resulting from the obligation on the tenant to carry out the Works. I do not accept that submission. I consider that there is a considerable difference in commercial terms between: (1) a landlord constructing and equipping a building at its expense and letting the same to the tenant; and (2) a tenant doing so, even under an obligation to the landlord. The difference in commercial terms is very marked. In the first case, the landlord incurs the capital expenditure and receives a rent for the land and the equipped building. In the second case, the landlord does not incur the capital expenditure, the tenant does. Further, the landlord does not receive a rent in respect of an equipped building. The tenant’s return on its capital is that it has a building to use for which it does not pay rent. The fact that the rent is reviewed on the basis of the land without buildings shows this is so. The further fact that the rent is reviewed on the basis that the tenant is under an obligation to erect a building emphasises the same point.

Accordingly, I will apply the reasoning in Mowats Ltd v Hudson Bros Ltd and Young v Dalgety plc in this case. Applying that reasoning, the fact that the tenant was under an obligation to construct a fully equipped steelmaking plant does not say anything about the tenant’s ability to remove at any point in time such parts of that plant which would be regarded as removable tenant’s fixtures under the general law. In particular, the obligation to construct the plant does not mean that in law the fixtures are not removable by the tenant or that they are to be regarded as landlord’s fixtures or that they are to be regarded as owned by the landlord. Having reached that conclusion, it is not necessary to consider whether it would be appropriate to distinguish between the plant which the tenant introduced into the premises in order to comply with clause 1 of the lease and plant which the tenant introduced later.

The Claimant’s second submission was that the removal of tenant’s fixtures was regulated by clause 2(6) of the lease and, in the current circumstances, the Defendant was not entitled to remove the tenant’s fixtures. The Claimant submitted that all fixtures, therefore including tenant’s fixtures, formed part of the realty and therefore part of the premises demised by the lease. The Claimant then submitted that clause 2(6) prevented the Defendant from carrying out “alterations” or “changes” to the demised premises and that the removal of tenant’s fixtures, particularly the large items of fixed plant in this case, would amount to carrying out such alterations or changes. This submission is said to be a straightforward application of the words of clause 2(6).

In order to assess the submission based on clause 2(6), it is appropriate to look carefully at a number of the terms of the lease. The lease defines “the said premises” by reference to the Site (i.e without buildings) plus the “Buildings” erected thereon. Although the definition of “the said premises” refers to “Buildings” with a capital B, that word does not appear to be defined in the lease.

The lease contains an exception and reservation which refers to the right of the landlord to “alter” buildings on adjoining land.

The lease is for a term of 125 years at a rent which does not include any element for the buildings on the land or for the fixed plant in those buildings. Indeed, the rent is to be reviewed on the basis that the hypothetical tenant has an obligation to erect buildings but not to install plant and machinery in such buildings. The lease also reserves an additional rent in any case where the landlord carries out “alterations” or additions of the premises.

I have already referred to the tenant’s obligation to build in clause 1 of the lease. This obligation was part of the consideration moving from the tenant for the grant of the lease.

As to clause 2(6), I will first consider that clause before it was varied by the 1992 deed of variation. The clause can be considered as having two parts. The first part imposes an absolute ban on doing the things, such as alterations and changes, to which it refers. The second part of the clause then gives an unqualified permission to do those things, but only for the purposes of steel making etc. From the outset, the lease contained clause 2(14) which permitted the tenant to change the use of the premises with the approval of the landlord, such approval not to be unreasonably withheld. This juxtaposition of provisions could operate in a curious way and the curiosity would be even more pronounced if the first part of clause 2(6) prevented the removal of tenant’s fixtures, in addition to the other things which it prevented. For example, if the landlord gave approval to the tenant using the premises for a purpose other than steel making, the tenant would not be entitled under the second part of clause 2(6) to remove its tenant’s fixtures which had been used for steel making and, indeed, the tenant would (on the Claimant’s argument) be the subject of an absolute ban on doing so. I fully appreciate that clause 2(6) was later varied by the 1992 deed of variation but the starting point is likely to be that the meaning of the words “alterations” and “changes” in clause 2(6) (which words were not varied) had the same meaning both before and after the deed of variation.

The other points to note about clause 2(6) are that the “alterations” and “changes” are “in or to the said premises” and “the said premises” is a defined phrase. Secondly, clause 2(6) does not use the words “fixtures and fittings” whereas other clauses do refer to fixtures and fittings.

Clause 2(7) obliges the tenant to repair “the said premises” and “all other buildings” and also “the fixtures and fittings and all additions thereto”. This clause, coming immediately after clause 2(6), serves to emphasise that clause 2(6) does not expressly refer to fixtures and fittings. I consider that a covenant to repair the premises and the fixtures would not prevent a tenant removing tenant’s fixtures. The covenant to repair should be interpreted so that it applies to such fixtures as are, from time to time, in the premises. Counsel for the Claimant submitted otherwise in his written opening submissions but he, rightly, did not press that point.

Clause 2(11) contemplates that at the end of the term the tenant is entitled to remove tenant’s or trade fixtures. The clause expressly mentioned those fixtures as an exception to all other fixtures and fittings of every kind, which the tenant is obliged to yield up. Thus, it is clear that the tenant is not obliged to deliver up tenant’s fixtures at the end of the term. If the tenant were to begin to remove tenant’s fixtures before the end of the term in preparation for vacating the premises at the end of the term then, if the Claimant is right about clause 2(6), the tenant would thereby be in breach of clause 2(6).

Although clause 2(7) obliged the tenant to repair the premises and the fixtures, clause 2(11) which allows the landlord to enter to carry out repairs only refers to repairs to “the said premises”. Clause 2(13)(c) refers only to “landlord’s fixtures” although clause 2(13)(d) refers to “removal of fixtures”; in the context, it may be that clause 2(13)(d) would be read as applying only to landlord’s fixtures. By clause 2(21)(a), the tenant’s obligation to insure relates to “the said premises” and “all buildings” and “the Lessors’ fixtures therein”. Accordingly, the tenant is not required to insure the tenant’s fixtures nor to re-equip the premises with further tenant’s fixtures by way of reinstatement following damage from an insured risk: see clause 2(21)(b).

Having reviewed all of the terms of the lease, including clause 2(6), and recalling the general legal principle that a provision (which is to take away from a tenant the right which the tenant would otherwise have to remove tenant’s fixtures) must be expressed in clear terms, I have to determine whether clause 2(6) is in such terms. I consider that it is not sufficiently clear from the language of clause 2(6), read in the context of the lease as a whole, that the removal of a tenant’s fixture is an alteration or a change “in or to the said premises” given the definition of that phrase and the absence of any reference to fixtures in clause 2(6). It follows that clause 2(6) does not regulate the tenant’s ability to remove tenant’s fixtures.

The overall result is that the Defendant is entitled to remove from the premises the items which I have classified, in the course of this judgment, as chattels or as removable tenant’s fixtures.