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Buying Business – Understanding Fixtures and Chattels at Law

Buying Business - Definition in Law of Chattels and Fixtures

Buying business

I was with a friend the other day when they mentioned that they had finally decided on buying a business. Congratulations, I said enthusiastically. However, my friend then went on to tell me that they had no idea of the difference between a chattel and a fixture.

So, this article I hope will take some of that confusion out of the equation. Maybe it could confuse you more. We will see.

Factors to consider

There are many factors that must be considered when deciding whether something is a chattel or a fixture. And of course, it can be ambiguous.

The complexities that can occur in certain situations, such as with large equipment used in long-term mining enterprises may beg the question, when does a chattel become a fixture? What seems to be clear from current law is that the focus has shifted to the objective, or purpose of the attachment, rather than the degree of annexation.

Common law

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These days the common law has taken the view focused on the degree of the annexation of the chattel to the land so that if it is firmly annexed (fixed) it is a fixture. But if not, it is a chattel. So how can we tell I hear you saying? Some of the answers can be seen in past case-law of course.

Take for example Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW), where some seats were bolted to the floor and fastened together in a theatre. They were considered chattels, not fixtures. Why? Well, the court took the view a fixture is a thing once a chattel which has become in law and through having been fixed to land. What? How confusing I hear you say!

In considering this, we need to look at the extent of annexation is not the decisive test but rather the intention. For example, whether a chattel which has been to some extent fixed to the land is a fixture is actually based on the intention that the chattel becomes permanent or fixed, which then must be contrasted with intention. For example, was it intended to be a temporary purpose?

In contrast, a decision with Vaudeville Electric Cinema Ltd v Muriset (1923) where the premises were used for the sole purpose for a cinema where the chairs once again were bolted to the floor was considered fixtures because of the permanent benefit. The point here is the importance of determining whether a thing is a fixture or a chattel.

Intent and definition in law

The definition lies in the fact that it depends upon differing circumstances. A chattel annexed to land may change its nature from personal to real property. The question is of law. The most recent situation is that to determine whether an item is a fixture we must consider the intention with which the thing was affixed.

As you are aware this can be uncertain whether an item is affixed to further the use and enjoyment of the land or to further enjoy the use of the thing affixed. I think we focus on intention as this may be more helpful.

Basically, we need to focus on the surrounding circumstances to determine if the thing is a chattel or not.

We will continue this journey in my next article but until then I will leave you with this quote from Walsh J. ”The question is not one of ascertaining the actual intention, but one of determining from the circumstances of the case, and in particular from the degree of annexation and the object of annexation, what is the intention that ought to be presumed.”

Author: Kathleen Dale, Business Advisor and Founder of Compass Business Advisory.

Business Advisor and Compass Business Advisory Founder Kathleen Dale in Townsville North Queensland
Image: Kathleen Dale, Business Advisor 
and Founder of Compass Business
Advisory in Townsville North Queensland

 

Further reading:

Property Law – The concept of property and its ridiculous history

Idalia – Top Price Property of the Week – 8 Waterbury Terrace

Property Law – The Concept Of Property And Its Ridicules History

North Ward – Top Price Property Of The Week – 49 Alexandra Street – $752,500

Major Projects Feasibility Ranking: $22 Billion Investments In Townsville North Queensland

Trading On The Seas; North Queensland And China Steaming In The Fast Line

Mount Low – Top Price Property Of The Week – 6 Newell Court – $560,000

Guide to selling a luxury home

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Disclaimer

Kathleen Dale
Kathleen has a Bachelor of Commerce and a Major in Business Law and employment law. Kathleen is working on her honors in Occupational Health & Safety & Environment Management and Human Resource because Kathleen believes these areas give Compass Business Advisory an opportunity to give clients the best possible outcomes. Kathleen's experience is vast from a union delegate to a safety officer. Kathleen is a specialist in Small to Medium business, has personally owned and sold her own successful businesses and business compliance is her specialty.
https://www.compass-businessadvisory.com/

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