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