What can a tenant Peel and Sheer?

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Summary: Even large, bulky items, which cannot be removed without significant investment of time and money, can be considered to be tenant’s fixtures and therefore removable by the tenant.Landlords hoping to prevent tenants’ removal of items that it has installed or annexed at the property must make express provision in the lease to that effect.

Summary

If landlords want to keep tenants’ additions to the property, specific wording to that effect should be added to the lease. Just because an item is heavy or bulky does not mean that it will be deemed to be a fixture of the property and so the tenant may still be entitled to remove it.

Peel Land and Property v TS Sheerness Steel

This case re-stated the law on fixtures, tenant’s fixtures and chattels, in considering whether industrial machinery could be removed by a tenant and whether the terms of the lease could prevent the tenant from removing it.

The Facts

In its lease, the tenant (“T”) agreed to build a fully-equipped steel-making plant and rolling mill. Some years later, the landlord (“L”) became aware that T intended to remove large parts of the machinery installed on, or brought onto, the property. L applied for a declaration that it owned the installed machinery and an order restraining T from removing it.

The Judgment

The previous decision, of the High Court, re-stated the approach to categorising items brought onto let premises by tenants.

  1. Are the items chattels? Chattels are the personal property of a tenant. Fixtures are chattels that have been affixed to the property so as to become part of it. The High Court decided that, notwithstanding the heavy and bulky nature of much of the machinery, several of the items in this case could be categorised as chattels.
  2.  Some fixtures can be detached from the property and, once detached, again categorised as the tenant’s personal property. Such removable fixtures are known as tenant’s fixtures. Categorisation as a tenant’s fixture depends on the ‘bulkiness’ of the item; whether it was installed with the intention that it would remain personal property and be for temporary use; the difficulty of removing the item; the effect of its removal and ease by which that can be remedied; and whether the item will remain usable. Notwithstanding the high cost, considerable timeframe and significant inconvenience associated with removing much of the machinery, several of the items in question were categorised as tenant’s fixtures by the Court (i.e. removable).
  3. Do the terms of the lease override a tenant’s right of removal?

The Court considered that the obligation on T under the lease, to install the machinery, was not relevant to the question of whether an item was a chattel or a fixture. Additionally, a clause restricting T from making alterations to the property may or may not be read to restrict the removal of tenant’s fixtures.  That is a matter of construction.  It was this third aspect that was the subject of an appeal.  The Court of Appeal found that the construction of the lease did prevent the tenant from removing its fixtures during the term.

Summary

For landlords, it is worth bearing in mind that items installed by tenants may well be capable of removal, notwithstanding their bulky or heavy nature.  Further, while the removal of the items in question may be complicated that will not necessarily prevent tenants exercising their rights to remove them, in the absence of express provisions in the lease.

Landlords should ensure that where they intend items affixed by tenants to become fixtures and remain on the property, the lease makes that clear.

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