In a recent case, Spielplatz v Pearsons , the Court of Appeal asked whether a chalet was a chattel or whether it had become part of the land, and concluded that it had become part of the land. Specialist Real Estate Litigators Martin McKeague and Alice Wilson highlight the key practical points arising out of this decision.
The claimant was the freehold owner of a naturist resort which comprised various plots and which the freeholder let to its members, many of whom constructed chalets on them. The claimant granted an annual tenancy to the defendants in 1992 and the tenancy agreement described the premises as "the plot or clearing in the grounds". The previous tenant sold the chalet to the defendants separately.
The claimant had not been involved in the installation or construction of the chalet. Its view was that its only proprietary interest was in the plot and that the accommodation on a plot was a chattel which belonged to the relevant tenant.
The chalet was a single-storey wooden chalet and was initially used by the defendants only at weekends. However they later began to live in it permanently. During 2011 and 2012, the defendants carried out extensive renovations to the chalet, which resulted in the claimant serving a six month notice to quit. The case revolved around whether the chalet formed part of the plot of land. If so, the tenancy would include both the soil and the chalet (and not just the land itself), which would provide the defendants with protection under the Housing Act 1988.
The Court of Appeal referred to the House of Lords’ decision in Elitestone Ltd v Morris , which held that whether a structure could be removed from the land without being demolished was of significant importance when deciding whether a structure was a chattel or formed part of the land. If it could not, then the structure could not have been intended to remain a chattel and must have been intended to form part of the land.
In light of the County Court’s earlier findings that the purpose of the chalet was to allow its occupiers to enjoy the amenities of the land and, based on expert evidence that the chalet could not be removed without dismantling, the Court of Appeal concluded that the chalet was indeed part of the land.
It was irrelevant that both the freeholder and the tenants believed that the building belonged to the tenants. The fact that the tenancy agreement did not refer to the chalet did not prevent the chalet becoming part of the land. The tenants therefore had an assured tenancy of the plot.
This recent case confirms the importance of the basic principles of annexation when considering the question of what has become part of the real estate (and is, therefore, or has become, a ‘fixture’), as opposed to what is merely a chattel. This can have implications for all aspects of landlord and tenant law, including the parties’ respective repairing obligations and disputes arising at rent review, lease renewal and in dilapidation claims.