The Degree of Annexation
14 In determining the degree of annexation, the Court may consider the following:
· Whether removal would cause damage to the land or buildings to which the item is attached: see Hellawell v Eastwood (1851) 6 Ex 295 at 312; 155 ER 554 at 561; Adams v Medhurst & Sons Pty Ltd (1929) 24 Tas LR 48 at 49; Spyer v Phillipson [1931] 2 Ch 183 at 209-210.
· The mode and structure of annexation: Leigh v Taylor, supra at 162; Teaff v Hewitt 1 Ohio St., 511 referred to by Griffith C.J. in Reid v Smith, supra at 667; Boyd v Shorrock (1867) LR 5 Eq 72 at 78.
· Whether removal would destroy or damage the attached item of property: Litz v National Australia Bank Ltd, supra at 57,549.
· Whether the cost of renewal would exceed the value of the attached property: Metal Manufactures Ltd v FCT, supra at 411.
The Impact of N.H. Dunn Pty Ltd v L.M. Ericsson Pty Ltd
15 The New South Wales Court of Appeal has emphasised in more recent years that there is no single principle or test which is adequate to determine whether an item of personal property is a fixture or a chattel. Certainly the purpose of annexation and the degree of annexation will remain important considerations. However, the Court should have regard to all the facts and circumstances: see N.H. Dunn Pty Ltd v L.M. Ericsson Pty Ltd, supra at 9244-5 per Mahoney JA and at 9246-7 per Glass JA; McIntosh v Goulburn City Council (1985) 3 BPR 97197 at 9374.4 per Mahoney JA with whom Priestley and McHugh JJA agreed. The principal reason behind this relatively slight shift in focus is that in certain circumstances a chattel which is securely annexed to realty may remain a chattel: A-G (Cth) v RT Co Pty Limited, supra at 156-7; Anthony v The Commonwealth, supra at 89; Australian Provincial Assurance Co Ltd v Coroneo, supra at 712. On the other hand, it has been accepted that occasions may arise where a chattel merely resting on its own weight has become a fixture: Reid v Smith, supra at 668-9, 679; Australian Joint Stock Bank v Colonial Finance Mortgage Investment and Guarantee Corporation (1894) 15 LR (NSW) 464 at 474; Monti v Barnes [1901] 1 QB 205 at 207, 209-210. In McIntosh v Goulburn City Council, supra at 9374.4, Mahoney JA, with whom Priestley and McHugh JJA agreed, observed that:
"… the law of fixtures is not now so simple: at least, it is not open to this court to see it as so. Thus, a chattel may be a fixture even though it is not affixed to the land; and whether it may be removed depends upon rules more complicated than those to which I there referred.
In my judgment, I there referred to certain tests which have been proposed or adopted for determining whether a chattel accrues to the owner of the land and/or whether it may be removed. I suggested that each of these tests is less than fully satisfactory in that it has in its difficulties in form which affect its application in the determination of particular cases. I referred in this regard to tests of whether property is a fixture or is removable from land which have been stated variously as: "the purpose and object of affixing the chattel to the land"; "the intention of the parties when it was affixed"; and "whether the chattel was affixed for the better enjoyment of the land or the chattel". None of these, I suggested, is a test which, by application of it to the facts, will produce a decision as to whether the chattel is owned by the landowner. It may be that the law in this regard, and the factual circumstances with which it must cope, are such that no single principle will alone be adequate. But, however this be, this is a branch of the law which, I think, is open to judicial reconsideration."
16 I would respectfully adopt his Honour's proposition that there is no single test which is sufficient to determine whether an item of property is a chattel or a fixture. It is clear that the Court ought to have regard to all the circumstances of the case in making its determination: see N.H. Dunn Pty Ltd v L.M. Ericsson Pty Ltd, supra at 9246 per Glass JA. No particular factor has primacy and each case depends on its own facts: see Eon Metals NL v Commissioner of State Taxation (WA) (1991) 22 ATR 601 at 606 per Ipp J. Thus the approach of the New South Wales Court of Appeal in N.H. Dunn Pty Ltd v L.M. Ericsson Pty Ltd has marked a realistic response which may continue to restate the general law in this otherwise inherently undefinable area.
Burden of Proof
17 Where an item of property is affixed to the land to any extent, aside from resting on its own weight, it is presumed to be a fixture, and the burden of proof lies upon the party asserting that it is not a fixture. Conversely, where an item of property is not affixed to the land but merely rests on its own weight, it is presumed to be a chattel and the party asserting that it is instead a fixture bears the onus of proof: see Holland v Hodgson, supra at 334-5; Re May Bros Ltd, supra at 513; Australian Provincial Assurance Co Ltd v Coroneo, supra at 712. In the present case, the relevant items comprising of the two electric pumps appear to rest on their own weight on the skids, which in turn rest on their own weight on the ground. The sprinkler heads also rest on their own weight. Consequently, the NAB bear the onus of proving that these items of personal property are not chattels. The contrary would be the situation in relation to the L-shaped special valves.
Application of the Law to the Facts
18 I will first address the fixture issue so far as concerns the two electric pumps, which as indicated at [7] above, were bolted to rails which are connected to steel skids. Such pumps were located adjacently to the river from which water was drawn to irrigate the pastures. The steel skids rested on the ground on their own weight, and were not embedded in the soil, and attached at each end of the skids were hooks and towing points so that the same can be towed by tractors. Consequently the burden of establishing that such pumps constituted fixtures lies upon the Bank.
19 The Bank submitted that the irrigation system needed to be addressed as a whole, and that the entire irrigation system depended upon the placement and function of the two electric pumps. The Bank further submitted that there was no evidence that such pumps were moved around different paddocks adjacent to the adjoining river, and that indeed there was no evidence of other sources of electrical supply in other paddocks. Thus the Bank concluded, without the two electric pumps, the underground pipes and the remaining infrastructure of the entire irrigation system would have been without utility, and accordingly it should be inferred that the pumps were intended to remain in the same position permanently.
20 The Bank sought to draw an analogy between the circumstances here and those in Litz v National Australia Bank Ltd, supra where a not dissimilar factual matrix was involved. Reliance was placed upon the following findings and reasons therefor appearing on pages 57,448 and 57,550 respectively:
"… As each area was to have its own irrigator, the equipment was not designed to be towed around the property from one location to another although, to a limited extent, they can be moved.
The critical features, as it seem to me, are on the one hand that the equipment is affixed to the land at one point and at one point only while, on the other, each irrigator was designed to be installed and to operate in a specific area and to remain there as a permanent feature.
… Much of the evidence was directed to the question whether the irrigators are towable or not and to the time required for disconnection and dismantling of the equipment. I am satisfied and I find that the system was intended, as I have said, to be a permanent feature of the farm and in particular that each irrigator was intended to be a permanent feature of the areas in which it was installed. It was not intended that the centre pivot and its associated spans should be moved from location to location on the farm although theoretically this was possible in one direction at least. …
…It must be remembered however that there is no point in such a movement unless the pivot can be towed direct to another pad at which electricity and water connections are available. …"
…
"… So far as the five irrigators aboveground are concerned I have no doubt that they too and every part of them was intended to be a permanent feature of the property. I find further that the intention with which they are affixed to the land is for the irrigation of the circular parcel at the centre of which their pivot or tower is secured. It is a convenient point at which to say that in determining that this equipment was affixed as it is with the intention that it remain in position permanently. …
… There was really no point in these irrigators being placed on this land except for the improvement of its utility as land. Their central pivots are not secured so that they may be used for some purpose which is independent of the cultivation of the land. They are in truth installed as a feature which is intended to enhance the productivity of the land as a subject of cultivation."
21 However in Litz, although as above appears, the irrigators were found to be fixtures, a contrary finding was made in relation to a 15hp pump. The Bank sought to distinguish such pump in Litz from the larger, heavier and more powerful pumps of the Blackers.
22 The Blackers for their part emphasised two factors, first, that the two electric pumps were designed to be towed around the paddocks and for that purpose could be readily disconnected from the steel skid rails. Moreover it was submitted that the pumps could be readily removed in the case of flooding, or the purpose of maintenance, and could be readily replaced. The Blackers compared the subject electric pumps to the pump in Litz, which was held to be a chattel and not a fixture. It was also argued that the other irrigation equipment in Litz which were found to be fixtures were vastly different to such equipment in the present case. They pointed to the mine pumping equipment in Eon Metals NL v Commissioner of State Taxation (WA), supra, which was lightly attached and could be removed without causing damage, and was economically worth moving. Other factors pointed more in favour of characterisation of the two electric pumps as chattels were that the irrigation system was widely disbursed throughout the pasture areas of the dairy, and could be readily replaced without adversely affecting the working utility of the remainder of the irrigation system or otherwise causing the replacement of any equipment forming part of such remainder. Disconnection of each pump from the remainder of the irrigation system apparently occurred at least on the occasion when maintenance work on each such pump was needed or when the Bega river flooded. Whilst it appears otherwise that the subject pumps were operated in essentially the same paddock areas, the fact remains that the same could be towed by tractor in whatever area and direction might be required for the purposes of the dairy farm operations.
23 Before resolving the electric pumps' issue, it is appropriate that I next consider the remaining plant the subject of dispute, namely the 200 sprinkler heads and the 200 L shaped special valves. In relation to such equipment the Bank contended that here again the decisive point should be that the same constituted part of the irrigation system as a whole, and should not be viewed in isolation, since the fragmentation of the system by removal of the sprinkler heads and valves, as in the case of the two electric pumps, would effectively render the system inoperable. One end of the L-shaped special valves connects to underground piping. The other end of the valves connects to soft polythene pipe, which lies above the ground. The polythene pipe is locked into the sprinkler heads by a James Hardie type garden connection. The sprinkler heads appear from the photographs in evidence to be typically those commonly to be seen on farming properties and golf links. Though larger in size than normal home garden sprinklers, they resemble the same in appearance as well as utility, and thus rest on their own weight, are not embedded in the soil and can be readily detached. As in the case of garden sprinklers, the same can be moved around where appropriate without occasioning damage: Metal Manufacturers Ltd v FCT, supra at 411. The L-shaped special valves are more potentially controversial, since the same connect to underground pipes, when in use, and to that extent are located below ground level when in use. Such valves can however be readily connected and disconnected without difficulty and without causing damage. There is no suggestion that their design is unique, such that removal thereof would render the underground piping of no utility. Moreover they are not intended for use and operation necessarily in any particular area but are interchangeable.
24 An important question that arises is whether such equipment retains significant indicia of personality, or are they such significant integers of the irrigation system, that the court cannot characterise the same as separate parts ignoring the function of the system as whole? See Craven v Geal [1932] VLR 172 at 176-7; Re May Bros [1929] SASR 508 at 513; Bank of Melbourne Ltd v CBFC Leasing Pty Ltd (1991) A&NZ Conv R 561.
In Craven v Geal [1932] VLR 172, Sir Leo Cussen, ACJ said the tile manufacturing equipment in question, consisting of articles arranged in the usual manner and in the usual sequence, be looked at as a whole. In my view, the two pumps, the sprinkler heads and the L-shaped special valves can be characterised separately. Certainly, there are cases where the parts of a machine (which is a fixture) should not be treated independently from the machine: as for example, a driving-belt attached to an engine or to the shafting in a factory (Sheffield and South Yorkshire etc Building Society v Harrison (1884) 15 QBD 358, or different sizes of rolls for a fixed rolling-machine, or duplicate rolls for such a machine, provided they have been completely made and fitted to the machine (Ex parte Astbury (1869) LR 4 Ch 630 at 635-6). In my view, those cases are distinguishable from the present case. Those cases related to items of property which formed part of large machines which weighed several tonnes. This is different to the present case where the irrigation system is more spread out. The pumps only weigh half a tonne each (approximately). Furthermore, there is nothing to suggest that the pipes connected to the two pumps were especially designed for the pumps concerned. The pumps are not so unique that as a consequence of their removal, the delivery lines which connect to it would be useless and that a substantial amount of piping or hosing would need to be replaced. Similarly, there is no evidence to suggest that removal of the sprinkler heads and L-shaped special valves would mean that the equipment and undergrond piping that remains would have to be removed.
25 In all the facts and circumstances I have reached the conclusion that the two electric pumps the subject of controversy bear the characterisation of chattels according to law, and that the Bank has not discharged the burden of proof to which I have earlier referred at [17] above. I would not infer the existence of any objective intention to make any of the pumps part of the land. The pumps have rested on the land on their own weight for all operational purposes (see Re May Bros, supra at 513) and were not so relatively heavy in weight as to have yielded any inference of intended permanency of physical location. It is true that the pumps were held in the same ownership as the land, but it is equally true that upon the sale of farming property, it is a well known practice for the farm lands to be sold separately from plant equipment and stock.
26 Whilst the two pumps, alike the irrigation equipment in Litz v NAB Ltd, supraat 57,548, tended to be operated in a specific area, there are a number of distinguishing features about that case here relevant. First, the irrigation equipment in that case was affixed to the land. Secondly, the irrigators in Litz could only move at right angles, whereas the two pumps here involved can be towed in any direction that a tractor may pull the same. Thirdly, unlike the present case, structural adjustments were necessary to change the method of attachment of the wheels. Furthermore, in the present case no damage would be done to the pumps nor the realty (see Hellawell v Eastwood, supra at 312 and Eon Metals NL v Commissioner of State Taxation (WA), supra at 609) and it would cost far less to remove the pumps than what they are worth (Metal Manufacturers Ltd v FCT, supraat 411). By way of contrast in Litz, Connolly J found that the irrigators would cost tens of thousands of dollars and that some damage would be done to the equipment.
27 It is true that the nature of the land is potentially relevant to the general inquiry which has to be undertaken in accordance with the ordinary principles referred above: Eon Metal NL v Commissioner of State Taxation (WA), supraat 608. The Springbrook property by its very nature, would require the two pumps to enable the irrigation system to cultivate the land: see Litz, supra at 57,550. Having regard to the degree of annexation and the place where the two pumps are positioned (ie by the river), the pumps were designed by virtue of its towing gear to be able to be towed around without any real difficulty. What if the river was flooded for a significant period of time? Surely the pumps could be moved to a more suitable location by the swollen river. The nature of a river and a river bank can change by reason of flood, drought or erosion. I find that the design of the pumps and their placement were intended to be able to adapt to any such variations.
28 The L-shaped valves may be distinguished from the two pumps by reason that the same were attached to the underground system when in use, with the consequence that the onus of proof would be the reverse to that appertaining to the two pumps [17]. However the operational features of such valves [23] were such as to deny to them the character of fixtures, notwithstanding that when installed, they functioned as part of an underground irrigation system. They could be readily and conveniently be removed and replaced by the same or similar items without causing damages or inconvenience, they were comparatively inexpensive as items of plant, and would have been readily replaceable if lost or damaged: see Metal Manufacturers Ltd v FCT, supra at 411. The sprinkler heads can similarly be removed without difficulty. They rested on their own weight and the Bank failed to meet the onus required to prove that they are not chattels.
29 I therefore find that all of the above described plant and equipment in issue bore the character in law of chattels, and I would therefore dismiss the Bank's cause of action for return and delivery up of the same.