Tenants' fixtures
64 The Sublease used the expression "Sublessee's Property" and one element of the Sublessee's Property was its "fixtures": see [18], [20], [21] above. The Sublessee's fixtures were not identified in the Sublease and at the time of its execution they did not yet exist.
65 In Lees & Leech Pty Ltd v Commissioner of Taxation (1997) 73 FCR 136, Hill J said (at 149):
…When it is said that an item is a "tenants' fixture", all that is meant is that the tenant has a right to remove the item at the expiration of the term of the lease or a reasonable time thereafter: cf D'Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317. If the item in question were not a fixture, a fortiori it would belong to the tenant and could be removed by the tenant at any time. Thus, the whole concept of tenants' fixtures assumes that the items in question have become fixtures but that the tenant has a right in equity in the land, co-extensive with the right of the tenant to come upon the land after the expiration of the lease and remove the fixture.
66 The expression "tenants' fixtures" is apt to mislead unless adequately explained. The tenant does not own the freehold and a fixture does not belong to the tenant by virtue of being part of the freehold. Rather, fixtures are the property of the owner of the land, but in the case of "tenants' fixtures" they are subject to the tenant's right to remove them during the term of the lease or within a reasonable time thereafter and so convert them back into chattels.
67 Under the general law, for the purposes of the limited exception to the quicquid plantatur maxim in favour of tenants' fixtures, the latter are things installed by a tenant for trade, domestic or ornamental purposes. If it matters, the fixtures with which I am concerned were all installed by NFD for the purpose of its trade. It may not matter because the right of removal is regulated by the Sublease which speaks generally of NFD's fixtures without reference to their purpose. In any event, so far as the evidence reveals, there were no fixtures installed by NFD for any purpose other than trade.
68 In my opinion, the fixtures to which I referred above were all "tenant's fixtures" of NFD. Mr Stebbing's and Mr Cussen's evidence referred to at [13] and [14] above shows that they were constructed by or for NFD. The Sublease bears the consent under seal of the Head Lessor, LDC. LDC therefore consented to the provisions relating to NFD's fixtures, to removal of them by NFD and, in default of that removal, to disposal of them by Vopak. In addition, as noted at [7] above, LDC does not seek to make submissions in opposition to the relief sought by Vopak in this proceeding.
69 I am satisfied on the evidence that since 30 January 2009, NFD has not had a right to enter upon the Premises and remove its fixtures. I note in passing that that the defendants have not sought relief from forfeiture.
70 Clause 13.2 of the Sublease (set out [21] above) may suggest that even after the expiry of the three month period, NFD was to remain the owner of the fixtures, since that clause purports to give Vopak a right to deal with NFD's Property "as if it were" Vopak's property. On the hearing, senior counsel for Vopak made it clear that he relied on cl 13.2 only as demonstrating that NFD's rights in respect of its fixtures had come to an end, not as the source of Vopak's rights in respect of them. The latter were attributable, according to senior counsel's submission, to Vopak's interest in the land itself, which the fixtures followed.
71 This submission raises indirectly a question that was referred to by Young CJ in Eq (as Young JA then was) in Eye Corp Australia Pty Ltd v Goliath Investments Pty Ltd (2006) 12 BPR 23, 949; [2006] NSWSC 159 at [26]-[27]. His Honour posed the question as being which of two theories is correct: the theory that tenants' fixtures never become part of the freehold (his Honour referred to Mowats v Hudson (1911) 105 LT 400), and the theory that they do but are subject to the tenant's right to detach them and thereby make them chattels again (his Honour referred to Horwitch v Symond (1914) 110 LT 106 (affirmed by the Court of Appeal (1915) 84 LJKB 1083)).
72 I do not propose to review the authorities, interesting though the issue is. The clear preponderance of authority favours the latter view. Woodfall's Law of Landlord and Tenant (Sweet & Maxwell/Thomson Reuters, 2009, looseleaf) vol 1 at [13.148] addresses the present issue as follows:
Although it has been suggested that a tenant's fixture is an exception to the rule that anything affixed to the land becomes part of the land [Re Hulse [1905] 1 Ch 406], it is considered that the better view is that a tenant's fixture does become part of the land until severed, and that the tenant's right of severance is an exception to his obligation to deliver up that which has become part of the land [Gibson v Hammersmith & City Railway Co (1853) 2; Drew & SM 603; 1 New Rep 305; Brain v Brand (1876) 1 Ap Cas 762. The rule that tenants' fixtures cannot be seized by way of distress is also consistent with the view that until severed, a tenant's fixture is part of the land]. Thus it has been said that in the case of landlord and tenant "it is well settled that, in the absence of an agreement to the contrary, any building erected by the tenant upon the demise of the land immediately becomes part of the land itself and at the expiration of the lease reverts to the landlord. In such a case unless the building has been erected in contravention of some stipulation in the lease, the landlord obviously has a right to compel the tenant to take down and remove it. [Never-Stop Railway (Wembley) Ltd v British Empire Exhibition (1904) Inc [1926] Ch 877 ...]. However, if the tenant leaves behind redundant equipment which needs to be removed in order to make the premises usable, the premises as a whole will not have been delivered up in good and tenantable condition [Shortlands Investments v Cargill [1995] 08 EG 163 ...]
See also the discussion of the question by Professor Butt in Land Law (5th ed, Thomson Lawbook Co, 2006) at [15,252] which is consonant with the view expressed in the above passage and with the "better opinion" referred to by Dixon J in the passage from North Gas Co set out at [55] above.
73 In my opinion NFD's fixtures became part of the land; NFD's right to remove them was regulated by the Sublease; NFD ceased to be entitled to remove them after 30 January 2009; and since then NFD has not been entitled to interfere with a sale of them by Vopak.
74 These conclusions are sufficient to resolve the dispute between the parties to the proceeding, subject to my discussion below of the claims made by the Administrators. However, it is necessary that I say something of the Head Lease and of the position of LDC.
75 The first and obvious point to be made is that consistently with the quicquid plantatur principle, NFD's fixtures are part of LDC's land, and the question arises how they can be sold (a) by anyone other than LDC, and (b) otherwise than as part of the land, perhaps following a subdivision. Professor Butt discusses this kind of question in Land Law, op cit, at [319]-[322], though without the added complexity of the head lease/sublease arrangement of the present case.
76 Clause 16.2 of the Head Lease provides that if the lessee (Vopak) observes the terms of the Head Lease, it may during the term or any renewed term of the Head Lease remove from the demised premises all of its "plant, equipment and fittings (including the improvements)" subject certain provisos.
77 It may be that the fixtures in question are "Sublessee's fixtures" as between Vopak and NFD, and "Head Lessee's fixtures" as between LDC and Vopak. If this analysis is correct, cl 16.2 of the Head Lease would operate in relation to them and would not be affected by the fact that they were once NFD's fixtures or the fact that they are apparently now to become the Buyer's fixtures.
78 I referred at [7] above to the stance taken by LDC, and at [68] above to LDC's having consented to the grant of the Sublease. Moreover, a sale by Vopak to the Buyer will be subject to LDC's consenting to the proposed sublease from Vopak to the Buyer (see [39] (b) above). It may be that LDC will be estopped from denying Vopak's right to sell.
79 It may be that there will be, vis-a-vis LDC, a deemed removal by Vopak, a sale, and a deemed reinstallation by Vopak or by the Buyer of NFD's fixtures. Deemed removal, or at least an ignoring of, tenants' fixtures is not unknown in the context of rent review clauses: see, for example, New Zealand Government Property Corporation v HM & S Ltd [1982]QB 1145; Young v Dalgety [1987] 1 EGLR 116.
80 LDC is not a party to this proceeding and I have not had the benefit of submissions from it, or indeed from the parties, on the difficult questions that arise. It may be that they will not arise because LDC, Vopak and the Buyer will deal with them in a tripartite agreement.
81 The appropriate course for the Court to take is to resolve only those questions that need to be resolved as between the present parties in order to make it clear that Vopak is entitled, as in my opinion it is, as against the defendants to sell the fixtures.