The case of General Motors UK Ltd v The Manchester Ship Canal Company Ltd concerned a licence agreement which allowed General Motors to discharge surface water into the canal for a modest annual fee of £50.
Trouble in Paradise
A naturist resort. A chalet. And a modest plot of land. Those were the subjects of the hotly contested case of Spielplatz Limited –v- Pearson.
The legal issues that were laid bare during the proceedings centred on whether the chalet was a chattel or whether it formed part of the land on which it was situated. The difference of opinion between the occupiers of the chattel and the owner of the resort resulted in the parties striding brazenly off to the Court of Appeal.
The facts of the case were that Spielplatz were the freehold owners of the resort. The resort comprised various plots which Spielplatz let to its members, many of whom had constructed chalets on them. Spielplatz were not involved with the construction of the chalets and their view was that their only proprietary interest was in the plots of land and that they had no interest in the chalets themselves which belonged to each tenant as chattels.
In 1992, Spielplatz granted an annual tenancy of one of the plots to Mr and Mrs Pearson. The plot contained a single storey wooden chalet which Mr and Mrs Pearson had bought from the previous tenants.
In due course, Spielplatz served a six month notice to quit on Mr and Mrs Pearson, purporting to terminate the tenancy of the land. Mr and Mrs Pearson immediately challenged the validity of the notice and argued that the chalet formed part of the land and that the tenancy agreement that Spielplatz had issued to them in 1992 gave them an assured tenancy of not only the plot but also the chalet. Their primary argument was that Spielplatz had served the wrong form of notice and that Speilplatz were obliged to determine the tenancy in accordance with the Housing Act 1988.
The argument boiled down to whether the chalet formed part of the land or not. This involved analysing the “degree and purpose of annexation to the land”. Put simply, could it really be said that the chalet was a structure that could be disassembled and removed from the plot?
The County Court was persuaded by the fact that the chalet was annexed to mains water and electricity and was immovable except by destruction. It found that the nature of the chalet was such that it could not be classed as a chattel, that it formed part and parcel of the plot and must therefore have been let as a dwelling in 1992. The tenancy agreement was therefore an assured tenancy agreement and the notice served by Spielplatz was invalid.
Spielplatz appealed this decision and argued forcefully that Spielplatz had no proprietary interest in the chalet itself. If it did not own it, how could it have granted a right to occupy it? Spielplatz argued that the tenancy issued in 1992 was confined to the land itself and not to the ‘object’ located on it.
The Court of Appeal were not persuaded by this argument. The appeal was dismissed and the County Court’s decision upheld. The appeal Judges noted in particular that the chalet could not be moved except by destroying it and that it had been placed on the plot to enable its occupiers to enjoy the amenities offered by the plot and by the resort. The inescapable conclusion was that the chalet was part of the land in 1992 when the tenancy was granted.
The case is a reminder of how the Court applies the principles relating to annexation. Whether or not an object is a chattel is a question of fact and degree. The parties’ own beliefs as to whether a certain feature or object is a chattel or not are irrelevant.
The issue of whether an object is part of the land is important in other situations. For example it can be relevant in determining whether on a property sale, an object passes to the purchaser. It can also be relevant when deciding whether a tenant has the right to remove a certain item at the end of a lease.
In the case of Spielplaz, all may not be lost. They can still pursue a claim for possession provided that they serve notice in accordance with the Housing Act 1988 and that they can prove the relevant grounds for possession.