Landlord’s fixtures/tenant’s fixtures –what’s the difference?

The Court of Appeal in Peel Land and Property (Ports No.3) Ltd v TS Sheerness Ltd [2014] EWCA explores what is meant by tenant’s fixtures and whether a tenant has the right to remove tenant fixtures.  In general the position is:

• Landlord’s fixtures - anything attached to the land or a building on the land is prima facie a landlord’s fixture whether attached by the landlord or the tenant.  As such it becomes part of the “demised premises”.  So if the tenant has covenanted to repair the demised premises, it must repair the (landlord’s) fixtures it has attached.  Likewise a landlord who has covenanted to insure the demised premises must insure these fixtures.
• Tenant’s fixtures – tenant’s fixtures are like landlord’s fixtures in that they become part of the demise premises.  However, there is one difference: a tenant has a right to remove tenant’s fixtures during the term or at its end though he may choose to leave them in place.

Of course the words of an individual lease can alter the general law: the lease may exclude tenant fixtures from the definition of the demised premises; it may place an obligation on the tenant at the end of the term to remove all fixtures (whether they be landlord’s or tenant’s) it has added to the premises.  In the Peel Land case the landlord and tenant were arguing about whether the lease excluded the tenant’s right to remove tenant’s fixtures during the term.

The lease was a building lease granted in 1971 for 125 years which obliged the tenant to construct a steel making plant and rolling mill at the Isle of Sheppey in Kent.  The building is no longer used and the current tenant wanted to remove valuable tenant’s fixtures from the building with a view to selling them or reusing them in other buildings.  The landlord wished to restrain the tenant from doing so.  The Court of Appeal has decided that the wording of the relevant clause in the lease excludes the tenant’s right under the general law to remove tenant’s fixtures. So the tenant must leave the fixtures in place.

The interest of the case for me is its explanation of what is a tenant’s fixture.  To qualify as a tenant’s fixture:

• The tenant must install in it in connection with his trade or business; and
• If he chooses to remove it, he must be able to do so without causing irreparable damage to the building.

Another test used to distinguish a tenant’s fixture from a landlord’s fixture is – can the tenant use the removed fixture in another building?

The Peel case does not change the law.  Its interest lies in its reminder of what is a tenant’s fixture and the fact that (in the absence of contrary wording in the lease) the tenant has a right to remove tenant’s fixtures.  As the court put it in Peel Land:

“unless the language of the lease makes it clear that the tenant’s right to remove tenant’s fixtures is ousted, the lease will not be so read: in such cases of doubt (including, for example, cases where the meaning is ambiguous), it will be construed against the landlord.”

Like any case it was a decision on a particular set of words in a particular lease.  So anyone advising a client on this issue must begin by looking at the relevant drafting in the lease to see if this excludes the general right of a tenant to remove tenant’s fixtures.