The High Court in Sabah & Sarawak heard this appeal. The Hon. Justice Ian Chin (as he was then) delivered his judgement on 21 November 2000. The appeal by Kueh Teck Swee was partially allowed with the Sessions Court’s judgment retained – save the order for costs.
Facts of the Case
BBMB Kewangan Bhd (the plaintiff/respondent) rented Kueh Teck Swee’s premises under a lease. After the lease expired on 30 September 1989, Kueh Teck Swee (the defendant/appellant) held on to the deposit (RM27,000) because BBMB Kewangan Bhd “beached the terms of the lease” and further counterclaimed a sum of RM36,723.13. This latter included costs of repairs and the value of fixtures removed by BBMB Kewangan Bhd.
The Sessions Court ruled in favour of BBMB Kewangan Bhd on 28 March 1994. Kueh Teck Swee’s counterclaim was also dismissed.
The High Court focused predominantly on Kueh Teck Swee’s counterclaim.
Appallant’s Counterclaim
The counterclaim was based on provisions in the lease agreement which compels the tenant to keep the property in good condition. After the tenancy period, the landlord is allowed to deduct costs of repair from the tenant’s deposit.
So, Kueh Teck Swee’s RM36,723.13 counterclaim included:
- Double rent covering 1 to 19 October 1989 for holding the property over the lease expiry: RM5,516
- Cost of repair: RM20,202
- Value of fixtures & fittings removed by BBMB Kewangan Bhd: RM11,005
- Two airconditioners;
- Steel frame shelves; and
- Lighting & wiring.
Grounds of Appeal
I. Holding over
The High Court agreed with the Sessions Court that there is no holding over.
BBMB Kewangan Bhd’s furniture remained on the premises with Kueh Teck Swee’s permission from 1st to 19th October 1989. Both parties were negotiating the cost of the repairs. Simultaneously, the defendant was looking for new tenants.
The High Court also notes the defendant’s advocates’ letter to the plaintiff which recognised that the defendant never protested the plaintiff’s furniture stored there. If the lawyer’s noted that the defendant’s objected to their temporary occupation, it would have amounted to a holding over.
On top of that, a new tenant rented the unit from 1 November, not 1 October.
II. The Deposit
The learned judge found the defendant’s arguments do not hold ground.
Note: “forfeit” is to lose your property, right, or privilege because of your wrongdoing. Non-refundable, or no refund, means that whatever you surrendered will not be returned irrespective of wrongdoing.
The lease agreement did not provide for the forfeiture of the deposit (except for re-entry by the landlord under cl. III(c)); it did allow for the refund not to be made.
What are the instances allowed by cl. III(c)?
- The plaintiff failing to pay rent for 21 days after becoming due;
- The plaintiff failing to observe and perform their covenants;
- The plaintiff being wound up or having entered into composition with their creditors; or
- The plaintiff suffering any distress or execution.
So, the High Court concluded that the clause was constructed to allow the refund of deposits after the landlord deducted costs to “make good the breaches or non observance”.
III. Cost of Repair
BBMB Kewangan Bhd admitted that they owe the landlord RM13,400 for repairs. The letter they sent to the defendant included this admission. It is, thus, hard to ignore the fact that the premises needed to be repaired. The landlord ended up paying RM16,356.75 for the repair works.
IV. Chattels or Fixtures?
Were the air-conditioning, wiring, and lighting chattels or fixtures?
This is where a bulk of the judgement was focused on. Both the Sarawak Land Code and National Land Code include “things attached to the earth or permanently fastened to anything attached to the earth” in the definition of “land”.
The general rule is:-
“[E]verything that is permanently attached to a building erected on the land belongs to the landowner unless the parties have agreed otherwise”
Ian Chin J in BBMB Kewangan Bhd v Kueh Teck Swee [2001] 1 MLJ 176
Your belongings become part of the land when:
- It is permanently fastened to the building on land; or
- It is part of the land by agreement.
This comes from the Roman law of quicquid plantatur solo, solo cedit.
Permanence has always been a subject of debate. Do air conditioning units bought by a tenant and installed at their cost belong to the landlord the moment it is fixed? What about other appliances like chandeliers? You see this often in spas and treatment centres. Often the removal of these items could result in damage to the property.
Based on the lease agreement (Clauses 11 (c) & (d)), Kueh Teck Swee allowed BBMB Kewangan Bhd to install, attach, and affix signages, notices, and partitions during their lease tenure.
As a product of common law, ‘permanently fasten’ does not have a precise meaning.
It is ‘used by different writers to express different meanings; but it is always applied to articles of a personal nature which have been affixed to land. In its most extensive sense it means anything annexed to the freehold in such a
Stroud’s Judicial Dictionary (4th Ed) vol 2
manner as to become parcel of it’ … and it will pass with it.
“Fixtures” carry a different meaning and legal consequences. Fixtures become part of the land. Except in the case of ‘tenant fixtures’ and ‘trade fixtures’. These may be removed by the tenant or seller.
Ian Chin J turned to several cases:
- Reynolds v Ashby [1904] AC 474: In considering what is a fixture, ‘attention must be paid, not only to the nature of the thing and to the mode of attachment, but the circumstances under which it was attached, the purpose to be served, and last, but not least, to the position of the rival claimants to the thing in dispute’
- Billing v Pill [1954] 1 QB 70; – though secured to a concrete base using bolts, army hut is not a fixture;
- Vaudeville Electric Cinema Ltd v Muriset [1923] 2 Ch 74 – cinema seats secured to the floor by screws, a patent screen, and advertising board outside a cinema hall are not ‘fixtures’;
- Spyer v Phillipson [1931] 2 Ch 183 – So long as the chattel could be removed without doing irreparable damage to the demised premises, neither the method of attachment nor the degree of annexation, nor the quantum of damage that would be done either to the chattel itself or to the demised premises by the removal, had any bearing on the right of the tenant to remove it, except in so far as it throws a light upon the question of the intention with which the tenant affixed the chattel to the demised premises
- Elliot v Bishop; Bishop v Elliot 24 LJ Ex 229; 11 Ex 113 – A tenant may remove trade fixtures for them to be more profitable or to conduct their business;
- Beaufort v Bates 31 LJ Ch 485 – A lease ought not to be construed so as to take away the ordinary right of a tenant to remove trade chattels unless such an intention is clearly expressed.
The High Court also applied Singma Sawmill Co Sdn Bhd v Asian Holdings (Industrialised Buildings) Sdn Bhd [1980] 1 MLJ 21. The Federal Court did not disapprove the High Court’s application of English law, thus deemed by the learned judge as approving the application.
Trade Fixtures. Fixtures attached by the tenant for the purpose of his trade or business have long been removable by the tenant at any time during the term, but not after it has come to an end.
Megarry & Wade on The Law of Real Property (4th Ed)
The learned judge, thus, ruled in favour of BBMB Kewangan Bhd, finding that the air-con, steel frame shelves, and wiring amounted to “trade fixtures”.
Extra: What are the statutory definition of ‘land’?
This section isn’t included in the judgment. However, it is for our benefit where you can find both provisions on the definition of “land” in the Sarawak Land Code and the National Land Code in the quotes below:
“land” includes things attached to the earth or permanently fastened to anything attached to the earth;
s. 2, Land Code [Cap 81] (1958 Edition)
“land” includes—
s. 5, National Land Code
(a) that surface of the earth and all substances forming that surface;
(b) the earth below the surface and all substances therein;
(c) all vegetation and other natural products, whether or not requiring the periodical application of labour to their production, and whether on or below the surface;
(d) all things attached to the earth or permanently fastened to any thing attached to the earth, whether on or below the surface; and
(e) land covered by water,
As you saw, the definition in the Sarawak Land Code is similar to paragraph (d) in the National Land Code. This means that a Federal Court’s interpretation of the latter applies.
