Q&A: Delving into the definitions of landlord’s fixtures

Question

I act for clients who have a lease of an open-fronted shop unit in a large shopping centre. When they lock it up at the end of the day they use a roller shutter mounted to the external wall of the unit. My clients did not think the shutter was very good so replaced it without asking their landlord, who is unhappy about this and threatening to serve a section 146 notice and forfeit the lease if the shutter is not reinstated. The lease contains a covenant not to remove any “landlord’s fixtures”. Are my clients in breach?

Answer

It will depend on the precise nature of your clients’ shop and the wording of their lease – and in particular whether there is any clear definition of the term “landlord’s fixtures”. However, assuming it is what might be thought of as a “standard” shop unit (eg with stock left on shelves overnight), we think your clients have reasonably good prospects of defending any forfeiture claim because the roller shutter secures their shop when closed.

Explanation

Since the House of Lords decision in Elitestone Ltd v Morris [1997] PLSCS 119, objects brought onto land have been classified as (a) chattels, (b) fixtures, or (c) part and parcel of the realty. Exactly where the line is between category (b) and (c) objects is not always clear, and while many are familiar with the phrase “tenant’s fixtures”, “landlord’s fixtures” is much more opaque.

There is, however, some helpful guidance from the Court of Appeal in the recent case of Marlborough Knightsbridge Ltd v Fivaz [2021] EWCA Civ 989; [2021] PLSCS 121. In that case, Thierry Fivaz had two long leases of flats in a large block in Knightsbridge. Each lease demised the whole premises (including the front door) and contained a covenant on behalf of the tenant not to, among other things, “remove any of the landlord’s fixtures therefrom without first having made a written application”. The term “landlord’s fixtures” was not defined. Fivaz replaced his front doors to both flats without seeking permission, and the landlord sought a declaration from the First-tier Tribunal that there had been a breach of the leases. The landlord was successful in the First-tier Tribunal, but the Upper Tribunal reversed that decision, holding that the front doors were not fixtures at all (landlord’s or otherwise) but were instead part and parcel of the realty.

The landlord appealed to the Court of Appeal, which dismissed the appeal. It reviewed the older authorities, and drew a distinction between (1) something which is “so completely part of the land as being essential to its convenient use”, and/or which is made part of the original structure of a building in the course of its construction and (2) something which is “affixed to the freehold as accessory to the house”. The latter are fixtures, the former part and parcel of the realty.

Applying that, the Court of Appeal agreed with the Upper Tribunal that an entrance door to a domestic flat is part and parcel of the realty, as it is part of the original structure of the flat, and is an essential part of that structure because it affords privacy and security. Although doors are fixed by hinges after the walls are built, the Court of Appeal found that was immaterial because “no one would say the construction of a flat was complete if the entrance door had not yet been hung”.

So, assuming there is no helpful definition of “landlord’s fixtures” in your clients’ lease, their case is less clear cut than Fivaz. While the Court of Appeal found that a flat must have a front door, being self-contained is less integral to a shop. The presence of stands and other shop-like units without enclosure in shopping centres makes it less obvious that a shop must have a shutter – particularly if the stock is, say, locked away in a secure room and not left out overnight. Plus, privacy is of little or no concern in a shopping unit.

However, assuming (a) that your clients’ shop unit does not follow that model, and (b) their shutter unit was provided as part of the demise when the unit was let to them, there is a strong indication they were intended to have control over being able to secure their premises. That being so, it does become difficult to consider the unit complete until (in effect) its fourth wall has been added, and the points made by the Court of Appeal regarding security apply with the same force. Therefore, on the basis of the information provided, your clients should have a good argument that their roller front shutter is in fact part and parcel of the realty, and not a “landlord’s fixture”.

A version of this article was published in Estates Gazette on 31 August 2021. For more information on the above please contact Rachel Morrish or your usual Charles Russell Speechlys contact.