Russell Peter Ball-Guymer v Arthur Livanes and Spiro James Livanes Sca [1990] ACTSC 46; (1990) 102 FLR 327 (21 November 1990)

SUPREME COURT OF THE ACT

RUSSELL PETER BALL-GUYMER v. ARTHUR LIVANES and SPIRO JAMES LIVANES
S.C.A. No. 79 of 1989
Landlord and Tenant - Damages
[1990] ACTSC 46; (1990) 102 FLR 327

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

Landlord and Tenant - fixtures - question as to whether an office erected by licensees within licensor's warehouse was a fixture.

Damages - conversion - goods on land with plaintiffs' license to occupy had expired - plaintiffs possessing right to remove goods - goods of little value once removed - question of award of nominal damages.

Penton v Robart 2 East 88, 102 ER 302 at 303

Australian Provincial Assurance Co. Ltd. v Coroneo (1938) 38 SR (N.S.W.) 700 at 712

Fleming on Torts, 7th ed, 1987, p 50

Penfolds Wines Proprietary Limited v James Peter Elliott [1946] HCA 46; (1946) 74 CLR 204, 229

A.W.B. Simpson, Action on the Case for Conversion (1959) 75 LQR 364

Dymocks Book Arcade Limited v McCarthy (1966) 2 NSWR 411

Breavington v Godleman [1988] HCA 40; (1987-1988) 169 CLR 41

Clarke v Holford (1848) 2 Car and Kir 540

Barff v Probyn (1895) 64 LJQB 557

HEARING

CANBERRA
21:11:1990

Counsel for the appellant: Mr T. Johnstone

Solicitors for the appellant: Maliganis Edwards Johnson

Counsel for the respondents: Mr H. Selby

Solicitors for the respondents: Macphillamy Cummins and Gibson

ORDER

The appeal be allowed on the quantum of damages only.

There be judgment for the respondents but in a nominal sum.

DECISION

"The old cases upon this subject leant to consider as realty whatever was annexed to the freehold by the occupier: but in modern times the leaning had always been the other way in favour of the tenant, in support of the interests of trade which is become the pillar of the State. What tenant will lay out his money in costly improvements of the land, if he must leave every thing behind him which can be said to be annexed to it. Shall it be said that the great gardeners and nurserymen in the neighbourhood of this metropolis, who expend thousands of pounds in the erection of green houses and hot houses, etc. are obliged to leave all these things upon the premises, when it is notorious that they are even permitted to remove trees, or such as are likely to become such, by the thousand, in the necessary course of their trade."

2. Thus spoke Lord Kenyon C.J. in 1801 in Penton v Robart 2 East 88, 102 ER 302 at 303. Whether the Lord Chief Justice of England contemplated that these words might be applied to the then fledgling colony in New South Wales where people were scratching the earth for a living and greenhouses must have been in short supply, we know not.

3. This appeal from the Canberra Magistrates Court is, on one view, a case about fixtures, in New South Wales. The appellant defendant was the owner of premises at 5 Patterson Parade, Queanbeyan, New South Wales. The plaintiffs respondents carried on business concerned with the delivery of goods in refrigerated trucks. They entered into a licence agreement with the defendant to occupy the warehouse. The licence agreement was not a lease. It provided that the plaintiffs were to have the right to occupy the premises for an indeterminate period commencing 9 June 1987, subject to termination by either party on 7 days written notice and subject to the payment of an occupation fee and other terms and conditions. There was no provision about what was to happen at the end of the occupation period in relation to any fixtures that might be brought on to the premises by the plaintiffs. At or before going into occupation the plaintiffs and the defendant discussed a proposal by the plaintiffs that they have erected within the warehouse an office with partition walls and a ceiling. The discussions were inconclusive. The office was constructed. The partition walls were fixed to the floor with masonry nails and bolted to the side walls of the warehouse building.

4. After ten weeks in occupation the plaintiffs gave notice by letter of 20 August 1987 terminating the agreement on 31 August 1987. During the period of notice there were indeterminate discussions between the plaintiffs and defendant relating to the office and its possible purchase by the defendant. Ultimately the defendant refused access by the plaintiffs to the office and occupied it himself.

5. The Magistrate found that there was an agreement by the defendant that the plaintiffs were entitled to erect and remove the office and that the defendant would permit them to do so. The Magistrate concluded that the office was, accordingly, not a fixture. The Magistrate also found that the defendant subsequently changed his attitude after receiving legal advice. On about 4 September the defendant refused access to the plaintiffs and changed the lock on the office door. He subsequently occupied the office and made certain minor renovations to it.

6. The claim in the Magistrate's Court was based on a claim in contract, alternatively a claim in damages for conversion. The defendant denied the contract and denied liability for conversion. In regard to the claim in conversion the defendant contended that the office was a fixture and therefore part of the realty. It was argued that if that were so the plaintiffs would not be entitled to succeed in conversion since that is a cause of action concerned with wrongful interference with chattels. The Magistrate found in favour of the plaintiffs on the claim for damages for conversion. He did not make any positive finding in favour of the plaintiffs on the alternative claim based on breach of contract. The award for damages for conversion was based on the cost of erecting the office, less a factor for depreciation and the plaintiffs were awarded $7,374 damages accordingly, together with interest.

7. The defendant appeals challenging the finding that the office was not a fixture and in addition challenging the damages awarded.

8. The celebrated passage in the judgment of Jordan C.J. in Australian Provincial Assurance Co. Ltd. v Coroneo (1938) 38 SR (N.S.W.) 700 at 712 is an authoritative statement of the relevant law on what are fixtures:
"A fixture is a thing once a chattel which has become

in law land through having been fixed to land. The
question whether a chattel has become a fixture depends
upon whether it has been fixed to land, and if so for what
purpose. If a chattel is actually fixed to land to any
extent, by any means other than its own weight, then prima
facie it is a fixture; and the burden of proof is upon
anyone who asserts that it is not: if it is not otherwise
fixed but is kept in position by its own weight, then
prima facie it is not a fixture; and the burden of proof
is on anyone who asserts that it is: Holland v Hodgson
LR 7 CP 328 at 335. The test of whether a chattel
which has been to some extent fixed to land is a fixture
is whether it has been fixed with the intention that it
shall remain in position permanently or for an indefinite
or substantial period: Holland v Hodgson, or whether it
has been fixed with the intent that it shall remain in
position only for some temporary purpose: Vaudeville
Electric Cinema Ltd v Muriset (1923) 2 Ch 74 at 87. In
the former case, it is a fixture, whether it has been
fixed for the better enjoyment of the land or building, or
fixed merely to steady the thing itself, for the better
use or enjoyment of the thing fixed: Holland v Hodgson;
Reynolds v Ashby and Son (1904) AC 466; Colledge v H.C.
Curlett Construction Co. Ltd. (1932) NZLR 1060; Benger
v Quartermain (1934) NZLR s.13. If it is proved to
have been fixed merely for a temporary purpose it is not a
fixture: Holland v Hodgson; Vaudeville Electric Cinema
Ltd. v Muriset. The intention of the person fixing it
must be gathered from the purpose for which and the time
during which user in the fixed position is contemplated:
Hobson v Gorringe (1897) 1 Ch 182; Pukuweka Sawmills
Ltd. v Winger (1917) NZLR 81. If a thing has been
securely fixed, and in particular if it has been so fixed
that it cannot be detached without substantial injury to
the thing itself or to that to which it is attached, this
supplies strong but not necessarily conclusive evidence
that a permanent fixing was intended: Holland v Hodgson;
Spyer v Phillipson (1931) 2
Ch 183 at 209-210. On the other hand, the fact that the
fixing is very slight helps to support an inference that
it was not intended to be permanent. But each case
depends on its own facts. In Pukuweka Sawmills Ltd. v
Winger, a bush tramway introduced on the land for the
temporary purpose of removing logs in the course of
timbergetting and clearing, and capable of being moved
from place to place, was held not to be a fixture;
notwithstanding that a relatively secure degree of
fixation was necessary whilst the tramway was in use in
any particular place. On the other hand, a wooden
building, resting on land by its own weight but brought
there for the purpose of being permanently used as a
dwelling house, was held in Reid v Smith 3 CLR 656; 9
Austn Digest 176 to be a fixture."

9. It is clear from the judgment of Jordan C.J. that the test is a subjective one to say, one has regard to the intention accompanying the fixing. If the intent is that the item shall remain in position permanently, indefinitely or for a substantial period, then it is a fixture. If it is fixed with the intent that it may remain only temporarily or for a temporary purpose, then it is not a fixture. The physical security with which the item has been fixed and the extent to which the item itself or the premises might be damaged if the item is detached or severed is only evidence of intention. The greater the damage to the item or to the realty the greater the possibility that it was fixed with the intention of becoming part of the realty.

10. In the present case the Magistrate found, as he was entitled to find, that the plaintiffs caused the office to be erected for a temporary purpose. The fact that the partitions were secured to the floor by nails and secured to the walls by bolts was recognized and taken into account. The Magistrate laid emphasis also on the fact that the licence agreement was determinable by a week's notice on either party and that the plaintiffs had no real security of tenure. The Magistrate concluded that any erection by them of a structure upon the premises was intended to be of a temporary nature. The approach of the Magistrate was very similar to that of Lord Kenyon C.J. nearly two hundred years ago, recognizing that persons in occupation of land are unlikely to effect improvement without an expectation that they do not lose the whole of the benefit of the improvements upon ceasing occupation. The office structure in this case consisted of prefabricated wall frames which were brought on to the site and then had the cladding added there. The partition walls were then bolted to the sides of the walls of the building itself. Prefabricated doors and windows were fitted. Although some damage was shown to be inevitable to the premises in the event of removal of the office, that damage was not shown to be irreparable. On the other hand, the office itself would on severance cease to have the character of an office. It would be merely a collection of reusable building materials most of which could without much difficulty be re-assembled and used for the erection of a similar office elsewhere. I think that the Magistrate was correct in regarding the office as not part of the realty and therefore not a fixture.

11. The next question is whether the plaintiffs are entitled to judgment in conversion. There was no real issue on this question, in the event that the office was found n to be a fixture. However, in my view, it is to be emphasised that the gravamen of the plaintiffs' complaint that the defendant wrongfully converted their chattel lies not so much in the fact that the defendant later occupied the office and began to use it but in the fact that soon after the plaintiffs ceased to be in possession the defendant changed the lock, made it clear that the plaintiffs were not allowed on these premises and wrongfully kept them out of possession of their chattel.

12. I turn now to the question of damages which, after reserving my decision, I found to be the most difficult aspect of the case.

13. It is essential to bear in mind the nature of the tort of conversion. As Fleming observes (Torts, 7th ed, 1987, p 50), it is difficult to understand the modern law relating to the protection of possessing rights over chattels without a digression into legal history. These reasons will not make much of a digression of that nature. Fleming himself (p 49) defines conversion partly by reference to the relief which a court will grant: "Conversion may be defined as an intentional exercise of control over a chattel which so seriously interferes with the right of another to control it that the intermeddler may justly be required to pay its full value". The author states (p 49) that "Characteristic of this tort is that the ordinary measure of damages is the full value of the chattel", and (p 57) "In contrast, a casual and harmless use, without any assertion of title, seems now to be regarded as too trivial to warrant a compulsory sale".

14. In support of the latter proposition the author cites Penfolds Wines Proprietary Limited v James Peter Elliott [1946] HCA 46; (1946) 74 CLR 204, 229. It is not clear that the passage in the judgment of Dixon J., to which the author refers, does support that proposition. Dixon J. (as he then was) says, inter alia:

"The essence of conversion is a dealing with a
chattel in a manner repugnant to the immediate right of
possession of the person who has the property or special
property in the chattel. It may take the form of a
disposal of the goods by way of sale, or pledge or other
intended transfer of an interest followed by delivery, of
the destruction or change of the nature or character of
the thing, as for example, pouring water into wine or
cutting the seals from a deed, or of an appropriation
evidenced by refusal to deliver or other denial of title.
But damage to the chattel is not conversion, nor is use,
nor is a transfer of possession otherwise than for the
purpose of affecting the immediate right to possession,
nor is it always conversion to lose the goods beyond hope
of recovery. An intent to do that which would deprive
"the true owner" of his immediate right to possession or
impair it may be said to form the essential ground of the tort."

15. Although in its origins, as an action on the case and not an action in trespass, a claim for conversion required proof of actual damage (see A.W.B. Simpson, Action on Case for Conversion (1959) 75 LQR 364) this no longer appears to be so, as appears from the passage of Dixon J. quoted above.

16. Clerk and Lindsell on Torts (16th ed, paras. 1-101) and older editions of Salmond on Torts (e.g. 11th ed, p 316) do not d fine conversion in such a way as to make damage essential to the cause of action. It may be doubtful whether Fleming's statement (p 50) that the clue is "whether a tortious intermeddling is serious enough to justify the drastic sanction of compelling the wrongdoer to buy the plaintiff out" applies to every case of conversion, if the value of the goods is incapable of being assessed in monetary terms.

17. The difficulty has, however, been resolved by the legal representatives for the defendant sending to my Chambers a reference to a case which was not cited in argument, namely Dymocks Book Arcade Limited v McCarthy (1966) 2 NSWR 411, a decision of the New South Wales Court of Appeal. That decision which is precisely in point appears to be binding on me. A State or Territory court in which action is brought for damages for a tort committed in another State or Territory applies the law of that other State or Territory, as the law of the place where the wrong was committed, in determining liability for damages: Breavington v Godleman [1988] HCA 40; (1987-1988) 169 CLR 41. Accordingly, in this case the applicable law is the law of New South Wales. Dymocks Book Arcade was a case about a bookstall on a suburban railway station. The bookstall was demolished by an incoming licensee who incorporated part of the materials into a new bookstall. The owner of the former bookstall claimed damages in conversion. The leading judgment was delivered by Jacobs J.A., as he then was, with whom the other Judges agreed on the question of the principle applying to the assessment of damages for conversion. Jacobs J.A. remarked that he found the question "one of very considerable difficulty". However, Jacobs J.A. considered that in the light of the English decisions of Clarke v Holford (1848) 2 Car and Kir 540 and Barff v Probyn (1895) 64 LJQB 557; (1895-9) All ER Rep 1038, which established that the principle was that where the plaintiff cannot claim trespass to land but can claim only an interference with a right to sever fixtures or a right to the fixtures in a severed state, the measure of damages in an action for conversion of fixtures is their value when severed and not their value unsevered to an incoming tenant. His Honour concluded that in the circumstances of the case the plaintiff was entitled only to such value as the material comprising the bookstall had when severed and was not entitled to its value unsevered to an incoming licensee. Moreover, in that case the trial judge accepted that the dismantling and removal would cost more than the value of the material when dismantled. The trial judge awarded nominal damages. The members of the Court of Appeal took the view that the ultimate decision was one of fact and unappealable.

18. In the present case, a building consultant, Mr Ian Jones, gave uncontradicted before the Magistrate that the total salvage value of the material comprising the office which was usable on demolition was $282, and that the cost of demolition, cleaning and disposing of unusuable demolished material was $584.76. In other words, it would have cost the plaintiffs about $300 to engage a builder or demolisher to come in and demolish and remove the office, whilst allowing the builder or demolisher to keep whatever materials were of use.

19. The written submissions on behalf of the plaintiffs in the present case seek to distinguish Dymocks Book Arcade from the facts of the present case, but I do not think that any relevant distinction may be made. The fact that the plaintiff in that case had abandoned the bookstall is not, in my view, to the point. It is clear, in the light of Dymocks Book Arcade case, that the law does not allow the plaintiffs to recover the value of any improvement that the office brought to the defendant's land, nor for the value of the commercial advantage which the defendant might have enjoyed from his use of the office, nor indeed for any use or occupation fee. As Wallace P. observed at p 412, the fact that the wrongdoer used portions of the Dymock's bookstall in the construction of his new bookstall at first sight seems to make the award of nominal damages in that case appear somewhat curious, yet when the principles relating to the measure of damages are kept in mind, this apparent anomaly disappears.

20. In Dymocks Book Arcade the Court of Appeal affirmed the decision of the trial award nominal damages only. The question whether there should have been a verdict for the defendant in the absence of proof or actual damage was raised. Although the discussion of principle in the judgments suggests that proof of damage is essential to the cause of action in conversion, the decision on the appeal did not result in judgment for the defendant and the plaintiff was there awarded judgment in a nominal sum. It may be that the simple fact that the present plaintiffs have been kept from possession of their chattel, although that chattel may turn out in the end to have no value, is in itself sufficient damage. In the event, it is appropriate to follow the Dymocks Book Arcade decision, allow the appeal on the quantum of damages only and enter judgment for the respondents but in a nominal sum. Subject to what the parties wish to say, I think the appropriate order for costs would be that the parties pay their own costs of the appeal and of the proceedings before the Magistrate.