Solar panels passed to buyer on a sale of land but fish in a commercial fishery did not
Solar panels were fixtures which passed to a property buyer, but coarse fish in man-made lakes were chattels which did not.
That is the decision of the High Court in the recent case of Borwick Development Solutions Ltd v Clear Water Fisheries Ltd.
This is the first time that the Courts have considered the legal nature of fish stocks in a commercial fishery.
The case is a useful reminder of the need for buyers and sellers to think carefully about what they intend to be included in the deal and to document their agreement in the contract.
In a receivership sale, the position is complicated as the receivers will also need to give careful consideration as to whether their powers extend to dealing with chattels. Accordingly, they will need to consider their options carefully.
What happened in the Clear Water Fisheries case?
The claimant, the former borrower and landowner, made a conversion claim against a purchaser of land in respect of solar panels and fish stocks which remained on a property on completion of a sale. The sale was actually undertaken by receivers appointed over the property and the contract was silent on how the solar panels and the fish were to be dealt with.
In the absence of express provision in a sale contract, the general rule of law is that fixtures, as an integral part of the property, pass with the property on a sale. However, title to chattels does not pass, as they are merely personal property.
The receivers further confirmed that they offered no warranty in respect of transfer of the ownership of the fish, as they did not consider their appointment extended to them. This is a fair and reasonable position for the receivers to take and is common in receiverships.
The claimant argued that at all material times it was the owner of both the solar panels and the fish and that they did not pass to the buyer.
The High Court held that the claimant’s conversion claim failed in respect of the solar panels, as the panels were fixtures and passed with the sale of land, but the Claimant succeeded in respect of the fish stocks in the lakes.
Solar panels
The High Court outlined that the solar panels were fixtures for two key reasons.
Firstly, the solar panels were fixtures due to the method and degree of annexation. The solar panels were fixed to a metal frame, and were bolted onto a wooden platform concreted into the land. However, the panels could be easily unclipped and removed from their frames. The Court considered the structure as a composite whole, and determined that due to the degree of attachment to the land, the solar panels were fixtures.
Secondly, the panels were fixtures due to the object and purpose of the annexation. The Court outlined that the solar panels’ purpose was to receive sunlight, convert it into energy and power equipment at the site’s restaurant. Therefore, the purpose of the panels was not for their use independently of the land but rather as an integral part of the land.
For these two reasons, the solar panels were fixtures and would pass to the buyer on the sale of land.
Fish
The Court had to consider the legal nature of fish stocks in a commercial fishery for the first time. The High Court held that the fish were chattels, and belonged to the claimant. These were not living wild animals (to which there is no title even while on a landowner's property) but were introduced into and isolated in the closed water system. This meant that the commercial fish were chattels.
In discussing the distinction between property in wild animals and animals in captivity, the judge provided the example of a rabbit in a hutch. Title to the rabbit would not automatically pass on the transfer of land itself, as the owner had title in the rabbit whilst it remained in the hutch. Title in the rabbit would not pass to the buyer without express reference to this transfer in the sale contract of land.
The seller introduced and contained the fish In this case in the closed water system, with mesh separating the various lakes and ponds. As the fish were in captivity, the sellers had a qualified property in them.
Lessons from the case for receivers
This case highlights that Receivers need to tread carefully in respect of any items at a property over which they are appointed. Such items may be considered to be chattels, rather than part of the property itself.
If such items are deemed to be chattels, the charge pursuant to which the receivers are appointed may not contain powers to deal with them or sell them..
The receivers will need to consider the following options:
- remove the chattels from the property prior to sale through liaison with the borrower or other owner of the chattels;
- serve notices, pursuant to the Torts (Interference with Goods) Act, of their intention to remove and deal with the chattlels; or
- if they sell a property with any chattels remaining in place; ensure that it is clear in the contract that no title is being passed and require suitable protection (probably in the form of an indemnity) in respect of any claims made by the borrower or other third parties in relation to them.
TLT has a dedicated property insolvency and recoveries team which is experienced in advising receivers on these and other issues. Please get in touch to find out how we can help you.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2019. Specific advice should be sought for specific cases. For more information see our terms and conditions.
