Makhoul v Foster and Lockhart

• Jurisdiction: Antigua and Barbuda
• Judge: Pereira, C.J.
• Judgment Date: 23 February 2015
• Neutral Citation: AG 2015 CA 2,[2015] ECSC J0223-1
• Docket Number: ANUHCVAP2009/0014
• Court: Court of Appeal (Antigua and Barbuda)
• Date: 23 February 2015

Court of Appeal

Pereira, C.J.; Thom, J.A.; Farara, J.A.

ANUHCVAP2009/0014

Makhoul

and

Foster and Lockhart

Appearances:

Mr. Hugh C. Marshall Jr. for the appellant.

Sir Gerald A. Watt, QC, with him, Dr. David Dorsett and Mr. Jared Hewlett for the respondents.

Landlord and Tenant - Appeal against the decision of the judge upholding the validity of the notice to quit — Whether the notice to quit was valid — Whether the evidential burden of proving the invalidity of the notice to quit rested on the appellant — Whether the building on the land had become a fixture — Whether the building could be classified as a tenant's fixture as opposed to a landlord's fixture — Whether the appellant was entitled to remove the building.

Damages - Whether an award should be made for damages under the user principle.

In 1979, the first respondent's father, Stanley Walter, granted the appellant's husband, Elias Makhoul, a five-year lease of land situate at the corner of Market Street and South Street in St. John's, Antigua. Mr. Walter gave Mr. Makhoul permission to erect thereon a chattel building for use by Mr. Makhoul as a store. The parties subsequently entered into a new lease agreement in 1985 for a six-year term. [By that time Mr. Walter had died and the second respondent, a partner in a firm of lawyers who acted on behalf of Mr. Walter and after his death, the first respondent, was then the executor of Mr. Walter's estate.] The lease agreement provided that upon determination of the lease, Mr. Makhoul was to deliver up possession and remove from the land any building constructed thereon. It was also a term of the lease that Mr. Makhoul could not erect a structure of a permanent nature on the land. A building was in fact erected on the land.

After many defaults by Mr. Makhoul and many indulgences by the lessor, the lessor eventually refused to grant any further leases to Mr. Makhoul. However, sometime in 1996 or prior thereto, the first respondent (“Ms. Foster”) discovered that the Makhouls had caused an addition to be constructed to the original building and had also entered into in a tenancy agreement with one Habib George whereby the Makhouls acted as Mr. George's landlord and Mr. George, with the agreement of the Makhouls, financed the construction of the addition. When Ms. Foster became aware of this, the Makhouls and Mr. George were advised of the unlawfulness of their action. The result was that in 1996, Ms. Foster, in seeking to clarify the position, entered into two lease agreements: one with the appellant (“Ms. Makhoul”) and the other with Mr. George. Ms. Makhoul's lease provided inter alia that the lease of the land was for a period of 2 years at a monthly rental of $700.00 and that at the end of the lease she would have to remove the building on the land. Conversely, Mr. George's lease provided that at the end of the lease the building would become the property of Ms. Foster. At the end of the two-year term no new lease was granted to Ms. Makhoul, thus she remained in possession of the land as a tenant holding over.

Sometime in 2002, Ms. Makhoul approached Ms. Foster about subletting the lot she occupied. [Mr. Makhoul had died by this time.] Ms. Foster was not amenable to this due to past difficulties she experienced with the Makhouls and proposed instead an arrangement whereby she would have a direct landlord/tenant relationship with the proposed tenant and would pay Ms. Makhoul a monthly commission for referring the proposed tenant. The arrangement never materialised as Ms. Makhoul proceeded to sublet the lot without receiving permission from Ms. Foster.

In February 2003, the second respondent (“Mr. Lockhart”) had cause to write Ms. Makhoul concerning an extension to the original building which it was discovered Ms. Makhoul was constructing, requesting that she cease from so doing. Mr. Lockhart also reminded her that she was not permitted to sublet the premises. The letter, dated 26th February 2003, was also accompanied by a notice to quit of even date which fixed the date for delivery up of possession by 31st March 2003.

Ms. Makhoul subsequently commenced legal proceedings against the respondents on 25th March 2003 seeking a declaration of title of the buildings located on the land at the corner of South Street and Market Street and a prohibitory injunction to prevent the respondents from executing the notice to quit. She asserted that she was entitled to all the buildings on the land and therefore to rents being collected by Ms. Foster. Ms. Foster defended the action and Counterclaimed for possession of the premises and mesne profits. At the conclusion of proceedings, the learned trial judge found that the notice to quit was validly given and ordered delivery of possession of the premises to Ms. Foster and for payment of mesne profits then found to be due. She also found that when Ms. Foster caused the lease to be entered into with Ms. Makhoul, it was only in relation to the portion of land where the original chattel building/store (“the Building”) was and that the additional structure was constructed by Mr. George in respect of which he had later entered into his own lease arrangements with Ms. Foster. The learned trial judge further found that the store rests on a foundation that is attached to the ground and that the store had become part of the land and affixed to it and was therefore now owned by Ms. Foster. Ms. Makhoul was aggrieved by the learned trial judge's decision and appealed on several grounds.

HELD: allowing the appeal in part, only to the extent that the appellant was entitled to remove the original building erected on the property at the end of the tenancy and otherwise dismissing the appeal; valuing the claim at $50,000.00 under CPR 65.5(2)(a) and awarding prescribed costs to the first respondent on that sum in the lower Court and on appeal two-thirds of that sum, discounted by 20%, to reflect the degree of success of the appellant in the appeal; dismissing the counter-appeal by the first respondent with costs to the appellant fixed in the sum of $5,000.00; and awarding prescribed costs in the Court below to the second respondent under CPR 65.5(2)(a) in the sum of $7,500.00, that:

• 1. Section 53(h) of the Registered Land Act places an evidential burden on the party who asserts that the other party unreasonably refused to give consent to subletting to prove that the refusal of consent was unreasonable. It is a trite principle of law that he who asserts must prove and this principle in respect of the evidential burden is only displaced where the law places the burden ether expressly or by necessary implication on the other party. In this appeal, the learned judge correctly found that it was for the appellant to place facts and circumstances before the Court from which it could infer that consent to sublet had been unreasonably withheld. There was no evidence before the Court tending to show any response from the appellant to the first respondent's proposal and the evidence was simply that, without further reference, the appellant proceeded to sublet on at least two occasions. The learned judge correctly found that the appellant had not discharged the evidential burden and accordingly there was no basis for disturbing her finding that the notice to quit was valid.

  Section 53(h) of the Registered Land Act applied.

• 2. In determining whether a structure is or is not a fixture, the decisive factors a Court must consider are the degree of annexation to the land and the object of annexation. The answer whether such a structure has become annexed is as much a matter of common sense as precise analysis, but a building which is constructed in such a way that it cannot be removed at all, save by destruction, cannot have been intended to remain as a chattel. In the present case, evidence presented to the learned trial judge showed that any attempt to remove the Building would result in the destruction of the Building. Consequently, based on all the evidence before the learned trial judge, as well as her own observations from her site visit, it was open to her to conclude that the Building had become a fixture. Elitestone Ltd. v. Morris [1997] 1 All E.R. 513 applied.

• 3. Although parties may agree to treat a structure as a chattel, the question whether a structure is a chattel is one of law. The terms of a such an agreement will regulate the contractual rights to sever from the land as between the parties to the contract and where an equitable right is conferred by the contract, as against certain third parties. However, such an agreement cannot prevent the chattel once fixed, becoming in law part of the land and owned by the owner of the land so long as it remains fixed.

  Melluish (Inspector of Taxes) v. BMI (No 3) Ltd. [1996] A.C. 454 applied; Elitestone Ltd. v. Morris [1997] 1 All E.R. 513 applied.

• 4. Notwithstanding that as a general rule a chattel affixed to land is deemed in law to be a fixture, a tenant who has affixed a chattel for the purpose of trade may have a right of severance and removal of the chattel so affixed. It is the purpose and object of the erection of the building that is critical in determining the character which it is to assume. Further, a Court in determining the question of removability may consider in particular the various relationships between the interested parties such as landlord and tenant and each case must be decided on its own facts. In this appeal, the lease agreement between the first respondent as lessor and the appellant as lessee, expressly provided that the appellant was required to remove the Building at the end of the term. Further it was not disputed that the Building had been erected for the purpose of carrying on a trade, namely, the operation of a store. Consequently, although the Building became a fixture at the end of the term of the lease, the appellant was entitled to sever and remove the...