Gebrueder Buehler AG v Chi Man Kwong Peter

• Jurisdiction: Singapore
• Judgment Date: 13 August 1986
• Date: 13 August 1986
• Docket Number: Originating Summons No 1021 of
• Court: High Court (Singapore)

Gebrueder Buehler AG

Plaintiff

and

Chi Man Kwong Peter

Defendant

[1986] SGHC 28

L P Thean J

Originating Summons No 1021 of 1984

High Court

Personal Property–Title–Retention of title clauses–Whether equipment became fixture–Intention of parties

Facts

The defendant was appointed the receivers and managers of Allied Cocoa Industries Pte Ltd (“the company”) by the Bank of America National Trust & Savings Association (“the Bank”) under deeds of debenture where the company had charged in favour of the Bank by way of fixed charge “all the freehold and leasehold property of the company both present and future and the fixed plant and machinery (including trade fixtures) from time to time thereon” and by way of floating charge “the undertaking and all other property and assets of the company both present and future”. After the company fell into financial difficulties, the defendant, exercising the powers contained in the deeds of debenture, took possession of the factory and all the property and assets of the company. The defendant eventually sold the whole of the property and assets of the company as a going concern to WR Grace & Co.

The plaintiff argued that it was the owner of various machinery and equipment including spare parts (collectively “the equipment”) which the company had not yet paid in full as the equipment were sold subject to a retention of title clause. The plaintiff claimed that it was therefore entitled to be paid out of the proceeds of sale the balance of the purchase price of the equipment.

In response, the defendant contended that the plaintiff had, for two reasons, lost its title to the equipment prior to the defendant's possession and disposal of the equipment. First, the defendant argued that the equipment had become part of the land to which they were permanently affixed. As such, the equipment had ceased to be chattels and passed with the land to the Bank. Second and in the alternative, the equipment had ceased to be identifiable once they were assembled with other plant, machinery and equipment (not supplied by the plaintiff) to form an integrated cocoa processing plant.

Held, dismissing the claim:

(1) The equipment had not lost their identity. Although the equipment were installed and incorporated such that they now form a part of the entire cocoa processing plant, the equipment remained unaltered in substance and were clearly identifiable: at [6] and [7].

(2) The question whether the equipment had become fixtures and therefore part of the land depended on the company's intention at the time they were installed. If it was intended that the equipment should form a permanent part of the factory then in law they became fixtures upon annexation thereof to the factory and such intention is to be gathered mainly from: (a) the degree of annexation; and (b) the object or purpose of annexation: at [10].

(3) The equipment were firmly affixed directly or indirectly to the land or the building because they would not be able to operate as part of the integrated manufacturing process had it not been so. It was clear that the object or purpose of the annexation was for the better enjoyment of the factory. The machinery and equipment served the factory's purpose of having a modern and advanced factory for the manufacturing of cocoa butter and cocoa powder. The value of the company's leasehold interests in the land was enhanced as a result. In law they had become fixtures and formed part of the land to which they were affixed: at [11], [13] and [16].

(4) The equipment became part of the land once the factory became operational and production began in October 1982. The plaintiff had since lost its title to the equipment and what it had lost could not be revived by the defendant's subsequent treatment of the equipment as chattels separate from the land: at [18].

Aluminium Industries Vaassen BV v Romalpa Aluminium Ltd [1976] 1 WLR 676 (refd)

Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25 (refd)

Clough Mill Ltd v Martin [1985] 1 WLR 111; [1984] 3 All ER 982 (refd)

Hendy Lennox (Industrial Engines) Ltd v Grahame Puttick Ltd [1984] 1 WLR 485 (refd)

Hobson v Gorringe [1897] 1 Ch 182 (refd)

Holland v Hodgson (1871-72) LR 7 CP 328 (refd)

Reynolds v Ashby & Son [1904] AC 466 (refd)

Walmsley v Milne (1859) 7 CB (NS) 115; 29 LJ (CP) 97; 141 ER 759 (refd)

M Karthigesu (Cooma, Lau & Loh & M Karthigesu) for the plaintiff

Goh Heng Leong (Allen & Gledhill) for the defendant.

L P Thean J

1 The plaintiffs are a Swiss engineering company which manufacture machinery and equipment and provide services for erection and installation of machinery and equipment for the manufacture of cocoa and chocolate. The defendants are the receivers and managers of Allied Cocoa Industries Pte Ltd (“the company”) appointed on 27 February 1984 by the Bank of America National Trust & Savings Association (“the Bank”) under the deeds of debenture dated 9 April 1980 and 2 September 1981. The company was incorporated in Singapore and was engaged in the business of making cocoa butter and cocoa powder. It erected a factory at 342 Jalan Boon Lay, Singapore, which is on a piece of land marked as Government Survey Lot 1644 of Mukim VI, Peng Kang. The land was leased from Jurong Town Corporation for a term of 30 years commencing from 1 January 1980.

2 On 9 April 1980, the company executed a deed of debenture in favour of the Bank, whereby the company, among other things, charged by way of fixed charge “all the freehold and leasehold property of the company both present and future and the fixed plant and machinery (including trade fixtures) from time to time thereon” and by way of floating charge “the undertaking and all other property and assets of the company both present and future” to secure the payment of all moneys and liabilities agreed to be paid under the deed of debenture. About one and a half years later, on 2 September 1981, a further deed of debenture was executed in favour of the Bank whereby the company charged, among other things:

(a) by way of fixed charge “all the freehold and leasehold property of the company wheresoever situate and the fixed plant and machinery thereon”;

(b) by way of fixed charge “all future freehold and leasehold property of the company and fixed plant and machinery from time to time thereon”; and

(c) by way of floating charge “all other the undertaking and assets of the company whatsoever and wheresoever both present and future”.

3 Since the beginning of 1981 the company had...