Medical Equipment Not Considered a Fixture in Leased Premises

The court decided that medical equipment installed in leased premises does not become a fixture if it can be removed without causing substantial damage to the premises. The ruling was based on the evidence presented regarding the ease of removal and the lack of permanent attachment to the premises.

Supreme Court New South Wales

Medium Neutral Citation: In the matter of [COMPANY] (administrator appointed) [2013] NSWSC 37 Hearing dates: 24 and 25 January 2013 Decision date: 04 February 2013 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: The First Defendant to deliver up the Property to the [NAME]. Catchwords: REAL PROPERTY - fixtures to land - intention of parties - whether tend to improvement of the premises REAL PROPERTY - fixtures to land - degree of annexation - whether medical equipment is a fixture REAL PROPERTY - fixtures to land - removal - whether removal would cause substantial damage to premises - whether removal would destroy or damage the equipment - whether equipment is a tenant's fixture. Legislation Cited: - Corporations Act 2001 (Cth) ss 447D, 440B - Personal Property Securities Act 2009 (Cth) Cases Cited: - Anthony v Commonwealth (1973) 47 ALJR 83 - Attorney-General v [COMPANY] (No 2) (1957) 97 CLR 146 - [NAME] (1938) 38 SR (NSW) 700 - Commissioner of Stamps (WA) v L Whiteman Ltd [1940] HCA 30; (1940) 64 CLR 407 - Craven v Geal [1932] VLR 172 - [COMPANY] v Commissioner of Taxation (1997) 73 FCR 136 Leigh v Taylor [1902] AC 157 - Loiero (aka Lero) v Adel Sportswear Pty Ltd [2010] NSWSC 1133; (2010) 15 BPR 29,689 - Macrocom Pty Ltd v City West Centre Pty Ltd [2001] NSWSC 374; (2001) 10 BPR 18,631 - [COMPANY] v Commissioner of Taxation [1999] FCA 1712 - National Australia Bank Ltd v Blacker [2000] FCA 1458; (2000) 104 FCR 288 - [COMPANY] v Commissioner of State Revenue [2001] WASCA 112; (2001) 24 WAR 70 - NH Dunn Pty Ltd v LM Ericsson Pty Ltd (1979) 2 BPR 9241 Reid v Smith (1906) 3 CLR 656 [COMPANY] (in liq) (1982) 6 ACLR 312 Texts Cited: - [NAME], Land Law, 6th Edition, 2010 Category: Principal judgment Parties: [NAME] in his capacity as administrator of [COMPANY] (Administrator Appointed) (First Plaintiff) [COMPANY] (Administrator Appointed) ([NAME]) [COMPANY] (First Defendant) [COMPANY] ([NAME] Defendant) [COMPANY] (Third Defendant) Representation: Counsel: [redacted] [NAME] (First Defendant) Submitting appearance ([NAME] Defendant) Submitting appearance (Third Defendant) Solicitors: [redacted] Morgan Lewis (First Defendant) [NAME] ([NAME] Defendant) [NAME] (Third Defendant) File Number(s): 12/356210

Judgment 1By Amended Originating Process filed on 24 January 2013, the [NAME] ("Administrator") in his capacity as administrator of [COMPANY] (administrator appointed) ("[NAME]") and [NAME] seek declarations as to the title to certain property ("Property") situated in premises at Hurstville in which the [NAME] have interests. The [NAME] also seek directions under s 447D of the Corporations Act 2001 (Cth) that the Administrator is justified in proceeding on the basis that, in effect, [NAME] has title to the Property which forms part of its assets and consequential orders. The [NAME] are [COMPANY] ("[NAME]"), which took an active role in the proceedings, and [COMPANY] and [COMPANY] which filed submitting appearances in the proceedings. 2By way of background, [NAME] developed and owns a substantial medical centre situated at Hurstville, known as the Medica Centre. The Medica Centre is a private medical facility containing a surgical hospital, radiology and nuclear imaging service, cancer treatment centre, pathology laboratory and other facilities ("Premises"). The Premises are subject to a first ranking mortgage to the [NAME] Defendant, [COMPANY] and a [NAME] ranking mortgage to the Third Defendant, [COMPANY] over lots in the relevant strata plan. [NAME] occupies parts of Level B2 and Level 6 of the Premises although no written lease agreement was or is in place between [NAME] and [NAME]. 3On 27 April 2009, [NAME] contracted to purchase two Clinac iX linear accelerators and associated equipment ("Equipment") from [COMPANY] ("[NAME]") for a total of $8,985,545 (excluding GST). Linear accelerators are used for treatment of cancer patients by delivering high-energy radiation to the precise region of a patient's tumour. The Equipment was delivered and installed on Level B2 of the Premises between late September 2010 and December 2010. [NAME] holds a Purchase Money Security Interest in the Equipment, which is registered in the Personal Property Security Register established under the Personal Property Securities Act 2009 (Cth). Reports as to affairs provided by [NAME]'s directors to the Administrator acknowledge that [NAME] currently owes [NAME] in excess of $9.8 million in respect of the Equipment. After the Administrator's appointment, claims have been made by [NAME] and [NAME] that the Equipment is a fixture in the Premises, so that title in it has passed to [NAME] and is subject to the mortgages over the Premises. 4During the course of the hearing before me, the scope of the property in dispute between the parties was narrowed and the Court made orders, that were not opposed by [NAME], in respect of certain elements of that property. The substantive issue which remains to be determined is whether the Equipment has become a fixture in the Premises so that the lessor, [NAME], and secured lenders to [NAME] now have an interest in the Equipment. An ancillary question arises, because of the manner in which [NAME] has put its case and [NAME] has put its defence, as to what constitutes the Equipment. The evidence 5The [NAME] rely on the evidence of [NAME]. [NAME] has been a Site Solutions Manager for [NAME] since June 2008, and his responsibilities include organising and overseeing installation, acceptance testing and commissioning, and decommissioning and removal of linear accelerators supplied by [NAME]. He has relevant tertiary qualifications and has arranged the installation of approximately 61 new linear accelerators and the removal and de-installation of some 30 linear accelerators. [NAME] has also recently been responsible, on [NAME]'s behalf, for decommissioning and relocating two linear accelerators for a large public hospital to a newly built building and is also commissioned to undertake a similar task for another public hospital in January and May 2013. [NAME] also managed the delivery and installation of the Equipment in the Premises. [NAME] is plainly knowledgeable and experienced in the field of installation and removal of linear accelerators and gave evidence in a direct and convincing manner. 6Each linear accelerator is installed on a steel base frame that is used to anchor its components. [NAME]' evidence is that the steel base frame is not part of, and is separate to, the linear accelerator ([NAME] 16.12.2012 [18]). The steel base frame was installed several weeks prior to the installation of the linear accelerator in accordance with the usual installation practice. It is common ground that each base frame is situated in a recessed pit in the concrete slab floor of level B2 of the Premises, and is cemented or grouted into that floor flush with the floor ([NAME] 16.11.2012 [10]-[12], [NAME] pp 79-83). [NAME]' evidence is that that grouting is not structural in character and it and the base frame could be removed if [NAME] wished to do so. [NAME]' evidence is also that the steel base frame is the only piece of the equipment supplied and installed by [NAME] that was affixed to the floor of the Premises; each linear accelerator attaches to that steel base frame with six removable steel bolts ([NAME] 16.12.2012 [14]); and the purpose of bolting the linear accelerator to the base frame is to prevent its movement when in operation so it provides precise movements to ensure that an "isocentre" (or central point) of less than 0.5mm is maintained during treatment. 7Mr [NAME] also gave detailed evidence as to the process that would be adopted to decommission and relocate the equipment, which would be transported on travel frames with air or mechanical skates in the same manner as it was installed. The linear accelerators would be separated for transport into a drive stand; linac gantry; counterweight; and electronics rack ([NAME] 16.12.2012 [9]). [NAME]' evidence is that no modification to the Premises was required when the Equipment was delivered and installed, and that steel base frames are ordinarily, and would also in this case, be left in place when a linear accelerator is removed. [NAME]' evidence is also that the door heights and widths as built in the Premises are sufficient for removal of the Equipment; no vibration would be expected to occur during the decommissioning and removal, so other facilities in the Premises could continue to operate; and that the linear accelerators could be removed to a new site to be reinstalled and commissioned, or alternatively placed in storage, following removal. 8Mr [NAME] also prepared a videorecording, which was led in evidence, identifying and explaining the operation of the linear accelerators and their component parts and explaining how they would disassembled and removed. His evidence is that it would take two days to prepare the premises for removal of both linear accelerators and 1-1½ days to remove both linear accelerators from the premises; the cost of removal would be approximately $60,000; and that the removal process using air skates and disassembling the relevant components would not cause damage to the flooring, the finishes or the Premises generally ([NAME] 20.12.2012). [NAME] also gives evidence that linear accelerators are most commonly relocated in Australia as a result of the owner moving premises, whereas, outside Australia and particularly in the United States, linear accelerators are commonly relocated as a result of their sale to other persons or entities. 9Cortez relies on the affidavit of [NAME] dated 7 December 2012. [NAME] is a project manager employed by a third party which was retained by [NAME] to act as project manager for the construction of the Premises. [NAME] has experience as an architectural draftsman and project manager for construction, but there is no suggestion that he has any particular expertise in the installation, still less the removal or relocation, of linear accelerators. [NAME] was primarily responsible for project management of the construction of the Premises at the time the basement levels were handed over by the relevant contractor to [NAME] and witnessed the steps involved in the installation of the linear accelerators or was involved in organising those steps. [NAME] has also prepared a report which details the steps taken to install the linear accelerators and the way in which they are fixed or connected to the Premises. [NAME]'s evidence is that the base frames were delivered and installed first, followed by other items. [NAME] does not give evidence as to the process which would be adopted to remove the linear accelerators and, importantly, does not take issue with [NAME]' evidence as to that matter. [NAME]'s evidence indicates, and I accept, that [NAME] as owner of the Premises had designed them to allow the ready installation of linear accelerators in their basement. The proper characterisation of the Equipment 10An initial issue arises as to the proper characterisation of the Equipment. A schedule to the Amended Summons lists the items that the [NAME] seek to establish have not become fixtures and does not include the base frames to which the linear accelerators are bolted or a turntable that rests upon each base frame. [NAME] contends that the base frame is part of the linear accelerators and that whether the linear accelerators are fixtures must be determined by reference to the Equipment as a whole, including the base frames. [NAME]'s report appears implicitly to assume that the base frame constitutes part of the linear accelerator. In my view, [NAME] is not qualified to express an opinion as to that matter and his report contains no reasoning to support that assumption, which is not probative of the fact. I prefer [NAME]' evidence that the linear accelerators and the base frames are distinct, and I refer to several matters that support that conclusion below. 11Cortez accepts that [NAME] distinguishes in his evidence between the steel base frames on the one hand and the linear accelerators on the other, but contends that distinction is artificial because the function of the base frame is not merely to anchor the machinery but also to "provide a turntable on and centre directly under the isocentre". I accept that, as [NAME] points out and consistent with [NAME]' evidence, a combination of the linear accelerator, base frame and treatment couch enables the linear accelerator to maintain a precise location for the "isocentre" which is necessary to the effective operation of the linear accelerator. However, I do not consider that the distinction drawn by [NAME] is artificial, where the evidence is that the base frame was separately installed several weeks before the linear accelerator in accordance with the usual installation practice; [NAME], linear accelerators are regularly dismantled or moved from place to place, in circumstances that the base frame is left in the previous premises; and, third, the linear accelerators, once removed, can be installed on separate base frames (which are standardised for [NAME] equipment) in a new location and other linear accelerators can be installed on the base frames remaining in the Premises. In my view, the steel base frames are in fact distinct items in substance, being steel frames on which complex medical equipment rest, rather than part of that complex medical equipment. 12Cortez also contends that the distinction in [NAME]' evidence between the base frame and the linear accelerator is contrary to authority that it is necessary to determine whether a machine as a whole is a fixture: Craven v Geal [1932] VLR 172 at 176-177; National Australia Bank Ltd v Blacker [2000] FCA 1458; (2000) 104 FCR 288 at [24]; Loiero (aka Lero) v Adel Sportswear Pty Ltd [2010] NSWSC 1133 at [12]; (2010) 15 BPR 29,689. I do not accept that submission. That principle seems to me to be applicable to the approach to be adopted to items that are in fact part of a single machine, rather than requiring the Court to treat an item that is in fact not part of a machine as part of that machine, merely because that separate item is attached to the machine. Before that principle could apply in this case, it seems to me that it would first be necessary to find that the base frames were part of the linear accelerators in fact, and I consider that the evidence to which I have referred above establishes the contrary. 13Moreover, as [NAME] observes in Land Law, 6th ed, 2010 [3 11], the principle that a machine should be treated as a composite whole is also qualified where a part of the machine has a separate and independent viability; see also Macrocom Pty Ltd v City West Centre Pty Ltd [2001] NSWSC 374; (2001) 10 BPR 18,631. Even if, contrary to my view, the base frame and the linear accelerator should be treated as a single item rather than two separate items, they plainly have separate and independent viability because a new linear accelerator may be installed on the existing base frame if it is left in the premises, and the linear accelerator, once removed, can be installed on a new base frame in other premises. Indeed, as [NAME]' evidence makes clear, this would be the ordinary approach adopted in the removal and relocation of linear accelerators. 14Cortez also contends that the base frames should be treated as part of the linear accelerators because they were part of the purchase orders by which the linear accelerators was bought by [NAME]. I do not accept that submission, and note that a range of other ancillary items, including free-standing computers and other ancillary equipment, were also part of that purchase order. It does not follow that either they, or the base frames, were part of the linear accelerators because they were purchased at the same time as them or promoted their more effective operation. 15I therefore find that the base frame is not part of the linear accelerators, although it is plainly used in conjunction with them and promotes their effective operation. For completeness, I note that [NAME] also submitted that a turntable (which is placed on the base frame, at ground level, and to which a treatment couch is then attached) was part of the base frame. However, on the basis of [NAME]' evidence, it is properly characterised as a separate item that sits upon the base frame. Whether the linear accelerators are fixtures 16I now turn to whether the linear accelerators, as distinct from the base frames, are fixtures. There was little dispute before me as to the legal principles to be applied, with both parties accepting that the primary issue was the application of those principles to the relevant facts. 17Whether chattels have become affixed to land, so that they are to be regarded as fixtures and as part of the land, is to be determined by reference to the objective intention of the chattels' owner, with relevant factors including the degree of affixation of the chattel to the land and the object or purpose for which it was affixed. In Land Law, 6th ed, 2010 [15 248], [NAME] summarises the relevant principles as follows: "... in determining whether an item that was once a chattel has become a fixture, the guiding principle is the intention with which the item was brought onto the land, and pointers to that intention are the degree and purpose of the annexation. ... an intention to permanently improve the realty is easier to discern when an absolute owner brings the item onto the land than when a tenant does so, for a tenant is unlikely to intend to make a present of the item to the landlord." 18In Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 at 712, [NAME] observed that: "A fixture is a thing once a chattel which has become in law land through having been fixed to the land. The question whether a chattel has become a fixture depends upon whether it has been fixed to the land, and if so for what purpose. If a chattel is actually fixed to the 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 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." 19There is some utility to referring to several of the decided cases addressing similar issues, although each case will depend on its own facts. In Commissioner of Stamps (WA) v L Whiteman Ltd [1940] HCA 30; (1940) 64 CLR 407, machinery attached to a concrete base was held to be a fixture where it had been installed to promote the use of the land to make clay bricks and the shedding in which it was housed would have to be demolished in order to remove it. That result is consistent with the owner of the machinery having affixed it to the land to better use that land. On the other hand, in Attorney-General v [COMPANY] (No 2) (1957) 97 CLR 146, the High Court held that substantial printing presses were not fixtures although they were affixed to concrete foundations by bolts to steady them while in use and could only be removed by dismantling them at a substantial cost. [ADDRESS] emphasised (at 157) that the purpose of affixing the presses was to hold them steady while in operation. In Anthony v Commonwealth (1973) 47 ALJR 83, the Court held that several steel poles and associated telephone line had not become fixtures, although those poles had been concreted into holes dug in the ground, where their removal would not be a major task or adversely affect the land. In NH Dunn Pty Ltd v LM Ericsson Pty Ltd (1979) 2 BPR 9241, the Court of Appeal held that a PABX system, which had been installed in premises occupied by a company under a long term lease, was not a fixture although it was attached to the structure of the premises at floor and wall level and cabling had been laid in a channel in the floor. [ADDRESS] of Appeal noted that the relevant affixation was for the purpose of steadying the equipment while in use and that the equipment could be removed without substantial damage to the building and any such damage could be repaired without substantial expense. [COMPANY] v [COMPANY] above, [NAME] held that a satellite aerial erected on the roof of a building was a fixture rather than a chattel (although he also indicated that he would have held that it was a tenant's fixture), given the weight of the item, the fact that additional steel support to the roof was necessary prior to its installation and the way in which it was connected to the building. 20In [COMPANY] v Commissioner of Taxation (1997) 73 FCR 136 at 148, [NAME] summarised the relevant principles as follows: "There is little room for dispute as to the principles to be applied in determining whether a particular item is or is not a fixture. The generally accepted view is that the question will depend upon the degree of annexation and the object or purpose of that annexation: Commissioner of Stamps (Western Australia) v L Whiteman Ltd (1940) 64 CLR 407 at 411. The two matters are not exclusive of each other. The degree of annexation tells as to the object or purpose of the annexation. When the cases speak of object or purpose, they are not concerned with subjective purpose of some person, although intention will not be irrelevant: [NAME] v Commissioner of State Taxation (WA) (1991) 91 ATC 4841 at 4846; N H Dunn Pty Ltd v L M Ericsson Pty Ltd (1979) (2) BPR 9241 at 9244-9245. The prima facie view, as expressed in cases such as Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR(NSW) 700, is that an object merely standing by its own weight on the land will not ordinarily be a fixture. On the other hand, if fixed to any extent prima facie it will be. But that is but a prima facie view as Mahoney JA pointed out in [NAME] v [NAME] (supra) at 9246. ... When the cases refer to the degree and object of annexation to the land, what is meant is that the fixing of the item to the land, whether by bolts, concrete bases or whatever, is such that removal would be difficult as, for example, where the items could be ruined if sought to be removed: [NAME] (supra) at 411. That case is important in that it drew as a relevant distinction the question whether the affixation was for the better enjoyment of the land, in contrast to the case where the affixation was for the enjoyment of the item itself. That distinction is one later taken up by Mahoney JA in [NAME] v [NAME] (supra), but subject to the qualification that much may turn upon the actual nature of the asset." 21In [COMPANY] v Commissioner of Taxation [1999] FCA 1712 at [165], Emmett J identified considerations which were relevant to the assessment whether a chattel had become a fixture including whether removal would destroy the chattel; whether the cost of removal would exceed the value of the chattel; whether removal of the chattel would occasion significant damage to the property; whether the attachment was for the better enjoyment of the chattel or for the better enjoyment of the property; the nature and contemplated use of the property; the period of time for which the property was to be in position and the function to be served by the annexation of the property. His Honour also noted (at [170]) the relevance of the intention of the person who affixed the equipment to the land and the degree of annexation, which in turn is indicative of the objective intention of that person. The relevant authorities were also reviewed by Conti J in [COMPANY] v [NAME] above. 22The authorities were also recently helpfully summarised by Ball J in Loiero (aka Lero) v [COMPANY] above at [11], where his Honour noted that: "The question whether an item is a chattel or a fixture depends on whether it was placed on the land with the intention that it become part of the land or whether it was placed on the land with the intention that it remain separate from it: Reid v Smith (1906) 3 CLR 656. Generally, the intention of the person who placed the item on the land is to be determined objectively: May v Ceedive Pty Ltd [2006] NSWCA 369 at [65] per Santow JA (with whom Mason P and Beazley JA agreed), although, in some cases, courts have been prepared to look at the subjective intention of the person who placed the item on the land: for discussion, see National Australia Bank v Blacker [2000] FCA 1458; 104 FCR 288 at [12] per Conti J. Of particular significance in determining the party's intention is whether the item has been affixed to the land and, if so, the degree of annexation: Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 at 712-3 per Jordan CJ. Indeed, it is often said that if an item is affixed to the land then there is a presumption that it is a fixture (the strength of the presumption depending on the degree of annexation) and if it is not affixed then there is a presumption that it is not a fixture: [NAME] (1938) 38 SR (NSW) 700 at 712. However, the fact that the item is affixed to land is not determinative. An item may be a fixture where it simply rests on land by virtue of its own weight. A house resting on wooden piles is an obvious example: Reid v Smith (1906) 3 CLR 656, although even then there may be cases where a demountable house is not regarded as a fixture: Jiwira v PIBA [2000] NSWSC 1094. Conversely, an item that is fixed to land may not be a fixture. A typical case is where machinery is attached to land for the more effective use of the machinery rather than with the intention of improving the land: Reid v Smith (1906) 3 CLR 656 at 680-1 per O'Connor J; cf Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 at 712 per Jordan CJ." 23I now turn to the application of these principles in these circumstances. The [NAME] contend that the Equipment would not tend to improvement of the Premises. On the other hand, [NAME] contends that the overall architectural design of level B2 of the Premises was directed to the installation of the Equipment and, specifically, that the Equipment is located and affixed in treatment rooms that were prepared for the performance of radiological medical procedures, for the better use of the Premises. [NAME] also points out that steel plating was used in the relevant area to protect against the escape of radiation and that heavy duty conduits and other equipment was installed to facilitate the operation of the equipment. [NAME] draws attention to analogies such as, for example, where a milk processing plant was annexed to the land for the better enjoyment and use of the land as a diary processing plant ([COMPANY] v Commissioner of State Revenue [2001] WASCA 112; (2001) 24 WAR 70) or machinery in a factory plant was annexed for the better use and enjoyment of the land as a furniture factory ([COMPANY] (in liq) (1982) 6 ACLR 312). 24I accept that the Premises were developed with a view to housing various medical facilities for the treatment of cancer and the treatment rooms were designed in a manner that is well suited for the conduct of radiological medical procedures. However, the design of that area facilitated the use of radiation equipment generally and could be used for equipment other than linear accelerators. On removal of the Equipment and termination of [NAME]'s occupation of the Premises, it would be open to [NAME] to lease the premises to another entity that used linear accelerators or other radiological equipment or any other form of radiological medical equipment, for example, a CT scanner of the kind contained in an adjoining treatment room, or indeed for other purposes. Moreover, it does not seem to me to follow from the design of the Premises or the treatment rooms that [NAME], as a tenant of the Premises, would have objectively intended that Equipment installed in Premises that had been designed to be suitable for its installation would become the lessor's property. As the [NAME] point out, the position is analogous to that of the owner of a shopping centre which may design its facilities so that it is suitable for the installation of, for example, equipment regularly used in supermarkets or other stores likely to be found in shopping centres, without tenants of that shopping centre objectively intending that that equipment should become the owner's property. 25Cortez also contends that the installation of the Equipment in the Premises promotes their function as an integrated medical centre; and, conversely, in the absence of the Equipment, the Premises would have a diminished range of medical services to offer to the community. While that is plainly correct, the interests of [NAME] as the owner of the Premises are to be distinguished from the interests of [NAME] as the owner of the Equipment, and the proposition that the lessor's interests (or indeed the community's interests in the use of a particular facility) would be diminished by the removal of Equipment provides little support for a proposition that [NAME] would have objectively intended to transfer ownership of the Equipment to [NAME]. The position again seems to me to be analogous to the situation where a tenant may install chattels in, for example, a shop in a shopping centre, which no doubt promotes the use of the shopping centre generally, but provides little support for an inference that the objective intention of the tenant was that the equipment should become part of the land or the lessor's property. [NAME]'s submission also tends to prove too much, since much of the equipment installed by many of the tenants in an integrated medical centre will promote its function as such, but those tenants are unlikely to have objectively intended that the equipment installed in their tenancies would become the lessor's property. 26In my view, [NAME]' evidence that he has installed some 61 new linear accelerators and arranged the removal or de-installation of 30 linear accelerators, and has also been engaged for two further relocations with two more planned in the near future ([NAME] 16.11.12 at [3]) is also relevant both to the determination of the objective intention of [NAME] when the equipment was installed in the Premises and to assessing the feasibility of the removal of the equipment and the likelihood that damage would result. [NAME], as a purchaser of very expensive medical equipment, is likely to have known that it was capable of being moved from place to place or removed and that is a factor that tends strongly against an objective intention that that the Equipment should become the property of [NAME] as lessor of the premises. [NAME], the fact that linear accelerators are regularly removed and de-installed is a factor that indicates that the removal of the Equipment is not likely to cause substantial damage to the Premises. That indication is confirmed by [NAME]' detailed evidence, to which I have referred above, of the steps that would in fact be taken to remove and relocate the Equipment, which was not controverted by [NAME]. 27Cortez contends that the Premises would be damaged by the removal of the steel base frames. However, as I have noted above, I do not consider that the base frames should be treated as part of the linear accelerators; it is not presently suggested that the base frames are to be removed; and in any event, the evidence is that any damage resulting from their removal could readily be repaired. [NAME] also contends that the use of skates for removal of the linear accelerators would damage the surfaces along the proposed route for removal, but I accept [NAME]' evidence that such damage should not result from the steps proposed to be taken to remove the Equipment. 28So far as Emmett J identified several other relevant factors in [NAME] above are concerned, it is also plain that removal would not destroy or damage the Equipment, given the evidence that linear accelerators are regularly removed and replaced. The Equipment has substantial value, which on any view would exceed [NAME]' evidence that the cost of its removal would be in the order of $60,000, and the fact that the cost of removal would not exceed its value is also evidenced by the extent to which other linear accelerators are removed and relocated. The time taken to remove the Equipment would be limited, being several days for its complete removal from the Premises. 29The [NAME] point to another factor that, in my view, strongly tends against a finding that the objective intention of [NAME] was that the Equipment should become a fixture in the Premises that are owned by [NAME]. [NAME] does not presently have a registered or written lease or agreement to lease the area of the Premises in which the Equipment is located, and the parties accepted that it occupied that area as a tenant at will, although [NAME] is presently unable to terminate that tenancy while [NAME] is in administration by reason of s 440B of the Corporations Act. [NAME] accepted that [NAME] was a tenant at will for an indefinite term, although it submitted that it foreseeably had tenure as secure as [NAME], by reason that [NAME] and [NAME] were owned by interests associated with their common directors, [NAME]. 30The evidence before me is ultimately not sufficient to establish the detail of any corporate relationship between [NAME] and [NAME]. Two entities associated with [NAME], [COMPANY] ("Polar") and [COMPANY] ("Iowa"), each hold 50% of the issued share capital in [NAME]. [NAME] relies on a draft business plan of a third entity, [COMPANY] ("[COMPANY]") prepared in 2010 to seek to establish the nature of the corporate relationship between [NAME] and [NAME]. That draft document appears to be less a traditional business plan than a document prepared to provide third parties with information about [COMPANY]'s then proposed business, and includes a disclaimer as to its content. The document notes that [NAME] then held a 50% interest in another entity, [COMPANY], that in turn held a 74% interest in [NAME] and indicates that [COMPANY] then intended to purchase the issued capital of [NAME] from Polar and Iowa. [NAME] also relies on a statement in that draft document that: "It is intended [COMPANY] will put in place formal rental agreements between the entity owning the strata units [in the Premises] and [[NAME]]..." I do not consider that I can place significant weight on that draft document as further illuminating the nature of any corporate relationship between [NAME] and [NAME], where it is a draft prepared over two years ago; it refers to structures and transactions that are proposed and may or may not later have been implemented and interests that may or may not later have changed; and where the evidence is that some of those proposed transactions, such as the proposed purchase of the shares in [NAME] by [COMPANY] from Polar and Iowa and the entry into a formal lease between [NAME], were not in fact implemented. 31There also seem to me to be several other difficulties with [NAME]'s reliance on the corporate relationship between [NAME] and [NAME] as a basis for a right of occupation of the Premises. First, by contrast with the position considered by Emmett J in [NAME] above, [NAME] was not [NAME]'s holding company and did not control it so it had no ability to secure its occupancy of the premises by exercising corporate control. [NAME], the common directors of [NAME] and [NAME] could not properly act to secure [NAME]'s occupancy of the premises, if it were in [NAME]'s interests to terminate the tenancy at will although they also could also not properly prefer [NAME]'s interests to those of [NAME] in that situation. In my view, the fact that the directors of [NAME] did not insist on a long term lease of the Premises before purchasing the Equipment and installing it in the Premises tends strongly against any objective intention of [NAME] that the Equipment become a fixture. Had that been [NAME]'s intention, its directors would have been bound to take steps to ensure that [NAME] had a secure right of occupancy of the Premises to mitigate the risk that its ownership and use of the Equipment that it had purchased at a substantial price and any income stream derived from it would be lost to [NAME]. 32The [NAME] contend, and I accept, that it is inherently unlikely that [NAME] would objectively intend that medical equipment that it had purchased at a cost of approximately $9 million would become the property of [NAME], where it had no security of tenure and that could have occurred at any time. The position, so far as [NAME] as a tenant at will is concerned, is closely analogous to that contemplated by Lord Halsbury LC in Leigh v Taylor [1902] AC 157 at 159, in asking the rhetorical question whether it was likely that a tenant from year to year would have put up expensive tapestries with a value of £7,000 and thereby made a present of their value to the lessor. There seems to be no less reason to answer that rhetorical question in the negative where dealings are between associated entities with common directors and a present by [NAME] to [NAME] of equipment purchased at a price of nearly $9 million would be prejudicial to the interests of [NAME] and of its creditors. 33The [NAME] also contend, and I also accept, that another factor tending against an objective intention that the Equipment would become part of the premises was that it was purchased on credit, and the terms and conditions of sale provided that the vendor, [NAME]: "... shall retain a purchase money security interest in all Products and the proceeds thereof until the Customer has made payment in full to [NAME] of all sums due, including late fees and collection costs." ([NAME] affidavit, Ex RD 1, Tab 9, Cl 3) The reference to a "purchase money security interest" is to an interest registered in the Personal Property Securities Register created under the Personal Properties Securities Act 2009 (Cth). The fact that [NAME] and [NAME] both proceeded on the basis that [NAME] was able to give an effective security interest over the Equipment is inconsistent with any objective intention of [NAME] that they would become part of the Premises and the property of [NAME]. 34For these reasons, I find that the Equipment has not become a fixture to the Premises. Whether the Equipment is a tenant's fixture 35The [NAME] alternatively contend that, if the Court were to hold that the Equipment had become a fixture, then it would properly be characterised as a tenant's fixture that may be removed by [NAME] within a reasonable time of termination of its right to occupy the Premises. I should briefly address this contention, although it is not necessary to do so in detail where I have not found that the Equipment has become a fixture. 36In Land Law, 6th ed, 2010 [15 248], [NAME] refers the approach adopted by the common law in permitting tenants to remove fixtures they had brought onto the land, provided that the fixtures were installed for trade, domestic or ornamental purposes, and also points to the qualification that a tenant cannot remove items that are so firmly fixed that removal would destroy their essential character or value or would substantially damage the reality. The authorities indicate that a right to remove fixtures can arise as between lessor and lessee by, inter alia, implication, and such a right may arise where a tenant has affixed chattels to land for the purpose of trade: [NAME] (1906) 3 CLR 656 per O'Connor J at 677-678. 37In [COMPANY] v Commissioner of Taxation above, [NAME] observed that: "Prima facie, once an item is a fixture it attaches to the land and becomes part of the realty. In other words, it becomes part of the property of the owner of the land. There is a question as to whether that is the case where the item in question is a "tenants' fixture":cf Re Sir Edward Hulse [1905] 1 Ch 406 at 411; Spyer v Phillipa [1931] 2 Ch 183; Registrar of [NAME] (1909) 9 CLR 641; and Commissioner of [NAME] (1967) 120 CLR 118. When it is said that an item is a "tenants' fixture", all that is meant is that the tenant has a right to remove the item at the expiration of the term of the lease or a reasonable time thereafter: cf [NAME] (1987) 8 NSWLR 317. If the item in question were not a fixture, a fortiori it would belong to the tenant and could be removed by the tenant at any time. Thus, the whole concept of tenants' fixtures assumes that the items in question have become fixtures but that the tenant has a right in equity in the land, co-extensive with the right of the tenant to come upon the land after the expiration of the lease and remove the fixture." 38In [COMPANY] v [COMPANY] above, [NAME] indicated (at [21]) that, although he had held a satellite dish to be a fixture as I noted above, he would have held, had the case been between landlord and tenant and the question to be determined during the term of the lease, that the tenant could remove that satellite dish where it was erected for the purposes of its trade. 39Had I held, contrary to the conclusion that I have reached above, that the Equipment had become a fixture, then I would have held that [NAME] was entitled to remove the Equipment as a tenant's fixture. To the extent that such a term was to be implied into the lease in fact, that implication could more readily be drawn given the informality of the relevant tenancy arrangement. The only submission put by [NAME] to the contrary was that the removal of the Equipment would cause substantial damage to the Premises. However, that submission depended, first, upon the proposition that the base frame was part of the Equipment, which I have not accepted. I also accept [NAME]' evidence that is a relatively straightforward task to remove the base frame, whether to install the base frame for a linear accelerator manufactured other than by [NAME] or so that no base frame remains in the Premises, if [NAME] ultimately wishes to do so. Orders 40Accordingly, I propose to make the following orders in the form sought by the [NAME]:

1. A declaration that: (a) The property described in Schedule A ("Property") is not a fixture of the land located at [ADDRESS] ("Premises") in which the [NAME] have an interest; (b) the [NAME] have no title, interest or rights in respect of the Property; and (c) the [NAME] has title in the Property.

2. Order that the First Defendant immediately deliver up the Property to the [NAME] or, in the alternative, permit the [NAME] to remove the Property from the Premises without impediment. It will be necessary for the parties to prepare an Amended Schedule A, deleting those items that were previously the subject of orders made by the Court in the course of the hearing. I will also hear the parties further as to any other modifications that may be required to the form of the proposed orders. 41I note that the [NAME] also sought a direction that the Administrator is justified in proceeding in the administration of [NAME] on the basis that, aside from any security interests in respect of [NAME] perfected under the Personal Property Securities Act 2009 (Cth), [NAME] has title to the Property and the Property forms part of its assets. I do not consider that it is necessary or appropriate to make such a direction. I do not consider that it is necessary to make that direction, because no claim to an interest in the Property other than that advanced by the [NAME] was addressed in the hearing before me, and that dispute will be resolved by the declaration and order that I will make. I do not consider it is appropriate to make that direction, where there is no evidence before me that would exclude the possibility of other interests in the Property, although no party in the proceedings before me claimed any such other interest. 42The First Defendant should pay the [NAME]' costs of the proceedings.

********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 February 2013