698 THE ADVOCATE
VOL. 78 PART 5 SEPTEMBER 2020
a bigger fixture (although it has been suggested that the word “fixture”
should not be applied to buildings2) and hence the rule for fixtures in scenario
(a) applies to buildings.
In scenario (b), where the parties have agreed that the tenant will remain
the owner of the chattel even after it is attached to the building, the law in
England is that the agreement is to be disregarded: a fixture is part of the
building and hence belongs by operation of law to the landlord; no agreement
between the parties can alter that rule.3 The English cases have been
cited in Canada.4
In Zellstoff Celgar Limited v. British Columbia,5 the issue involved distinguishing
a fixture from a chattel in the context of B.C.’s Property Transfer Tax Act
(“PTTA”).6 The PTTA imposes a tax on the fair market value of any land
when a transfer of that land is registered in the Land Title Office (“LTO”).
Zellstoff Celgar Limited (“Zellstoff”) purchased all of the assets associated
with a pulp mill. The total purchase price was $252 million. The assets
included 11 parcels of land, buildings, vehicles, machinery and equipment.
Zellstoff attributed $14,889,600 of the purchase price to the land and paid
property transfer tax of $286,298 based on this value. In their asset purchase
agreement, Zellstoff and the vendor characterized “all of the machinery,
plant, equipment” and other items as “personal property”.
The province reassessed Zellstoff on the basis that the machinery and
other items were fixtures and hence part of the land, so that tax was payable
on the entire purchase price.
After setting out the basic principles of fixtures, Fisher J. (as she then
21 These principles presume that an item affixed to the land in any
manner is a fixture unless the degree and purpose of its annexation objectively
demonstrate otherwise. The subjective intention of the party affixing
the items, or of the parties to the transaction, are not determinative.
In Melluish (Inspector of Taxes) v BMI (No. 3) Ltd., 1996 AC 454, the House
of Lords held as follows (at 473):
... the intention of the parties as to the ownership of the chattel
fixed to the land is only material so far as such intention can be
presumed from the degree and object of the annexation. The
terms expressly or implicitly agreed between the fixer of the
chattel and the owner of the land cannot affect the determination
of the question whether, in law, the chattel has become a fixture
and therefore in law belongs to the owner of the soil.
22 While parties may by contract assign rights to chattels or fixtures,
such rights are contractual only and do not affect the legal question of
whether a chattel, once affixed, becomes a fixture and as such a part of