MacDonald Ltd v Radini NO and the Potchefstroom Dairies Co Ltd

• Jurisdiction: South Africa
• Judge: Innes CJ, Solomon JA, Juta JA, AFS Maasdorp Acting AJA and Wessels Acting AJA
• Judgment Date: 11 May 1915
• Hearing Date: 15 February 1915
• Court: Appellate Division

Innes, C.J.:

This appeal raises questions of considerable importance to dealers in machinery. The point at issue is whether certain refrigerating plant and appurtenances supplied by the plaintiff to a buyer under a suspensive contract and installed in a building purchased by, but not transferred to, the latter from the defendant, remains under all the circumstances of the transaction the property of the original vendor, or whether it devolves upon the defendant as owner of the buildings to which it has been attached. The relevant facts may be shortly stated. In January, 1912, the defendant company owned portion of an erf in Potchefstroom upon which there had been erected a dairy plant for pasteurising milk. The structure had apparently been built for the special purpose of accommodating the necessary machinery and affording the facilities required for carrying on the business. On January 25 the company sold the entire property with all the contents of the building to a syndicate, of which one Jacobson was a member, and the contractual rights of which he subsequently acquired. The purchase price was payable in instalments extending over four years; possession was to be given forthwith, but transfer only after satisfaction of a certain portion of the total liability. And it was specially provided that in the event of any default, the sellers should be entitled to cancel the sale, resume possession, and if necessary eject the purchasers; and that all payments and improvements already made should in that case be forfeited to the sellers. In March, 1912, the purchasers took possession, and for some ten months thereafter the instalments were duly met. With a view to improving the plant, Jacobson entered into communication with the plaintiff, and on August 25 a contract was concluded, in terms of which the company undertook to supply and erect a 12½ ton refrigerating machine, with condenser, receiver, and other appurtenances, to be paid for in periodic instalments, the last of which was to fall due in June, 1914. It was specially stipulated that the plant should remain the property of the seller until all the payments had been made; and that, in case of default, the seller should have the right "to enter, with force, if necessary, and without liability for trespass or otherwise, the premises where the plant may or ought to be, and take possession of or remove the plant," any past payments to be retained in reimbursement of the expense of delivery, installation and removal. The refrigerating machinery thus obtained was installed in December, 1912. Jacobson

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had previously pulled down three cold storage rooms and substituted larger ones. The new plant was actually placed in situ by the plaintiff in terms of the contract, but the concrete foundation on which portion of it rested, bolts inserted therein, and certain insulation work were made, supplied and performed respectively by Jacobson. As to the effect of this installation upon the old plant, the evidence is not as clear as it might be; but it would seem that a considerable portion was connected with the new machinery and utilised, part was superseded and left in its place, while one brine tank at least was taken out and scrapped; though whether it was removed from the premises is not apparent. An accurate description of the new machinery, and of the extent of its attachment to the building is given by the learned JUDGE-PRESIDENT. Part of it is held in position by long bolts and nuts, the former embedded in a solid concrete foundation; another part is attached to the wall also by bolts and nuts; pipes connecting the various portions pass through holes in the walls, and certain tanks and coiled piping are supported and fixed in manner described. The conclusion at which the trial Court arrived was that though thus attached to the building, the new plant could be taken to pieces and removed without injury to the premises. In regard the re-instatement of the old plant no opinion was expressed; but the evidence of the engineers is to the effect that it could be replaced, connected up, and made ready for use at a cost variously estimated at from £25 to £75. With plant thus enlarged and improved Jacobson continued his dairying operations, but with no measure of success. Early in 1913 he made default in respect of machinery payments, and in April plaintiff terminated the contract and reclaimed the plant. The instalments for the property were also in arrear, and the defendant company thereupon cancelled the sale, asserted its rights, and took possession of the buildings and all improvements. In July, 1913, Jacobson's estate was sequestrated; his trustee has been joined as defendant, but makes no claim to the refrigerating machinery, the title to which is disputed between the two main parties to the action. It is claimed by the plaintiff company as being movable property, with the dominium in which it has never parted and which in law forms no portion of the building containing it. There is an alternative claim for compensation in respect of the increase in value of the

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landed property, in the event of an adverse finding on the first contention. The defendant maintains that the machinery became on erection a fixture, that the title pawed to the owner of the land, and that it constitutes, therefore, an improvement for which no compensation is claimable. There is a further plea to the effect that, as against the defendant company, the plaintiff cannot claim that the new plant is in a different position from the old in respect of ownership or liability to removal. The Transvaal Provincial Division, though it found that the machinery in dispute could be removed without injury to the premises, held that it must be considered to be immovable property, because it had been installed by Jacobson with intent that it should permanently remain. That the owner of the land had in consequence become the owner of the plant and was entitled to retain it without compensation. Judgment was, therefore, entered for the Potchefstroom Dairies and it is against that order that the plaintiff appeals.

It is neither contended nor even suggested that dominium in the machinery was at any time vested in Jacobson. The case for the respondent is that though (on the authority of Quirk's Trustees v Liddel's Assignees, 3 J., p. 329, and other cases), the ownership remained in the plaintiff up to the time when the plant was attached to the building, yet it thereupon passed to the defendant by accession to the realty. And the result of the judgment is to establish the proposition that A may take the property of B, and give it to C, by annexing it to the building of the latter, even though the annexation be of such a character that it may be severed without injury either to the premises or to the thing attached.

The question whether an article, originally movable, has become immovable through annexation by human agency to realty is often one of some nicety. As was pointed out in Olivier v Haarhof (T.S., 1906, p. 497) each case must depend on its own facts; but the elements to be considered are the nature of the particular article, the degree and manner of its annexation, and the intention of the person annexing it. The thing must be in its nature capable of acceding to realty, there must be some effective attachment (whether by mere weight or by physical connection) and there must be an intention that it should remain permanently

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attached. The importance of the first two factors is self-evident from the very nature of the inquiry. But the importance of intention is for practical purposes greater still; for in many instances it is the determining element. Yet it is sometimes settled by the mere nature of the annexation. The article may be actually incorporated in the realty, or the attachment may be so secure that separation would involve Substantial injury either to the immovable or its accessory. In such the intention as to permanency would be beyond dispute. But controversy generally arises where the separate identity of the article annexed is preserved, and when detachment can be effected with more or less ease. Indeed, it may happen (as has happened here) that the annexation is in itself consistent with the article either being, or not being, a portion of the realty; and it thus becomes necessary to examine with the greatest care the intention with which it was annexed. The authorities emphasise the necessity for the presence of an intention that the attachment should be permanent. The well-known passage from Paul Voet (C. 4, par. 3) has been quoted by the learned JUDGE PRESIDENT, and I do not propose to repeat it. Others might be added. Burge, for example (vol. 2, p. 15), states that "movables affixed to land or buildings acquire the quality of immovables, by reason not alone of their being affixed, but of their being affixed with the intention of permanently remaining." But the intention required (in conjunction with annexation) to destroy the identity, to merge the title, or to transfer the dominium of movable property, must surely be the intention of the owner. It is difficult to see by what principle of our law the mental attitude of any third party could operate to effect so vital a change. Certainly, in Olivier v Haarhof, and, so far as I am aware, in all other South African cases, the intention which was looked to was the intention of the owner. And Johannes Voet (Ad. Pand., 1, 8, 14), in dealing with this matter, indicates the state of mind of the owner as the decisive factor. "But what are generally regarded as movables," he says, "may yet . . . by the intention and act of the owner, be regarded as movables, as far as concerns legal consequences . . . If what were formerly movables are joined to buildings not for temporary but for perpetual use, whether they are beams or columns or...