Battle over steel works fittings

Posted: 4th October 2013

Factory1In the context of a bitter landlord and tenant dispute in respect of a steel works which had been kept in mothballs for almost two years since its closure, the High Court has refused to grant an interim injunction restraining the tenant from removing its chattels and trade fixtures from the site.

The parties had engaged in more than one round of litigation since the plant, which opened in the early 1970s, closed down and the majority of its workforce was laid off. The dispute had focused on the issue of whether items of plant and equipment on the site should be viewed as chattels or fixtures.

The Court found that certain items were chattels that the tenant was entitled to remove. Other items were ruled to be fixtures but, in relation to the vast majority of these, the Court found that they were ‘trade fixtures’ which were owned outright by the tenant and which it was entitled to sever from the land.

In reliance on a covenant in the lease, which forbade certain alterations being made to the site, the landlord argued that the tenant was in any event not entitled, at least for the time being, to remove trade fixtures from the premises. The landlord had been granted permission to argue its case before the Court of Appeal on that issue and sought an interim injunction to maintain the status quo pending that hearing.

In rejecting the application, the Court found that any harm that the landlord might suffer if the injunction were refused could probably be adequately compensated by an award of nominal damages. The plant having been closed for almost two years, and most of its workforce having been made redundant, there was evidence that the prospect of the site re-opening as a steel works was ‘increasingly remote’.

Ruling that the grant of an injunction would carry with it a ‘real risk of injustice’ to the tenant, the Court noted that, if the tenant were prevented from selling trade fixtures on the site in order to discharge its rent and other outgoings, it might well face insolvency. In those circumstances an award of damages might well not be an adequate remedy if the injunction turned out to have been wrongly granted.