Following recent news, a promising restaurant venture in Malaysia turned into a heartbreaking tale when the owner, who invested RM300,000.00 in a stunning makeover, faced sudden eviction after just two months. The landlord's decision to sell the property left the tenant in a bind, as the new land proprietor hesitated to honor the existing rental agreement. Adding to the woes, the new owner proposed allowing the tenant to stay only if they agreed to a threefold rental increase – an untenable proposition for the business.
This underscores the legal principle 'quicquid plantatur solo, colo cedit,' revealing the stark reality that enhancements made to a property might lack protection during changes in ownership. The essence of 'quicquid plantatur solo, colo cedit' lies in the idea that anything affixed to the land is considered part of the land. In simpler terms, if something is attached to the land, the owner of the land also owns the attached item. This principle is particularly crucial in tenancy law, where alterations and renovations made by tenants become the property of the landlord, and tenants cannot reclaim these improvements at the end of the lease or tenancy.
Applying this principle to the Malaysian legal framework, the Civil Law Act 1956 allows the utilization of English Law (Common Law)[1] to determine the status of fixtures and chattels. In the Malaysian torrens system, the 'quicquid plantatur solo, colo cedit' principle, along with a two-staged test, is employed to ascertain the status of an object on the contested land.
As per Holland v Hodgson (1872)[2], in considering whether an object is a chattel or a fixture involves the consideration of the ‘two-staged test’. First, the degree of annexation of the item to the land, and secondly, the purpose of the annexation to the land. The two-staged test must be performed on an object by object basis.
For the first test which is to see the degree of annexation, if the object is affixed to the land, there is a presumption that it is a fixture, especially if the consequence of the removal of the object will cause harm dan damage to the land. But if the object stands on its own weight, it is assumed to be a chattel. These presumptions are rebuttable, and the duty of proof rests with those who claim that the item is a fixture or a chattel.
For the second test which is looking at the purpose of the annexation, O’Conner J in Reid v Smith (1906)[3] held that if the object was meant for the better enjoyment of the land as a whole so as to improve its usefulness and value, there is a strong presumption that it is a fixture. On the other hand, if the object was attached to the land solely for the more complete enjoyment and use of the item as a chattel, it rebuts the assumption that it is a fixture.
Looking at the National Land Code 2020, the definition of ‘Land’ which states that ‘all things attached to the earth or permanently fastened to anything attached to the earth, whether on or below the surface’[4] gives us an overview of fixtures belong to the land as per the latin maxim. This is sufficient to establish the rights and transactions involving dispute of lands matter.
This legal doctrine can have significant implications for tenants who invest in substantial renovations. In cases where a tenant has spent a considerable amount of money and effort to enhance the property, there might be a risk of losing those improvements if the property is sold or if the tenancy agreement is terminated.
It's crucial for tenants to carefully review and negotiate the terms of their lease agreements to address issues related to improvements, renovations, and the fate of these enhancements in case of changes in ownership or termination of the lease and/or tenancy. Seeking legal advice before undertaking major renovations can also help tenants understand their rights and responsibilities, allowing them to make informed decisions about property improvements.
[1] Section 3 Civil Law Act 1956
[2] [1872] LR 7 CP 328
[3] [1905] HCA 54; 3 CLR 656; [1906] 12 ALR 126
[4] Section 5(d) National Land Code 2020
Authored by Afiqah Ariffin
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