Consultation Paper on the General Law of the Landlord and Tenant

tenant. Often an item installed in the premises by the tenant for thepurposes of the tenant’s business (a typical example of a tenant’sfixture 8 ) eg, expensive plant, machinery or equipment, will not havebeen bought outright by the tenant. Instead, it will have beenacquired by the tenant under a hiring or “leasing” arrangement, 9whereby ownership of the item will be retained by a third party (eg,the hiring or leasing company). If the tenant then installs the itemhired or leased in the demised premises in such a way that it becomesa fixture, a conflict arises. As a fixture, the item belongs to thelandlord and remains so until the tenant exercises the right ofremoval, yet according to the tenant’s hiring or leasing agreement theownership of the item is supposed to be retained by the hiring orleasing company. 10 Technically, therefore, the tenant’s actions ininstalling the equipment in the demised premises may be a breach ofthat agreement. If the tenant defaults on that agreement, so that thehiring or leasing company wishes to repossess the item in question, itpresumably has to rely upon the tenant exercising the right ofremoval. 11 This may give rise to all kinds of practical difficulties,especially where the tenant has disappeared or refuses to co-operate. 124.06 Difficulties may also arise under the taxation system.Where a tenant expends very substantial sums on the acquisition ofmachinery or plant for the business which is to be run on the demisedpremises, the tenant may wish to claim capital allowances in respectof income or corporation tax. Such “wear and tear” allowances canbe claimed only in respect of “machinery or plant” which “belongs”to the taxpayer and is used for the purposes of the taxpayer’s trade. 13It would clearly be unjust if the tenant, who has incurred the relevantcapital expenditure, were deprived of such allowances on the ground8910111213See paragraph 4.09 below.Attention was drawn earlier to this somewhat, confusing use of the conceptof leasing: see paragraph 1.03 above.See Re Galway Concrete Ltd [1983] ILRM 402 (batching plant,comprising two cement silos and two cement screw conveyors, obtained bytenant under a conditional sale agreement).Per Keane J in Re Galway Concrete Ltd ibid at 405-406.For an illustration of such problems see Lombard and Ulster Banking Ltd vKennedy [1974] NI 20.Section 284(1) of the Taxes Consolidation Act 1997.75