Diamond Neon had a contract with a dealership to have signs affixed to the property. When the property was sold to TD, the signs were still there and TD did not know about the contract. TD wanted to sell the signs arguing that they had become fixtures before TD bought the land.
Are the signs fixtures? Otherwise, has conversion of chattels occurred by sale?
An article is a fixture unless expressly excluded from a sale; tenants must convert fixtures to chattels for removal on a timely basis.
The court followed the La Salle test to determine whether an object is a fixture or chattel:
** 1. Is the item resting on its own weight? If so, leads to a presumption that the object is chattel;
** 2. What is the degree of annexation? The stronger the attachment, the greater the presumption that the object is a fixture.
** 3. What is the purpose of annexation? If the object has been affixed for the better use of the chattel, then it strengthens the presumption that it is a chattel. If the object has been affixed for the better use of the land, then it strengthens the presumption that it is a fixture.
The court also noted that if an item is decorative, it strengthens the presumption that the object is chattel.
TD was able to sell signs because they had becomes fixtures before TD bought the land.
The degree and object of annexation makes the signs fixtures, before the defendant purchased the land. When land was acquired, signs were present: no reason to inquire otherwise. Turns on question of timely removal: Dueck did not remove signs.
Decision in favour of TD - signs are indeed fixtures. No conversion occurred, as TD was entitled to sell.
Dissent: In favour of Diamond Neon (signs speak for themselves)