Nature, Functions & Sources of Property

Law 

The Concept of Property
 The accumulation of property is generally associated with wealth and power
 Disputes over a property a common and bitterly contested
 An example is the housing affordability crisis in Sydney and Melbourne, where the law,
policy and governance impact young peoples’ access to the housing market.
 The security of registered land titles is the cornerstone of the NSW Torrens land titling
system, as such, privatisation of land raises several concerns:
o Compromised of the integrity of the system
o Likelihood of increased costs for new home buyers
o Experience of Land Property Information skilled workforce may be lost.
 Property issues are intertwined in social, legal and political arrangements.
 Historical precedents exist in marital arrangements, etc.
 Property is a difficult concept to define:
o Tool of social organisation closely connected to democracy
o ‘real property’ – rights enforceable to ‘all the world’ – a certain expectation that
everyone, not just those party to a contract, should respect your
ownership/integrity of the land.
 Remedies were broader and breaches for property relied on ‘real actions’:
o The land would theref0re be returned as it was – res (thing ‘thing’ itself)
o no need for damages, the remedy would be the land itself.
o Appropriate remedy because land is ‘unique and valuable’ – o two pieces of land
are the same.
o Therefore, it would be impossible to equate damages to the loss of that land.
Hence, no adequate compensation (historically).
 People engage with property directly and indirectly – K Grey – “real property is where
life begins and where life ends’

Introduction to the concept

 Commentaries of the Laws of England (Sir William Blackstone) definitions of property:
o “Property is that sole and despotic dominion which one man claims and exercises
over the external things or the world, in total exclusion of the right of any other
individual in the universe.” – identifies essential elements of property,
distinguishing it from other areas of substantive law.
o “there is nothing which so generally strikes the imagination, and engages the
affections of mankind, as the right of property’ – prescriptive or evaluative
assessment, expresses moral or political approval of the institution.
  Expresses values about appropriate levels of dominion and exclusion.
 Basically 3 dimensions to the concept of property:
o Analytical: definition of the term
o Philosophical: justification for a particular regime of property rights
o Doctrinal: which legal rules classify, define and delimit property rights –
boundaries between property and other rights.

Analytical Dimension
The term ‘property’
 The definition of property as direct consequences on a variety of important questions
regarding the distribution of economic wealth and power, the role of governments and
the autonomy of citizens (Davis v Commonwealth – civil rights v property rights)
 3 elements of any property right:
o Dominion – some form of legally authorised power.
o Exclusion can’t have the positive without the negative – can’t have dominion
without being able to exclude someone.
o External things – must be an actual thing to exert power over – transferal,
alienate – customary rights counting as property – Milirrpum v Nabalco
 J Blackburne: “I think that property in its’ many forms generally implies
the right to use or enjoy, the right to exclude others, and the right to
alienate I do not say that all these rights must co – exist before there can
be a proprietary interest or deny that each of them may be subject to
qualifications.”
 The rules (Snare):
1. A can use P
2. Others can use P only with A’s consent
3. A may permanently transfer the rights under 1 and 2 to other, specific persons
by consent
4. Punishment rules: consequences for B if they interfere with A’s P:
5. Damage rules – B pays compensation of they damage P without A consent
6. Liability rules, which specify that if A’s use of P results in damage to other they
will be held responsible.
 Honoré’s elements of property rights:
1. Right to possess – exclusive control over things or non – physical things (e.g.
copyright) – reaping the rewards you are entitled to as a result
2. The right to use
3. The right to manage – how to use
4. Right to the income
5. Right to the capital – consume, waste or destroy
6. The right to security – exclude others, even the state.
7. The power of transmissibility – the right to transfer in life (inter vivos) or upon
death.
8. The absence of term: indefinite use/ enjoyment
 9. The prohibition of harmful use – can’t be used to interfere with other people’s
property and/or personal rights.
10. Liability to execution – have the ting taken away for the satisfaction of debts
11. Residuary rights – rights which govern the entitlements of other persons to the
thing when present ownership has lapsed.

Property as a ‘relationship’ or a ‘thing’

 Where property is recognised as a legal relationship between the property (‘thing’) and
the owner:
o Obscure the extent to which rights over property are almost always limited
o Unlimited property rights are considered undesirable where no prohibition mean
damage to that thing
o Minimises the focus on public interest and focuses on restriction of personal
property rights
 Legal realists:
o Hohfeld:
 Not owner thing, legal relations
 Relationship with others
 Duties; rights; immunities
 Not an absolute right, property is not necessarily a physical thing.
 Lochner v New York:
 Substantive due process.
 Infringement on constitution rights regarding contract privacy in
relation to regulating working hours inside the contract.
 Pitney J (USA SC): “it is impossible to uphold freedom of contract
and the right of private property without at the same time
recognising as legitimate those inequalities of fortune that are the
necessary result of those rights.”
o F Cohen:
 ‘Thingification’ of property – presumes to derive legal principles from the
nature of the thing itself.
 Political choices gave rise to legal rules
 Private right and public interest should be more effectively balanced.
 Approach was abandoned
o M Cohen
 Dominium v imperium
 “there can be no doubt that our property laws do confer sovereign power
on our captains of industry and even more so on out captains of finance.

Philosophical bases of property

Labour theory of property
 Lockes’s Theory
  People are entitled to own both what they produce and by means of their own efforts
whatever they have laboured on – individualism
 An individual has a right to the fruits of their labour
 Based on natural rights – pre – exists the laws of any state
 Applies universally – distinguished from earlier theories which confine property rights to
specific people/groups
 Two limits to property rights:
o As long as there are no reduced opportunities for others when that person
appropriates that land – no objection to unlimited acquisition of property
o The appropriation doesn’t spoil that property
 No distinction between the mixing of labour with something and the mere act of
appropriation.
 Operates to justify the unlimited private expropriation of land and goods held in
common – create inconsistencies
 Inconsistencies likely to do with context in which the theories were written –
justification theory
 Focuses on the selectivity of persons capable of ownership – servants versus owner
gaining a profit – similar with women.
 Justification for the notion of ‘private property.’

Utilitarian justifications for private property

 Rejects the natural rights argument as too unstable for justifying the private property
regime
 Property is taken as a means to achieve happiness
 Jeremy Bentham: Subsistence, security, abundance and equality – we create the
property rights, recognise them – law and property live and die together – there is no
natural law that creates it, it is a human invention/ concept
 Sees the state of nature as lawless which leads to an endless conflict over property for
others
 Law creates property, not labour
 Emphasises, despite it being one of the principles, that equality should not be a goal for
legislators in the distribution of property.
 “an attack upon the property of an individual excites alarm among other proprietors…”
o Ignores marginal utility
o Not all proprietors get anxiety over marginal utility
o Doesn’t discuss distinctions from different types of property

Economic justification for private property

 Focusses on promoting efficacy and wealth maximisation
 Economic or efficacy theorists commonly avoid the sort of calculation of individuals
comparative happiness
 Economic theorist – conditions necessary for a wealth – maximising property regime:
 o Exclusivity of ownership protected by the law
o Rights associated with ownership must be legally transferable, in sum or in part
o Guaranteed universality of all property – all things should be privately owned,
except for property so bountiful that if it were to be commonly owned it
wouldn’t impede on the rights of others
 Debates about which is the most effective – exclusive or inclusive

Justice and equality

 Karl Marx – property as a tool of oppression – ever increasing cycle of exploitation
 Tawney suggests that it wasn’t private property itself that cause problems, it was the
lack of regulatory measures surrounding industrial production.
o Property socialisation
o Different types of property with different types of regulations
 Progressive property – values depends on the context

Women and property

 Philosophical analysis highlights how women are systematically disadvantages by the
law – invisibility of women in this area
 Doctrinal questions regarding gender – based inequality:
o Formal rules are actually different for men and women
o Rules which are the same for men and women are insensitive to the different
position of the two parties – perpetuating inequality
 Functional approach – looks at the outcomes of different property law regimes
o Feminisation of poverty
o Different approaches and opinion on the issue within the feminist community
o Liberal feminists – treated as formally equal to men – not satisfactory to other
feminists as it ignores the issues perpetuated by Locke etc.
o Hard to argue as it oversimplifies the characteristics of men and women as a
static entity – those change too often to make a point
o Carr and Wong – feminist approaches to property law unravel gendered
consequences

Pluralist approach
 An approach which amalgamates all of the best parts of each theory – Munzer’s attempt
 3 main pillars of property justification theory:
o Utility and efficacy
o Justice and equality – Kantian theory of equal moral worth of all human beings
 Floor thesis – basis minimums of how far people should be allowed to fall
in relation to property ownership
 Gap thesis – the bigger the inequalities the harder it is to have a
consistent moral standard in regard to property – create moral
resentment.
 o Labour and desert – imposes limits (on the Locke theory) so as to avoid the gap
thesis and exists in the form of the floor thesis
 Expressly context independent

Historical changes in the Nature and Function of Property

 Concepts of property have changed over the years > feudalism > liberal seventeenth
century > not to be excluded to exclude others > common property > welfare state > a
new emerging right not to be excluded from a share in the collective resources of
society > laissez faire has a diminishing appeal > dated arguments.
 A pervasive sense of property as a right to exclude is now the dominant idea of
property, as the sheer scale of private ownership overtakes public property.

K Gray, ‘Property in Thin Air’ (1991) Cambridge Law Journal 252

 Property as a vacant concept – dynamic not static, hard to apply an actual definition.
 Cuius est solum, eius est usque as coelum et ad inferos – “the owner of the soil has
prima facie ownership of everything reaching up to the very heavens and down to the
depths of the earth.”
 Morally, you couldn’t exclude someone – or legally

Visual trespass
 How looking at someone’s ‘property’ can be viewed as trespassing

Propertiness of Property
 Technological transition context – 1931 – radio broadcasting results in real time was a
new concept in that context.
 Victoria Park Racing v Taylor – man owned racing park and charged admission, man who
lived near the property too advantage of the proximity and started a betting company
off of the racing that took part in the park. T made a lot of profit. It was decided that
there was nothing legally wrong with T’s conduct
o Discussion centralised around the ‘propertiness’ of property
o Whether T actually took something classified as ‘property’
o Minority – took from the labour – John Locke’s theory
o Majority – no deprivation of any vested legal entitlement by the defendant – no
property in a spectacle
 Unproprertised resources remain in the commons, available for use and exploitation by
all – a resource can only be propertised where it can be excludable.
 Only excludable where it is feasible for a legal person to exercise regulatory control over
the access of strangers to the various benefits which come from the resource.
 A resource may be non – excludable for either physical, legal or moral reasons, and on
any of these grounds, must remain in the commons.
Property as control over access
 Lord Wilberforce in National Provincial Bank Ltd v Ainsworth: “must be definable by
third parties, capable in its nature of assumption by third parties and have some degree
of permanence or stability”
 Justificatory theories of property range from appeals of investment labour to arguments
based on first occupancy, utility or personhood.
 Locke’s theory is outdated on the modern world as people are seeking more often to re
– acquire land as opposed to occupy completely new land.
 Property isn’t about enjoyment of access or the resources it provides – it’s about control
over access
 Property is relative
 State v Shack – can’t take advantage of property to the extent where other people are
too disadvantages – curtails on human rights
 Property and labour power – can’t own labour power but can own what labour power
produces – moral limit of property (slavery)
 Property can include private information – Smith Kline & French
 Property stems from contract, or components of contractual theory – consent
 Private property is never truly private because it is delegated by the states
 Property is yet to be completely defined by the courts

The Tragedy of the Commons – G Hardin

An assessment of imposing moral limits in the acquisition of property – low – population
density. Infringements on personal lenities occur all of the time and people grow less and less
outraged as time passes because no one that was alive before is alive to care now.

‘The Meaning of Property’ – CB Macpherson

 Misconceptions about the meaning of the word property as being synonymous with
private property
 As soon as society makes a distinction between property and a physical possession it has
defined property as a right
 The difference between property and a possession is that proprietary ownership is
enforced by the society or state by custom, convention or law.
 Historically a bundle of rights in the form of enforceable claims
 Property is a political relation between persons – property is therefore political
 Private property means you can exclude someone from that ‘thing’
 Common property is the right not to be excluded from that ‘thing’ – doesn’t need to be
an unlimited claim
 The state creates rights and individuals have rights
 Corporate property is an extension of private property – an artificial person is reaping
the benefits of that ‘thing’
  State property – an exclusive right of an artificial person – rights that it has created for
itself or may also have taken from either individuals or corporations – acting as an
artificial person over that property like a corporation
 The misconceptions about property came from the market were ‘things’ were traded for
other things, not necessarily the right to use those traded things prima facie
 More of a ‘rights to revenue thing’ in the 20 – 21st centuries as opposed to the ‘rights to
the thing’ trade in the market
 Jean Bodin – common property creates community, no state, no one to enforce the
rights of property
 Modern private property is not limitless – utilitarian perspective
 Modern right – the right to alienate, dispose of/use, not conditional on the owners’
performance on societal functions.
 Because of its dynamic nature the definition of property becomes periodically
controversial
 Property is a right in the sense that it is an enforceable claim and while its enforceability
is what makes it a legal right, that enforceability depends of society’s moral perception
of that right
 Property is not a right because it is an enforceable claim – it is an enforceable claim
because it is seen as a human right
 Property always has to be justified by something more basic – without it an enforceable
claim is not justifiable and therefore there is no property (without the claim)

R A Posner, Economic Analysis of the Law (3rd ed, 1985)

 Legal protection of property rights has the important economic function of creating
incentives to use resources efficiently
 The creation of exclusive rights is a necessary rather than sufficient condition for
efficient resource use- the rights must be transferable
 Through the succession of transfers, resources are shifted to their most valuable uses
and efficiently in the use of economic resources is thereby maximised
 Universality – all resources should be owned by someone – except for things so plentiful
that there’s no point claiming ownership e.g. the sun
 Exclusivity – the more exclusive the property right, the greater incentive to invest the
right amount of resources into the development of the property
 Transferability – if a property right cannot be transferred resources will not be shifted
from less to more valuable uses through voluntary exchange,