31.07.2015
What is ‘property’?
7.11 The idea of property is multi-faceted. The term ‘property’ is used in common and some legal parlance to describe types of property that is both real and personal. ‘Real’ property encompasses interests in land and fixtures or structures upon the land. ‘Personal’ property encompasses tangible or ‘corporeal’ things—chattels or goods. It also includes certain intangible or ‘incorporeal’ legal rights, also known in law as ‘choses in action’, such as copyright and other intellectual property rights, shares in a corporation, beneficial rights in trust property, rights in superannuation[15] and some contractual rights, including, for example, many debts.[16] Intangible rights are created by law. Tangible things exist independently of law but law governs rights of ownership and possession in them—including whether they can be ‘owned’ at all.[17]
7.12 In law, the term ‘property’ is perhaps more accurately or commonly used to describe types of rights—and rights in relation to things. In Yanner v Eaton, the High Court of Australia said:
The word ‘property’ is often used to refer to something that belongs to another. But … ‘property’ does not refer to a thing; it is a description of a legal relationship with a thing. It refers to a degree of power that is recognised in law as power permissibly exercised over the thing. The concept of ‘property’ may be elusive. Usually it is treated as a ‘bundle of rights’.[18]
7.13 The ‘bundle of rights’ that property involves, acknowledges that rights in things can be split: for example, between rights recognised at common law (‘legal’ interests) and those recognised in equity (‘equitable’ or ‘beneficial’ interests); and between an owner as lessor and a tenant as lessee. Equitable interests may further be subdivided to include ‘mere equities’.[19]
7.14 In Yanner v Eaton, Gummow J summarised this complexity:
Property is used in the law in various senses to describe a range of legal and equitable estates and interests, corporeal and incorporeal. Distinct corporeal and incorporeal property rights in relation to the one object may exist concurrently and be held by different parties. Ownership may be divorced from possession. At common law, wrongful possession of land might give rise to an estate in fee simple with the rightful owner having but a right of re-entry. Property need not necessarily be susceptible of transfer. A common law debt, albeit not assignable, was nonetheless property. Equity brings particular sophistications to the subject. The degree of protection afforded by equity to confidential information makes it appropriate to describe it as having a proprietary character, but that is not because property is the basis upon which protection is given; rather this is because of the effect of that protection. Hohfeld identified the term ‘property’ as a striking example of the inherent ambiguity and looseness in legal terminology. The risk of confusion is increased when, without further definition, statutory or constitutional rights and liabilities are so expressed as to turn upon the existence of ‘property’. The content of the term then becomes a question of statutory or constitutional interpretation.[20]
7.15 As Gummow J suggests in this passage, ‘possession’ is a distinct and complex concept. Its most obvious sense is a physical holding (of tangible things), or occupation (of land). An example is when goods are in the custody of another, where things are possessed on account of another.[21]
7.16 A ‘property right’ may take different forms depending on the type of property. Implicit in a property right, generally, are all or some of the following rights: the right to use or enjoy the property, the right to exclude others, and the right to sell or give away.[22] Property rights also depend on the statutory framework of laws and property rights affecting the particular type of property, for example, the system of land tenure in a particular state or territory, or a scheme such as the Personal Property Securities Act 2009 (Cth), and the interaction between that statutory scheme and the common law.
7.17 For land and goods, both of which may be possessed by someone other than the lawful owner,property rights in the sense of ownership must be distinguished from mere possession of the land or goods, even though the latter may give rise to qualified legal rights,[23] and from mere contractual rights affecting the property. The particular right may be regarded as ‘proprietary’ even though it is subject to certain rights of others in respect of the same property: a tenancy of land, for example, gives the tenant rights that are proprietary in nature as well as possessory.
7.18 The ‘bundle of rights’ approach has presented some contemporary challenges, particularly in relation to land holding. Laws that limit what a landowner can do, for example by creating rights in others in the same land, may give rise to arguments about compensability, expressed in the question, when does regulating what someone may do with land become a ‘taking’ of that land? This is considered later and in Chapter 8.
7.19 What may amount to a property right is of ongoing philosophical and practical interest. One clear historical example is the recognition of copyright from the 17th century, as a new form of intangible personal property created by statute and the development of a specialist body of law governing its creation and transfer. Trade marks and registered designs have a similar genesis, as statutory creations.[24]
7.20 The recognition of new forms of intangible property may be argued in the context of s 51(xxxi) of the Constitution, which is considered below. Arguments concerning rights over one’s person, for example claims over bodies and body parts, including reproductive material, are lively.[25] The need to recognise ‘traditional knowledge and traditional cultural expressions of Aboriginal and Torres Strait Islander people’ has also been advanced. In this Inquiry, the Arts Law Centre argued for recognition of cultural knowledge as intellectual property and subject to appropriate protection, noting that the Native Title Act 1993 (Cth) did not do so.[26] Similar intellectual property issues were raised in the Rights and Responsibilities consultation.[27]
7.21 The significance of recognising cultural knowledge was identified by the ALRC in the report, Connection to Country: Review of the Native Title Act 1993 (Cth). While this issue lay outside the Terms of Reference for that Inquiry, the ALRC concluded that
the question of how cultural knowledge may be protected and any potential rights to its exercise and economic utilisation governed by the Australian legal system would be best addressed by a separate review. An independent inquiry could bring to fruition the wide-ranging and valuable work that has already been undertaken but which still incompletely addresses the protection of Aboriginal and Torres Strait Islander peoples’ cultural knowledge.[28]
7.22 Understandings about what amounts to property reveal a certain fluidity when viewed historically. As one stakeholder commented:
The rights that attach to different objects, be they land, personal or intellectual property are not frozen in time. Just as for all legal rights, the nature and content of property rights will evolve and potentially change quite significantly over time.[29]
7.23 Similarly, with respect to land, Professor Peter Butt noted that the ‘categories of interests in land are not closed’ and they ‘change and develop as society changes and develops’.[30]
7.24 Another challenge in terms of property rights in the Australian context is the recognition of native title; and understanding how such interests in land or waters fit within, or relate to, the understanding of property rights of the common law.[31]
The reach of property rights
7.25 Complex interactions of property rights of different forms fill chapters of books on property law under the generic heading of ‘priorities’, where rules of law and equity, including statute law, have, over the centuries, established what property interest takes priority over another in given circumstances, regulating competing property interests. Each circumstance may involve a ‘loser’ in the sense of someone losing out in a contest of proprietary rights (rights in rem), and being relegated in such circumstances to whatever rights may be pursued against the individuals concerned (rights in personam). Some examples, expressed in very general terms, suffice to illustrate:
the priority of the bona fide purchaser of a legal estate for value without notice of a prior equitable interest;[32]
the indefeasibility of registered interests under Torrens title land systems;[33]
the effect of registration on priority of registered security interests in personal property;[34] and
the doctrine of fixtures, in which items of personal property—chattels—may lose their quality as personal property and become part of the land.[35]
7.26 A further illustration of property rights being lost may come through the operation of statutory limitation over time. So, for example, a person may be held to acquire title to land by long ‘adverse’ possession. The adage, ‘possession is nine-tenths of the law’, is reflected in the modern expression of title by possession in the Limitation of Actions legislation.[36] Under such legislation, the claim of a person may be barred after a designated period, generally between 12 and 15 years.[37] There is authority that even under Torrens title systems, title may be gained by adverse possession.[38]
7.27 A further question about the extent of property rights includes how far the title of a landowner extends in the air above and the earth below. Cases involving scaffolding, overflying and cranes, have tested airspace rights.[39] Cases involving subterranean caves, treasures and minerals have tested the limits below the surface.[40] An aspect of such issues concerns prerogative claims to minerals, including substances like coal.[41]
7.28 The extent of property rights can be at issue when it is argued that rights of property have been taken away and therefore that the property owner is entitled to compensation for that ‘taking’. This was raised by stakeholders in this Inquiry in the context of environmental regulation issues, water rights and intellectual property.
‘Vested’ property
7.29 The ALRC’s Terms of Reference refer to ‘vested property rights’. ‘Vested’ is primarily a technical legal term in property law used to differentiate a presently existing interest from a contingent interest.[42] However, particularly in the United States, the term has acquired rhetorical force in reinforcing the right of the owner not to be deprived of the property arbitrarily or unjustly by the state[43] or, in disputes over land use, to reflect the confrontation between the public interest in regulating land use and the private interest of the owner—including a developer—in making such lawful use of the land as he or she desires.[44] The tension is particularly strong with respect to retrospective legislation.[45]
7.30 In this Inquiry the ALRC considers ‘vested property rights’ more in its broad, rhetorical sense, than in its technical sense, in which there are distinct shades of meaning of ‘vested’.[46]