Definitions of property

What is ‘property’?

18.15  The idea of property is multi-faceted. The term ‘property’ is commonly used to describe types of property, 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, like a car or a table. It also includes certain intangible or ‘incorporeal’ legal rights, ‘choses in action’, such as copyright and other intellectual property rights, shares in a corporation, beneficial rights in trust property, rights in superannuation[20] and some contractual rights, including, for example, many debts.[21] 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.[22]

Bundle of rights

18.16  In law, the term ‘property’ is 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’.[23]

18.17  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’.[24]

18.18  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.[25]

18.19  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.[26]

18.20  A ‘property right’ may take different forms depending on the type of property. When the term ‘property’ appears in legislation, without further definition, its content ‘then becomes a question of statutory or constitutional interpretation’.[27] Implicit in a property right, generally, are all or some of the following characteristics: the right to use or enjoy the property, the right to exclude others, and the right to sell or give away.[28]

18.21  For land and goods, property rights in the sense of ownership must be distinguished from mere possession, even though the latter may give rise to qualified legal rights, 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.

18.22  The ‘bundle of rights’ approach has presented some contemporary challenges, particularly in relation to land holding—and in the context of native title.[29] 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’ or ‘acquisition’ of that land in constitutional terms? This is considered later and in Chapters 19 and 20.

Recognising new forms of property

18.23  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 18th century as a new form of intangible personal property created by statute. Trade marks and registered designs have a similar genesis, as statutory creations.[30]

18.24  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.[31]

18.25  Arguments concerning rights over one’s person, for example claims over bodies and body parts, including reproductive material, often involve lively contests over the recognition of new forms of intangible property.[32] There is also the assertion of a new wave of property rights generated by information technology.[33]

18.26  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’.[34]

18.27  The recognition and classification of Aboriginal and Torres Strait Islander rights and interests in land and waters has proved a challenge for the common law of Australia. In the first claim for customary rights to land, the 1971 case of Milirrpum v Nabalco, Blackburn J found that ‘there is so little resemblance between property, as our law … understands that term, and the claims of the plaintiffs for their clans, that I must hold that these claims are not in the nature of proprietary interests’.[35]

18.28  However, in Mabo v Queensland [No 2], the High Court found that pre-existing rights and interests in land held by Aboriginal and Torres Strait Islander peoples—native title—survived the assertion of sovereignty by the Crown.[36] Such rights and interests were not of the common law, but could be recognised by it. In Fejo v Northern Territory, the High Court stated:

Native title has its origin in the traditional laws acknowledged and the customs observed by the indigenous people who possess the native title. Native title is neither an institution of the common law nor a form of common law tenure but it is recognised by the common law.[37]

18.29  Because its content is defined by the traditional laws and customs of the relevant Aboriginal or Torres Strait Islander peoples, native title rights and interests ‘may not, and often will not, correspond with rights and interests in land familiar to the Anglo-Australian property lawyer’.[38]

18.30  Some have argued that the ‘traditional knowledge and traditional cultural expressions’ of Aboriginal and Torres Strait Islander people should be recognised as a form of intellectual property. 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.[39] Similar intellectual property issues were raised in the AHRC Rights and Responsibilities consultation.[40]

18.31  The significance of acknowledging 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.[41]

‘Vested’ property rights

18.32  The ALRC’s Terms of Reference refer to ‘vested property rights’. In property law ‘vested’ is primarily a technical legal term used to differentiate a presently existing interest from a contingent interest.[42] In this Inquiry the ALRC uses the phrase ‘vested property rights’ in a broad sense, not a technical one.[43]

The reach of property rights


18.33  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;[44]

  • the indefeasibility of registered interests under Torrens title land systems;[45]

  • the effect of registration on priority of registered security interests in personal property;[46] 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.[47]


18.34  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 acquisition of title by possession in the limitation of actions legislation.[48] Under such legislation, the claim of a person may be barred after a designated period, generally between 12 and 15 years.[49] There is authority that even under Torrens title systems, title may be gained by adverse possession.[50] In the context of personal property, the right of the possessor may be defended against all but the rightful owner—expressed in the adage, ‘finders keepers’.[51]

Airspace and subterranean rights

18.35  The extent of property rights of a landowner includes how far the title extends in the air above and the earth below. The early common law doctrine is expressed in the maxim ‘cujus est solum ejus est usque ad coelum et ad inferos’: ‘to whom belongs the soil, his is also that which is above it to heaven and below it to hell’.[52] As Sir William Blackstone explained:

no man may erect any building, or the like, to overhang another’s land: and downwards, whatever is in a direct line between the surface of any land, and the center of the earth, belongs to the owner of the surface; as is every day’s experience in the mining countries. So that the word ‘land’ includes not only the face of the earth, but every thing under it, or over it.[53]

18.36  If a landowner ‘owned’ land in this extended sense, intrusions upon it may amount to a trespass. Such a simplified approach was readily modified in the modern era, where cases involving scaffolding, overflying and cranes, have tested airspace rights.[54] Professor Adrian Bradbrook commented that, ‘[w]hile the maxim correctly indicates that the ownership of land is not confined to the land surface; its accuracy beyond this is highly questionable’;[55] and Young CJ in Eq stated that ‘the old adage … is not to be taken literally’.[56]

18.37  The modern common law doctrine is expressed in the principle that the rights of a land owner in the air space above the land are limited ‘to such height as is necessary for the ordinary use and enjoyment of his land and the structures upon it’.[57] Cases involving intrusions on privacy have also raised questions concerning the extent of land owners’ rights: for example concerning unmanned surveillance devices flying over land and cameras overlooking land.[58]

18.38  Cases involving subterranean caves, treasures and minerals have tested the limits below the surface of land.[59] In Di Napoli v New Beach Apartments Pty Ltd, a case involving whether rock anchors projecting into the plaintiff’s land constituted a trespass,Young J stated that, with respect to subterranean rights, ‘a person has substantial control over land underneath his or her soil for considerable depth’.[60]

18.39  The examples of water and minerals involve both classification issues: is it property and, if so, whose is it? They also involve constitutional issues: is the property owner entitled to compensation if property rights are affected by government action? Both aspects are considered below.

The example of water

18.40  Water is an example of something that is regarded as common (publici juris),[61] or a ‘public asset’,[62] like air or light, not itself the subject of ownership,[63] but in which certain rights may exist. The nature of those rights has changed over time: from common law to statutory rights. In Australia, those statutory rights have involved an increasing shift towards Commonwealth involvement, particularly in relation to waterways that cross state boundaries, as in the Murray-Darling Basin.

18.41  Blackstone said that ‘water is a moveable, wandering thing, and must of necessity continue common by the law of nature’; and any rights to water are only ‘temporary, transient, usufructuary’.[64] At common law, while the water itself was not capable of ownership, a landowner had certain rights in relation to it, depending on whether the water was under the land (‘percolating’ water), or in a watercourse that flowed through or adjoined the property.

18.42  In the case of percolating water, the landowner was permitted to draw any or all of it without regard to the claims of neighbouring owners.[65] It was treated ‘as a feature of the land itself and the landowner was entitled to appropriate the resource without limitation’.[66] In the case of water flowing through land, the ‘riparian’ owner had certain valuable, but limited, rights: to fish; to the flow of water, subject to ordinary and reasonable use by upper riparian owners and to a corresponding obligation to lower riparian owners;[67] and to take and use (‘abstract’) all water necessary for ordinary purposes and other reasonable uses.

18.43  In Embrey v Owen,Parke B explained that ‘each proprietor of the adjacent land has the right to the usufruct of the stream which flows through it … [I]t is a right only to the flow of the water, and the enjoyment of it, subject to the similar rights of all the proprietors of the banks on each side to the reasonable enjoyment of the same gift of Providence’.[68]

18.44  The common law principles applied to Australia at colonisation, but from an early stage it was clear that ‘the driest inhabited Continent’[69] needed a different approach.[70] Water management regimes based on the assertion of state control and the grant of a range of licences were introduced.[71] Limits were also set on the amount of water that may lawfully be taken.[72]

18.45  Where the common law focused on individual rights in water, which was otherwise publici juris, the statutory regimes ‘saw the re-emergence of the recognition of water as a “public responsibility”’.[73] All levels of government ‘now recognise that water must be managed in a manner which allocates water to users without compromising the environment’.[74]

Consequently, the introduction of statutory schemes which set up regulatory bodies capable of distributing water resources in a more equalised and efficient manner became a crucial step in the trajectory of Australian water management.[75]

18.46  The control of water, through statutory intervention, is traditionally a state responsibility in Australia.[76] The Commonwealth has more limited scope to legislate in relation to water.[77] There is also the constraint in s 100 of the Constitution:

The Commonwealth shall not, by any law or regulation of trade or commerce, abridge the right of a State or of the residents therein to the reasonable use of the waters of rivers for conservation or irrigation.

18.47  Since 1915, a cooperative approach to water resource management in the Murray-Darling Basin has prevailed between the Commonwealth government and the governments of New South Wales, Victoria and South Australia.[78]

18.48  A combination of provisions has been relied upon to support Commonwealth intervention in water management, particularly the Water Act 2007 (Cth), including a referral of power by New South Wales, Queensland, South Australia and Victoria.[79] The Water Act was designed ‘to enable the Commonwealth, in conjunction with the Basin States, to manage the [Murray-Darling] Basin water resources in the national interest’.[80] This had been ‘the primary focus of both Commonwealth and interstate attention to management of the water resources for decades’.[81]

18.49  The Water Act puts into place a framework that ‘ensures continuity in Basin States’ existing roles and responsibilities in Basin water management’. Water entitlements continue to be defined and managed under Basin State laws; and state agencies continue to manage storages, river flows and water deliveries.[82]

18.50  The Water Act was preceded by the agreement, in 1994, of the Council of Australian Governments to a framework to achieve the efficient and sustainable use of water. This was based on the ‘separation of water property rights from land title and clear specification of entitlements in terms of ownership, volume, reliability, transferability and, if appropriate, quality’.[83] It also made explicit provision for environmental water.[84]

18.51  In 2004 this approach informed the National Water Initiative (NWI). Pursuant to this initiative, all governments in Australia made a number of commitments, including to:

  • return over-allocated water systems to sustainable levels of use

  • improve water planning, including through providing water to meet environmental outcomes

  • expand permanent trade in water

  • introduce better and more compatible registers of water rights and standards for water accounting

  • improve the management of urban water.[85]

18.52  A key aspect of the NWI was to provide statutory access entitlements, which have a number of features that are characteristic of ‘property’ rights: exclusivity, alienability, and enforceability.[86] However, commentators express uncertainty as to the precise nature of statutory water rights. As Michael McKenzie remarked:

Looking at all the characteristics together, there is probably enough to suggest that the water rights under access licences do amount to rights of property. However, depending on the context and the type of access licence, it would not be such a surprise if a court found otherwise.[87]

18.53  In ICM Agriculture Pty Ltd v Commonwealth (ICM Case) the High Court had to construe whether certain licences were caught by the constitutional provision concerning acquisition of property on just terms, in s 51(xxxi). This is considered below.

The example of minerals

18.54  In 1568 the Case of Mines established that all mines of gold and silver—the ‘royal minerals’—belonged to the Crownwith the power to enter, dig and remove them.[88] The common law position with respect to gold and silver also became the law in the Australian colonies.[89] How far below the surface the cujus est solum doctrine went with respect to the surface land owner’s land at common law was unclear, although, as Bradbrook noted,

it is beyond doubt that at common law minerals are under the effective control of the landowner in that access to the resource can only be obtained by the surface landowner or by developers allowed entry onto the land with the landowner’s consent. Thus, minerals may be said to be effectively, it not legally, in the ownership of the surface owner.[90]

18.55  In Australia, land granted from the Crown has always been subject to reservations in the Crown grant; and, from the late 19th century, such grants reserved all minerals to the Crown.[91] This amounted ‘to a complete rejection of the operation of the cujus est solum doctrine’.[92] The limitations in the grants necessarily constrain the extent of the relevant property rights of the landowner in question. Where substances lie beneath the surface of the land the key issues in the Australian context are: the extent of reservations in the Crown grant, apart from gold and silver; and the effect of statutory intervention. With respect to the grant, if the relevant minerals were reserved, the landowner does not ‘own’ them. Where the relevant minerals were not reserved, a later intervention to claim them for the Crown may give rise to a question of whether such taking is compensable and what control over access to the land the surface owner may have with respect to those granted licences for minerals.

18.56  In the Australian colonies the general pattern in each jurisdiction was ‘to progressively reserve various minerals from Crown grants by legislation’.[93] What amounts to ‘minerals’ is a matter of construction and the legislation in each state and territory differs significantly.[94] Where some early legislation simply reserved ‘minerals’, later legislation was more specific in defining what was meant by the term. However, as Butt noted:

These statutory definitions are very wide—so wide that one writer has commented that modern landowners may not even own the soil on their land.[95]

18.57  This has meant that to determine the extent of a surface owner’s interest in minerals below the surface, the dates of the original Crown grants and the particular legislation in each jurisdiction ‘assume great significance in determining in each instance whether a landowner owns a particular mineral beneath her or his land’.[96]

18.58  In addition, governments in several states have resumed mineral rights that may have remained in private ownership under the relevant Crown grant applicable to that land. Crown ownership of minerals has been made universal in Victoria and South Australia by legislative expropriation of all minerals;[97] in Tasmania of specified minerals;[98] and, in New South Wales, of coal.[99] State ownership of minerals ‘has the important result that governments, rather than private landholders, determine the legal regimes governing mineral exploration and production’.[100] With respect to petroleum, a similar outcome has been achieved.[101]

18.59  The position in Australia is in contrast to that in the US, where landowners own the minerals and mining companies deal directly with them over access, extraction and royalties. This difference has major implications in relation to extraction of minerals from private property.[102]

18.60  The surface landowner’s ability to control access, for the purpose of mineral exploration, is limited.[103]For example, a mining lease or mineral claim may not be granted over the surface of land in New South Wales which is on or within 200 metres of a dwelling house,[104] on or within 50 metres of a garden,[105] or over the surface of land on which there is a ‘significant improvement’,[106] without the written consent of the owner of the house, garden or improvement (and that of the occupant of the dwelling house, if applicable).[107] A mining lease or claim may be granted without consent below the surface ‘at such depths, and subject to such conditions, as the [Minister] considers sufficient to minimise damage to that surface’.[108] A party who wishes to dispute whether such consent is required may apply to the Land and Environment Court for determination.[109] This was the course of action taken, for example, by a group of landholders in Sutton Forest in New South Wales, in opposition to Hume Coal drilling test bore holes on their property.[110] The Court granted Hume Coal access to the land, holding that an equestrian course, car park and improved pastures did not amount to ‘significant improvements’ under the legislation.[111]

18.61  The holder of a mining licence or lease must reach an access arrangement with the landowner, or have one determined by an arbitrator, to enter and conduct activities on a property.[112] However, the landowner has no power of veto over access to their land, and must comply with the statutory procedure for determining access arrangements.[113] The landholder is entitled to compensation for loss suffered or likely to be suffered as a result of the exercise of the rights conferred by the access arrangements.[114]

18.62  The impact of the Coal Acquisition Act 1981 (NSW) was considered in Durham Holdings Pty Ltd v New South Wales (Durham Holdings).[115] At the time the legislation was passed there were substantial coal reserves in the Hunter Valley that were still in private ownership and there were major coal mining developments planned.[116] By virtue of the legislation, the private owners would no longer obtain the anticipated extent of royalties. There was provision in the legislation for compensation to private owners, but the rate of compensation was capped.[117]

18.63  The plaintiffs argued that the capping of compensation amounted to the denial of ‘just’ or ‘adequate’ compensation and as such was invalid. As is pointed out in Blackshield and Williams, ‘[i]f the acquisition had arisen under a Commonwealth statute, it would have breached the requirement in s 51(xxxi) of the Constitution that such acquisitions be made on “just terms”’.[118] The argument drew upon the judgment of the Court in Union Steamship Co of Australia Pty Ltd v King, in leaving open the possibility that there was a constitutional limit in state power founded on ‘rights deeply rooted in our democratic system of government and the common law’[119]—in this case that the taking of the coal required just compensation.

18.64  The Court of Appeal rejected this argument and the High Court refused special leave to appeal. Gaudron, McHugh, Gummow and Hayne JJ said that

whatever may be the scope of the inhibitions on legislative power involved in the question identified but not explored in Union Steamship, the requirement of compensation which answers the description ‘just’ or ‘properly adequate’ falls outside that field of discourse.[120]

18.65  The legal result was that the states could acquire property without having to pay just compensation. Emeritus Professor David Farrier submitted that the High Court specifically rejected the idea of an implicit constitutional limit on state power founded on ‘rights deeply rooted in our democratic system of government and the common law’:[121]

While the Court was concerned with the interpretation of the NSW Constitution, the argument that a just terms provision should be implied was based on the common law. The High Court rejected the suggestion that there was a doctrine of vested property rights under the common law. While this decision was primarily concerned with the right to exclude others (the government) from enjoyment, it necessarily has implications for any right to use: the effect of the acquisition was that this was completely removed.[122]

18.66  The Law Council of Australia (Law Council) expressed some disquiet, about the result in Durham Holdings,which, it said, ‘may accord inadequate protection for so fundamental a right’.[123]

18.67  A further question concerns the relationship between native title and mineral rights. Following the High Court decision in Mabo v Queensland [No 2][124]and the Native Title Act 1993 (Cth), native title lies in recognition: it does not lie in Crown grant.[125] Professor Richard Bartlett notes that minerals and petroleum have been excluded from all determinations of native title by consent.[126] Other questions focus on whether native title has been extinguished by inconsistent grant and by legislation in relation to minerals.[127] However, as Bartlett states:

it must be concluded that [Western Australia v Ward] dictates the general conclusion that native title rights to minerals and petroleum, even if they could be established, have been extinguished throughout Australia.[128]

18.68  The position with respect to land held by Indigenous groups under state laws may be different. For example, s 45(2) of the Aboriginal Land Rights Act 1983 (NSW) provides that any transfer of lands to an Aboriginal Land Council under the Act ‘includes the transfer of mineral resources or other natural resources contained in those lands’. This is qualified by later subsections with respect to gold, silver, coal, petroleum and uranium.[129]

18.69  The position with respect to other land rights legislation is that minerals occurring on land owned or held by Aboriginal groups under land rights legislation are owned by the Crown, not the Aboriginal group. This position is consistent with other non-Indigenous landowners.[130]