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Types Of Property Rights Notes

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Types of Property
Respect of Goods

Rights

in

Introduction
Property Rights and the Numeras Clausus
The characteristic of a property right is that it is capable of being asserted against 3rd parties (i.e.
those who are not party to the agreement to grant the right). Therefore, in deciding what rights are to be given this 'proprietary status', the key policy decision is whether and why a party should be able to enforce his right against 3rd parties.
What rights have proprietary status has an important effect on the law of tort, because where B has a property right he may able to obtain compensation for interference with that right by C through the law of tort.
In common law, the numeras clausus principle operates so that to be a property right, the content of B's right must match that of the limited number of rights currently recognised as legal or equitable property rights. However, interestingly there is no codified list of those property rights so that we must look to case law to determine its content.

McFarlane (2013): "One of the dangers of such a system is that, if the true significance of previous decisions is overlooked, future judgments may inadvertently or unjustifiably depart from general concepts"

A. The position in Land Law
In land law, we speak of rights with respect to land. These rights can be both proprietary (e.g. the lease) and personal (e.g. a licence). There are both legal and equitable property rights. The LPA 1925 gives some legislative force to the numeras clausus principle by fixing the list of possible legal estates or interests in land in S1 and the possible equitable interests in land in S4(1).
The List of Property Rights with Respect to Land
Legal Property Rights (S1 LPA 1924)
A. The Fee Simple
B. Leases
 Note that leases can also be equitable (see below)
C. Profits a prendre
Equitable Property Rights in Land
A. Restrictive Covenants
B. Mortgages (rights of the mortgagor)
C. Equitable Leases
 Equitable leases exist where a contract for the grant of a lease is capable of specific performance (where damages are not adequate and the land is unique)
 In this case, equity will treat as done that which ought to be done and there will be an equitable lease (Walsh v Lonsdale)
Lord Denning attempted to argue that the numeras clausus principle does not apply to equitable property rights (see cases of Errington; Ashburn Anstalt; Ainsworth). However, subsequent case law has not adopted this (e.g. Rhone v Stephens- positive covenants are not a recognised right). Thus, it is clear that the principle is not a peculiarity of the common law.
What is the purpose of the numeras clausus principle (McFarlane):

1. It balances the basic tension of property law between (i) the need to protect prior users of things (e.g. B); and (ii) the need to protect those later acquiring right in relation to thing (e.g.
C).

2. It provides transparency and predictability. If B claims that his right is a property right, a court can simply check the list: it does not need to 'reinvent the wheel' each time by evaluating that claim and weighing up the pros and cons of allowing B's right to be prima facie binding on the rest of the world

3. It protects C, a third party dealing with a thing. C simply needs to check the list: if the right claimed by B is not there, C will know that he is not under a prima facie duty not to interfere with B's use of the thing.

4. By protecting C, the principle promotes the marketability of things: it limits the situations in which a pre-existing right of B, relating to a thing, can bind C.
The Relevance in Land Law of Notice
In land law, the basic rule is that notice of a personal right does not somehow make you bound by it.
I.e. notice of a right does not give it proprietary force (King v David Allen- notice of a lease is irrelevant since it is purely personal). It is therefore clear that what makes a right binding (gives it proprietary status) is the fact that it is included in the closed list of property rights.

B. The Position in Personal Property
There are obvious practical differences between land and chattels:


Goods can be moved whereas land is stationary
We generally desire goods to be more easily and quickly transferable than land to which title has more permanence
There are certain rights with respect to land that cannot by nature exist over goods:
o E.g. Easements over goods would not be appropriate. It makes sense to have them over land since the stationary nature of land means that it requires rights of way,
light, water, etc. There is no such need for this in chattels; there is no dominant and servient tenements.

What is included in the numeras clausus of personal property?
We will look below at some options of property rights that may be said to be included in the closed list of property rights with respect to chattels:
1)
2)
3)
4)
5)
6)

The right to exclusive possession forever
A possessory interest
Chattel leases
Security Interests
Co-ownership
The power to revest right to exclusive possession forever The 'Best Title'
There are very limited circumstances where we can know for certain who has the 'best title' to a chattel (e.g. manufacture, birth). It is often impossible to know who has the best title.
Arguably, though, English law is not concerned with who has the best title. It operates under a system of relativity of title.

In a private law claim it could be said that it distracts from the issue at hand to focus on trying to find the 'true owner'
It does somewhat matter to the parties, however, whether or not they have the best title:
only the person with the best title is truly at liberty at law to use the chattel. Everyone else is subject to duties in respect of the property (and still can commit legal wrongs by using the chattels in certain ways)
o Best title therefore matters in determining the duties that people are under with respect to property
It is also arguable that only the person with the best title fits in with the ordinary layman's perception of 'ownership': that an owner is completely free to use the thing as they see fit

One situation in which the law will make the use of the concept of 'best title' is in The Winkfield (see creation topic). It was held that the bailee could recover full value of the goods due to the negligence of the defendant, despite the bailor having better title. The court said that where someone is in possession for the purposes of assessing damages, it will treat them as though they were the absolute owner.

The purpose of this is to ensure that the burden is not placed on a claimant to prove that they have the best title.

The Torts (Interference with Goods) Act 1977 deals with the consequences of The Winkfield rule:

Instead S8 places the burden on the defendant to show that a 3 rd party has a better right than C
in an action for wrongful interference shall be entitled to show, in accordance with rules of court, that a third party has a better right than the plaintiff as respects all or any part of the interest claimed by the plaintiff, or in right of which he sues, and any rule of law (sometimes called jus tertii) to the contrary is abolished.
S7 takes steps to ensure that if C is overcompensated as a result of this rule, the court will take steps to mitigate the unjust enrichment.

Torts (Interference with Goods) Act 1977
S7.- Double Liability
(4) Where, as the result of enforcement of a double liability, any claimant is unjustly enriched to any extent, he shall be liable to reimburse the wrongdoer to that extent.
For example. If a converter of goods pays damages first to a finder of the goods, and then to the true owner, the finder is unjustly enriched unless he accounts over to the true owner under subsection (3); and then the true owner is unjustly enriched and becomes liable to reimburse the converter of the goods.
S8.- Competing Rights to the Goods
(1) The defendant in an action for wrongful interference shall be entitled to show, in accordance with rules of court, that a third party has a better right than the plaintiff as respects all or any part of the interest claimed by the plaintiff, or in right of which he sues,
and any rule of law (sometimes called jus tertii) to the contrary is abolished. A. The Right to Exclusive Possession Forever
The starting point is that the only interest which a person can have in respect of a chattel is a single and indivisible right to exclusive possession forever.
What do we call this right?

It is equivalent to the fee simple absolute in possession in respect of land. However, this language is not appropriate with respect to chattels.
To use this terminology would be to speak in terms of tenure. We would never speak of tenure in respect of goods.

An equivalent title for goods might be:
A. The right to exclusive possession (capable of lasting) forever?
o Problem with this is that it is incomplete

You have a lot more than merely a right to exclusive possession (e.g. the right to sue in the tort of trespass)
B. Ben McFarlane says that we should call this right 'Ownership' (with a big 'O').
o Rationale: civil law has an understanding of ownership as something that only one person can have. Whereas, in English law, more than one person can have the 'fee simple' in one piece of land. Similarly, with respect to goods, more than one person can have the same right.
o However, we come across different notions of ownership in English law. It is unclear how helpful it is to put a big O at the front.
C. 'Title'- this does not help. Title simply means 'entitlement' which doesn't tell us much about the nature of the right
D. A 'general property' in goods: this is the latest name that has been adopted

B.

A Possessory Title?

Example: A has Ownership of a bike. B steals A's bike by taking physical control of it. C takes the bike from B.
It is commonly submitted that title that is acquired through possession is different to the right that we think of as 'ownership'. In this scenario we know that B independently acquires a property right when he takes physical control of the bike. Therefore, C would commit a wrong against both A and
B. However, what is the nature of B's right? Is it also Ownership/general property or is it something called 'possession'?

Should we term this title 'a possessory title'?
Luke Rostill argues against the terminology of 'possessory title' in (2018) 134 LQR 407:

4 possible interpretations of 'possessory' in this context are all unhelpful or misleading:
(1) To say that the title is possessory in the sense that it was acquired by possession is unhelpful. While lesser titles can be acquired through possession they can also be acquired in other ways. Therefore the fact that they are 'possessory' is of no great significance.
(2) A second interpretation is that the title is possessory in that it will only subsist for so long as the title-holder is in possession of the chattel. But we know from case law that this is not the case (e.g. Armory v Delamirie) (3) In order for the title to exist, possession must have moved from the person with the best/better title to the person with the lesser title. This is also wrong- we know from the law of sale that title can be acquired without a change in possession.
(4) Lastly, it is said that a lesser title consists solely of a right to possession. This is not true because a lesser title is protected by the law of conversion under which there at be conversion without dispossession (e.g. Kuwait Airways)

Is the content any different?



There is some suggestion that the 'mere possessory title' only lasts for as long as the party is in possession of the chattel

However, the Armory v Delamirie line of cases show that this is not true
 Armory v Delamirie: the chimney sweep's boy could still enforce his right even though he had handed over possession to the jeweller
 Costello: C successfully asserted his right even though the police had seized it from him
Can also not be said that the difference between the 'mere possessory title' is necessarily different from 'Ownership' based on how it arises. Ownership can also be acquired through possession
The content of A and B's property right is the same:
o The rest of the world is under a prima facie duty not to interfere with both A and B's use of the bike

Also The Winkfield rule provides that for the purposes of tort- someone with a lesser title will be treated as having the best title
If the rights have the same content then it is clear that they are of the same nature: a general property in/Ownership of the bike
The only difference between the rights is their timing: B was already under a duty not to interfere with A's property right. Therefore A can be said to have the 'better title'.
Furthermore, we know that possession is not necessarily a requirement for there being a general property in goods (Rostill)
o E.g. birth, attornment

Possession vs Ownership in the context of the Sale of Goods Act
The SGA 1979 shows that a person who has a title in goods acquired by possession can alienate (i.e.
sell) his interest in the same way that someone with the best interest can.

S61 defines property as a 'general property' in goods
But we can see from the rest of the act that this refers to both those with the best title and inferior titles:
o S5 provides that goods include goods 'owner or possessed' by the seller

Also the implied term in S12 is not that the seller has the best title but that the buyer will enjoy quiet possession of the goods "except in so far as it may be disturbed by the owner" if any such encumbrance is disclosed or known by the seller

Nemo dat rule is found in S21: "where goods are sold by a person who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller has"
All these provisions show us that a mere possessor can sell goods

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