Introduction

Property Rights and the Numeras Clausus

The characteristic of a property right is that it is capable of being asserted against 3^rd 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 3^rd 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”

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).

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.

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:

  • 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. The right to exclusive possession forever

2. A possessory interest

3. Chattel leases

4. Security Interests

5. Co-ownership

6. 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)

  • 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...

Buy the full version of these notes or essay plans and more in our Personal Property Law Notes.