What Is Property?

CHAPTER 1


WHAT IS PROPERTY?


1.1   Understanding the concept of property


The common understanding of property within Western societies is the right to exclusive ownership and control of a specified object. In a legal sense, property is defined not as the object itself but, rather, the relationship which an individual or a corporation has with the object and with the rest of the world in relation to that object. The character of the relationship may vary according to a range of factors which include: the nature of the object (the object may be tangible or intangible, land or chattels), the duration of time for which the relationship is expressed to exist, the jurisdiction in which the relationship is legally enforceable and, more fundamentally, the political, legal and economic structure of the society in which it is enforced.


Private property has become the dominant form of property relationship in the modern capitalist world. Private property is one of the fundamental tenets of a capitalist system as it promotes a liberalist, laissez faire society whereby individuals have the right to accumulate property and wealth for their own exclusive means. Inevitably, however, capitalist systems produce disparities in property and wealth distribution, and the evolution of private property has helped to perpetuate social inequality and oppression.


Socialist, communist regimes espouse communal, collective ownership in preference to private property. Karl Marx considered private property to be not only a source of social oppression but also alienation; he felt private property and the fundamental desire to ‘have’ eventually overwhelms other natural physical and intellectual senses in man and in this way alienates man from his true being. Marx notes:


Private property has made us so stupid and narrow minded that an object is only ours when we have it, when it exists as capital for us or when we directly possess, eat, drink, wear, inhabit it, etc, in short, when we use it. Yet private property itself in its turn conceives of all these direct realisations of property merely as means of life, and the life which they serve is that of private property, labour, and capitalisation. Thus all physical and intellectual senses have been replaced by the simple alienation of all these senses, the sense of having. [Economic and Philosophical Manuscripts: Private Property and Communism. Taken from Marx, K, Early Writings, Colletti, L (ed), 1975, London.]


The sense of ‘having’ and the desire to acquire property exclusively continues to dominate many modern cultures. Monopolisation of the world’s resources and the desire to own and control is the backbone of the current social and economic ideology. The expansion of private property has produced social divisions resulting in a separation between those who have the power to control resources and those who do not. Proudhon has claimed that private property is tantamount to theft, because the acquisition of property in modern capitalist societies increasingly confers power and authority. This ‘theft’ has become so much a part of the modern world that it is now an accepted practice. Exclusive ownership and the further acquisition of property rights now identifies most of modern capitalist existence.


In its essence then, property is a social dynamic; mutable, mercurial and value laden, it forms the primal core of most social activity in the modern world. It is, as one commentator has noted, ‘an emotive phrase in search of a meaning’. (Gray, K, ‘Property in thin air’ [1991] CLJ 252.)


In a legal context, property is used to describe a range of interests. The diversity and erudition of the property concept was appraised by the High Court in Yanner v Eaton (1999) 166 ALR 258:


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…Sometimes it is employed to indicate the physical object to which various legal rights, privileges, etc, relate; then again—with far greater discrimination and accuracy—the word is used to denote the legal interest (or aggregate of legal relations) appertaining to such physical objects. Frequently there is a rapid and fallacious shift from the one meaning to the other. At times, also, the term is used in such a ‘blended’ sense as to convey no definite meaning whatever.1


1.2   Characteristics of the property relationship


1.2.1   Property is a right and not a thing


Property describes the relationship between an individual and an object or resource; it does not refer to the object itself. The property relationship confers a legally enforceable right or, more accurately, a bundle of rights entitling the holder to control an object or resource. Once it is understood that property describes the relational interplay between individual and object rather than the object itself, the breadth, diversity and potential for expansion that is characteristic of property rights is easier to appreciate. Almost any usable object, corporeal or incorporeal, is capable of being owned, although restrictions upon what is capable of being owned may be legally introduced by common law development or express statutory provisions, or through changing social mores, where ownership is considered to offend the prevailing moral milieu. For example, most modern societies refuse to recognise the ability of one person to own another as it contravenes basic human rights of freedom and liberty.


Ownership rights focus upon rights of use, control and possession over an object and include:



•   the right to exclusive physical control of the property;


•   the right to possess the property;


•   the right to use and enjoy the property; and


•   the right to alienate (that is, transmit, devise or bequeath) the property.


The definitive right in private property relationships is the right of the owner to the use, possession and enjoyment of the object to the exclusion of the rest of the world. Legally, this right is known as an ‘in rem’ right because it is enforceable against the rest of the world. Other rights which generally characterise the private property relationship, although are not definitive in nature, include the right to possess and enjoy the object and the right to get rid of or ‘alienate’ the object. In combination, these rights entitle an owner of property to deal with that property in whatever manner the owner chooses, provided it is lawful and proper.


1.2.2   Property is only enforceable by law


Private property rights can only truly exist where the prevailing legal system protects and enforces such rights. Without legal recognition, private property rights would be unenforceable. As noted by Felix Cohen, in his ‘Dialogue on private property’ (quoting Jeremy Bentham), ‘Property and Law are born together, and die together. Before laws were made there was no property; take away the laws, and property ceases’.2 Most mature societies have a legal system which recognises and enforces a variety of different types of property rights. Nevertheless, despite being legally enforceable, the rights of property owners are not absolute; both the courts and Parliament may impose restrictions. Restrictions may be placed upon both the type of rights associated with ownership and/or the manner in which those rights may be performed. The right to impose such restrictions stems from the fact that property owners are bound to comply with the legal system which regulates them. This is not to suggest that property rights may be arbitrarily taken away from the holder. For example, the owner of a piece of land does not have the right to refuse its compulsory acquisition by the government but does have the right to seek just compensation for such an acquisition.3


1.2.3   Several property interests may exist in a single object


As property is a relationship, it is possible for a range of differing forms of property interests to arise in a single object. Property interests may be fragmented according to time or according to the jurisdiction in which they are enforced. This means that a single object may be the subject matter of a variety of different property relationships—whether they be common law, equitable or statutory in nature and whether they be for an indefinite or precisely defined period.


Where a property right is expressly limited to a particular period of time, the limitation will create a surplus and this surplus will constitute a different type of property right. For example, a piece of land may be owned by A for the duration of her life and, once she dies, be owned absolutely by B. In such a case, both A and B acquire an interest in the property, with A’s interest being limited by her life and B’s being unlimited but only coming into possession upon the death of A. In such a case, it can be said that both A and B hold a property interest in the land, although each interest is of a different character because of the fact that the right to possession vests at different times. (See, further, Chapter 3: The doctrine of tenure and estates.)


1.2.4   Not everything is capable of being owned


With our rapidly developing technology, the range of objects capable of being owned is constantly expanding; nevertheless, in all societies there are some things which are not capable of being owned. For example, most societies either do not recognise or expressly prohibit ownership over such things as air or water because of their fundamental significance to human existence. If, as noted above, private property results in the accumulation of wealth and resources into the hands of a few, it would be detrimental to a large proportion of society to allow fundamental necessities such as air and water to be owned. Sometimes, to ensure a fairer distribution and equal access, property which is considered to be beneficial to society as a whole is owned by the state. The state then regulates this property in accordance with the needs of the community overall. For example, in Australia, everyone has a right of access to beaches and national parks, and the government owns these areas in order to ensure their protection and upkeep for the community as a whole.


Ownership may also be restricted where it offends prevailing moral attitudes. Parents are not regarded as capable of owning their children and a husband does not own his wife. Society deems such ownership as morally reprehensible even though, in some situations, the effective control that one person may have over another is tantamount to ownership. Some rights are incapable of being owned because ownership would interfere with the proper cultural and intellectual development of society as a whole; for example, there is no property in such rights as the right to produce children, to watch a particular film or to read a particular book.


Some rights are incapable of being owned because there is no clear method by which such rights could be properly enforced or because enforcement would unduly interfere with the rights of others. If a resource is incapable of excluding others, it may not be capable of becoming property; this may occur where it is impossible to prevent third parties from using or accessing the resource. For example, there is, as yet, no property in the right to a view or the right to light, primarily because there is no way of effectively regulating its access.4


1.3   The philosophical evolution of private property


The centrality of private property in the evolution of social and political institutions has, inevitably, encouraged a wide variety of philosophical discourse. Most of these discussions reflect the prevailing social or political structure in existence at the time that they were written. An examination of the broad elements of some of these theories is an integral part of the appreciation of the overall dynamic of property law.


Perhaps one of the first and most fundamental theories justifying the existence of private property is the natural rights theory, the earliest advocate of which was John Locke. According to Locke, property was originally owned in common by all men; however, men had a natural right to appropriate this common property for their own private use where they themselves had laboured to create it. Locke conceptualised what became known as the ‘social contract’, whereby individuals agreed to hand over particular powers to the government to control in exchange for a guarantee of protection of fundamental natural rights of life, liberty and property.5


The evolution of ‘money’ and the establishment of structured communities assisted in the regulation of the agreements which, according to Locke, labour and industry had begun. The Lockean philosophy formed an essential part of the social ethic during the period of the American and French revolutions and the rise of the middle class liberalists. Locke’s natural right theory became the classic liberalist theory and functioned as a benchmark for middle class revolutionaries, in particular the large group of independent workers in the 18th century who produced their own goods and lived by their own trade. For such people, natural rights symbolised a perfect sense of equity and justice because they ensured that each individual enjoyed the profits of his own labour. Such an approach was deemed much fairer than the blatant inequality apparent in the old feudal customs and royal privileges.


By the start of the 19th century, however, with the rise of a more structured, omniscient government and a more established social structure, the classical approach to natural rights began to diminish. The emergence of a powerful parliament and the increasing regulation of society meant that individuals were subjected to greater control. In a social climate where most private property was rapidly being acquired by the government, and very little was being acquired by the peasants who worked the land, a natural rights theory based upon individual labour had very little relevance.


In such an environment, property discourse increasingly examined governmental rights and the notion of ‘royal dominion’. Royal dominion assumed that all land ownership was ultimately vested in the Crown. Nevertheless, the natural rights philosophy did not disappear altogether. Private ownership was still assumed to be a natural right, but only where it was granted in accordance with the legitimate governmental process. Gradually, parliamentary authority began to subjugate the autonomy of individual property rights.


In his famous Commentaries on the Laws of England, William Blackstone pointed out that natural rights, as willed by God and discoverable by reason, would only be protected where the individual agreed to comply with the rules and regulations of society, and that these rules were capable of limiting or altering the ambit of natural rights. He noted:


All property is derived from society, being one of those civil rights which are conferred upon individuals, in exchange for that degree of natural freedom which every (person) must sacrifice when entering into social communities. If a member of any national community violates the fundamental contract of association, by transgressing the municipal law…the State may very justly resume that portion or property, or any portion of it, which the laws have before assigned.6


Given the significance of societal regulation, it was important, as John Rawls has noted, for individuals to choose a society which would best enable them to select and properly enjoy their natural rights. If individuals wished to maximise their right to life, liberty and property, they needed to enter into a society, the rules of which were consistent with ‘the most extensive, total system of equal basic liberties compatible with a similar system of liberty for all’.7


In the late 19th century, discussion and thought on private property began to take a slightly different course. This new direction stemmed from the increasing belief that governments were set up for the common good of all members of society and that private property rights were consistent with public utility. This new approach was encapsulated in the emerging philosophy, referred to generally as utilitarianism.


Utilitarianism became a major political philosophy in the late 19th century. Its original concept was espoused by Jeremy Bentham, who saw the aim of government as being the promotion of the greatest happiness in the greatest number of people.8 Providing a structure for the accumulation of private property was one way in which government could promote public happiness. In this sense, utilitarians believed that private property was not a natural right but rather a societal creation.


David Hume was one of the early proponents of utilitarianism; he rejected the natural rights approach, believing that reason alone was incapable of determining social and political obligations. Private property existed because it had become a social convention that individuals obeyed, it being in their mutual interests and the general public utility to do so. Hume believed that common good led an individual to concur with a system of rules implementing private property but that, ultimately, all property was subordinate to the authority of civil laws.9 Private property, and the creation of wealth that it stimulated, were considered by the utilitarians to enhance the general welfare of the community, and this advantage was felt to outweigh the inequality and oppression it inevitably created.


Other philosophers in the 19th century rationalised property on a more metaphysical level. Kant and Hegel felt that private property only existed where an individual exerted his or her will upon it, and they rejected the Lockean theory of natural rights. These philosophies became known as ‘idealist philosophy’. According to Kant, a person acquires property, not by the mechanical operation of mixing labour with external objects, but through the transcendental operation of directing will upon a given object; where a person has possession of an object and believes he owns that object to the exclusion of all others, private property may exist, provided it is in accordance with what Kant refers to as the ‘general will’. Under Kant’s theory, there must be a union of wills or a recognition of a general will which can convert the individual’s possession into a right:


In a word, the mode in which anything external may be held as one’s own in the state of nature, is just physical possession with a presumption of right thus far in its favour, that by union of the Wills of all in a public Legislature, it will be made juridical.10


The ‘general will’ refers to a legal system which approves of an individual’s assertion of right where it was perceived to be for the benefit of the community as a whole. Like Kant, Hegel felt that a person had the right to direct will upon any object in order to make that object his own. It was individual will which, according to Hegel, gave an object a true meaning and existence. He noted, ‘A person has the right to direct his will upon any object as his real and positive end. The object thus becomes his. As it has no end in itself, it receives its meaning and soul from his will’.11


Hegel therefore felt that an object only truly exists when an individual directs his attention to it and claims it as his own. This direction of will is important for an individual’s realisation of freedom; appropriating property for private use is one of the primary ways in which an individual may objectify himself as he has the freedom to use his property in any manner in which he may see fit. The more communal the ownership, the more that this freedom is restricted. Hence, according to Hegel, ownership of property by an individual is essential for the realisation of liberty.


Like Kant again, Hegel believed that consent for this appropriation of property came from the commands of the general will as expressed in the state. Hegel felt, however, that the state embodied the general will of all its members and its claim to property would always be superior to those of the individual; hence, the rights of property owners are always subject to the higher spheres of state rights. The state cannot, however, capriciously interfere with an individual’s rights and cannot redefine those rights to favour communal rather than private ownership. The state can only interfere with private property rights where it can be established that those rights are no longer achieving the desired goals. Hegel justified the inequality associated with private property by noting that the human spirit is itself unequal: different people need different levels of property to achieve self-fulfilment. Inequality is an intrinsic part of the human condition, hence, an unequal division of property is an appropriate reflection of human individuality.


The Lockean notion of private property as a natural right was critically reassessed with the rise, in the late 19th century, of what became known as the ‘philosophy of history’. The emergence of the philosophy of history encouraged a reappraisal of existing beliefs and perceptions concerning property rights; it claimed that property may have been a product of a number of rights, and the significance of any one right depended upon the traditional cultures and customs adopted by individual societies. It was found that common ownership of property was preferred by primitive societies to private, exclusive ownership, and this historical reconstruction was used as a basis for the rejection of the natural rights analysis and the construction of a communal property philosophy.


In the Communist Manifesto of 1848, Marx suggested that the time was ripe for the transformation of private capital into common property. Proudhon, in 1840, had previously reached the conclusion that land, because it is not created by labour, ought to remain common property, but that capital should belong to the workers. This approach was broadly consistent with natural rights theories although it combined a labour justification with a communal property theory. Marx followed a similar approach; in the Communist Manifesto he advocated the transfer of private property from the capitalist class (the ‘bourgeoisie’) to the class whose labour had created that property (the ‘proletariat’). Marx stated that, ‘Communism deprives no man of the power to appropriate the products of society; all that it does is to deprive him of the power to subjugate the labour of others by means of such appropriation’.12


The ultimate ambition of communism as advocated by Marx was a more equal distribution of property so that it could be distributed ‘from each according to his ability, to each according to his needs’.


The socialist reassessment of property rights revealed very clearly the fact that private property relations are simply a societal construct. Once the fundamental customs and values of society change or are reinterpreted, the right to exclude may not be the defining feature of the property relationship. Private property, whilst pervasive in the modern world, does only represent one form of ownership, and there is always the potential for different forms of ownership to emerge. Whether private property exists as a natural right, a social construct or the metaphysical application of individual will, it can only exist to the extent that it emulates the needs and demands of society. This is something that most modern socialists recognise. Engels, like most socialists of the 20th century, expressed the view that in an ideal society, the natural right theory may simply be an historical formula and that ‘need’ will eventually form the primary right to property, replacing ‘labour’. If this approach were adopted, it would represent the ultimate destruction of the natural right philosophy.


In recent times, economic arguments have emerged in defence of private property structures, although such theories do not focus upon the humanist concerns about the inequality and oppression that the expansion of private property has engendered.13 It has been suggested that communal property encourages waste and an inefficient use of resources. Where property is owned communally, each owner has an incentive to make sure that he or she gains the most out of the property without necessarily taking into account the overall benefit of the property; this invariably leads to a more immediate destruction in the resources of the property due to overuse. Where property is owned privately, those resources may be utilised more efficiently. Individuals are not competing against each other for use, and may therefore spend more time and effort planning the most resource effective activities.14 These arguments are particularly potent in a society increasingly concerned with resource efficiency and environmental protection.15


This economic rationalisation of private property is a persuasive one except when we recall some of the consequences of private property in a capitalist system in human terms. Those who own large amounts of property in a free enterprise, capitalist society, of which there are very few, tend also to control the capital, and this gives them the power to affect directly the lives of individuals who depend upon the proper management of capital. Whilst there may be some limitations upon this power, usually in the form of basic standards of wage and minimal legislative safeguards for working environments, those who control the capital generally have the institutional power to sustain the repression of those who do not. Inevitably this perpetuates the division between the ‘haves’ and the ‘have nots’ and results in the segregation of production from need. The rich may lavish money upon extravagant lifestyles when the poor barely have enough to survive. The rich have the power to exploit, whether this be of production, industry, natural resources or poorer nations, thereby entrenching inequality and oppression. In human terms, the injustice of such a system is overwhelming.16


Contemporary society is, however, unlikely to move towards a socialist, communal system of property distribution. Private property has become such an entrenched part of the social and economic milieu of modern society that major structural change is unlikely to be accepted, and those in control are unlikely to allow such change to occur anyway. All that can be realistically expected is that the power and control of those in charge of existing property resources be effectively restrained for the interests of the community as a whole.


The increasing public face of private property resources, particularly those having a direct impact upon the needs of the public at large, such as oil companies, and private institutions catering for health and education, has meant that those in charge must exercise a greater degree of public obligation and accountability. Nevertheless, such obligations do not represent a sufficient check on the way in which power and control are exercised in these areas and, with the increasing trend towards the privatisation of fundamental social services, greater legislative protection may be necessary. Future discussions concerning the type of resources capable of forming the subject matter of property and the social obligations that holders of such property rights should face are likely to become more relevant than discussions critically analysing the existence of private property, because these discussions have already been well aired.17 As Lawrence Becker notes: