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Introduction to personal property law

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Classification of property

This section will consider the law concerning personal property. Personal property can be distinguished from real property, in that real property refers to land. Personal property is easier to trade, and the owner cannot eject others from personal property.

Personal property can be subdivided into chattels real and chattels personal. Chattels real refers to personal property which is treated as real property, such as leases. Chattels personal, proper personal property, will be dealt with in this section.

Chattels personal can be further subdivided into choses in possession and choses in action, where ‘chose’ means ‘thing’. Choses in possession are ‘things’ that can be touched. Choses in action cannot be touched. Their existence can only be enforced through legal action. To make some choses in action easier to deal with, they are represented by a document. The chose in action is then known as a documentary intangible. For example, a bill of lading is a document which allows the rights to goods on a ship to be negotiated whilst the goods are in transit. Any chose in action not classed as a documentary intangible is known as a pure intangible. Pure intangibles, such as debts or intellectual property rights cannot be possessed or sold, they can only be assigned.

According to Swift v Dairywise Farm [2000], a milk quota is a documentary intangible; but a trust under an exemption clause, according to Southern Water Authority v Carey [1985] is not a documentary intangible and so cannot be held on trust.

Definition of property

It is difficult to define what property is, except by reference to its status as being ‘owned’. When something is owned, its owner has a number of rights over that property. These rights are enforceable against the world and persist through insolvency. A property right is therefore stronger than a personal right. Property rights concern alienability (a right to exclude others), enforceability (against whom) and policy considerations.

In Yearworth v North Bristol NHS Trust [2009], it was found that the sperm of sperm donors could be owned by the donor (i.e. the sperm could be classed as property) given that the donors had the right to demand the destruction of their sperm at any time. Policy considerations were also at play here, as allowing ownership allowed a hospital to be sued for the unintentional destruction of sperm.

According to National Provincial Bank v Ainsworth [1995], a property right must be:

  • Definable (in a deed);
  • Identifiable by third parties;
  • Capable of assumption by third parties; and
  • Stable, or have some degree or permanence

Interests in property

Just as in land law, multiple persons may have certain rights, or interests, in property. A person have have an equitable or a legal interest in property. Equitable interests are interests held on trust by another person. Legal interests include ownership and possession. Ownership is the greatest interest that person may have in property. It is superior to possession, discussed below.

Unlike in land law, co-owenrship may occur both in law and in equity in the form of a joint tenancy (where the four unities are present) or a tenancy in common.

People may also have security interests in property. A person (such as a bank) may hold:

  • A mortgage over property – the property is transferred to them until the security is discharged
  • A charge over property – a right to own property
  • A pledge over property – a right to both possess and sell property
  • A lien – a right to possess property

Possession

Possession, as opposed to ownership, usually forms the basis of security interests and claims against other today. Different people may therefore own and/or possess the same property. J A Pye (Oxford) v Graham [2002, HL] defines possession as control of property with the intention to exclude others.

Control

  • Young v Hitchens (1843) distinguishes control from ‘almost control’. A defendant cases fish to escape from a net, but that net had not been closed, so control had not yet been taken of the fish. The defendant could not be sued in trespass for property not yet controlled and therefore not yet possessed by the claimant
  • The Tubantia [1924] defines control as doing as must as could be done to to control. Perhaps reinforced by a policy to encourage salvage operations, marking the location of a shipwreck was enough to evidence control and therefore prevent rival salvors from taking the goods contained on the shipwreck
  • OW Homes stated in 1881 that until control is lost, one still has control of property

Intention to exclude others

In J A Pye (Oxford) v Graham [2002], it was said that this intention element must still be proven, though it was clear that an adverse possessor did intend to exclude the true owner of the property in question.

Further points

  • Possession is a context-dependent question, as evidence by Re Atlantic Computer Systems Plc [1992], where property given out on loan was still considered to be in possession of Atlantic Computer Systems Plc.
  • Possession is also indivisible, according to Powell v McFarlane (1979), cited by J A Pye (Oxford) v Graham [2002], where a 14 year old had no intention to dispossess an owner of a filed when he grazed his cows on it.
  • Possession and ownership can be shared, through the concept of bailment. Whether bailed at will, or by virtue of a contract, a bailor has a bare proprietary right in property bailed, according to HSBC Rail (UK) v Network Rail Infrastructure [2005].

Transfer of possession

Possession can be transferred where it voluntary, according to s 61(1) of the Sale of Goods Act (SGA) 1979. There must be receipt of goods, acceptance, and a common intention to transfer, according to Farina v Home (1846).

Transfers of possession can take place through:

  • Actual delivery – though a physical transfer or symbolic transfer, such as the delivery of a control of access in Wrightson v McArthur & Hutchinsons (1919)
  • Constructive delivery – no physical transfer. The buyer may be in possession, or the goods may be delivered to a carrier in a commercial transaction under s 32(1) SGA 1979, where it is then for the buyer to insure them in transit under s 32(4)
  • Attornment – the bailor is changed at the request of the original bailor and the bailee notifies the new bailor of the change in accordance with s 29(4) SGA 1979:
    • Laurie & Moregood v Dudin [1926] – A lack of acknowledgment will prevent attornment taking place, allowing the owner of maize to stop delivery and protecting the bailee from an action in conversion
    • Michael Gerson (Leasing) Ltd v Wilkinson [2001] – Goods being attorned must be identified
  • Documents of title delivery – the document is delivered, such as a bill of lading, transferring a right to receive goods

Next: Bailment

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