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PERSONAL PROPERTY

Lecture 10

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Other units

Equity – choses in actionCommercial Law – sale of goods and security

over personal propertyCompetition and Consumer Law – consumer

sale of goodsIntellectual Property Law – intangible

property such as copyright, trade marks, designs, patents

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Real and Personal Property

Personal property lies on the border of property / no property

Land is permanent and immovable: The primary importance of land historically has been for its use and for the status that it gave rather than as a commodity to be traded to increase wealth

Personal property has traditionally been viewed as moveable, tradeable and valuable only in monetary terms. Goods can be physically transferred from hand to hand, may deteriorate over time and are often fungible.

Personal property usually has a limited lifespanDifferent means of transfer or real and personal property

require different rulesDifferent remedies

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Personal Property

Personal Property

Chattels real Chattels personal

Choses in action:

intangible

Pure intangibles

Documentary intangibles

Choses in possession:

tangible

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Chose in possession v chose in action

R v Hawcroft [2009] ACTSC 145 The accused was charged under s 89 Crimes Act 1900 (ACT)

with 230 counts of theft of sums of money after she had misappropriated the proceeds of a trust account of which she was the trustee.

The ‘property’ of the beneficiaries that she had stolen was a chose in action not a sum of money

Kingdon v Western Australia [2012] WASCA 74Unicomb v Official Trustee in Bankruptcy 99 FCR 1

The passing of a resolution to demutualise a credit union was not sufficient to vest any enforceable contractual right in the applicant. Thus no chose in action arose at that time meaning that shares which were to be later issues were not available to the a bankrupt’s trustee in bankruptcy as they were not “property” at that time.

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Further classification

Choses in action may be further sub classified as pure intangibles or documentary intangibles.

Examples of documentary intangibles: documents of title to goods (for example a bill of lading) documents of title to payment of money (negotiable instruments) Documents of title to negotiable securities (eg, bearer bonds).

 Pure intangibles include: debts, goodwill, and intellectual property

Personal property may be held at law or in equity

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Fundamentals of Personal Property:Ownership and possession

the transfer of possession of personal property without a corresponding transfer of ownership may create a bailment, or, if the purpose of the transfer of possession is to use the property by way of security then it may create a pledge,

ownership without possession will allow a creditor to retake (repossess) an asset if the person who has possession becomes bankrupt

the transfer of ownership without a transfer of possession gives the possessor rights over the goods which may end up with the owner losing their ownership.

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Ownership and Possession

OwnershipThe doctrine of tenures does not apply to goods; subject

to social controls it is possible to own them absolutelyLegal title to goods is indivisible but more than one

legal title may exist. Title can be held concurrently either as a joint tenancy

or a tenancy in commonIn common law countries, although not in civil

jurisdictions, ownership can be split into legal and equitable title

‘Interest’ is the quantum of the right to an asset‘Title’ is the strength of that right as against others

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Gatward v Alley (1940) SR (NSW) 174

Jordan CJ: 178 – 180“A good title to property, in the sense of such ownership as the law allows, consists in having the legal right to exercise with respect to it all such rights, as against all such persons as by law are capable of being exercised with respect to property of the class in question. A person who has possession of property but not ownership has, as a general rule, the same legal rights as the owner, save to the extent to which those rights are qualified as against the owner...De facto possession of a chose in possession is prima facie evidence of ownership, and also of itself creates a legal right to possess which is enforceable against anyone who cannot prove that he has a superior right to possess: any person who interferes with this legal right, without being able to prove a superior right, is therefore a wrongdoer”

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Possession – why is it important?

it is a root of title good against the whole world except the true owner.

it will form the basis of some security interests such as pledges and liens and will also be important for bailees.

possession will often be the element that decides who owns ‘found’ property.

it is an important element in the making of a giftit applies only in the case of physical property ie that

which is capable of possession. Purely intangible property cannot be physically possessed.

possession or a right to possession is a necessary precondition for the granting of some remedies, such as conversion

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Possession

It is possible to have possession in fact (de facto possession) and/or possession in law (de jure possession).

Possession has a physical and a mental aspect

SS Tubantia

“Possession is not limited simply to physical possession or custody of tangible property. Legal possession also denotes a state of mind where the person in possession of tangible property (or goods) regards him or herself as having exclusive control over the goods and this entitled to use those goods free from interference by other persons”

Pollock and Wright, An Essay on Possession in the Common Law (1888)

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Possession

Possession may mean different things in different contexts

F H Lawson and B Rudden, The Law of Property (2nd edn, 1982)‘Now in certain circumstances, although a person’s possession passes the ordinary tests applied by the average layman, a judge may think it improper to accord such rights to a person whom an average laymen would not regard as a possessor; or again he may wish to vary the concept depending on the function it is to fulfil. Thus if money and heroin are slipped into someone’s handbag unawares, the owner certainly has possession of the money as against a thief, but not of the drug so as to incur criminal liability.

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Possession

“Delivery is favourably construed, taking is put to strict proof”

a) of what kinds of physical control and use the thing in question is physically capable’

b) with what intention the acts in question were done,

c) the knowledge and intention of other relevant people,

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Moors v Burke (1919) 26 CLR 265

Moors was charged with having possession of stolen property. Was the property in his ‘actual’ possession “Possession is proved by various acts varying with the nature

of the subject matter. But exclusiveness is essential. That, of course, does not mean that several persons may not in concert have and exercise that exclusive possession as against the rest of the world”

Williams v Douglas (1949) 78 CLR 521: … It is wide enough to include any case where the person alleged to be in possession has hidden the thing effectively so that he can take it into his physical custody when

he wishes and where others are unlikely to discover it except by accident … R v Delon [1992] 29 NSWLR 29 Perna v Police [2007] SASC 306

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Acquiring and Divesting Possession

delivery; this is a voluntary transfer,finding (its counterpart is loss),abandonment and occupationoriginal acquisition eg foraging for

plants

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Delivery

Actual delivery is sometimes described as manual delivery and usually entails a physical handing over of the goods

Constructive delivery “takes place by an alteration in control over goods without any change in their physical possession”

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Finders Law

Armory v Delamirie (1722) 1 Stra 505 A chimney sweep found a jewel, Delamirie (de Lamerie)

attempted to wrongfully keep it de Lamerie who was unable or unwilling to produce the

original stone was ordered to pay the value of the best jewel

of that size.

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Finders Keepers?

Parker v British Airways Board [1982] 1 QB 1004 Parker found a gold bracelet in the British Airways executive

lounge. He handed it in, left his details, and when the owner was not found, requested its return.

BA refused to return it and sold it as part of a lost property sale. Donaldson LJ: The issue is decided by the degree of control that

is exercised: “an honest finder acquires good title against all the world except the true owner”

Waverley Borough Council v Fletcher [1996] QB 334: “Where an article is found in or attached to land, as between the owner or lawful possessor the land and the finder of the article, the owner or lawful possessor of the land has the better title.”

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Finders Keepers

Tamworth Industries Ltd v Attorney General [1993] 3 NZLR 616:$52,452 cash and 20 to 30 bags of cannabis found on leased property in boxes and bags secreted below the floorboards of an abandoned building

Chairperson, National Crime Authority v Flack 156 ALR 501: $433,000 cash in a briefcase in a cupboard in Mrs Flack’s home

Pollock & Wright's Essay on Possession in the Common Law p41 : "The possession of land carries with it in general, by our law, possession of everything which is attached to or under that land, and, in the absence of a better title elsewhere, the right to possess it also. And it makes no difference that the possessor is not aware of the thing's existence... It is free to anyone who requires a specific intention as part of a de facto possession to treat this as a positive rule of law. But it seems preferable to say that the legal possession rests on a real de facto possession constituted by the occupier's general power and intent to exclude unauthorised interference.”

Criminal Assets Recovery Act 1990 (NSW) (amended in 2010 by the Criminal Assets Recovery Amendment (Unexplained Wealth) Bill 2010): Allows recovery “if the Supreme Court finds there is a reasonable suspicion that the person has engaged in a serious crime related activity (or has acquired any of the proceeds of any such activity of another person) unless the person can establish that the wealth was lawfully acquired” (s 3(a1))

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Roger Rogerson

Transfer of ownership of personal property21

saleaccession, commingling and specificationabandonment bartergiftfindingwill or donations mortis causa

Sale22

Competition and Consumer Act 2010 (Cth) governs transactions involving the sale of goods or the provision of services at a cost of $40,000 or less or, if more than that, where the goods or services were provided wholly or predominantly for private, domestic or household purposes.

Non consumer sales - Sale of Goods Acts of the various States and Territories unless the parties exclude the operation of that legislation.

International sales may be covered by the Sale of Goods (Vienna Convention) Acts of the States and Territories.

Roman law

accessio (alteration or the doctrine of accession)

confusio and commixtio (commingled goods)specificatio (the doctrine of specification in

which the original good loses its physical identity through its inclusion in a manufacturing process)

Principles applied in the Personal Property Securities Act 2009 (Cth)

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Accession

“Accession takes place where one chattel is added to (or accedes) to another chattel in circumstances where the chattel attached (the accessory) cannot be removed from the chattel to which the accessory is attached (the principal) without the destruction or serious injury to the article as a whole” (Pearson et al, Commercial Law, Commentary and Materials, 3rd ed, 2010, Thomson Reuters)

McKeown v Cavalier Yachts Pty Ltd (1988): $24,409 worth of work acceded to a yacht hull worth $1,777

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Commingling

“Commingling refers to the mixing together of goods which belong to two or more people in such a way as to result in common ownership of the resultant mass or bulk. Commingling takes two forms and they derive from the Roman legal doctrines of commixtio (solids) and confusio (liquids).” (Although the Romans apparently used the terms somewhat interchangeably) (Pearson et al, Commercial Law, Commentary and Materials, 3rd ed, 2010, Thomson Reuters)

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Indian Oil Corp Ltd v Greenstone Shipping [1988] 1 QB 345, “The Ypatianna”

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Mixture of crude oil in tankerStraughten J (QB):

“If the wrongdoer prevents the innocent party providing how much of his property has been taken, then the wrongdoer is liable to the greatest extent that is possible in the circumstances....If the components are proved to be of equal value, the innocent party is entitled only to the given quantity, which I take to be that which he contributed. It is only if the innocent party cannot tell what was the original value of his property that he is entitled to the whole.”

Specification

Specification is the process under which a raw material or other material or input is altered by the application of manual work or some mechanical process or chemical process to produce an output of a different identity or species from the input or inputs. (Pearson et al, Commercial Law, Commentary and Materials, 3rd ed, 2010, Thomson Reuters)

Associated Alloys Pty Ltd v Metropolitan Engineering and Fabrications(1996)

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Gifts

Gifts Inter vivosTestamentary GiftsDonationes Mortis Causa

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Three elements to making a valid gift inter vivos

The donor must have an intention to give the property to the donee

The donee must have the intention to accept the gift of property

Both the donor and the donee (but especially the donor) must perform an act of acts adequate to give complete effect to the relevant intention.

Pearson et al, Commercial Law, Commentary and Materials, 3rd ed, 2010, Thomson Reuters, [3.205])

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Olsson v Dyson (1969) 120 CLR 365

Windeyer J: .. “to make a gift of any thing the intending donor

must actually give it to the donee in a way which the law recognises. The owner of a thing does not effectively give it away simply by saying ‘it is yours as a gift’. He must not only say it is a gift, he must give it to the donee, who must, by words or conduct, accept it. How a thing can be given away depends on what it is”.

 

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3 ways to make a gift31

By deed. Actual delivery of the goods the subject of the gift is not necessary: Norman v FCT (1963) 109 CLR 9.

By oral or written words indicating an intention to give the goods, together with delivery of the goods: Williams v Williams [1956] NZLR 970. A transfer of property by way of gift is achieved by deed or by delivery accompanied by the intention to pass ownership:

The owner can also declare himself or herself to be a trustee of the goods which are the subject of the gift.

 

Cases

Rowland v Stevenson BC200502120, Supreme Court of NSW, equity division: gift of a yacht

Papathanasopoulos v Vacopoulos [2007] NSWSC 502: gift of an engagement ring

held to be conditional upon the marriage actually taking place 

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Donationes Mortis Causa

Gifts in Contemplation of Deaththe gift must be in contemplation of impending death;its subject matter must be personal propertythere must be delivery of the subject matter of the gift,

a transfer of the means or part of the means of getting at the property, or a transfer of the indicia of title

the gift must be conditional on the donor’s death (but otherwise unconditional

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Cosnahan v Grice 15 ER 476

Lord Chelmsford:“Cases of this kind demand the strictest scrutiny. So many opportunities, and such temptations, present themselves to unscrupulous persons to pretend these deathbed donations, that there is always a danger of having an entirely fabricated case set up. And, without any imputation of fraudulent contrivance, it is so easy to mistake the meaning of persons languishing in a mortal illness, and by a slight change of words, to convert their expressions of intended benefit into an actual gift of property, that no case of this description ought to prevail, unless it is supported by evidence of the clearest the most unequivocal character.”

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Hobbes v NSW Trustee & Guardian [2014] NSWSC 570

“shortly before his death Mr Gibson made gifts to her which became effective on his death of a credit balance in a bank account with the St. George Bank Ltd, a fixed term deposit with St. George Bank, and his real estate consisting of a unit in Bayley Street, Dulwich Hill”

“when I go everything is yours,” “Take these, I don’t need any more” Held that Mr Gibson had intended to give her the money in a bank

account. Delivery of the bank passbook was a sufficient delivery of the indicia of title. Similarly a card, which evidenced a term deposit of $100,000 was sufficient to transfer title mortis causa to her.

Not possible to have a valid donationes mortis causa of real property in Australia. If it was, the delivery of the keys was not sufficient. Would also need a transfer of the documents of title

Abandonment

Leonard George Munday V. Australian Capital Territory (1998) SC ACT 62 NO. SC 320 OF 1998.

Johnstone & Wilmot v Kaine (1928) 23 Tas LR 43 “On the whole I think that I should adopt the rule that the intentional abandonment of a chattel by the owner of it does not divest him of his ownership.”

Munday v. Australian Capital Territory No 2 [1999] ACTSC 8: Restraint of trade?: “ENTRANTS MUST OBEY ALL SIGNS AND DIRECTIONS BY STAFF AND MUST NOT TRADE, SALVAGE, SCAVENGE, BARGAIN FOR OR SOLICIT FOR MATERIALS, GOODS OR WASTE WITHIN THE LANDFILL”

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International Barter

In 2004 the WTO estimated that 15% or $8.43b in international trade was conducted on a non cash basis

According to the US Department of Commerce, barter accounts for nearly 30 percent of world business.

The International Reciprocal Trade Organisation (IRTA) estimates that their 400,000 participating businesses transacted $12 billion globally in 2009/2010

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Pepsi for Vodka

“One well known example of bartering is Pepsi Cola’s arrangement with Russia where Pepsi is sold in exchange for Russian vodka and Russian-built oil tankers. The vodka is exported and sold for hard currency. The tanker can either be sold or operate in international trade for hard currency.

Coca Cola receives Russian-built Lada cars, which are sold in Great Britain for the final transformation to hard currency for Coke originally sold in Russia for soft currency.

R.J Reynolds counter trades Bulgarian and Yugoslavian tobacco with American-made cigarettes.

Feist, Heely, Lu, Nersesian, Managing a Global Enterprise 1999 Greenwood Publishing Group

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Barter39

“Bartering can become incredibly complex. One deal started with the hard currency purchase of raw sugar from Brazil. the sugar was exported to the Ukraine for refining with the processing payment being a portion of the refined sugar. The remaining refined sugar was bartered in Siberia for an oil product, which, in turn, was bartered in Mongolia for copper concentrate. The copper concentrate was refined in Kazakhstan with the processing payment in refined copper. The remaining refined copper was exported into the world market to cover its intial purchase of raw sugar.”