PERSONAL PROPERTY

THE DISTINCTION BETWEEN REAL AND PERSONAL PROPERTY

Real property is land and things built on land
Personal property is all the property that is left after real property has been subtracted from the
class of property taken as a whole. Personal property is, therefore, a residual class of property.
The law treats real and personal property differently specific performance is rarely ordered where
a buyer fails to deliver goods, but it is where a vendor fails to complete a contract for the sale of
land.
Goode says that the different characteristics of the two types of property result in these
differences; land is generally immovable, and permanent, whereas personal property generally
flows freely.
TYPES OF PERSONAL PROPERTY
Personal Property can be divided into chattels real and chattels personal.
Chattels real are mainly leasehold interests in land
Chattels personal can be divided into tangible movables (choses in possession: goods and money)
and intangible movables (choses in action: documentary intangibles (documents that not only
evidence an underlying right to money, goods, or securities, but also embody that right. The right
that the document respresents may be pledges or otherwise transferred simply by delivery of the
document, together with any necessary indorsement e.g. insurance policies and and pure
intangibles (choses in action that are not documentary intangibles debts, copyright, and goodwill).
Anything can be defined or described as property, as long as it is not real property, or personal
property.
WHAT IS PROPERTY?
Vaines: A tangible thing itself, or rights in respect of that thing, or rights, such as debt, in relation to
which no tangible thing exists.
Gray: Property is the condition of being proper to (or belonging to) a particular person. Property
is not a thing but a relationship. This relationship is dynamic; the content of the relationship is
liable to change.
Gray: Property is a relative, and not an absolute concept. Two or more subjects may have
concurrent property rights in the same object. These rights may or may not conflict.
Gray: Property is a dynamic relationship. Both the subjects and the objects of the relationship may
change.

WHAT ARE THE CHARACTERISTICS OF PROPERTY RIGHTS?
The law has facilitated the process of buying and selling commodities by limiting the number of
property interests that can exist in relation to the commodity in question and ensured that each
interest is clearly defined, easily discoverable by third parties, and readily convertible into money.
Lord Wilberforce in National Provincial Bank Ltd v Ainsworth: before something can be admitted
into the category of property, it must be definable, identifiable by third parties, capable in its
nature of assumption by third parties, and have some degree of permanence or stability.
Gray states that excluding things which are not property brings us much closer to establishing what
is property.
In Victoria Park Racing and Recreation Grounds Co Ltd v Taylor, a man had erected a platform on his
land so that he could look over the neighbouring racecourse and deliver a radio commentary. As a
result, people stayed at home and the racecourse owner lost out. The Court held that the neighbor
had committed no legal wrong, as they had not taken anything that might be regarded as the
plaintiffs property, There could be no property in a spectacle such as a horse race.
TYPES OF PROPERTY RIGHTS
1. Ownership
2. Possession for a limited interest, including liens and rights arising under pledges.

All other rights exist only in equity for example the rights of a beneficiary under a trust, and mere
charges.
THE SIGNIFICANCE OF PROPERTY RIGHTS
The distinction between the ownership of an asset, and a purely personal right to acquire an asset
(such as under a contract) is usually of little significance so long as the debtor is traceable and
solvent, because if the debtor fails to deliver then the creditor can simply obtain what is due to him.
Its when the debtor is insolvent that the distinction becomes crucial because its a basic principle
of insolvency law to adopt the non-bankruptcy ordering of rights and thus to respect proprietary
rights held by another prior to the debtors bankruptcy.
In Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd, The Aliakmon [1986], goods were damaged on a
voyage when the risk in the goods but not the property in them had passed to the buyers. The
buyers had no claim against the carrier under the contract of carriage as they were not a party to
that contract, and the House of Lords held that the buyers had no cause of action in the tort of
negligence. Lord Brandon held that in order to enable a person to claim in negligence for loss
caused to him by reason of loss or damage to property, he must have had either the legal
ownership of or a possessory title to the property concerned at the time the loss or damage
occurred, and it is not enough for him to have only had contractual rights in relation to such
property which have been adversely affected by the loss of or damage to it.
A property right binds third parties. However, there is a line of authority which suggests that in
certain cases, a personal right relating to property may do the same, such as in De Mattos v Gibson,
where a mortgagee sought to enforce his security on a ship which held a charterparty that he was
fully aware of. The charterer applied for an injunction to prevent the mortgagee from doing
anything that would interfere with the performance of the charterparty, and was successful. This
principle was later applied in Lord Strathcona Steamship Co LTd v Dominion Coal C and Swiss Bank
Corprn v Lloyds Bank Ltd.

OWNERSHIP
Honore: Ownership is the greatest possible interest in a thing which a mature system of law
recognises.
Examples of incidents of ownership: the right to possess, use, manage, income of thing, capital,
security, prohibition of harmful use, liability to execution.
A person can be described as the owner even though all the listed incidents of ownership are not
present. If I lend you my car, I have residual rights, and an absolute interest in the car. You have
special rights of possession and a limited interest in it.

LEGAL AND EQUITABLE OWNERSHIP
Legal and equitable ownership can be separate, but legal ownership cannot be split it must be
transferred entire.
It is only possible for two legal interests to exist at one time; that of the true owner and the
independent legal interest of a person who holds possession of the chattel with the intention of
asserting rights of ownership (animo domini).
INTEREST AND TITLE
Both the true owner of an asset and the person in possession of an asset animo domini have an
independent legal interest in the asset. Each has title to the absolute interest in the asset and each
may assert his interest against a third party, as long as the third party does not have a better title.
However, against each other, the owner has an absolute title and the possessor has only a relative
title.

CO-OWNERSHIP
Personal property may be the subject of co-ownership at law and in equity. Although legal
ownership is indivisible, two or more persons may be indivisible, two or more persons may be the
legal co-owners of a chattel as joint tenants or tenants in common. In Mercer v Craven Grain
Storage, where farmers deposited grain with a grain storage company, allowing it to be mixed with
grain deposited by other farmers, the HoL held that all the farmers were tenants in common of the
commingled mass.


ACQUISITION AND TRANSFER OF LEGAL AND EQUITABLE OWNERSHIP
A) LEGAL OWNERSHIP
Can be acquired by the following means:
- Taking possession of a thing without an owner
- Bringing a new thing into existence
- Consensual transfer of a thing from the existing owner (gift or sale).
- Transfer which overrides the rights of the existing owner nemo dat quod non habet
- By operation of law when goods become fixtures or accessions or through specification, confusion,
or commingling.
- By operation of law on death or insolvency.

B) EQUITABLE OWNERSHIP
Can be acquired by any one of the following means:
- By an agreement to transfer legal or equitable ownership
- By a defective transfer of legal ownership
- By a purported present transfer of an after-acquired asset
- By declaration of trust: either the transferor of an asset declares himself to hold it on trust for the
transferee, or the transferor instructs a to hold the asset on trust for the transferee.

Equitable ownership may be transferred by written agreement or declaration of trust. Because equity
regards as done that which ought to be done, the obligation to transfer an asset is treated in equity as a
transfer. For this to occur, these conditions must exist:
- The subject matter is identifiable
- Consideration is in due course paid.
The intended transferee cannot assert an inchoate interest against the intended transferor or third parties
until he pays the price and converts that interest into full equitable ownership, which is deemed to relate
back to the time the agreement was made.
POSSESSION
Pollock and Wright:
- Physical control or de facto possession is different to legal possession, which is again different to
the right to possess or to have legal possession.

The whole terminology of possession is still very loose and unsettled. It lacks agreed terminology.

De Facto Possession
Physical control of a chattel may not create possession in law. Physical control must be coupled with an
intention to exclude others. The degree of control necessary to acquire possession will be relative to the
nature of the chattel.

Legal Possession
When you have both ownership and intention to control, this is legal possession.

Right to Possess or to have legal possession
This is a legal concept there is no right to possess in English law. Possession is single and exclusive, so a
bailee who holds possession of a chattel for his own interest does not have legal possession. He can be said
to have constructive possession.

ATTORNMENT
This is an important commercial application of the concept of constructive possession. Attornment is the
process by which a person (the attorner) holding actual possession of a chattel for himself or another
person, later undertakes to hold possession of the goods for someone else.

The attorner must give his undertaking to the attornee and once given, the attornee is deemed to have
constructive possession of the chattel.

- This most commonly arises where goods sold by A to B are held by C, who is a warehouseman or
carrier.
- C will attorn to B when he acknowledges, with As assent, that he henceforth holds the goods for B.
- However, for attornment to take place, the goods must be identified.
- Thus, where the goods sold by A to B form an unidentified part of a bulk held by C, the
acknowledgement by C that he now holds the goods for B cannot operate as an attornment so as to
give constructive possession to B, but it will estop C from denying that he holds the goods as
described on behalf of B.

The possession of a document of title to goods held by a third party does not usually carry with it
constructive possession of the goods themselves, but the exception to this rule arises in the case of a bill of
lading (a detailed list of a ship's cargo in the form of a receipt given by the master of the ship to the person
consigning the goods). The holder of a bill of lading is deemed to have constructive, or more likely
symbolic, possession of the goods referred to.

TRANSFER OF POSSESSION
Although the transfer of possession of a chattel may be effected by unilateral assumption of possession
(including theft), or by operation of law (on death or insolvency), the most common method is voluntary
transfer effected by actual or constructive delivery.

- Actual delivery transfers actual possession of the chattel to the deliveree.
- Constructive delivery transfers control of the chattel to the deliveree, usually without giving him
actual possession.
- The following are ways that constructive delivery may take place:
o Deliveror in actual possession of the chattel agrees to hold it as bailee for the deliveree
o Third party in actual possession of the chattel as bailee for deliveror attorns to the deliveree
with the deliverors consent
o Deliveror agrees that the deliveree, who is already in actual possession of the chattel as
bailee for the deliveror, shall continue to hold the chattel for himself deliveror has actual
possession after constructive delivery.
o Deliveror agrees that the deliveree, who is already holding custody of the chattel shall
continue to hold the chattel for himself again, deliveror has actual possession after
constructive delivery.
o Deliveror transfers a document of title of goods to the deliveree.
o Seller of the goods transfers them to a carrier for the purpose of transmission to the buyer.
o Deliveror transfers to the deliveree an object giving physical control of the chattel e.g. a
key to the warehouse where the goods are stored.
THE IMPORTANCE OF POSSESSION
- Possession is a legal concept it has no counterpart in equity.
- An agreement to give possession does not create property rights in law or in equity.
- Possession is only relevant to chattels which are capable of physical possession. Goods, money, and
documentary intangibles are all capable of physical possession, but a pure intangible is not.
- Where a changing fund of assets is given to one person to manage on behalf of another, the person
for whom the assets are managed does not have a possessory or proprietary right to any particular
component of the fund, unless he has and exercises a power to terminate the managers authority
and crystallise the fund.

The concept of possession remains important for the following reasons:
1. Possession is relevant to the acquisition of legal ownership, at least where a possessory title is
claimed, and to the acquisition of other legal interests that depend on possession.
2. Possession is relevant to the transfer of legal ownership, such as a gift
3. Possession is prima facie evidence of ownership
4. Possession is a basis for remedies such as in actions for trespass.
5. Possession may be relevant in cases of insolvency. When the buyer of the goods becomes insolvent,
an unpaid seller may still be able to exercise a lien on the goods, despite property in the goods
having passed to the buyer.
BAILMENT
Pollock and Wright: any person is to be considered as a bailee who otherwise than as a servant either
receives possession of a thing from another or consents to receive or hold possession of a thing for another
upon an undertaking with the other person either to keep and return or deliver to him the specific thing or
to apply the specific thing according to the directions antecedent or future of the other person.

Ashby v Tolhurst: man gave a car park attendant keys to park his car. Attendant negligently let thief drive
away car. Denied liability. Case turned on whether the attendant had become the bailee. Court found that
the car owner had merely been given permission to park in the car park the owners of the car park had
not received possession of the car. The relationship was therefore licensor and licensee, rather than bailor
and bailee.

You need more than possession to create a bailment you also need the bailor to have a superior interest
in the chattel to that of the bailee (reflected in the fact that at the end of the bailment, the chattel must be
delivered back to the bailor or dealt with according to instructions). The second requirement is that the
bailee must consent to take possession of the chattel involuntary bailments arent really bailments at all.
It has recently been argued that it is the bailees and not the bailors consent which matters. This was
approved by the Privy Council in The Pioneer Container.

Its common practice to divide bailments into two categories; gratuitous bailments, where you lend
something free of charge, and bailments for reward, such as warehousing and carriage.

THE BAILEES LIABILITY
The bailee owes the bailor a duty to take reasonable care of the bailed chattel. Does a gratuitous bailment
require a different standard of care to a bailment for reward?

- In Houghland v RR Low (Luxury Coaches) Ltd [1962] the CoA rejected the traditional approach and
said that the same test applies to all types of bailment: the bailees standard of care is that required
by the circumstances of the particular case.
- However, in the later case of Port Swettenham Authority v TG Wu the Privy Council continued to
distinguish between the standard of care expect of a bailee for reward and gratuitous. The position
is still unclear.
- There remains a number of reasons for Courts to distinguish between the two types of bailment;
o The Supply of Goods and Services Act 1982 applies only to contractual bailments.
o There may be contractual exemption clauses which exclude or limit the bailees duties,
subject to UCTA controls.
o The fact that a bailment is gratuitous may be relevant when assessing whether the bailee
has exercised reasonable care in all the circumstances
- In certain circumstances, the bailees liability for loss or damage to the bailed chattel may be strict.
Strict liability normally arises as follows:
o Where bailee is a common carrier, unless the loss or damage to the goods is caused by an
excepted peril.
o Bailee deviates in the conduct of the bailment e.g. by storing the chattel anywhere other
than the place agreed.
- Its traditionally said that an involuntary bailee will not be liable for mere negligence, and that his
sole duty is to refrain from intentional destruction or damage of the goods.

BAILMENT AND THIRD PARTIES
- A bailee having possession is sufficient to meet the requirement that a claimant in action for
trespass, conversion, or detinue (which has now been abolished) must have been in possession of
the chattel at the time of the interference alleged against the wrongdoer.
- The bailee may ensue an action based on tort against the wrongdoer, and despite having only a
limited interest in the chattel, is entitled to recover the full market value of the chattel and also
damages for consequential loss.
- There are three exceptional situations where the wrongdoer may raise another persons superior
title to the chattel as a defence against an action brought by the bailee. These are as follows;
o When the wrongdoer defends the action on behalf of or with the authority of the true
owner
o When the wrongdoing was committed with the authority of the true owner
o When the wrongdoer has, since the time of the wrongdoing, become the owner of the
goods.
- When the bailee has recovered in full from the wrongdoer, he may subtract the value of his own
interest and pay the surplus to the bailor.
- When the bailee recovers damages in full from the wrongdoer, no action may later be maintained
by the bailor, even if he would otherwise have a right of action to sue.
- The bailors right of action in trespass or conversion against a wrongdoer depends on the bailor
having a right to immediate possession of the bailed chattel at the time of the wrongdoing.

SALE OF GOODS DISTINGUISHED FROM OTHER
TRANSACTIONS

a) Sale distinguished from gift
- No consideration for the transfer of the property in the goods.
b) Sale distinguished from barter or exchange
- Consideration in a contract of sale should be in money. If it takes some other form such as
exchange for other goods or services it is a contract of barter or exchange.
- Where goods are exchanged, it may not be appropriate to call it bartering. There may be reciprocal
sales, such as in Alridge v Johnson.
c) Sale of goods distinguished from transfer of an interest in land
- A contract under which aa person is to come onto anothers land and remove gravel, for instance,
may be so drawn as to appear to be a grant of mineral rights, on one hand, or a sale of gravel, as
goods, on the other.
- Even though the parties may intend to make a sale of goods, the transaction may be overridden by
severance by the claim of a third party with superior title to land.
d) Sale distinguished from hire-purchase
- In practical terms, the position of the hirer under such a contract is very similar to that of a person
who has agreed to buy the goods from their owner on the understanding that he is to take
immediate delivery, but pay the price by instalments over a period.

Finish notes up to 287.