WHAT IS PROPERTY :

There is property where :

1. Thing (chose or res)
2. Person (can be a company)
3. Thing (chose or res) is one to which the person has title
Title = ownership, possession or ownership and possession at the same time
Possession in fact (literal) , possession in law (ownership) & constructive possession (possession was
given)

t is usually said that property has two distinguishing qualities:

(i) Assignable or transferable right: If you own something you can give it away to other people as in
succession
or on bankruptcy. This is the view which regards property as assets – an all-encompassing view that
includes
contractual rights and rights accruing from tortious conduct. This view has some flaws. It does not
provide an
entire picture of the matter. The essence of a property right is that it is a right that attaches to a thing,
that is a
right in rem and this distinguishes it from a personal right or a right in personam.
It is usually said that property has two distinguishing qualities:
(i) Assignable or transferable right: If you own something you can give it away to other
people as in succession or on bankruptcy. This is the view which regards property as
assets – an all-encompassing view that includes contractual rights and rights accruing
from tortious conduct. This view has some flaws. It does not provide an entire picture of
the matter. The essence of a property right is that it is a right that attaches to a thing, that
is a right in rem and this distinguishes it from a personal right or a right in personam
(ii) Enforceability: All legal rights create corresponding obligations, and these may be
personal or property rights and so establish a relationship which is enforceable against
particular persons. Property rights however do not require particular persons for their
enforcement because they establish a correlative obligation binding on members of the
entire society to respect a person’s right to a thing and not to interfere with that right. This
is the so-called Hohfeldian view of property, that is, that personal rights are enforceable
against “a single person or one of minuscule aggregations of identical rights that are
enforceable against “a few definite persons” whereas property rights comprise “a large
class of fundamentally similar yet separate rights” which correspond to the obligations of
“a very large and indefinite class of persons.” There is a difficulty with this viewof
property right. In the practical world this is not the way the law appears to function. There
is no identifiable group of people ready to be sued; indeed their identity is irrelevant until
an interference with a property right actually occurs. All people are simply under an
obligation to respect another person’s right to a thing and not to interfere with that right
From the two views of property discussed above it becomes apparent that anything worthy of the
appellation property must be in existence, that is, property must have a corpus and occupy space.
Property rights must relate to things extrinsic to us. On that basis our bodies and our body parts, our
reputation, etc, though valuable cannot be the subject of property rights. However, a lot of the things
we call property have no substance: patents, trademark and copyright for example. An easement right
similarly has no corporate identity. Again in real property law the quantum of interests is determined
with reference to time, not space: fee simple, life estate, a lease etc.

HOW ARE RIGHTS CREATED :

BY HUNTING
A person comes to have title of a thing(chose), especially a wild animal by (Pierson V Post)
- Intending to take possession of it
- Actually taking possession of it
Taking possession of the thing (chose) does not involve :
- ‘merely pursuing’ it but actually ‘intercepting’, ‘killing’ , ‘occupying’ or ‘taking it’ (Pierson
V Post)
- ‘all but reducing’ it into his/her ‘actual power’ or ‘custody’ but actually ‘reducing’ it into
his/her ‘actual power’ or ‘custody’ (Young v Hichens)
Title = property rights
Title = possession and by rebuttable presumption, ownership

BY GATHERING OR FINDING
The general rule is that if a thing (chose) is found in some place, then title to the thing (chose) (Parker
v British Airways Board):
- is vested in the true owner (whether title was created in the true owner or transferred to
him/her
- if not vested in the true owner, becomes vested in the “occupier”, i.e. the person who occupies
the place where the thing (chose) is found; or
- if not vested in the occupier, becomes vested in the “finder”, the person who found the thing
(chose)
For the purposes of the general rule (Parker v British Airways Board):
- the “place” may be some land, a building, a room, a “ship, [a] motor car, [a] caravan[,] or [an]
aircraft”
As against the true owner (i.e. versus the true owner), title becomes vested in the occupier if the
following (“pro-occupier”) conditions are met (Parker v British Airways Board):
1. the thing (chose) is found;
 2. when found, the thing (chose) is in the possession of no one in particular (i.e. “has been
abandoned or lost”);
3. the occupier takes reasonable steps to return the thing (chose) to the true owner; and
4. the occupier takes reasonable care of the thing (chose) in the “meanwhile” (i.e. until [s]he
returns it to the true owner, if [s]he is able to return it)
As against the occupier (and ultimately as against the true owner), title becomes vested in the finder if
the following (“pro-finder”) conditions are met (Parker v British Airways Board):
1. the thing (chose) is found;
2. when found, the thing (chose) is in the possession of no one in particular (i.e. “has been
abandoned or lost”)
3. the finder takes reasonable steps to return the thing (chose) to the true owner;
4. the finder takes reasonable care of the thing (chose) in the “meanwhile” (i.e. until [s]he
returns it to the true owner, if [s]he is able to return it);
5. the thing (chose) is in (or on a surface in) the place without being attached to the place (i.e.
without being a fixture; i.e. without being part of the real property);
6. the finder is in the place (where the thing [chose] is found) without “dishonest intent”;
7. the finder is in the place (where the thing [chose] is found) without “trespassing”, i.e. with the
(explicit or implicit) permission of the occupier; and
8. the finder takes possession of the thing (chose)
As against the finder as agent “agent”, “employee”, or “servant” (and ultimately as against the true
owner), title becomes vested in the principal, employer, or master/mistress if (Parker v British
Airways Board):
- the finder finds the thing (chose) “in the course” of his/her work as agent, employee, or
servant (“work”), i.e. “not wholly incidentally or collaterally” to the work; and
- the finder has not agreed (with the principal, employer, or master) that as between them, the
finder has title to any thing (chose) that (s)he finds in the course of the work
As against the occupier, title does not become vested in the finder if (Waverley Borough Council v
Fletcher):
- the thing (chose) is in or attached to the place (where the thing [chose] is found); or
- whatever the finder is doing in the place (where the thing [chose] is found) is something that
(s)he is doing without the (explicit or implicit) permission of the occupier to do in the place

BY HUNTING AND FINDING

Possession of a thing (chose) is (Flack v Chairperson, National Crime Authority):
- not only evidence of ownership;
- but also a type of title, meaning that the person who has possession has better title than any
other person except the true owner
An occupier (Flack v Chairperson, National Crime Authority):
- has possession of a thing (chose) found if (s)he intends to be in control of the place (where the
thing [chose] is found) (Flack v Chairperson, National Crime Authority), whether or not (s)he
knows that the thing (chose) is there; and
- is presumed to be in control of the place if it is his/her home
Two persons have title to a thing (chose) if (Popov v Hayashi):
- one of the two persons becomes vested with a pre-possessory interest in a thing (chose) (i.e.
does everything that [s]he could have done to take possession of it but loses possession of it);
and
- then the other of the two persons takes possession of it
If two persons have title to a thing (chose), the Court may order equitable division (i.e. that the two
persons sell it and share the proceeds) (Popov v Hayashi)

HOW ARE PROPERTY RIGHTS TRANSFERRED:

Title to a thing (chose) may be extinguished in one person and then (re)created in another
- For example, in Popov v Hayashi, title to the ball was extinguished in Major League Baseball
(when Bond threw it) and then (re)created in Popov (when he touched the ball with his glove)
and in Hayashi (when he picked the ball up)
Title to a thing (chose) may also be transferred from one person to another by:
- consent, e.g. by:
- sale; or
- gift; or
“operation of law”, whether:
- at law; or
- in equity
One of the two reasons is that the person who has title generally bears the risk of the thing (chose):
being lost or damaged, i.e. it is:
- “his/her bank account that takes the hit” if the thing (chose) is lost or damaged (Contract and
Commercial Law Act 2017 [“CCLA”], s 148); or (in other words);
impossible for him/her to sue any other person for compensation, unless (s)he is insured; or
having to pay a tax (or more tax) if having title to the thing (chose) is a “taxable event”

The other of the two reasons is that the person who has title generally enjoys the benefit of:
being a “priority creditor”, i.e. of the debt to him/her being repaid before and in priority over the debts
to other creditors if the debtor becomes insolvent;
There are two types of priority creditors:
- preferential creditors, i.e. (generally) creditors prioritised by operation of law; and
 - secured creditors, i.e. (generally) creditors prioritised by consent
being able to pay less tax if having title to the thing (chose) entitles him/her to a tax reduction
There are two types of tax reduction:
- the tax deduction, where an amount is subtracted from the amount to which the applicable tax
rate(s) is/are applied, e.g. where the taxpayer may subtract $1,000 from the income that (s)he
must declare, indirectly reducing the amount of the income tax that (s)he owes;
- the tax credit, where an amount is subtracted from the amount of tax to be paid, i.e. after the
applicable tax rate(s) has/have been applied, e.g. where the tax authority subtracts $1,000
from the amount of income tax that (s)he owes, directly reducing the amount of income tax
that (s)he owes
CCLA, s 120: CONTRACT OF SALE OF GOODS
A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property
in goods to the buyer for a money consideration (the price)
The term “consideration” is a term of contract law
Basically, the term means “whatever one party (to a contract) agrees to give (or to do/not to do) in
exchange or in return for the other party giving (or doing/not doing) whatever (s)he agrees to give (or
do/not do)”
Commentators typically describe consideration as being the quid pro quo under a contract, although in
my opinion, this description is not particularly helpful to law students
Under a contract of sale, the consideration that comes from:
the buyer is the price; and
the seller is property in (or, in other words, title to) goods (or other things [choses])

CCLA, s 148: WHO BEARS THE RISK

Unless otherwise agreed,—
1. goods remain at the seller’s risk until the property in the goods is transferred to the buyer; but
2. when the property in the goods is transferred to the buyer, the goods are at the buyer’s risk
(whether or not delivery has been made).
However, if delivery has been delayed through the fault of either the buyer or the seller, the goods are
at the risk of the party at fault with respect to any loss that might not have occurred but for the fault

CCLA, s 119(1): WHAT ARE GOODS

Goods :
includes—
- all kinds of movable personal property, including animals; and
- emblements, growing crops, and things attached to, or forming part of, the land that are
agreed to be severed before sale or under the contract of sale; and
 - computer software; but
does not include money or things in action
The two main ways of classifying goods are according to whether goods are:
1. existing goods or future goods;
2. specific goods or (un)ascertained goods

CCLA, s 126(1): WHAT ARE EXISTING GOODS ?

The goods that form the subject of a contract of sale may be—
1. existing goods that are owned or possessed by the seller; or
2. goods that are to be manufactured or acquired by the seller after the contract of sale is made
(future goods).

The term “specific goods” is defined by statute:

CCLA, s 119(1):
- specific goods means goods identified and agreed on at the time a contract of sale is made
The question of whether goods are “identified” and “agreed on” is a question of fact
- The law does not have a “ready-made” answer to the question of what it “looks like” for
goods to be identified and agreed on

(un)ascertained goods :
Mann and Blunden:
- “Goods identified and effectively appropriated (set apart) after a contract of sale is made.
Under the various Sale of Goods Acts [and the CCLA,] property in unascertained goods does
not pass until the goods are ascertained”
CCLA, s 143:
Under a contract for the sale of unascertained goods, no property in the goods is transferred to the
buyer unless and until the goods are ascertained.
Example :
A person (A) agrees to buy 1 000 gold coins from Gold Suppliers Limited.
Gold Suppliers Limited stores its gold in bulk without allocating it to individual buyers.
While the gold is stored as part of an undifferentiated bulk, ownership of the gold coins does not pass
to A

WHEN DOES TITLE TO EXISTING GOODS PASS FROM THE SELLER TO THE BUYER ?
CCLA, s 144:
1. Under a contract for the sale of specific or ascertained goods, the property in the goods is
transferred to the buyer at the time that the parties to the contract intend it to be transferred.
 2. For the purpose of ascertaining the intention of the parties, regard must be had to—
- the terms of the contract; and
- the conduct of the parties; and
- the circumstances of the case
CCLA, s 145:
Unless a different intention appears, the rules in section 146 are the rules for ascertaining the intention
of the parties as to the time at which the property in the goods is to pass to the buyer
Here, the term “ascertain” does not mean “ascertain” in the sense of “ascertained” goods
CCLA, s 146
In many cases, goods are in a deliverable state “as is” or “off the shelf”
Miller and Barber:
- On the sale of a car, the buyer will take the car as it is presented. The car does not need to be
cleaned, repaired or panel-beaten
There is one particularly common case where there “appears” a “different intention”:
CCLA, s 147:
1. If there is a contract of sale for specific goods or if goods are subsequently appropriated to the
contract, the seller may, by the terms of the contract or appropriation, reserve the right of
disposal of the goods until certain conditions are fulfilled.
2. If the seller reserves the right of disposal as referred to in subsection (1), the property in the
goods does not pass to the buyer until the conditions imposed by the seller are fulfilled
(despite the delivery of the goods to the buyer or to a carrier or other bailee for the purpose of
transmission to the buyer).
Generally, if there is such a condition to be fulfilled, the parties will include it as a clause in the
contract
If the condition to be fulfilled is that the price be paid, the clause is called a “retention of title” clause
or a Romalpa clause, after the case Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd
[1976] 1 WLR 676, [1976] 2 All ER 552 (CA)

WHEN DOES TITLE TO FUTURE GOODS PASS FROM SELLER TO BUYER :

Future goods :
- after-acquired goods;
- expectancies;
- expectations; or
- possibilities
CCLA, s 126(3):
A contract of sale operates as an agreement to sell if, by the contract, the seller purports to effect a
present sale of future goods
CCLA, s 123(2):
A contract of sale is an agreement to sell if the transfer of the property in the goods is to take place at
a future time or subject to a condition or conditions to be fulfilled at a future time

WHEN DOES TITLE TO AN INTANGIBLE PASS FROM THE SELLER TO THE BUYER
The CCLA does not apply to the assignment of intangibles (but does apply to the assignment of
computer software)
However, there is another statute that does: the Property Law Act 2007 (“PLA”)
The rules vary depending on whether the assignment is:
- legal; or
- equitable
As regards legal assignment:
PLA, s 50:
1. The absolute assignment in writing of a legal or equitable thing in action, signed by the
assignor, passes to the assignee—
- all the rights of the assignor in relation to the thing in action; and
- all the remedies of the assignor in relation to the thing in action; and
- the power to give a good discharge to the debtor.
2. Subsection (1) applies whether or not the assignment is given for valuable
Generally, the term “absolute assignment” is synonymous with “legal assignment”
Law:
- [A]n absolute assignment is one that transfers the assignor’s entire interest to the assignee
unconditionally. If less than his[/her] entire interest (e.g. part of a debt) is transferred, or if
any condition is attached to the transfer (e.g. that the consent of a third party be obtained), the
assignment is not absolute
As regards equitable assignment:
PLA, s 50:
5. A legal or equitable thing in action is to be treated as having been assigned in equity (whether
the assignment is oral or in writing) if—
- the assignee has given valuable consideration for the assignment; or
- the assignment is complete.
6. An assignment to which subsection (5) applies is complete when the assignor has done
everything that needs to be done by the assignor to transfer to the assignee (whether
absolutely, conditionally, or by way of charge) the rights of the assignor in relation to the
thing in action

BY GIFT:
The general rule is that a donor makes a gift if (Cochrane v Moore; Williams v Williams):
- the donor shows that (s)he intends to make a gift of a thing (chose);
- the donee accepts (or “assents to”) the gift; and
- the donor actually or constructively delivers the thing (chose) to the donee (or has it actually
or constructively delivered to the donee)
The donor makes a legal gift of an intangible if the general rule is satisfied, the donor constructively
delivering the thing (chose) to the donee if:
- (s)he makes the gift in writing (PLA, s 50(1)); and
- any formalities (specific to the relevant intangible) that need to be completed are completed
The donor makes an equitable gift of an intangible if the donor does everything that needs to be done
by the donor to make a legal gift (or transfer) (to the donee) of the intangible (PLA, s 50(5) and (7);
Cochrane v Moore)
- In other words, the donor completes any formalities (specific to the relevant intangible) that
need to be completed by the donor

BY OPERATION OF LAW
Arguably, the phrase “by operation of law” is confusing
It means “other than by consent”
Generally, it means:
- “by statute”; or
- “other than by consent and in equity” (yes, “in equity”, as opposed to “at law”)
One example of transfer by statute is “succession to personal estate on intestacy”, i.e. inheritance from
a deceased person who did not make a will (see Administration Act 1969, ss 77)
One example of transfer other than by consent and in equity is by constructive trust
There are two types of constructive trust (Fortex Group Ltd v MacIntosh):
- the institutional constructive trust, i.e. a constructive trust that pre-exists the relevant court
proceedings – that is created by equity as an institution, and that is merely recognised by the
court (see Lankow v Rose); and
- the remedial constructive trust, i.e. a constructive trust that does not pre-exist the relevant
court proceedings – that is created by the court acting in its equitable jurisdiction, and (in
other words) that is not merely recognised by the court
There can be (Fortex Group Ltd v MacIntosh):
- no institutional constructive trust unless (among other things) the subject matter of the
(would-be) trust (i.e. the thing [chose] held under the [would-be] trust) is certain
- no remedial constructive trust unless (among other things) it would be unconscionable for the
person who has legal title to the subject matter of the (would-be) trust to exercise his/her
rights in relation to the subject matter
HOW ARE PROPERTY RIGHTS TRANSFERRED BY ‘SUCCESSION TO PERSONAL ESTATE
ON INTESTACY’
Before a person (the deceased) dies, (s)he may:
- make a will; and
- (in it) appoint an executor, i.e. “[a] person appointed by a will to administer the [deceased]’s
estate” (Law)
To “administer the deceased’s estate” is to undertake “[t]he collection of assets, payment of debts, and
distribution to the beneficiaries of property in the estate of a deceased” (Law)
When the deceased dies, the High Court makes an order called probate
Probate is “an order to the effect that” (Law):
- “the will is valid”; and
- “the executors are authorized to administer the deceased’s estate”
If the deceased:
- made no will; or
- made a will without appointing an executor;
the High Court appoints an administrator (Administration Act 1969, s 6)
- In broad terms, an administrator is a court-appointed executor
- The executor or the administrator is known as the “personal representative”
Administration Act 1969, s 77:
- If a person (the intestate) dies intestate as to any real or personal estate and leaves the other
person or people referred to in column 1 of the following table [(i.e. of the table in s 77)], that
estate must be distributed in the manner or held on the trusts set out in column 2 of that table
opposite the reference to the other person or people:
(“Person or people intestate leaves”):
- The “issue” of the deceased means the descendants of the deceased, i.e. the children of the
deceased, the children of these children, and so on, down through the generations
(“How estate to be distributed”):
- Essentially, the “personal chattels (as defined in s 2(1))” are the tangibles of the deceased
- The “residue of the estate” is what is left of the estate after the debts (incurred while the
deceased was still alive) have been repaid
- The “prescribed amount” is $155,000 (Administration (Prescribed Amounts) Regulations
2009, s 5)

BY ACTING IN CONVERSION :
HOW ARE PROPERTY RIGHTS ENFORCED
Grantham and Rickett (mainly):
A person may come to have property rights by property rights being:
 - created in him/her, by the law of property and
- transferred to him/her, by:
- consent and gift or
- operation of law (e.g. succession to the personal estate on intestacy and constructive trust
However, property rights are (mainly) enforced (or protected) by the law of tort and, more
specifically, by the so-called “property torts” or “proprietary torts”
Here, the term “proprietary” means “property-related”
The term “property right” is synonymous with the term “right in rem”, which means a right that a
person has:
indirectly:
- through a res, i.e. through a thing (chose);
- against the rest of the world;
to the rest of world not doing anything to the thing (chose) (unless (s)he consents)
The term “right in personam” means a right that a person (the “obligor”, to whom I will simply refer
as the “plaintiff”) has:
- directly against a specific person (the “obligee”, to whom I will refer as the “defendant”);
- to the defendant doing some act or not doing some act, e.g. paying the plaintiff money
The law of persons is concerned with who may have rights
The law of property is concerned with whether or not persons actually have rights in rem, i.e. with
whether or not they have property
The law of tort is:
- part of the greater area of the law concerned with whether or not persons actually have rights
in personam, i.e. with the greater law of “obligations”, as are:
- the law of contract;
- the law of restitution; and
- others; and
- the (main) part of the law of obligations concerned with enforcing (or protecting) property
rights
The main property torts are:
- trespass (to chattels);
- conversion; and
- detinue
There are other property torts, including:
- action on the case, one that is uncommon;
- trover, one that has largely “given way” to trespass and conversion; and
- replevin, one that has largely “given way” to detinue
Like all other causes of action, the property torts have:
“elements” or “ingredients”
- To use the language of Birks, these are the “events” causing some state of affairs that is
recognised by the lawyer, i.e. (here) causing the defendant to be liable in one or more
property torts; and
“remedies”
- To use the language of Birks, these are a type of “response”
- More specifically, they are responses to some act or omission that is recognised as unlawful
by the lawyer
One of these elements (or “events”) is itself a response: title
In other words, title is (Grantham and Rickett):
- a “response” from the point of view of the law of property; and
- an “event” from the point of view of the law of tort
The “events” to which title is a “response” (from the point of view of the law of property) are the
“events” that we covered in weeks 2 and 3 (although we did not describe them as “events”):
- a person intending to have control, custody, or occupancy of a thing (chose);
- the person actually having control, custody, or occupancy of the thing (chose);
- the person having found the thing;
- the thing not being in the possession of any person other than the finder etc
The elements of (or “events” causing action in):
- trespass;
- conversion; and
- detinue;
are the following (although the case law does not present them in so “structured” a way):
As remedies for (or “responses” to the wrongs of):
- trespass;
- conversion; and
- detinue;
the court may order that the defendant do the following (although the case law does not present them
in so “structured” a way):

The plaintiff may concurrently (i.e. at the same time) act:

- in trespass, conversion, and detinue;
- against several defendants;
“in respect of” (i.e. in connection or relation to) the same thing (chose)
However, the court will (generally) avoid making an order that “enriches” the plaintiff
For example, if the loss equals $1,000, and:
- there is one defendant, liable in trespass, conversion, and detinue, (s)he will be liable to pay
$1,000 (and no more)
- here are two defendants, each liable in trespass and conversion, each will be liable to pay a
portion of the $1,000 (e.g. $500)

WHAT IS BAILMENT:
What is bailment :
There are several possible working definitions of the term “bailment”
Under one such definition, there is bailment if there is (Law):
“The transfer of the possession of goods by the owner (the bailor) to another (the bailee) for a
particular purpose”
Under another such definition, there is bailment if a person (the bailor) gives another person (the
bailee):
- a tangible;
- temporarily:
- for:
- safe-keeping; or
- some other reason, in circumstances where the reasonable person would expect the bailee to
keep the tangible safe
Structurally, a bailment is similar to a (legal) gift (inter vivos) (Law Shelf)
The general rule is that there is a bailment if (Coggs v Bernard):
- the bailor shows that (s)he intends to bail a thing (chose);
- the bailee accepts (or “assents to”) the bailment; and
- the bailor delivers the thing (chose) to the bailee (or has it delivered to the bailee)
However, the gift and the bailment differ in (at least) three important ways:

How is bailment created and enforced

There is no bailment if the thing (chose) delivered is not identified with certainty (Coleman v Harvey)
However, the would-be bailor may nevertheless have title “in common” to the thing (chose) as part of
a bulk
The bailee has a duty to:
 - take reasonable care of the thing (chose) bailed (Conway v Cockram Motors (Christchurch)
Ltd); and
- return it to the bailor (Morris v C W Martin & Sons Ltd)
If the bailee breaches either duty, then the bailor may act against him/her to recover any loss or
damage
If the bailor acts against the bailee (to recover any loss or damage), the bailor must prove that:
- there was a bailment by him/her to the bailee; and
- there occurred loss or damage (Conway v Cockram Motors (Christchurch) Ltd)
- The bailor does not have to prove that the bailee breached the duty
The bailee must prove that:
- (s)he took reasonable care; or
- the loss or damage would have occurred even if (s)he had taken reasonable care
If:
- there is a bailment (i.e. a bailor bails a thing [chose] to a bailee); and
- the bailee (the head bailee) bails the thing (chose) to another person (the sub-bailee)
then there is a sub-bailment (Morris v C W Martin & Sons Ltd)
Under a sub-bailment (Morris v C W Martin & Sons Ltd):
- the (head) bailor has rights against the sub-bailee; and
- these rights are the same as those that the (head) bailor has against the head bailee
In fact:
if the (head) bailee and the (head) bailor agree to exclude or limit the liability of the sub-bailee to the
(head) bailee;
then the exclusion or limitation does not apply as against the (head) bailor;
unless the head (bailor) explicitly or implicitly agrees to the exclusion or limitation
Here, the term “exempt” is synonymous with “exclude”
However, the term “exclude” is much more common
The liability of the bailee is limited or excluded:
by law if (s)he is a “carrier”, namely “a person who, in the ordinary course of the person’s business,
carries or procures to be carried goods that are owned by any other person” (CCLA, s 246) (for the
relevant limitations and exclusions of liability, see CCLA, ss 248 to 260)
by contract if (Samuel Smith & Sons Ltd v Silverman):
the bailee has the limitation or exclusion worded broadly enough (to apply to the facts); and
the bailee takes reasonable steps, before the bailment, to notify the bailor of the limitation or
exclusion

WHAT IS THE DIFFERENCE BETWEEN LEGAL TITLE AND EQUITABLE TITLE:

Worthington (in Cane and Conaghan):
 - The tag that equity is the conscience of the law reflects the history of equity’s development
- As the volume of Chancery business grew, and successive Chancellors saw the advantages of
consistent decisions, so equity grew. Equity was clearly never an independent system of law,
but an appendix and complement to the common law, and unintelligible apart from it
- Because [equitable] orders had to be carried out, and the claimant had to receive the property,
the orders were eventually seen as giving the claimant ownership of the property ‘in equity’
even before physical delivery by the defendant, and, eventually, even before the court had
made its order. This technique effectively converted personal remedial obligations into
property, and so the trust was born
- Equity is said to be conscience‐based, moral, and discretionary in ways that the common law
is not
Rickett (“Introduction”):
- [There was a] fusion in the administration of the two systems inaugurated in 1873 with the
passage of the Judicature Act 1873 [(UK)]. In New Zealand [the common] law and equity
were administered in the same court from the inception of the Supreme Court of New Zealand
(now the High Court) in 1841
Rickett (“Legal and Equitable Rights Contrasted”):
- [Legal and equitable rights] are created differently and accorded a different level of priority
when in competition with other rights
- Legal rights are rights directly to and in things (land, goods, choses in action). Equitable
rights operate indirectly against property as parasites that feed on other rights. All property
rights may be subject to equitable property rights. Additionally, equitable property rights are
stamped on legal property rights and not created out of them: see DKLR Holding Co (No 2)
Pty Ltd v Commissioner of Stamp Duties (at p474) [[1982] HCA 14, (1982) 149 CLR 431,
(1982) 40 ALR 1]
- In other words (“The Rise of the Court of Chancery”):
- A particularity of equity was that it operated in personam – that is against the particular
person; whereas legal rights are rights in rem that is, rights to and in things

HOW ARE EXPRESS TRUSTS CREATED :

The express trust:
- was historically a creature of the case law (here, the term “common law” would be
misleading!); but
- is now (in New Zealand) the subject of statute law, i.e. of the Trusts Act 2019
Express trusts are used (pun intended) as the basis for:
- so-called “trust funds”, which are common in popular fiction, in particular popular fiction
produced in the US (see e.g. Hoffower);
 - family trusts, which are common in New Zealand (see e.g. New Zealand Law Society)
Trusts Act 2019, s 12 (“Meaning of express trust”):
For the purposes of this Act, an express trust means a trust that—
- has each of the characteristics set out in section 13 [(“Characteristics of express trust”)]; and
- complies with section 14 [(“Sole trustee cannot be sole beneficiary”)]; and
- is created in accordance with section 15 [(“Creation of express trust”)]
Trusts Act 2019, s 13 (“Characteristics of express trust”):
The characteristics of an express trust are as follows:
- it is a fiduciary relationship in which a trustee holds or deals with trust property for the benefit
of the beneficiaries or for a permitted purpose; and
- the trustee is accountable for the way the trustee carries out the duties imposed on the trustee
by law
Trusts Act 2019, s 14 (“Sole trustee cannot be sole beneficiary”):
A sole trustee of a trust must not be the sole beneficiary of the trust
Trusts Act 2019, s 15 (“Creation of express trust”):
1. An express trust may be created—
- by or under an enactment; or
- by a person (the settlor) who, clearly and with reasonable certainty (and subject to any
formalities prescribed by any enactment),—
- indicates an intention to create a trust; and
- identifies the beneficiaries (or classes of beneficiaries) or the permitted purpose of the trust;
and
- identifies the trust property.
2. A trust created under subsection (1) commences when a trustee holds property of the trust

WHAT IS THE THEORY OF (PERSONAL) PROPERTY:

WHAT IS THE DIFFFERENCE BETWEEN RIGHTS IN REM AND RIGHTS IN PERSONAM
Grantham and Rickett (mainly):
The term “property right” is synonymous with the term “right in rem”, which means a right that a
person has:
indirectly:
through a res, i.e. through a thing (chose);
against the rest of the world;
to the rest of world not doing anything to the thing (chose) (unless (s)he consents)
The term “right in personam” means a right that a person (the “obligor”, to whom I will simply refer
as the “plaintiff”) has:
directly against a specific person (the “obligee”, to whom I will refer as the “defendant”);
to the defendant doing some act or not doing some act, e.g. paying the plaintiff money
The law of persons is concerned with who may have rights
The law of property is concerned with whether or not persons actually have rights in rem, i.e. with
whether or not they have property
The law of tort is:
part of the greater area of the law concerned with whether or not persons actually have rights in
personam, i.e. with the greater law of “obligations”, as are:
the law of contract;
the law of restitution; and
others; and
the (main) part of the law of obligations concerned with enforcing (or protecting) property rights

WHAT IS A RIGHT
Hohfeld:
As we saw, Grantham and Rickett discuss what the difference is between rights in rem and rights in
personam
Hohfeld discusses what we mean by “right”
Hohfeld lists what he calls the “jural correlatives”
We may describe these as the “building blocks” of legal rules
The jural correlatives are:
1. Rights and duties:
- I have a right (vis-à-vis you) where:
- you must do something (or must not do something); and
- if you fail to do it (or fail not to do it), I may take legal action against you (i.e. sue you)
- You have a duty (vis-à-vis me) where:
- you must do something (or must not do something); and
- if you fail to do it (or fail not to do it), I may take legal action against you (i.e. sue you)
2. Privileges and “no-rights”:
- I have a privilege (vis-à-vis you) where:
- I may do something (or may [if I please] not do something); and
- if I fail to do it (or fail not to do it), there is no legal action that you may take against me
- You have a “no-right” (vis-à-vis me) where:
- I may do something (or may [if I please] not do something); and
- if I fail to do it (or fail not to do it), there is no legal action that you may take against me
3. Powers and liabilities
4. Immunities and disabilities
WHAT ARE PROPERTY RIGHTS
Honoré:
- Hohfeld discusses what we mean by “right”
- Honoré discusses what we mean by “property right” or (more accurately) by “ownership”
- He “provisionally” defines ownership “as the greatest possible interest in a thing which a
mature system of law recognizes”
- He did not define “mature system of law”
- He was a product of his time
- It is possible (or even probable) that he meant something like:
- a recorded system of law; or
- a system of law belonging to an industrialised economy
- For our purposes here (in class), it does not matter whether a given system of law is “mature”
or not
- Honoré considers this interest to manifest in the 11 “incidents” of ownership, i.e. of the best
title that exists in a legal system
- The 11 incidents are:
- “the right to possess”, i.e. to “enjoy actual possession”;
- “the right to use” (in the everyday sense of the word);
- “the right to manage”, i.e. to “decide how and by who[m] the thing owned shall be used”;
- “the right to the income”, i.e. to any money that the thing (chose) makes, while the thing
(chose) exists;
- “the right to the capital”, i.e. to “alienate [(i.e. transfer away)] the thing and […] consume,
waste or destroy the whole or part of it” (i.e. “liquidate” the thing (chose) or transform it into
money);
- “the right to security”, i.e. to “look forward to remaining owner indefinitely if [(s)]he chooses
and if [(s)]he remains solvent”
- “the incident of transmissibility”: ownership transfers by succession (i.e. by inheritance);
- “the incident of absence of term”: if “the holder [of the thing (chose)] live[d] for ever, [(s)]he
would, in the ordinary way, be able to continue in the enjoyment of [it] for ever”, if (s)he
chose to do so
- “the prohibition of harmful use”: the owner may not use the thing (chose) unlawfully
- Note:
- In my opinion, incident 9 is not actually an incident of ownership (in the common-law
tradition)
- Generally, any such prohibition comes from another area of law, particularly criminal law or
tort law
 - “liability to execution”: the owner may have his/her thing (chose) taken away “either by
execution of judgment debt or on insolvency”:
- Note:
- In my opinion:
- incident 10 is not actually an incident of ownership; and
- Honoré makes this claims (that incident 10 is an incident of ownership) because:
- he is reasoning as a common lawyer; and
- the common law does not have a direct equivalent of the civil-law concept of “patrimony”,
i.e. the legal person (natural or juristic) viewed not “personally” but “financially”, as a
“balance sheet” representing the finances of the person
- residuary character”: “on the lapse of an interest [less than ownership,] rights, including
liberties, analogous to the rights formerly vested in the holder of the interest, vest in or are
exercisable by someone else, who may be said to acquire the ‘corresponding rights’”

1. Who (during the bailment) had the right to possess the goods?
2. Who (during the bailment) had the right to use the goods?
3. Who (during the bailment) had the right to manage?
4. Who (during the bailment) (probably) had the right to the income (if we assume that the
goods were pots of seedling crocus sativus plants, whose flowers produce the extremely
valuable spice saffron)?
5. Who (during the bailment) (probably) had the right to the capital?
6. Who (during the bailment) (probably) had the right to security?
7. Who would have benefited from any transmission?
8. Who benefited from the absence of term?
9. Who (once the bailment ended) had the right to enjoy the goods?

What is the essence of property rights (Penner)? What makes property rights different from other
types of rights?
Penner
- Honoré discusses what it is that is incidental to property
- The incidents of property are the phenomena that generally exist in the case where there exists
property
- The incidents are non-conclusive signs that there is property
- The fewer incidents there are, the less probable there is property
- Penner discusses what it is that is essential to property
- The essence of property is the phenomenon that necessarily exists in the case where there
exists property
 - The essence is the (only) conclusive sign that there is property
- If there is no essence, there is no property
- In defining property as he does, Penner uses the concept of exclusion:
- “[I]n order to understand property, we must look to the way that the law contours the duties it
imposes on people to exclude themselves from the property of others”
- “This can be expressed as follows, in what I shall call the exclusion thesis: the right to
property is a right to exclude others from things which is grounded by the interest we have in
the use of things”
- Penner also uses the language of Hohfeld:
- “On this formulation use serves a justificatory role for the right, while exclusion is seen as the
formal essence of the right. It is our interest in the use of property which grounds the right in
rem to property and the correlative general duty in rem”
- “The right to property itself is the right that correlates to the duty in rem that all others have to
exclude themselves from the property of others”
- “one has the right to dispose of [(i.e. use [up])] property any way that one wishes, in the
broadest terms, but only in so far as those dispositions are protected by the specific duties on
others to exclude themselves from the property”
- To define property using the concept of exclusion is to define property as a (state-enforced)
freedom from (interference by the world):
- “In the same way that having the right to drive a car does not mean that the state is obliged to
teach would-be drivers to drive or provide all of them with cars, the right to use is not the
right to be given materials to build a house on one’s land if that is why one bought it. It is a
negative liberty”
- “The concept of exclusion, not use, dominates the legal analysis”, at least in the common-law
tradition

“What ways do we traditionally justify (personal) property”

Lewis is concerned with the question as a matter of both
- At the time when Lewis wrote the article, her home country, (post-secession) South Africa,
was drafting its new constitution
- South African had to decide what mattered (enough) to it as a country, so that it could draft
the constitution
Lewis structures her discussion by:
- “sketch[ing] briefly, and in rudimentary terms, the traditional theories advanced in favour of
the institution of private property, and the difficulties associated with the justifications”; and
then
 - “concentrat[ing], (albeit briefly, and without being able to do full justice to their scholarship)
on the work of two modern theorists, Jeremy Waldron and Stephen Munzer, who themselves
have considered the work of other philosophers and jurists at length and who illuminate the
issues about which there is intense debate”

‘OCCUPANCY’ OR ‘RES NULLIUS’ (JUSTIFICATION THEORY)

“One of the oldest justifications is based on the right of the discoverer of property to take control of it,
and to dispose of it”
“The right of the first occupier is indeed recognised in Roman, Roman-Dutch and South African law,
but only in respect of those things that are unowned”
“[This is] a category of little significance today, and not much since first civilizations began”
“And even if we concede that the first occupier may retain control over a thing, this does not mean
that she should be able to use it arbitrarily, or dispose of it in any way she deems fit”
Also, “[t]he theory of occupancy does not account for acquisition by transfer or by inheritance”
Also, would you argue that ownership as it exists in tikanga is based on a concept similar to
occupancy theory? If so, why? If not, why not?
If so, what would the main difference be between the concepts as they exist:
in the common- and civil-law worlds, on the one hand; and
in te ao Māori, on the other?

‘LABOUR’ (JUSTIFICATION) THEORY

“The labour theory holds that every one is entitled to the produce of her labour”
“Locke’s arguments in justification of an entitlement over a resource created by mixing one’s labour
with it were that private appropriation was the only way to meet human needs; and that the mixing of
one’s labour in itself gives rise to entitlement”
“The difficulties inherent in this justification are obvious”
“[V]ery few things are produced by the labour of one person alone”
“[T]he theory does not take account of need on the part of others”
“[L]ike the occupancy theory, [the theory] does not account for inheritance and transfer”

‘PERSONALITY’ (JUSTIFICATION) THEORY

“Waldron’s analysis of Hegel’s views on property (in very broad terms) is that property is needed by
everyone for the development of freedom and personality”
“People cannot be free unless their basic physical needs are met. These needs can be satisfied by
possession rather than ownership, and so they are insufficient in themselves to justify property”
“But the development of personality does require private property in order to sustain and develop the
qualities that define an individual’s status”
“Ethical development involves a transition from the inner subjective world of the individual to the
external objective world. The world of material objects is the appropriate realm for the initial
excursion of free will to take place”
“The inherent flaw in this theory is that, while it accounts for rights in personal items, even in land
held for private occupation, it does not justify private property in resources required by the public”

‘ECONOMIC’ (JUSTIFICATION) THEORY

“The economic theory in favour of private property claims that maximum productivity is promoted by
it: the person who makes the greatest profit is the person who has the greatest power to foresee
demand”
“Cohen asserts (and recent events in Eastern Europe, and the collapse of the Soviet Union appear to
bear him out, although the debate has not been conclusively finished) that the history of agriculture
and industry show that there is a strong prima facie case for the view that greater productivity prevails
under individual ownership”
“Again, however, there are flaws in the approach”
“Many things, including land, are not increased in number by making them private property”
“There are inherent sources of waste in a regime of private enterprise, for as Cohen points out, the
success of the ‘economically fittest’ is likely to result in the failures of those less fit – which results in
loss to the community”
“And, most importantly, private property in industry may be argued to sacrifice the interests of society
to commercial profit”
Be critical of arguments against or for “communism” (or “socialism”)
On the one hand, it is uncertain exactly what communism means
In its “purest” form, communism is a way of organising society in which there is no such thing as
private property, in either a formal or functional sense
On the other hand, (historically) there have been almost no examples of communist organisations (or
of communist states)
Many organisations are only aspirationally communist, at their own admission
Arguably:
the Soviet Union was actually an example of state capitalism (i.e. a system where property is mainly
owned by the state “for” or “on behalf of” the workers rather than by the workers themselves)
the People’s Republic of China is actually an example of state capitalism
Many organisations identify as communist (or socialist) when in fact they are not
The National Socialist German Workers’ Party (i.e. the Nazi Party) had a highly capitalist (or
neoliberal) economic policy, favouring extreme competition
Generally, commentators would regard such an economic policy as anything but socialist
If a person (over-) uses the term “communist” or “socialist”, consider the possibility that (s)he is
simply a propagandist of some type (either anti-communist or pro-communist!)
When people such as Jordan Peterson argue against socialism using Nazi Germany as an example,
consider the possibility that they:
do not understand what socialism is; or
are being (intellectually) dishonest

‘UTILITY’ (JUSTIFICATORY) THEORY

“Utilitarian theories have also played an important role”
Perhaps the most famous utilitarian (in the English-speaking world) was Bentham
“These [theories] maintain that the total, or average, happiness of society will be greater if resources,
particularly the means of production, are owned and controlled by individuals (an argument closely
allied with the economic argument […])”

‘UTILITARIAN’ (JUSTIFICATION) THEORY

“Waldron maintains that Aristotle’s views on property are utilitarian, in that [Aristotle] considers that
social disharmony will be avoided if each person has his own land on which to work, and more will
be produced when each person applies himself to what is his own property”
“Aristotle none the less argued in favour of the communal uses of resources: he differed from Plato,
however, in maintaining that the sharing of wealth should be the result of virtue [(if you are interested,
see the Stanford Encyclopedia of Philosophy)] rather than legal compulsion”
“The principal difficulties with utilitarian arguments are that they take human interests and desires as
given, assuming that the fulfilment of a desire has a positive value and that they are quantifiable”
“Further, the arguments take no heed of the problem of distribution. Waldron argues that a utilitarian
who is concerned to maximize the happiness or satisfaction in a community is incapable of taking into
account the deprivation or poverty of a few. Thus equality and justice, on a pure utilitarian theory, are
not important considerations”
Or “equality and justice, on a pure utilitarian theory, are […] important considerations” only to the
extent that they are useful or necessary to achieving the end of the greatest happiness for the greatest
number of people

‘HISTORICAL ENTITLEMENT’(JUSTIFICATORY) THEORY

“Waldron also looks at the theory of historical entitlement, exemplified by the writing of Robert
Nozick”
“Nobody has any right to hold resources as private property unless rights have been acquired by
particular people over particular resources by particular actions or transactions. A system of positive
law would determine which actions or transactions were able to give rise to rights of use and control”
‘HISTORICAL ENTITLEMENT’ (JUSTIFICATION) THEORY
“Waldron claims the following for Nozick’s thesis (a thesis which amounts to no more than the ‘bare
bones of a theory’)”
“Justice will be achieved, on the Nozick account, if a distribution is made only to those who are
entitled to hold. The specification of just procedures is to be found in an inductive definition of
‘entitlement’: a person who acquires a holding in accordance with the principle of justice in
acquisition is entitled to that holding; one who acquires from him[/her] in accordance with the
principle of justice in transfer is entitled to the holding. No one is entitled to a holding except through
repeated applications of these steps. Nozick does not elaborate on what amounts to justice in
acquisition”
“Waldron argues that a theory which makes no allowance for subsistence, and protects only those
rights acquired in accordance with ‘a principle of justice’ is not tenable”

Lewis argues (or appears to argue) that Waldron’s and Munzer’s theories are “composites” of the
other theories

What ways may we criticise (personal) property?

MARX’S CRITICISM
In the extract, Marx refers to the concept of “primitive accumulation”
One working definition of this concept is (Lievesley, in McLean and McMillan):
“[t]he process, described by Marx, beginning with the gathering together of commodities, then gold
and silver, and finally money by which nascent capitalism created the material base (through the
systematic exploitation of labour, expropriation of resources, and colonial plundering) that facilitated
its dominance in the economic and political spheres”
“[P]rimitive accumulation plays in Political Economy about the same part as the original sin in
theology?”
“The capitalist system presupposes the complete separation of the labourers from all property in the
means by which they can realize their labour”
“As soon as capitalist production is once on its own legs, it not only maintains this separation, but
reproduces it on a continually extending scale”
“The process, therefore, that clears the way for the capitalist system, can be none other than the
process which takes away from the labourer the possession of his[/her] means of production; a process
that transforms, on the one hand, the social means of subsistence and of production into capital, on the
other, the immediate producers into wage labourers”
“The so-called primitive accumulation, therefore, is nothing else than the historical process of
divorcing the producer from the means of production”
“What does the primitive accumulation of capital, i.e., its historical genesis, resolve itself into? In so
far as it is not immediate transformation of slaves and serfs into wage labourers, and therefore a mere
change of form, it only means the expropriation of the immediate producers, i.e., the dissolution of
private property based on the labour of its owner”
“Private property, as the antithesis to social, collective property, exists only where the means of
labour and the external conditions of labour belong to private individuals. But according as these
private individuals are labourers or not labourers, private property has a different character”
“The private property of the labourer in his[/her] means of production is the foundation of petty
industry, whether agricultural, manufacturing, or both; petty industry, again, is an essential condition
for the development of social production and of the free individuality of the labourer himself[/herself].
[His/her individuality] flourishes, it lets loose its whole energy, it attains its adequate classical form,
only where the labourer is the private owner of his own means of labour set in action by
himself[/herself]: the peasant of the land which [(s)]he cultivates, the artisan of the tool which he
handles as a virtuoso”
“This mode of production presupposes parcelling of the soil and scattering of the other means of
production. As it excludes the concentration of these means of production, so also it excludes
cooperation, division of labour within each separate process of production, the control over, and the
productive application of the forces of Nature by society, and the free development of the social
productive powers”
“The expropriation of the immediate producers was accomplished with merciless Vandalism, and
under the stimulus of passions the most infamous, the most sordid, the pettiest, the most meanly
odious. Self-earned private property, that is based, so to say, on the fusing together of the isolated,
independent labouring individual with the conditions of his labour, is supplanted by capitalistic
private property, which rests on exploitation of the nominally free labour of others, i.e., on wage
labour”
“As soon as this process of transformation has sufficiently decomposed the old society from top to
bottom, as soon as the labourers are turned into proletarians, their means of labour into capital, as
soon as the capitalist mode of production stands on its own feet, then the further socialisation of
labour and further transformation of the land and other means of production into socially exploited
and, therefore, common means of production, as well as the further expropriation of private
proprietors, takes a new form. That which is now to be expropriated is no longer the labourer working
for himself, but the capitalist exploiting many labourers. This expropriation is accomplished by the
action of the immanent laws of capitalistic production itself, by the centralisation of capital”
“Along with the constantly diminishing number of the magnates of capital, who usurp and
monopolise all advantages of this process of transformation, grows the mass of misery, oppression,
slavery, degradation, exploitation; but with this too grows the revolt of the working class, a class
always increasing in numbers, and disciplined, united, organised by the very mechanism of the
process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of
production, which has sprung up and flourished along with, and under it. Centralisation of the means
of production and socialisation of labour at last reach a point where they become incompatible with
their capitalist integument. This integument is burst asunder. The knell of capitalist private property
sounds. The expropriators are expropriated”
“[C]apitalist production begets, with the inexorability of a law of Nature, its own negation”
“The transformation of scattered private property, arising from individual labour, into capitalist
private property is, naturally, a process, incomparably more protracted, violent, and difficult, than the
transformation of capitalistic private property, already practically resting on socialised production,
into socialised property. In the former case, we had the expropriation of the mass of the people by a
few usurpers; in the latter, we have the expropriation of a few usurpers by the mass of the people”

PIKETTY’S CRITICISM
Stewart (references omitted):
The “commercial success [of Capital in the Twenty-First Century] is no doubt attributable to its
rigorous yet far from dispassionate analysis of some of the leading policy questions of our time: is
income and wealth becoming more concentrated in the hands of the few? if so, why? and what, if
anything, should we do about it?”
“Piketty’s central empirical argument is that, in a capitalist market economy, there are powerful forces
tending to increase inequality of both wealth and income. Other things being equal, the share of
national income derived from capital increases when the rate of return on capital exceeds the growth
rate of the economy as a whole (r > g or r-g > 0); consequently, the share of national income derived
from labour must fall”
“Piketty marshals considerable evidence supporting the proposition that the rate of return on large
fortunes is greater than the rate of return on small fortunes, which Piketty attributes to the ability of
wealthier individuals to hire the best money managers”
“Piketty is at pains to emphasize that, although the fact that r > g is the most important driver of
increasing concentration of wealth and income, that fact is a good thing, not a bad thing, because it is
essential for capital to continue to accumulate […]. Piketty’s analysis shows that over the last 150
years the only periods during which capital’s share in the national income of advanced economies fell
sharply were the two World Wars, when the European nations were not only destroying each other’s
stocks of physical capital but also likely consuming far more than 100 per cent of their income from
whatever capital was left – a fact that should give pause to those who believe that war is good for
business”
“War is a particularly dramatic example of a more general point: although the fundamental fact that r
> g does tend to increase the concentration of wealth, there are many institutional, historical, and
political factors that work in the opposite direction”
“Piketty’s proposals for redressing the increasing inequality of income and wealth do not fit easily
into the North American left/right spectrum. He is not a socialist. He would give only a modest role to
progressive income taxation and is very sceptical about protectionism and currency controls as
strategies for promoting growth and equality. But neither is he a neo-liberal or an apologist for
whatever result the market generates.”
Piketty “proposes three related policy instruments to impede the increasing concentration of income
and wealth: reducing the public debt, reinforcing the role of the social state, and imposing a
progressive global tax on wealth”
“Finally, and most controversially, he proposes ‘a progressive annual tax on global wealth’. This tax
would be levied annually on each individual’s holdings of wealth (all financial assets, physical assets,
and real property). The rate would be high enough to generate significant revenue for the state, but
low enough to avoid outright confiscation of capital. It would make a separate property tax
unnecessary, but it would not generate enough revenue to replace income and consumption taxes. It
would be progressive: relatively modest fortunes would not be taxed at all and the (presumably
marginal) rate on even the largest fortunes would be only a few per cent. Quite apart from generating
revenue to reduce the public debt and support the social state, it would also reduce the effective
difference between r and g and so offset the increasing concentration of wealth and income”
“[F]or the most part, [Piketty] assumes that inequality is a bad thing but doesn’t say much about why”

Pazzanese:
“GAZETTE: You seem to have taken to heart some of the limitations of ‘Capital in the 21st Century.’
One that you’ve frequently acknowledged is the last book’s Western-centric focus and what you’ve
called its ‘black box’ treatment of the political and ideological changes associated with inequality.
How have you tried to rectify those shortcomings here?
PIKETTY: First, I show how the rise of inequality in Western societies was very much rooted in a
system of world domination and of colonial domination and colonial appropriation. It’s a theme that
was present a little bit, but was not very well developed. So now, I insist on the importance of slave
societies and post-slavery colonial societies in the formation of modern inequality”
“PIKETTY: [I]n the post-War period, in the ’50s and ’60s, the Democratic Party in the U.S. and
social democratic parties in Europe were able to convince voters with lower education, lower income,
lower wage[s] that they are the platform for them. That, in effect, what ties them together, despite
their differences … is a platform of educational expansion, workers’ rights, Social Security,
progressive taxation. […] Then, what we see is that gradually over the past four decades, these parties
have become the party of the educational elite. So while the right-wing parties and the center-right
party are still the parties of the business elite or the high wealth elite … [W]e have moved from this
class-based system to what I describe as a multi-elite system, where basically the educational elite
votes for the Brahmin left and the wealthy elite votes for the merchant right or the business right. This
rise of elitism, in effect, has left a lot of voters feeling abandoned [by] the main two parties, and I feel
this has largely contributed to the rise of what is sometimes known as populism”
“GAZETTE: You propose a way forward that reinstitutes a progressive tax system that will fund
something like a universal basic income […].
PIKETTY: […] I [also] talk about ‘inheritance for all.’ The idea is to use a progressive tax on wealth
in order to finance [a] capital transfer to every young adult at the age of 25. This transfer is in effect,
120,000 euros [about $134,000] per person[…]. That will very much transform the ability of children
from poor families or middle-class families to create their own firms […] What I propose is not full
equality; there will still be a lot of inequality. But this would make a big difference. The general idea
is that not only the children of wealthy parents who have good ideas can create companies and
participate in the economy. We need to rely on a much broader group of the population”

PRINS’ CRITICISM
Prins is a financial journalist
She used to work at the investment banks Bear Sterns and Goldman Sachs
She held senior roles in both
“Welcome to what I call the Second Great Bank Depression. Why that name? Because this period of
economic chaos, loss, and global financial destruction was manufactured by the men who shaped the
banking sector. They had help, of course”
“If it seems as if the culture of Goldman Sachs pervades the halls of Washington, that’s because the
people of Goldman Sachs pervade the halls of Washington”
“Finance is based on the principle of continuously pushing nothing for something throughout the
system as long as someone else is around to pay for it”
“Wall Street is not only addicted to money. Unconscionable bonuses and ethics abound because its
titans are addicted to winning”
“The acquisition of power comes though the consolidation of money on Wall Street. You need to have
a big appetite for power to be truly successful there. I think that when you live outside this world, it’s
hard to understand the motivation to act in ways that seem, and often are, so disconnected from
reality. As much as their actions are about hoarding money, their strategy is more about consolidating
power and influence. Money is a marker. Power is a drug of choice”
“[T]here are [five] primary roots of the crisis[:]
risky loans that benefitted lenders over borrowers
layered securities consisting of complex combinations of those loans
the immense amount of borrowing, or leverage, taken on by the financial system using those loans
and securities as collateral
the greed for money and positioning […]
the repeal of the Glass-Steagall Act of 1933”
“[R]isky loans that benefitted lenders over borrowers”:
Borrowers wishes to buy houses that they could not afford (on their incomes)
Sellers of home loans advised borrowers to inflate their incomes in their loan applications (and the
lenders knew it)
Lenders accepted the applications, because:
(they argued) home prices would continue to rise, meaning that if borrowers defaulted, lenders would
be able to sell the homes at a profit; and
they allegedly knew that the government would not let them go bankrupt (this is what Prins argues)
“[L]ayered securities consisting of complex combinations of those loans”, i.e. “securitisation”:
Lenders “sold” these loans (i.e. their status as creditor, i.e. their right to be paid back) to investors,
collecting the loans up in bulk and repackaging these loans
Investors have to “put” their money somewhere and (at the time) considered these packages to offer a
better return on investment (ROE) than, say, savings accounts
Rating agencies reviewed these packages and rated them (e.g. A+++)
But the lenders paid the rating agencies to review the packages, meaning that the rating agencies had a
disincentive to give the packages “bad reviews”
When home prices started to fall, the value of the packages fell, too, because the borrowers were
unable to pay the loans making up the packages
“[T]he immense amount of borrowing, or leverage, taken on by the financial system using those loans
and securities as collateral”
Businesses of all types borrowed using these packages as collateral, i.e. as personal-property security
interests
Eventually, the packages proved to be poor collateral, in that the borrowers under the loans making up
the packages started to default on the loans
Why, for Prins, did the above happen? Because of:
“the greed for money and positioning […]”; and
“the repeal of the Glass-Steagall Act of 1933”, i.e. Banking Act of 1933, 73 PL 66, 48 Stat 162, 73
Cong Ch 89
Arguably, the repeal of the Glass-Steagall Act of 1933 mattered because:
in theory, financial institutions may do three main types of “underwriting” (i.e. “risk-taking”)
(Investopedia):
loan underwriting, i.e. agreeing to be paid interest for lending money to the customer (and to risk not
being paid back) (this is what “retail and commercial banks” do);
securities underwriting, i.e. agreeing to be paid fees for buying shares (i.e. for becoming shareholder
in the customer) or bonds (i.e. for becoming lender of money to the customer) and reselling the shares
or bonds to end buyers (potentially at a loss) (this is what “investment banks” do)
insurance underwriting, i.e. agreeing to be paid a premium for paying money to the customer (or
otherwise helping him/her) if (s)he is harmed by some event that is uncertain to occur (e.g. his/her
house catching fire) or that is uncertain in its timing (e.g. death) (this is what insurers do)
Glass-Steagall prevented any financial institution from engaging in more than one type of
underwriting, meaning that the institution becoming insolvent would not affect the financial system
too seriously (i.e. that the institution would not become “too big to fail”); and
the repeal of Glass-Stegall meant the repeal of these preventive measures and (in particular) any
financial institution being able to engage in both loan underwriting and in securities underwriting

PPSA LEGAL ISSUES

The Personal Property Securities Act 1999 (PPSA) came into effect in 2002.
‘the PPSA has introduced, in the place of the general law, An entirely new set of rules governing
priorities in the case of an insolvency.’ – NZ Supreme Court in Stiassny & Ors v CIR [201] NZSC
106
Notice regime via the Personal Property Securities Register (PPSR).
Title no longer determines priority.
Financiers quick to adopt new terminology but suppliers and lessors have been slower. Still a real trap
for new start-ups and SMEs.

Expectation that old forms and documentation would continue to work successfully.
For personal property, old terminology such as charges and mortgages etc has largely been replaced.
Instead lenders and suppliers tend to seek a “security interest” on terms that are set out in the
particular document.
A financier will take either a general security interest, by a general security agreement (“GSA”), or a
specific security interest, by a specific security agreement (“SSA”). Though it is not necessary for the
financier to enter into a separate “GSA” in order to take a security interest in all the debtor’s present
and after acquired property (“APAAP”) or “ALLPAAPP”).
Those abbreviations, as with “PMSI” (purchase money security interest), “ROT” (retention of title),
“ALLPAAPP” (all present and after-acquired personal property) and others are now common
commercial language.

Security interest
- What constitutes a ‘security interest’ is one of the most fundamental questions in the PPSA.
- An interest in personal property created by a transaction that in substance secures payment or
performance of an obligation without regard to the form of transaction or who has title to the
collateral – s 17 PPSA.
Collateral
- ‘collateral’ means personal property that is subject to a security interest.
- 13 types of collateral.
- Goods - motor vehicles
- Goods - aircraft
- Goods - other
- Goods – livestock (for example, cows, sheep, ostriches)
- Goods – crops (for example, pip fruit crop, grape production, wheat production)
- Documents of title (for example, bills of lading, warehouse receipts)
- Chattel paper (for example, hire purchase agreements)
- Investment securities (for example, shares, options)
- Negotiable instruments (for example, a promissory note, a letter of credit)
- Money (for example, NZ dollars, Japanese yen, bank deposit of $NZ8 million lodged with a
bank)
- Intangibles (for example, trademarks, patents and copyright, accounts receivable)
- All present and after acquired personal property
- All present and after acquired personal property except...
GSA or GSD
SSA
PMSI
Attachment
- Proof that something is owed by the debtor to the secured party and that the secured party has
a security interest in the collateral.
- Required if secured party wants to enforce an interest over collateral.
- Section 40 PPSA
- A security interest attaches to collateral when—
- (a) value is given by the secured party; and
- (b) the debtor has rights in the collateral; and
- (c) except for the purpose of enforcing rights between the parties to the security agreement,
the security agreement is enforceable against third parties within the meaning of section 36.
Perfection
- Perfection is the process of registration or taking possession of collateral.
- Perfection by registration only requires collection of the necessary data to register.
- It is not necessary to have anything in writing (e.g. a credit application) to register.
- Nor do you need an existing debt or contract to register.
- Not uncommon for banks and financiers to register before loan and security documentation is
completed.
 - Retention of title suppliers typically register once (to cover multiple supplies).
Priority
- General priority rules
- Perfected security interest has priority over unperfected.
- Priority between two perfected security interests generally determined by who registers their
financing statement or takes possession first.
- ‘Super’ priority for purchase money security interests (PMSI) over ordinary security interest.

Security agreement
- ‘Security agreement’
- (a) means an agreement that creates or provides for a security interest; and
- (b) includes a writing that evidences a security agreement (if the context permits).
- Priority issues arise when security interests come into conflict.
- Insolvency practitioners search the PPSR and ask creditors for the documents that prove the
existence of their security interest.

Enforceability
- A security agreement is only enforceable against third parties (e.g. other creditors) if:
- The secured party has possession of the collateral; or
- The debtor has signed or assented to the security agreement and it contains:
- an adequate description of the collateral by item or kind that enables it to be identified; or
- a statement that a security interest is taken in all of the debtor’s present and after-acquired
property; or
- a statement that a security interest is taken in all of the debtor’s present and after-acquired
property except for specified items or kinds of personal property.

LIQUIDATION AND RECEIVERSHIP ISSUES

When a Receiver or Liquidator is appointed
Steps taken by a Receiver or Liquidator on appointment
- PPSR search
- Contact security holders
- s305 notice to secured creditors
- Determine priority of securities
- Realise assets
- Distribute funds accordingly
Rankings between securities
- Priority is determined based on perfection
 - Perfection is determined at the time of registration or possession
- PMSI creditors have a ‘super’ priority (even over GSA holders)
- Priorities between competing unsecured creditors is determined by attachment

Purchase Money Security Interest (PMSI)

- Usually a secured trade supplier
- Automatically extends to proceeds
- PMSI holder has right to retrieve any unsold/unmanufactured stock
- If business traded on then Receiver/Liquidator must account to PMSI holder for the value of
goods used
- Usually a commercial arrangement is negotiated as it is the best outcome for all parties

Serial numbered goods

- Applies to vehicles and assets with wheels
- Must have specific registration against registration and/or vin to be perfected
- Be careful to search for security over vin as sometimes no registration yet on new vehicles

Tracing to proceeds of sales

- PMSI holder that has attachment to proceeds has the ability to trace and claim over proceeds
- Only able to claim if you can accurately trace into proceeds
- Useful if proceeds are in WIP at date of appointment
- Harder if goods used and co-mingled with others
- If funds receipted into company’s overdrawn bank account prior to appointment, then cannot
trace
Common myths and confusions
- “Retention of title in terms of trade give me the right to take my goods back” – correct; only if
there is no GSA holder or other perfected security interests.
- “The asset is on lease so no need to register a security interest” – depends; on the term of the
loan. If over one year or for a unspecified term then should register.
- “The asset uses proprietary consumables so we don’t bother about registering a security
interest” – depends; this is a commercial decision for the creditor and it depends if they are
willing to absorb the cost of the asset.
- “What’s the point? I don’t get anything back anyway” – depends; again this is a commercial
decision and would depend on the goods/service the creditor provides.
- “Using the PPSR is confusing and in the too hard basket” – incorrect; there is training and
help out there. If you don’t protect your interests then you are not maximising your chances of
getting paid.
 - “I have a PG over the director so that should be enough” – depends; you never know what
other PG’s the director has given. Securing your position against the company gives you a
better chance of getting paid.

Receiver or Liquidator has been appointed

s305 notice received
Unsure of what to do and options you have
Seek legal advice or ask a reputable insolvency practitioner for help
Creditors often act too slowly and reduce their chances of recovery
Make sure agreement documentation is “watertight”
Register your security to perfect your security interest
Ensure registration is valid
If receiver or liquidator appointed seek advice and take action ASAP
If in doubt, seek assistance