Property Law in Australia

Property law is complex because there is common law (black-letter or judge-made law), contract law, and then another position in Equity. Statute reduces the common law position into writing whilst attempting to preserve the position in Equity. Specific legislation varies between the States and Territories in Australia; however, the common principles remain the same across Australia.

Elements of Property

A property right can be both transferred and enforced, although the property to which the property right pertains must have a corpus or body or substance to enable it to be transferred. A right in personam is a personal right (such as an individual’s right to recover a loan of money), whereas a right in rem is a right that attaches to the property itself (such as the right to possession of a book). Property rights are enforceable against a group of people, and there is an obligation on the rest of society not to interfere with the right of a person to property.

Classification of Property

Property is broadly divided into two classes:

  • Real property (or realty); and
  • Personal property (or personalty).

Real Property (or Realty)

Real property can be either tangible (such as land, which has a physical presence) or intangible (such as shares, which are governed by an instrument such as securities or bills of exchange).

Personal Property (or Personalty)

Personal property can be either chattels real (such as property rights for chattels) or chattels personal (such as personal possessions).

Ownership of and Interests in Land

Land is a valuable and finite resource. Therefore, there is a public interest in its regulation. Historically, cuius est solum eius usque ad coelum et ad inferos (he who owns the land owns also the depth below and the heavens above) was the over-arching principle. However, this is no longer relevant today, as there have been common law and statutory limitations imposed in relation to mineral rights, water rights and air space.

Rights to Airspace

A person’s interest in their land extends above and below the surface; however, the rights to airspace only extend to the height normally necessary for the proper enjoyment of that person’s land, as there is a public interest in airspace, and space above that needs to also be taken into consideration.

Rights Below Surface (Mineral Rights)

Minerals are “any naturally occurring metalliferous ore, precious stone or any other mineral (including sand, gravel, stoned, shell, coal, oil shale, shale and clay)” including any minerals under the sea or natural water supply source. Minerals vest in the State, as do roads and waterways.

Encroachment

Encroachment can occur when adjoining property (for example, neighbours) intrudes onto another, thus constituting continuing trespass.

Fixtures

Fixtures are items that are attached to land. At common law, cuiquid plantatur solo solo cadit (what is planted on land goes or falls with the land) is the principle that prevails, such that what is affixed to the land becomes a part of the land. The critical issue is whether those things can be removed and taken away from the land whilst maintaining the integrity of the property to determine if it is a fixture. Furthermore, the intention or the degree of annexation (or the more firmly) that the item (or chattel) is affixed to land, the greater it infers that the person wished it to be a permanent fixture to the land. In addition, the purpose of annexation – whether to facilitate better use (or improvement) and enjoyment of land, or to enhance quality and value of the land – will also be considered.

Legal Limits to Land Use

An owner’s right of use and enjoyment of their land at common law is sic uture tuo ut non laedes (use your own in such a way as not to cause injury to others). However, there are further statutory limitations to this, such as specific legislation to promote sustainable and integrated management of the state’s natural resources.

Possession and Ownership of Personalty (Chattels)

Possession of realty began as a feudal policy consisting of two elements: seisin (or investiture: the right of a freehold owner) and possession. Seisin provides the freehold owner with the obligation to perform feudal obligations, the right to convey, and the right to divide. The freehold owner has the feudal obligations and can convey or divide possession to others. The tenant does not have the seisin rights and obligations, as possession is the only right granted to the tenant from the landholder, and the landlord retains the interest in the property. This is what it means to “split” the property.

Possession of Chattels

There is a distinction between realty (immovable property) and personalty or chattel (movable property). Realty has continual value, whereas the value of a chattel is transitory. Possession is not essential for realty (except when title is challenged). In contrast, possession is vital for chattels (such that, if a person cannot prove possession, then it does not belong to them). Hence, a person must demonstrate physical control and the intention to possess the chattel.

Possession may be acquired consensually (that is, through sale, purchase, gift, borrowing and hiring) or non-consensually (such as finding and wrongful acquisition or theft). Property Incapable of Possession does exist and these are intangible property (such as copyright) or choses in action (such as a cheque or negotiable instrument). A person can protect a possessory right from violation or interference through Tort Law; however, a person cannot sue in trespass, conversion or detinue unless that person can prove a proprietary right.

Native Title

The case of Mabo v Queensland (No. 1) (1988) 166 CLR 186 is synonymous with Native Title. The Queensland Government enacted legislation preventing any Indigenous tenure scheme, and the High Court determined that this was contrary to the Racial Discrimination Act 1975 (Cth) and the Australian Constitution. Native Title is extinguished where the people lose their connection with the land or cease to observe their own traditions on the land.

What Is Native Title?

Native Title is sui generis, that is, in a class on its own. It does not derive from Crown grant and does not have the same value as estates (English); therefore, doctrine of tenure cannot apply.

In the case of Mabo v Queensland (No. 2) (1992) 175 CLR 1, the High Court definition stated, “The term ‘native title’ conveniently describes the interests and rights of indigenous inhabitants in land, whether communal, group or individual, possessed under traditional laws acknowledged by and the traditional customs observed by the indigenous inhabitants.

The source of native title is therefore the traditions, laws and customs of Indigenous people and not the common law, although it is recognised at common law.

Section 223 of the Native Title Act 1993 (Cth) states, “The expression native title or native title rights and interests means the communal, group or individual rights and interests of Aboriginal peoples or Torres Strait Islanders in relation to land or waters where:

  • The rights and interests are possessed under the traditional laws acknowledged and traditional customs observed by the Aboriginal peoples or Torres Strait Islanders; and
  • The Aboriginal peoples or Torres Strait Islanders, by those laws and customs have a connection with the land or waters; and
  • The rights and interests are recognized by the common law of Australia.”

Land is the subject of the rights and interests and entitlements, not personal property. Hence, native title is a property right that attaches to land; therefore, it is enforceable against “the whole world”.

Process of Incorporation of Native Title into the Common Law of Australia

The theory that English people carried their laws with them to new colonies meant that, upon colonisation, the common law became the legal system of Australia. However, complications arise due to the fact that there were several ways in which sovereignty could be acquired in International Law. The usual ways are as follows:

  • Conquest;
  • Cession; and
  • Occupation and Settlement.

It is said that sovereignty in Australia was acquired through the third method, namely settlement, because Australia was pronounced to be terra nullius – land belonging to no one. However, the High Court rejected that view, although proceeding to state that the High Court had no jurisdiction to determine the issue of sovereignty and that it would concern itself with the issue of property rights.

Nature of the Crown’s Title

The crown acquired sovereignty over Australia with the establishment of New South Wales in 1788 and with it a title to land extended in stages to Western Australia (1829) and the Torres Strait (1879).

Proof of Native Title

Unlike most property at common law the rights to which are easy to prove – such as contract, registration and certificate of title, and possession – native title is difficult to prove due to the conspicuous absence of documentation and its late recognition and incorporation into Australian law. It must first be shown to have been in existence at the date of acquisition of sovereignty. The claimants must further establish the following:

  • The property rights are held according to the claimants’ traditional laws and customs;
  • Those same rights were held by Indigenous people at the time of acquisition of sovereignty; and
  • Those rights derive from Indigenous people.

All of the above must relate to some land. Therefore, the claimants must further establish:

  • The identity of the claimed land;
  • The possession of the claimed land. In the Mabo case, the plaintiffs established Meriam peoples’ possession of the island of Mer in 1879. Records of events were kept in a mission house (London Missionary Society) and by relevant colonial administrations in Queensland. For most claimants that will be a difficult task; and
  • Transfer of rights under traditional laws and customs. This is generally difficult to prove, unlike the position under the general law because of the availability of wills, transfers and mortgages. Group rights are generally transmitted from generation to generation. Therefore, proof of the claimants’ Indigenous people at the time of colonization may suffice. In the Mabo case, the High Court observed, “It is impossible to identify any precise system of title, any precise rules of inheritance or any precise methods of alienation... there was undoubtedly a local native system.”

Loss of Native Title

Native title may be lost through:

  • Indigenous peoples’ loss of connection with land, in which case the land becomes ownerless and therefore Crown property;
  • Indigenous peoples’ non-observance of the traditional laws and customs from which the native title rights derive; and
  • Extinguishment by the Crown by a grant of fee simple, as in the case of Fejo & Mills v Northern Territory of Australia & Oilnet (NT) Pty Ltd [1998] HCA 58. Extinguishment can also occur by the grant of common law exclusive possession lease, as in the case of Western Australia v The Commonwealth; Wororra Peoples v Western Australia; Biljabu v Western Australia (1995) 128 ALR 1 and Wik Peoples v Queensland (1996) 187 CLR 1.

The Doctrines of Tenure and Estate

Tenure and Estate are two doctrines that relate to feudalism and are essential to the common law:

  • Tenure is derived from Latin meaning “to hold” and is defined as holding a position, that is, to hold land;
  • Estate is derived from Latin meaning “status” to establish somebody or a position on the land.

Legal and Equitable Rights Dichotomy

There are differences between the legal and equitable rights and interest, as they are created differently and accorded different levels of priority in competition with other rights. Legal rights are rights directly to and in things (such as land, good, and 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.

Whether a property right is legal or equitable can become significant, as it determines the order of priority, namely which interest takes precedence over others, where there are several in competition with each other or are in a chain of interests.

Priority of Property Rights

The governing principle is “Nemo dat quod non habet”, which in Latin means “no one gives what one does not have”. If a thief steals something and sells it to a third party, that third party acquires no title or ownership of the thing. The third party may have gained possession, which was all that the thief had, and the third party can enforce that right of possession against another party who interferes with the third party’s possession. However, as against the true or real owner, that person is the one who has title and ownership superior or paramount to the third party’s possession. Thus, the owner of the property and the third party are both victims of the thief, and the law must determine which must bear the loss by attributing priority to the competing rights. The principle Nemo dat plays a crucial role in the resolution of conflicting legal claims. There are some exceptions to this, such as the Sale of Goods Act.

Priority of Equitable Rights

Legal rights are good against the whole world; in contrast, equitable rights are good against all persons except the bona fide purchaser of the legal estate without notice and those claiming under such a purchaser.

A legal interest is so potent that it is unassailable. A person can have a legal interest where someone else purports to have a legal interest in the same property. In such a case, Nemo dat quot habet provides that a person cannot have title which was not duly passed to them.

Acquisition and Transfer of Interests

An acquisition of interest in property is the ability to create a new property. However, most interests are acquired through transfer Inter vivos (between living people) or through testamentary disposition (under a will). Acquisition can be with consent (consensual, such as a sale or gift) or without consent (non-consensual, such as a find, theft or adverse possession). Transfer of Realty is done through a Deed of Conveyance and then Registration through the Torrens Title System.

A non-Consensual way of acquiring property is through adverse possession, whereby the owner is aware of the possession and has lost the right to recover, as in JA Pye (Oxford) Ltd v Graham [2002] UKHL 30. This promotes the efficient use of resources, such that if a person does not use it, then someone else can use it. There are legislative provisions for adverse possession after a certain amount of time (for instance, 15 years).

The Torrens System

Property in Australia is registered under the Torrens System, and there are protections by the registration of property under this system, as it does not depend on possession as evidence of title, rather on registration of title. Therefore, if there is an adverse possession claim, the registration will have priority over the possession.

The Torrens System provides the following:

  1. System of registration of land title (not land as such);
  2. System of legal title by (virtue of) registration;
  3. Registration (with few exceptions), which is conclusive of legal title;
  4. System is compulsory for everybody;
  5. System in which state guarantees and ensure that title is secure;
  6. System of accurate surveys of land.