New Perspectives on Property Law

Obligations and Restitution

Alistair Hudson

• Publisher: Routledge-Cavendish
• Year: 2013
• ISBN:
  9781135334260
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

The essays in this collection examine the conceptual notions of property and obligations in law. Ideas of property and of obligations are central, organising concepts within law but are nevertheless liable to fragmentation and esoteric development when applied in particular contexts. In particular this collection focuses on the ways in which those concepts are applied to commercial law, land law, human rights law, intellectual property law, the law of restitution, company law and legal theory. This is a challenging and progressive collection of essays which cohere into an extensive examination of private law.

THE NATURE OF THE LAW OF PROPERTY AND ITS RELATIONSHIP WITH THE LAW OF OBLIGATIONS

Chapter 1

The unbearable lightness of property

Alastair Hudson

INTRODUCTION

Property law is concerned with the recognition of entitlements in relation to land, chattels and intangible property. Such entitlements may reflect possession, the right to take a benefit, the right to prohibit use by others and so forth. It is of course the business of property lawyers to inquire into the different incidents and extents of those various rights. What is suggested here is that the law of property ought also to recognise that different aspects of property have different weight.

There are circumstances in which this weight demonstrates itself in the classical sense of property ownership, connoting both exclusive rights of possession and the burdens of ownership: this is most people’s experience of their homes, the maintenance of their cars and the insurance of their other chattels. Alternatively, for the cosmopolitan elite,¹ identified in recent social theory, their property indicates a lightness in ownership, either in the sense that its owners do not feel that they are bound to their property by ties of maintenance and sentiment, or in the sense that professional advisers are able to construct sophisticated mechanisms to conceal their ownership for fiscal and other regulatory purposes. Further, it will also be suggested that the ancient principles of property law now evidence a similar conceptual lightness which has begun to render them incoherent. The lightness both of modern forms of property and of the jural responses which have sought to account for them are the forms of this chapter.

The basis for suggesting that property has different weight in this way is the work of the sociologist Richard Sennett.² Every conspiracy theorist logged onto every internet chatroom in the world is aware of the annual meetings in the Swiss resort of Davos at which the premier league of the world’s entrepreneurs, CEOs and industrialists go on retreat with a few carefully selected politicians and influential thinkers.³ In commenting on the meetings at Davos, Sennett records his observations of entrepreneurs like Microsoft’s Bill Gates who, in talking about their assets, do not consider them to be something tangible and heavy, carrying both the incidents of ownership and the burdens of maintenance, but rather as constituting merely an expression of a market value such that they are themselves necessarily disposable. Significantly this property is something which is kept (rather than owned) solely to realise its financial value. Sennett noted that:

[Gates] seems free of the obsession to hold on to things. His products are furious in coming forth and as rapid in disappearing, whereas Rockefeller wanted to own oil rigs, buildings, machinery, or railroads for the long term.⁴

For this ultra-cosmopolitan elite in their Davos seminars, property has a very different quality from that experienced by the lumpen mass of the population about their few possessions, mortgaged to the hilt and, so far as the sociologists can make out, deeply insecure about their place in the world.⁵

The term ‘cosmopolitan’ is one that is very much in vogue among social theorists.⁶ It refers to those participants in the global economy who move easily from one jurisdiction to another, trading on their global brands, and finding new and disposable sites for their franchised operations. What is produced, in Bauman’s terms, is a ‘light, free-floating capitalism, marked by the disengagement and loosening of ties linking capital and labour’.⁷ This is bound up with a perception of globalisation which permits the capitalists to withdraw quickly and tidily from labour markets by relocating their manufacturing franchises elsewhere, thus creating lightness for capital and weight for labour. This contested approach to globalisation and its impact on the individual’s perception of her relationship with her property is also explored here.

This chapter seeks to probe both the illogicalities at the heart of English property law and the significant gap between tangibility and separateness—which mainstream English property law still assumes in its core concepts—and the necessarily ephemeral and disposable nature of property in the late capitalist world. What is at issue then is the bedrock of capitalism: the ability to establish and to protect rights to private property, whilst also permitting the capitalists ‘lines of flight’ from disadvantageous entanglements with any particular geographic location.⁸ To understand the challenges facing property law it is necessary to understand first the nature of that capitalism which, it will be argued, offers weight to some and lightness to others.

THE NATURE OF CAPITALISM

The lightness of late capitalism: from franchising to freedom

To understand the late capitalists’ use of property it is necessary first to understand those capitalists. By ‘late capitalist’ is meant those entrepreneurs, industrialists and others who own the means of supply in this period of economic history which has seen individuals transformed from citizens and producers into mere consumers;⁹ a period of time dubbed by many social theorists as ‘postmodernity’. By ‘means of supply’ is meant a connection to this process of consumption whereby the capitalist owns the means of supplying that which is consumed, whether that is the ideology informing consumption—produced by advertising agencies, politicians and public relations consultants—or whether it is the goods which are actually consumed, produced by a range of industries from the traditional hardware metal-bashers to software engineers.

This new spread of industrial capitalism into virtual data production has been termed ‘soft capitalism’, a reference to the non-tangible nature of much of the material that is produced.¹⁰ However, other theorists prefer to think of this capitalism not as being ‘soft’, because the competitive nature of global markets is typically cut-throat and unrelenting, but rather as responding better to metaphors such as ‘dancing’ or ‘surfing’ as an illustration of its lack of connection with any particular geographic location in which its goods are produced.¹¹ Surfing, in particular, carries with it connotations of being carried along on waves of other elemental forces, with the skill of the surfer being to direct the board successfully and flamboyantly to shore. Surfing is also resonant of the internet, of course, and the ability to ride waves of data so as successfully to manipulate virtual markets.

The point relates to the globalisation both of these markets and also of the places of their production. In the globalised industrial world, the capitalists no longer need to own the means of production; rather they prefer to own the trade mark which governs the right to sell that product and to franchise out the task of mechanical production to the cheapest available labour pools in the developing world.¹²

The value of nothing: the business of late capitalism

In the dramatic corporate collapses of 2002, such as Enron and WorldCom, what has been most apparent is that the products generated by these financial giants have been assets which have no tangible existence and a market value calculated only by reference to their reputation or a common belief in that mythical marketplace that they are of a given value. The most obvious is Enron, a corporation which traded energy, or rather traded rights to be delivered amounts of energy the value of which was calculated on the basis of predictions as to future energy demands: that is, it traded on people’s expectations of whether or not it will rain tomorrow.¹³ Many of the large institutions involved have strayed across that line from inadvertently overstating their worth today based on overly optimistic predictions of their actual worth tomorrow, into deliberately overstating that same worth. Absent the fraud that is present in one case but not the other, the similarity between these cases is based on an ascription of a notional value to property which has no true personality; this is referred to as quasi-property below.¹⁴

It is suggested that this constitutes an entirely new conception of property and one which English property law will struggle to conceptualise, as considered below in relation to tangible property theory. This new form of property is ‘light’ in a different sense from that considered above—it is light both in that it is not tangible and in that its value can disappear in an instant. Neither of these facets of property is entirely new; however, it is suggested that the sorts of assets which are conceived of in corporate accounts as bearing value (financial derivatives, future cash flows, and present market value calculations of securitised assets) are different from anything which has gone before.

What is also important to note here is that the industrialists, particularly in the new high-technology sectors, do not need to own the means of production any more. They do not need to establish burdensome ties either with the plant which produces the goods or with the workers who populate that plant. Instead, they have the lightness of owning merely the rights to receive the cash flows which derive from exploiting those goods once produced.¹⁵

More of this lightness later; first it is important to unpack a little further the postmodern turn in this late capitalism and so to set out the framework through which we can analyse the nature of property in this sense.

PROPERTY AND THE POSTMODERN

The model on which this development of capitalism through its modern to its postmodern phase will be based is that found in the work of the social theorist Zygmunt Bauman. Bauman identifies in this expansion of global capitalism a form of liquid modernity in which the old social building blocks have melted away; in their place is a constantly shifting sea of choices, opportunities and risks.¹⁶ For the cosmopolitan elite which is free of the ties of geography, for those commercial actors who are able to remove themselves from any particular location without feeling any fetters, there is a lightness about their lifeworld.¹⁷ Not for them the ties of place, nor the burdens of creating direct contractual links with the workforce employed by the franchisee in that place.

Indeed the spirit of place which was so much a feature of the poetry of Lawrence Durrell and others—themselves considered by literary theorists to have been among the early modernists—appears now to be a hackneyed notion. Why dwell over the experiences in Avignon described in the five volumes of Durrell’s Avignon Quintet when you could move on after a single holiday to Klosters, then Bali, then trekking on Kilimanjaro? The spirit of our age is of short-term consumerism, a fetish for multiculturalism and consequently a disdain for the pedestrian heritage of any particular place or time. Our money is electronically stored and transferred, our allegiances are many and shifting. Our modernity is liquid.

The global commercial actor’s being is light. Property has become a means to an end and not a value in itself. To consider an ordinary share in a company to be property in the same way as a home is to stretch one concept of property to fit very different models. A share is many things: an investment, a contingent right in the property of the company on winding up, an expression of a hope that a dividend will be declared.¹⁸ The commercial purpose of a share is that it is both intangible and that it is merely an expression of value—not a thing in itself. A home, on the other hand, is more likely intended to be solid, to be reliable, to be an expression of emotional security in bricks and mortar.¹⁹ It also embodies a range of expressions of hope and of anxiety; but the crucial distinction between the home and the share is that the home necessarily embodies those feelings whereas the share merely expresses a value which fluctuates from time to time. Now, clearly property law does accept both of these items as being property. Nevertheless, a property law which is insensitive to these sorts of nuances will not be capable of dealing adequately with the various different circumstances which will be brought before it. More than that, I shall suggest that, while property law is of course sensitive to context in a number of circumstances, many of those examples of relativity advantage commercial interests over other uses of property. What will be important to consider later in this chapter is the fact that property, as dealt with by commercial people in particular in the late capitalist world, does not respond to the old requirements of tangibility or capability of identification. Property in this new world order is identifiable primarily by its ability to generate cash flow and not through any permanence, nor the necessity for separation from other property which has troubled judges in cases like Westdeutsche Landesbank v Islington.²⁰

The development of Bauman’s own thought: from modernism to postmodernism

Before leaving t...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Preface
• List of contributors
• Introduction
• THE NATURE OF THE LAW OF PROPERTY AND ITS RELATIONSHIP WITH THE LAW OF OBLIGATIONS
• FOUNDATIONAL QUESTIONS IN THE DOCTRINE OF RESTITUTION OF UNJUST ENRICHMENT
• PROPERTY AND OBLIGATIONS IN COMMERCIAL TRANSACTIONS