Property Law (test)

The Structure(s) of Property Law

02 June 2017 - By Thomas Gibbons

Most property lawyers are pragmatists – we aim to get things done. But property law, as a structure, is not entirely driven by pragmatism. The numerus clausus principle suggests there are fixed categories of “property”. While contract law can give rise to all sorts of agreements and arrangements, property law cannot.

We are all familiar with fee simple, lease, mortgage, and easement as categories of property right. Land covenants are a species of property created by case law (Tulk v Moxhay [1848] EWHC J34 (Ch)), while unit titles (stratum estates in freehold or leasehold) are a species of property created by statute (the Unit Titles Act 2010). Property lawyers cannot themselves simply create property rights.

Escrow Holdings

The numerus clausus principle is not universally accepted. In Escrow Holdings Forty-One Ltd v District Court at Auckland [2016] NZSC 167, the Supreme Court considered a complex arrangement under which lots 2, 3 and 4 were subject to an encumbrance and land covenants. Lots 2 and 3 were to each own a half share in lot 4, but lot 2 was “de-amalgamated” from lot 4. While held together, lot 2 could use lot 4 for parking; once separated, the basis of lot 2’s right to use lot 4 came under scrutiny. Lot 2 was also subdivided into unit titles.

The High Court found that the covenant arrangements did not create positive rights of access or use. The Court of Appeal disagreed. The Supreme Court accepted the Court of Appeal’s argument, and held that the owner of lot 2 was entitled to use lot 4 for parking.

The Supreme Court’s decision is a challenging one. In blunt terms, an easement is normally understood as a right to use another person’s land, falling short of a lease or licence. A land covenant is normally understood as an obligation to do, or not do, something on one’s own land (a positive, or restrictive, covenant). A land covenant is not usually understood as allowing or creating a right over someone else’s land.

 

CHRIS O'CONNOR
PARTNER