Of Crocodiles and Cryptocurrency: Or, Property is a Relationship between Persons in Respect of Things, and Why It Matters

In those cases where courts are asked to decide whether property exists in a novel set of circumstances or in respect of novel assets, the question arises whether property is a relationship between persons and things or between persons in respect of things.  Cryptocurrency offers a topical example of this ‘property question.’  In answering it, many courts the world over seem to follow—either explicitly or implicitly, a statement found in the High Court of Australia’s decision in Yanner v Eaton, a case involving whether wild crocodiles could be property for the purposes of a native title claim.  The High Court said that ‘‘property’ is a comprehensive term [which] can be used to describe all or any of very many different kinds of relationship between a person and a subject matter.”  But can that be so?  Here I want to explain why it cannot, and why it matters.

Let’s begin with why the person-thing relationship view cannot be so.  If property, as a concept, is a short-hand way of describing legal relationships, then it is an impossibility for a person to have a relationship with an inanimate subject-matter, or thing, whatever it might be.  Consider the three main rights said to constitute the core of ownership (the “liberal triad”): use (of a rivalrous or scarce resource), exclusivity, and alienability.  People exercise each of those rights—legal relationships—against other people, not things.  One does not protect one’s use as against another thing, or seek exclusion as against other things, or seek to alienate whatever is the subject-matter of property to another thing.  Rather, one enforces one’s use (or decision-making authority, or agenda-setting, or preference-satisfaction) as against others who attempt to interfere with it; one seeks to enforce one’s right to exclude other people from the use of a thing said to be the object of one’s property (think of cases in which landowners have attempted to prevent others from viewing what is taking place on their land, and in which the courts have found that there is no legal means of doing so—courts in nineteenth century America, twentieth century Australia, and twenty-first century England have each considered ‘overlooking’ one’s neighbour); one alienates the object of one’s property—the thing—to other persons, not to other things.  Joseph William Singer states this fact succinctly: ‘property concerns legal relations among people regarding control and disposition of valued resources. Note well: Property concerns relations among people, not relations between people and things.’

Why, then, does it matter that we take the ‘relationship between persons in respect of things’ view of property?  To answer that, consider what judges do in determining whether property exits in a novel set of circumstances.  A judge uses one of two approaches identified by Bruce Ziff.  The first, the ‘attributes approach’ involves looking for family resemblances, with the focus of “the enquiry hing[ing] on whether the right being asserted looks like property: one searches for a strong family resemblance.”  The second, a ‘functional approach’ looks at the function or role that property serves in a society and involves ‘‘[l]ook[ing] … at the policy factors at play.’  It takes account of how property, as a tool of social life, should be used.  This approach recognizes that property is not an acontextual entity that demands conceptual purity, but a purposive concept, to be used to meet social needs.’  Judges usually use the attributes approach in tandem with the person-thing view of property.  In doing so, they focus on the thing for which proprietary status is sought, and not the relationship that exists between persons in respect of that thing.  That holds any new asset hostage to those things which have come before it which the courts have recognised as property—the court attempts to analogise the thing before it to other things that have gone before, and that means that growth in what constitutes property becomes restricted, if not impossible.  A court might reason: ‘this thing, whatever it is, cannot be property because those things like it that have come before were also not property, and so, only those things that are like those that have gone before and that have been recognized as property can now become the object of property.’  The reasoning is tautological. The flaw in the attributes approach, when combined with the person-thing view of property, is that it allows for nothing new to be recognised as property unless a court is willing to step outside the existing framework of recognised proprietary interests. Doing that calls for a court to take a functional approach.

Consider the difference in outcome if a court takes the functional approach, informed by the property as ‘relations between persons in respect of things’ view.  If a court looks at the functions that property is intended to serve—the policy factors at play in the relationship between persons—and whether those functions are evident in a given novel relationship between persons, a very different outcome can follow, one not tied to analogising things to one another.  While it is true that the thing is always entirely irrelevant to a court’s inquiry using the functional approach, the property question ought for the most part to focus on what matters, the legal relationship between persons, and not exclusively on the thing as such. Clearly some courts have been willing, historically, to take a functional approach combined with the ‘relationship between people in respect of things’ view; if it were otherwise, property would long ago have ossified into a rigid system in which innovation was incapable of protection by property.

In novel claims, then, looking at relations between persons in respect of things, it is entirely possible that a given novel relationship may constitute property, quite irrespective of whether the object of that relationship, a thing, looks like other things recognised as property in the past.  The function or role played by the relationship governs the recognition of property, and not the things treated as property in the past.  One sees property as active, the other as rigid and lifeless.  In other words, if we look at the functions that a given set of relationships serve in respect of a given thing, what we might see is that those functions constitute property even if the thing itself may not satisfy some arbitrary list of attributes drawn from previously decided cases or legislation, reified and applied to the thing before the court (The Ainsworth indicia, so beloved of courts in cryptocurrency cases, are just that sort of arbitrary list).  Or, put another way, when we focus exclusively on the thing, we lose sight of what property is: an active, living, relationship between persons in respect of that thing.  It is the relationship—use, exclusivity, alienability—that matters, not the thing that is the object of those relations (rights).  The shift in perspective—from thing to relationship—changes everything.  The difference between the two not only matters, it is absolutely fundamental, to our understanding of what property is.  Our focus in resolving novel property claims, then, ought not to be things—crocodiles, cryptocurrency, or any other thing, whatever it might be—but the legal relations between persons in respect of those things.