This is the second book in the series ‘The Common Core of European Private Law’ which will publish its results within Cambridge Studies in International and Comparative Law. The project was launched in 1993 at the University of Trento under the auspices of the late Professor Rudolf B. Schlesinger. The methodology used in the Trento project is novel. By making use of case studies it goes beyond mere description to detailed inquiry into how most European Union legal systems resolve specific legal questions in practice, and to thorough comparison between those systems. It is our hope that these volumes will provide scholars with a valuable tool for research in comparative law and in their own national legal systems. The collection of materials that the Common Core Project is offering to the scholarly community is already quite extensive and will become even more so when more volumes are published. The availability of materials attempting a genuine analysis of how things are is, in our opinion, a prerequisite for an intelligent and critical discussion on how they should be. Perhaps in the future European private law will be authoritatively restated or even codified. The analytical work carried on today by the almost 200 scholars involved in the Common Core Project is a precious asset of knowledge and legitimization for any such normative enterprise.

Case

Realty, a company dealing in land, leased space to Travel, a travel agency, for ten years at a fixed monthly rent. One year later, Travel's business fell off because of an economic recession. Realty agreed that Travel could pay half the agreed rent for the duration of the recession. Two years later, when the recession ended, Realty demanded that Travel pay the remainder of the originally agreed rent for the previous two years. Can it recover that amount from Travel?

Discussions

FRANCE

Whether Realty will recover half the rent in arrears for two years from Travel depends on how the agreement reached by the parties is construed. The parties have clearly reached an agreement. The question is, what exactly have they agreed? It is assumed that no variation to the lease has been made, since a lease must be modified in writing (law of 6 July 1989). Either they agreed to cancel Travel's obligation to pay the full rent during the recession or they agreed to postpone the date at which it is to be paid. In the first case, the agreement would be characterized under French law as the waiver of a debt (remise de dette), and in the second, as an extension of the term.

Waiver of a debt is governed by arts. 1282–8 of the French Civil Code. If the new agreement waives a part of the debt under scrutiny (half of the previously agreed rent, as long as the recession will last), then there is no way that Realty will be allowed to recover the money at some point in the future.

Case

Contractor, a construction company, agreed to build an office building for Realty, a real estate company. According to their agreement, Contractor was to receive a fixed amount ‘which shall be due after an architect appointed by Realty certifies that the building is finished according to the specifications’ contained in the contract. While the building was under construction, Contractor promised, without demanding or being offered additional payment, to install more expensive glareproof windows than the specifications called for. Some time later, Realty promised that Contractor would be paid without seeking an architect's certificate. Are either of these promises binding? Would it matter if Realty had already advertised the glareproof windows, or Contractor had already covered over portions of the building the architect would have needed to inspect, before the other party threatened not to keep its promise?

Discussions

FRANCE

Once a contract exists, as a general principle under art. 1134 of the Civil Code, it cannot be modified unilaterally. However, French law recognizes that a party can agree to modify the contract in his sole interest, provided that the conditions for the formation of a contract are satisfied. Whether they are is a question of fact which is within the absolute authority of the trial courts. In our view, the oral promises here would be enforceable.

THE ENFORCEABILITY OF PROMISES

They may be considered to be unilateral offers to modify the contract. They must be accepted, and, as a general rule, silence does not amount to acceptance.

It is difficult to imagine a state without stable rules regarding the allocation of resources. At the same time, the content and nature of these rules are as changeable as the economic, social and political circumstances in which they operate. A successful state must therefore recognise the institution of property, while also recognising the need to modify property rules and distributions in appropriate circumstances. In practical terms, the state must have the power to take, tax and regulate property without the consent of individual property owners, but the exercise of these powers must be subject to some sort of restraint.

This book concentrates on the constitutional law regarding the compulsory acquisition of property in the Commonwealth. Most Commonwealth countries include a right to property in a constitutional bill of rights. These rights generally provide that property may not be acquired compulsorily except for a public purpose and upon payment of adequate compensation. The framing and interpretation of these rights to property raise a number of common issues across the Commonwealth, and this book seeks to describe the main issues and the different ways in which framers and judges have addressed them.

In the Commonwealth, comparative law has always played an important role in legal development. The use of comparative law in Commonwealth courts can be traced back to the colonial era, when the Privy Council held that a single common law applied to all common law jurisdictions in the Commonwealth, except as specifically varied by legislation.

At the centre of the constitutional right to property lies property itself. The meaning of ‘property’ varies according to its function in a particular context, and so we might conclude that it simply has no general meaning. Constitutional framers clearly did not share this view, since Commonwealth constitutions are written in terms of a right to ‘property’. Hence, we cannot know what the constitution protects without knowing what property is. The constitutional texts offer no guidance, as the vast majority do not attempt to define ‘property’. This task has been left to the courts, and so by determining the scope of property they determine the extent of the protection provided by right to property.

This chapter opens by considering the judiciary's sense of property. Most judges follow the legalist approach to interpretation, inasmuch as they work on the assumption that property does have a meaning that can be applied to most cases. However, while they seek to discover and apply the ‘plain meaning’ of property, their approach runs into the difficulties identified by Bruce Ackerman, who argues that property has two different plain meanings. The first is the meaning that the ordinary, non-lawyer would give to property; the second is the meaning that the lawyer would give to it. The first part of this chapter examines how Commonwealth courts choose between these two different meanings of property.

The ordinary, non-legal meaning of property would probably limit it to ownership interests in tangible objects.

Introduction

In most Commonwealth countries, the enactment of a bill of rights brought about profound changes in the constitutional system. In many cases, the bill of rights represented a break with a colonial system characterised by political oppression and economic inequality. While the ringing endorsements of equality in bills of rights seem to support egalitarian reforms, the right to property provides the propertied classes with an instrument for resisting change. Not surprisingly, courts vary in the enthusiasm with which they approach judicial review and the right to property. The counter-majoritarian difficulty – that an unelected judiciary can invalidate legislation passed by an elected legislature – arises in respect of all fundamental rights, but it is especially acute in relation to property rights. For most judges, the resolution of the difficulty lies in the method of constitutional interpretation. Only some methods of interpretation are legitimate, but as long as a legitimate method of interpretation is followed, most judges believe that they have fulfilled their constitutional function and can therefore refute allegations that they have usurped the powers of the legislature.

This chapter therefore examines how the courts interpret the right to property. The first section of the chapter examines legalist interpretation, which concentrates on the language of the relevant provisions. The terms used to define the right to property – ‘property’, ‘acquisition’, ‘deprivation’ and ‘compensation’ – provide the courts with the structure for analysing property cases.

In most Commonwealth countries, the courts have the power to review legislation. A constitutional right to property enables the courts to declare legislation invalid in certain circumstances. In this sense, there is no constitutional right to property in countries where the courts do not have the power to review legislation, or where there is no right to property in the written constitution. In a more traditional sense, however, the idea of fundamental rights encompasses more than justiciable rights under written constitutions. In the English system, lawyers have long recognised a fundamental right to property that formed part of the constitution. Plainly, the fundamental right did not empower the courts to review legislation, but it has an important impact on state powers over property. This chapter examines the fundamental right to property partly because it is important in its own right, and partly because it provides the background to the entrenched Commonwealth rights to property. It begins by examining the unwritten right to property as an ethical limitation on Parliament, and how the unwritten right is reflected in the presumptions of statutory interpretation. It then concludes with a brief examination of the Crown's prerogative powers over property.

Parliament and property

The idea that state power was limited by fundamental law was accepted by the majority of writers in England in the Middle Ages and through to the seventeenth century.

Constitutional law and compensation standards

In the vast majority of cases, an owner of property cannot resist expropriation on the grounds that the state intends to act for a constitutionally improper purpose. Hence, most cases focus on the amount and payment of compensation. Most constitutional rights to property state that the owner must receive compensation for expropriated property. Some constitutions specifically state that compensation must be ‘fair’, or ‘just’, or ‘adequate’. The interpretation of these provisions has been guided by the judicial belief that the primary purpose of compensation is to ensure that the owner of property is treated fairly. The protection of public funds may enter into consideration, but the central theme is one of fairness to the individual. This leads most courts to assume that compensation should be no less than the market value of the property that is taken.

This chapter begins by examining the market value principle. An idea as broad as fairness must be set in some sort of context in order to provide a guide to the courts. The assumption that market value must be paid derives from the nineteenth-century English view that compensation should indemnify the owner against the loss of the property. One question that is asked is whether other perspectives on fairness would lead to other compensation standards.

A second context is provided by the compensation standards of the European Convention on Human Rights.

Introduction

The fundamental rule of English law that property could be taken only for a public purpose and on payment of compensation eventually found its way into the written constitutions of most Commonwealth states. The development of rights to property has been somewhat disjointed, as some constitutions reflect the style of drafting of the Fifth and Fourteenth Amendments of the United States Bill of Rights, while many others are based on early Indian legislation. Some important elements of recent constitutions borrow heavily from the European Convention on Human Rights, and the Irish and German constitutions have been influential on the drafting of Commonwealth rights to property. Consequently, the style, detail and structure of rights to property vary considerably across the Commonwealth.

This chapter therefore describes the different formulations of written rights to property in the Commonwealth. Unlike the remaining chapters of this book, it concentrates on the framing and drafting of constitutions rather than their subsequent interpretation by the judiciary. It begins with the protection of property under the federal constitutions of Canada and Australia. While these constitutions do not contain rights to property, they do reflect the idea of constitutional supremacy and the importance of limiting legislative power. In Australia, in particular, the conferral on the Commonwealth of a limited power to acquire property has had the same effect as the entrenchment of a right to property.

It then considers the early formulations of rights to property in the Government of Ireland Act 1920.

Introduction

Commonwealth constitutions do not require compensation for every state action that affects property. Consequently, legislation may affect a great many property owners adversely, but only a small number may be entitled to compensation. However, those that do receive compensation are generally treated quite generously. Accordingly, it is of the greatest importance to determine whether a given interference with property gives rise to a right to compensation. In this century, framers and courts have attempted to develop tests for distinguishing those situations where the state's interference with private property gives rise to a duty to compensate from those where it does not. Finding a test that is both workable and fair is difficult, especially in relation to the regulation of property use, where an owner may suffer an economic loss of the same magnitude as an outright acquisition of part or even all of the property. In such circumstances, the justice of awarding compensation to one person and not to another is difficult to discern.

The first section of this chapter examines the threshold of compensatability. The state cannot afford to compensate in every situation where property rights are affected, and so there must be some minimum level of interference before a claim can be made. Many Commonwealth courts have expressed this idea in some form; indeed, it offers some justification for limiting the right to compensation to interests in property rather than any economic interest. The difficulty is defining the minimum level of interference.

This chapter is concerned with the purposes for which the legislature may exercise its powers over private property. Early civilian writers agreed that the sovereign powers over property could only be exercised in the public interest, although the precise nature of the public interest was disputed. In the English constitution, the principle of parliamentary supremacy has meant that property can be taken for any purpose, public or private. Nevertheless, the legislature usually gives some indication of the purposes for which property may be taken, and the courts do not allow compulsory powers of acquisition to be used for an improper purpose.

Most Commonwealth constitutions contain some limitations on the purposes for which the legislature may authorise the acquisition of property. India's independence Constitution stated that property could not be expropriated ‘for public purposes’ unless compensation was paid. A number of Nigerian-model constitutions include detailed purpose clauses. For example, the Constitution of Kenya states that property may be taken only if it is ‘necessary in the interests of defence, public safety, public order, public morality, public health, town and country planning or the development or utilization of property so as to promote the public benefit’. Other constitutions are still more detailed; for example, the Constitution of Botswana repeats the list of purposes given in the Constitution of Kenya, and adds that property may be taken ‘in order to secure the development or utilization of the mineral resources of Botswana’.

Rights of appeal

Final decisions

In certain restricted circumstances and only with leave, an appeal may be taken directly from the High Court to the House of Lords, ‘leapfrogging’ over the Court of Appeal. Subject to this, until 1999, appeal to the Court of Appeal lay as of right from final decisions of the High Court, and, provided that the ‘value of the appeal’ was sufficient, also from final decisions of the county court. Now, however, leave (‘permission’) is required in all cases, with the exception of three special classes of case all affecting the liberty of the subject. Further appeal is possible from the Court of Appeal to the House of Lords, but leave is always required.

Interlocutory decisions

In the High Court, interlocutory decisions are made in the first instance by a ‘Master’, or, in the provinces, by a district judge, not by a High Court judge. From him appeal lies as of right to such a judge. Further appeal to the Court of Appeal and the House of Lords is possible, but only with leave. In the county court, interlocutory decisions are usually made by the district judge and there is an appeal to the judge. Any further appeal to the Court of Appeal lies only with leave.

It is almost an article of faith on the part of common lawyers that because their civil procedure is ‘adversarial’ it is therefore superior to the ‘inquisitorial’ procedure which they believe to be used elsewhere. The word ‘inquisitorial’ conjures up visions of the Inquisition, and they do not care for the methods that common lawyers have been led to believe are used by inquisitors.

It seems desirable to stress at the outset, therefore, that no system of civil procedure can in the nature of things be wholly adversarial or wholly inquisitorial. It cannot be wholly inquisitorial because there is nothing to which a civil inquisitor can direct his enquiry unless and until one person has propounded a claim against another in more or less specific terms. It cannot be wholly adversarial because, even if we speak of the winner of a contest between the litigating parties, the winner of contested litigation cannot be determined objectively as can the winner of a race. Indeed, we neither expect nor require that the judge shall act as a human photo-electric device whose only function is to declare which of the litigants was in front when the contest ended. On the contrary, even in common law countries, we expect and require that the judge make use of his own knowledge and experience on matters of fact as well as of law - which means that he must enquire of himself - and we also expect, if we do not require, that he will enquire of others, as when he directs a question to a witness or engages in dialogue with counsel.