Beyond the Fine Print: Unpacking the Property Bill

Current property laws in England and Wales dictate ‘things in possession’ and ‘things in action’ are capable of being objects of personal property rights. The Property (Digital Assets etc) Bill 2024 (Property Bill), if passed, will mean property deemed ‘digital property’ will also be capable of comprising personal property rights. The possibilities stemming from this Bill once it receives Royal Assent in relation to law are unlimited, but, for now, this article will focus on the specifics of the Property Bill itself and how it might be expanded upon before being passed. We will also outline the main reasons for its introduction and the long-standing and indirect impact the Property Bill may have once passed. 

What exactly is the Property Bill?

The Property Bill, introduced in the House of Lords on September 11^th 2024, is currently within its first reading. Its remit includes England and Wales only. This ‘remarkably brief’ Bill has only two clauses right now, aimed at clarifying the law in situations involving digital assets, (e.g., crypto tokens) and personal property rights; clause 1 states a ‘thing’ which is not in possession or action, may not be barred from being ‘the object of personal property rights’ purely by virtue of its digital nature. 

Given the Property Bill was created following calls for reform in the form of a third category of ‘thing’ (relating to personal property rights) in the Law Commission No. 416, it isn’t unlikely that provision might be created expressly allocating discretion to courts regarding standards an asset must meet to be ‘digital’. Alternatively, this could be included in the accompanying Explanatory Notes. Regardless, the Property Bill requires considerable inclusion of material before it becomes ready for Royal Assent. 

Reasons for the creation of the Bill

Numerous reasons exist for this development in the law; some significant ones will be explored. The Law Commission highlighted courts lean toward acknowledging certain things capable of comprising personal property despite not falling into either of the existing categories (see, e.g., AA v Persons Unknown [2019] EWHC 3556). It is argued that this is satisfactory, given that digital assets cannot neatly fall into either existing category, since things in possession tend to be able to be physically possessed, and unlike things in action, ‘[digital assets] can be taken without consent, damaged and destroyed’. 

Statutory affirmation of this concept will align the courts and legislature better and provide clarification here. Additionally, providing statutory structure for our increasingly digital society allows for transactions involving digital assets to proceed smoothly, creating an environment for these technologies ‘to flourish’ (see Property Bill Explanatory Notes). Existing categories of things capable of comprising personal property were not made in contemplation of the array of digital assets currently in use: the Property Bill attempts to tackle this issue by introducing another category. Given the range of cases personal property rights may apply to – from bankruptcy cases to questions of ‘legal rules concerning succession on death’, legislation that keeps pace with such types of cases is not only satisfactory but necessary (especially in the pursuit of justice).

Potential effects of the Property Bill

The Property Bill currently includes no exhaustive list specifying what assets are digital for the purposes of the Bill, and the Law Commission recommended in its report to allow common law to develop such a list through emerging case law. Given this, the law regarding digital assets may develop incrementally and thus slowly, potentially creating uncertainty in this area, which this Bill was created to remedy. 

The Property Bill may indirectly induce confusion by leaving to the courts a significant element of it, causing potential claimants to be unsure of their personal property rights. Additionally, while the Property Bill doesn’t yet specify how issues such as interference with personal property rights in relation to digital assets should be faced, the Law Commission discouraged looking to existing Acts (e.g., Torts (Interference with Goods) Act 1977) for remedies; as such, this additional category of subjects capable of comprising personal rights may prompt a novel way of responding to interferences, etc. with them, given their unique nature. This may be the start of seeing the law respond to new legal issues in novel and unique ways, given such issues will never have arisen before, and cannot be tempered by existing legislation as a result.

Finally, how might the Property Bill affect Scotland? Despite being south of the border and unaffected by its scope, Scotland encounters issues of a similar nature in the private law realm, with academics like Professor David Fox, at the University of Edinburgh, highlighting the obscurity of the law relating to digital assets in Scotland and the benefit Scotland’s legal system would obtain from similar legislation. Fox argued that ‘the need in Scotland… is even stronger’, considering Scotland’s much smaller jurisdiction and thus, a much smaller pool of case law from which to pluck legal principles regarding digital assets, and problems regarding the categorisation of property. Given this isn’t an area reserved for Westminster, Scotland is free to legislate and might just follow suit. 

To conclude, the Property Bill focuses on creating a new, third category of property capable of comprising personal property, to aid the unclear law in this area- digital assets will be properly acknowledged by the law. The Bill may also eventually include further provisions on identifying a ‘digital asset’ for the Bill. The Property Bill was created, in part, in response to concern in this unsatisfactory area of private law, to align with what courts have been leaning towards, statutorily, and with our society as it advances technologically. Potential effects of the Property Bill once passed include potentially not removing this area of uncertainty but intensifying it, potentially inducing novel remedies to issues surrounding digital assets in relation to property rights to be created, and potentially nudging Scotland to inevitably make similar legislation.