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1.5 Limitation of Scope

1.5.4 Land and Personal Property

115 Robert Bradgate, ‘Reservation of Title Ten Years On’ [1987] Conveyancer 434, 445.

116 The effect of registration will usually lead to ‘perfection’ (or third-party effectiveness). Further discussions

on perfection and effectiveness of security interest against third parties can be found in N. Orkun Akseli,

International Secured Transactions Law: Facilitation of Credit and International Conventions and Instruments

(Routledge 2011) Chapter 5.

117 Gullifer (n 104) 31.

118 Roderick J. Wood and Michael I. Wylie, ‘Non-Consensual Security Interests in Personal Property’ (1992)


Property can either be land including fixtures permanently attached to it such as buildings.119 Plants and trees which can also be affixed to land might not be regarded as land if they are continuously harvested on a termly basis,120 or personal (movable) property which is any property other than land. Personal property is residual in nature and ownership can be easily transferred. Goode expresses the different characteristics between both types of property: land is immovable, rarely divisible in nature, mostly perpetual and is seldom used daily in business circulation because it is mostly required for permanent use, while personal property is sometimes perishable, can easily be transferred freely in the business world, and has a fixed monetary value.121 The distinction between these two types of property carries deep historical roots which are explored in Chapter 2.

The focal point of this research excludes security interests in land, solely focusing on the use of personal property as security. Almost 80% of businesses in sub-Saharan African countries have very little access to affordable finance as a result of the type of collateral they have which is mostly personal property.122 It has been estimated that roughly 99% of personal collaterals that are accepted by lenders in the USA would be refused by lenders in Nigeria.123 It has also been shown in a recent study that 88% of loans provided to businesses in Nigeria require some form of collateral, while the percentage of firms not needing a loan amounted to only around 49%. In practice, lenders will only agree to provide credit to non- corporate entities if the credit will be secured by land. Where they do provide loan secured by personal assets to these non-corporate entities, possession of the asset is usually a mandatory requirement with very high interest rates. With access to finance remaining the biggest obstacle for businesses in Nigeria,124 this doctoral research study will help to enlighten our understanding of personal property secured transactions in order to facilitate economic growth and financial stability in Nigeria.

119 Law of Property Act 1925, s 1 (1). Certain items should not be confused as to whether they constitute a

fixture, e.g. a door key, as it was held in the case of Elliott v Bishop (1855) 156 ER 766 that a key will constitute a fixture due to its importance to the land and its continuous enjoyment.

120Peel Land & Property (Ports No.3) Ltd v TS Sherness Steel Ltd [2013] EWHC 1658 (Ch). A contractual

obligation to construct to construct a steel-making plant on the premises will not vitiate the removal of the fixture; and they cannot also be regarded as property belonging to the landlord.

121 Roy Goode, Commercial Law (3rd edn, Penguin Group, 2004) 29 - 30. 122 IFC Toolkit, 6.

123 Heywood Fleisig, Mehnaz Safavian and Nuria de la Peña, Reforming Collateral Laws to Expand Access

to Finance (World Bank 2006) 7.

124 Nigeria’s New Collateral Registry Aims to Increase Access to Finance for Small Business (World Bank, 3

August 2016) http://www.worldbank.org/en/news/feature/2016/08/03/nigerias-new-collateral-registry-aims- to-increase-access-to-finance-for-small-business last accessed 12 November 2016.

23 Choses in Possession (Tangible Assets)

Personal property, can either be classified as either choses in possession (tangible assets), or choses in action (intangible assets).125 Choses in possession comprises of tangible personal assets.126 A physical book is a chose in possession. Same applies to cars, jewellery, farm produce, etc. The size of the property is no hindrance as to whether it is indeed a chose in possession as far as it qualifies as such.127 Under the English Statute of Frauds, choses in possession, when subject to a sale, or any similar transaction, can also be referred to as ‘wares, goods or merchandise’.128 Choses in Action (Intangible Assets)

The other class of personal asset is the choses in action which embodies various types of intangible property.129 They are the residual properties of personal assets when choses in possession have all been excluded. As the name suggests, choses in action cannot be easily possessed.130 They can be further sub-divided into documentary intangibles and pure intangibles. Documentary intangibles are contractual instruments and documents that identify obligations between parties, making the performance of the terms of the agreement, executable through the medium of a written instrument.131 A major feature of a documentary intangible is that it can be transferred using security devices e.g. by pledging documents together with other necessary endorsements.132 Examples of documentary intangibles are negotiable instruments, warehouse receipts, company shares etc. Pure intangibles are choses in action that are not documentary intangibles. They may include goodwill, copyright, crypto-currencies, etc.

125Colonial Bank v Whinney (1885) 30 Ch D 261, 285 – 266, per Fry LJ. ‘Choses’ within this context simply

means ‘things’. It is also worth noting at this point that choses in action can take the form of documentary intangibles or pure intangibles.

126 Bridge (n 19) 3.

127 Large properties such as airplanes, yacht’s, ships, etc., fall into the category of choses in possession,

irrespective of their size.

128 Statute of Frauds 1677, s 17.

129Torkington v Magee (1902) 2 KB 427, 433 ‘A legal chose in action is something which is not in possession,

but which must be sued for in order to recover possession of it.’

130 ibid.

131 A negotiable instrument e.g. bill of exchange is an example of a documentary intangible. See Crouch v The Credit Foncier of England Ltd (1872-73) LR 8 QB 374.

132 Documentary intangibles can constitute a chattel personal because the document is seen as a tangible ‘thing’,