2 Balancing stability and flexibility

Dagan argues that some, but not all, changes in property rules are compatible with its autonomy telos. He suggests that ‘property's stability requirement, which is crucial for supporting our ability to plan, demands resistance to constant change but not to any change’ (Dagan, Reference Dagan2021, p. 212, emphases in original). This reflects the relationship between stable expectations and autonomy that Dagan developed in previous chapters. But it raises the ‘how much’ or ‘how far’ dilemma that underpins, and at times bedevils, constitutional property law.Footnote ¹

Three more precise questions arise. First, is a subjective or an objective approach to be adopted in assessing how much destabilisation is acceptable? Second, is the speed of change the core concern? And third, is the extent of change – the degree of impact on an owner's expectations – also relevant?

Obviously, the adverse autonomy impact(s) of property transitions will vary. Chapter 8 appears to assume an objective approach to the reasonableness of transitions. As such, the criteria that will guide such an objective assessment are key. At times, the pace of change appears to be the exclusive determinant of the legitimacy of property transitions, while in other places, pace and extent of change are blurred. For example, Dagan states that ‘moderate incremental changes are not necessarily offensive to self-determination because they do not disrupt the ability of owners to plan’, while ‘sudden and dramatic changes are disruptive of property's contribution to self-authorship’ (Reference Dagan2021, p. 213, emphasis in original).

This begs the question of what is meant by ‘moderate’ and ‘dramatic’. It raises the possibility that a substantial change (however assessed) that is introduced with plenty of notice, and even in stages, could potentially offend property's autonomy-enhancing telos. Dagan envisages this ambiguity being resolved in each community through locally formulated ‘property pacts’. The ‘property pact’ shifts the focus from the rate of change to the degree of change and is defined as prescribing ‘the foundational limits of the state's authority to revise our property rights’ (Dagan, Reference Dagan2021, p. 217).

3 Defining the ‘property pact’

How is the content of this important ‘property pact’ to be defined? Dagan argues that it should be understood in light of the whole of a community's legal tradition and need not entail ad hoc decision-making. He contends that through the ‘property pact’, the bearing of some disproportionate burdens falling short of those imposed through ‘sudden and dramatic’ rule changes may be understood as a legitimate part of citizens’ civic responsibilities.

The idea of a ‘property pact’ – of some community-level consensus about the appropriate distribution of the costs of property rule changes – vividly captures the core dilemma that judges face in constitutional property rights adjudication. The truly ‘hard cases’, those that generally result in doctrinal ‘muddle’, are precisely those in which judges are tasked with working out the nature and scope of such a ‘property pact’ (Rose, Reference Rose1984; Peterson, Reference Peterson1989).

Constitutional property rights guarantees that are structured in widely varying ways all ultimately ask the same foundational question: When is it fair to burden individual owners or discrete groups of owners in the interests of the common good? (Michelman, Reference Michelman1992, p. 99). Regardless of the express phraseology of a constitutional property rights provision, judges struggle to generate determinate or definitive ‘tests’ to address that question. Furthermore, given the distributive territory that it involves entering, judges tend not to clearly articulate reasons to explain the outcomes in ‘property pact’ cases, particularly decisions that constrain the exercise of the legislative power (Walsh, Reference Walsh2021).

The core doctrinal principle relied upon by Dagan to illustrate the ‘property pact’ is the ‘Armstrong’ principle, which was articulated by the US Supreme Court in interpreting the Takings Clause of the Fifth Amendment of the US Constitution.Footnote ² Justice Black defined the core purpose of the Takings Clause as follows:

While this principle has often been cited in the US Supreme Court's takings decisions,Footnote ⁴ it has tended not to be directly employed as the basis for those decisions.Footnote ⁵ Instead, the core question of fairness – the ‘property pact’ – is usually addressed through the prism of ‘rules’ that are themselves ambiguous and inconsistently applied.Footnote ⁶ Such doctrinal ambiguity can have concrete effects, for example making it difficult to dispel political and wider cultural myths about the strength of property rights (Underkuffler, Reference Underkuffler2007; Walsh, Reference Walsh2021). As Amnon Lehavi notes, to function well, property law must ‘facilitate broad-based social understanding about the legal regime’ (Reference Lehavi2010, p. 82). This requires clarity around the content of the ‘property pact’. To date, judicial decisions have not provided such clarity.

Dagan acknowledges that recognising the existence and importance of ‘property pacts’ does not avoid the difficult distributive questions raised by constitutional property dilemmas – it does not provide ‘a precise solvent of hard cases’ (Reference Dagan2021, p. 236). However, given that judicial decision-making has generally struggled to provide clarity on this issue, some more insight into the sources, institutions and actors that Dagan regards as appropriately influencing the content of the ‘property pact’ would be helpful.

Legislators and administrators, as well as judges, have a role to play, with judge-made law interacting with legislation and administrative decisions in arriving at a (hopefully reasonably stable) view of the appropriate rate and scale of property rule change. Less clear is the role of wider cultural views and expectations about these issues in shaping the ‘property pact’. Hard cases often emerge in which judges are called upon to bridge a gap between cultural intuitions and assumptions about property rights and appropriate transitions on the one hand and legal rules on the other. Additionally, political attitudes towards the permissible rate and degree of change may diverge from those reflected in legal rules, which can slow or even block property transitions that may be otherwise desirable from a policy perspective (Walsh, Reference Walsh2021, p. 102). Do political and broader cultural attitudes appropriately inform the content of the ‘property pact’, as well as the ‘whole of the legal tradition’? If so, how are such attitudes to be gauged and filtered into the formulation of the ‘property pact’? There is scope for further analysis of these fascinating questions raised by A Liberal Theory of Property.

4 The remedy question: veto or compensation?

A final question concerns the consequences of determining that a property transition is illegitimate or unfair from an ‘autonomy facilitation’ perspective. Is the appropriate response to prevent the transition, with owners exerting a veto over legal change? Or is the appropriate response to pay compensation to adversely affected owners?

Chapter 8 of A Liberal Theory of Property proceeds on the latter basis, distinguishing for example between property ‘accretions’ that are capable of being accommodated in a system of liberal property without compensation and property ‘avulsions’, which ‘intrude too far too fast on our individual autonomy’ and must be compensated (Dagan, Reference Dagan2021, p. 213). It refers to the need to work out ‘the scope of acceptable non-compensable changes of the applicable property pact’, indicating that the property pact debate is about compensation or no compensation rather than the permissibility of legal change.

This reflects how property rights are protected in practice. Unlike most other fundamental rights, states can usually legitimise interferences with property rights through compensation. Property rights are primarily treated as fungible interests that are appropriately protected in terms of their exchange value rather than their use value (van der Walt and Walsh, Reference Van der Walt, Walsh, Graziadei and Smith2017, pp. 212–213). However, given the situation of Dagan's analysis of property transitions within a broader theory of property grounded in autonomy, it would be helpful in developing that theory to consider whether compensation is in fact an adequate response to a property transition that excessively disrupts owners’ expectations.

Compensation may not always solve the resulting ‘autonomy’ problem, which in at least some instances may turn on the need to retain property or to carry out particular uses of property to fulfil life plans. Margaret-Jane Radin famously argued that retention of property in fact, rather than simply in terms of its economic value, may be important for personal development (Radin, Reference Radin1995). In legal doctrine, the application of specific performance to contracts to convey property in broad terms reflects the intuition that damages are not always an adequate remedy for the destabilisation of expectations that is caused by a breach of contract in respect of a conveyance of property (Capper, Reference Capper, Lichere and Weaver2015). Eminent domain (expropriation) law also shows how compensation may not, at least from the subjective perspective of adversely affected owners, adequately remedy the adverse autonomy impacts of compulsory acquisitions (Kochan, Reference Kochan1998; Alexander, Reference Alexander2018). This was well illustrated by the backlash to the US Supreme Court's eminent domain decision in Kelo v. City of New London Footnote ⁷ and the resulting wave of state legislation aimed at securing possession of privately owned property (Calfee, Reference Calfee2006; Merriam, Reference Merriam2016).

In short, further analysis of how compensation is understood by Dagan to appropriately mitigate the negative effects of ‘sudden and dramatic’ changes in property rules on autonomy would help to clarify the connections between the idea of the ‘property pact’ articulated in Chapter 8 and the broader arguments of A Liberal Theory of Property.