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THE FUNCTION OF THE DEFENCE

The function of the bona fide purchase defence is to make good defects in the defendant’s title to property.[1] The defence constitutes an exception to the nemo potest dare quod non habet principle, by virtue of which the transferee cannot obtain rights to property which are better than those of the transferor. Consequently, where the transferor of property does not have good title to that property, the defendant can only be considered to have obtained good title if the conditions for the bona fide purchase defence have been satisfied. It is for this reason that the operation of the defence is confined to those restitutionary claims which involve the vindication of the claimant’s property rights. Where the defence applies, the defendant cannot be considered to have interfered with the claimant’s proprietary rights simply because, at the time when the defendant received the property, he or she is considered to have obtained good title to the property so that the claimant’s property rights are extinguished. It follows that there are no longer any property rights of the claimant which can be vindicated so that the proprietary claim is defeated absolutely.

The operation of the bona fide purchase defence can be justified by the need to protect the security of commercial transactions. Where the defendant has obtained property in good faith and for value then, as between the owner of the property and the recipient, the latter should have the better claim to the property, since he or she should be secure in the validity of the receipt of the property if there is nothing to put him or her on notice that the transferor did not have a good title to transfer.[2]

  • [1] See Boscawen v Bajwa [1996] 1 WLR 328, 334 (Millett LJ). See also Swadling, ‘Restitution and Bona FidePurchase’, 103.
  • [2] Bishopsgate Motor Finance Corp v Transport Brakes Ltd [1949] 1 KB 322, 336-7 (Denning J).
 
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