The ambit of the bona fide purchase defence depends on whether the proprietary restitutionary claim is brought at Law or in Equity.


(i) The Defence is Generally Inapplicable

The bona fide purchase defence has a very limited role at Common Law. In respect of most proprietary restitutionary claims the defence is inapplicable because of the operation of the nemo dat principle. So, for example, where a car is transferred to the defendant by a third party in circumstances where that third party does not have legal title to it, the defendant is not able to obtain any better title to the car, even if the defendant could be characterized as a bona fide purchaser for value because he or she had paid for the car and was not aware of the third party’s lack of title.[1]

(ii) Proprietary Restitutionary Claims to Money

Where, however, the defendant receives money which has passed into circulation as currency,[2] the claimant’s title is destroyed and the defendant obtains title to the money if he or she receives it in good faith and for value.[3] In other words, the bona fide purchase defence is applicable to extinguish the claimant’s title to the money so that any proprietary restitutionary claim brought by the claimant in respect of the money will be defeated. The reason why the defence is recognized where the defendant has received money as a bona fide purchaser has been identified by Fox, who states that ‘[it] helps money to circulate readily in the economy in that it reduces the need for recipients to make detailed inquiries into the title of people who tender money in payment of debts or to buy goods’.[4]

  • [1] See Greenwood v Bennett [1973] QB 195.
  • [2] D Fox, ‘Bona Fide Purchase and the Currency of Money’ (1996) 55 CLJ 547.
  • [3] Miller v Race (1758) 1 Burr 452, 457-8; 97 ER 398, 401 (Lord Mansfield). See also Clarke v Shee andJohnson (1774) 1 Cowp 197, 98 ER 10411; Banque Belge pour l’Etranger v Hambrouck [1921] 1 KB 321, 329(Scrutton LJ) and Ilich (1987) 69 ALR 231.
  • [4] Fox, ‘Bona Fide Purchase and the Currency of Money’, 565.
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