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CONDITIONS FOR ESTABLISHING THE DEFENCE

The burden of establishing the bona fide purchase defence is placed on the defendant[1] who must show on the balance of probabilities that two conditions have been satisfied. Once they have been established the defence operates absolutely, barring the claimant’s proprietary restitutionary claim completely, although the claimant may still be able to found a restitutionary claim on the defendant’s unjust enrichment or the commission of a wrong by the defendant.

(A) GOOD FAITH

The defendant must show that he or she acted in good faith in receiving the property from the transferor. What is meant by good faith depends on whether the restitutionary claim is brought at Law or in Equity.

(i) Common Law

At Common Law the notion of good faith is equated with honesty.[2] This is a subjective test which will not be satisfied if the defendant knew or suspected that the transferor had a defective title to the property which was transferred.

  • [1] Re Nisbet and Pott’s Contract [1906] 1 Ch 386. Cf Polly Peck Internationalplc v Nadir (No 2) [1992] 4 All
  • [2] ER 769. 12 Nelson v Larholt [1948] 1 KB 339.
 
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