OPERATION OF THE DEFENCE

The defence has a number of peculiar characteristics.

(A) A COMPLETE DEFENCE

Where the conditions for establishing the defence have been satisfied the restitutionary claim is barred completely, rather than being barred merely to the extent that the defendant has provided value for the property.[1] It is consequently a different type of defence to that of change of position which only operates to the extent that the defendant’s position has changed.[2]

(B) THE DEFENCE MAY BE APPLICABLE EVEN THOUGH THE DEFENDANT WAS NOT A BONA FIDE PURCHASER

Usually the bona fide purchase defence will be pleaded by the defendant who seeks to establish that he or she satisfied its conditions. But this need not be the case. It is possible that the claimant’s property was transferred to a third party in circumstances where the claimant’s intention to transfer title can be considered to be vitiated but the third-party recipient can be considered to be a bona fide purchaser of the property. Consequently, the third party will have obtained a good title to the property which he or she will be able to transfer to the defendant. The claim against the defendant to vindicate property rights cannot succeed in such circumstances simply because the claimant’s title to the property has been defeated by reason of the third party being a bona fide purchaser for value. Once that interest has been defeated it cannot subsequently be resurrected against the defendant.

  • [1] Ilich (1987) 69 ALR 231, 245 (Wilson and Dawson JJ). See also Lipkin Gorman v Karpnale Ltd [1991] 2
  • [2] AC 548. 8 See Chapter 25.
 
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