Modern Studies in Property Law: Volume 9

Modern Studies in Property Law - Volume 7

The decision in Re Rose 1 fundamentally changed equity's approach to imperfect transactions.

Australian property law journal, 2007

Equitable ownership arises in some, but not all, circumstances when legal title is held on trust. Prior to the procedural fusion of the law and equity in the late nineteenth century, equitable ownership arose only from the creation of express trusts and in limited circumstances where a constructive or resulting trust was recognised. The use of equitable ownership was not widespread. Being unknown to the common law, equitable ownership was not a concept that was utilised as part of the remedial response to common law torts like conversion or as a response to a payment made by mistake. The author examines the development of equitable ownership since the late nineteenth century and argues that the introduction of the Judicature Act opened the way for equitable ownership to be used as a response to common law wrongdoing. In addition, contracting parties began to see the flexibility inherent in having two levels of ownership and as a result equitable ownership has become widespread. This...

Current Legal Problems, 2002

for their comments. 1 The concept of invalidity is considered below. 2 e.g. bona fide purchase or the equity"s darling defence; as to change of position, see the section below on tracing. 3 Lord Diplock made a much-cited reference to the distinction between the primary right to performance in contract and the remedial right or claim to compensation for breach of contract in Photo Productions Ltd v Securicor Transport Ltd [1980] AC 827. The terminology appears to come from European civil law: see B Dickson, "The Contribution of Lord Diplock to the General Law of Contract" (1989) 9 Oxford Journal of Legal Studies 441. 4 Subject to the "apparent wealth" argument considered below, text following n.56. the property. This is generally the position taken by the common law. 5 The latter regime is open to the objection that it gives some effect to the invalid transfer: the implication is that, although invalid as against the direct recipient, the transfer is effective so far as third parties are concerned. In principle it seems right that if the transfer is invalid as against the direct recipient it should also be invalid as against third parties, so that ownership is retained and the claim is in rem. "Property", the subject matter of ownership, is generally taken to be a tangible thing, or at least a "specific asset" in the sense discussed below. The main part of this article is concerned with the right to wealth, i.e. transferable or exchangeable value. Wealth may take the form of a tangible thing, but insofar as it is treated as wealth, its value is its exchange value, not any special value that it may have for the owner as a tangible thing. Most importantly, wealth takes the form of value held for exchange or investment by way of money as notes or coins, 6 or in the form of "pure value", held by way of a debt-righti.e. in a bank account or in the form of some other investment. ("Debt-right" is used to signify the right of the creditor as opposed to the liability of the debtor in relation to the debt.) It is often assumed that there cannot be ownership of, or an in rem right to, wealth, except where it consists of tangible things, and that a right to pure value must be in personam, for example a claim in debt. But, to the contrary, as is argued below, and as seems generally to be assumed in non-technical or informal contexts, wealth including pure value can be the subject matter of ownership in more or less the same way as tangible things, or, as one might express it, "property" can encompass wealth as pure value as well as tangible things; and, furthermore, not only is there a primary in rem right to wealth, but also the claim arising from an invalid transfer of wealth can be and generally ought to be in rem. To avoid confusion it may be helpful at this point to mention an issue that will be dealt with more fully later. This article is concerned with "invalid transfers" of property or wealth. An invalid transfer is a transfer that is not effected by a valid exercise by the owner of his power of disposition. 7 This will be the case because of some factor affecting the exercise of the power like mistake, duress, undue influence 5 Although not always, especially with respect to goods. 6 Here the tangible thing is valuable as a token of the wealth that it represents. 7 The "transfer" is a transfer of possession or control. With respect to pure value, control refers to the right as creditor to deal in respect of a contractual debt. In equity, the legal title will pass with possession or control. See below, text following n.83.

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The Cambridge Law Journal, 2014

between a liability principle that focuses specifically on the loss and acquisition of rights and one which treats enrichment as a broader concept, encompassing not only rights but also other forms of value. In so doing, it aims not only to point out some of the situations in which R3RUE departs from English and Australian law, but also to consider how the means adopted by R3RUE have affected those end results. 10 English and Australian law also seem to allow for the existence of such a trust of the proceeds of stolen property: see, eg, Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 (HL) 716 (Lord Browne-Wilkinson); Black v S Freedman & Co (1910) 12 CLR 105. Dicta in the latter case also state that a trust also arises over the initially stolen property, but the case itself involved a trust of the proceeds of such property. 11 For the acquisition of title through the possession of stolen property, see, eg, Costello v Chief

Law & Equity