In Rem Claims to Wealth and Surviving Value

Abstract

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.