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worth considering, and the same applies to the other events which can postpone or extend the limitation period. So, for all practical purposes, the combination of the conventions for proving the provenance of titles and the limitation of action rules make unregistered titles to land as fully marketable as registered titles.
In relation to goods, the limitation of action rules are less effective in extinguishing dormant claims. This is for technical reasons which will be considered in the next chapter, but essentially the problem is that time does not run in favour of thieves (and goods, unlike land, can be stolen), nor does it start to run in favour of innocent takers (such as finders) unless and until they commit the tort of conversion. The role that limitation of actions plays in proving title is therefore more restricted. Nevertheless, even in relation to goods, the combination of provenance and limitation of actions is enough to make most goods fully marketable most of the time.
10.4.5. Relativity of title and the ius tertii
One final point to note about relativity of title is that there are some exceptional cases where a defendant in a title dispute can successfully defend the action by pleading a ius tertii – i.e. by showing that a third party has a better title than the plaintiff has. It has already been seen that the basic principle is that, in any dispute about title, the law is concerned only with the relative strengths of the titles of the rival claimants: it is not concerned to establish the ‘true’ ownership of the thing in question, and a court will order the return of the thing to the claimant who can prove he holds the stronger title, even if it can be proved that there exists someone else whose title is stronger still. This was recently reaffirmed in the High Court by His Honour Judge Rich in Ezekial v. Fraser [2002] EWHC 2066 (a case concerning disputed possession of a house), where he reviewed all the authorities and confirmed the basic principle that the ius tertii of the ‘true’ owner is no defence in a possession action brought by the first wrongful takers of the house against those who subsequently dispossessed them.
However, a statutory exception to this general principle, applicable only to goods, was created by section 8 of the Torts (Interference with Goods) Act 1977 partially implementing recommendations made in 1971 by the Law Reform Committee in its
Eighteenth Report on Conversion and Detinue (Cmnd 4774, 1971). The most important effect of this is that it ensures that a defendant does not have to pay damages for wrongful interference with goods to a claimant who is not the owner. This applies only if the ‘true’ owner can be found and is willing to be joined as a party, and then only at the price of having to pay damages to the true owner instead. This is of immense practical importance to a defendant faced with the threat of multiple liability for damages in tort arising out of the wrongful interference with goods: as a consequence of this provision and section 7, the threat of double liability is removed.
10.5. The nemo dat rule
The nemo dat rule is that no one can give to another a greater interest in a thing than he himself has. However, the application of the rule is determined by policy
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not logic, and when policy reasons demand, English law sees no conceptual difficulty in making exceptions to the rule. The classic statement of the policy considerations at work here was made by Lord Denning in Bishopsgate Motor Finance Corp. Ltd v. Transport Brakes Ltd [1949] 1 KB 322 at 336–7:
In the development of our law, two principles have striven for mastery. The first is for the protection of property: no one can give a better title than he himself possesses. The second is for the protection of commercial transactions: the person who takes in good faith and for value without notice should get a good title. The first principle has held sway for a long time, but it has been modified by the common law itself and by statute so as to meet the needs of our times.
Decisions as to whether, in any particular circumstance, an exception should be made to the nemo dat rule have tended to be made on an ad hoc basis, and consequently the detailed picture is complicated and technical. However, the following broad principles can be abstracted.
10.5.1. Scope of the nemo dat rule
First, it is helpful to distinguish the situations in which the nemo dat rule is relevant from essentially similar situations which English law views as involving issues of priority and enforceability rather than the nemo dat rule. There are at least four different ways in which you can try to give someone more than you yourself have, and the nemo dat rule affects only two of them. In order to distinguish between them it is necessary to revert to the distinction made at the beginning of this chapter between title and interest. In general, the nemo dat rule is concerned with title, not with quantum of interest. To make this clearer, consider the following four situations:
1You purport to transfer something in respect of which you have no interest or title whatsoever. It might be that you never had any interest in the thing: for example, you
might purport to sell to T a car you have just stolen, or to mortgage the Royal Albert Hall to M. Alternatively, you might once have had an interest in the thing but have since lost it: for example, you purport to sell to T a car you once owned but have already sold to X.
2Nemo dat and section 62 of the Law of Property Act 1925. You do have an interest in the thing, but the interest you actually hold is not as extensive as the one you purport to transfer. For example, you purport to sell the fee simple in land to P when all you have is a monthly tenancy of the land, or you hire a car from O and then purport to sell
it to P.
3Priority of derivative interests. You have an interest in the thing and you then grant lesser interests in the thing to a series of grantees, each lesser interest being actually or potentially incompatible with the others. For example, you hold the legal fee simple in your house and you first grant a seven-year lease of the house to T, then you mortgage the legal fee simple to M1 and then you mortgage it again to M2. Or you charter your ship to C for twenty-one years, then allow it to become subject to a lien to secure S’s charges for rescuing the ship, and then mortgage the ship to M.
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4Enforceability of derivative interests. You have an interest in a thing but having already granted lesser interests to third parties (as in 3 above), you now purport to transfer your interest to P free from any lesser interests. So, taking the examples given in 3, you now purport to sell to P the fee simple in your house free from T’s lease and the mortgages to M1 and M2, and to sell the ship to P free from C’s charterparty, S’s lien, and M’s mortgage.
In Case 1, the issue is whether you can give a better title to the interest you are purporting to transfer or create than the title you yourself have: in resolving this issue, the only relevant principle is the nemo dat rule.
Case 2 is slightly more complicated. In determining whether you can give a good title to the interest you are purporting to transfer or create, the relevant principle is again the nemo dat rule, as in Case 1, but there is also a separate and subsidiary issue: if because of the nemo dat rule you fail to confer a good title to that interest, might you nevertheless succeed in conferring a good title to the lesser interest you do in fact have? The answer is usually yes, because of the basic property principle that a disposition of a greater interest than you have will be effective to dispose of whatever interest you do have in the same thing. This is enshrined in section 62 of the Law of Property Act 1925 (not confined to land) and the same result can be achieved via the doctrine of partial performance, as demonstrated in Thames Guaranty Ltd v. Campbell [1985] QB 210 (i.e. if this is what the buyer wants, the court will order you to perform your contract up to the extent you can do so, and pay damages to compensate for the shortfall).
Cases 3 and 4, on the other hand, have nothing to do with the nemo dat rule at all. In Case 3, each grantee will get a good title to the interest you purport to grant to him, but the issue is whether that interest will be postponed to or take priority over the interests of the other grantees. English law treats that issue as a question of priorities between the competing lesser interests, and ranks them between themselves in an order arrived at by applying special priority rules.
Similarly, in Case 4, there is no difficulty about title: there is no reason why P should not get a good title to the fee simple – the only issue is whether she will take the interest subject to or free from the encumbrances you have carved out of that interest. English law treats that issue as a question of the enforceability of each of the lesser interests as against P, governed by special enforceability rules. While priority rules and enforceability rules have close affinities with the nemo dat rule (and with the common law bona fide purchaser rule Lord Denning contrasted with it in the above quotation from Bishopsgate Motor Finance Corp. Ltd v. Transport Brakes Ltd
[1949] 1 KB 322), they are not explicitly based on them and it avoids confusion in this context if they are kept distinct. Priority and enforceability of interests are therefore considered separately in Chapter 14.
In cases where the nemo dat rule is relevant – Cases 1 and 2 – the balance drawn between the nemo dat rule and the bona fide purchaser rule varies depending on the nature of the property in question. In the following sections we consider first some general principles applicable to all types of property and then the specific principles applicable to goods, money and land respectively.