396 Property Law

10.5.2. General principles applicable to all property

10.5.2.1. Registration and the nemo dat rule

Where registration of title systems apply, it is registration itself which confers title. So, even a purchaser from someone with an unimpeachable title will not himself acquire a good title unless and until he becomes registered as title holder. And conversely anyone who becomes registered as title holder thereby acquires a better title than anyone else in the world, even if the registration was simply a mistake, or was procured by forgery or a trick. This is essentially what happens in our system of registration of title to land under the Land Registration Act 2002, and also in our system for registering interests in ships under the Merchant Shipping Act 1995.

In such a system, the nemo dat rule has no application. If T is registered as title holder, but X, who has no title whatsoever, executes a transfer deed in favour of P and P manages to become registered as title holder instead of T, then P acquires a good title and T’s title is extinguished. This is a purely mechanical process. The court (or the Registrar) might have a power to order rectification of the register so as to divest P of his title and reinstate T, but rectification is neither as of right nor retrospective, and it is unlikely to be ordered to the detriment of any innocent purchaser who acts on the faith of P’s registration.

10.5.2.2. Dispositions to volunteers

It is a basic principle of English law that a donee can never be in a better position than his donor. In accordance with this principle, a volunteer (i.e. a transferee who gave no consideration for the transfer) can never obtain a better title or a greater interest than his transferor, whatever the nature of the property. There are only two qualifications to be made to this. The first is the point already made about registration – once a volunteer’s interest is registered, his title is as good as anyone else’s (although some registration systems treat registered volunteers less favourably than registered purchasers when it comes to issues of enforceability, as we see in Chapter 15 below). The second qualification to be made is that the donee might have some sort of general law defence, such as estoppel, which will effectively prevent the true owner asserting his title.

This basic principle that a volunteer can never obtain a better title than his transferor is entirely consistent with the policy enunciated by Lord Denning in

Bishopsgate Motor Finance Corp. Ltd v. Transport Brakes Ltd [1949] 1 KB 322, quoted above, that exceptions to nemo dat arise out of the need to protect commercial transactions: in the absence of some added factor such as estoppel, gifts are not regarded as requiring the same protection.

10.5.2.3. Powers of sale

There are some circumstances in which the holder of an interest in a thing is invested with a special power to confer on a purchaser a greater interest in the thing than she herself possesses. The interest held by the seller is nearly always a security