Relativity of Title - David Fox

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Cambridge Law Journal, 65(2), July 2006, pp. 330–365Printed in Great Britain

RELATIVITY OF TITLE AT LAWAND IN EQUITY

DAVID FOX*

THE relativity of titles to land is a fundamental feature of propertyholding in the common law system. It is treated as one of thefeatures that distinguishes it from civilian systems of propertyholding and proves the pragmatic stuff from which the commonlaw is made.1

Although the principles of title applying to land are well knownand comprehensively explained in the literature,2 the way that theyapply to other kinds of property has hardly been touched upon.This article seeks to expand the inquiry by investigating the fullbreadth of the relativity principle across all branches of the law ofproperty. One question is the extent to which relativity of title, as afeature of property holding at common law, applies to chattels. It isproposed here that it does, but with the important difference that arelative title to a chattel is more easily extinguished than a relativetitle to land. A second question is more fundamental: whether thetitle conferred by an equitable interest in an asset is relative, in thesame way as a legal title to a tangible asset is.3 The view developedin this article is that relativity is as much a feature of theenforcement of equitable titles as it is of legal titles to tangibleproperty. A third, and related, question is whether relativity appliesto legal titles to intangible property. The view proposed is that it isgenerally impossible to have a relative legal title to a purelyintangible asset.

The article begins by examining the core case of relativity oftitle: the title to possess generated by a person’s being in adversepossession of unregistered land. It elucidates some of the mainfeatures of, and reasons for, the relativity principle. The article then

* Faculty of Law, University of Cambridge. I am grateful for the comments of David Ibbetson,Richard Nolan and Michael Prichard. The usual disclaimers apply.

1 E.g., K. Gray, ‘‘Property in Common Law Systems’’ in G.E. van Maanen and A.J. van derWalt (eds.), Property Law on the Threshold of the 21st Century (Tilburg 1996); K. Gray andS.F. Gray, Elements of Land Law, 4th ed. (London 2005), paras. [6.1]–[6.5] (hereafter cited as‘‘Gray and Gray’’).

2 E.g., Gray and Gray, ch. 6; Megarry and Wade, Law of Real Property, 6th ed. by C. Harpum(London 2000), paras. [3-115]–[3-126]; ch. 21 (hereafter cited as ‘‘Megarry and Wade’’).

3 It seems that the only author who has directly considered the relativity of equitable titles isProfessor R.M. Goode in his Commercial Law, 3rd ed. (London 2004), pp. 40–1 (hereaftercited as ‘‘Goode’’).

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develops definitions of the concepts of ‘‘title’’ and ‘‘relativity’’before turning to an investigation of the three main questionsoutlined above.

Certain themes link all parts of the inquiry and establish itsgeneral importance. The first is the inseparability in common lawreasoning of rules of evidence and procedure from the substantivelaw of property. The enforcement of titles to an asset is governedby evidential presumptions about the existence of claims to thatasset and by the rules on joinder of parties applying to disputesover it. The second theme is the fundamental link—which iscommonly overlooked—between the resolution of disputes over titleto an asset and the rules of priority which determine the ranking ofcompeting interests. Once this link is appreciated, it will be seenthat the relativity principle applies far more widely across the lawof property than is commonly thought.

I. THE CORE CASE: ADVERSE POSSESSION OF UNREGISTERED LAND

Suppose that one party (‘‘P1’’) has a valid paper title to the landunder an unregistered fee simple estate. A second party (‘‘P2’’)squats on the land and dispossesses him.4 By virtue of hispossession, P2 acquires a title to the land enforceable against allthird parties who cannot prove a title which is positively strongerthan his own. His title is sufficient for him to sue any trespasserwho interferes with his possession or generally to allow him recoverpossession from any third party (‘‘P3’’) who in turn may dispossesshim.5

An evidential presumption applies under which P2 is treated asholding a fee simple estate in the land.6 The presumption would infact be the same whether the person whom he dispossessed had titleto the land under a freehold or leasehold estate.7 The modern rulederives from the old rule of evidence that as against a wrongdoer a

4 For the authoritative modern statement of the elements of adverse possession see J.A. Pye(Oxford) Ltd. v. Graham [2003] 1 A.C. 419.

5 P2’s possession would even found a title ito sue in nuisance for interference with his reasonableuse and enjoyment of the land: Foster v. Warblington U.D.C. [1906] 1 K.B. 648, recentlyapproved in Hunter v. Canary Wharf Ltd. [1997] A.C. 655.

6 Leach v. Jay (1878) 9 Ch.D. 42, 44–45 per James L.J.; and J.H. Matthews, Treatise on theDoctrine of Presumption and Presumptive Evidence as affecting Title to Real and PersonalProperty (London 1827), p. 29. For a modern statement, see Megarry and Wade, paras. [3-117]and [21-059]. P2’s interest arises as soon as he is in possession, not merely once the limitationperiod has run and P1’s title has been barred: Rosenberg v. Cook (1881) 8 Q.B.D. 162, 165 perJessel M.R. In this respect, P1’s interest arising from adverse possession differs from aneasement arising from long user under the doctrine of prescription. The easement is only takento be granted to the dominant owner once the full prescription period has elapsed.

7 Leach v. Jay (1878) 9 Ch.D. 42, 44–5 per James L.J.; Rosenberg v. Cook (1881) 8 Q.B.D. 162,165 per Jessel M.R.; and, generally, N. Curwen, ‘‘The Squatter’s Interest at Common Law’’[2000] Conv. 528, 532–3; Land Registration for the Twenty-First Century (Law. Com. No. 254),para. [10.73].

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person in possession of land was presumed to have seisin in feesimple.8 Since the presumption of P2’s title arises from his havingtaken possession of the land, his estate is treated as being newlycreated, not deriving by grant from P1.9 So long as P1’s title topossession remains enforceable, his paper title to an estate istreated as continuing independently of, and concurrently with, theequivalent estate of P2.

Provided that time has not run under the Limitation Act 1980,P1’s title to possess the land remains stronger than P2’s and hemay bring an action to recover the land from him.10 Accordingly,we say the validity of P2’s title is relative, in the sense that it isvoid against P1 but generally valid against any third person (‘‘P3’’)who interferes with his possession. If P3 were to interfere in thisway, his only defence would be to prove that his title was strongerthan P2’s, as it would be if it derived by valid grant from P1. It isno defence to P3 that he can prove that P2’s title is weaker thanP1’s. The long-established rule is that P3 cannot defend hiswrongful possession of land by proving the jus tertii, i.e., the rightof possession of a third party, P1, which is stronger than that ofthe claimant, P2. If P3 is to succeed at all, he will do so by thepositive strength of his own title relative to P2’s, not by theweakness of P2’s title relative to P1’s.

II. ‘‘TITLE’’ DEFINED

The definition of ‘‘title’’ is elusive since the sense in which the wordis used varies with the context. Sometimes it is used in a very loosesense as a synonym for ownership. So it is that we would say thata bare trustee holding an asset as a nominee for another has thelegal title to the trust asset and the beneficiaries have the equitabletitle to it. The word also takes on specific meaning in the contextof the Land Registration Act 2002. The word ‘‘title’’ refers in thatcontext to the extent to which a proprietor’s claim to a registeredestate is indefeasible and backed by a state guarantee that aproprietor will be paid an indemnity if it turns out that that hisentry as proprietor is mistaken. So it is that a proprietor ofregistered freehold estate may be registered as having an‘‘absolute’’, ‘‘qualified’’ or ‘‘possessory’’ title to it, which confersupon the proprietor a different level of guarantee by the state.11

8 See Peaceable d. Uncle v. Watson (1811) 4 Taunt. 16, 17 per Mansfield C.J., and generallyA.W.B. Simpson, History of the Land Law, 2nd ed. (Oxford 1986), pp. 153–4.

9 Tichborne v. Weir (1892) 67 L.T. 735.10 Limitation Act 1980, sections 15 and 17 bar the claimant’s right of action to recover the land

and extinguish his title after the limitation period has run.11 Land Registration Act 2002, s. 9.

332 The Cambridge Law Journal [2006]



None of these uses quite captures the specific sense in which theword ‘‘title’’ is used in this article. As a starting point, title is bestunderstood as referring to a claim to an asset arising from aproprietary interest. In its strict sense, title does not refer so muchto the content of the claimant’s proprietary interest—i.e., to theincidents of practical enjoyment which his interest in the assetconfers on him—but to the strength of his claim to that enjoyment,relative to other people who have similar interests in the sameasset. Inherent in the notion of title is the question whether oneperson’s claim to those incidents is stronger or weaker than that ofother potential claimants. Professor Goode has expressed the pointas depending on the difference between the quantum of theclaimant’s right to the asset and the strength of that right asagainst others.12

Once this meaning of title is understood, it makes sense tospeak of two claimants having competing titles to an asset wheretheir claim is something less than ownership. Examples could begiven of competing titles to the enjoyment of profits a prendre overland, such as exclusive fishing rights. There may be a dispute overwhich grantee has the better right to take fish from the waters onthe grantor’s land. This would be a dispute about the strength ofone grantee’s title relative to that of the other. This dispute wouldbe wholly different from one about the content of the grantee’senjoyment of the fishery, such as the weeks of the year when hewas permitted to exercise his right, and what species of fish he wasallowed to take.

While it is true that in the core case of adverse possession ofland the rival parties make competing claims to possession, thesame is not necessarily true for other kinds of asset. Theconnection between title and possession is contingent. The keyconnection is that between title and the ability to assert and defendthe benefit inherent in the interest concerned. Since title consistsessentially in a claim, what the claimant can enforce by his titledepends entirely on the content of his interest in the asset and theincidents of practical enjoyment which the nature of the assetpermits. In the example given, the rival grantees of the exclusivefishing rights have a claim to take fish from the grantor’s land butnot to be in possession of it. Similarly, if we suppose a case wherethere are competing equitable assignments of a debt, the mainincident of the assignees’ equitable title is their right to compel theassignor to sue on the debt. It makes no sense to say that their titleconfers on them a claim to possess the debt—the debt is intangible.

12 See Goode, p. 31.




To summarise then, relativity of title is about the respectiveenforceability of competing claims to vindicate the incidents ofenjoyment inherent in some particular proprietary interest.

III. ABSOLUTE AND RELATIVE TITLES COMPARED

(i) Absolute Title to Assets

We could suppose a property holding system which recognised onlyabsolute titles to assets. In such a system, it would be impossible tocreate competing interests of the same kind in the same asset, eachof which conferred on its holder equivalent entitlements to enjoy it.The best illustration is the right of Quiritary ownership in classicalRoman law. Since the content of the right is not directly relevantfor present purposes, it will be enough to say that Quiritaryownership amounted to full beneficial ownership of the assetconcerned.13 More relevant in this context was the unitary andexclusive character of Quiritary ownership. It was an inherentincident of Quiritary ownership that only one such interest couldexist in an asset. In strict principle, it made no sense to conceive oftwo or more Quiritary owners concurrently holding their rights,with each right conferring a competing title to the asset.14 In thestrict sense therefore the title of the Quiritary owner was absolute.15

13 For accounts of the content of Roman ownership, W.W. Buckland, Textbook of Roman Law,3rd rev. ed. by P. Stein (Cambridge 1963), pp. 186–94; M. Kaser (trans. R. Dannenbring),Roman Private Law, 2nd ed. (London 1968), pp. 92–101; P.B.H. Birks, ‘‘The Roman LawConcept of Dominium and the Idea of Absolute Ownership’’ [1985] Acta Juridica 1, pp. 7–24;and J. Getzler, in S. Bright and J. Dewar (eds.), Land Law: Themes and Perspectives (Oxford1998), pp. 82–85.

14 On unitary character of Quiritary ownership and the absolute title which it conferred, see B.Nicholas, An Introduction to Roman Law (Oxford 1962), pp. 127, 154–55; and D.L. CareyMiller, ‘‘Property’’, Chapter 3 in E. Metzger (ed.), A Companion to Justinian’s Institutes(London 1998), at p. 45. Whatever the strict theory, even classical Roman law must, inpractice, have permitted something akin to the relativity of ownership interests. A personseeking to enforce his Quiritary ownership by the rei vindicatio might be forced to rely on hispossession of the thing in good faith as the strongest evidence of his ownership. In practice,therefore, he might succeed against a defendant on proof of a title that was defeasible. Theclassical Roman law also recognised a right of bonitary ownership in res mancipi. It conferredon the owner all the practical incidents of Quiritary ownership. It arose when a personreceived a res mancipi from the Quiritary owner without the formal procedures of mancipatiowhich were necessary to transfer Quiritary ownership in such things. It was enforceablethrough the actio Publicana against third parties generally. By the exceptio rei venditae ettraditae the bonitary owner could even protect his interest in the asset against the Quiritaryowner who brought a rei vindicatio to enforce his interest in it. For an analysis of bonitaryownership as a form of relative ownership, see Nicholas, op. cit., at pp. 127–8; and W.W.Buckland and A.D. McNair, Roman Law and Common Law, 2nd ed. by F.H. Lawson(Cambridge 1965), pp. 85–6.

15 This is not to say that the Quiritary owner could not grant away lesser rights to other people.He might create a usufruct entitling another person to the beneficial use of his land, orperhaps burden his land with a servitude entitling another person to a right of way. The titleof the Quiritary owner was unitary and absolute, notwithstanding that he had granted awayhis entitlement to enjoy certain incidents that might otherwise have comprised part of thecontent of his ownership. These situations are entirely different from that in which two peopleindependently claim the same kind of interest in the one asset, each entitling them to co-extensive incidents of enjoyment.




The theory of the classical Roman law was to exclude thepossibility of relative ownership rights. The title of the Quiritaryowner had to be the best since, by definition, no other ownershipinterest could exist to compete with it. English law, however, freelypermits the possibility of more than one fee simple estate existingconcurrently in the same land. As has been seen, it applies apresumption in favour of the person in possession of land that heholds it under a fee simple estate. The presumption allows whatare, in effect, multiple fees simple to be created in the same land.While the Roman law could only contemplate the right of theQuiritary owner being valid in an absolute sense, the Englishapproach allows the possibility that an estate in land can at the onetime be valid and void, depending on which other claimant’s title itis compared with.

A further refinement should be added to what is meant here byan ‘‘absolute’’ title. The word does not have the same meaning hereas it does when we speak of a ‘‘fee simple estate absolute inpossession’’. In that sense, it means that the claimant’s interest is ofpotentially unlimited duration and extent, within the limits of thelaw. The contrast is with a determinable or contingent interest, theduration of which potentially limited or which may not vest untilan uncertain future event occurs.16 In that sense, ‘‘absolute’’ refersto the content of the claimant’s right over the asset, not to therelative strength of his title to it.

The significance of the Roman law comparison is that itillustrates the permeability of the common law distinction betweenrules of evidence in procedural practice and rules of substantive lawin recognising the existence of proprietary rights. In the commonlaw, possession of property could be treated as evidence of a goodtitle arising from some underlying proprietary interest,notwithstanding that there was almost certainly some otherclaimant who could assert an equivalent proprietary interest in theasset. To a large extent, presumptions of evidence determined aclaimant’s right of recovery rather than any conceptual theory ofsubstantive proprietary interests.

(ii) Absolute Versus Best Title to Assets

We must distinguish also between the concepts of an ‘‘absolute’’and the ‘‘best’’ title to an asset. In this article an ‘‘absolute’’ titlewill be taken as one which is unitary and exclusive, like the title

16 The distinction is lucidly drawn by F.H. Lawson, Introduction to the Law of Property (Oxford1958), p. 36. The current edition of the work does not consider this point: F.H. Lawson andB. Rudden, Law of Property, 3rd rev. ed. by B. Rudden (Oxford 2002). For absolute asdistinct from contingent or determinable interests, see Megarry and Wade, para. [4-039].




conferred by the strict conception of Quiritary ownership. Theexistence of such a title necessarily excludes the possibility of anyequivalent proprietary interest conferring a competing title on adifferent claimant.

The ‘‘best’’ title to an asset will not necessarily be absolute inthis specific sense. The best title is one which is superior to that ofany other person but it may still not be absolute. An example isthe title of a proprietor of a registered freehold estate in land. Histitle to the land is for all practical purposes indefeasible: subject tointerests taking priority over his estate and to very narrowlydefined grounds of alteration, the fact of registration guarantees histitle to enjoy all the normal incidents of ownership. However,although the registered proprietor’s title in fact is guaranteed to bethe best, it is not necessarily absolute. His title still lacks thatcharacteristic of unitary absoluteness which necessarily excludes thepossibility of another person having an equivalent interest at thesame time.17 A squatter can still take adverse possession of theregistered land and in doing so he establishes a relative title topossess under a fee simple estate, which is enforceable against allbut the registered proprietor.18

The significance of the distinction is to illustrate that althoughEnglish law was content to recognise the notion of the ‘‘best’’ titleto an asset, it was not thereby accepting the theory underlying theRoman law conception of Quiritary ownership which would haveabsolutely excluded the possibility of any competing claim to theasset arising from an equivalent interest. Rules to determine thebest title to assets are fully consistent with a theory of relativity oftitle.

(iii) Relativity of Title and Priority of Interests

A third point that needs to be clarified is the difference, if any,between disputes which turn on competing titles to an asset andthose which turn on the resolution of a priority conflict amongcompeting interests. The view proposed here is that there is no

17 In the light of these examples, Gray and Gray at para. [6.26] perhaps overstate the point insaying that the effect of the land registration system is to demonstrate ‘‘an inexorable drifttowards the hitherto alien continental concept of dominium’’.

18 H.M. Land Registry and Law Commission, ‘‘Land Registration for the Twenty-First Century’’(Law Com. No. 271). Under the scheme provided in s. 97 and Sched. 6 of the LandRegistration Act 2002, after 10 years the squatter may apply to be registered as proprietor ofthe estate to which his possession has been adverse. Sched. 6, para. 9(1) implicitly recognisesthat until the registrar accedes to the squatter’s application, the squatter has an unregisteredtitle to the land which exists concurrently with that of the registered proprietor. Anotherexample of a relative title to registered land arises from the procedure governing theinsolvency of a registered proprietor. It presupposes that a trustee in bankruptcy may take anunregistered legal title to an estate alongside that of the now bankrupt registered proprietor:see Ruoff and Roper, Registered Conveyancing (London 2003), para. [34.004] explaining theeffect of Insolvency Act 1986, s. 306(1), (2).




sharp distinction in kind between the disputes described in thesetwo ways. All disputes about relativity of title can be recast asdisputes about priority. Any dispute over ‘‘stronger’’ or ‘‘weaker’’titles to an asset is resolved by the rules of priority applying toassets of that kind.

We typically speak of a dispute over title when the claimantsassert competing, but equivalent, interests in the same asset, such aswhen a squatter and the proprietor of a registered estate claimpossession of the land. We generally speak of a priority disputewhen the claimants assert different kinds of interest in the sameasset, which may confer incompatible incidents of enjoyment to theasset. An example would be the equitable interest of a beneficiaryin occupation under a trust of land and the legal charge of amortgagee of the land who seeks an order for possession.19 Bothconfer rights to possess the land but the nature of each interest isdifferent. The distinction between competing titles and priority rulesis a loose one, but, for the most part, it is not important to try todraw it sharply. For once the differences in terminology arestripped away, it will be seen that disputes over competing titlesnecessarily depend on rules of priority.

Any property system which allows the creation of multiple validtitles to the same asset needs priority rules to determine thestrength of those titles relative to each other. To speak of a ‘‘bettertitle’’ or a ‘‘stronger title’’ necessarily presupposes priority ruleswhich have ranked the competing titles into their proper order.Priority rules are therefore essential to resolving disputes arisingfrom the relativity of titles. It follows that title disputes can berecast as disputes over priority among competing interests in thesame asset. For example, the rules by which we resolve the familiartitle disputes found in the common law—such as between a papertitle holder of unregistered land and a squatter—can be re-expressed by saying that priority is generally awarded to whicheverclaimant relies upon the earlier title. The claim of the paper titleholder is stronger precisely because it arose earlier in time than thesquatter’s, and he takes advantage of the classical rule of commonlaw priorities that legal interests bind the world.20 The same, it willbe argued, is true of competing equitable titles to an asset. Theirenforceability relative to one another depends on the relevant ruleof priority which applies to interests in assets of that kind.

This fundamental similarity between common law and equity isoverlooked for two reasons. First, disputes over competing

19 E.g., Williams & Glyn’s Bank Ltd. v. Boland [1981] A.C. 487; Bank of Baroda v. Dhillon [1998]1 F.L.R. 324.

20 See Goode at pp. 654–5; and J. McGhee, Snell’s Equity, 31st ed. (London 2005) para. [4-03].




equitable titles to an asset tend to be expressed in terms of thepriority of competing interests in the asset rather than in terms ofrelativity of title. This is in contrast with the classic common lawdisputes over titles to tangible property which tend to be expressedin terms of the relative enforceability of those titles, rather than interms of the priority of interests. The second reason for theobscurity is that equity sometimes applies a priority rule to resolvedisputes over relative titles which does not depend on the order inwhich the titles were created. It will be argued,21 for example, thata common case of relativity of title in equity arises from multipleassignments of the same debt. These tend not to appear as disputesover title because they are resolved by a priority rule that dependson the giving of notice to the debtor, rather than the usual rule—more common to title disputes at law—that priority depends on theorder in which the competing titles were created.

Once these differences are put aside as essentially linguistic andthe connection between relativity of title and priority is established,it will be seen that the principle of relativity is far more widespreadthan might at first appear.

(iv) Reasons for Relativity of Title

The rule that P2 can enforce a merely relative title to landillustrates the pragmatic approach of the common law to the proofof title and the resolution of disputes to property. There are manyreasons for allowing it and only a few of them need be sketchedout here.22

First, the presumption of a legal title from the fact of possessionis important to resolving uncertainties in evidence when proof of avalid paper title conferred by a chain of conveyances may bedoubtful. When supported by rules on the limitation of actions, atheory of title by possession quietens title to assets by eliminatingthe risk of competing claims to it, whether spurious or wellfounded. With real property in particular, it has been shown thatthe combination of limitation rules and the relativity principlefacilitates conveyancing and promotes the free alienability of land.23

Secondly, relativity of title is a concomitant of the fact that, in theabsence of a conclusive system of title registration, it may bedifficult for a claimant to prove that he has the best title to thedisputed asset. To force him to establish this would require theproof of a universal proposition—that there is no other person witha title superior to this own. Even in a system which only requires

21 See Part IV below.22 See, e.g., Gray and Gray at pp. 367–71.23 M. Dockray, ‘‘Why Do We Need Adverse Possession?’’ [1985] Conv. 272.




facts to be proved to the standard of balance of probabilities, suchproof can be difficult, given that there is an unascertained numberof individuals who would need to be considered to see whether theyhad a claim to the property.24 Thirdly, the rule that allows a personto sue on a merely relative title to land shows the preference of thecommon law for discouraging the social disruption that comeswhen one person unjustifiably interferes with the settled possessionof another. The presumption of title in a mere possessor of an assetillustrates one of the many instances where uncertainties in evidenceare resolved against a wrongdoer.25

Beyond these commonly cited reasons, there are two over-arching explanations for the breadth of the relativity principle atlaw and in equity. One is the effect of relevant rules on joinder ofparties which apply to the proceedings where the title to thedisputed asset is litigated. It will be seen that a relative title is morelikely to be recognised and enforced when the claimant is notrequired to join to his action a third person who might have astronger claim to the asset. This is generally the case at commonlaw.26 But the more stringent rules of joinder in equity have tendedto require an equitable claimant to join any party who is believedto have a stronger title than his own. This allowed finality in thelitigation. As a result, it has been uncommon for a claimant to suesuccessfully on a merely equitable relative title, which may explainwhy the operation of the principle in equity has been obscure.

Second, the fact that proceedings to determine property rightsoperate in personam makes it practically impossible to reach adetermination binding on the world at large that a particularclaimant has the best title to an asset.27 Any determination that thecourt may make only binds those people who are joined as partiesto the action.28 An estoppel by record operates between them,

24 K.W. Saunders, ‘‘The Mythic Difficulty of Proving a Negative’’ (1985) 15 Seton Hall L. Rev.276.

25 Compare the evidential presumptions applied against a person who wrongfully mixes his ownfungible goods or money with those of the innocent claimant. Any deficiency in the mixture ispresumed to be attributable to the wrongdoer: Indian Oil Corporation Ltd. v. GreenstoneShipping S.A. [1988] Q.B. 345; Re Hallett’s Estate (1880) 13 Ch.D. 696.

26 See below.27 On the meaning of proceedings in personam and their distinction from proceedings in rem, see

generally, Smith’s Leading Cases, 13th ed. by T.W. Chitty, A.T. Denning and C.P. Harvey(London 1929), pp. 666–74; and Spencer Bower, Turner and Handley, Res Judicata, 3rd ed. byK.R. Handley (London 1996), pp. 238–9. An example of property litigation operating inpersonam is the case where a purchaser of land objects to the vendor’s title. A purchaser maybe compelled by an order of specific performance to accept a vendor’s title, even though it isarguably subject to an adverse interests held by a third party. A determination between thevendor and purchaser that the third party’s interest is unlikely to be valid would not bind thethird party. See Smith v. Colbourne [1914] 2 Ch. 533; Johnson v. Clarke [1928] Ch. 847; andM.E.P.C. Ltd. v. Christian Edwards [1981] A.C. 205.

28 See Johnson v. Gore Wood & Co. [2002] 2 A.C. 1; Isaacs v. Salbstein [1916] 2 K.B. 139, 144per Atkin J., and Spencer Bower, Turner and Handley, Res Judicata, at pp. 215–6. The rule is




which prevents a party to the original proceedings from disputing itin a later action. The corollary is, however, that a third person whohad an interest in the subject of the original proceedings but whowas not joined as a party to them, would be not be estopped fromraising the same issue in fresh litigation. So even on the hypothesisthat a court were to rule in the original proceedings that P2 hadthe best title to the disputed asset, its determination could not binda third person, P1, who in fact had a better title but who was notjoined as a party to the original proceedings. Acknowledging thatinherent limitation on the courts’ powers, English law has oftenbeen content to allow a claimant to sue on a title which wasobviously relative.

With this background established, let us consider how therelativity principle applies in different areas of property law.

IV. RELATIVE LEGAL TITLES TO TANGIBLE PERSONAL PROPERTY

Alongside the well-known doctrines of adverse possession of land,there are corresponding principles which apply to personalproperty. The simplest example is the possessory title of a personwho finds a lost chattel.29 Suppose that P2 finds and takes into hispossession a lost chattel which belongs to P1. As against P3, awrongdoer who interferes with P2’s possession of the chattel, P2’spossession is evidence that he has a title enforceable by action intrespass or conversion. P2’s title arises as soon as he is inpossession of the chattel. It is not the case that he must wait tillthe relevant limitation period has elapsed so as to extinguish thecause of action and title of P1.30 In this respect, possessory titles topersonal property are explained by rules which are similar to thoseapplying to real property where a squatter is presumed to have atitle through a fee simple estate, regardless of whether the papertitle holder’s interest has been extinguished.31

There are three main differences in the creation and enforcementof possessory titles in real and personal property. First, undersection 8 of the Torts (Interference with Goods) Act 1977, there aresituations where a defendant in the position of P3 may plead thejus tertii of P1. The intention of the provision is that the court

implicit in the rules governing the binding effect of judgments or orders: C.P.R., rr. 19.6(4),19.7(7).

29 The most famous example is Armory v. Delamirie (1721) 1 Str. 505, and the leading modernexample is Parker v. British Airways Board [1982] 1 Q.B. 1004.

30 The classic finder’s case, Armory v. Delamirie (1721) 1 Str. 505, would have to have beendecided differently if it had been true that the plaintiff had no title to sue until the limitationperiod had elapsed. The basic limitation period for actions founded on tort is six years, andat the end of that period the title of P1 is extinguished: Limitation Act 1980, ss. 2, 3(2).

31 Cf. Rosenberg v. Cook (1881) 8 Q.B.D. 162, discussed in note 6 above.




would require P1 to be joined as a party to the action, with theresult that P2 would be barred from recovering on the strength ofhis possessory title.32 The competing claims to the asset can beresolved in one set of proceedings. The Civil Procedure Rules whichgive effect to this provision require the claimant to name everyperson who is believed to have an interest in the disputed goods soas to allow the defendant to apply to have that person joined asparty.33 In principle, therefore, this exception would only afford P3a defence if he knew P1’s whereabouts and if P1 were available tobe joined as a party. So if P1 were the undiscovered owner of alost or stolen chattel, the old common law rule would still apply.P3 would be barred from pleading the jus tertii of P1 in defence toP2’s claim on his possessory title.34

The rule that the jus tertii could not be pleaded in claims arisingfrom dealings with personal property was generally observed beforethe enactment of the Torts (Interference with Goods) Act 1977,whether the plaintiff sued in trespass or in trover for conversion.Before the Common Law Procedure Act 1852 abolished the formsof action, the relevant elements which the plaintiff was required toplead in his declaration of trover were as follows:

[The plaintiff] . . . was lawfully possessed, as of his ownproperty, of certain goods and chattels, to wit, [the goods werethen listed] of great value, to wit, the value of _ pounds . . . ;and being so possessed thereof . . . casually lost the said goodsand chattels out of his possession; and the same afterwards . . .came into the possession of the [defendant] by finding . . . andafterwards . . . converted and disposed of the said goods andchattels to his [the defendant’s] own use.35

The cases and writers accepted that a plaintiff with a purelypossessory title could plead that the goods were ‘‘as of his ownproperty’’, as the form of declaration required.36 So the finder of alost jewel could sue in trover to enforce his limited property against

32 For the practical workings of s. 8, see A.M. Dugdale (ed.), Clerk and Lindsell on Torts, 18thed. (London 2000), paras. [14.89]–[14.90]; and G. Battersby, ‘‘The Present State of the JusTertii Principle’’ (1992) 56 Conv. 100.

33 Civil Procedure Rules 1998, r. 19.5A, inserted by Civil Procedure Amendment Rules 2001(S.I. 2001 No. 256) and re-instating the former R.S.C. O.15, r.10A. P2 could of course joinP1 as a party on his own initiative under the general power to add parties in C.P.R., Part 19.But if he believed that P1’s title was superior to his own, he would often have no incentive tocontinue the action with P1 as a party.

34 Costello v. Chief Constable of Derbyshire Constabulary [2001] 1 W.L.R. 1437, noted [2002]C.L.J. 27, is a stark modern illustration. P2, who had been in possession of a car which wasundoubtedly stolen, successfully sued the police, P3, in conversion after their statutoryauthority to detain the car from him had expired. The police had failed to identify theoriginal owner of the car, P1, and therefore could not rely on the jus tertii defence.

35 For the full form of the declaration, see H.J. Stephen, Treatise on the Principles of Pleading inCivil Actions, 2nd ed. (London 1827), p. 51.

36 Ibid., at pp. 354–6; and J. Chitty, Practical Treatise on Pleading, 5th ed. (London 1831),p. 173.




a person who wrongfully withheld the jewel from him.37 Abankrupt could sue a person who interfered with his possession ofthe goods, notwithstanding that the property in the goods mighthave passed by statutory assignment from the bankrupt to thetrustee in bankruptcy.38 A buyer of wood who took delivery of itunder a void grant from the seller would have a sufficient title tosue a person in trover who interfered with his possession of thewood.39 This would follow even though the property in the goodsmight remain in the seller because the grant was ineffective. In allthese cases, if the defendant alleged that the plaintiff was notpossessed of the goods ‘‘as of his own property’’, he was effectivelyraising the jus tertii, though the explicit language of that plea bythe defendant does not appear in the judgments of the court. Thecourt would not accept the plea in trover just as it would not haveaccepted it in an action in trespass.40

The second difference between real and personal property is thatlegal estates cannot be created in personalty.41 Therefore so far as itis necessary to describe the content of the interest of a person witha possessory title to a chattel, he would be presumed against awrongdoer to have an ownership interest in it, not an estate. Wehave seen that with real property there was an evidentialpresumption applied against wrongdoers that a person in possessionof land had seisin in fee simple.42 With chattels, the evidentialpresumption arising from possession of a chattel had to bedifferent. The classical statement of the rule is that of Sir FrederickPollock:

37 Armory v. Delamirie (1721) 1 Str. 505.38 Webb v. Fox (1797) 7 T.R. 391. See especially the judgment of Lord Kenyon C.J. at p. 397

who said that it should make no difference whether the bankrupt sued in trespass or inconversion.

39 Basset v. Maynard (1601) Cro. Eliz. 820.40 The precise way in which the defendant would have pleaded the jus tertii changed over time.

After the judges promulgated the New Pleading Rules of Hilary Term 1834 (the ‘‘HilaryRules’’), the defendant would have had to plead the defendant’s lack of title specially by wayof confession and avoidance. If he pleaded the general issue, that would be taken merely as adenial of the conversion only, not of the plaintiff ’s title to the goods: see W. Selwyn,Abridgment of the Law of Nisi Prius, vol. 2, 9th ed. (London, 1838), p. 1402 discussing ruleIV, 1, 2. Before that reform, the defendant could have put the plaintiff ’s title in issue bypleading the general issue. Under this plea every ground of defence which would have provedthat the conversion was lawful might be given in evidence. Compare the 5th ed. of Selwyn(London 1820), p. 1317. Webb v. Fox (1797) 7 T.R. 391 seems to be an example where thedefendant raised the jus tertii by a plea of the general issue.

41 See J. Williams, Law of Real Property (London 1848), pp. 7, 21; J. Crossley Vaines, PersonalProperty, 5th ed. (London 1973), p. 6. The reason for the difference is that a privateindividual can only hold land in tenure ultimately from the Crown which is the allodialowner. The system of tenures did not apply to chattels. A private person could therefore bethe direct owner of a chattel. Interests corresponding to estates can only be created in chattelsby means of a trust.

42 See Section I above.




[P]ossession is prima facie evidence of ownership . . . [F]or thevery reason that possession in fact is the visible exercise ofownership, the fact of possession, so long as it is not otherwiseexplained, tends to show that the possessor is the owner:though it may appear by further inquiry that he is exercisingeither a limited right derived from the owner and consistentwith his title, or a wrongful power assumed adversely to thetrue owner.43

Pollock explains the rule in terms of the content of P2’s interest.That is to say, P2 is presumed to have an ownership interest in thechattel which he possesses, which is why he has title to suewrongdoers who interfere with that possession. Pollock might havebeen trying to produce a consistent explanation across both realand personal property that property rights can be presumed fromthe fact of possession. However, in contrast to the approach ofPollock, it is very rare for the earlier cases or writers to speak ofthe person with a possessory title to a chattel as having anownership right in it.44 They were generally unconcerned with thecontent of whatever interest P2 might have. They simply spoke ofhis having a title to the chattel and considered the enforceability ofthat title relative to other claimants. If ever they spoke of hishaving property in the chattel, they would generally only say thathe had a ‘‘special property’’. A special property was the interest ofa person who was in possession of goods but who held themsubject to the title of another person who had the generalproperty.45 The common examples were the special property of abailee in relation to a bailor, a carrier to an owner of goods, or afactor to his principal. The relationship between a finder of goodsand the true owner was explained in the same terms. In nearly allcases, a person could not have the special property in goods unlesshe had them in his possession.46

This difference in approach between the quotation from Pollockand that of earlier sources is understandable. In a typical casewhere P3 interferes with P2’s possession of the chattel all thatmatters is that P2 has a sufficient title relative to P3 to enable him

43 F. Pollock and R.S. Wright, An Essay on Possession in the Common Law (Oxford 1888), p. 25.44 E.g., Webb v. Fox (1797) 7 T.R. 391, 397 per Lord Kenyon C.J.: ‘‘The plaintiff is possessed of

these goods, and prima facie the possessor of personal property is the owner of them’’; andless precisely Wilbraham v. Snow (1670) 2 Wms. Saund. 47l, 6th ed.: ‘‘So possession with anassertion of title, or even possession alone, gives the possessor such a property as will enablehim to maintain this action against a wrongdoer; for possession is prima facie evidence ofproperty’’.

45 W. Selwyn, Abridgment of the Law of Nisi Prius, vol. 2, 9th ed. (London 1838), p. 1383 citingWebb v. Fox (1797) 7 T.R. 391, 396 per Lord Kenyon C.J.

46 The exception was that a factor would have the special property in his principal’s goods andwould therefore have been entitled to sue for their conversion even though he, the factor, hadnever had them in his possession: Chitty, Practical Treatise on Pleading, at p. 175 citing adictum of Lord Eyre C.J. in Fowler v. Down (1797) 1 Bos. & Pul. 44.




to sue in trespass or conversion. The issue is the relative strength ofthe parties’ claims to possession of the asset, not the content of theinterest which entitles P2 to sue P3. Strictly, it would only benecessary to refer to P2 as having a relative ownership right in thechattel if the issue were between P2 and some person who claimedto derive title from him, as where P2 offered to sell the chattel to apotential buyer,47 or if a person wanted to lend money on thestrength of P2’s apparent ownership of the chattel.48 That personcould fairly treat P2’s possession as evidence of an ownershipinterest which he would acquire in the transaction, or as sufficientevidence that P2 was good for the repayment of the loan which hemade. But between P2 and a wrongdoer, P3, all that mattered wasthat P2’s title to possession was stronger than P3’s.

The third difference between real and personal property is that arelative title to personal property seems to be more vulnerable toextinction than a relative title to real property. In general, it onlysurvives so long as P2 remains in possession of the chattel. Bycontrast, the standard view of the modern writers is that, subject tothe extinction of titles under the Limitation Act 1980, any numberof relative fee simple estates can be created in land. So, forinstance, Megarry and Wade write: ‘‘[The squatter has, in fact, alegal estate, a fee simple absolute in possession. But so also has the[original owner], until such time as his title is extinguished bylimitation . . . [T]here is thus no absurdity in speaking of two ormore adverse estates in the land, for their validity is relative’’.49

It seems, however, that it is generally impossible for more thantwo ownership interests to exist concurrently in personal property,the best one in the original owner and the other relative one in thepossessor for the time being. Accordingly, it is generally thoughtthat once a person with a purely possessory title to a chattel hasbeen dispossessed, he loses his title to it.50 He acquires insubstitution a purely personal right of action in trespass orconversion against the person who wrongfully dispossessed him.The practical powers arising from whatever continuing title he mayhave to the chattel are very slim indeed. Apart from someexceptions discussed below, he has no continuing title to the chattel

47 E.g., Hiern v. Mill (1806) 13 Ves. Jun. 114, 119 per Lord Erskine C.J.48 E.g., Ryall v. Rolle (1749) 1 Atk. 165, 168 per Burnett J. discussing the bankruptcy doctrine

of reputed ownership under the statute 21 Jac. 1, cap. 19, s. 11.49 Megarry and Wade, paras. [3-122]-[3-123]. A similar conclusion seems to have been reached,

though with full awareness of the analytical difficulties which it creates, by B. Rudden in‘‘Terminology of Title’’ (1964) 80 L.Q.R. 63, pp. 67–71.

50 See Goode at pp. 32–3, though the general position stated there does need to be qualified bythe possible exception discussed in the text accompanying note 55 below. For a full historicalaccount of the rights of the dispossessed owner of chattels, see J.B. Ames, ‘‘The Disseisin ofChattels’’, ch. 67 in Select Essays in Anglo-American Legal History, vol. 3 (Cambridge 1909),pp. 555–60.




on which to found an action against a third person, P4, to whomthe dispossessor passes the chattel. His only right is the chose inaction enforceable against the person who dispossessed him. As abare cause of action, the traditional common law rule before theenactment of section 25(6) of the Judicature Act 187351 was thatsuch a right could not be assigned. Moreover, his power to alienatehis surviving interest in the chattel is much attenuated. He cannotmake a simple gift of the chattel itself since an effective conveyancerequires a delivery of possession, and he lacks it to give. He wouldhave to resort to making the gift by deed.52 Owing to the rule thatallows title to goods to pass by an executory contract, he could sellhis limited interest to a third party.53 But the donee by deed or thebuyer under the contract would, of course, take subject to all theweaknesses in the donor’s or seller’s title so he could have no claimto recover the goods from a third party to whom the dispossessorpassed it. The transaction would confer a worthless benefit. Thereasons for this result will be explained in turn.

The presumption of title in P2 is generated by the fact that he isin possession of the chattel and that his possession is enforceableagainst all third parties who cannot claim any lawful title todispossess P2.54 But the presumption has its limits. It applies solong as P2 remains in possession, or if he is wrongfully dispossessedby another, P3, then the presumption that P2 has title applies asbetween himself and P3. It does not necessarily apply as betweenP2 and P4, a third person who acquires the chattel from P3without deriving title through P3’s original wrong against P2. So,for instance, if P4 stole the chattel from P3, then P2 might have noright of action in conversion against him, since he would not bepresumed to have any continuing title to the chattel at the time ofP4’s conversion. The policy of protecting possession only goes sofar as to give P2 a right of action in trespass or conversion againstP3. Since P4 did not unlawfully interfere with P2’s possession, thepresumption of title would not work in P2’s favour. It could not be

51 The legal assignment of choses in action is now provided for in s. 136(1) of the Law ofProperty Act 1925.

52 Bourne v. Fosbrooke (1865) 18 C.B. (N.S.) 515, and, generally, F.W. Maitland, ‘‘The Mysteryof Seisin’’ (1886) 2 L.Q.R. 481, pp. 494–5.

53 Sale of Goods Act 1979, ss. 17, 18.54 See Stephen, Treatise on the Principles of Pleading in Civil Actions, at p. 357; Chitty, Practical

Treatise on Pleading, at p. 173. The rule is often expressed by saying that possession is asufficient title against a wrongdoer (e.g., Taylor v. Eastwood 1 East 212, 217 per Lord KenyonC.J.; Elliott v. Kemp (1840) 7 M. & W. 306, 312 per Parke B.; Buckley v. Gross (1863) 3 B. & S.566, 572 per Cockburn C.J.; M. Bacon, New Abridgment of the Law, 6th ed. (London 1832),p. 792. The circularity of this way of formulating the rule makes it less helpful. It cannot beknown that the defendant’s conduct is sufficient to make him a wrongdoer unless it is known,for some independent reason, that the claimant has an enforceable title to the chattel.




presumed that P2 maintained a subsisting title to the chattel at thetime when P4 converted it from P3.

On the other hand, if P4 derived title to the chattel from P3 (ashe would if P3 made a gift or sale of the chattel to him), then thereis very slim authority in the South Australian decision of Field v.Sullivan that the presumption of title would apply as between P2and P4, so as to make P4 liable to P2 in conversion. In that caseMacfarlan J. said:

[P2] is in possession of goods, he is prima facie in lawfulpossession of them, and prima facie has the right to thatpossession; in the absence of any evidence to the contrary, inany proceedings that possession is proof of ownership; but thatpossession may be divested out of him, either lawfully orunlawfully. If unlawfully, his right to possession remains. Asagainst the person who unlawfully deprived him of hispossession [P3], or those claiming through him [P4], [P2’s]possession (even if wrongful) up to the time of seizure, issufficient evidence to establish his right to possession.55

Macfarlan J.’s statement derived from some obiter dicta of theCourt of King’s Bench in Buckley v. Gross,56 a problematic decisionwhich is considered in detail below.57 A simple example adaptedfrom the facts of the classic case on possessory titles shouldillustrate Macfarlan J’s point. In Armory v. Delamirie58 a chimneysweep found a jewel. He took it to a goldsmith to be valued. Thegoldsmith wrongfully refused to return the jewel to him. The sweepsuccessfully sued the goldsmith in trover on the basis of hispossessory title to the jewel. If we suppose instead that thegoldsmith had given the jewel to his wife, then the presumptionthat the sweep was the owner would have applied against her aswell since she derived her title through the goldsmith.

This account provides an explanation for Buckley v. Gross,59 anunusual case which is better known for the rule that the originalowners of liquid substances which are mixed without their authorityhave interests in the resulting mixture as owners in common. Asevere fire in some warehouses and wharves along the River

55 Field v. Sullivan [1923] V.L.R. 70, 84 per Macfarlan J.56 The judgments in Buckley v. Gross are reported with varying emphases and in different

degrees of detail in (1863) 3 B. & S. 566; (1863) 32 L.J.Q.B. (N.S.) 129; (1863) 9 Jur. (N.S.)986; (1863) 7 L.T. 743; (1863) 27 J.P. 182. The implication that a claimant with a merepossessory title to the chattel could sue a successor in title of the person who wrongfullydispossessed him appears in the reports in (1863) 3 B. & S. 566, 571 per Cockburn C.J.;(1863) 32 L.J.Q.B. (N.S.) 129, 130 per Cockburn C.J., 131 per Blackburn J; (1863) 9 Jur.(N.S.) 986, 987 per Cockburn C.J., 987 per Blackburn J.

57 See text accompanying note 59 below.58 (1722) 5 Str. 505.59 (1863) 3 B. & S. 566; (1863) 32 L.J.Q.B. (N.S.) 129; (1863) 9 Jur. (N.S.) 986; (1863) 7 L.T.

743; (1863) 27 J.P. 182. The argument and reasoning are reported most fully in (1863) 3 B. & S.566; (1863) 32 L.J.Q.B. (N.S.) 129; and (1863) 9 Jur. (N.S.) 986.




Thames caused large quantities of molten tallow to flow down thesewers and into the river. A person retrieved a lump of solidifiedtallow and sold it to the plaintiff. The police seized the tallow andcharged the plaintiff with a crime of being unlawfully in possessionof stolen goods. The magistrate dismissed the charged. However, heexercised a statutory power to keep the tallow in the possession ofthe police with a view to returning it to its original owner, or ifthat proved impossible, to make some order to dispose of it.60

Shortly afterwards, the police sold the tallow to the defendants.The plaintiff sued the defendants for conversion of the tallow,alleging that his former possession of the goods gave him a title topossession which was enforceable against the defendants.

The Court of Queen’s Bench dismissed the plaintiff ’s claim. Itaffirmed the rule from Armory v. Delamirie that possession is goodevidence of title against a wrongdoer so that a person with a purelypossessory title to goods could sue one who wrongfully interferedwith his possession. So, for instance, Crompton J. said: ‘‘It isclearly established that bare possession is alone sufficient to enablea person to maintain trespass or trover, against a wrongdoer whodeprives him of possession’’.61 There were, however, two possibledistinctions between that situation and the one before the court.First, the plaintiff had not been unlawfully deprived of hispossession, and, secondly, the defendant had not dispossessed theplaintiff. The police took the tallow out of the plaintiff ’s possessionand the defendant derived title from them. The originaldispossession of the plaintiff was lawful because, on one view, thepolicemen who seized the tallow from him held it on behalf of theoriginal owners. It was as if they were dispossessing him by relyingon a stronger title.62 On another view, the dispossession of theplaintiff was lawful because the magistrate acted within hisjurisdiction by ordering that it should be detained from theplaintiff.63 As a consequence, the second point of distinction—whether a possessory title can be enforced against a defendantderiving title from the original wrongdoer—did not arise. Thecomments of the court on that point are therefore strictly obiterdicta. Summarising the outcome, Crompton J. said:

[The plaintiff] would still be able perhaps to maintain an actionagainst a person wrongfully taking the tallow from his

60 2 & 3 Vict. c. 71, s. 29.61 (1863) 9 Jur. (N.S.) 986, 987. See also the reports in (1863) 3 B. & S. 566, 573 and (1863) 32

L.J.Q.B. (N.S.) 129, 131 which are worded almost identically.62 (1863) 3 B. & S. 566, 575 per Blackburn J; (1863) 32 L.J.Q.B. (N.S.) 129, 132 per Blackburn

J.; (1863) 9 Jur. (N.S.) 986, 988 per Blackburn J.63 (1863) 3 B. & S. 566, 572 per Cockburn C.J.; (1863) 32 L.J.Q.B. (N.S.) 129, 131 per Cockburn

C.J.; (1863) 9 Jur. (N.S.) 986, 987 per Cockburn C.J.




possession. But before the defendants dealt with the tallow thepossession of the plaintiff had been divested, and he cannotrevert to his previous possession, in order to maintain theaction, unless he had the property. But here the plaintiff hadno property, and his possession had been lawfully divested,and the tallow was ultimately converted by one who does notclaim through a wrong-doer . . . . [V]ery possibly an actionmight be maintained on a bare posssessory title against aperson claiming through a wrong-doer; but the action to bemaintainable must be either against the wrong-doer who takesthe article out of the hands of the possessor, or, at all events,against one claiming title under the wrongdoer.64

In the Jurist Crompton J. is recorded as having added to theversion of this statement in the Law Journal Reports that since theplaintiff had been lawfully divested of the chattel ‘‘no subsequentdealing therewith, even if not altogether justifiable, [could] operateto revest in him the right of possession, so as to afford a ground ofaction’’.65

As a result, the plaintiff could not invoke against the defendantsthe presumption of title from possession. He had no interest in thechattel when the defendant converted it. He was not the originalowner with an indefeasible ownership interest, and his title wascorrespondingly vulnerable. His only possible action could havebeen against the police for their detaining the tallow from him.However, they had a proper statutory authority for their actions sothat issue could not be argued.

This vulnerability of relative titles in personal property must becontrasted with the rights of an owner with an indefeasible title,P1. An indefeasible owner who is out of possession of a chattel hasa right to possess which is enforceable against third partiesgenerally.66 He is not confined to enforcing it only against thirdparties who wrongfully dispossess him of the chattel or who derivetitle through such a person. This is because his ownership and theright to possession which depends on it are indefeasible. Theclaimant is not simply presumed to be the owner from the fact ofhis previous possession. So if P2 stole the chattel from P1, and then

64 (1863) 32 L.J.Q.B. (N.S.) 129, 131; cf. (1863) 3 B. & S. 566, 573, per Crompton J.; and (1863)9 Jur. (N.S.) 986, 987 per Crompton J. See also (1863) 3 B. & S. 566, 571 per Cockburn C.J.:‘‘It is not necessary to decide whether a person who has possession of a chattel without titlemay, if the possession be taken from him by a wrong doer, maintain an action against thewrong doer and persons deriving title from him otherwise than in market overt; for theanswer to the plaintiff ’s case is, that the defendants do not derive their title from a wrongdoer’’. The reports in (1863) 9 Jur. (N.S.) 986, 987 and (1863) 32 L.J.Q.B. (N.S.) 129, 130 areworded similarly. In Irving v. National Provincial Bank Ltd. [1962] 2 Q.B. 73, 80 HolroydPearce L.J. adopted the reasoning of Cockburn C.J.

65 (1863) 9 Jur. (N.S.) 986, 987.66 Hollins v. Fowler (1875) L.R. 7 H.L. 757. G. Battersby, ‘‘The Present Status of the Jus Tertii

Principle’’ (1992) 56 Conv. (N.S.) 100, p. 104 notes this anomaly, particularly where P1 mayhave no way of proving his indefeasible title other than by relying on long possession.




P3 stole it from P2, P1 could recover damages from P3 for theconversion of a chattel, even though P3 did not wrongfullydispossess P1. On similar facts, P2, a person with a purelypossessory title, would have no action against P4, a person whostole the chattel from P3, who had in turn stolen it from P2.However, if the dictum in Field v. Sullivan is followed—and apossessory title can be enforced against recipients who derive titlefrom the person who wrongfully dispossessed the claimant—then itmight only be in the rare instances of successive thefts, as outlinedabove, that there would be any real difference between a claimantsuing on a relative and an indefeasible ownership interest in achattel.

The vulnerability of relative titles to personal property showssome similarity to the rules which applied to real property beforethe reforms of the early nineteenth and twentieth centuries. Theoriginal common law conception was that, once dispossessed by asquatter, the proprietor of land lost his fee simple estate.67 Heceased to have seisin. Only one person could be seised of land at atime, and it was against that person that the lord would exact anyservices due to him. Accordingly, the squatter, P2, was taken to beseised as a tenant in fee simple. The dispossessed proprietor, P1,was left with a mere right of entry or a right of action enforceableagainst P2. The right of entry was enforceable by P1’s summarilyejecting P2, but the right of action could only be enforced by oneof the real actions.

Important practical consequences followed from treating P1 ashaving lost the estate in the land. P1 could not alienate the land bythe two effective methods of conveying a freehold unless he firstrecovered possession. Since P1 was out of possession, he could notenfeoff another person by giving livery of seisin, and it would bedifficult for him to effect a lease and release to the transferee sincehe would not be in a position to put the nominal lessee inpossession of the land, as this method of conveyancing required.68

Neither were P1’s right of entry or right of action freelytransferable since each was in the nature of a chose in action.Although the right of entry was heritable, it was incapable of beingassigned inter vivos. It could not be devised by will before the

67 For a full historical account of the rights of the disseised proprietor, see J.B. Ames, ‘‘TheDisseisin of Chattels’’, at pp. 543–6.

68 For the common law methods of conveyance, see Williams’ Principles of the Law of RealProperty (London 1926), 24th ed., by T.C. Williams (London 1926), pp. 210–36. For lease andrelease, see J.H. Baker, Introduction to Legal History, 4th ed. (London 2002), pp. 305–6, andLitt., para. [459]. The impossibility of a dispossessed proprietor conveying the land still findsits analogue in personal property. Unless he makes the gift by deed, the donor of a chattelmust deliver the chattel from his possession into that of the donee, and he therefore cannottransfer the chattel if he lacks possession of it.




reforms of the Wills Act 1837. The position was summed up in anearly treatise on conveyancing:

Things in action, and things of that nature, as causes ofaction, rights and titles of entry are not grantable over tostrangers but in special cases. And therefore if a man havedisseised me of my land or taken away my goods; I may notgrant over this land, or these goods, until I have seisin of themagain. Neither may I grant the suit which the law doth give tome for my relief in these cases to another man.69

The statutory reforms of the early nineteenth and twentiethcenturies must have caused this theory to change. The point wasreached where the disseised proprietor of land could be treated asstill having an estate in the way that the authors of Megarry andWade describe.70 The incidents of his right of entry graduallybecame equivalent to those of an estate.71 First, the right of entrybecame as freely alienable as an estate in possession would havebeen. The Real Property Act 184572 allowed a person who held aright of entry to convey it by deed inter vivos, and the Wills Act183773 allowed a right of entry to be devised by will. Secondly, theformal procedures for transferring an estate were gradually broughtinto line with those which had been established for transferring aright of entry. Section 2 of the Real Property Act 1845 made itpossible to convey land by deed of grant, as an alternative toconveyance by livery of seisin. Section 51 of the Law of PropertyAct 1925 took this progression one stage further by abolishinglivery of seisin. From then on land could only be conveyed by deedof grant. The grantor could pass his right to possession of the landwithout going through the previous formal step of allowing thetransferee to enter on the land, something which a dispossessedproprietor would be in no position to do.74 Thirdly, it had longbeen established that dispossession of the person who had held alimited interest in the land did not accelerate remainder interestswhich were expectant on his estate. All in all, it became easier toconceive of a right of entry which conferred a general right topossession becoming equivalent to a fee simple estate still vested ina person out of possession.

69 W. Sheppard, Touchstone of Common Assurances, 9th ed. by E. Gibson Atherley (London1826), p. 240.

70 See the quotation cited in note 49 above.71 The stages of the transition are described in B. Rudden, ‘‘Terminology of Title’’ (1964) 80

L.Q.R. 63, 67–68, upon which this account relies.72 8 & 9 Victoria, c. 106, s. 6.73 1 Victoria, c. 26, s. 3. For the historical limitations on the devise of rights of entry by will, see

F.W. Maitland, ‘‘The Mystery of Seisin’’ (1886) 2 L.Q.R. 481, 484–5.74 See F.W. Maitland, ‘‘The Mystery of Seisin’’ (1886) 2 L.Q.R. 481, 484; Williams’ Principles of

the Law of Real Property, p. 224.




A corresponding transition seems not to have happened withpersonal property, or at least not to the same extent. The RealProperty Act 1845 did not extend to making rights of action inrespect of personal property assignable by deed. It remainsgenerally true that a conveyance of a chattel requires a delivery ofpossession. A dispossessed owner—even one with an indefeasibletitle—cannot make a gift of the chattel till he recovers possession,unless he does so by deed. Even then the most he could assignwould be a cause of action to recover the chattel.75 Althoughchoses in action have generally been assignable since the JudicatureAct 1875,76 the rules prohibiting the maintenance of actions maynonetheless prevent the assignment of causes of action in tort,whether under the statute or in equity. With torts against property,rather than against the person, the policy objections in favour ofprohibiting such assignments must be questionable, particularlysince rights of entry to land have long been assignable. That said,the prohibition may well still stand.77 The combination of thesecircumstances probably discouraged the view that P2, the personwho had acquired a possessory title to the chattel, had anycontinuing interest in it once he had been dispossessed.

V. RELATIVITY OF EQUITABLE PROPRIETARY RIGHTS

(i) The Creation and Priority of Equitable Titles

The view advanced in this section is that relativity is as much afeature of equitable titles as it is of common law titles to tangibleassets. In principle, it is possible to create an indefinite number ofequivalent equitable titles to the same item of property. There is norelevant distinction for this purpose between tangible and intangibleproperty. It will be seen, however, that the different rules on joinderof parties applied in the Court of Chancery have meant that itwould be uncommon for a person to succeed in a claim based on amerely relative equitable title to property. The theoretical possibilitynonetheless exists.

The fundamentally similar approach to title disputes acrosscommon law and equity tends to be overlooked because relativetitles have different causes at law and in equity.78 A relative legaltitle can arise simply from the claimant taking possession of thedisputed asset79 but possession alone cannot generate an equitable

75 See text accompanying n. 52 above.76 See now Law of Property Act 1925, s. 136(1).77 See the dicta in Defries v. Milne [1913] 1 Ch. 98, 109 per Farwell L.J; and Trendtex Trading

Corporation v. Credit Suisse [1980] 3 All E.R. 721, 744 per Lord Denning M.R., affirmed ondifferent grounds: [1982] A.C. 679.

78 Goode at p. 41, note 102 makes the same observation.




title to an asset. A relative equitable title commonly arises from aderivative creation of rights made by the person who either has thelegal interest or the equitable beneficial interest in an asset. Thesimplest instances are where a creditor makes an equitableassignment of a debt to a third person, or where the same assetbecomes subject to the concurrent competing claims of thebeneficiaries under different trusts. Each of these examples will bedeveloped in this section.

Another reason why the similarity of approach can beoverlooked is that equitable titles to assets often consist in claimswhich are substantively different in content from those which aremost frequently met at common law. Common cases of legal titlesinvolve claims to possession of tangible property. This is often notthe case in equity. For example, with equitable titles arising fromthe multiple assignment of the same debt, the assignees’ title doesnot give rise to any possessory claim. It would make no sense tospeak of possession in the context of a debt. Rather, his titleconsists in his claim to compel the original assignor to join him insuing the debtor so as to secure a payment which discharges thedebt.80 With titles arising under competing trusts of the same asset,each claimant’s title consists in his right against the trustee tocompel him to administer the asset according to the terms of thetrust existing in his favour.81 The claimant’s title under the trustmay not necessarily give him any rights to possession of the trustasset—often it will not.

The example of multiple equitable titles generated by competingassignments of a debt is well illustrated by Dearle v. Hall,82 thedecision which defined the priority rule applying to competingequitable assignments of a debt. Zachariah Brown was the lifetenant under a trust declared under his father’s will. In 1808 Brownassigned his claim to the trust income to Dearle, as security for anannuity which he had undertaken to pay to Dearle during the restof Brown’s life. In 1809 Brown made a second assignment of hisclaim to the trust income, this time to Sherring to secure a furtherannuity to Sherring. Three years later, Brown made a thirdassignment of his life interest, on this occasion selling it to Hall fora lump sum. By each assignment Brown became a trustee to therespective assignees of his equitable claim against the will trustees.Provided that each assignee joined Brown as a party to the action,he had the effective equitable claim against the will trustees to

79 See Section I (above.80 See J. McGhee, Snell’s Equity, 31st ed. (London 2005), paras. [3-20]–[3-21].81 Target Holdings Ltd. v. Redferns [1996] A.C. 421, 434 per Lord Browne-Wilkinson; Lord

Millett, ‘‘Equity’s Place in the Law of Commerce’’(1998) 114 L.Q.R. 214, 225–7.82 (1828) 3 Russ. 1; affirmed on appeal: 3 Russ. 48 (Lyndhurst L.C.).




compel them to pay him the income, to the exclusion of Brown.Later rationalisations of this analysis have it that the assignor heldhis primary claim on the debt on trust for each assignee, as if toimply that the assignments created multiple equitable titles to thedebt enforceable by Brown against the will trustees.83 In explainingthe relative ranking of those titles, Sir Thomas Plumer M.R.formulated the rule of priority which now applies generally tocompeting equitable assignments of a debt. He held that Hall hadpriority over the two previous assignees since he was the first togive notice to the debtors, the trustees of the will. He held that theusual first in time rule governing the priority of equitable interestsin property did not apply to competing equitable assignments of adebt.

The Master of the Rolls justified the priority rule based onnotice by saying the equitable title of the assignee was not completeuntil he had given notice to the debtor of the assignment. Thisexplanation of the outcome has since been rejected. In Ward v.Duncombe84 Lord MacNaughton explained that the assignee’s titlewas complete regardless of whether he had given notice to thedebtor. The giving of notice was relevant in that it secured thepriority of one assignee’s claim over the claims of the others, andensured that the debtor would get a good discharge from theassignee so that he could not be sued again by the assignor.

If it had been impossible to create relative titles in equity, thenthere could have been only one result in Dearle v. Hall: whicheverassignee was first to get a complete equitable title to the debt wouldhave had priority. Any later assignment would have been void sincethe entire claim against the debtor would already have vested in thefirst assignee. Hall could not have had priority because he was onlythe third assignee to get a complete title. As it is, however, theoutcome of the case supposes that the title of each assigneeconferred a valid equitable claim to compel payment of the samedebt, any one of which could have been enforced against the debtorbefore notice was given to him. Once Hall gave notice, his titlebecame the stronger in any action to which he and the debtor wereparties. His title would be stronger against the debtor even if hewere sued by another assignee. The debtor could no longer procurean effective discharge, binding on Hall, from any of the otherassignees.

83 Torkington v. Magee [1902] 2 K.B. 427 (overruled on other grounds by the Court of Appealin [1903] 1 KB 644.).

84 [1893] AC 369, 391–2. See further Gorringe v. Irwell Rubber and Gutta Percha Works (1886) 34Ch.D. 128, 132 per Cotton L.J.; and Re Trytel [1952] 2 T.L.R. 32.




It is true that Dearle v. Hall is generally considered as a case onequitable priorities. As has been explained,85 however, this isperfectly compatible with its also being an illustration of therelativity of equitable titles. The principle of relativity allowed thecreation of competing equitable titles to the debt, the comparativestrength of which was then determined by the priority rule basedon giving notice. Usually, the relative strength of competing titlesdepends on a first in time priority rule. This is generally true ofcompeting legal titles to land and chattels86 but there is no logicalnecessity for this rule to apply.

At first sight, the result in Dearle v. Hall seems an obviousbreach of the rule nemo dat quod non habet. If the assignees’equitable claims derived from an intentional transfer of rights bythe assignor, how could the assignor validly carve out of hisprimary claim against the debtor more than one competing claimfor different assignees of the same debt? There is no correspondingproblem at common law when a person acquires a possessory titleto land or a chattel. The fee simple or ownership interest which heacquires is newly created from the fact of possession and does notderive by grant from the paper owner. There can be no argumentthat the nemo dat rule has been breached.

The answer to this apparent problem follows from the way inwhich an assignment of a debt takes effect in equity. Eachassignment effectively operates as the creation of a fresh equitableliability in the assignor to be joined as a party in an action againstthe debtor.87 In functional terms, the assignee’s title to the debtconsists in a claim against the assignor, a third party. In contrast, alegal title to tangible property consists primarily in a claimenforceable directly against the property itself. As a result, it iseasier to conceive of the proprietor of a legal interest in tangibleproperty as exhausting his interest in it when he makes a grant toanother person. But since titles to a debt consist primarily in claimsagainst a person not a thing, it is possible for the same assignor tocreate multiple valid claims against himself by a series ofintentional assignments of the same debt.

Once this analysis of an assignment is understood, it is only ashort step to explain the creation of relative titles by means ofcompeting declarations of trust. In functional terms, the effect ofcreating equitable rights under a trust is to create a personal claimagainst the trustee, which is enforceable by the beneficary,governing his management and disposition of the trust assets.88 The

85 See Section III (iii) above.86 See Section I above.87 See note 80 above.




right is proprietary in the sense that the beneficiary can compel athird party to whom the trustee wrongfully transfers the trust assetto return it to the trustee, unless the third party’s legal interest inthe asset takes precedence according to the relevant rule of priorityapplying to property of that kind.89 While the beneficiary’s claimdoes not subject a third party transferee to the full range ofadministrative and fiduciary duties owed by the original trustee, itcan at least make him liable to restore the asset to the trustee whowill then be bound to administer it according to the terms of thetrust instrument.90 Treated therefore as a functional account of howtrusts operate, Maitland’s description of equitable property rightsunder trusts as arising from the enforcement of a personal claimsagainst the holders of the trust asset remains fundamentally true,though a refinement needs be added to explain the different contentof those personal claims against the original trustee or a wrongfulthird party transferee.91

If this functional understanding of interests under trusts isoverlooked, it is easy to draw a mistaken conclusion that relativetitles cannot be created under trusts. The error is to treat thebeneficiary’s interest under the trust as a reified entity and then toinfer from that that once the interest has been created in oneperson, it cannot be created again in another. It may be thoughtthat the creation of the interest in one person must exhaust thetrustee’s capacity to create it a second time. But properlyunderstood as claims against the trustee in respect of hismanagement of the trust asset, there is no logical reason whyequity cannot allow the creation of relative titles to the same assetby a series of derivative transactions. The analysis is similar to thatwhich applies to the case of multiple assignments of a debt. Aperson can validly create any number of claims against himself forthe benefit of different people. It is no objection to the validity ofeach claim that they cannot all be satisfied out of his present orfuture resources. It is a common experience for a person ofprecarious means to keep incurring more debts even when his assets

88 See text accompanying note 81 above.89 The most common examples are where a bona fide purchaser for value acquires the legal

ownership of personal property or where a legal estate in registered land is transferred andthe priority of the trust interest has not been protected in one of the specified ways: LandRegistration Act 2002, sections 28, 29.

90 See generally, R.C. Nolan, ‘‘Equitable Property’’ (2006) 122 L.Q.R. 232.91 F.W. Maitland, Equity; also the Forms of Action at Common Law, 2nd ed. (Cambridge 1936),

p. 116, and chs. 9 and 10 generally. For more recent writings describing the contractarian orobligation element of property holding by trust, see J.H. Langbein, ‘‘The Contractarian Basisof the Law of Trusts’’ (1995) 105 Yale L.J. 625; P. Parkinson, ‘‘Reconceptualising the ExpressTrust’’ [2002] C.L.J. 657; R.H. Sitkoff, ‘‘Agency Costs Theory of Trust Law’’ (2004) 89Cornell L. Rev. 621. Langbein’s article explicitly adopted and expanded upon Maitland’sanalysis of the trust.




available to meet them are inadequate. The debtor does not exhausthis capacity to create more valid claims against himself simplybecause he no longer has enough money to meet them.

So it is with claims under a trust. Nothing prevents the trusteefrom creating a series of equivalent claims against himself to thebeneficial enjoyment of the same asset. Viewed in functional termsas a bilateral relation between the trustee and each beneficiary, theclaim is valid. The claims of beneficiaries of subsequent declarationsof trust are as valid as those created earlier. The relevant rules ofpriority applying to equitable interests then determine the relativeranking of the beneficiaries’ claims among themselves and,accordingly, the relative strength of each beneficiary’s title to thetrust asset. In the case of competing equitable interests in the sameasset, the rule is generally that the beneficiary whose title is createdearlier in time takes priority over later equitable titles.92

To illustrate the theory, we may suppose a case of a settlor whomade successive and inconsistent declarations of himself as atrustee.93 He first declares a bare trust for a beneficiary, P1, whotakes the entire beneficial and equitable title to the asset. If thesettlor/trustee then declares another bare trust of the same asset infavour of P2, and again in favour of P3, then P1’s interest wouldrank ahead of that of the others. But in a dispute between P2 andP3, the settlor/trustee could still be taken to have created a validbeneficial interest in P2 even though he had previously declared atrust for another person who was not a party to the action. But P3could not plead the effect of the rule of first in time priority asbetween P1 and P2, in defence to P2’s claim to priority over him.In principle, this would be irrelevant in a dispute between P2 andP3. If P3 could successfully argue that the priority rule operatedabsolutely so as to defeat P2’s claim against him, then he wouldeffectively be setting up a defence of jus tertii. Subject to thedifferent Chancery rules of joinder which are discussed below andwhich would commonly require P2 to join P1 as a party to hisaction,94 a defendant in an equitable action should only be allowedto succeed by relying on the strength of his own title, not bypointing out the weakness of the claimant’s title.

We can take the point further to illustrate how, in principle, arelative equitable title could be enforced against third parties.Suppose again a case where a settlor/trustee makes successive

92 McGhee, Snell’s Equity, para. [4-03].93 Another way in which the same result could be achieved would be if a person holding the

legal interest in an asset were to incur liability as a constructive trustee to more than oneequitable claimant, as in Bracken Partners Ltd. v. Gutteridge [2004] 1 B.C.L.C. 377 discussedin text accompanying note 96 below.

94 See Section V (ii) below.




declarations of a bare trust of the same asset for three differentbeneficiaries. If the trustee wrongfully transferred the trust asset toa third person, any one of the beneficiaries would have a sufficientequitable title to recover it in specie by a proprietary claim, or tobring a personal claim for restitution of its value by an action forknowing receipt. Any one of them would have a personal claimagainst the trustee for any residual loss that resulted from thebreach of trust. If P2 or P3 brought the action, neither the trusteenor the third person could defend himself by pointing to therelative weakness of their title as against P1. Again that would beto allow the defendant to succeed by arguing a jus tertii. The effectof the first in time priority rule would be that P1’s title to the assetwould be stronger relative to that of P2 or P3, so if all three werejoined as parties to the action, P1 could take the entire benefit ofthe action to the exclusion of P2 and P3. Moreover, if P1discovered that the trustee had paid any trust money to P2 or P3,he could treat that as a breach of his trust. He could get restitutionof the money from P2 and P3 by a personal or proprietary claim.From P1’s perspective, they would be as much strangers to his trustas any third person to whom the trustee might have paid themoney.

The same analysis would be true in a dispute between P2 andP3 or between P3 and a third party. Either way, the claimant withthe stronger title would have a claim for restitution of his trustmoney from a recipient with a weaker title or a personal claimagainst the trustee for losses resulting from the breach. Thedefendant could not avoid liability by showing that another personmight have had a better equitable title than the claimant to someor all of the money.

El Ajou v. Dollar Land Holdings Plc. (No. 2)95 is a rarereported instance of such reasoning at work. The main question inthe case was the amount of the defendant’s liability to the plaintifffor knowing receipt of a mixed fund of misapplied moneyamounting to £2.3 million. The fund was subject to charges forrepayment of much larger sums which had been misappropriatedfrom the plaintiff and many other unidentified victims of afraudulent share selling scheme. The relative proportions of theplaintiff ’s and other victims’ charges was 7:3. Robert Walker J. heldthat the defendant was liable to the plaintiff for the full amountreceived, not just 70% of it. The defendant could not plead whatwas in effect the jus tertii of the other fraud victims to reduce hisliability to 70% of the money received. It was held that the plaintiff

95 [1995] 2 All E.R. 213.




could succeed in full upon his partial equitable title to the moneyreceived. His quantifiable defect in title as regards the other victimsof the fraud was irrelevant to its enforcement against thedefendant.

A case which reaches a similar result but for differently statedreasons is Bracken Partners Ltd. v. Gutteridge.96 An argumentabout the enforcement of relative equitable titles was expressly putin the case though not in fact relied upon by the Court of Appeal.Gutteridge was the director of, and controlling influence behind,three related companies which can conveniently be called P1, P2and P3. In breach of fiduciary duty, he transferred money from P1to P2. From P2 he transferred it to P3 before finally paying it tohis wife, Ms. Smalley, who applied it towards the purchase of ahouse. Significantly for present purposes, each of the transfers fromP1, P2 and P3 represented a misapplication from the companiesfrom which the money was taken. Each recipient became aconstructive trustee to the company one link before it in the chainof misapplications.

In an action brought by P2 against Ms. Smalley, she admittedthat she held the house on constructive trust because it representedthe traceable proceeds of the money originally misapplied from P1.However, she disputed P2’s equitable title to sue, arguing that P2had no equitable title at all to the money: title remainedthroughout in P1 as the victim of the original misapplication. TheCourt found an easy solution to the problem. Since P2 was aconstructive trustee to P1, it could sue Ms. Smalley on P1’s behalf,leaving it to account for the proceeds of its action to P1. The casewould simply be treated as one where a trustee exercised equitablerights of action on behalf of its beneficiaries.97 In this way, theCourt did not need to consider whether P2 could have successfullysued Ms. Smalley by relying on its own equitable title arising fromthe misapplication from itself to P3. It is consistent with theargument in this paper that this should have been possible. Ms.Smalley could not have defeated P2’s claim against her by pointingto P1’s superior equitable title. That would have allowed her tosucceed on unmeritorious grounds by arguing the jus tertii. P2should have been free to sue on its own equitable title, leaving itliable to an accounting action by P1 in which P1 could haveenforced its superior title.

96 [2004] 1 B.C.L.C. 377.97 See J. Mowbray et al., Lewin on Trusts, 17th ed. (London 2000), para. [43-01]; Montrose

Investment Ltd. v. Orion Nominees Ltd. [2004] EWCA Civ 1032, (2004) 7 I.T.E.L.R. 255;C.P.R., r.19.7A.




(ii) Joinder of Parties in Equity

Whatever the position in theory, the historic rules on joinder ofparties made it rare that a claimant could enforce a merely relativeequitable title to an asset. This probably explains why instances ofrelativity of title seem so obscure in equity. The outcome in El Ajouv. Dollar Land Holdings Plc. (No. 2) was atypical: the othervictims of the fraud who might have claimed a competing title tothe money were not joined as parties and there seemed to be norealistic possibility of their being identified and joined. Typically,this is not the case.

It had long been a strict rule of the Court of Chancery that allpeople who had a material interest in the subject of the suit,however numerous, had to be joined as parties.98 If the plaintifffailed to do so, the defendant could plead a demurrer for want ofparties. The court sought to ensure that it would bind all peoplewith an interest in the subject of the suit by joining them as parties.As Lord Redesdale explained, once they were joined, the courtcould ‘‘do complete justice by deciding upon and settling the rightsof all persons interested’’. It could ‘‘make the performance of thecourt order perfectly safe for those who were compelled to obey it,and prevent future litigation’’ as would have happened if the sameissue were to be raised later by another interested person who hadnot been joined as a party.99

As a consequence, it was far less likely that a claimant with amerely relative equitable title, P2, could successfully recover againsta defendant, P3, in cases where it was known that a third person,P1, had a stronger equitable title to the disputed asset. Unlike thegeneral rule at common law, P3 would be permitted to raise P1’sjus tertii in the form of a demurrer for want of parties. But hecould not raise P1’s better title to avoid liability altogether. Thecourt would require P2 to join P1. It could then determine thatP1’s title was stronger than P2’s and allow him to recover againstP3 to the exclusion of P2. This outcome would not mean that P1’stitle was guaranteed to be the best, but it would at least mean thatP2 would be denied the opportunity of enforcing a title which wasknown to be relative and when the claimant with the better titlewas available to be joined as a party. In this way, it was morelikely that the court could reach a conclusive determination of the

98 For the general rule and its permitted exceptions, see Barker v. Wyld (1682) 1 Vern. 140;Chancey v. May (1722) Prec. Ch. 592; Adair v. New River Company (1805) 11 Ves. Jun. 429;Cockburn v. Thompson (1809) 16 Ves. Jun. 321; and the cases gathered in Equity CasesAbridged, ch. 12(B).

99 J. Mitford (Lord Redesdale), Treatise on the Pleadings in Suits in the Court of Chancery, 5thed. (London 1847), para. [164].




competing claims to the disputed asset. Since the trustee wouldhave to be joined as a party to any dispute between the competingbeneficiaries, it would be all the more likely that the defendantwould discover and join a rival claimant. A claimant might onlysucceed by relying on a relative title in the rare instances where theperson with the better title was unknown or where it was notpracticable to join him as a party.100

The historic approach of equity to the enforcement of a relativetitle would have been similar to the modern rule under the Torts(Interference with Goods) Act 1977 about pleading a jus tertii inactions for conversion or trespass. As has been seen, a defendant insuch an action is now authorised to show that a third party has abetter right to the disputed goods than the claimant.101 The claimantis generally required to identify any person whom he knows claimsan interest in the goods, and the defendant may apply for directionsfrom the court as to whether any person should be joined as a partywith a view to establishing whether he has a better right than theclaimant.102 A claimant whose title is known to be only relative isunlikely to prevail in his action against the defendant.

By the middle of the nineteenth century, however, the strictChancery rules on joinder were relaxed. Section 51 of an 1852statute,103 enacted to amend Chancery practice and procedure,provided that it was lawful for the Court of Chancery to adjudicateon questions arising between parties notwithstanding that theymight be only some of the parties interested in the disputedproperty, without making the other people interested in theproperty parties to the suit. This rule continued to hold even after1875 when the jurisdiction of the Court of Chancery was absorbedinto that of the newly constituted Supreme Court.104

But this relaxation would probably not have made muchpractical difference to the enforcement of relative titles in equity.The defendant would be liable to the plaintiff unless he joined theperson with a better title.105 It was clearly advantageous for him todo so in any case where he could identify the person with the

100 For instance, the court would not require a person with a material interest in the litigation tobe joined as a party if he was outside jurisdiction (Cockburn v. Thompson (1809) 16 Ves. Jun.321, 326 per Lord Eldon L.C.); or his exact identity was unknown but where other partieshad a similar interest which they could represent on his behalf (Adair v. New River Company(1805) 11 Ves. Jun. 429).

101 See text accompanying note 32 above.102 Torts (Interference with Goods) Act 1977, s. 8(2)(b)–(c).103 15 & 16 Victoria, cap. 86 (‘‘An Act to amend the Practice and Course of Proceeding in the

High Court of Chancery’’). The statute, which was the Chancery counterpart to the betterknown Common Law Procedure Act 1852, seems never to have been given a short title.

104 All provisions governing the procedure in the former courts continued to apply in theSupreme Court unless some later statute or rule of court modified them: Judicature Act 1873,s. 24. See also the commentary to the former R.S.C., O.15, r.4 in The Supreme CourtPractice 1997 (Vol. 1), para. [15.4.5].




stronger title: he could thereby avoid any chance of future liabilityto that person. So, for instance, a debtor who paid the secondassignee, P2, would not get a good discharge as regards the firstassignee, P1, who had ensured his priority by giving notice to thedebtor.106 Likewise, in a case of multiple trusts over the same assetwhere the first in time priority rule applied, the trustee would notdischarge his liability to the first beneficiary, P1, if he paid thesecond beneficiary, P2. The defendant, therefore, had a strongincentive to discover and join the party with the better title. Thiswould not be difficult. With multiple assignments of the same debt,the rule in Dearle v. Hall would mean that the debtor would havereceived notice of assignment from the assignee with the best title.With multiple declarations of a bare trust, the settlor/trustee shouldhave been in a position to know if he had made any earlierdeclarations of trust which took priority over P2’s claim.

In substance, therefore, it would be rare that a person wouldsucceed in enforcing an equitable claim to an asset based upon amerely relative title. The defendant could typically defeat the claimby joining a third party with a stronger title, so rendering theplaintiff ’s title unenforceable.

VI. RELATIVE LEGAL TITLES TO INTANGIBLE PROPERTY

In Dearle v. Hall each assignee had a relative equitable title to thepayment of the debt. The outcome raises an interesting parallelquestion: at common law is it possible to create relative titles tointangible property? In principle, it seems that this is not possible,at least where the title arises from a right of ownership. There canbe only one valid right of legal ownership to a chose in action.However, some slim authority exists to suggest that multiple legaltitles can be created to a chose in action where the chose representsthe traceable proceeds of an unauthorised exchange of an originalasset belonging to the claimant.

This general conclusion can be demonstrated by showing howneither of the two ways of creating relative titles applies to the legalownership of a chose in action. First, the presumption thatpossession of property is prima facie evidence of title can have only

105 R.S.C. 1873, O. XVI, r. 13, to be found in the Judicature Act 1875, Sch. I, expresslyprovided a judge or court with power to strike out parties who had been improperly joined,or to join as a party any person whose presence was necessary to enable the court‘‘effectually and completely [to] adjudicate upon and settle all the questions involved in theaction’’. The rule would have applied equally to proceedings in the Chancery or CommonLaw divisions of the High Court. Under the current practice, the court has power to add aparty to an action if that would be desirable to resolve all the matters in dispute in theproceedings: C.P.R., r. 19.2.

106 Brice v. Bannister (1878) 3 Q.B.D. 569; Bence v. Shearman [1898] 2 Ch. 582.




a limited application to choses in action. A pure intangible—that is,a chose in action which is not represented by a tangibledocument107—is incapable of being possessed. This method ofgenerating a relative title in tangible assets simply cannot apply tosuch a chose in action. The title is in the person with the right tosue on the claim. The right is necessarily unitary.

The presumption of title from possession does, however, havesome limited relevance when the chose in action is a documentaryintangible, such as a share warrant transferable by simple delivery,a bill of exchange payable to bearer, or a bearer bond. If, forinstance, P1, the original owner of a share warrant, were to havethe warrant stolen from him by P2, then P2’s possession of thewarrant would confer on him a relative title to the document asagainst any third party, P3, who tried to interfere with hispossession. As between P1 and P2, however, P1’s subsisting legalownership would give him the stronger title. P1’s ownership of thewarrant document would continue until the person in possessionnegotiated it to a bona fide purchaser without notice of thepossessor’s defect in title.108 The basic distinction is between actionswhere the claimant depends on possession of the tangible documentand those where he is suing on the intangible claim embodied inthe document.

The analysis is different, however, when the warrant is viewed inits character as a chose in action enforceable against the company.In issuing the share warrant, the company would undertake toregister the bearer as a member of the company if he surrenderedthe warrant to the company for cancellation.109 The benefit of itspromise, and correspondingly the legal ownership of the chose, is inthis way freely transferable. From the company’s point of view, theright to apply for registration could be enforced by only oneperson, the bearer for the time being. Possession is an exclusiveconcept so the bearer’s title to the warrant, as a chose in action, isunitary and indivisible. If P2 were to have himself registered as amember of the company, then P1 could have no claim against thecompany. His only recourse would be against P2 for interferingwith his title to the warrant in its character as a chattel.110

107 For the distinction, see Goode, pp. 47–50.108 See Rumball v. The Metropolitan Bank (1877) L.R. 2 Q.B.D. 194 (scrip certificates); and

Webb, Hale, and Co. v. Alexandria Water Company Ltd. (1905) L.T. 339 (share warrants). Forthe analogous rules applying to other varieties of bearer instruments, see Bills of ExchangeAct 1882, s. 29(1) (negotiable bills of exchange); and Garey v. Dominion Manufacturers Ltd.[1925] 1 D.L.R. 99 (bearer bonds).

109 See Companies Act 1985, s. 355(1)–(2).110 P1 would have an action in conversion against P2, leading to an award of compensatory

damages. The starting point is that damages would be assessed according to the value of theshares when P2 first converted the warrant: Sollaway v. McLoughlin [1938] A.C. 247;B.B.M.B. Finance Ltd. v. Eda Holdings Ltd. [1990] 1 W.L.R. 409.




Returning to pure intangibles, what slim authority there is onthe point suggests that it is also not possible to create relative legaltitles in a chose in action by a series of derivative transfers of thelegal right to sue on it. It seems that multiple legal assignments ofa chose in action under section 136(1) of the Law of Property Act1925 are impossible. That section provides that on completion ofan absolute assignment pursuant to its provisions, the right to sueon the debt passes to the assignee. The assignee may give a gooddischarge of the debt without the concurrence of the assignor. Inthis respect, statutory assignments differ from equitable assignmentsof debts, which, as have been seen,111 allow the creation of multipleequitable titles to the same debt. The key to the difference is thatthe assignee’s equitable title to the debt is not enforceable directlyagainst the debtor. He must first join the assignor as a party to hisaction. Strictly, his title to the debt consists in a claim against theassignor to compel him to sue the debtor on the assignee’s behalf.As has been seen, multiple claims against the same assignor areperfectly possible.

The only authority directly on point is the sparsely reporteddecision of Denman J. in Cronk v. McManus.112 Cavell, amortgagee of land, made a legal assignment of the mortgage debtto Gardner. Cavell then purported to make a second assignment ofthe debt to the plaintiff, Cronk, under section 25(6) of theJudicature Act 1873, the predecessor of section 136. The defendant,the debtor under the original mortgage, resisted the plaintiff ’sclaim for payment of the debt. Denman J. held thatthe defendant should succeed: ‘‘[I]t is impossible to say that theplaintiff is the assignee of a debt or other legal chose in actionwithin the provision of the Judicature Act’’.113 Denman J.’sreasoning assumes that the first assignment of the legal interest inthe debt exhausted the assignor’s interest. Any later assignment

111 See text accompanying note 82 above.112 (1892) 8 T.L.R. 449. See also Ellerman Lines Ltd. v. Lancaster Maritime Co. Ltd. [1980] 2

Lloyd’s Rep. 497, 503 per Goff J, and the discussion in F. Oditah, Legal Aspects ofReceivables Financing (London 1991), pp. 139–40. In the same passage of the Ellerman Linescase, Goff J. implied that any purported second legal assignment of the debt might be treatedas an equitable assignment. Although this might create a create a valid equitable claim in thesecond assignee, the earlier legal assignee would be assured of priority under the rule inDearle v. Hall. A purported second assignee who had taken all the steps he could to perfecthis title would be sure to have given notice to the debtor since that is a condition to a legalassignment taking effect.

113 (1892) 8 T.L.R. 449. It is worth noting that the debtor in Cronk v. McManus was effectivelyallowed to plead the jus tertii of the first legal assignee of the debt in defence to his actionagainst the purported second assignee. This is less surprising than it may first appear. Withclaims to chattels, it seems that even before section 8 of the Torts (Interference with Goods)Act 1977 was enacted the defendant was allowed to plead a jus tertii if his aim in doing sowas to show that the plaintiff had no title to the disputed chattel, not merely a title whichwas weaker relative to that of the original owner. See G. Battersby, ‘‘The Present Status ofthe Jus Tertii Principle’’ (1992) 56 Conv. (N.S.) 100.




would have been absolutely void at law. Consequently, a debtorwho paid the purported second assignee of the debt could not getan effective discharge as against the first assignee to whom heactually owed the debt, since he would not be paying pursuant toany valid legal obligation.114 With legal interests in intangibles, itseems therefore that the nemo dat rule operates absolutely, just as itdoes with tangible property.

Claims to property enforced after the process of tracing mayillustrate the rare instance where the common law allows thecreation of multiple legal titles to the same chose in action. Forexample, a credit balance in a bank account held in the name of P2may represent the traceable proceeds of money which has beenwrongfully misapplied from P1.115 P2 holds the chose in actionsubject to the superior title of P1. P1’s title is inchoate in the sensethat it does not confer the present right to full ownership on P1. Itwould, however, be sufficient to allow him to have a declarationrequiring the bank to pay the funds to him. If P2 were to transferthe money to a third party, P1’s title would be sufficient for him toenforce an action against the recipient for money had andreceived.116 Apart from this instance, however, it seems that thecommon law does not allow the creation of multiple titles tointangible property arising from interests in the property whichhave the same incidents of enjoyment. All the more so, it does notallow such titles to be created by a derivative creation of aproprietary interest, as is possible in equity.

VII. CONCLUSION

A title to an asset is essentially a claim to enjoy the substantiveincidents of a certain kind of proprietary interest in it. The relativevalidity of those claims depends on the rule of priority whichapplies to proprietary interests in the asset and the procedural rulesgoverning the joinder of parties.

It follows from these observations that although relativity oftitle is best known in cases of adverse possession of land, it appliesfar more widely across the law of property. Common law relativetitles can be created in chattels, just as they can be in real property.They are, however, more vulnerable to extinction once the claimantloses possession of the chattel. The reasons for this difference are

114 The debtor could not recover his payment from the second assignee for mistake of law ortotal failure of consideration. His action would be met by the defence that the money wasdue to the second assignee in equity because second purported legal assignment of the debtwas effective in equity, if not at law.

115 Trustee of the Property of F. C. Jones & Sons (A Firm) [1997] Ch. 159, 170 per Millett L.J.116 Lipkin Gorman (a firm) v. Karpnale Ltd. [1991] 2 A.C. 548.




historical: certain statutory reforms which allowed rights of entry toland to be alienated had no equivalent applying to personalproperty. Relative titles can be created in equity. They can even becreated by a series of derivative grants out of the same asset,something which the different basis of property holding at commonlaw prevents. But the different joinder rules which applied in equityhave made it unlikely that a claimant would be successful inenforcing a merely equitable relative title to an asset. The relativityprinciple has no part to play in determining competing legal claimsto choses in action, except where the chose is embodied in adocumentary intangible or in those rare instances where the titlearises from an unauthorised substitution of an original asset. Ingeneral, the relativity principle illustrates the pragmatic interactionin common law reasoning between the rules of evidence andprocedure, and the substantive principles governing the creationand transfer of property interests.



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Relativity of Title - David Fox