Competing Rights
| Author | Robert Chambers |
| Pages | 235-293 |
235
CHA PTER 9
COMPETING RIGHTS
A. INTRODUCTION
The law of property provides rule s to resolve disputes when two or more
people claim competing rights to t he same thing. Every ca se discussed
in this book concerns a d ispute over something. Often the issue before
the court is whether someone has a property r ight at all. Can they have
an exclusive right to hire boats to be used on a canal?1 Can they com-
pel their neighbour to repair thei r roof?2 Did they acquire a fee simple
est ate?3 A re they the beneficiary of a trust?4 Sometimes the issue is how
far the right extends. Did an airplane flying overhead t respass through
a fee simple estate?5
In this chapter, we deal with c ases in which the dispute is between
people who undoubtedly have property rights to the sa me thing, but
their rights are i ncompatible with one another. Who has the better right
to a can of money found under a house: the owner of the house, the boy
who found the can, or the authorities who took it away from the boy?6
The law provides priority r ules to answer questions like these.
3 Butt v Humber (1976), 46 APR 92, 17 Nfld & PEIR 92 (Nfld SC) (see Chapter 8).
4 Paul v Constance, [1977] 1 WLR 527 (CA) (see Chapter 8).
6 Bird v Fort Frances, [1949] 2 DLR 791 (Ont) (see Chapter 2).
THE LAW OF PROPERTY236
The previous chapter was about the ways in which people can
acquire rights. This ch apter is about the ways in which people can lose
their rights. The resolution of a priority di spute will diminish or destroy
the property rights of t he losing party. It cannot be helped.
In many cases, both parties are the innocent v ictims of someone
else’s wrong. To use an example loved by property law teachers around
the world, what should happen if a thief stole my bicycle and sold it
to you, who paid full market value and had no way of knowing it was
stolen? The loser will have a claim against t he thief for damages (mine
is for the tort of conversion, and yours is for breach of contract), but that
is probably not worth pursuing. Who should win?
There is no natural answer to t hat question. The common law has
chosen to protect my ownership rather tha n your purchase in good faith,
but that is an arti ficial choice. Other legal systems may ma ke dierent
choices. For example, in Winkworth v Christie Manson and Woods Ltd,7
works of art were stolen from the plainti in Engla nd, sold to an honest
buyer, and then oered for sale in England by auction. If that was the
whole story, the plainti would win. However, the artworks were sold
to the honest buyer in Italy and then returned to England for sale. The
sale in Italy was governed by Ital ian law, under which the honest buyer
wins. The plainti’s ownership did not revive when the artworks were
back in England.
We have several dierent sets of priority rules. The rules that deter-
mine the priority of legal property rights are dierent from the rules
that protect equitable propert y rights. This is one reason why it matters
whether rights are legal or equitable. Most property r ights to land are
governed by registration system s, which provide dierent priority rules.
The priority of security intere sts in personal propert y also depends on
registration. Each of these dierent sets of rules is discussed below.
This chapter then looks at competing claims to goods that get
attached to land (as fixtures) or to other goods (as accessories). Property
rights to goods can b e lost if those goods lose their separate identity and
become part of land or other goods belonging to s omeone else. They
can also be lost if goods are used to manufacture other goods. Fin ally,
it sometimes happens that goods of the same type get mixed together,
so it is impossible to tell them apar t. The law provides rules to resolve
the competing claims of those who owned the goods that went into the
mixture.
7 [1980] Ch 496 (Ch D).
Competing Ri ghts 237
B. COMMON LAW
1) Nemo Dat
When dealing with a competit ion between legal property rights, the
best place to start is w ith the principle called ne mo dat quod non habet
(or nemo dat for short), which means that no one can give what they do
not have. It explains why the owner of the stolen bicycle wins in the
example above. The honest buyer cannot get a better title than the th ief
who sold it. They acquired the thief’s tit le, which is a right to possession
that is enforceable against ever yone else in the world, except someone
with a better right.8 The owner ha s a better right because the theft did
not destroy their right to posse ssion or transfer it to the thief. The thief
acquired a new right to posse ssion when they stole the bicycle (subject
to the owner’s better right), and that is all they could sell.
Normally, it does not matter whether the owner was careless and
might have avoided the loss. As Morris LJ said in Central Newbury Car
Auctions Ltd v Unity Finance Ltd, “The improv ident householder who has
left a window open at night which gives easy access for a thief is not in
a worse position in assert ing ownership of stolen articles tha n is the
cautious householder who has checked the secure closing of hi s house.”9
Another example is provided by Northern Counties of England Fire
Insurance Co v Whipp.10 Mr Crabtree was the pla inti’s manager. He
mortgaged his land to the plai nti in exchange for £7,000. The mortgage
deed and his title deeds were kept in the plainti’s safe, to which Crab -
tree had a key. He then mortgaged the land to Mrs Whipp for £3,500 and
gave her the title deeds, which he had stolen from the safe. She thought
she was getting a first legal mortgage, but since the land had alre ady
been mortgaged to the plainti, she could not get a mortgage of anything
more than Crabtree had to g ive, which was his equity of redemption.
The vice-chancellor held that Whipp’s equitable mortgage had prior-
ity over the plainti ’s older legal mortgage because the plainti had
been careless w ith the title deeds by allowing Crabtree to have access
to them. That was reversed by the Court of Appe al. FryLJ said,
The decisions on negligence at common law h ave been pressed on us
in the present ca se, but it appears to us enough to obser ve, that the
action at law for negligence imports t he existence of a duty on the
8 Costello v Derbyshire Constabulary, [2001] EWCA Civ 381, [2001] 1 WLR 1437 at
para 31.
[1902] AC 325 at 335–36 (HL) [Farquharson Brothers].
10 (1884) 26 Ch D 482 (CA) [Northern Counties].
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