INTRODUCTION

Having summarised the principles governing the question of whether legal ownership is retained ab initio in a defective transfer of ownership (the proprietary transfer being entirely void at common law), we shall now consider proprietary transfers which are not entirely void, neither at law nor in equity, but which are still voidable, at law and/or in equity.

VOIDNESS PREVAILS OVER VOIDABILITY

By definition, a contract which is void cannot be voidable; and neither can a proprietary transfer be voidable if it is void. Casually speaking, voidness prevails over voidability. The simple reason for this obvious truism lies in the facts that, on the one hand, a voidable contract is – until avoided – a valid and enforceable contract and that, on the other hand, a voidable proprietary transfer is – until rescinded – effective to transfer ownership. This can evidently not apply if a contract or a proprietary transfer is entirely void, at law and in equity. Accordingly, any analysis of a defective transfer of property must, strictly speaking, first inquire whether the underlying contract and/or the proprietary transfer is void at law (Chapter 3) and/or in equity (Chapter 5). If the transferor has retained (legal or equitable) ownership, there is no point in asking whether he has obtained a power in rem to revest the retained ownership right since there is then nothing to revest. For example, if A is fraudulently induced to enter into a contract and to part with property and if his mistake is a proprietarily fundamental one, he retains ownership ab initio.

The principle that voidness prevails over voidability was exemplarily applied by Arden LJ in Clark v Cutland, a case which concerned a misapplication of company assets by a director without authority. The transfer was void in equity rather than merely voidable: