Ramcoomar Koondoo v McQueen (1872)

Transfer of Property · Ostensible Owner

Facts.

Property was bought with one man’s money but purchased and held benami in the name of another, who thus appeared to the world to be the owner. That apparent owner sold the property to a purchaser who paid value and, after examining the ostensible title, believed in good faith that she was the true owner. The real owner’s representatives later sought to recover it.

Issue.

Can a real owner who allows his property to stand in another’s name recover it from an innocent purchaser who bought from the apparent owner for value?

Held.

The Privy Council held he cannot. Where a person allows another to hold himself out as owner, and a third person purchases from that apparent owner in good faith and for value, believing him to be the real owner, the real owner cannot recover against that purchaser — the loss falls on the one who created the deceptive appearance.

Why it matters.

It is the equity later codified in s.41 (transfer by an ostensible owner) — the honest purchaser for value who took reasonable care is protected against the real owner who clothed another with ownership.

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