Election, Ostensible Owner & Fraudulent Transfer — KSLU Property Law Notes

Election, Ostensible Owner & Fraudulent Transfer

The doctrine of election (s.35) rests on the principle that “he who takes a benefit under an instrument must also bear the burden” — a person cannot approbate and reprobate. Where a transferor purports to transfer property he does not own and, by the same instrument, confers a benefit on the true owner, the owner must elect: either confirm the transfer (and take the benefit) or reject it (and forgo the benefit, which is then used to compensate the disappointed transferee).

flowchart TD
    A["Owner is given a benefit under a deed that<br/>also transfers HIS property to another"]:::root
    A --> B["ELECT to take the benefit<br/>-> must confirm the transfer of his property"]:::yes
    A --> C["ELECT against (keep his property)<br/>-> must give up the benefit"]:::no

    classDef root fill:#FFF8DC,stroke:#333,color:#000;
    classDef yes fill:#E6FFE6,stroke:#1E7A1E,color:#000;
    classDef no fill:#FFE6E6,stroke:#8A1E1E,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Under the ostensible owner rule (s.41) — based on Ramcoomar Koondoo v. McQueen — where, with the consent (express or implied) of the real owner, a person is the ostensible owner and transfers the property for consideration, the transfer is not voidable on the ground that the transferor was not authorised, provided the transferee acted in good faith after reasonable care. Fraudulent transfer (s.53) makes a transfer of immovable property made with intent to defeat or delay creditors voidable at the option of the creditors so defeated.