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//Facing up to Fraudulent Transactions

Facing up to Fraudulent Transactions

By Michael Murphy, Senior Solicitor, Litigation Department

Introduction

With the onset of the recession and the increase in fraud cases, the phrase ‘caveat emptore’ (buyer beware) applies more than ever when purchasing second hand items. This could be particularly relevant to aspiring antique hunters or those involved in the second hand motor trade.  There are criminal law aspects to such fraudulent transactions but we will concentrate upon the civil position.

For some unfortunate purchasers, goods purchased in good faith may prove to have been stolen from the rightful owner at a much earlier point in time and sold on to an unsuspecting purchaser.  When the rightful owner traces their goods to that purchaser, this leads to the vexed question as to whether the purchaser has an entitlement to retain those goods or whether the goods will instead have to be returned to the rightful owner.

The Law

The area is presently governed by an 1893 Act and a 2005 Irish High Court case involving the purchase of a valuable book-case and the position is worth noting for all parties involved in second-hand purchases.

Section 12(1) of the Sale of Goods Act 1893, as amended, provides that in any contract for sale there is an implied condition on the part of the seller that he has a right to sell the goods or will have a right to sell the goods at the time when the title to the property is to pass.

Section 12(2) of the Act of 1893, as amended, provides for certain warranties in a contract of sale, in the case of which there appears from the contract or is to be inferred from the circumstances of the contract, an intention that the seller should transfer only such title as he or a third person may have.

The case of Mallett and Son (Antiques) Limited v. Rory Rogers

[2005] IEHC 131 (‘the Mallett case’) provides guidance as to the application of the aforementioned legislation. This also happens to be a case with which this office has some affiliation, having acted in proceedings which arose out of this case.

The ‘Mallett’ Case

In the Mallett case, a Queen Anne red lacquered bureau bookcase (‘the Bookcase’) was stolen in 1990 during a robbery at the estate of Lord Roden, County Down.  By 2000 the Bookcase had come into the possession of Rory Rogers, an antique seller. Mr. Rogers agreed to sell the Bookcase on to Mallett & Son (Antiques) Limited (‘the Company’), which specialised in purchases/sales in this area, for Stg£80,000.

The Company then expended the sum of Stg£31,553 refurbishing the Bookcase, to Mr. Rogers’ knowledge, before it subsequently came to light that Mr. Rogers did not have the right to sell the Bookcase and the title to the Bookcase still rested with the lawful owner, i.e. the estate of Lord Roden.

It was accepted by all of the parties that the Company had no right to retain the Bookcase which was returned to the lawful owner.  The Company was entitled to the return of not only the purchase price but also the consequential loss incurred by the Company in refurbishing the Bookcase and the Court awarded the Company damages in the sum of Stg£111,553 against Mr. Rogers on the basis that title to the Bookcase had never rested with either Mr. Rogers or indeed the Company. Title (or ‘rightful ownership’) had at all times rested with the lawful owner of the Bookcase.

Principles Derived from the Mallett Case

The basic rule as to the transfer of title to personal property is that no one can give a better title than his own (the doctrine known as nemo dat quod non habet); therefore, if the item in question is stolen and the vendor has no title then the purchaser cannot obtain good title in such circumstances.  However, a purchaser may have a claim in damages against the purchaser under the Sale of Goods Act 1893, as amended, or common law.
Conclusion

If a bargain seems to be too good to be true, that might very well prove to be the case and an aggrieved original owner, wrongfully deprived of his or her property, may come knocking on your door seeking the return of their property – to which they are entitled once they can demonstrate that they are the rightful owner and that the property was wrongfully deprived from their ownership.  When purchasing particular items of significance, it is always prudent to carry out authenticity checks to try to verify the source of the goods and to ensure that the origins of the item can be confirmed.If it proves to be the case that the goods have to be returned, it will be helpful if the vendor is a good ‘mark’ for damages to be pursued for the loss. In such circumstances professional legal advice should be sought on a case by case basis to ascertain if there is any possible claim for damages. If you require further information please contact Michael Murphy, Senior Solicitor, Litigation Department.

Summary

  • Purchasing second hand goods which it transpires may be stolen can result in the return of the goods to the original rightful owner.
  • Purchasers may lose out, however in some circumstances there may be a claim for damages against a seller.

 

2018-11-13T10:48:21+01:00December 9th, 2014|Publications|
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