Equity’s darling and good faith

A purchaser of a legal estate in land takes free of prior equitable interests in land if he or she is equity’s darling (a bona fide purchaser for value of a legal estate in the land without notice of the prior equitable interest).

In Cheung Pik Wan v Tong Sau Ping [1986] HKLR 921 the first defendant had managed to have ownership of a flat in Tsuen Wan transferred to her. She then transferred the title to the flat to the second and third defendants who were related to her. The plaintiff (the original owner) had been tricked by the first defendant into signing the relevant documents and parting with the title deeds. The plaintiff was entitled to have the transfer to the second and third defendants set aside unless they were equity’s darlings.

It was found that they lacked the necessary good faith. They  had not bothered to ask why the plaintiff had handed over the title deeds to the first defendant and signed the legal documents. They had not bothered to inspect the property before buying it. These circumstances persuaded the court that they were in bad faith.

Michael Lower

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