Where a cheque is obtained by fraud equivalent to theft, a trust arises immediately in favour of the victim. A recipient who gives value for the cheque before notice of the fraud acquires only such rights as the consideration actually purchased at that time; if the recipient later receives notice before acquiring full beneficial entitlement, subsequent consideration cannot enlarge those rights. A party claiming to be a bona fide purchaser for value without notice bears the onus of proving absence of notice, and where it fails to make reasonable inquiries after receiving information suggesting fraud, that onus is not discharged. A party contesting on an 'all or nothing' basis who fails to identify and quantify the limited rights acquired without notice will have no pro tanto defence.
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