This section is from the book "Dart's Treatise On The Law And Practice Relating To Vendors And Purchasers Of Real Estate", by J. Henry Dart . Also available from Amazon: A treatise on the law and practice relating to vendors and purchasers of real estate.
A purchaser need not disclose any fact, unknown to the vendor, which increases the value of the property itself; e.g., the existence of a mine (m); or the existence of negotiations for an advantageous sale of part of a mortgaged estate, supposed to be a short security, upon the purchase by the first mortgagee of a previous charge for less than its nominal value (n). Where, however, the owners of a colliery entered into a contract with an adjoining landowner for the purchase of his estate without disclosing the fact, of which he was ignorant, that they had without authority got a considerable quantity of coal from under it, the Court, in an action by the purchasers, refused to enforce the contract, though there was no proof of undervalue; and, in an action by the vendor, held that he was entitled to the value of the coals got from under his land (o). In such a case the proposal is not simply one for the purchase of the property, but involves a purchase of rights which the owner has acquired against the purchaser. The subject matter of the sale, as understood and intended by the vendor, namely land in its ordinary condition, and the subject matter as intended by the purchaser - namely land with part of the mines excavated plus a release of the right of action arising from the trespass - are entirely different (p).
Concealment, etc. by purchaser.
(l) Reg. v. Burgon, (1856) 25 L. J. M. C. 105; 2 Jur. N. S. 596 (case of mortgagees); Reg. v. Roebuck, (1856) 25 L. J. M. C. 101; 2 Jur. N. S. 597.
(m) Fox v. Mackreth, (1788) 2 Br. C. C. at p. 420; Turner v. Harvey, (1821) Jac. 169. See and consider our Lord's parable of the treasure hid in a field, Matt. xiii. 44; and see Turner v. Green, 1895, 2 Ch. 205; 64 L. J. Ch. 539, as to silence with regard to a material fact in making a compromise when there is no duty to disclose.
(n) Dolman v. Nokes, (1855) 22 Beav. 402.
(o) Phillips v. Homfray, (1871) 6 Ch. 770; and as to interest, S. C, 1892, 1 Ch. 465; 61 L. J. Ch. 210.
The duties of a purchaser as to disclosure may be summed up in the words of Lord Selborne ,(g): "Every purchaser is bound to observe good faith in all that he says or does, with a view to the contract, and of course to abstain from all deceit, whether by suppression of truth or suggestion of falsehood. But inasmuch as a purchaser is, generally speaking, under no antecedent obligation to communicate to his vendor facts which may influence his own conduct or judgment, when bargaining for his own interest, no deceit can be implied from his mere silence as to such facts, unless he undertakes or professes to communicate them. This, however, he may be held to do, if he makes some other communication which, without the addition of these facts,, would be necessarily or naturally and probably misleading. If it is a just conclusion that he did this intentionally, and with a view to mislead in any material point, that is fraud; and it is sufficient ground for setting aside a contract, if the vendor was in fact so misled. A man is presumed to intend the necessary or natural consequences of his own words and acts; and the evidentia rei would therefore be sufficient without other proof of intention. If the vendor was not in fact misled, the contract could not be set aside; because a dolus which neither induced nor materially affected the contract is not enough."
Summary of duties of purchaser as to disclosure, etc.