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.
Misrepresentation, under such circumstances as would sustain an action of deceit, affords ground for setting aside a purchase after completion (e) ; nor, in the case of want of title, need the purchaser wait until eviction, but he may, at once, claim to have the conveyance set aside (/); and he should be prompt in applying to the Court (g).
Fraudulent misrepresentation is ground for rescission after completion.
(b) Trevelyan v. White, (1839) 1 Beav. 588.
(c) See sup., sect. 4, and authorities cited ; and see Brewster v. Eitchin, (1698) Raym. 317, 322; and (1698) 5 Mod. 369; and Holmes v. Buckley, (1691) 1 Eq. Ca. Ab. 27 ; and the remarks on these decisions in 1 Sm. L. C. 11th ed. 79 ct seq.
(d) See Morgan v. Pike, (1854) 14 C. B. 473 ; 23 L. J. C. P. 64 ; Northampton Gas Co. v. Tarnell, (1855) 15 C. B. 630 ; 21 L. J. C. P. 60.
(r) Edwards v. M'Leay, (1815) G. Coop. 308, 312; (1818) 2 Sw. 287; Berry v. Armistead, (1836) 2 Ke. 221 ; 5 L. J. N. S. Ch. 370; Lovell v. Hicks, (1836) 2 Y. & C. 46 ; 5 L. J.
N. S. Ex. Eq. 101 ; Roddy v. Williams, (1845) 3 J. & L. 1; see Jillard v. Edgar, (1849) 3 De G. & S. at p. 507; Money v. Jorden, (1852) 2 D. M. & G. 318; 21 L. J. Ch. 893; rev. (1854) 5 H. L. C. 185; 23 L. J. Ch. 865; Hutton v. Rosseter, (1855) 7 D. M. & G. 9 ; 24 L. J. Ch. 106. Generally as to what is sufficient to sustain an action of deceit, see Berry v. Peek, (1889) 14 A. C. 337; 58 L. J. Ch. 864 ; and sup. p. 112.
(/) Edwards v. M'Leay, sup., at p. 318.
(y) Sup., p. 51; R. P. Lim. Act, 1833, s. 24 ; Carson, R. P. Stats. (1902), p. 159; and see Jennings v. Broughlon, (1854) 5 D. M. & G. 126 ; 23 L. J. Ch. 999.
A fraudulent concealment, by the vendor, of a material fact which the purchaser has no sufficient means of discovering (h), may entitle the purchaser to relief (/). Thus, where a purchaser in possession was fraudulently induced by the vendor and his solicitor, in the absence of his own professional adviser, to pay the purchase-money and execute covenants for the production of title deeds, while the title to part of the property was under investigation with reference to a known defect, he was held entitled to rescind the contract, to recover his purchase-money, with his costs, charges, and expenses, and to have the deeds of covenant delivered up to be cancelled (k).
So is fraudulent concealment.
A distinction must be carefully drawn between the ordinary right to rescind an executory contract before completion, and the right to have the transaction set aside after completion. In order to obtain rescission of an executory contract, it is only necessary in Equity to prove that there was misrepresentation ; however honestly the misrepresentation may have been made, however free from blame the person who made it, the contract having been obtained by misrepresentation cannot stand (/). At Common Law the rule was not quite so wide; but even at Common Law a contract could be rescinded for misrepresentation, though it could not be shown that the person making it knew the representation to be false; but, it seems, the statement must have been made recklessly, and without care whether it was true or false, and not with the belief that it was true (m).
Distinction between rescission before, and setting aside after, completion.
(h) Conybeare v. New Brunswick B. Co., (1860) 1 D. F. & J. 578 ; 29 L. J. Ch. 435 ; but see 9 H. L. Cas. 711 ; 31 L. J. Ch. 297 ; New Brunswick B. Co. v. Muggeridge, (1860) 1 Dr. & S. 363; 30 L. J. Ch. 242; Aliter, if the defect is patent; sup. p. 99 ; and see Loundesv. Lane, (1789) 2 Cox, 363.
(i) Edwards v. M'leay, (1815) G. Coop. 308, 312; Early v. Garrett, (1829) 4 Man. & R. 687, 690 ; 8 L. J. (O. S.) K. B. 76 ; and see Gibson v. BfEste, 2 Y. & C. C. C. 577 ; and the judgment in Small v. Attwood, (1832) You. 407, 455 ; (1838) 6 CI. & F. 232.
(k) Berry v. Armistead, (1836) 2 Ke. 221; 5 L. J. N. S. Ch. 370.
(I) Per Lord Herschell in Berry v. Peek, (1889) 14 A. C. 337, 359; 58 L. J. Ch. 864 ; judgment of Lord Cairns in Beese River Mining Co. v. Smith, (1870) L. R. 4 H. L. 64 ; 39 L. J. Ch. 849 ; Redgrave v. Hurd, (1881) 20 Ch. D. 1, 12; 51 L. J. Ch. 113.
(m) Per Jessel, M. R., in Redgrave v. Burd, sup.
The principle of innocent misrepresentation being a ground for rescission is, as appears from the above passage, applicable only to executory contracts; and a Court of Equity would not only refuse its discretionary remedy of specific performance, but would go further and restrain a vendor from asserting his legal right to claim damages in a Court of Law, on the ground that it was unconscientious in him to do so. But the principle could not be extended to the taking away after completion the price of the property, which at Law had become absolutely the vendor's, without advancing the interference of the Court of Equity further than has yet been authorized by judicial decision. In other words, misrepresentation is no ground for setting aside an executed contract, unless such misrepresentation would be not only sufficient to afford ground in Equity for rescission of an executory contract, but also is deceitful in contemplation of a Court of Law (n), or, as Lord Selborne stated it, "unless there is fraud or misrepresentation amounting to fraud " (0).
What is sufficient to set aside purchase after completion- fraudulent misrepresentation.
Mutual mistake may be a good ground for rescission after conveyance, though there is neither fraud nor a total failure of consideration: but it seems that it will require a very strong case to induce the Court to exercise its jurisdiction on this ground (p) : such mistake must be one relating to the substance of what was purchased (q).
The general doctrine as to the responsibility of a vendor for the acts of an agent, whom he has either expressly
General doctrine as to how far authorized, or, by his conduct, adopted, is well established; but it is extremely difficult to define what sort or degree of misrepresentation on the part of the agent will entitle the purchaser to set aside a purchase which has been completed by conveyance and by payment of the purchase-money. We have already (r) referred to this subject in treating of the relative duties of vendors and purchasers before entering into an agreement for sale ; and we shall again refer to it more fully in treating of the grounds of defence to a suit for specific performance.