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.
As to valuations.
As to offer of purchase.
A false statement that a specified rent is paid for the premises (p), has been held to subject the vendor to an action at Law, though the purchaser made independent inquiries of other persons. Nor, in a case of fraud, is the action necessarily barred by the fact of the purchaser having paid the purchase-money in an action for specific performance (q).
As to rent.
(h) Drysdale v. Mace, (1854) 5 D. M. & G. 103; 23 L. J. Ch. 518.
(i) See Jones v. Rimmer, (1880) 14 Ch. D. 588; 49 L. J. Ch. 775.
(k) See Clapham v. Shillito, (1844) 7 Beav. 146; and cf. Roots v. Snelling, (1883) 48 L. T. 216.
(l) Buxton v. Lister, (1746) 3 Atk. at p. 386; Small v. Attwood, (1832) You. 407; Attwood, v. Small, (1838) 6 C. & F. 232; Partridge v. Usborne, (1828) 5 Russ. 195; 7 L. J. O. S. Ch. 49; Sug. 14th ed. 4; Lord Brooke v. Rounthwaite, (1846) 5 Ha. 298; 15 L. J. Ch. 332; Pike y. Vigers, (1839) 2 Dr. & Wal. 1, 150; 8 Cl. & F. 562; Redgrave v. Hurd, (1881) 20 Oh. D. 1; 51 L. J. Ch. 113; and cf. Dawsons, Ltd. v. Bonnin, 1922, 2 A. C. 413, 422.
(m) Powell v. Edmunds, (1810) 12 Ea. 6.
(n) Sug. 14th ed. 2; 1 Rolle's Abr. 101, pl. 16 (1598); sed quære.
(o) Gerhard v. Bates, (1853) 2 E. & B. 476; 22 L. J. Q. B. 364.
(p) Lysney v. Selby, (1705) Raym. 1118; see Dobell v. Stevens, (1825) 3 B. & C. 623; 3 L. J. O. S. K. B. 89; Wilson v. Fuller,(1843) 3 Q. B. 68, 1009.
The same liability is incurred by a stranger, who from mere wantonness intending to deceive, though without any view to gain, makes a false representation to a purchaser as to the value or rent of the property; nor is it material that the sale is by auction instead of by private contract (r). To sustain an action of deceit fraud must be proved, and "fraud is proved when it is shown that a false representation has been made, (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless, whether it be true or false" (s). But where there is a legal duty to give correct information, honest belief will not excuse a false representation, although an action of deceit will not lie (t).
It has been held that where a man, by his words or conduct, wilfully causes another to believe in the existence of a certain state of things, and induces him to act on that belief, so as to alter his position, he is concluded from averring that the state of things was different from that represented (u). And where a misrepresentation of an existing fact has been made in circumstances raising an equitable estoppel, the result may be equivalent to compelling the party to make good, his representation (x). But the idea formerly entertained, that where there is neither contract nor estoppel, Equity has jurisdiction to compel a party making a misrepresentation to make the same good, appears to be unfounded (y).
Fraudulent misrepresentation made good by estoppel.
(q) Jendwine v. Slade, (1797) 2 Esp. 572.
(r) Bardell v. Spinks, (1849) 2 Car. & K. 646.
(s) See Berry v. Peek, (1889) 14 A. C. 337, per Lord Herschell. pp. 359, 374; 58 L. J. Ch. 864; discussed as to No. 3 in Angus v. Clifford, 1891, 2 Ch. 449; 60 L. J. Oh. 443; Tackey v. Mcbain, 1912. A. C. 186; and see the cases collected under Pasley v. Freeman, 2 Sm. L. C.
(t) See Low v. Bouverie, 1891, 3 Ch. 82, 100, 105, 112; Le Lievre and Dennis v. Gould, 1893, 1 Q. B. 401; Everett v. Griffiths, 1920, 3 K. B. 163.
(u) Pickard v. Sears, (1837) 6 A. & E. 469, 474; Pollock on Contracts, 9th ed. pp. 565 - 566.
(x) See Pulsford v. Richards, (1853) 17 Beav. 87; 22 L. J. Ch. 559: Pollock on Contracts, 9th ed. p. 625.
Where either of the parties to the contract has procured the other to enter into it by means of a material misrepresentation or such a concealment pi a material fact as is considered in Equity equivalent to a misrepresentation (z), the Court will not merely decline to enforce, but will even rescind, the contract (a), unless, it seems, the party defrauded elect to complete upon the misrepresentation being made good (b). And, in a suit by a purchaser for rescission, the Court will direct the deposit to be returned, and declare a lien for it on the property (c); but it cannot award damages by way of compensation;to the plaintiff under its general jurisdiction (d). Nor did Lord Cairns' Act apply to a case where the suit was not for the specific performance, but for the rescission, of the contract; and since the Jud. Acts, though the Courts have power to administer all kinds of relief (e), there appears to be no substantive right to damages, where there was none before the Acts.
Material misrepresentation, rescission.
Where an offer to purchase has been made to the knowledge of the vendor on the faith of circumstances connected with the property, and these circumstances change between the making of the offer and its acceptance by the vendor, it is conceived that the vendor is bound to disclose the fact and nature of the change, and that if he accept the offer without doing so, specific performance will be refused, or the contract rescinded (f).
Rescission, change of ciroumstances undisclosed.
(y) Fry, 6th ed. p. 145; Pollock on Contracts, 9th ed. p. 757 et seq.
(z) As to what is sufficient to evoke the interference of the Court, see Torrance v. Bolton, (1872) 8 Ch. 118; 42 L. J. Ch. 177, in which case Lord Justice James lays it down that the Court will interfere "where it is unconscientious for a person to avail himself of the legal advantages which he has obtained" by his misrepresentation or concealment; and see Carlish v. Salt, 1906, 1 Ch. 335, 341. Cf. Blaiberg v. Keeves, 1906, 2 Ch. 175, and Beyfus v. Lodge, 1925, Ch. 350.
(a) Berry v. Peek, (1889) 14 A. C. at p. 347; 58 L. J. Ch. 864; Wauton v. Coppard, 1899, 1 Ch. 92; 68 L. J. Ch. 8; but see Beyfus v. Lodge, 1925, Ch. 350.
(b) Rawlins v. Wickham, (1858) 3 D. & J. 304; 28 L. J. Ch. 188.
(c) Torrance v. Bolton, (1872) 8 Ch. 118; 42 L. J. Ch. 177.
(d) Gwdlim v. Stone, (1807) 14 Ves. 128; Sainsbury v. Jones, (1839) 5 My. & C. 1.
(e) See Manners v. Mew, (1885) 29 Ch. D. 725; 54 L. J. Ch. 909.
A voidable contract may be set up by a subsequent confirmation, or even by mere waiver or abandonment of the right to rescind it (g); but the confirmation must be clear, amounting, in fact, to a new contract by reference to the terms of the original contract, when such original contract is tainted with actual fraud (h). But in the absence of fraud, the Court will not entertain a suit for the delivery up of the contract for cancellation, except perhaps in cases where to allow it to remain in the defendant's possession might prejudice the plaintiff's title (i).
Rescission, right to. lost.
And in Equity a misrepresentation, though made in perfect good faith, if made in order to induce others to act upon it, or under circumstances in which the party making it may reasonably suppose that it will be acted on, prima facie binds the party making it, as between himself and those whom he has thus misled (k).
Innocent misrepresentation binds in Equity.
(f) See Traill v. Baring, (1864) 4 D. J. & S. 318; 33 L. J. Ch. 521; Davies v. London and Provincial Marine Insurance Co., (1878) 8 Ch. D. 469; 47 L. J. Ch. 511; Re Scottish Petroleum Co., (1883) 23 Ch. D. 413.
(g) See Cole v. Gibbons, (1734) 3 P. W. 290; Chesterfield v. Janssen, (1751) 2 Ves. sen. 125; Morse v. Royal, (1806) 12 Ves. 355; Roche v. O'brien (1810) 1 Ball & B. at p. 355; Campbell v. Fleming, (1834) 1 A. & E. 40; 3 L. J. N. S. K. B. 136; Attwood v. Small, (1838) 6 C. & F. 424, 432; Flint v. Woodin, (1852) 9 Ha. 618.
(h) Be Montmorency v. Devereux, (1840) 7 C. & F. 188, 230.
(i) Onions v. Cohen, (1865) 2 Hem. & M. 354; 34 L. J. Ch. 338; and see the V.-c.'s remarks on Gwillim v. Stone, (1807) 14 Ves. 128; but see contra, Panama Telegraph Co. v. Indiarubber Co., (1875) 10 Ch. 515, 534; 45 L. J. Ch. 121.
(k) West v. Jones, (1851) 1 Si. N. S. 205, 208; 20 L. J. Ch. 362; A.-g. v. Stephens, (1855) 1 K. & J. at p. 748; 24 L. J. Ch. 694; Peek v. Gurney, (1873) L. R. 6 H. L. p. 412; 43 L. J. Ch. 19.
If the vendor procure payment of a deposit from the purchaser by means of a false and fraudulent representation as to the state of the property, he may, it seems, be convicted of obtaining money by false pretences (l).
Vendor's liability for obtaining money on false pretences.