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.
Difficulties of, and exceptions to, the rule.
(r) Sup. p. 1075 et seq.; and see per Turner, L. J., in Hughes v. Jones, (1861) 3 D. F. & J. 307, 315; 31 L. J. Ch. 83.
(s) Williams v. Higden, (1828) C. P. Coop. 500.
(t) Wilson v. Williams, (1857) 3 Jur. N. S. 810 ; Brewer v. Broadwood, (1883) 22 Ch. D. 105, 107 ; 52 L. J. Ch. 136.
(u) Hughes v. Jones, (1861) 3 D. F. & J. 307, 316; 31 L. J. Ch. 83;
Perriam v. P., (1884) 32 W. R. 369.
(x) Fry, 4th ed. 541 ; Thomas v. Bering, (1837) 1 Ke. 729, 746; 6 L. J. N. S. Ch. 267 ; and see sup. p. 680, n. (f).
(y) Rudd v. Lascellcs, 1900, 1 Ch. 815; 69 L. J. Ch. 396.
(2) Rudd v. Lascclles, sup. ; Cato v. Thompson, (1882) 9 Q. B. D. 616, 618. As to mode of assessing compensation for a road not being made, see Re Chifferiel, (1889) 40 Ch. D. 45 ; 58 L. J. Ch. 137, 263.
So, too, the rule will not be applied so as to interfere with the rights of third parties (e), or to cause or encourage breaches of trust. Thus, where the vendor could only make a title to three-fourths of the property, the remaining fourth being vested in other parties, and trust-money was invested on the security of the vendor's interest to an amount exceeding the purchase-money which would be payable if the claim for abatement succeeded, the purchaser's claim for specific performance with an abatement was refused (/). So, where a trustee, who was also beneficially entitled to one-fifth of the proceeds of sale, contracted to sell the whole, but failed to obtain the concurrence of his co-trustees, specific performance was refused (g).
Where there are rights of third parties.
(a) Hexter v. Pearce, 1900, 1 Ch. 341; G9 L. J. Ch. 146; discussing and explaining Price v. Griffith, (1851) 1 D. M. & G. 80; 21 L. J. Ch. 78.
(b) Sug. 14th ed. 316.
(c) Wheatley v. Blade, (1830) l Si.
(d) Fry, 4th ed. 538 ; Sug. 14th ed. 318. See also Maw v. Topham, (1854) 19 Beav. 576, where the vendors were oidy entitled to three-fourths.
(e) Fry, 4th ed. 542.
(f) Maw v. Topham, sup.
The result then of the authorities appears to be that, except where there is a good defence on the ground of hardship, mistake, or injury to third parties, the Court will insist on a vendor making good his contract to the extent of his ability, and on his submitting to a proportionate reduction of the purchase-money, if the purchaser was ignorant of the defect at the date of the contract, and is willing to complete on these terms; and that, in applying this rule, no distinction will be drawn between cases where a vendor has contracted to sell an entire estate, when he has only part of it, and cases where he has contracted to sell undivided shares in the estate, and has not so many shares as he contracted to sell.
Result of the authorities.
In two cases (h), where the vendor's title was only contingently defective, it was held, that the purchaser might take the estate with an indemnity; but it has been settled by subsequent decisions, that an indemnity will not be enforced against either party (i), unless it be provided for by special agreement (k). For example, where trustees of a settled estate, which, with other properties, was subject to a pecuniary charge, were empowered to sell at the request, and by the direction, of the tenant for life, a contract entered into by the latter, without the consent of the trustees, was enforced after his death ; hut, in the absence of any special agreement, without any indemnity against the charge (/).
Indemnity, neither given nor taken compulsorily.
(g) Naylor v. Goodall, (1878) 47 L. J. Ch. 53.
(h) Bale v. Lister, cited 16 Ves. 7 ; Milligan v. Cooke, (1808) 16 Ves. 1.
(i) Balmanno v. Lumley, (1813) 1 Ves. & B. 224 ; Baton v. Brebner, (1819) 1 Bl. 42, 66; Aylett v. Ashton, (1835) 1 M. & C. 105 ; Xouaille v. Flight, (1844) 7 Beav. 521; 13 L. J. Ch. 414 ; B'idgway v. Gray, (1849) 1 M. & G. 109, 111 ; see at Law, Blake v. Bhinn, (1847) 3 C. B. 976; 16 L. J. C. P. 159.
(k) Walker v. Barnes, (1818) 3 Mad. 247 ; Aylett v. Ashton, (1835) 1 M. & C. 105; Baterson v. Long, (1843) 6 Beav. at p. 598 ; 13 L. J. N. S. Ch. 1 ; nor has an arbitrator on the agreement any implied authority to award an indemnity; Boss v. Boards, (1838) 8 A. & E. 290, 294; 7 L. J. N. S. Q. B. 209. As to the mode of indemnity on purchase by railway company of part of lands subject to rent-charge, see Bowell v. South Wales B. Co., (1855) 1 Jur. N. S. 773.
And matters which would not be considered fit subjects for compensation as against a purchaser, may, if he elect to take the estate, entitle him, as against the vendor, to an abatement of purchase-money; e.g., the existence of mining rights (m), or rights of common over the estate (n), or the want of a road which the vendor had agreed, but was unable, to make (o).
Vendor's and purchaser's rights in respect of abatement, not reciprocal.
Another ground upon which the Court will almost invariably refuse to put the general rule into force, and decree specific performance against the vendor with an abatement, is the knowledge of the defect by the purchaser at the date of his contract. Thus, where the purchaser was aware at the date of entering into the contract that the vendor could only carry it out with the consent of the trustees of his settlement, specific performance was refused (p). Again, where a husband and wife agreed to sell the wife's estate in fee simple, and the purchaser knew that the estate belonged to the wife, who refused to convey, it was held that he could not compel the husband to convey his interest at an abated price (q). So, the knowledge by a purchaser that the vendor is ignorant of his title may lead the Court to refuse a decree with abatement (;•). Nor will an abatement be allowed in respect of a lease granted by the vendor, which is void by statute (s). And in one case, where the purchaser, knowing that the estate was copyhold, had agreed to take a lease for thirty-one years, and entered and spent money upon the land, and it subsequently turned out that the lord of the manor could not grant a lease for more than twenty-one years, on a hill filed by the purchaser for repayment of the money expended, the Court went so far as to order the purchaser to accept a lease for twenty-one years with a covenant for a further term of ten years, and compensation in respect of the difference in value between such a lease and covenant, and a legal term of thirty-one years (7). Again, where a purchaser was told at the auction that premises, which were in the particulars stated to be let to a company, were in fact let to an individual, and subserviently tried to get off his bargain on the ground of the misrepresentation, it was held that, whether he was to be treated as plaintiff in a suit for rescission, or as defendant in a suit for specific performance, he must be held to his bargain (u). On the same principle, the omission of the purchaser to make proper inquiries before accepting the title, may preclude him from claiming compensation for a defect which, with a little more diligence, he would have discovered. Thus, where on an agreement for the purchase of an advowson, nothing was said on either side as to the amount of the income of the living, or as to the basis of calculation on which the purchaser's offer was founded, and the living was in fact charged with the repayment of a loan from Queen Anne's Bounty, the purchaser suing for specific performance was held not to be entitled to an abatement; inasmuch as the charge was an ordinary liability, the existence of which he would have learnt by prudent inquiry (x). In one case, where the purchaser at the date of the contract was aware that the property was in the occupation of a tenant, and made no previous inquiry as to the nature and duration of the tenant's interest, it was held that he was not entitled to specific performance with an abatement, on the ground that the property was subject to an undisclosed lease (y). And this case has been followed in