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.
Increased by interest; rate of, if no agreement.
If, then, a time is fixed for completion of the contract, and there is delay attributable to the purchaser, he must from that time pay interest upon his purchase-money (o), though it has been lying idle and appropriated to the purchase (p), and though he has not had possession of the estate, which (as in the case of a house bought for a residence) has therefore been unproductive; but he will be entitled to any actual profits arising from it(g). If the purchase includes the goodwill of a business, and there is deliberate delay on the part of the purchaser in completion, the vendor is entitled to carry on the business at the risk of the purchaser, and to be indemnified by him, provided that the vendor informs the purchaser of what he is doing, and (if such is the case) that the business is being carried on at a loss (r).
Parable from time fixed for completion, if delay rests with purchaser.
If, on the other hand (a time being fixed for completion), there is delay attributable to the vendor, the purchaser, if he has been in actual possession, or in receipt of the rents and profits, must pay interest, unless and until his money has been appropriated to the purchase and lying idle, and notice of such being the case has been given to the vendor (s); and, in one case, where, after notice of appropriation given to the vendor, the purchase-money had, through his default, lain idle, the vendor was disallowed interest on the purchase-money, though held accountable for the rents (t); but it appears that (if out of possession) a purchaser will be charged with interest only from the time when he might prudently have taken possession: i.e., when a good title was shown (u) and verified (x): or (in an action for specific performance) from the date of the Master's certificate (y). And though he may, if he please, in the interim, pay interest and take the rents and profits from the time fixed for completion, he is not bound to do so, where the interest exceeds the rents and profits (z). Where the purchaser pays interest on the purchase-money from the date fixed for completion, but the vendor is in occupation, the latter must pay a fair occupation rent (a). The vendor may, like a mortgagee, be made to account for not only what he actually has, but for what he might, without wilful default, have received (b). Such a direction is not as of course, but must be founded on a special case made against him (c).
From what time payable if delay rests with vendor.
(m) Civil Procedure Act, 1833, s. 28; see Usury Laws Repeal Act, 1854, s. 3; L. C. & D. R. Co. v. 8. E. R. Co., 1892, 1 Ch. 120; 61 L. J. Ch. 294; 1893, A. C. 429; 63 L. J. Ch. 93. As to whether compound interest can be claimed, see Attwood v. Taylor, (1840) 1 Man. & G. 279, 332; Stratton v. Symon, (1838) 2 Mo. P. C. 125; Silkstone & Haigh M. Co. v. Edey, 1900, 1 Ch. 167; 69 L. J. Ch. 73; Re Magheramorne, (1901) W. N. 152.
(n) Re Davy, 1908, 1 Ch. 61; and see Sug. 14th ed. 643; Calcraft v. Roebuck, (1790) 1 Ves. 221.
(o) See General Conditions of 1925, No. 7.
(p) Calcraft v. Roebuck, sup.; Enraght v. Fitzgerald, (1842) 2 Ir. Eq. R. 87; Sug. 14th ed. 628. See Hyde v. Price, (1837) 8 Si. at p. 593; A.-g. v. Corp. of Ludlow, (1849) 1 H. & Tw. 218. If the agreement fix the rate, any subsequent agreement for reduction will be construed strictly against the purchaser; Attwood v. Taylor, (1840) 1 Man. & G. 279; and see Minchin v. Nance, (1841) 4 Beav. 332.
(q) See tup. p. 268.
(r) Golden Bread Co., Ltd. v. Hemmings, 1922, 1 Ch. 162.
(s) Powell v. Martyr, (1803) 8 Ves. 146; Roberts v. Massey, (1807) 13 Ves. 561; Rowland v. Norris, (1784) 1 Cox, 59, 62; Sug. 14th ed. 628; Fry, 6th ed. p. 658.
(0 Regent's Canal Co. v. Ware, (1857) 23 Beav. 575; 26 L. J. Ch. 566; and see Vickers v. Hand, (1859) 26 Beav. 630.
(u) Forteblow v. Shirley, (1806) cited 2 Sw. 223; 13 Ves. 81; Binks v. Lord Rokeby, (1819) 2 Sw. 222; Jones v. Mudd, (1827) 4 Rus. 118; 6 L. J. (O. S.) Oh. 26; Monck v. Huskisson, (1827) 4 Rus. 121; Carrodus v. Sharp, (1855) 20 Beav. 56. See Re Bayley-worthington and Cohen's Contract, 1909. 1 Ch. 648.
(x) Parr v. Lovegrove, (1857) 4 Dr. 170.
(y) Halkett v. Earl Dudley, 1907, 1 Ch. 590.
(z) Esdaile v. Stephenson, (1822,) 1 S. & S. 123; Jones v. Mudd, (1827) 4 Rus. 118, 123; 6 L. J. (O. S.) Ch. 26; Paton v. Rogers, (1822) 6 Mad. 257; Collard v. Roe, (1859) 4 D. & J. 525; 28 L. J. Ch. 560.
(a) Met. R. Co. v. Defries, (1877) 2 Q. B. D. 189; 387; but see inf. p. 549.
(b) Acland v. Cuming, (1816) 2 Mad. 28; Wilson v. Clapham, (1819) 1 J. & W. 37; Crosse v. Duke of Beaufort, (1851) 5 De G. & S. 7.
(c) Sherwin v. Shakspear, (1854) 5 D. M. & G. 517; 23 L. J. Ch. 177, 899; but see and consider Phillips v. Silvester, (1872) 8 Ch. 173; 42 L. J. Ch. 225; and see inf. p. 563.
In De Visme v. De V. (d) it was held that a purchaser, out of possession, was not justified in laying aside his purchase-money, and rendering it wholly or in part unproductive, until the time when a good title was shown; but this case cannot, it is thought, be upheld (e).
Whether until title is shown purchaser may appropriate his money and claim exemption from interest.
The cases seem to show, that when a purchaser is in actual possession or receipt of the rents and profits, he must pay interest upon his purchase-money (unless lying idle with notice of the fact to the vendor) from the time fixed for completion, even though the vendor delay to show a good title, and the contract does not in terms make the purchase-money payable until a good title is shown. Thus, where parties already in possession agreed to purchase land, the purchase-money to be paid on the 25th March next, "on a good and valid title being made and executed," and a title was not made until many years afterwards, but they continued in possession, and did not appropriate the purchase-money, they were held liable to pay interest from the above date (f).