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.
(z) Duddell v. Simpson, (1866) 2 Ch. 102; 36 L. J. Ch. 70; Greaves v. Wilson, (1858) 25 Beav. 290; 27 L. J. Ch. 546; Turpinv. Chambers. (1861) 29 Beav. 104; 30 L. J. Ch. 470; Merrett v. Schuster, 1920, 2 Ch. 240; and see Be Des Beaux and Setchfield's Contract, 1926. Ch. 178.
(a) The Vestry of St. Leonard's, etc. v. Hughes, (1864) 17 C. B. N. 8. 137; 33 L. J. C. P. 49; Bowman v. Hyland, (1878) 8Ch. D. 588; 47 L. J. Ch. 581; Ker v. Crowe, (1873) I. R. 7 C. L. 181.
(b) Re Starr-bowkett, etc, (1889) 42 Ch. D. 375; 58 L. J. Ch. 651; Be Dames and Wood, (1888) 29 Ch. D. 626; 54 L. J. Ch. 771; Duddell v. Simpson, sup.; Merrett v. Schuster, sup.
(c) See Be Dames and Wood, sup.; Glenton to Haden. (1886) 53 L. T. 434.
(d) See General Conditions of 1925, No. 10.
To "conveyance" and those as to "title."
In the absence of such words as "notwithstanding previous negotiations," or the like, an answer by the vendor made with the view to completing the title will destroy the right of rescission (i), but not where the right only arises on insistence by the purchaser; and the question may be avoided by stating all answers to be "without prejudice." The right may also be lost by acquiescence in, or confirmation of, the contract; or by the commencement, by the vendor, of an action for specific performance, and that in spite of the words "notwithstanding litigation" (k), as regards objections already taken (l), but not as regards objections raised for the first time by the defence (m); but the tendency of the Court is rather to regard the commencement of an action by the vendor for specific performance as strong, but not conclusive, evidence of waiver of the condition (n). Although the words "notwithstanding litigation "are absent, the vendor may nevertheless rescind after the institution of proceedings by the purchaser for specific performance (o), or for the return of his deposit (p). Where a purchaser discovers a defect in the title of a nature entitling him to repudiate the contract, he should repudiate at once (q). Delay would probably prevent the right being exercised, if in the meantime the vendor completes his title. Where a purchaser, after discovering a defect going to the root of the title, does not repudiate at once but continues for a time to treat the contract as subsisting, he should, if he afterwards gives a notice of rescission, limit a time allowing the vendor a reasonable period for curing the defect (r).
Right to rescind, when lost.
(e) Bain v. Fothergill, (1874) L. R. 7 H. L. 158, 209; 43 L. J. Ex. 243.
(f) Sober v. Kemp, (1847) 6 Hare, 155; Greaves x. Wilson, sup.
(g) Kitchen v. Palmer, (1877) 46 L. J. Ch. 611; Re Deighton and Harris, 1898, 1 Ch. 458; 67 L. J. Ch. 240.
(h) Batten v. Russell, (1888) 38 Ch. D. 334; 57 L. J. Ch. 425.
(i) Tanner v. Smith, (1840) 10 Sim. 410; 4 Jur. 310; Gardom v. Lee, (1865) 3 H. & C. 651; 34 L.. J. Ex. 113; but see Morley v. Cook, (1842) 2 Hare, 106; 12 L. J. Oh. 136.
(k) Sheard v. Venables, (1867) 36 L. J. Ch. 924.
(l) Motor, etc. v. British Colonial Motor Co., (1901) 45 Sol. J. 672; Gray v. Fowler, (1873) L. E. 8 Ex. 240, 280; 42 L. J. Ex. 181. But see Warde v. Dickson, (1859) 5 Jur. N. S. 698; 28 L. J. Ch. 315, where V.-c. Kindersley expressed an opinion that the vendor could rescind under such circumstances, after getting his bill dismissed with costs; and see Isaacs v. Towell, 1898, 2 Ch. at p. 290; 67 L. J. Ch. 508; Procter v. Pugh, 1921, 2 Ch. 256.
(m) Gray v. Fowler, sup. If the vendor has commenced an action for specific performance, the action must be dismissed and the costs paid before he can rescind: Warde v. Dickson, sup.
Where the title is defective and the purchaser repudiates the contract, this will not in itself operate as rescission; but if given on sufficient grounds and in due time, it will deprive the vendor of the equitable remedy of specific performance, even though the title be perfected before the date fixed for completion (s). A decree for specific performance enures for the benefit of both parties, and accordingly after decree a purchaser is not entitled to repudiate either the contract or the title without the leave of the Court (t).
Repudiation by purchaser.
A condition that, on rescission by the vendor, payment of the deposit shall be in full satisfaction of all claims whatever does not, it seems, oust the jurisdiction of the Court to order the vendor to pay the costs of litigation incurred before rescission (u). And the vendor has been ordered to pay the purchaser's costs, including the costs of investigation of title (x), till rescission, where the purchaser's action was reasonable (y).
(n) See Isaacs v. Towell, 1808, 2 Ch. at p. 292; 67 L. J. Ch. 508. (o) Hoy v. Smythies, (1866) 22 Beav. 510. (p) Isaacs v. Towell, sup.; Procter v. Pugh, sup. (q) Halkett v. Earl Dudley, 1907, 1 Ch. 590; Berners v. Fleming, 1925, 1 Ch. 39; lb, 264.
(r) Halkett v. Earl Dudley, 1907, 1 Ch. p. 600. (s) Ib. 596. (t) Ib. 601.
The vendor may rescind though the point objected to falls within the condition as to compensation (z); but not where he is unable to make any title at all (a); or where the vendor knows that he is unable to make a good title without the concurrence of persons whom he cannot compel, and who have not promised, to concur (b); or where the condition relates to title only, and the requisition is as to the conveyance; or when the vendor has been guilty of wilful misrepresentation (c). The vendor cannot use such a condition to get rid of the duty which attaches to him upon the rest of his contract; thus if he has undertaken to give possession, he cannot rescind on a requisition by the purchaser that a party wrongfully in possession should be ousted before completion(d); nor can a vendor refuse to procure the concurrence of a mortgagee, if he has contracted to sell free from incumbrances (e). The vendor's right of rescission must not be exercised arbitrarily (f) or as a means of escaping from the contract in order to accept a better offer (g). But the reasons for rescission need not be stated and where it is apparently made in good faith, and there is no evidence of caprice or dishonesty, the Court will not infer that the vendor is acting unreasonably (h).