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.
(l) Spencer v. Topham, (1856) 22 Beav. 573.
(m) 1903, 1 Ch. p. 60.
(n) Prees v. Coke, (1871) L. R. 6 Ch. 645.
(o) See Mcpherson v. Watt, (1877) 3 A. C. 254, 263.
(p) Jones v. Thomas, (1837) 2 Y. & C. at p. 519; Edwards v. Meyrick, (1842) 2 Ha. at p. 68: 12 L. J. Ch. 49.
A subsequent gift of the property to the attorney by the client will not validate a previous voidable sale to the attorney, unless it is sufficiently clear that the client was aware of its voidability (u) . Where the purchase is fair at the time when it is made, and the transaction is unimpeachable on other grounds, the mere circumstance of the solicitor having subsequently resold at a profit, is not material (x). "A solicitor is not wholly incapacitated from purchasing or taking a lease from his client," 6aid Parker, J. in Allison v. Clayhills (y), "but where the relationship of solicitor and client exists, the onus of upholding the transaction will rest upon the solicitor. It is equally clear that although the relationship of solicitor and client in its strict sense has been discontinued, the same principle applies as long as the confidence naturally arising from such a relationship is proved or may be presumed to continue " (z).
Purchase by solicitors.
(q) Austin v. Chambers, (1837) 6 Cl. & F. 1; Lawrance v. Galsworthy, (1857) 3 Jur. N. S. 1049; Coaks v. Boswell, (1886) 11 A. C. 232; 55 L. J. Ch. 761; Nutt v. Easton, 1899, 1 Ch. 873; 1900, 1 Ch. 29; 68 L. J. Ch. 367.
(r) See Holman v. Loynes, (1854) 4 D. M. & G. 270; 23 L. J. Ch. 529; Gibbs v. Daniel, (1863) 3 D. J. & S. 479; 11 W. R. 653; Lord Clanricarde v. Henning, (1861) 30 Beav. 175; 30 L. J. Ch. 865; Demerara Bauxite Co. v. Hubbard, 1923, A. C. 673.
(s) King v. Savery, (1853) 1 S. & G. 271, 311; Savery v. King, (1856) 5 H. L. C. 627; 25 L. J. Ch. 482.
(t) Gibbs v. Daniel, (1863) 3 D. J. & S. 479; 11 W. R. 653.
(u) Waters v. Thorn, (1856) 22 Beav. 547, where the gift was by will; and cf. Stump v. Gaby, (1852) 2 D. M. & G. 623; 22 L. J. Ch. 352.
(x) Spencer v. Topham, (1856) 22 Beav. 573.
(y) (1907) 97 L. T. p. 711.
The rule which disqualifies a solicitor from purchasing from his client, pending the relation between them in the particular transaction, applies also to his clerk, who has been professionally concerned for the client (a)
Purchase by clerk of solicitor.
The son or other relation of a trustee or other disqualified person may in good faith purchase on his own account; and, though, when a trustee sells to a relation, the relationship is calculated to excite a suspicion, which, if confirmed by any other circumstance, would require a strong case to remove (b), the Court will, in the absence of fraud, decree specific performance at the suit of the purchaser (c).
Relation of disqualified purchaser.
A tenant for life, with an express power of leasing (d), and a mortgagor with power of leasing until entry by the mortgagee (e), have been held entitled to lease to a trustee for themselves, but it is probable that these cases would not now be followed (f).
Tenant tor life, exercise of express powers by.
By s. 68 of the S. L. Act, 1925 (taking the place of, and extending s. 12 of the S. L. Act, 1890), it is provided that in the manner mentioned in that section and subject to the conditions therein contained, a sale, lease, or other disposition of settled land may be made to the tenant for life. And by sub-s. (2), in every such case the trustees of the settlement, in addition to their powers as trustees, have all the powers of a tenant for life in reference to negotiating and completing the transaction.
Of S. L. Act powers.
(z) See Demerara Bauxite Co. v. Hubbard, 1923, A. C. 673, 675. (a) Hobday v. Peters, (1860) 28 Beav. 349; 29 L. J. Ch. 780. (b) See Ferraby v. Hobson, (1847) 2 Ph. at p. 261; 16 L. J. Ch. 499; John v. Jones, (1876) 34 L. T. 570.
(c) Sug. 14th ed. 692; see Coles v. Trecothiek, (1804) 9 Ves. 234.
(d) Wilson v. Sewell, (1766) 4 Burr, at p. 1979; Cardigan v. Montague, (1754) Sug. Pow. 8th ed. 918.
(e) Bevan v. Habgood, (1860) 1 John. & H. 222; 30 L. J. Ch. 107. (f) Boyce v. Edbrooke, 1903, 1 Ch. at p. 843; 72 L. J. Ch. 547;
Re Lacon's Settlement, 1911, 1 Ch. p. 355; Farwell, 3rd ed. p. 631.
A trustee or agent is not incapable of purchasing from his cestuis que trust or employers, etc, if they be sui juris (g); but, in any such case, the Court looks at the transaction with a jealous eye (h); and the question to be determined is, not whether the price is fair, but whether the purchaser, having held a confidential situation, previously to the purchase, has, at the time of the purchase, shaken off that character, by the consent of the other parties, freely given, after full information, and has bargained for the right to purchase (i); and the burden of proving the propriety of the transaction is laid upon, the trustee (k). So, where the sale by auction is in fact conducted by the beneficiary, a purchase at an adequate price by the trustee for sale may be supported (l), if the cestui que trust so acts as to render it inequitable to dispute the validity of the transaction.
Purchase from beneficiaries.
The solicitor of a beneficiary has no general authority to authorise a purchase by the trustee (m).
Solicitor cannot consent for beneficiary.
A trustee cannot get rid of his incapacity by resigning the trust or confidential situation; for he would still retain the knowledge acquired while in office (n).
Resignation of trust immaterial.
The circumstance of a trustee or agent purchasing secretly in the name of a third person is indicative of fraud; and the sale will, as a rule, be set aside (o).
(g) See Coles v. Trecothick, (1804) 9 Ves. at p. 244; Randall v. Errington, (1805) 10 Ves. 423.
(h) Davidson v. Gardner, (1743) Sug. 14th ed. 601; Murphy v. O'shea, (1845) 2 Jo. & Lat. 422, 429; Plowright v. Lambert, (1885) 52 L. T. 646.