¹ Under Lord Cairns' Act (Chancery Amendment Act 1858).

² [1979] 2 W.L.R. 487.

³ These two meanings of the expression “rescission” emerge clearly from the judgments of Farwell J. in Mussen v. Van Diemen's Land Co. [1938]Google Scholar Ch. 253, 260 and of Buckley L.J. in Buckland v. Farmer & Moody [1979] 1 W.L.R. 221, 231–232Google Scholar (see also Goff L.J. at pp. 237–238 and Sir John Pennycuick in Capital and Suburban Properties v. Swycher [1976] 2 W.L.R. 822, 831).Google Scholar

⁴ The existence of the defect may of course give him some independent right to claim damages on the grounds of misrepresentation or fraud.

⁵ This choice is often encapsulated in the adage that “You cannot both rescind and claim damages”—see Megarry J. in Horsler v. Zorro [1975] 2 W.L.R. 183, 195.Google Scholar

⁶ Williams on Vendor and Purchaser, 4th ed., pp. 993 and 1004Google Scholar, Williams on The Contract of Sale of Land, p. 121.

⁷ “Mr. Cyprian Williams' Great Heresy” (1975) 91 L.Q.R. 337.Google Scholar

⁸ [1975] Ch. 302.

⁹ [1976] 2 W.L.R. 822.

¹⁰ See the judgments of Buckley L.J. at p. 828 and of Sir John Pennycuick at p. 831. The third member of the court, Orr L.J., merely agreed with both the judgments delivered.

¹¹ [1979] 1 W.L.R. 221.

¹² Per Buckley L.J. at pp. 231–232, per Goff L.J. at pp. 237–238. The third member of the court, Cumming-Bruce L.J., agreed with both the other judgments.

¹³ At p. 237.

¹⁴ [1979] 2 W.L.R. 487. Johnson v. Agnew, like Capital and Suburban Properties v. Swycher, was actually concerned with the question of whether damages for breach of contract are available after there has been a failure to comply with a decree for specific performance but Lord Wilberforce carried out a general review of the law in this area.

¹⁵ Lord Salmon, Lord Fraser of Tullybelton, Lord Keith of Kinkel and Lord Scarman.

¹⁶ At p. 497. Lord Wilberforce actually approved the statements of Goff, L.J. in Buckland v. Farmer & Moody earlier in his judgment at p. 494.Google Scholar

¹⁷ Abatement of the purchase price is not, of course, an award of damages but an example of the equitable power to give relief on terms (see the judgment of Lord Eldon L.C. in Todd v. Gee (1810) 17 Ves. 273, 277–278). The best example of specific performance being ordered together with abatement of the purchase price is where there has been some misdescription or non-disclosure by the vendor. See Jacobs v. Revell [1900] 2 Ch. 858Google Scholar and Re Belcham and Gawley's Contract [1930] 1 Ch. 56Google Scholar (where the vendor was held able to obtain specific performance subject to abatement where there had been, respectively, a trivial misdescription and a trivial non-disclosure) and Rutherford v. Acton-Adams [1915]Google Scholar A.C. 866 per Viscount Haldane at p. 870 and Rudd v. Lascelles [1900] 1 Ch. 815Google Scholar (where the purchaser was held able to obtain specific performance with abatement where there had been, respectively, a substantial misdescription and a substantial non-disclosure).

¹⁸ A good example of damages being awarded in addition to specific performance under Lord Cairns' Act is Grant v. Dawkins [1973] 1 W.L.R. 1406Google Scholar, where the defendant contracted to sell free from incumbrances a house which was in fact mortgaged for more than the purchase price. Goff J. ordered specific performance of the contract with abatement of the purchase price in full and also awarded damages under Lord Cairns' Act to the extent that the sum required to discharge the mortgages exceeded the purchase price. However, he held that such damages were limited to the amount by which the value of the property at completion exceeded the purchase price. This restrictive view was criticised at the time (see P. H. Pettit (1974) 90 L.Q.R. 297) and, it is submitted, cannot now stand in the light of Johnson v. Agnew [1979] 2 W.L.R. 487Google Scholar, where Lord Wilberforce stated that in such circumstances damages under Lord Cairns' Act should be assessed on the same basis as at common law (see page 76).

¹⁹ Upon completion, a contract for the sale of land merges with the conveyance so that, as a general rule, no action can be brought upon the contract after completion (see Knight Sugar Co. v. Alberta Railway & lrrigation Co. [1938] 1 All E.R. 266Google Scholar). However, merger is not an absolute rule but depends on the intention of the parties. Therefore contractual provisions for compensation for any misdescription (see Palmer v. Johnson (1884) 13 Q.B.D. 351), for indernnity against claims from sitting tenants (see Eagon v. Dent [1965] 3 All E.R. 334Google Scholar) and for vacant possession (see Hissett v. Reading Roofing Co. [1969] 1 W.L.R. 1757Google Scholar) will not normally merge with the conveyance on completion and so can be enforced thereafter. Further, the Court of Appeal has now held that either party can obtain damages for loss suffered by reason of a delay in completion by the other whether or not time was of the essence as to completion (see Raineri v. Miles [1980] 2 W.L.R. 189Google Scholar; noted supra, p. 21) and such claims will obviously usually be brought after completion.

²⁰ This situation causes little difficulty where the defaulter is the vendor, since the purchaser can apply to th e court under the Trustee Act 1925, ss. 48–50, for an order vesting the property in him or for the appointment of a third party to convey the property to him. However, where the defaulter is the purchaser, the vendor, while of course able to move against the purchaser's property by way of sequestration, may often have little option but to abandon the contract and seek damages (this was the case in Johnson v. Agnew, where the property had already been sold by the vendors' mortgagees).

²¹ (1879) 12 Ch.D. 666, 667.

²² Sweet v. Meredith (1863) 4 Giff. 207 and Watson v. Cox (1873) L.R. 15 Eq. 219. 23 [1945] Ch. 187.

²⁴ At pp. 189–190.

²⁵ In other words, that his lordship meant that “rescission” and damages could not both be obtained in the same action, a proposition for which there was at that time some authority (see Hythe Corporation v. East (1866) L.R. 1 Eq. 620 and the judgment of Lord Wilberforce in Johnson v. Agnew [1979] 2 W.L.R. 487, 494).Google Scholar

²⁶ [1945] Ch. 187.

²⁷ [1976] 2 W.L.R. 822.

²⁸ Per Buckley L.J. at p. 829, per Sir John Pennycuick at p. 832.

²⁹ At p. 829.

³⁰ Dawson, F., “Damages after Specific Performance” (1977) 93 L.Q.R. 232Google Scholar; the present author, “Damages for breach of contract after a contract has been repudiated” (1977) 36 C.L.J. 20.Google Scholar

³¹ [1979] 2 W.L.R. 486.

³² The plaintiffs had in fact entered into a contract for the purchase of another property on the same day as they had contracted to sell Sheepcote Grange and had completed that contract by means of bridging finance.

³³ [1976] 2 W.L.R. 822.

³⁴ [1978] 2 W.L.R. 806.

³⁵ At p. 812 per Buckley L.J., with whose judgment Goff L.J. and Sir David Cairns both agreed.

³⁶ Per Buckley L.J. at pp. 812–815, per Goff L.J. at pp. 817–822.

³⁷ [1977] 1 W.L.R. 701—the case was in fact decided prior to the hearing before Megarry V.C. but was not reported until afterwards.

³⁸ [1978] 2 W.L.R. 806 per Buckley L.J. at pp. 815–817, per Goff L.J. at pp. 823–824.

³⁹ Lord Salmon, Lord Fraser of Tullybelton, Lord Keith of Kinkel and Lord Scarman.

⁴⁰ (1879) 12 Ch.D. 666.

⁴¹ [1976] 2 W.L.R. 822.

⁴² [1945] Ch. 187.

⁴³ [1975] Ch. 302.

⁴⁴ [1979] 2 W.L.R. 487, 494.

⁴⁵ McDonald v. Dennys Lascelles (1933) 48 C.L.R. 457Google Scholarper Dixon J. at pp. 476–477; Holland v. Wiltshire (1954) 90 C.L.R. 409Google Scholarper Dixon C.J. at p. 416, and McKenna v. Richey [1950] V.L.R. 360Google Scholarper O'Bryan J. at pp. 372, 376.

⁴⁶ [1979] 2 W.L.R. 487, 497.

⁴⁷ [1978] 2 W.L.R. 806.

⁴⁸ [1941] Ch. 338, 341.

⁴⁹ [1979] 2 W.L.R. 487, 498. His lordship then went on to consider the respective measures of damages at common law and under Lord Cairns' Act. These issues will be considered later on at, respectively, p. 67, and p. 76.

⁵⁰ [1972] 1 Q.B. 60, 63–64.

⁵¹ (1874) L.R. 7 H.L. 158. The rule has recently been the subject of opposing articles in The Conveyancer by Angela Sydenham [1977] 341 and Emery, C. T. [1978] 338.Google Scholar

⁵² The Contract of Sale of Land (1930), p. 128.Google Scholar

⁵³ The passage quoted was cited by Megarry J. in Wroth v. Tyler [1974]Google Scholar Ch. 30, 53 and by Stephenson L.J. in Malhotra v. Choudhury [1978] 3 W.L.R. 825, 843.Google Scholar

⁵⁴ The traditional formulation of the rule dates from Flureau v. Thornhill (1776) 2 Wm.Bl. 1078, long before the measure of damages for breach of contract came to be expressed in terms of an election between damages for loss of profit and damages for wasted expenditure. Today, it seems more appropriate to formulate the rule in Bain v. Fothergill in the way suggested in the text.

⁵⁵ [1978] 3 W.L.R. 825. See [1979] C.L.J. 35 (D. J. Hayton).

⁵⁶ The wife's rights as legal joint tenant obviously precluded any order for conveyance of the legal estate to the plaintiff and were held, following Rudd v. Lascelles [1900] 1 Ch. 815Google Scholar and Walts v. Spence [1976] Ch. 165Google Scholar, also to preclude any order for conveyance of the husband's beneficial joint tenancy on the grounds of hardship to her.

⁵⁷ (1874) L.R. 7 H.L. 158.

⁵⁸ [1978] 3 W.L.R. 825 per Stephenson L.J. at p. 843.

⁵⁹ Per Stephenson L.J. at p. 844, per Cumming-Bruce L.J. at p. 845.

⁶⁰ Flureau V. Thornhill (1776) 2 Wm.Bl. 1078, Hopkins V. Grazebrook (1826) 2 B. & C. 31; Engell v. Fitch (1867) L.R. 3 Q.B. 314; L.R. 4 Q.B. 659; Bain v. Fothergill (1874) L.R. 7 H.L. 158; Day v. Singleton [1899] 2 Ch. 320: Bray-brooks v. Whaley [1919] 1 K.B. 435Google Scholar; Keen v. Mear [1920] 2 Ch. 574Google Scholar. The narrower view adopted by Graham J. in Watts v. Spence [1976] Ch. 165, 174Google Scholar thus seems to have been disapproved (see [1979] C.L.J. 35).

⁶¹ Contracts for the assignment of a leasehold where the consent of the landlord is necessary provide a good illustration of the scope of the rule. The vendor will not be able to rely on the rule if he makes no attempt to obtain the consent of his landlord or actively dissuades him from consenting (Day v. Singleton [1899] 2 Ch. 320). However, he will be able to rely on the rule if he seeks and fails to obtain the consent, even if it was unreasonably withheld. In Lehmann v. McArthur (1868) L.R. 3 Ch.App. 496 it was held that it is enough if the vendor actively seeks the necessary consent; he is not obliged to go so far as to take proceedings against the landlord under the Landlord and Tenant Act 1927, s. 19 (1) for unreasonably withholding his consent.

⁶² Engell v. Fitch (1867) L.R. 3 Q.B. 314, L.R. 4 Q.B. 659, where the vendor was unable to give the vacant possession for which the contract stipulated due to his unwillingness to incur expense in evicting a mortgagor.

⁶³ This was in Wroth v. Tyler [1974]Google Scholar Ch. 30, 56. A wife registered a notice to protect her right of occupation the day after her husband had contracted to sell the property. Megarry J. held that an unregistered right of occupation could not be regarded as a defect of title since Parliament could not have intended, by enacting the Matrimonial Homes Act 1967, to render defective millions of perfectly good titles. Further, since such an unregistered right would not anyway bind a purchaser on completion, he held that a vendor who refused to complete in such circumstances would not be able to invoke the rule in Bain v. Fothergill. He then held that registration of the charge after contract did not bring the rule into play either on the grounds that a supervening event could hardly bring within the rule a case initially outside it. He then went on to hold that in any event such rights were sui generis and “did not fall within the spirit or intendment of the rule in Bain v. Fothergill.” This indicates that his lordship would have held that the rule did not apply even where such a right was registered before contract—this point obviously did not arise directly. It is not easy to support such a result. Such a registered charge must be a defect in title; it has appeared “without the fault” of the vendor (unless he can be held to be at fault for having married such a recalcitrant spouse in the first place!); and he clearly has no power to remove it (see Emery, C. T. [1978] ConveyancerGoogle Scholar 339, n. 14). It is therefore submitted that, so long as the rule in Bain v. Fothergill remains part of English law, that rule should apply to any right of occupation under the Matrimonial Homes Act 1967 which has been protected by registration.

⁶⁴ At pages 81–83 and 77 respectively.

⁶⁵ The rule has recently been attacked by Sydenham, Angela in [1977] ConveyancerGoogle Scholar 341 and was subsequently defended by Emery, C. T. in [1978] ConveyancerGoogle Scholar 338.

⁶⁶ At that time, the only evidence of title was contained in deeds which were often, in the famous phrase attributed to Lord Westbury, “difficult to read, disgusting to touch, and impossible to understand.”

⁶⁷ See Malhotra v. Choudhury above.

⁶⁸ This point will be discussed later at pp. 81–83.

⁶⁹ This was stated particularly clearly by Parke B. in Robinson v. Harman (1848) 1 Exch. 850, 855.

⁷⁰ (1854) 9 Exch. 341.

⁷¹ [1966] 1 W.L.R. 753.

⁷² [1961] Ch. 22.

⁷³ It should be noted that it makes no difference to a purchaser's measure of recovery that he neglected to protect his contract by registration and thus enabled the vendor to sell the property to a third pary free from his interest. This was held by Wynn-Parry J. in Wright v. Dean [1948] Ch. 686Google Scholar and by Harman J. in Hollington Brothers V. Rhodes [1951] 2 T.L.R. 691.Google Scholar

⁷⁴ [1945] 2 All E.R. 654.

⁷⁵ [1979] 2 W.L.R. 487.

⁷⁶ At p. 499.

⁷⁷ His lordship cited in support of this proposition Ogle v. Earl Vane (1867) L.R. 2 Q.B. 275; L.R. 3 Q.B. 272; Hickman v. Haynes (1875) L.R. 10 C.P. 598 and Radford v. de Froberville [1977] 1 W.L.R. 1262.Google Scholar

⁷⁸ The facts have already been set out on page 64.

⁷⁹ [1979] 2 W.L.R. 487, 499–500.

⁸⁰ [1972] 1 Q.B. 60.

⁸¹ [1971] 1 W.L.R. 535.

⁸² The formal title of the legislation was the Chancery Amendment Act 1858. The jurisdiction was reviewed recently in this Journal by Jolowicz, J. A., “Damages in Equity—A Study of Lord Cairns' Act” (1975) 34 C.L.J. 224Google Scholar and by Pettit, P. H., “Lord Cairns' Act in the County Court: A Supplementary Note” (1977) 36 C.L.J. 369Google Scholar and (1978) 37 C.L.J. 51.

⁸³ By the Statute Law Revision and Civil Procedure Act 1883.

⁸⁴ [1924] A.C. 851 per Viscount Finlay at p. 863.

⁸⁵ The background to and the purposes and effect of the enactment and subsequent repeal of Lord Cairns' Act are fully discussed by J. A. Jolowicz, op. cit.

⁸⁶ [1977] 3 W.L.R. 943.

⁸⁷ Per Goff L. J. at p. 957, per Buckley L. J. at p. 966. Scarman L.J. agreed with both judgments at p. 968.

⁸⁸ At p. 967.

⁸⁹ At pp. 957–958.

⁹⁰ Per Goff L. J. at p. 958, per Buckley L. J. at p. 968.

⁹¹ Equity regards every piece of land as unique so that damages can never be an adequate compensation for its loss. A purchaser of land is thus always prima facie entitled to obtain specific performance and the courts have always also allowed a vendor to obtain specific performance on the grounds that, having already divested himself of his beneficial interest at contract under the equitable doctrine of conversion, he is entitled to seek the exact purchase price in exchange for divesting himself of his legal title (see Eastern Counties Railway Co. v. Hawkes (1855) 5 H.L.C. 331 per Lord St. Leonards at p. 376).

⁹² [1975] Ch. 302.

⁹³ This appears to mean that a claim for specific performance must not be formally abandoned before the hearing but must be pleaded and remain extant until the commencement of the hearing.

⁹⁴ At p. 307.

⁹⁵ [1974] Ch. 30.

⁹⁶ [1977] 1 W.L.R. 701.

⁹⁷ [1979] 2 W.L.R. 487.

⁹⁸ [1974] Ch. 30, 57 and 58.

⁹⁹ [1979] 2 W.L.R. 487, 499.

¹ His lordship referred to statements to this effect by Turner L.J. in Ferguson v. Wilson (1866) L.R. 2 Ch. 77 (a decision to which Lord Cairns himself was a party) and by Kay J. in Rock Portland Cement Co. v. Wilson (1882) 52 L.J.Ch. 214 and also to the similar result reached, by rather different reasoning, by the Court of Appeal in Malhotra v. Choudhury [1978] 3 W.L.R. 825.Google Scholar

² It was argued by Sydenham, Angela in [1977] ConveyancerGoogle Scholar 341 that the rule in Bain v. Fothergill could be circumvented by an award of damages under Lord Cairns' Act on the basis that assessment of damages thereunder has nothing to do with the common law rules. This view was challenged by Emery, C. T. in [1978] ConveyancerGoogle Scholar 338, 340, n. 15 and cannot now stand in the light of Johnson v. Agnew.

³ Precisely what constitutes an effective actionable misrepresentation of fact is discussed in Chitty on Contracts, 24th ed. (1977), paras. 354–367 (Atiyah, P. S.).Google Scholar

⁴ These were the words used by Lord Herschell in Derry v. Peek (1889) 14 App.Cas. 337, 374.

⁵ [1969] 2 Q.B. 158.

⁶ Per Lord Denning M. R. at p. 167, per Winn L. J. at pp. 167–169, per Sachs L. J. at p. 171.

⁷ Under the Administration of Justice (Miscellaneous Provisions) Act 1933.

⁸ Per Lord Denning M. R. at p. 167, per Winn L. J. at p. 169.

⁹ Per Lord Denning M. R. at p. 167, per Winn L. J. at pp. 169–170, per Sachs L. J. at p. 172.

¹⁰ See Emery, C. T. [1978] ConveyancerGoogle Scholar 338, 342–343.

¹¹ This rule was discussed at pp. 67–70.

¹² Before the enactment of this provision, the only possibility of obtaining damages for a non-fraudulent misrepresentation was under the doctrine enunciated in Hedley Byrne v. Heller and Partners [1964]Google Scholar A.C. 1129. However, where a concluded contract has actually been formed, this doctrine now remains important only where a party has been induced to enter that contract by a misrepresentation by a third party and, in a contract for the sale of land, it is unlikely that there would be the special relationship between the third party representor and the representee which is required to ground liability.

¹³ [1978] Q.B. 574.

¹⁴ Per Lord Denning M. R. at pp. 592–593, per Bridge L. J. at p. 596, per Shaw L. J. at p. 601.

¹⁵ See Chitty, op. cit., para. 377.

¹⁶ [1972] C.L.Y. 492; (1972) 223 E.G. 1743

¹⁷ [1973] Q.B. 233.

¹⁸ At p. 237.

¹⁹ [1974] 2 Lloyd's Rep. 27.

²⁰ At p. 32.

²¹ [1976] Ch. 165.

²² At p. 173. Specific performance in respect of the legal estate was obviously impossible since one of the joint tenants was not a party to the contract, while specific performance in respect of the first defendant's beneficial joint tenancy was denied on the grounds that a conveyance thereof could not be said to be a conveyance of part of the fee simple (following Rudd v. Lascelles [1900] 1 Ch. 815Google Scholar) and that any such decree for specific performance would unreasonably prejudice the other joint tenant.

²³ At p. 175. The rule was discussed at pp. 67–70.

²⁴ At p. 178.

²⁵ (1976) 240 E.G. 455.

²⁶ At p. 461.

²⁷ [1977] 2 Lloyd's Rep. 166.

²⁸ At p. 181.

²⁹ See Chitty, op. cit., paras. 389–391.

³⁰ The advantages of damages for misrepresentation over damages for breach of contract or in lieu of specific performance may be illustrated by the following example. Suppose that a purchaser agrees to purchase a house for £20,000 on the strength of a misrepresentation by the vendor that he is absolute legal and beneficial owner thereof. The purchaser incurs legal and other expenses of £500 before discovering that, as in Watts v. Spence, the vendor is only one of two legal and beneficial joint tenants and cannot secure the co-operation of his co-owner. By completion date, the property is worth £21,000. Damages for breach of contract or in lieu of specific performance will prima facie give the purchaser an election between damages for loss of profit and damages for his wasted expenditure—an election between £1,000 for loss of profit (assuming that the damages are assessed at the date of breach) and £500 for wasted expenditure. However, according to Watts v. Spence, the rule in Bain v. Fothergill will apply to this situation and limit the purchaser to damages for his wasted expenditure (£500), although since Malhotra v. Choudhury this will only be the case if the vendor can affirmatively prove that he has done everything within his power to persuade his co-owner to join in the conveyance. Damages for misrepresentation, on the other hand, are not so restricted. If the misrepresentation is held to be fraudulent, damages therefor will be £1,000 if compensation for loss of bargain is (as has been suggested) available. If, on the other hand, the misrepresentation is held to be within s. 2 (1) of the Misrepresentation Act 1967, damages thereunder will also be £1,000, either on the basis that such damages are tortious or on the basis that, as held in Watts v. Spence, they are contractual and Bain v. Fothergill does not apply. Thus, damages for misrepresentation clearly enable the purchaser to circumvent the rule in Bain v. Fothergill. Further, such damages will also be available if the purchaser has rescinded the contract ab initio because of the misrepresentation, a situation in which damages for breach of contract or in lieu of specific performance are not available at all.

³¹ The history and development of this particular type of constructive trust was discussed in detail by Waters, D. W. M. in The Constructive Trust (1964), pp. 74–143.Google Scholar The modern law is summarised by the present author in Constructive Trusts (1978), pp. 112–132.Google Scholar

³² A claim under a constructive trust is not, of course, itself a claim for damages.

³³ The principles of following property into its product are fully discussed in Goff, R. & Jones, G., The Law of Restitution, 2nd ed. (1978), pp. 46–63.Google Scholar See also the discussion by the present author in (1975) 28 Current Legal Problems 64.

³⁴ [1974] 1 W.L.R. 1073.

³⁵ (1809) 16 Ves. 249, 254.

³⁶ A vendor may, in certain circumstances, be able to seek the imposition of a constructive trust and an account of profits thereunder. Such circumstances arose in English v. Dedham Vale Properties [1978] 1 W.L.R. 93Google Scholar, where the parties were engaged in negotiations for the sale and purchase of land but, before a formal contract had been concluded, the prospective purchaser, purporting to act as agent for the prospective vendors, submitted an application for planning permission in respect of the subject matter of the proposed contract. A contract was subsequently entered into and completed, planning permission having subsequently been granted to the purchaser. Some time later, the vendors discovered the facts and sought an account of the profits that the purchaser had made by acting as their self-appointed agent. This claim was upheld by Slade J. However, it is difficult to see how a vendor could ever sustain a claim of this type unless the contract had already been completed. Thus such claims are outside the scope of this paper.