• Any

CATCHWORDS

HEARING

DECISION

2. The respondents are the executors of the will of Louisa McNamara, who diedin November 1954. Included in her estate was a pieceof land at Grassy Flat,near Bendigo, on which stood (or was believed to stand) a hotel known as theBull's Head Hotel. Attachedto the hotel was a victualler's licence under theLicensing Acts of Victoria. The title to the land is a general law title: ithasnot been brought under the Torrens System. By a contract dated 2nd March1955 the respondents agreed to sell, and the appellant agreedto buy: "1. Allthat piece of land being Crown allotment fifteen of section O 'Grassy Flat'Parish of Sandhurst County of Bendigobeing the land comprised in conveyanceNo. 176 book 221 together with the licensed premises known as the 'Bull's HeadHotel' erectedthereon subject to all registered appurtenant easements (ifany). 2. The victualler's licence issued for and in respect of the saidhoteland the goodwill thereof." The contract also included an area of adjoiningland held on "permissive occupancy" under the LandActs of Victoria, but thisis of no importance. The purchase price was 5,000 pounds, of which 500 poundswas to be paid as a deposit.The balance was to be paid to the vendors, andpossession was to be given and taken, on the granting of the approval of theLicensingCourt to the transfer of the licence to the purchaser. Of the totalpurchase money, the sum of 800 pounds was apportioned to thefreeholdpremises, and the balance of 4,200 pounds to the licence and goodwill. Thecontract incorporated the conditions containedin the fourth schedule to theProperty Law Act 1928 (Vict.). To these it will be necessary to refer later.(at p193)

3. The deposit was paid on the signing of the contract. What Martin J. called"only a cursory examination" of the title to the freeholdland seems to havebeen made on the appellant's behalf. Certain requisitions were delivered andanswers made, but these were notput in evidence. No survey of the land wasmade. On 22nd June 1955 the Licensing Court approved of the transfer of thelicence, andon 24th June the appellant paid the balance of purchase money andentered into possession. The conveyance of the land, though (forsome reasonnot clearly explained) it bears the date 31st December 1955, was executed onor about 29th June 1955. The respondentsconvey "as legal personalrepresentatives of Louisa McNamara". The description of the land conveyed isthe same as that containedin a Crown Grant dated 14th October 1859 to oneBenjamin Roper, from which the title is traced in the recitals. Thatdescriptionis as follows: - "All that piece or parcel of land in the State ofVictoria containing by admeasurement one rood be the same moreor lesssituated in the County of Bendigo Parish of Sandhurst being allotment fifteenof section O Grassy Flat bounded on the northby a road one chain fifty linkswide bearing north eighty four degrees fifty minutes east one chain on theeast by a line bearingeast eighty four degrees fifty minutes south two chainsfifty links on the south by a line bearing south eighty four degrees fiftyminutes west one chain and on the west by a line bearing west eighty fourdegrees fifty minutes north two chains fifty links". (atp193)

4. The Licensing Court, when it approved of the transfer of the licence,appears to have indicated that, when the licence came upfor renewal inNovember, the licensee would be in difficulties unless substantial repairs andimprovements were effected. Questionsarising as to the location ofimprovements required by the licensing inspector, the appellant, soon aftergoing into possession,thought it desirable to ascertain the exact boundariesof the freehold land which he had bought. For this purpose he engaged Mr.Pritchard, a licensed surveyor. Mr. Pritchard appears to have foundconsiderable difficulty in his task, for, although the land isdescribed inthe Crown Grant by metes and bounds, no commencing point is given, and, if wehave understood the position aright, itbecame a matter of identifying, byreference to the Lands Department, "allotment 15 of section O Grassy Flat". Bethis as it may,it is common ground that there is a discrepancy between thearea fenced and occupied and the area described in the title, and itisadmitted on the pleadings that only a portion of the hotel building stands onthe land described in the Crown Grant, and thatthe rest of it stands onunalienated Crown land. The discrepancy is substantial: it would appear fromthe plan, which is exhibitK, that something like one third of the hotelbuilding stands on Crown land. The bar, two bar parlours, two bedrooms, andthe kitchen,are within the title. The whole of two bedrooms, part of anotherbedroom, and part of a "lounge", are outside it. The fact that itis on Crownland that the latter portion stands is a fact of practical importance. If itwere not Crown land, a possessory titlecould almost certainly be established.But s. 275 of theProperty Law Act 1928 (Vict.) provides that the title of theCrown to anyland shall not be, and shall be deemed not to have been, in anyway affectedby possession adverse to the Crown. (at p194)

5. The appellant applied to the Licensing Court for a renewal of the licencein November 1955 when the application was adjournedpending determination ofthe questions raised by these proceedings. The appellant's action wascommenced on 14th December 1955. Byhis statement of claim he alleged that thecontract and the conveyance were executed "upon the common basis and/orimplied condition,which all parties accepted as fundamental", that the hotelwas erected wholly on the land described, and that the parties enteredintothe contract under a common mistake of fact. He also alleged that the portionof the hotel standing on unalienated Crown landwas essential to the "properand lawful operation of the premises as a hotel". This last allegation doesnot seem to be establishedby evidence. The building is very old and in badrepair and it is a fair inference that the licence is in jeopardy unlesssubstantialimprovements are effected, but it is quite consistent with theevidence that the requirements of the Licensing Court could be metby workdone on land comprised within the paper title. The appellant claimed (a) adeclaration that the contract and the conveyancewere executed "under a commonmistake as to the existence of a fact accepted by all parties as a basis orcondition fundamental tothe transaction", (b) a declaration that the contractand the conveyance "are and were at all material times void", (c) an ordersetting aside the contract and the conveyance, and (d) repayment of the sum of5,000 pounds. (at p195)

6. Martin J. dismissed the action. After considering a number of decisions,he came to the conclusion, in effect, that a purchaseof land could not be setaside after conveyance except because of fraud or total failure ofconsideration. No suggestion of fraudhas ever been made against therespondents. No relevant representation of any kind, innocent or fraudulent,was ever made by them.And it is obviously impossible to say that there hasbeen a total failure of consideration for the payment of the sum of 5,000pounds.More than four-fifths of that sum was attributable to the licence andgoodwill as distinct from the land, and the licence was dulytransferred tothe appellant. (at p195)

7. The appellant, as has been seen, claimed by his statement of claimdeclarations that both the contract and the conveyance werevoid, and it wasargued before us that both instruments were void on the ground that they wereexecuted under a "common mistake"as to a fundamental fact, in that allparties believed that the hotel stood wholly on the land sold. But, if onething in this caseis clear, it seems to us to be that neither instrument wasor is void. (at p195)

8. So far as the contract is concerned, it may be assumed that all partiesbelieved that the hotel stood wholly on the land sold.In that sense there wasa "common mistake". It may also be assumed that the appellant, if he had knownthat a considerable part ofthe building stood on Crown land, would not haveentered into the contract. But these facts do not make the contract void. Thesubjectof "mistake" in relation to contracts has recently received a gooddeal of attention in the courts and in legal journals. This Courtin McRae v.Commonwealth Disposals Commission[1951] HCA 79; (1951) 84 CLR 377, at p 407 adopted withrespect a passage in the judgmentof DenningL.J. (while saying nothing as tothe actualdecision) in Solle v. Butcher (1950) 1 KB 671 To quote now fromthat judgmentat somewhatgreater length, his Lordship said: -" .. . once acontract has been made, this is to say, once the parties, whatevertheirinmoststates of mind, have to all outward appearancesagreed with sufficientcertainty in the same terms on the same subjectmatter, thenthe contract isgood unless and until it is setaside for failure of some condition on whichthe existence of the contractdepends,or for fraud, or on some equitableground. Neitherparty can rely on his own mistake to say it was a nullity fromthe beginning,no matter that it was a mistake which to his mind wasfundamental, and no matter that the other party knew that he was under amistake.A fortiori, if the other party did not know ofthe mistake, butshared it" (1950) 1 KB, at p 691 Denning LJ has since expressed thesame viewin Frederick E. Rose (London) Ltd.v. William H. Pim Jnr. & Co. Ltd. (1953) 2QB 450, at p 460, after saying that hewas"clearly of opinion that thecontract wasnot a nullity", although "both parties were under a mistake, andthe mistake was ofa fundamentalcharacter with regard to the subject-matter"(1953) 2 QB, at p 459 Reference should also be made to two learned articles-"The Mythof Mistake in the English Law of Contract"by Mr. C.J. Slade (1954)70 LQR 385 and "The Supposed Doctrine of Mistakein Contract"by ProfessorK.O. Shatwell (1955) 33 Can BR164 (at p196)

9. "Mistake" might, of course, afford a ground on which equity would refusespecific performance of a contract, and there may becases of "mistake" inwhich it would be so inequitable that a party should be held to his contractthat equity would set it aside.No rule can be laid down a priori as to suchcases: see an article by Professor R.A. Blackburn in Res Judicata (1955), vol.7, p.43. But we would agree with Professor Shatwell (1955) 33 Can BR, at pp186, 187 that it is difficult to conceive any circumstancesin which equitycould properly give relief by setting aside the contract unless there has beenfraud or misrepresentation or a conditioncan be found expressed or implied inthe contract. (at p196)

10. In the present case there was no fraud or misrepresentation, and theposition must depend on the terms, express and implied,of the contract. Thecontract in express terms provides that the vendor sells "All that piece ofland being Crown allotment 15 ofsection O . . . together with the licensedpremises known as the 'Bull's Head Hotel' erected thereon". The words "erectedthereon"have been discovered to be an inaccurate description. In any case, ofcourse, the contract would be performed by a conveyance ofland withoutmention of any building. But it is, in our opinion, clearly involved in thedescription of the property sold that thevendors are promising to convey thewhole of the land on which the hotel is erected: cf. Horning v. Pink (1913) 13SR (NSW) 529;30 WN 144 If the appellant had discovered before conveyance thata substantial portion of the hotel stood on land to which the respondentshadno title, it seems clear that he could not have been compelled to complete thecontract. A suit by the respondents for specificperformance must have beendismissed: equity has refused to enforce a contract against an unwillingpurchaser of land in cases wherethe defect of title was much less substantialthan it is in the present case. Further, he could have claimed damages at lawin respectof the respondents' inability to make title, though his damageswould have been limited in accordance with the rule laid down inBain v.Fothergill (1874) LR 7 HL 158 On the other hand, he could not himself have hada decree for specific performance requiringthe respondents to obtain andconvey a title to that part of the land which was outside the title they had:Perrin v. Reynolds (1886)12 VLR 440 (at p197)

11. So far we have been dealing only with the position before the land wasconveyed and the licence transferred. It was, we think,more or less assumed,both in the judgment of Martin J. and in the respondents' argument before us,that the appellant could haveescaped from the contract if he had discoveredthe true state of affairs while the contract was still executory. But, in viewofthe argument that the contract was void, and for other reasons, it hasseemed desirable to see exactly what the position was at lawand in equity. Infact the true state of affairs was not discovered until after the land hadbeen conveyed and the licence transferred.These things having been done, whatremedies, if any, are open to the appellant? (at p197)

12. To begin with, it is clear that the conveyance was not void. It is aninstrument effective at law and in equity vesting in theappellant the legaland beneficial interest in the land conveyed. It would have been so effectiveeven if the contract had been void.It has not been suggested that thetransfer of the licence, or the approval thereof by the Licensing Court, wasvoid. It does not,however, necessarily follow, from the fact that theconveyance and the transfer of the licence are effective to do what theypurportto do, that the appellant is not entitled to equitable relief. Apartfrom declarations that the two instruments are void, what heseeks by hisstatement of claim is an order setting aside the two instruments and repaymentof the sum of 5,000 pounds. The conveyance,strictly speaking, cannot be setaside: it has done its work and vested the legal title in the appellant forbetter or worse, althoughthere is, of course, jurisdiction in equity to ordera reconveyance. What the appellant really wants seems to be repayment of thesum of 5,000 pounds, in return for which he is ready and willing to reconveythe land to the respondents. He says nothing about are-transfer of thelicence, but it may doubtless be assumed that he is ready and willian tore-transfer the licence, if the approvalof the Licensing Court can beobtained. If the appellant is entitled to relief, the proper order would seemto be that on reconveyanceof the land and re-transfer of the licence therespondents repay the sum of 5,000 pounds. But the substance of the matter isthatthe Court is asked to undo the whole transaction. (at p198)

13. In considering whether equitable relief can or should be granted to theappellant, we may confine our attention to contractsfor the sale of land: itis unnecessary to consider the question whether the case of Seddon v. NorthEastern Salt Co. Ltd. (1905)1 Ch 326 was correctly decided (as to whichreference may be made to an article by Mr. H. A. Hammelmann in the LawQuarterly Review,((1939) 55 L.Q.R. 90)). With regard to transactions relatingto land, equitable relief after conveyance was granted in Bingham v.Bingham[1748] EngR 397; (1748) 1 Ves Sen 126 (27 ER 934); Hitchcock v Giddings (1817) 4 Price 135 (146ER 418); Cooper v Phibbs (1867) LR 2 HL 149,andHart v Swaine (1877) 7 Ch D42 In every case of this type, however, which has been found, the positionsimply was that the vendorhad no title at all to the property sold. InBingham v. Bingham (1748) 1 Ves Sen, at p 127 (27 ER, at p 934) the land wasactuallythe property of the purchaser himself. In such cases a court ofequity is not called upon to undo anything. The conveyance is simplydevoid oflegal effect, and, if it were not for the fact that adjustments and allowanceswill generally have to be made, one wouldthink that the money paid could berecovered at law. Apart from this very special type of case, it is clearlyestablished that equitywill not undo a sale of land after conveyance unlessthere has been fraud or there is such a discrepancy between what has been soldand what has been conveyed that there is a total failure of consideration, orwhat amounts practically to a total failure of consideration.The classicalstatement of the attitude of courts of equity by Lord Campbell in Wilde v.Gibson[1848] EngR 658; (1848) 1 HLC 605, at pp 632, 633[1848] EngR 658; (9 ER 897, at pp 908, 909) puts thecase of fraud as the only case in which equity will grant specific reliefafter conveyance.Buthis Lordship was dealing with a case of innocentmisrepresentation, and doubtless meant only that, in a case ofmisrepresentation,equity would not interfere after conveyance unless themisrepresentation was fraudulent. Other statements of the general rule extendthe scope of the exception beyond cases of fraud, using various expressions,the general effect of which is, we think, correctlystated by saying thatthere must be a total failure of consideration or what amounts practically toa total failure of consideration.Of the cases, other than Wilde v. Gibson[1848] EngR 658; (1848) 1 HLC 605 (9 ER 897), it is sufficient to refer to Legge v. Croker(1811) 1 Ball& B 506; Brownlie v. Campbell (1880)5 App Cas 925; Re Tyrell;Tyrell v Woodhouse (1900) 82 LT 675; Angel v Jay (1911) 1 KB 666,and PublicTrustee v. Duchy of Lancaster(1927) 1 KB 516, at p 528 The principle of thesecases was accepted by Jenkins L.J. in Sollev. Butcher (1950) 1 KB, at p 703Inthe same case Denning LJ (1950) 1 KB, at pp 695, 696 expressed hisdisagreement with Angel v.Jay (1911) 1 KB 666 That case, however,was, likeSolle v. Butcher (1950) 1 KB 671, a case of an agreement for a lease, and onewouldgather that Denning L.J. was preparedto accept the general principle asapplicable in cases where equitable relief is sought afterconveyance on theground of a defectin the title of the vendor under a contract for the sale ofland. He said that, as applied inAngel v. Jay (1911) 1 KB 666: "It wouldmeanthat innocent people would be deprived of their right of rescission beforethey hadany opportunity of knowing they had it"(1950) 1 KB, at p 696 Themain purpose of the usual terms of a contract for the sale of landis to givethe purchaser an opportunityof knowing whether there are such defects in thevendor's title as will entitle him to rescind,to limit to a certain extenthisright of rescission for defects of title, and to preclude him from reliefif he does not exercisethe opportunity given him. Thetruth is, of course,that the "principle" applied in the cases cited is by no means an arbitraryone:it rests on a clear and reasonablebasis. Contracts for the sale of landpresent peculiar features of their own, which are clearlystated in cases towhich Mr. Voumardreferred us, of which may be mentioned Clare v. Lamb (1875)LR 10 CP 334, at pp 338, 339 andAllen v Richardson (1879) 13 Ch D 524,at pp539-541 It is the purchaser's business to investigate the title thoroughlybefore hepays his money, and the conveyance effectsa radical alteration inthe position of the parties, new express or implied covenantsgenerally takingthe place of the obligationsimposed by the contract. (at p199)

14. Here the contract incorporates the conditions contained in the fourthschedule to theProperty Law Act 1928 (Vict.). Clause3 of those conditionsrequires the purchaser to deliver his requisitions on title, if any, within aspecified time,and then providesthat all requisitions or objections not sodelivered shall be deemed to have been waived by him. The defect oftitle, ofwhich theappellant now complains, could have been made the subject of arequisition by him. It is true that the makingof a survey is theonly thingwhich could in this case have revealed the true position, and the appellantcould not have compelledthe respondents tohave a survey made. But he couldhimself, during the four months that elapsed between the making of thecontractand completion,have ascertained the true position by having a surveymade. The making of a survey is an ordinary precaution fora purchaser totake.Many purchasers, of course, decline to incur the expense involved in asurvey, and in many cases it may appearunnecessary, but,generally speaking,and in the absence of misrepresentation, a purchaser may fairly be regarded asomitting theprecaution at hisown risk. The terms of the contract would not,as we have said, have precluded the appellant from rescinding thecontractbeforeconveyance, but, having failed to take the opportunity which thoseterms gave him, and having taken a conveyance,he falls withinthe general andreasonable rule that equity will not interfere unless there is fraud or whatamounts practicallyto a total failureof consideration. There is nosuggestion of fraud, and it cannot be said that there was a failure ofconsideration.The appellantwould not, in our opinion, be entitled to reliefin equity even if the contract had been merely a contract for thesale ofland.The fact that the licence has been transferred as well as the land is anadditional factor against him, for the apportionmentofthe purchase moneyshows, on the one hand, that it was the principal part of the considerationfor that purchase money. On theotherhand, there is no suggestion that thelicence is in jeopardy because of the position with regard to the title to theland.It maybe in jeopardy if substantial improvements are not carried out,but that has nothing to do with this case, except so far asit suggeststhatthe appellant may have endangered the licence. There is no certainty in anycase that he will be able to re-transferthe licenceto the respondents. Noclaim is made for damages, and the appeal should, in our opinion, bedismissed. (at p200)

McTIERNAN, WILLIAMS AND WEBB JJ. This is an appeal by the plaintiff from ajudgment of the Supreme Court of Victoria (Martin J.)dismissing with costs asuit brought by the plaintiff claiming (1) a declaration that the agreement inwriting and conveyance hereinaftermentioned were entered into and executed bythe plaintiff and the defendants under a common mistake as to the existence ofa factaccepted by all parties as a basis or condition fundamental to thesetransactions, namely that the defendants were the owners ofthe whole of theland upon which the Bull's Head Hotel was erected, or which was used oroccupied in conjunction with that hotel;(2) a declaration that thesetransactions were void; (3) an order setting the agreement and conveyanceaside; and (4) an order forrepayment of the sum of 5,000 pounds by thedefendants to the plaintiff. The defendants, now the respondents, are theexecutor andexecutrix of the will of Louisa McNamara who died on 19thNovember 1954. At the date of her death the testatrix was the licenseeofhotel premises known as the "Bull's Head Hotel" situated at Grassy Flat nearBendigo and also the owner in fee simple of a roodof land being the whole ofthe land comprised in Crown allotment 15 of section O "Grassy Flat", parish ofSandhurst, county of Bendigo,being the land comprised in Conveyance No. 176,book 221, on which the hotel was supposed to be erected. (at p201)

2. On 2nd March 1955 the defendants, as her personal representatives, enteredinto a contract in writing to sell this land by thisdescription to theplaintiff "together with the Licensed Premises known as the 'Bull's HeadHotel' erected thereon", "The Victualler'sLicence issued for and in respectof the said Hotel and the Goodwill thereof", and the right title and interestof the vendors (ifany) in a permissive occupancy for 5,000 pounds, this sumbeing apportioned for the victualler's licence and goodwill 4,200 poundsandthe freehold premises 800 pounds. The contract provided for the purchaserpaying ten per cent of the purchase money as a deposit,for the balance of thepurchase money being paid into the hands of the vendor's solicitor three daysprior to the hearing by thelicensing court of an application for the transferof the licence to the purchaser, for this sum being held in trust pending thetransfer of the licence to the purchaser and for vacant possession being givenand taken on the granting of the transfer. The contractalso provided that itwas subject to the transfer of the licence being granted to the purchaser,that the obligation of the vendorsto convey the freehold premises and totransfer the licence to the purchaser should be simultaneous with theobligation of the purchaserto pay the whole of the moneys agreed to be paidby him, and that time should be considered to be of the essence of thecontractand of all conditions thereof. The contract also provided that theconditions in the fourth schedule to theProperty Law Act 1928(Vict.) shouldapply thereto subject to certain modifications. Condition 2 of the schedule,so far as material, provides that thevendor or his solicitor will at thewritten request of the purchaser or his solicitor within seven days from thedate of sale butat the cost and expense of the purchaser furnish within sevendays from the date of the request an abstract of title of the land.Condition3 provides for the production of the muniments of title in respect of the landsold, for an abstract of title and for themaking of requisitions andobjections thereto in writing within certain specified times. It also providesthat all requisitions orobjections not included in such writing shall bedeemed to be waived by the purchaser and that "in default of such requisitions(ifnone) and subject to such (if any) as are so delivered the purchaser shallbe deemed to have accepted title". Condition 4 conferson the vendor the rightto rescind the contract as therein mentioned if the purchaser makes arequisition or objection which thevendor shall be unable or unwilling toremove or comply with unless such requisition or objection is withdrawn.Condition 5 providesthat no mistake in the description measurements or areaof the land in or omission from the particulars shall invalidate the saleunless the vendor rescinds pursuant to the last preceding condition but ifnotified to the other party not less than three days beforethe day fixed forcompletion or within two months of the day of sale (whichever is the earlier)and not otherwise the same shallbe the subject of compensation. (at p202)

3. In the present case the plaintiff does not appear to have made anyrequisitions or objections to the title of the freehold. Heaccepted titleafter what his Honour called "a very cursory investigation of the chain oftitle". He did not have any survey made.The licence was duly transferred tohim on or about 24th June 1955 and on or about the same date the vendors bydeed (which for somereason not disclosed bears date 31st December 1955)conveyed to him the land comprised in conveyance No. 176, book 221, for anestatein fee simple. About the same date he entered into possession of thehotel and the balance of purchase money was paid to the defendants.(at p202)

4. After the plaintiff had entered into possession of the hotel, he appliedfor a renewal of the licence, but the licensing inspectorobjected to therenewal unless certain repairs and improvements were made to the hotelincluding the provision of a septic tank andit was in the course of a surveymade for the purposes of this work that the plaintiff discovered that part ofthe hotel was noterected on the land conveyed to him but on adjoining Crownland. The portion of the hotel erected on Crown land includes the wholeof twobedrooms, portion of two other bedrooms and portion of the lounge. The rest ofthe hotel, including two bedrooms, the bar,two adjoining parlours, and thekitchen is on the land conveyed. The plaintiff has therefore become thelicensee of the premises,the owner of the whole of the land comprised in theconveyance, and has been let into vacant possession of the whole of the hotelbuilding but part of the building is not erected on the land conveyed to himbut on adjoining land. Photographs of the hotel tenderedin evidence disclosea rather ramshackle old weatherboard building with a galvanised iron roof. Itwould probably not cost much topull down the portion that encroaches on Crownland and rebuild it so that the hotel would stand wholly on the land conveyed.Butthe contract describes the land sold as the land comprised in conveyanceNo. 176, book 221 "together with the Licensed Premises knownas the 'Bull'sHead Hotel' erected thereon" and Mr. Voumard, who appeared for the defendants,did not dispute that the contract wasone to sell licensed premises aspremises that stood wholly on that land. If the purchaser had refused tocomplete the contract onthe ground that portion of these premises encroachedon to the adjoining Crown land so that the vendors could not make title to asubstantial part of the land on which the building stood, questions would havearisen under the conditions of sale and under thegeneral law whether thepurchaser was bound to complete the contract with compensation or was entitledto rescind the contract andalso whether the vendor could have rescinded thecontract if the purchaser had objected to the title on this ground and hadrefusedto withdraw the objection. If these questions had arisen prior tocompletion and the vendor had sought to enforce the contract itis probablethat the court would have refused specific performance and decided that thepurchaser was entitled to rescind the contract.For, as pointed out in manycases of which Jacobs v. Revell (1900) 2 Ch 858 is one example, even wherethere is a condition for compensationyou must consider whether the purchaserhas got the subject matter he contracted to buy and, if he doesn't get what hecontractedto buy, he may be entitled to say that he will not havecompensation at all. But this interesting question need not be pursued becausethe plaintiff did not object to the title, no survey was made, and completiontook place. (at p203)

5. The plaintiff now claims to be entitled to set aside the contract andconveyance on the ground that neither would have been enteredinto but for thecommon mistake of himself and the defendants that the Bull's Head Hotel waswholly erected on the land sold. Hecontends that it was such a hotel that hebelieved he was buying and the defendants believed they were selling (what hiscounselMr. McInerney called a lawfully operable hotel, a hotel as a goingconcern). There was therefore a common mistake of a fundamentalnature as tothe substance of the property contracted to be sold. What was sold wassomething essentially different to what the partiessupposed it to be. Therewas an error in substantialibus, and the effect of such a common mistake is tomake the contract and thesubsequent conveyance both void or at least voidableso that the purchaser may sue the vendor for rescission of the contract andconveyance even after completion. A large number of authorities were cited tohis Honour on the question whether an executed contractcan be rescinded aftercompletion on this ground. After discussing these authorities his Honour said:"Accordingly the position appearsto be that, in the absence of fraud, acompleted contract may be set aside on the ground of mutual mistake only ifthe true factsare of such a nature that the agreement thereby purported to bemade is quite different in substance from what was supposed by bothparties tobe the case, as, for example, if both parties believed they were dealing indebentures secured in the assets of a companybut in fact ordinary shares inthat company were transferred by the vendor to the purchaser by mistake." HisHonour dismissed thesuit because he did not think the present case fellwithin this principle. He said that, while the plaintiff had not got all thathe and the defendants believed that he was getting, it could not properly besaid that thereby the identity of the subject matterof the contract wasdestroyed or that what the plaintiff got was quite different in substance fromwhat both parties believed hewas getting so as to enable him to say there wasno contract. It was therefore unnecessary to decide whether restitutio inintegrumwas possible because this question did not arise. (at p204)

6. The first question to consider is whether the doctrine that a contract canbe rescinded for common mistake can apply to the presentcase at all. Thesubject matter of the contract is the sale of the land comprised in conveyanceNo. 176 book 221. The contract statesthat the land is sold together with thelicensed premises known as the Bull's Head Hotel erected thereon. This is arepresentationthat the hotel premises stand wholly on that land. Theplaintiff does not allege that the defendants knew or should have known thatthe hotel stood partly off that land. The representation is at most aninnocent misrepresentation. The plaintiff does not claim toset aside thecontract now that it has been completed on the ground of innocentmisrepresentation. He relies on common mistake. Inone sense there is always acommon mistake where a vendor sells land to the whole of which he honestlybelieves he has a good titleand the purchaser honestly believes that if hecontracts to purchase this land he will get a good title to the whole of it.But ifthe vendor contracts to sell the land to the purchaser and thepurchaser contracts to purchase it, the fact that they would not haveenteredinto a contract but for such a common misapprehension does not avoid thecontract. The vendor contracts to sell the landon the basis that he has agood title to the whole of it and the purchaser contracts to purchase it onthat basis. If the vendorcannot make title he commits a breach of thecontract and, apart from special conditions, the purchaser is entitled torepudiateit. If the contract states that certain premises are erected on theland sold, that is a representation that the vendor will maketitle to land onwhich those premises are erected. The representation becomes a promisecontained in the contract and can no longerbe relied on as an independentground for rescission: Pennsylvania Shipping Co. v. Compagnie Nationale deNavigation (1936) 155 LT294 If the premises are not erected wholly on theland sold the vendor will fail to fulfill the promise or in other words willfailto make a good title to the whole of the land described in the contract.A purchaser who purchases land which is represented to havea building erectedthereon expects to obtain a complete building and not a building partlyerected on land to which the vendor cannotmake title. When the purchaserdiscovers that part of the building is not on the land he should object to thetitle. Such a misdescriptionis an objection to the title: In re Jackson andHaden's Contract (1906) 1 Ch 412; Horning v Pink (1913) 13 SR (NSW) 529; 30 WN144;Grace v Mitchell (1926) 26 SR (NSW) 330; 43 WN 12 If the contractcontemplates and makes provision for such a misdescription of theland soldhow can it be said that it is void or voidable for common mistake. This iswhat the present contract does. The obligationof the vendor under an opencontract is to prove his title strictly but open contracts are now rare andcontracts, as in the presentcase, usually contain stipulations relating tothe proof of title and giving the vendor the right to rescind the contract ifthepurchaser takes an objection with which he is unable to comply. Reallythere are three stages in the sale of land, first the makingof the contractof sale, secondly the interval between the making of the contract and itscompletion to allow the purchaser to investigatethe title, to survey the landand make any relevant inquiries as for instance as to tenancies and thirdlythe completion of the contractby the conveyance of the land and the paymentof the purchase money. It is in this interval between the making of thecontract andits completion that the purchaser has the opportunity ofsatisfying himself whether or not the vendor can make a good title to thewhole of the land described in the contract and if he cannot of exercisingsuch rights as are given to him by the contract or thegeneral law. Thecontract may, as in the present case, provide to some extent for the rightsand obligations of the parties wherethe vendor is unable strictly to performhis obligation to make a good title to the whole of the land sold. Condition 5of the fourthschedule provides that no mistake in the descriptionmeasurements or area of the land shall invalidate the sale unless the vendorrescinds pursuant to the last preceding condition. It may be that, in thepresent case, even with this condition in the contract,the court would nothave granted specific performance of the contract even with compensation atthe suit of the vendors if the mistakehad been discovered prior to completionand would have rescinded the contract if the purchaser had been unwilling tocomplete. Suchquestions could have arisen if the purchaser had objected inthe second stage but it would be useless to discuss them now becausetheplaintiff did not object to the title as he could have done and in accordancewith the third condition in the schedule must bedeemed to have accepted thetitle. Having accepted the title the plaintiff could have had the landsurveyed prior to completion tobe certain that the hotel was erected whollyon the land sold. But he neglected to do so. He proceeded blindly to completethe contract.As it has been said the contract contemplated and provided for amistake in the description of the land. It gave a right to compensationinthat event provided compensation was claimed at the proper time. But thecontention is that the contract, nevertheless, was voidor voidable because itwould not have been entered into but for the mistaken belief of both partiesthat the hotel building stoodwholly on the subject land. Such a mistakenbelief could not possibly avoid a contract which contemplates and provides forit. InBell v. Lever Bros. Ltd.[1931] UKHL 2; (1932) AC 161, Lord Atkin, in discussing theeffect of mistake upon the validity of a contract,after referringto Cooperv. Phibbs(1867) LR 2 HL 149, to which reference will be made hereafter, said:"Even where the vendor hasno title, thoughboth parties thinkhe has, thecorrect view would appear to be that there is a contract: but that the vendorhaseither committeda breach of a stipulationas to title, or is not able toperform his contract. The contract is unenforceable byhim but is not void"(1932) AC, at p 218 (atp206)

7. The peculiar nature of a contract for the sale of land, and in particularthe opportunity given to the purchaser of investigatingthe title and hisright to rescind the contract if the vendor fails to show a good title and hisalternative right if he so choosesto accept such title as the vendor has, andcomplete the contract either with or without compensation, places a contractfor thesale of land in a special category. Upon the execution of theconveyance the rights and obligations of the parties under the contractaremerged in the conveyance except in so far as the contract provides expresslyor impliedly that merger shall not take place -for instance where it isintended that a right to compensation given by the contract may be exercisedeven after completion: KnightSugar Co. Ltd. v. Alberta Railway & IrrigationCo. (1938) 1 All ER 266, at p 269 As a result the rights of a purchaseragainstthevendor, apart from those which arise under covenants for title,for quiet enjoyment etc. included in the conveyance itself orimpliedbystatute, are very limited. It is clear that a contract for the sale of landcannot be set aside on the ground that thepurchaserwas induced to enter intoit by an innocent material misrepresentation or on the ground that the vendorhas innocentlyconcealedsome defect of title after completion has takenplace. Actual fraud must be proved. A reference to a few of the many caseswherethis has been said will suffice: Wilde v. Gibson[1848] EngR 658; (1848) 1 HLC 605, at pp632, 633[1848] EngR 658; (9 ER 897, at pp 908, 909); Brownlie v. Campbell(1880) 5 App Cas925, at pp 937, 938; Soper v. Arnold (1887) 37 Ch D 96, at p 102;(affirmed(1889) 14 App Cas 429); Public Trusteev Duchy of Lancaster (1927) 1 KB 516,at pp 528, 529 The finality of the transactionafter conveyance has beenemphasised in manycases. See for instance Clare v. Lamb (1875) LR 10 CP 334,at pp 338, 339; Allen v.Richardson (1879) 13 Ch D 524, at pp 537 et seq;Joliffe v. Baker (1883) 11 QBD 255, at pp 265-267, 272, 273 It may be possibleinexceptional cases to obtain relief on the groundof common mistake after acontract for the sale of land has been completed. Butthe cases must be veryrare. They are unlikely togo beyond cases where there has been a totalfailure of consideration. One caseis where it is found, after completion,that thepurchaser and not the vendor is the owner of the land so that thepurchaser is reallypaying for his own property. In Bingham v.Bingham[1748] EngR 397; (1748)1 Ves Sen 126 (27 ER 934) (see also Belts Supplement Ves Sen Supp 79(28 E.R.462)) the plaintiff had contracted topurchaseland from the defendant, towhich the defendant had no title although he believed that he had, which wasthe property ofthe plaintiff.The defendant conveyed the land to theplaintiff by deed of lease and re-lease. It was contended that it was theplaintiff'sownfault as the title deeds had been produced to him and he hadhad time to examine the title and the maxim caveat emptor applied.Butit washeld that there was a plain mistake and a court would not suffer the defendantto run away with the money in considerationof the sale of an estate to whichhe had no right. This was a case where the mistake was so fundamental thatthere was a total failureof consideration. The plaintiff had paid to thedefendant the purchase money for land which was the property of the plaintiff.InCooper v. Phibbs (1867) LR 2 HL 149 there was also a total failure ofconsideration. The plaintiff had agreed to lease a fisheryof which he was,unknown to him, the tenant for life from the defendant who had no title at allto the property. In Seddon v. N.E.Salt Co. Ltd. (1905) 1 Ch 326 Joyce J,after referring to Wilde v Gibson[1848] EngR 658; (1848) 1 HLC 605 (9 ER 897); Brownlie vCampbell (1880)5 App Cas 925; Soper v Arnold (1887) 37 Ch D 96 and Kennedy v.Panama, NewZealand & Australian Royal Mail Co. (Ltd.) (1867)LR 2QB 580;held that the court will not grant rescission of an executed contractfor thesale of a chattel or chose in action ontheground of an innocentmisrepresentation. This principle was applied to an executedlease by theDivisional Court in Angel v.Jay(1911) 1 KB 666 and by Devlin J. in Edler v.Auerbach (1950) 1 KB 359 In Solle v. Butcher(1950) 1 KB 671, however, decidedsixweekslater, the Court of Appeal by a majority (Bucknill L.J. and DenningL.J., Jenkins L.J.dissenting) held that an executed leasecanbe set aside onthe ground that the parties were induced to enter into it by a commonmistake.Denning L.J. said that "The factthatthe lease has been executed is no bar tothis relief. No distinction can, in thisrespect, be taken between rescissionfor innocentmisrepresentation and rescission for common misapprehension, formany of the commonmisapprehensions are due to innocent misrepresentation;andCooper v. Phibbs (1867) LR 2 HL 149 shows that rescission is availableevenafter an agreement of tenancy has been executed andpartly performed. Theobservations in Seddon v. North Eastern Salt Co. Ltd.(1905) 1 Ch 326 havelost all authority since ScruttonL.J. threw doubt on them in Lever Bros. Ltd.v. Bell (1931) 1 KB 557, at p588 and the Privy Council actually set aside anexecutedagreement in Mackenzie v. Royal Bank of Canada (1934) AC 468 If andin sofar as Angel v. Jay (1911) 1 KB 666 decided that an executedlease couldnot be rescinded for an innocent misrepresentation, it wasin my opinion, awrong decision. It would mean that innocentpeople would be deprived of theirright of rescission before they hadany opportunity of knowing they had it. Iam aware that inWilde v. Gibson[1848] EngR 658; (1848) 1 HLC 605 (9 ER 897) Lord Campbellsaid that an executed conveyance could be set aside only on the groundofactual fraud;but this must be taken to be confined to misrepresentations asto defects of title on the conveyance of land" (1950)1 KB, at pp695, 696 InLeaf v. International Galleries (1950) 2 KB 86, however, both Evershed M.R.and Jenkins L.J. reserved theiropinionswhether Seddon v. N. E. Salt Co. Ltd.(1905) 1 Ch 326 was wrongly decided. We should certainly reserve our opinionon thispointas it does not arise directly in the present case. In the caseof the sale of land at any rate, relief has never been givenon theground ofinnocent misrepresentation after the contract has been executed and it isdifficult to see why common mistake, unlessitleads to a total failure ofconsideration, should be in any different position. There are dicta in thecases that relief can begivenafter the contract has been completed wherethere is a common mistake upon a material point although there is only apartialfailureof consideration: Jones v. Clifford (1876) 3 Ch D 779; Bettyesv Maynard (1882) 46 LT 766, at p 769; Debenham v Sawbridge(1901)2 Ch 98, atp 109 But the proper principle appears to be that, in the case of a completedcontract of sale, rescission isonly possibleon the ground of common mistakewhere, contrary to the belief of the parties, there is nothing to contractabout asin Bingham v.Bingham[1748] EngR 397; (1748) 1 Ves Sen 126 (27 ER 934) and Cooper vPhibbs (1867) LR 2 HL 149 Contracts for the sale of personalproperty havebeen saidto be void for mistake where the property has ceased to exist at thedate of the contract. Instances of suchcontracts will be foundin the speechof Lord Thankerton in Bell v. Lever Bros. Ltd.[1931] UKHL 2; (1932) AC 161, at p 236 InScottv Coulson (1903)1 Ch 453 (affirmed (1903) 2 Ch 249) both partiessupposed the assured to be alivewhereas he was dead. In Couturierv. Hastie[1856] EngR 713; (1856)5 HLC 673 (10 ER 1065) the cargo sold was held not to have existed atthe date of the sale. In Strickland v. Turner[1852] EngR 199; (1852) 7 Ex 208(155 ER 919) theannuitant was in fact dead at the date of the sale of the annuity. These areall cases where thesubject matterwas not in existence at the date of thesale. But even in these cases the contract is probably not void but merelyunenforceable.The one party is unable to supply the very thing that the otherparty contracted to take and therefore the contractis unenforceableby theone if executory, while if executed the other can recover back money paid onthe ground of total failureof consideration:McRae v. Commonwealth DisposalsCommission[1951] HCA 79; (1951) 84 CLR 377, at pp 403-408 But it would be hardto find ananalogous example inthe case of land because land does not ceaseto existunless one can take the somewhat fanciful examplesuggested by Richards C.B.in Hitchcock v. Giddings (1817) 4 Price 135(146 ER 418) of an estate sweptaway by a flood. In Bettyesv. Maynard (1882) 46 LT,at p 769 Kay J. referredto Earl Beauchamp v.Winn (1873) LR 6 HL 223 as a case of a completed contractbut, with all respect tothat learned judge, the transaction does not appearto have proceeded beyond a contract for the exchangeof two properties. InSollev. Butcher (1950) 1 KB, at p 695 Denning L.J. referredto the PrivyCouncil setting aside an executedagreement in MacKenzie v. RoyalBank ofCanada (1934) AC 468 but, with all respectto that learned judge, the PrivyCouncil doesnot seem to have done more thanset aside a contract of guaranteeon the ground ofa material misrepresentation of fact. Shares werehypothecated to the bank assecurity for the performance of that contract buttherights of the parties depended on the guaranteeand therefore rested inthecontract. Neither of these cases appears really to supportthe conclusionthat an executed contract forthe sale of property canbe rescinded forinnocent material misrepresentation or formaterial common mistake. The onlyauthorityfor that principle appearsto be the decision of the majority of theCourt of Appealin Solle v. Butcher (1950) 1 KB 671 and fromthe scope of thatdecisioncompleted contracts for the sale of land are carefully excluded.Allthat Scrutton L.J. said about Seddonv. North Eastern Salt Co.Ltd. (1905) 1Ch 326 in Lever Bros Ltd v Bell (1931) 1 KB 557,at p 588 was that he reservedliberty toconsider the decision sofar as it decides that executed contractscannot be rescinded forinnocent and material misrepresentation.He did notseriously examineits correctness. The decision of the Court of Appeal wasreversedon appeal by the House of Lords sothat it is difficult to seewhythe observations of Joyce J. in Seddon's Case (1905) 1 Ch 326should have lostall authority simplybecause Scrutton L.J. threwdoubt upon them. In Legge v.Croker (1811) 1 Ball & B 506 MannersL.C. held that an executed leasecouldnot be set aside on theground that the lessee had been induced to enter intoit by a materialbut innocent misrepresentation.This decision seems to beinconflict with that of the Court of Appeal in Solle v. Butcher (1950)1 KB 671yet Legge v. Croker (1811)1 Ball & B 506 whichwas followed in Angel v. Jay(1911) 1 KB 666 received the approval ofLord Selborne L.C. in Brownlie v.Campbell (1880) 5 App Cas,at pp 937, 938 At least it can be said that in thecase of a sale ofland nothing has occurred to throwdoubt on the statement ofCozens Hardy J., as he then was, in In re Tyrell; Tyrell v. Woodhouse(1900)82 LT 675 that "counsel havenot been able to discovera single instance ofsetting aside a purchase after conveyance exceptbecause of fraud or totalfailureof consideration as in Binghamv. Bingham[1748] EngR 397; (1748) 1 Ves Sen 126 (27 ER934) and Hitchcock v. Giddings (1817) 4 Price 135 (146 ER 418)In Jones v.Clifford (1876)3 Ch D 779the court carefully guarded against decidinganything on this point. If I were to say mutualmistake, not being an errorinthe substanceof what was purchased, justified rescission, every purchaserwould be applying to gethis purchase set aside. Iam not prepared tobe thefirst to give such a decision, and my own view is that there is nojurisdictionto set aside the purchase"(1900) 82 LT 675,at p 675 In thepresent case there was at most a partial failure of consideration. Thedefendants have been ableto convey the wholeof the land comprised inconveyance No. 176, book 221 on which a large part of thehotel is erected, togivethe plaintiff vacantpossession of the hotel and the licence has beentransferred to him. The contractbetween the parties was nevervoid. It was atmostliable to be set aside in equity not on the ground of mistake but forfailureby the vendors to show a goodtitle. A vendor neednot have a goodtitle at the date of the contract, it is sufficient if he canshow that he canmake title atthe proper time forcompletion. A vendor can enter into a validcontract to sell land although hehas no title at all. If he canenter intosuch a contractwhen he knows that he has none, how can it be said that thecontract isvoid if he mistakenly believesthat he has a good title?Thepurchaser can waive, if he chooses, all objections to the title andcompel thevendor to execute aconveyance of the land evenif he has no title to it atall. The purchaser may think it worth hiswhile to complete the purchasesimply to obtain vacant possessionof the land taking his chance of itripening into a possessorytitle in the future, or he maybe prepared to takethe chance of thevendor acquiring a good title in the future in which caseequitywould compel the vendor tomake good his promise to convey the landtothe purchaser when he subsequently acquired it. "A graft intothe old stock"as the Masterof the Rolls called it in Seabournev. Powel[1686] EngR 301; (1686) 2 Vern 11,at p 12[1686] EngR 301; (23 ER 619, at p 620) as longago as 1686. The principle isstated inSmith v. Osborne[1857] EngR 828; (1857) 6 HLC 375, at p 390[1857] EngR 828; (10 ER 1340, at p 1347) (at p211)

8. The present case on analysis falls completely within the principle that,after the contract has been completed by the executionof the conveyance andthe payment of the purchase money, the purchaser, apart from rights arisingfrom the deed of conveyance orsubsisting under the contract which do notmerge in the deed, has no remedy at law or in equity in respect of any defectseitherin the title to or in the quantity or quality of the estate: Brett v.Clowser (1880) 5 CPD 376, at pp 386-389 The conveyance havingbeen executedthe purchaser must take all the consequences: M'Culloch v. Gregory (1855) 1 K& J 286, at p 291[1855] EngR 180; (69 ER 466, atp 468)(at p212)

9. The appeal should be dismissed with costs. (at p212)

ORDER