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Decisions of the Superior Courts of New South Wales, 1788-1899

Stuart v. Foulkes [1847] NSWSupC 54

conveyancing, fraud

Supreme Court of New South Wales

Stephens C.J., Dickinson and Therry JJ, 31 March 1847

Source: Sydney Morning Herald, 1 April 1847, in Supreme Court Collection, Vol. 1, pp 101-102


Special Banco Sittings.

Before their Honors the three Judges.


Sir ALFRED STEPHEN, Chief Justice, pronounced judgment in this case as follows:-

This is an appeal by the defendants, Edward Foulkes and Lucy, his wife, against a decree made on the 3rd day of December, 1845, by the late Primary Equity Judge, Mr. Justice a'Beckett; whereby a certain sale and conveyance by the said Lucy Foulkes, (then Lucy Hamilton) of a house and land, purchased from her by the plaintiff in the year 1840, were declared to be fraudulent and void-and the same conveyance was accordingly, together with a mortgage on the property for securing part of the purchase money, executed by him, ordered to be delivered up to be cancelled. The appeal was argued before us on the 24th of November last, by Mr. Gordon for the plaintiff, and by Mr. Donnelly and Mr. Windeyer for the defendants; and the Court then took time to consider.

The facts, which are fully stated in the judgment appealed from, (Res. Judg. Eq. 1845 p. 70,) lie in a very narrow compass. The property belonged to Mrs. Foulkes's former husband; who bequeathed it to her, by a will attested by one witness only. After some negociations with other persons, Mrs. Foulkes contracted to sell it to the plaintiff; to whom it was accordingly conveyed-she taking a mortgage for the balance of the purchase money, with the usual covenant therein for payment. In the conversation which terminated in the contract, it being observed that the deeds should be left with an attorney, to prepare the conveyance, the plaintiff said he had no attorney; a friend of Mrs. Foulkes's who was present, suggested a Mr. Clark; she said that she had no objection; and they both then agreed, that with him the deeds should be left. Mr. Clark states that he was a stranger to both parties; till the papers were placed in his hands, to prepare the conveyance. He received among these a deed, and an extract from a will; and he could give no further account of the matter. No abstract was prepared; the conveyance, being executed, was paid for by the plaintiff; and then it was handed over, with the documents and mortgage to Mrs. Foulkes; the plaintiff taking possession of the property, which he has ever since retained. He has also paid off a considerable portion of the mortgage money. He states, however, that he was in ignorance until recently, of the defect in Mrs. Foulkes's title; and having now discovered it, he charges her with concealment of the fact from him, and seeks to be relieved from the purchase, and the mortgage consequent thereon.

It appears, that Mrs. Foulkes spoke of the property, in her treaty with the plaintiff, as her own; but there was no evidence that she knew it was not so. Some evidence was received tending to fix her with that knowledge; but it failed. In Mrs. Foulkes's answer, as we understand it, she distinctly denies that she possessed such knowledge. There is no evidence that Mrs. Foulkes used any means to conceal the state of her title, or was guilty of any misrepresentation, on any occasion, that was to her knowledge false. The conveyance describes her, however, as executrix and sole devisee under her husband's will; and it recites (though not saying how) that she is seized of the property in fee. On these representations, such as they are, the judgment below is founded. That Mrs. Foulkes denied having known them to be untrue, and that there was at least no adequate testimony to impeach that denial, is admitted by his Honor; who, indeed goes a step farther in her favor, by observing that there were circumstances tending to support it. So that, in effect, the sole question for our determination is this: whether, considering that Mrs. Foulkes had in fact no title, the circumstance of her negociating and dealing as if she had, and thereby inducing the purchaser to accept a conveyance, and give a mortgage and covenant for the purchase money, constitutes an equity in the latter, entitling him to be relieved from his bargain.

Notwithstanding our great respect for the learned and very able Judge, by whom that question was decided in the affirmative, we have been unable to bring our minds to the conclusion, that such an equity can be established. His Honor observed, that the transaction fixed the vendee with an obligation, which he never intended, and which Mrs. Foulkes knew he never intended, to incur. He thought it unconscientious, therefore, in one whose misrepresentation (whether innocent or not) led to such a result, to seek to enforce it. His Honor thought it no sufficient answer, on the part of the defendant, that Stuart might have found out the defect, had he inquired; for that he was entitled to rely on her representation; and it was not to be tolerated, that she should now object to him, as an act of negligence, that he had believed it to be true-as under the circumstances he might fairly suppose it to have been. In support of his conclusions on these points, the learned Judge refers to Bingham v. Bingham, 1. Ves. 126, and Belt's Sup. 79; Edwards v. M'Leay, Coop. 308, and 2. Swans. 287; Gibson v. D'Este, 2. Y. and C. Ch. 542; and Hitchcock v. Giddings, 4. Price 135. We have, therefore, looked into these cases. If they bear out the position for which they were cited, two well known and most important maxims, as it appears to us, (the one, that ignorance or mistake of law excuses not, the other that the law aids those who are vigilant, not those who slumber over their interests,) will be violated. The first and last of the cases, certainly, would appear to trench on both those principles. They are, however, if of binding authority, distinguishable from the present. In Bingham v. Bingham, though the plaintiff's ignorance was, apparently, the main ground of relief, there seem to have been misrepresentation, and persuasion. Both, certainly, are charged by the bill: with the pressure of an ejectment, in addition. And the persuasion, supposing it to be have existed, was by the defendant's own scrivener and conveyancer. But we conceive neither that case, nor Hitcock v. Giddings, to be a safe or received authority; and each is opposed to almost every other of its class. Ignorance of the law, Mr. Fonblanque says, in his treatise on Equity, vol. 1, p. 119, will in general not affect agreements, nor excuse from the legal consequences of acts. After citing this, Mr. Justice Story enumerates cases in support of it; and adds "it is a little difficult to reconcile these with the doctrine in Bingham v. Bingham," (1 Eq. Jur. 99.) In a subsequent page, again questioning that case, he suggests (p.111) that "there were probably some circumstances in it material to the decision, which have not reached us." Sir Edward Sugden offers no other remark on the case, than that "the authorities are certainly not easy to be reconciled." (1 V. & P. 386.) But he introduces an observation of Lord Redesdale, from 2 Sch. and Lef. 101, on the case put of a man taking a lease of his own estate, that if it were a case of mere ignorance, he should find a great difficulty in holding that a Court of Equity would interfere. On Hitchcock v. Giddings, Sir Edward Sugden is more decided. In that case, a man sold a remainder expectant on an estate tail, both parties being ignorant that he had no title; the tenant having barred the remainder by suffering a recovery. The Chief Baron held, that the purchaser was entitled to relief; and he ordered the bond, which had been given for the purchase money, to be cancelled. Sir Edward Sugden says-"That was a strong decision. The purchaser might have ascertained the fact by search." And, in a note, he states that Lord Eldon had expressed considerable doubt, about the doctrines in that case. (1. V. & P. 389., and 2. ibid. 43.) It is to be observed, however, that the ignorance in the last case was of a matter of fact. Both parties were apprised, that a recovery would bar the remainder; but neither knew, that one had then been actually suffered. It may be observed too, that in that case there was no consideration whatever, for the bond given. The thing supposed to have been sold, had at that time no existence; and so, there was nothing bought, and nothing was possessed, or delivered. Here, however, was a contract executed, on a mistake as to matter of law; and the land, which was then in the vendor's possession, was handed over to the vendee, by whom it has been (for aught that appears) ever since enjoyed.

The cases of Edwards v. M'Leay, and Gibson v. D'Este appear to us to establish the positions, contended for by the defendant's counsel; that, in a case of this kind, in order to defeat an executed contract, between vendor and vendee, there must have been either wilful misrepresentation, or fraudulent concealment, or there must have been no knowledge on the part of the person said to be deceived, of the fact misrepresented or concealed, and no means accessible to him of acquiring such knowledge. The former case was one of deliberate and intentional concealment, by the vendors, of a fact materially affecting their title, and which the purchaser had no means of discovering. This case has always been considered one of the first impression; but its authority has never, that we know of, been questioned. Sir W. Grant there says-"It certainly cannot be contended, that the insufficiency of a title, even when producing actual eviction, necessarily furnishes a ground for claiming restitution of the purchase money. By our law, a vendor is in general liable only to the extent of his covenants." He proceeds-"Whether it would be a fraud to offer as good, a title which the vendor knows to be defective in point of law, it is not necessary to determine. But, if he knows and conceals a fact, material to the validity of the title, I am not aware of any principle on which relief can be refused to the purchaser." On that ground, accordingly, not that there had been a misrepresentation, but an intentional and wilful one,--with the remark further, that the purchaser had no means afforded him of inquiring, the relief asked was afforded. In affirming the decree, Lord Eldon couples both these circumstances together, it will be seen, (2 Swanst. 289,) as furnishing the grounds on which, in his opinion, it was to be supported. And, indeed, without such limitations, the doctrine caveat emptor, which the Courts have always been so anxious to uphold with a firm and jealous hand, would be at an end. The case of Gibson and D'Este is of the same character; and, in fact, to precisely the same effect. There was a wilful concealment, in that case, by the defendant or her agents, of the existence of a right of road, over the property purchased; and the purchaser had neither knowledge, nor the means of knowledge, of that fact. That these circumstances all existed in the case, and were taken by the Vice-Chancellor into account, in setting aside the sale, will be apparent from a perusal of the observations, in pages 558, and 570, of his judgment. His Honor refers to the cases at law, as showing that fraud in a moral sense, or the presence of a corrupt motive, was not necessary; where there was a representation, false to the knowledge of the party making it. He dwells especially on Polhill v. Walter, 3 B. and Ad. 123, where such a misrepresentation was holden to sustain the action; while it was expressly admitted, that no liability would have been incurred, had the defendant believed his representation to be true.

In this last case, of Gibson v. D'Este, the Vice-Chancellor adds an important explanation, as to the phrase means of knowledge. His Honor holds it not to be enough, that the purchaser might possibly have learned the truth, by inquiry. He thinks that there should be some circumstance, sufficient, considering what the seller represented, to warn him of the propriety of such an inquiry. Now, applying that principle to the present case; how can we say that, having regard to what Mrs. Foulkes represented, there was not enough to warn the plaintiff of the propriety of making inquiry? It may be, that she knew the will was attested by one witness only. The learned Judge has conceded, however, (and we agree with him,) that she may not have known the importance of that fact; or, at least, its consequences. In her ignorance, then, of a mere matter of law, she describes herself as her husband's sole devisee, and states that she is seized in fee of the property. The will, by which she thus claims to be devisee, is mentioned in the plaintiff's conveyance; the attorney has the deed or deeds, showing the title of her husband; and he has an extract from that will. It appears clearly to us, that there was here ample matter to put the purchaser on inquiry; ample, to suggest to him the propriety of that inquiry. We have adopted the conclusion of His Honor, that the representations thus made induced Stuart to accept that conveyance. It may be, however, that he was as well aware as Mrs. Foulkes, (if indeed she was aware,) that there was but one witness to the will; and there are authorities to show, that a person with his means of knowledge, may fairly be presumed to have, in fact, possessed that knowledge. We will refer to three only; Clapham v. Shillito, 7. Beav. 149; Neesom v. Clarkson, 2. Hare. 173; and Jackson v. Rowe, 2. Sim. and St. 475. In the last of these, the Vice-Chancellor in effect holds, that every purchaser is presumed to have investigated, and known, his vendor's title. Every purchaser, says his Honor, is bound to use due diligence in the investigation of the title, before he accepts a conveyance. In the second case, Sir James Wigram states the rule to be clear, that where one deed is referred to by another, the person who claims under the latter is bound, at his peril, to ascertain the contents of the one referred to. On this point may be mentioned, also, Davies v. Thomas, 2 Y. and Coll. Exch. 234. In the first of the cases, Lord Langdale observes-"If the means of investigation be at hand, and the attention of the party receiving the representation be drawn to them, the circumstances of the case may be such, as to make it incumbent on a Court, to impute to him a knowledge of the result, which on due inquiry he ought to have obtained; and thus, the notion of reliance, on the representations made to him, may be excluded."-After all, however, in the present case, if the plaintiff did rely on the representations made, the fact amounts only to this; that both being therein equally ignorant, he chose to be satisfied with her opinion, (or that of her and his attorney,) on a point of law: as to which the rule is, that ignorance excuses or releases no one. And, had it been shown, that the representation in that matter was false to her knowledge, no case has been cited, but that from the Exchequer, to show that the plaintiff's reliance on it would have protected him. There was the will to consult:--if not in the attorney's hands, it was accessible in this Court; and he was bound, at his peril, to know its effect and operation. To hold otherwise, would be to give the rule of caveat emptor, (in our opinion a most wholesome and valuable one) a very narrow range and operation indeed; and to enable a purchaser, when it may suit his convenience, and especially where his speculation may have proved an unprofitable one, to defeat the most deliberate engagements, and inflict on his vendor a grievous wrong.

We have spoken of Mr. Clark, as the attorney of both these parties; but, if his employment were to be taken as that of one only, we should rather regard him as exclusively the attorney of Stuart, than that of Mrs. Foulkes. It is the business of the purchaser, ordinarily, to prepare his own conveyance; and that was in fact the only duty, according to the evidence, entrusted to Clark. He was a stranger alike to both parties; he does not appear to have consulted with Mrs. Foulkes, or she with him, on any matter connected with the sale; she gives him the papers, and says he is to draw the conveyance; and, when it is drawn, it is executed, and Mr. Stuart pays his charges. In all this we see nothing to constitute Clark peculiarly her attorney; but rather the reverse. We certainly feel no difficulty in holding that whatever knowledge he acquired, or might and ought to have acquired in the transaction, will and does at least as much affect the one party, as the other. It appears to us little to the purpose, that Stuart never troubled himself to see this attorney, till the conveyance was ready for execution. The nomination of Mr. Clark was in his presence; it was assented to by him; and, on the assumption that he trusted to Mrs. Foulkes, that she had the title she affected to have, and so made no inquiries, or thought none necessary, he has certainly no one to blame, for his supineness, his indifference, or his folly, but himself. Were it necessary to enter into that question, we might suggest a doubt whether the assumption itself has not, in fact, been too hastily made. Where both parties have equal knowledge, and means of acquiring knowledge, and equal skill, (and such we infer is the state of facts here,) "it is not easy to presume," says Lord Langdale, in the case cited from Beavan, "that representations made by one would have such, or any influence upon the other." We have, however, dealt with this case, on the footing most favourable to the plaintiff; conceiving it to be the safer ground, on which to rest our decision, that reliance on a seller's representations, in a case of this kind, and under circumstances such as those which it presents, affords the purchaser no protection.

The following authorities, independently of any others, are in our opinion quite decisive, in favour of the defendant. Sir Edward Sugden thus states the law, as to a purchaser's rights in cases of this nature. "Generally speaking, a purchaser-after a conveyance-has no remedy, except upon the covenants he has obtained; although evicted for want of title. However fatal the defect of title may be, if there is no fraudulent concealment by the seller, the purchaser's only remedy is under the covenants." (1. V. and P. 392). Again; in page 10. "With the exception of a vendor (or his agent) suppressing an incumbrance, or a defect in the title, it seems clear that a purchaser cannot obtain relief against a vendor, for any incumbrance, or defect of title, to which his covenants do not extend. Therefore, if a purchaser neglect to have the title investigated, or his counsel overlook any defect in it, he appears to be without a remedy." In another place he says, "If a purchaser neglect to look into the title, it will be considered as his own folly; and he can have no relief. It has even been laid down, that if one sells another's estate, without covenant, or warranty for the enjoyment, it is at the peril of him who buys; because, the thing being in the realty, he might have looked into the title." (Ibid. 2, p. 44). And in p. 426 he adds-"It seems that, if the conveyance be actually executed, the purchaser can have no relief, although the money be only secured." In support of these positions, the last excepted, Sir Edward Sugden refers to several cases; of which we will mention two only-the latter being, as it strikes us, almost identical with the present. In Bree v. Holbech, Doug. 630, the plaintiff claimed to be repaid the money advanced by him, on the assignment of a supposed mortgage, on the ground that the seller had nothing whatever to transfer; the mortgage assigned, or professed so to be, being a forgery. In the assignment, there was (as here) a representation that the assignor had a title. But the Court said, that it was incumbent on the plaintiff to have looked to the goodness of the title; and they held, that he could not recover. In Urmston v. Pate, 4 Cruise Dig. 60, and cited in 3 Ves. 235, (2. Sug V. P. 425,) the facts were as follows. The defendant conceived himself to be entitled to the moiety of an estate, lapsed by the death of one Ladbroke, as the latter's residuary devisee. He accordingly joined the parties entitled to the other moiety, in selling the estate to the plaintiff. The conveyance recited the original devise, and subsequent instruments. Shortly afterwards the purchaser discovered, that the moiety supposed to belong to Pate, was by law vested in the heir of the first devisor; and he then filed a bill, praying to have the money paid Pate restored to him. But the vendor was holden, on demurrer, entitled to retain it.

We will add yet a few passages from another most learned writer, Mr. Justice Story. Treating of the equity jurisdiction, to relieve parties in cases of mistake, he says-"The presumption is, that every person is acquainted with his own rights, provided he has had a reasonable opportunity to know them. " (1 Eq. Jur. 99.) But if by reason of a mistake as to the law, the party really was not acquainted with them, Mr. Justice Story goes on to show that he will not therefore stand absolved. "Agreements entered into in good faith," he observes, "but under a mistake of the law, are generally held valid and obligatory on the parties." ( Ibid. 100, and the numerous cases cited there, and in p. 98.) He examines the cases, which are supposed to be exceptions from the rule; and he remarks that all or nearly all of them rest on mixed considerations-not simply on mistake or ignorance of the law. "Many will be found to have turned, not upon the consideration of a mere mistake of law, stripped of all other circumstances, but upon an admixture of other ingredients, going to establish misrepresentation, imposition, undue confidence, or influence, mental imbecility, or that sort of surprise, which equity regards as a just foundation for relief." (Pages 105-110, 122.) Then, passing on to cases of mistake, or ignorance, of matters of fact Mr. Justice Story states the ground of the distinction to be, that men cannot be presumed, in all cases, to be acquainted with them; though every man is supposed to know the law. But he adds and dwells on the qualification which we have noticed, that the mistaken or unknown fact was one, which the party seeking protection had not the means, by reasonable diligence-when put on the inquiry-to get notice of. "For if, by such diligence, he could have obtained knowledge of the fact, equity will not relieve him." (P.129-133.) See also Pickering v. Dowson, 4 Taunt. 779.

In Pasley v. Freeman, 3. T. R. 51, the well-known leading case on the subject of actions for deceit, Lord Kenyon observes-"Undoubtedly, where the common prudence and caution of man are sufficient to guard him, the law will not protect him in his negligence." He then expressly instances the case of a purchase of land. "A person does not have recourse to common conversations, to know the title of an estate which he is about to purchase; but he may inspect the title deeds; and he does not use common prudence if he rely on any other security." On this principle, observes Mr. Smith, (2 L. C. 69.) that the law is not indulgent to negligence, was decided in the case of Priestley v. Fowler, 3 M. and W. 6. It is true, that in Kelly v. Solari, 9 M. and W. 54 followed by Bell v. Gardiner, 4 M. and G. 25, it has been held that, in cases of mistake or forgetfulness of facts, the circumstance of there being means of knowledge, accessible to the party, will not prejudice. But these are cases where the ignorance has been as to facts. In no one case, has ignorance or mistake of the law been holden a protection. Every man, said Lord Kenyon, in Bilbie v. Lumley, 2 East. 469, "must be taken to be cognizant of the law; otherwise, there is no saying to what extent the excuse of ignorance may be carried. It would be urged, in almost every case." Mr. Justice Story suggests in one place, (1 Eq. Jur. 109,) that mistakes respecting a man's title, may rather be considered mistakes on a question of fact, than law. In some cases this may be so. But a mistake, as to the operation of the will in this case, purporting to devise lands, but having the attestation of one witness only, seems to us to have been plainly a mistake on a matter of law, and nothing else. If the fact of there being but one witness was known, as it ought to and might have been known, to the purchaser, there was then nothing left but a question of law, on which mistake could have arisen. To say that it was the mistake of a fact, because it was a question of fact whether the seller had a title, or not, would be a quibble merely. Here, according to our clear apprehension of this matter, the defendant was fairly impressed with a belief, (or it is not shown, that she was otherwise than impressed with the belief,) that she had a right and power to sell this property, which undoubtedly her husband meant to leave her; and she innocently misrepresents to a purchaser that she has that power. On what principle can it be said, any more than in the many cases, mentioned in the note to Marriott v. Hampton, (2. Smith's L. C. 242. and see his observations in p. 244,) that under such circumstances it was inequitable in her, to complete the sale? But, if it was not, as we think it certainly was not, it cannot be against conscience in her, to retain or enforce payment of the money now. And, so regarding the defendant's position, and considering the plaintiff, on the contrary, as a person seeking to profit by his own ignorance, or his own negligence, we are of opinion that the decree in his favour must be reversed.

The Bill is consequently dismissed; and since it charges fraud, which the plaintiff has entirely failed to establish, it must be dismissed with costs. The defendants will not, however, have the costs of the Appeal.

Published by the Division of Law, Macquarie University