The purchaser of land had not completed and sought return of the deposit paid claiming default by the vendor, or alternatively under section 49(2).
Held: He was entitled to the repayment of the deposit on the first ground. The court went further to hold that, even if the purchaser had been at fault, section 49(2) was wide enough to enable the court to grant relief, giving a broad range of action.
Megarry J said: ‘In its 50 years of life, this section has remained remarkably quiescent. There are few authorities on it. From Charles Hunt Limited v Balmer, Finkielkraut v Monohan and James Macara Ltd. v Barclay, it appears, as one might expect, that the jurisdiction is discretionary and that it is to be exercised where justice requires it, but it will not be exercised so as to deprive a purchaser of the deposit which he is legally entitled to recover. This sub-section is essentially one that is available for use in mitigation of the vendor’s right at law to forfeit the deposit: see Williams’ Contract of Sale of Land (1930), pp. xv.94. Mr Lightman, basing himself mainly on Galbraith v Mitchenhall Estates Ltd, and the authorities there cited, contended that the jurisdiction under section 49(2) should only be exercised in favour of one party if there was unconscionable conduct by the other, but I do not think that what is appropriate in relation to any alleged equity of restitution provides any reliable touchstone for the exercise of the statutory jurisdiction conferred by section 49(2). That jurisdiction is, I think, exercisable on wider grounds than that, including a general consideration of the conduct of the parties (and especially the applicant), the gravity of the matters in question and the amounts at stake: see Shiloh Spinners Ltd v Harding which, though on a quite different point, provides a helpful analogy. The jurisdiction is, of course, statutory and is not the product of equity, but its discretionary character in relation to deposits on the sale of land makes it at least akin to equitable relief against forfeiture. A purchaser who does not claim rescission or is unable to establish a sufficient case for it may nevertheless recover his deposit by suing for its return and making out a proper case under the subsection.’
Megarry J VC
 30 P and CR 328
England and Wales
Applied – Universal Corporation v Five Ways Properties Limited CA 1978
The purchaser had failed to complete, notwithstanding the service of a notice to complete. The purchaser a Nigerian company suffered a delay in obtaining funds due to a change in the exchange control regulations. There was no attempt to exclude . .
Cited – Aribisala v St James Homes (Grosvenor Dock) Ltd ChD 12-Jun-2007
The parties had agreed in a contract for the sale and purchase of land to exclude the application of section 49(2). The buyer had failed to comply with a notice to complete.
Held: The parties cannot contract out of section 49(2). The . .
Cited – Cole v Rose 1978
The vendor had purported to rescind the contract and retain the deposit, while selling to another purchaser at a higher price.
Held: The purchaser was entitled to return of the deposit, because the notice to complete had been ineffective. . .
Cited – MIDILL (97Pl) Ltd v Park Lane Estates Ltd and Another CA 11-Nov-2008
Refusal to return Land Contract Deposit
The court was asked as to whether a seller could retain a deposit paid by the claimant on a sale where contracts had been exchanged but the buyer had proved unable to go ahead.
Held: The appeal against refusal of return of the deposit failed. . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 May 2022; Ref: scu.267649