The buyer agreed to buy a house when the developer had finished 300 houses on the site, but now sought return of his deposit.
Held: The developer’s appeal against an order for the return of the deposit failed.
Williams LJ said: ‘The lien which a purchaser has for his deposit is not the result of any express contract: it is a right which may be said to have been invented for the purpose of doing justice. It is fiction of a kind which is sometimes resorted to at law as well as in equity. For instance, when an action is brought for money had and received to the use of the plaintiff, it is not true that the money has been so received, but that is the way in which the law states the case in order to do justice. When Lord Westbury in Rose v. Watson speaks of a ‘transfer to the purchaser of the ownership of a part of the estate corresponding to the purchase-money paid,’ and Lord Cranworth speaks of the purchaser being exactly in the same position of a mortgagee of the estate to the extent of the purchase-money which he has paid, those expressions are merely verbal vehicles to carry the right which justice demands that the purchaser should have. Having read the report of Rose v. Watson, I must say that, speaking for myself, I agree with Mr. Brinton to this extent, that the decision does not expressly carry the purchaser’s lien beyond a case in which the contract has gone off through the default of the vendor.’
Stirling LJ said: ‘It is, I think, quite true, as Mr. Brinton has contended, that the question of the existence of the purchaser’s lien for his deposit arises in the present case in circumstances which differ from those of all previous reported cases. The contract has here been brought to an end, not by any act or default of the vendor, but by reason of the purchaser’s exercising a power of rescinding it which is reserved to him by the contract itself. This does not seem to have occurred in any previous case. Nevertheless, in the judgments in the two leading cases on the subject, Wythes v. Lee and Rose v. Watson, the rule is stated in terms which cover the present case. And, if we look at that which is really the foundation of the doctrine, namely the desire to do justice as between vendor and purchaser, it appears to me that reason applies no less forcibly in the present case than in the ordinary case in which the rescission of the contract takes place by reason of some default on the part of the vendor. In a case in which the vendor had rescinded under a power reserved to him, it would, I think, be absolute injustice if the purchaser were not allowed to have a lien for the purchase-money which he had paid, and by which was the security on his part for the performance by him of the contract. I think also the justice of the case requires that the purchaser should have a lien when the contract reserves to him a power to rescind.’
Williams LJ, Stirling LJ
 1 Ch 835
England and Wales
Appeal from – Whitbread and Co Ltd v Watt ChD 1901
The purchaser contracted to purchase a plot on a building estate belonging to the vendor. The contract provided that ‘the purchase is to be completed as soon as 300 houses shall have been erected on the said estate’. Thus the contract was one under . .
Cited – Chattey and Another v Farndale Holdings Inc and others CA 11-Oct-1996
The plaintiffs had paid deposits for apartments which were to be built. After the developer became insolvent the plaintiffs sought recovery of the deposits, saying they had a lien which preceded the claims of chargees.
Held: The one appeal . .
Lists of cited by and citing cases may be incomplete.
Updated: 31 July 2022; Ref: scu.259718