The lessee of three acres of land agreed in January, 1874, to let one acre to the Plaintiff for the whole of the residue of his term, and he agreed also to sell to the Plaintiff his interest in the whole three acres at any time within five years from the date of the agreement. The lease contained a covenant by the lessee not to assign the property, or to part with the possession of it or any part of it, without the written consent of the lessor. The Plaintiff was not, in fact, aware of this covenant. He was let into possession of the one acre, and he laid out money upon it, and also upon adjoining property of his own with the view of occupying the two together. The lessor was aware of this expenditure. In October, 1877, the lessee, without the Plaintiff’s knowledge, surrendered the lease to the lessor, in exchange for a new lease for a longer term of the three acres together with other property* The new lease contained a similar covenant by the lessee not to assign, and so on, without license. In November, 1877, the Plaintiff gave the lessee notice of his desire to exercise his option to purchase his interest under the original lease in the three acres. The lessee declined to perform his agreement, on the ground that the lessor refused to give his license to an assignment. The Plaintiff brought the action against the lessee and the lessor, claiming specific performance of the agreement by the lessee, and to compel the lessor to give his license, on the ground, inter alia, that he had acquiesced in the Plaintiff’s expenditure knowing that he was acting in the mistaken belief that the lessee was able to assign the property to him. It appeared that the lessor was not, when the Plaintiff’s expenditure was incurred, aware of the existence of the lessee’s covenant not to assign without license :-
Held: The Court will not compel a Defendant specifically to perform an agreement when the result would be to compel him to commit a breach of a prior agreement with another person. The lessee could not be compelled to perform his agreement, inasmuch as his doing so would involve a breach of his prior covenant not to assign without license, for that, as the Plaintiff was seeking to treat the original lease as still subsisting for one purpose, he must treat the covenant not to assign contained in it as still subsisting :
Held: also, that inasmuch as the lessor was ignorant of his own rights, and there was nothing to shew that he knew that the Plaintiff had been acting in ignorance of his legal rights, the lessor could not be compelled to give his license to assign to the Plaintiff.
The circumstances under which the owner of a legal right will be precluded by his acquiescence from asserting it considered.
Mistake of fact is not the less a ground for relief because the person who has made the mistake had the means of knowledge.
Fry J set out the test of unconscionability: ‘A man is not to be deprived of his legal rights unless he has acted in such a way as would make it fraudulent for him to set up those rights. What, then, are the elements or requisites necessary to constitute fraud of that description. In the first place the plaintiff must have made a mistake as to his legal rights. Secondly, the plaintiff must have expended some money or must have done some act (not necessarily upon the defendant’s land) on the faith of his mistaken belief. Thirdly, the defendant, the possessor of the legal right, must know of the existence of his own right which is inconsistent with the right claimed by the plaintiff. If he does not know of it he is in the same position as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge of your legal rights. Fourthly, the defendant, the possessor of the legal right, must know of the plaintiff’s mistaken belief of his rights. If he does not, there is nothing which calls upon him to assert his own rights. Lastly, the defendant, the possessor of the legal right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right. Where all these elements exist, there is fraud of such a nature as will entitle the court to restrain the possessor of the legal right from exercising it, but, in my judgment, nothing short of this will do.’
Fry J
(1880) 15 Ch D 96, [1880] UKLawRpCh 183
Commonlii
England and Wales
Cited by:
Cited – Budejovicky Budvar Narodni Podnik v Anheuser-Busch Inc CA 20-Oct-2009
The parties had long disputed the use of the trade marks ‘Bud’ and ‘Budweiser’ for their beers. The claimant now said that the defendants had made an abusive registration under the 1994 Act, by requesting a declaration that the registration by the . .
Cited – Singh v Rainbow Court Townhouses Ltd PC 19-Jul-2018
(Trinidad and Tobago) . .
Exlained – Shaw v Applegate CA 1977
There was a covenant against the use of a property as an amusement arcade. Within three years the purchaser had installed amusement machines, but it was not until three years later that the plaintiffs issued proceedings for an injunction and . .
Lists of cited by and citing cases may be incomplete.
Updated: 20 September 2021; Ref: scu.377526