10.

Equity looks on that as done

which ought to be done
Prepared by: Aik Yin Chien
 GENERAL

Requirement:
Specifically enforceable obligation

Equitys view:
Parties already in the position which they would be in after performance of the obligation.

Example:
An equitable lease agreement where both the leasor and leesee already treats the
agreement as if enforceable at law.
A specifically enforceable contract for sale of land transfers the equitable interest to the
purchaser, the vendor holding the legal title on constructive trust until completion.
Walsh v Lonsdale

Pf (leesee) made an agreement with Df (leasor) to rent his property for the
running of a mill.
The agreement was never executed as a formal lease (in the form of deed).
Pf went into possession of Dfs property for his business.
Df asked for 1-year rent payable in advance.
Pf did not pay, Df brought action by way of distress to sell Pfs goods.
Pf prayed for an injunction to restrain the defendant from selling his goods
under the distress, and for an order that the Df should withdraw from
possession of Pfs chattels.
Issue

Merely draft lease existed

Pf argued that it is not valid, Df not entitled to claim 1-year rent payable in
advance as was stated in one of the clauses
Held:

Tenant holds under the same terms in equity as if a lease had been granted,
it being a case in which both parties admit that relief is capable of being
given by specific performance. That being so, he cannot complain of the
exercise of the same rights as the landlord would have had if a lease had been
granted, and on the other hand he is protected in the same way.
In easier terms, as Pf had entered into possession, the court views the
agreement as an equitable lease.
Pf is equitable leesee with his rights of not being turned out of leasors
estate, and Df is equitable leasor with his rights to demand 1-year rent
payable in advance.
Lysaght v Edwards (1876)

FACTS:
Testator had agreed to sell farm, died before completion.

ISSUES:
Were the vendors rights personal or proprietary before his death?
When does the purchasers interest arise?
Questions to be considered

1. What is the meaning of the will itself?

In the absence of a contrary intention, you are to read a general gift of real
estate as being equivalent to "all the real estate which I (vendor) shall be
entitled to at the time of my death"
2. What is the effect of the contract?
The moment you have a valid contract for sale, the vendor becomes in equity
a trustee for the purchaser of the estate sold, and the beneficial ownership
passes to the purchaser
the vendor having a right to the purchase-money, a charge or lien on the
estate for the security of that purchase-money, and right to retain possession
of the estate until the purchase-money is paid, in the absence of express
contract as to the time of delivering possession.
Key Points

When there is valid contract for sale

Vendor is an equitable trustee for the purchaser
Beneficial ownership passes to the purchaser,
Vendor has a right to the purchase-money, a charge or lien on the estate for
the security, and right to retain possession until purchase-money paid
Held

The vendors rights are proprietary to the extent that they comprise a lien
and the vendor has legal title
However, the purchaser also has an equitable interest as cestui que trust
(person entitled to equitable estate)
 Additional
Jessel MR on rights and duties of vendor/purchaser where there is a valid contract of sale
1. vendor becomes constructive trustee for purchaser;
2. purchaser is beneficial owner;
3. vendor has a charge or lien over the property until balance is paid;
4. vendor can retain possession until completion;
5. vendor must not willfully damage or injure the property;
6. vendor to take reasonable care of the property;
7. risk passes to the purchaser at the time of the contract; - take note Sale of Land Act 1962
ss34-36
8. the vendor can keep the rents (if any) until completion.
9. Vendor is somewhere between a bare trustee and a mortgagee - proprietary rights, survive
the death of either party
ss34-36 Sale of Land Act 1962

S34: Before purchaser becomes entitled to possession or receipt or rent of

land, dwelling house damaged or destroyed, purchaser can rescind contract
S35: Insurance held by vendor to enure for purchaser during the time
between contract of sale and purchaser entering into possession
S36: If vendor restores damage to land before purchaser enter into
possession, purchaser not entitled to claim under s34 and s35.
Borneo Housing v Time Engineering
Developer charged land to finance company (A) for credit
Sold a building on land to purchaser (R)
Developer defaulted in payment
A sold the land to 3rd party
R argued that Developer is bare trustee, cannot sell land

HELD:
Incorrect to say that at time SPA concluded vendor is trustee for purchaser at
that time only parties to contract.
Bare trust exists once SPA completed that is, full purchase price paid, paid
timeously, vendor executed valid registrable transfer to purchaser.
Appeal allowed because at time charged executed, developer not yet bare
trustee.