Low v Bouverie
| Jurisdiction | England & Wales |
| Date | 1891 |
| Year | 1891 |
| Court | Court of Appeal |
Mortgage - Life Interest - Trustee - Prior Incumbrances - Notice - Inquiry by Mortgagor - Fraud - Misrepresentation - Mistake - Liability of Trustee - Duty of Trustee - Contract - Warranty - Estoppel.
Although it is the duty of a trustee to give his cestui que trust, on demand, information with respect to the dealings with and position of the trust fund, it is no part of his duty to assist his cestui que trust in selling or incumbering his beneficial interest by telling him what incumbrances he, the cestui que trust, has created, nor which of his incumbrancers have given notice of their respective charges; and it follows that the trustee is under no obligation to answer the inquiries of a stranger about to deal with the cestui que trust.
If the trustee takes upon himself to answer the inquiries of a stranger about to deal with the cestui que trust, he is not under any legal obligation to do more than to give honest answers to the best of his actual knowledge and belief: he is not bound to make inquiries himself. Provided he answers honestly, he incurs no liability to the inquirer, unless he binds himself by a statement amounting to a warranty, or so expresses himself as to be estopped from afterwards denying the truth of what he has said.
A statement to operate as an estoppel must be clear and unambiguous.
The doctrine of Derry v. PeekF1 — that a person is not liable for a false representation upon the faith of which another person acts, even though carelessly made, provided he made it in the honest belief that it was true — does not apply where there is a legal obligation on the part of one person towards another to give him correct information; as, for instance, where the law of warranties or of estoppel is applicable.
Having regard to Derry v. Peek, Burrowes v. LockF2 can now only be supported on the ground of estoppel.
Slim v. CroucherF3 cannot be supported on the ground either of warranty or of estoppel, and is therefore inconsistent with and is overruled by Derry v. Peek.
Per Lindley, L.J.:— An incumbrancer of a trust fund who first gives notice to any of the trustees obtains priority over any prior incumbrancer who has given no notice to any of them; but notice to one does not affect the other trustees so as to make them liable for what they may do in ignorance of the notice to their co-trustee.
The doctrine of estoppel as applicable to innocent misrepresentations, discussed and explained.
B., being entitled under a settlement to a life interest in a trust fund, applied to the Plaintiff for a loan on the security of such life interest, at the same time referring the Plaintiff to the Defendant, one of the trustees of the settlement, for information as to his, B.'s, means and position. The Plaintiff thereupon wrote to the Defendant inquiring what the trust fund consisted of, and whether B.'s life interest was subject to any incumbrances, but not stating that B. had applied for an advance. The Defendant replied that the life interest was subject to certain incumbrances, mentioning them, but did not say there were no others. The Plaintiff then made an advance to B. on the security of a mortgage by B. of his life interest. Subsequently the Plaintiff discovered that the life interest was subject to several incumbrances prior to his own, besides those the Defendant had mentioned, but the existence of which, as was admitted by the Plaintiff, the Defendant had forgotten when replying to the Plaintiff's inquiries, though he had had notice of them. The Plaintiff's security being insufficient, he brought an action against the Defendant to have him declared liable for the amount due on the security, alleging that the advance to B. was made upon the faith of the Defendant's written representations:—
Held, that the Defendant was not liable either on the ground of fraud, breach of duty, warranty, or estoppel.
IN January, 1888, Vice-Admiral F. W. P. Bouverie, who under the trusts of his marriage settlement, dated the 1st of September, 1845, was entitled for his life to the income of a sum of £5523 6s. 3d. Metropolitan 3½ per Cent. Stock, applied to a firm of solicitors who were in the habit of acting on behalf of the Plaintiff, Robert Low, in all loan transactions, to make him, Vice-Admiral Bouverie, an advance on the security of his life interest, and of certain policies of assurance on his life. The Defendant, Henry Hales Pleydell Bouverie, a banker, was one of the trustees of the settlement. In consequence of this application the Plaintiff's solicitors, on the 22nd of February, 1888, wrote on his behalf the following letter to the Defendant:—
“Dear Sir, — We are doing business with Vice-Admiral Bouverie, and he says you will give us information as to his means and position. He says he is entitled to a life interest in some funds held in trust, under a settlement dated the 1st of September, 1845, of which you are trustee. Will you kindly tell us what those funds are, and whether Vice-Admiral Bouverie is still entitled to the full benefit of his life interest therein. We understand he has not in any way mortgaged or parted with such life interest. Is this so? Your early reply will oblige.”
On the 23rd of February, 1888, the Defendant replied as follows:—
“Gentlemen, — In reply to your letter of 22nd inst. I beg to inform you that Vice-Admiral Bouverie has a life interest in £5523 6s. 3d. Metropolitan 3½ Stock, but the same life interest is charged with the payment of the premiums on two life policies, one of which amounts to £35 17s., and the other is extinct. Also it is charged with payment of interest for money already advanced to him to the extent of £34 per annum.”
On the 25th of February, 1888, the Defendant wrote again to the Plaintiff's solicitors as follows:—
“Gentlemen, — In furtherance of my letter to you of a day or two since, I beg to state that I hold a policy of insurance on Admiral Bouverie's life in the Mutual Life Assurance Society for £300, as security for the money advanced to him, for which the £34 mentioned to you is the annual charge of interest.”
On the same day the Plaintiff's solicitors had written to the Defendant as follows:—
“Dear Sir, — Will you kindly inform us whether you hold any mortgage or know of any incumbrance upon Vice-Admiral Bouverie's life interest in the funds mentioned in your letter of the 23rd inst., or on his life interest under his marriage settlement. By so doing you will much oblige.”
On the 27th of February, 1888, the Defendant replied to the last letter as follows:—
“Sirs, — I don't see how I can explain myself more clearly than I did the other day in my letter to you. I hold no mortgage from Admiral Bouverie for the charge of interest on money advanced to him; but this charge of interest is in the ordinary course of business; but the two policies of insurance, whose premiums now amount to £35, are mortgaged to his trustees.”
The Plaintiff thereupon, without any further inquiry, agreed to advance £600 to Vice-Admiral Bouverie on the security of a mortgage of his life interest and two policies of assurance on his life. The advance was accordingly made, and a mortgage was executed on the 1st of March, 1888, of which notice was duly given to the Defendant.
Towards the close of the year 1888, Vice-Admiral Bouverie was in pecuniary difficulties, and at present he was an undischarged bankrupt and residing out of the jurisdiction.
The interest on the Plaintiff's mortgage being in arrear, he, through his solicitors, in April, 1889, requested the Defendant to pay to him in future the balance of Vice-Admiral Bouverie's life income, after satisfying the charges mentioned in the Defendant's letters. A correspondence then ensued between the Plaintiff's and the Defendant's solicitors, from which the Plaintiff for the first time became aware that at the date of his mortgage Vice-Admiral Bouverie's life interest was already subject to no less than six prior mortgages, including a mortgage to secure the premiums on the policies mentioned in the Defendant's letter of the 23rd of February, 1888, two of the mortgages being to the trustees of the settlement of the 1st of September, 1845. It appeared, however, that, at the time he was corresponding with the Plaintiff's solicitors as above-mentioned, the Defendant had forgotten the existence of these prior mortgages, though he had had notice of them in the sense that they were recited in a deed of the 15th of February, 1885, by which he was appointed trustee of the settlement of the 1st of September, 1845.
The amounts secured by the six prior mortgages exceeded the capital value of the life interest and policies comprised in the Plaintiff's mortgage, and the interest payable on those six mortgages more than exhausted the income payable in respect of the life interest. To preserve his security the Plaintiff paid the premiums on the policies mortgaged to him.
Under these circumstances, there being due to him, besides the principal mortgage debt of £600, a sum due for interest, premiums, and costs, the Plaintiff brought this action, claiming a declaration that the Defendant was liable to pay to him the total amount due under his mortgage, and payment accordingly.
In his statement of claim the Plaintiff alleged that the Defendant, when he wrote his letters of the 23rd and 27th of February, 1888, knew that the information contained in them was sought from him as trustee of the settlement with the object of being communicated to some person who at that time contemplated lending money to Vice-Admiral Bouverie on the security of his life interest and policies; also, that the contents of those letters having been communicated to the Plaintiff, he, relying thereon, made the advance of £600 on the security of the mortgage of the 1st of March, 1888.
In his statement of defence...
To continue reading
Request your trial
- AETNA Universal Insurance Bhd (No 1); Teo Kim Huatt
-
Mutual Life and Citizens' Assurance Company Ltd v Evatt
...honest answer to his inquiry and, accordingly, the facts alleged did not disclose a cause of action (post, p. 809C, D). Low v. Bouverie [1891] 3 Ch. 82, C.A. applied. Dicta of Lord Reid and Lord Morris of Borth-y-Gest inHedley Byrne & Co. Ltd. v. Heller & Partners Ltd.[1964] A.C. 465, 486, ......
-
Woodhouse A.C. Israel Cocoa Ltd S.A. v Nigerian Produce Marketing Company Ltd
...I do not myself think there was ambiguity. But, on the assumption that there was, I agree with the Court of Appeal that such as Low v. Bouverie [1891] 3 Ch. 82 and Canadian and Dominion Sugar Co. v. Canadian National (West Indies) Steamships Ltd. [1947] A.C. 46 are authority for the propo......
-
Woodhouse A.C. Israel Cocoa Ltd S.A. v Nigerian Produce Marketing Company Ltd
...stopped on an ambiguity. To work an estoppel, the representation must be clear and unequivocal. That is clear from ( Low v. Bouverie 1891 3 Chancery, page 82), and ( Canadian and Dominion Sugar Co. Ltd. v. Canadian National (West Indies) Steamships. Ltd. 1947 Appeal Cases page 46). 48 Mr. M......
-
Equitable compensation for breach of trust: off Target.
...341 (Lord Cranworth LC). (69) Ultraframe (UK) Ltd v Fielding [2005] EWHC 1638 (Ch) (27 July 2005) [1513] (Lewison J). (70) Low v Bouverie [1891] 3 Ch 82, 99 (Lindley (71) Henry Ballow, A Treatise of Equity (John Fonblanque (ed), Small, 2nd revised ed, 1820) vol 2, 168. This proposition was ......
-
Die estoppelleerstuk : hoofstuk 8
...Landau & Co 1918 AD 388 op 391; Wilson v Blanck 1909 TS 344 op 352. 55 Simm v Anglo-American Telegraph Co [1879] 5 QBD 188 (CA) op 207.56 (1891) 3 Ch 82, [1891-1894] All ER 348.57 Rabie en Sonnekus 2000:22; Visser en Potgieter 207Twitchings58 dat die estoppelleerstuk in die Engelse reg nie ......
-
THE (QUISTCLOSE) RESULTING TRUST AS A PROPRIETARY RESPONSE TO UNJUST ENRICHMENT
...See also Neale v Willis(1968) 19 P &CR 836 at 839 and Ash Street Properties Pty Ltd v Pollnow(1987) 9 NSWLR 80 at 84D. 73Low v Bouverie[1891] 3 Ch 82 at 105; Nippon Menkwa Kabushiki Kaisha (Japan Cotton Trading Co) v Dawsons Bank Ltd(1935) 51 Ll L Rep 147 at 150; London Joint Stock Bank Ltd......
-
Bibliografie
...AD 132Levy and Others v Zalrut Invest-ments (Pty) Ltd 1986 4 SA 479 W Lindner v National Bakery (Pty) Ltd 1961 1 SA 372 O Low v Bouverie (1891) 3 Ch 82, [1891-1894] All ER 348; Lloyd v Grace Smith & Co 1912 AC 716Lodge v Modern Motors Ltd 1957 4 SA 103 SR Louisville NA&C Railway v Louis-vil......