‘I have asked my solicitor to get the contract drawn up at the fixed price of £8,700 as agreed’–Insufficient note or memorandum when there were terms to be referred to such as variations in building specifications and provision for stage payments
This was a
claim by Miss Adeline Grace Tweddell, of Dormer House, West Bank Road,
Allestree, Derby, against Mr Leo Henderson, of West Downs Road, Delabole,
Cornwall, for damages for breach of a contract to build her a bungalow on a
site owned by him. The defendant counterclaimed an order for vacation of an
estate contract in respect of the site registered by the plaintiff.
Mr P G Hughes
(instructed by Gregory, Rowcliffe & Co, agents for Taylor, Simpson &
Mosley, of Derby) appeared for the plaintiff, and Mr D M Burton (instructed by
Bridges, Sawtell & Adams, agents for G & I Chisholm, of Bodmin)
represented the defendant.
Giving
judgment, PLOWMAN V-C said that in the spring of 1972 the defendant was
developing three adjoining plots in a close off Fosters Lane, Delabole,
Cornwall, on one of which he had nearly completed a bungalow. The plaintiff, a
retired local government officer, wanted to move to Cornwall with her sister.
They visited the defendant’s site and were told by the defendant that he would
want £7,500 for a three-bedroom bungalow similar to the one he was already
building. In correspondence which followed, the defendant informed the
plaintiff that he had been offered a price of £8,700, but that he would give
her first refusal at that price. A crucial meeting took place on August 27
1972, at which the defendant agreed to build the plaintiff a bungalow for
£8,700, similar to that already being built, but with certain variations
requested by the plaintiff. It was also agreed that payment should be in four
stages. The plaintiff contended that that transaction amounted to a binding
oral contract, if (indeed) such contract had not been made in writing in the
previous correspondence. The defendant’s view was that he had not committed
himself irrevocably at that meeting; that until solicitors took matters in hand
and exchanged contracts, any conversation with a prospective purchaser was no
more than an inquiry.
He (his
Lordship) was satisfied that the bargain was not made either subject to
contract or in any other way conditional. Judged objectively, the parties had
been ad idem. On September 27 1972, however, the defendant’s solicitor
wrote to the plaintiff’s solicitor that due to a recent wages agreement in the
building industry it was quite impossible for the defendant to proceed with the
contract at a price of £8,700, but that he would be prepared to do so at a
price of £9,500. The plaintiff was not prepared to be ‘gazumped,’ and issued
her writ in the action. The question which accordingly arose was whether or not
the oral contract which he (Plowman V-C) held had been made on August 27 was
evidenced by a sufficient note or memorandum in writing to satisfy section 40
of the Law of Property Act 1925. The memorandum relied upon was a letter from
the defendant dated September 5 1972 in which the vital words were, ‘I have
asked him [the defendant’s solicitor] to get the contract drawn up at the fixed
price of £8,700 as agreed with you.’
He (his
Lordship) was prepared to hold, and did hold, that those words, having regard
in particular to the use of the phrase ‘the’ contract, as distinct from ‘a’
contract, amounted to a recognition by the defendant that a contract had been
entered into. But that did not conclude the matter, because it was a
well-recognised principle that a note or memorandum, to satisfy section 40, had
to contain all the material terms of the alleged contract. Counsel for the
defendant had pointed out that the letter made no reference to the variations
requested in the specifications, nor to an undertaking by the defendant to make
up a road at his own expense, nor to the arrangement for payment by stages.
Counsel for the plaintiff answered that by saying that a distinction had to be
drawn between terms of the contract which related to the actual transfer of the
defendant’s interest in the land and terms which related to other matters. He
submitted that on that basis, all the relevant terms were to be found in the
letter of September 5. He (his Lordship) accepted that in certain circumstances
it might be that some terms of a contract were within section 40 and some were
not; but the difficulty in the present case was that the price of £8,700 was
not simply the price for the sale of the bungalow without the variations: it
included the variations and other matters, and there was no way of severing the
figure of £8,700 so as to attribute so much to the cost of the land and
bungalow and so much to the variations. Nor was there any reference to the
stage payments arrangement, assuming it to be a material term, and it seemed to
him (the Vice-Chancellor) that it was material.
Accordingly he
concluded–with some regret, because he thought that the plaintiff had been
hardly treated–that the section 40 defence succeeded, and that although the
plaintiff had the merits, the defendant had the law, so that the action must be
dismissed.
Judgment was
given for the defendant on the counterclaim. The defendant was awarded his
costs of the counterclaim and half his costs of the action.
