McLaughlin v Duffill

Sale of land – Specific performance – Agent retained by appellant vendor to sell house – Agent signing contract with purchaser on appellant’s behalf – Section 53(1)(a) of Law of Property Act 1925 – Section 2 of Law of Property (Miscellaneous Provisions) Act 1989 – Whether purchaser entitled to specific performance of sale contract – Whether burden of proof on appellant to show agent not authorised to sign on her behalf – Whether authority required to be in writing – Appeal dismissedThe appellant engaged a firm of agents to sell a three-bedroom semi-detached house by auction with a reserve price of £140,000. A draft contract, suitable for a sale by auction, was prepared, but the property failed to sell. Pursuant to the terms of its engagement, the agent put the property on the open market at £140,000. The respondent made various offers, which the agent discussed with the appellant. A purchase price of £115,000 was finally agreed and contracts were exchanged. The agent signed and executed the contract, purporting to act for the appellant. The contract contained various special conditions that applied only to a sale by auction.The sale was not completed on the contractual completion date and the respondent served a notice to complete. He subsequently brought a claim for specific performance of the sale contract. The appellant maintained that she had agreed to such a sale on a “subject to contract” basis and had not authorised the agent to sign a contract on her behalf. The district judge held that the burden lay on the appellant to prove that she had not authorised the agent to do so, and that, on the evidence, such authority had been given orally. He further held that the contract complied with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 notwithstanding the inclusion of terms that were appropriate only to a sale by auction; if the contract included all the terms agreed, it did not matter that it also included terms that were inappropriate in the circumstances. He found the contract of sale to be binding and ordered specific performance.The appellant appealed. She contended that: (i) the judge had erred in placing the burden of proof on her to show that she had not given authority to the agent, thereby requiring her to prove a negative; and (ii) any such authority would have to be in writing by reason of section 53(1)(a) of the Law of Property Act 1925, since the sale contract amounted to a disposition of an interest in land within that section.Held: The appeal was dismissed. (1) Although the burden of proof would be decisive in cases where the court was unable to make findings of fact on a balance of probabilities, where they were made, those findings would determine the outcome of the case. In the instant case, the district judge’s conclusion that the appellant had verbally authorised the agent to sign the contract on her behalf was based on a clear finding of fact derived from a lengthy consideration of the oral and documentary evidence. Consequently, it became immaterial as to where the burden of proof lay, and there was no warrant for interfering with the judge’s order on that ground.(2) Authority for an agent to sign a contract for the sale of land on behalf of the vendor could be given orally as well as in writing. A distinction was to be drawn between a contract for the disposition of an interest in land and the disposition itself. Section 53(1)(a) of the 1925 Act applied only to the latter: Target Holdings Ltd v Priestley (2000) 79 P&CR 305 applied. Although the availability of specific performance might confer on the purchaser an immediate equitable interest in the property forming the subject matter of the contract, the remedy of specific performance was discretionary. The existence of the contract was a necessary precondition for an order of specific performance but was not, in itself and without more, a disposition of the property, or of an interest in it, within the meaning of section 53(1)(a).Further, section 2(3) of the 1989 Act, in requiring that the contract incorporating all the relevant terms had to be signed by or “on behalf of” each party, contained nothing to suggest that the requisite authority could be conferred only in writing. Therefore, the normal law of agency applied to transactions within section 2 and the authority could be conferred orally as well as in writing. There was no reason to imply restrictions where none had previously existed and where parliament had not seen fit to impose one expressly: Heard v Pilley (1869) LR 4 Ch App 548 considered. Accordingly, the absence of written authority did not preclude specific performance of the sale contract signed by the agent on the appellant’s behalf.The appellant appeared in person; David Green (instructed by Mace & Jones, of Liverpool) appeared for the respondent.Sally Dobson, barrister