Agreement for lease — Enforcement Whether agreement void for failure to incorporate all agreed terms in one document — Section 2 of Property (Miscellaneous Provisions) Act 1989 — Claim dismissed
The claimant purchased a development consisting of a block of flats. The vendor was a developer that had previously acquired the site by purchasing the shares in the company that owned it. The developer had agreed with the defendant, a shareholder in that company, that the latter should take a flat in the development, once completed, in part-payment for his shares. The agreement was set out in a letter written by the developer to the defendant. The defendant subsequently entered into a formal agreement for lease in respect of the flat. The agreement contained a requirement to pay a deposit in two instalments. The developer credited the defendant with the first instalment. It subsequently transferred the development to the claimant. The transfer expressly assigned the benefit of the agreements for lease entered into in respect of the individual flats, including the defendant’s flat.
The claimant went into administrative receivership, and the receivers served a notice to complete on the defendant in respect of the purchase of the flat. The defendant was willing to complete only if the claimant paid the remainder of the purchase price. The claimant brought proceedings to enforce the agreement for lease. The central issue in the proceedings was whether the agreement contained in the letter was an integral part of the agreement for sale of the flat, thereby rendering the sale agreement void under section 2 of the Property (Miscellaneous Provisions) Act 1989 for failure to incorporate all the terms expressly agreed and intended to be included. The claimant contended that the letter contained a separate and collateral contract, so that there were two independently enforceable transactions.
Held: The claim was dismissed.
The agreement to purchase the flat was given to the defendant in part-satisfaction of the developer’s acknowledged indebtedness to him. There was only one transaction in respect of the purchase of the flat, rather than two separate and independently enforceable transactions. The commercial reality was that the defendant would not have agreed to purchase the flat unless the developer had agreed that he would not have to pay the purchase price, which would be set off against the developer’s indebtedness to him: Kilcarne Holdings Ltd v Targetfollow (Birmingham) Ltd [2004] EWHC 2547 (Ch); [2005] 2 P&CR 8 considered. The agreement for lease was a sale or other disposition of land, and it did not incorporate all the terms agreed by the parties in one document. Accordingly, it was unenforceable by virtue of section 2 of the Act.
Paul Letman (instructed by Adams & Remers, of Lewes) appeared for the claimant; Michael Kennedy (instructed by Portner & Jaskel) appeared for the defendant.
Sally Dobson, barrister
