Oral agreement between builder and developer – Builder to purchase site and build residential accommodation – Developer to take over accommodation and reimburse plaintiff – Plaintiff subsequently claiming damages for breach of contract – Defendant applying to strike out – Whether agreement giving rise to one contract or two – Whether agreement required to be in writing – Section 2 Law of Property (Miscellaneous Provisions) Act 1989 – Action struck out – Plaintiff’s appeal dismissed
In 1991 the plaintiff, a building contractor, entered into an oral agreement with the defendant to develop the Old Fire Station, Merthyr Tydfil, to provide residential accommodation for leasing to tenants. The plaintiff agreed to enter into a contract to purchase the site, obtain planning permission for the erection of seven houses, demolish existing buildings and prepare the site for development. The defendant agreed to reimburse the plaintiff for the costs of acquiring the land, obtaining planning permission and demolition works, and to enter into a contract with the plaintiff for the construction of the houses. The plaintiff and defendant had already carried out the development of another property on the same terms.
The plaintiff purchased the site, obtained the stipulated planning permission and carried out the demolition works, but, so the plaintiff alleged, the defendant did not fulfill his side of the bargain. The plaintiff claimed damages for breach of contract. The defendant applied to have the plaintiff’s claim dismissed on the ground that it disclosed no reasonable cause of action, arguing that section 2 the Law of Property (Miscellaneous Provisions) Act 1989 provided a complete defence to the claim. The plaintiff contended that no writing had been required as the oral agreement, which amounted to two separate contracts, did not purport to cover the final stage in the process whereby the houses would be conveyed to the defendant. Furthermore it was argued that the defendant was precluded from denying the agreement as set out in the pleadings. The defendant contended that the plaintiff, in answering further and better particulars to aver that the agreement had included a provision to transfer the freehold of the site to the defendant, had shown that there had been only one agreement. The judge found that there was but one oral agreement relied upon, to which section 2 of the 1989 Act applied, and ordered that the action be struck out. The plaintiff appealed.
Held: The appeal was dismissed.
On the facts it had been unrealistic to plead that there were two contracts since the defendant had had no intention of, nor interest in, reimbursing the plaintiff for his side of the bargain unless it had all been part of one bargain. To call upon the assistance of equity to circumvent the need for the sale of an interest in land to be made in writing would, if accepted, drive a coach and horses through the 1989 Act. Section 2(5) had no application since the plaintiff’s claim was solely for damages, nor could the doctrine of estoppel be invoked to preclude the defendant from denying the agreement as pleaded. The claim fell foul of section 2 of the 1989 Act since the agreement upon which it was based did not comply with the basic requirements of the section and was thus a nullity and void.
Christopher Gosland (instructed by TS Edwards & Son, of Newport) appeared for the appellant; Geraint Jones (instructed by Hugh James, of Merthyr Tydfil) appeared for the respondent.
