Land offered at auction — Several parties interested in parts of same land — Parties agreeing that one would bid on behalf of all — Successful purchaser refusing to honour agreement — Section 40 of the Law of Property Act 1925 not satisfied — Whether purchaser an agent — Whether purchaser under fiduciary duty — Whether agreement should be honoured
The first two plaintiffs are the owners of a house near Stoke d’Abernon in Surrey; the third plaintiff also owns a house in the area. In 1986 an area of land nearby was offered for sale by auction. The plaintiffs were interested in purchasing different parts of the land being auctioned for grazing purposes and agreed that one of them should bid at the auction and they would then divide the land. Shortly afterwards the first defendant met the plaintiffs and expressed his interest in purchasing some of the same land being offered at the auction. In the event the first defendant was successful in purchasing the land for £50,000.
The plaintiffs alleged that immediately before the auction all the parties agreed that the first defendants should bid for the land and, if he was successful, they would acquire agreed portions at proportionate prices. The first defendant accepted only that if he was successful he would offer portions to the plaintiffs, but because of tax advice he could not resell the disputed portions of the land.
Held The evidence of the agreement as alleged by the plaintiffs was accepted in preference to that of the first defendant. However the agreement was not evidenced in writing to satisfy section 40(1) of the Law of Property Act 1925, nor was there any part performance to satisfy section 40(2).
The first defendant was the agent of the plaintiffs at the auction and that put the defendant in a fiduciary relationship. The defendant had a fiduciary duty to convey to the plaintiffs the agreed portions of the land purchased at the auction at the appropriate apportioned prices. The defendant’s failure was a breach of that duty and the advice on tax that was put forward as inhibiting the conveyance to the plaintiffs would have been different had the tax adviser realised that the first defendant was bidding for himself and as agent for the plaintiffs. The first defendant’s wife, the second defendant, was also impressed with the fiduciary duty as she had knowledge of the agreement. The plaintiffs are entitled to specific performance of the agreement.
Kevin Garnett (instructed by Hart Fortgang & Co) appeared for the plaintiffs; and Charles Purle (instructed by D J Freeman & Co, for A Alexander & Co, of Cranleigh, Surrey) appeared for the defendants.
