Sale of land — Dispute over payment of purchase price — Oral compromise agreement — Appellant purchaser agreeing to market property and pay net proceeds of sale to respondent vendors — Whether compromise agreement enforceable — Section 2 of Law of Property (Miscellaneous Provisions) Act 1989 — Appeal dismissed
The respondents agreed to sell to the appellant a house in Plumstead, London SE18, for an orally agreed price of £135,000. However, the written contract showed the amount as £105,000. Completion took place, at which time the appellant paid £105,000, most of which was borrowed by means of a building society mortgage. The respondents pressed for payment of the balance of £30,000, plus various expenses, and a dispute arose. This was resolved at a meeting between the parties, during which a further oral agreement was reached in full and final settlement (the oral compromise agreement). The terms included an agreement that the property should be sold at the best price available, and that the net proceeds, after the discharge of the mortgage, should be paid to the respondents.
Although the appellant instructed estate agents to market the property, he subsequently withdrew those instructions and made it clear that he did not intend to proceed with the sale. The respondents brought proceedings in which they sought to enforce: (i) the original sale agreement by reference to the orally agreed price of £135,000; or, in the alternative (ii) the oral compromise agreement. The recorder held that section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 prevented the enforcement of the former, but not the latter, on the ground that this was not a “contract for the sale or other disposition of an interest in land” within the meaning of the section. He accordingly ordered specific performance of the compromise agreement. The appellant appealed.
Held: The appeal was dismissed.
To say that the oral compromise agreement constituted a contract for the sale or disposition of an interest in property would be a misuse of language. Under the terms of that compromise, a sale or disposition could not proceed without the property having been marketed. In order for the appellant to succeed, he would have had to demonstrate that, under the compromise agreement, it was intended that the respondents would gain an “interest” in the legal or equitable sense of the word. It was not sufficient to argue that they had had an interest in the loose sense that the appellant had effectively handed over to them the power to put the property on the market.
Joseph Harper QC and Timothy Morshead (instructed by Payne Hicks Beach) appeared for the appellant; Sarah Asplin QC and Phillip Aliker (instructed by Charles de Alwis) appeared for the respondents.
Sally Dobson, barrister
