An oral agreement intended to be binding is enforceable but only if the enforcing party has performed its obligations under the agreed terms.
The High Court has considered the enforceability of an alleged oral agreement in Burgess v Kempson [2023] EWHC 2216 (Ch); [2023] PLSCS 160.
The defendant owned land at Owls Castle Barn, Horsham, West Sussex, comprising his home and 31.4 acres of agricultural land which was promoted for development in the Horsham local plan. In August 2011, he was offered a call option for the land at £250,000 per acre and indexation at 2.5% per annum by Liberty Property Trust UK Ltd. Despite lengthy negotiations the offer was not accepted.
The claimant, who was aware of the defendant’s discussions with Liberty, offered, at no expense to him, to introduce him to a larger developer in January 2013. That developer decided not to proceed. On 3 August 2013, the parties were due to meet another landowner affected by the scheme, and prior to the meeting the claimant sought to agree a fee arrangement with the defendant.
He claimed that an oral agreement was reached whereby the defendant would pay him 15% of any increase in value of the land over £250,000 per acre or 15% of any payments made to the defendant above that figure. If neither event occurred then the claimant was not entitled to anything for work done or services rendered. In November 2014, the defendant agreed that if he entered into an option with Liberty, the claimant would be entitled to a sum for services rendered.
Although the terms were referred to in correspondence from the claimant to the defendant on the question of fees, no documentation was signed. By March 2015 the parties had fallen out and the defendant sought to terminate the arrangement. He did not follow the claimant’s recommended strategy. He retained Owls Castle Barn and in September 2019 he sold 29.9 acres for £146,000 per acre and an entitlement to an overage payment.
The court found that at the meeting on 3 August 2013 a binding oral agreement was reached. However, the claimant did nothing to bring about the actual sale of the land. At most, he prevented the defendant from taking the Liberty offer but that was insufficient. The terms of sale did not warrant any payment.
The fact that there was an agreement was fatal to the quantum meruit claim in unjust enrichment: see Barton and others v Morris and others [2023] UKSC 3; [2023] EGLR 17. If the judge was wrong on the agreement then there was a claim in unjust enrichment based on the claimant’s time spent at £190 per hour.
Louise Clark is a property law consultant and mediator
