Sale of land — Oral agreement — Later written agreement — Property to be retransferred to vendor if latter acquitted of arson — Whether purpose of agreement was to defraud creditors — Whether specific performance would be proper and could be enforced
The first plaintiff and the first defendant are brothers; the second plaintiff and the second defendant their respective wives. The first and second defendants are the owners of premises consisting of a shop and flat above. In November 1983 there was a fire and the property was damaged. On February 13 1984 the first defendant was charged with arson in connection with the fire; on the same day there was said to be an oral agreement for the sale of the plaintiffs’ property to the defendants. On February 22 1984 the property was valued, and on April 17 1984 the agreement was put into writing. The defendants did not complete the sale and the plaintiffs commenced an action seeking specific performance on January 15 1985. In April 1985 the first defendant was acquitted of arson.
The evidence showed that the defendants had never moved out, nor had the plaintiffs taken any steps to put their property on the market. The oral agreement was found by the trial judge to include a term that the property would be retransferred if the first defendant was acquitted of arson; the transfer was to be at a nominal price. However, he refused to grant specific performance of the written agreement on the basis that the purpose of the agreement was to defraud the first defendant’s creditors.
Held The trial judge’s finding on the purpose of the written agreement must be set aside; the question of defrauding creditors had not been pleaded, had not been part of the case and there had been no supporting evidence. However, there had been ample evidence to support his finding of an oral agreement to retransfer the property in the event of an acquittal on the charge of arson. It followed that specific performance of the sale of the property to the plaintiffs would not be a proper remedy and in any event would be quite unenforceable.
Colin Braham (instructed by Gillhams) appeared for the appellant plaintiffs; and Tobias Davey (instructed by Stocker & Lambert) appeared for the respondent defendants.
