Failure of a property sale contract for non-compliance with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 does not prevent a proprietary estoppel claim succeeding.
The High Court has considered these issues in Thandi v Saggu [2023] EWHC 2631 (Ch); [2023] PLSCS 175.
The case concerned a rental property at 7 Parkside Road, Dartford, Kent acquired by Kuljinder Thandi in 2015 for £350,000.
In April 2018 she agreed to sell the property to Tripatpal Saggu, managing director of a construction company which had carried out extensive works on her home. Thandi had paid most of the costs but £15,000 was outstanding.
Thandi believed the property to be worth £280,000-£290,000 in April 2018, although its true value was £345,000. Saggu agreed to pay £270,000 and the balance due for the works.
The transaction was recorded in a handwritten note and three subsequent type-written letters. The note stated the property address, the selling price and that a 10% deposit was payable on exchange.
The letters – prepared by Saggu and signed by Thandi – recorded the property, the price, instalment deposit payments made and that Saggu waived the £15,000 payment. In total £5,000 was paid.
Solicitors were then instructed by both parties. Thandi failed to pursue the sale and in August 2018 Saggu informed her that he no longer wished to buy the property and claimed £25,000 from her.
Thandi brought proceedings to remove a unilateral notice registered by Saggu against the title to the property.
Section 2 of the 1989 Act requires a contract for the sale of land to be in writing incorporating all the agreed terms either in one document or, where contracts are exchanged, in each, signed by the parties.
The court decided neither the note nor the letters represented the entire agreement between the parties. The letters did not refer to agreements that a 10% deposit would be paid on completion; that Saggu would fund Thandi’s solicitors’ fees and that completion would take place within a year. The section 2 formalities were not satisfied.
Saggu’s claim in proprietary estoppel looked like an attempt to enforce a non-compliant contract but the court was not precluded from granting equitable relief to prevent any unconscionability.
Saggu was entitled to recover the £5,000 deposit and a contribution to aborted legal fees. The claim for the balance of the works was that of the company and could still be pursued.
A claim of £60,000 for the uplift in value of the property was an unwarranted benefit and failed.
Louise Clark is a property law consultant and mediator
