Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 imposes strict requirements in respect of contracts for the sale or disposition of interests in land. They must be made in writing, must incorporate all the terms expressly agreed, and must be signed by or on behalf of the parties to it. This must be done either in one document or, if there is an exchange of contracts, in each part. Kuznetsov v Camden London Borough Council [2019] EWHC 805 (Ch); [2019] PLSCS 61 concerned the effect of these requirements in the case of a short and simple letter.
The claimant was a tenant who had a long leasehold interest in a flat in a building in London, which was owned by the council. The council obtained planning permission to redevelop the estate and made a compulsory purchase order, followed by a declaration vesting the property in itself, leaving the tenant to claim statutory compensation for the acquisition of his interest.
However, the tenant claimed that the council had made a series of offers to him, culminating in a sale and purchase agreement created when he countersigned a letter from the council. The letter indicated that the council was willing to pay the Red Book valuation for the flat, plus compensation and all reasonable expenses. The tenant said that he had written the words: “I accept your offer and will instruct a valuer” at the bottom of the letter, before signing and dating his acceptance, and then hand-delivering it to the council.
The council sought to have the tenant’s claim for specific performance of the agreement struck out. So the case proceeded on the assumption that the tenant had received, countersigned and returned the letter in question.
The judge accepted that all the essential terms – the identities of the parties, property and price – were set out in the letter (even though the property was described simply as “your property”). But was the council correct to say that the decision in Commission for the New Towns v Cooper (Great Britain) Ltd [1995] Ch 259 prevented the letter from satisfying the requirements of section 2 because an exchange of correspondence can never do so? The judge ruled that the council was reading too much into the decision. There was no one document signed by both parties in Cooper – and that there was a real prospect of the tenant establishing at trial that the letter that he had countersigned constituted an open contract for the sale of his flat, which complied with section 2.
It is worth noting that the tenant also tried to argue that the contract had already been completed because the council had taken possession of the property, so that any non-compliance with section 2 was irrelevant: Tootal Clothing Ltd v Guinea Properties Ltd [1992] 64 P&CR 452. Alternatively, the letter actually disposed of the flat, as opposed to creating a contract to dispose of it, so section 2 did not apply: Rollerteam v Riley [2016] EWCA Civ 1291. The judge gave very short shrift to both arguments, deciding that the council had taken possession of the tenant’s flat under the compulsory purchase order and vesting declaration, and not as a result of any agreement subsequently completed by a transfer between the parties. Furthermore, it was impossible to construe the letter as a disposition of the flat; at best, it recorded an agreement to purchase at some point in the future.
Allyson Colby, property law consultant