Verbal Agreements not worth the paper they are written on
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13 December 2010
The law states that contracts to transfer land must be in
writing (section 2: Law of Property (Miscellaneous Provisions) Act
1989). This means that generally speaking an agreement to buy land or
take a lease is unenforceable unless it is in writing and signed by all
However, a recent case has illustrated that there can be
exceptions to this rule although these will be few and far between.
In Herbert –v- Doyle and Talati 2010 Mr Herbert was the
owner of a large house while Mr Doyle and Mr Talati were dentists
owning an adjoining property who used part of Mr Herbert’s house for
their practice. They also had a number of car parking spaces within
their own property. Mr Herbert wanted to build mews houses on his land
but to do so he needed part of the land owned by the dentists, in
particular for car parking spaces.
The facts and legal aspects were very complicated but
essentially concerned what was agreed around Mr Herbert’s kitchen table
in April 2003. As you would expect, each side had different opinions as
to what had been agreed but essentially the Court of Appeal held that
Mr Herbert was to get the car parking spaces he needed for the mews
houses together with a payment of £130,000 and the dentists were to get
new leases for different parts of Mr Herbert’s property which would
benefit their practice. The dentists were also to get a freehold
transfer of part of Mr Herbert’s property which would enable them to
build replacement car parking spaces.
Based on this agreement (which was apparently quite heated
because Mr Herbert had already started to lay out his site) Mr Herbert
then obtained his planning permission and went ahead to build the mews
houses, all without any legal documents being signed – in fact neither
side even instructed solicitors although they did discuss the matter.
From then on the matter became even more complicated with
arguments over what had actually been agreed and both sides wanting to
change the agreement. It appears the dispute escalated when Mr Herbert
encroached by 0.5 of a metre (about 20 inches) over the dentists’
property. He still wanted part of the dentists’ land to be transferred
to him as well, presumably so that he could sell his houses.
At the end, the Court of Appeal decided that, even though
there was no written document, the parties had intended the ‘kitchen
table’ agreement of April 2003 to be legally binding and matters had
gone too far to allow either party to back away from it or change it
substantially. The Court of Appeal therefore upheld the original
Judge’s decision that if the dentists transferred some car parking
spaces to Mr Herbert and paid him some money, he would then give the
dentists the leases and transfer land to them in accordance with the
Judge’s view of the ‘kitchen table’ agreement.
Why is this case important
1)Although there are useful legal aspects (see below) this
case clearly shows how important it is to instruct a good solicitor and
get everything agreed in writing before going ahead.
The dentists alone claimed they had incurred costs of over
£300,000 up to December 2008. In addition, there must have been
incredible stress and strain on the parties, and it would probably have
been difficult, if not impossible, to sell either of their properties
until all legal issues were resolved.
By contrast, from what we know of the terms and transactions
that were agreed we would guess that the total legal costs for both
parties would not have exceeded £10,000 and could easily have been much
2)The court emphasised very strongly that unless an
agreement about land is in writing it will not be enforceable. The only
reason that the ‘kitchen table’ agreement was allowed to stand was
because it would have been totally unfair to one side to allow the
other to back out of that agreement. (The court decided there was a
‘constructive trust’ which is a technical legal term where someone owns
property and has a duty to transfer it to someone else because to allow
them to keep it would both be wrong and would unjustly enrich that
3)This is a further example of the court implying terms into
an agreement in order to make it workable. In this case, one part of
the dispute involved the parking space. The parties had not decided
where this particular space would be but the court felt that Mr Herbert
could choose. The court decided:-
a.Mr Herbert must make his choice within a reasonable time;
b.If he did not do so the court would have the right to make
Effectively the court will not allow disagreement over a
minor matter to prevent the whole arrangement becoming unworkable.
N.B. This was an incredibly complicated case and the Court
of Appeal and original Judge had to decide on a large number of issues
and claims between the parties. We have therefore tried to summarise
the most important part of the case but obviously cannot cover all
What action should I take?
Always contact your solicitor when you intend to enter into
a binding legal agreement. Your solicitor should not only be able to
make sure that the agreement covers everything you need (and does not
include things that have not been agreed) but should also be able to
advise on the legal aspects of the transaction generally. They may also
be able to suggest changes which could add real value to your property
or your business such as savings in Stamp Duty Land Tax or risk
management for the future.
These notes are intended as general guidance only and should
not be relied on in any specific circumstances without additional
specialist legal advice.
Please call David Heys on 0116 212 1027 or Katherine
Cereghino on 0116 212 1148 for more information.
About the Author
Lawson-West specialise in commercial, business and employment law. Our team
of dedicated commercial solicitors can help with buying or selling a business,
business law and disputes, landlord and tenant issues and commercial property.
Our expert employment team can offer practical advice and guidance on all
aspects of employment law including redundancy, compromise agreements and
dismissal procedures. Visit
www.lawson-west.co.uk for more information.
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Article Published/Sorted/Amended on Scopulus 2011-02-08 17:32:33 in Legal Articles