Font Size

Verbal Agreements not worth the paper they are written on

 By

Lawson-West Solicitors - Expert Author

Legal Articles
Submit Articles   Back to Articles

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 the parties.

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 less.

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 person).

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; and

b.If he did not do so the court would have the right to make that decision.

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 aspects.

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.

Further information

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.



Follow us @Scopulus_News

Article Published/Sorted/Amended on Scopulus 2011-02-08 17:32:33 in Legal Articles

All Articles

Copyright © 2004-2021 Scopulus Limited. All rights reserved.