Property Law: David Norma Keay and Linda Mary Keay v Morris Homes (West Midlands) Ltd [2012] EWCA Civ 900 CA, Laws LJ, Rimer LJ, Patten LJ

The Appellant (MHL) agreed to purchase land from the Respondents (K) and K’s company. It was an agreed term that upon completion K would enter into a lease agreement with MHL for a medical centre that MHL was to build. The purchase price of £4.5 million was later reduced to £3.8 million by a supplementary agreement. K alleged that the reduction was based upon an oral agreement that MHL would promptly progress building works (“the works obligation”).

The issue to be determined by the Court was (i) whether s.2 Law of Property (Miscellaneous Provisions) Act 1989 (“the Act”) applied to the oral agreement; (ii) if it was applicable, whether the oral agreement was void for lack of compliance with the provisions of s.2 of the Act.

Held: It was a question of fact whether the supplementary agreement signed as recording the terms of the sale included all the terms of such sale that they had expressly agreed, Grossman v Hooper [2011] 3 F.C.R. 662 applied. When the parties entered into the oral agreement, their agreement had to be contained in a document that complied with s.2 of the Act. In effect they were entering into a new contract; and the nature of such an agreement was only valid if made in writing, signed and contained or incorporated all the expressly agreed terms of the original agreement. On the limited evidence before the Court it was difficult to determine if the works obligation satisfied the Grossman point. 

Further, Tootal Clothing Ltd v Guinea Properties Management Ltd (1992) 64 P. & C.R. 452 was no authority for the principle attributed to it by Lewison J in Kilcarne Holdings Ltd v Targetfollow (Birmingham) Ltd [2005] 2 P. &C.R. 8. The proposition that a void contract can, by acts in the nature of part-performance, mature into a valid one was contrary to principle and wrong. There was nothing in Tootal to support K’s submission that once the land elements of the sale agreement had been completed it was open to them to sue MHL for the alleged breach of the works obligation that should have been in the supplemental agreement. MHL’s appeal allowed in part.