Grossman v Hooper

Section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 requires a signed land contract to incorporate every express term on which the parties agreed that the relevant interest would be disposed of. It does not require the document to contain terms relating only to a separate transaction agreed contemporaneously.

The court must identify the terms governing the disposition and determine whether all of them appear in the signed document. The decisive question is whether the land transaction was conditional on the related transaction. Describing an arrangement as a collateral contract does not answer that question.

The appellant agreed in a signed letter to transfer his interest in a jointly occupied property to the respondent. The letter required the respondent to assume responsibility for the mortgage and two secured charges, but omitted an earlier draft provision concerning repayment of an unsecured £10,000 loan from Mr Modi.

The respondent sought specific performance. His Honour Judge Cox held that repayment of the Modi loan was a collateral matter and ordered the transfer. The appellant challenged that conclusion, contending that the repayment obligation was an omitted term of the land agreement and that section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 therefore made the agreement unenforceable.

The central issue was whether repayment of the Modi loan was a term upon which the parties agreed that the interest in land would be transferred.

1. The appeal was dismissed unanimously. Chadwick LJ delivered the leading judgment. Schiemann LJ agreed with Chadwick LJ and Sir Christopher Staughton.

2. Section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 requires the signed document to incorporate all express terms upon which the parties agreed that the relevant interest in land would be sold or otherwise disposed of. It does not extend to terms governing some other transaction merely because that transaction was agreed contemporaneously.

3. The proper inquiry has two stages: first, identify the terms on which the parties agreed to dispose of the interest in land; secondly, determine whether all those terms were incorporated in the signed document. Where another transaction is contemplated, the decisive factual question is whether the land contract was conditional upon that transaction. Merely describing the other arrangement as a collateral contract does not resolve the statutory issue.

4. The judge was entitled to find that repayment of the Modi loan was not a term of the transfer agreement. The parties had regarded the respondent as primarily responsible for that debt. The appellant deliberately removed the relevant paragraph from the final document which he prepared, although it had appeared in earlier drafts. The parties had merely discussed how an accepted responsibility would be discharged from the eventual proceeds of sale.

5. Sir Christopher Staughton considered it unnecessary to find any collateral contract. In his view, the parties concurred that the respondent would repay the loan, but they did not create a contractual term requiring her to do so. He expressed reservations about whether parties could avoid section 2 by separating integral obligations into another contract, but the court did not decide that wider issue. Schiemann LJ expressly left it open.

6. The order requiring the appellant to transfer the property therefore stood. The appellant was ordered to pay the respondent’s costs, subject to detailed legal aid assessment.

1. Court of Appeal (Civil Division): The appeal was dismissed unanimously. The order for transfer remained in force, with costs to the respondent subject to detailed legal aid assessment: [2001] EWCA Civ 615.

2. Lambeth County Court: His Honour Judge Cox held that repayment of the Modi loan was collateral to the land agreement and ordered the appellant to transfer the property. He refused permission to appeal.

3. Court of Appeal—permission: Sir Anthony McCowan granted permission to appeal and continued the stay pending appeal on 17 May 2000.

4. High Court, Chancery Division: The respondent commenced proceedings for specific performance before their transfer to Lambeth County Court.