Nweze & Anor v Nwoko

The Court of Appeal considered whether an oral family compromise requiring the defendant to "sell" a property at the best price obtainable was a contract for the sale or other disposition of an interest in land within section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. The court held that the compromise did not effect a sale or disposition between the parties but only imposed an obligation to market the property and, if a buyer were found, to enter into a sale; accordingly it was not caught by section 2 and was enforceable. The court relied on statutory construction, the historical context (including the Statute of Frauds and the 1925 Act), and authority distinguishing obligations to enter a future sale from contracts that themselves effect a disposition of land.

This was an appeal from Romford County Court (decision of Mr Recorder Salter QC, 14 August 2003). The Nwezes had originally agreed orally to sell their property to Mr Nwoko; exchanges and completion took place showing a lower price on the contract. A subsequent dispute over unpaid balance led to an oral compromise on 19 May 2002 under which the defendant was to market and sell the property with vacant possession at the best price obtainable, discharge a mortgage, and pay net proceeds to the claimants; certain monies advanced were repaid to the defendant and post-dated cheques returned. The claimants sought to enforce either the original sale at the higher oral price or, in the alternative, the oral compromise.

Nature of the application: the claimants sought specific performance or other enforcement of the oral agreements.

Issues framed:

• Whether the oral compromise was a "contract for the sale or other disposition of an interest in land" within section 2 of the 1989 Act such as to require writing and signature and thus be unenforceable if not in writing;
• Subsidiary issues raised before the Court of Appeal included whether restitution or a constructive trust should be imposed, but the principal appellate point was the applicability of section 2.

Court's reasoning: the court construed section 2 narrowly. The judges concluded that section 2 is concerned with contracts which themselves effect a sale or disposition of land (a vendor transferring an interest to a purchaser), not with agreements which merely oblige one party to take steps to procure a sale by a third party. Waller LJ held that under the compromise there could be no sale without marketing and a subsequent contract with a buyer, so the compromise did not itself dispose of an interest in the legal or equitable sense. Sedley LJ emphasised the historical statutory context and favoured the narrower construction of "for the sale". Carnwath LJ agreed and noted the absence of precedent treating an arrangement analogous to the present case as a contract for sale of land. The court therefore dismissed the appeal.

The Court of Appeal also noted the recorder's findings and that the county court had ordered specific performance of the compromise; the appeal was confined to the s.2 point. Permission to appeal to the House of Lords was refused and costs were ordered against the appellants.

Appeal dismissed. The Court of Appeal held that the oral compromise was not a contract for the sale or other disposition of an interest in land within section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 because it merely obligated the defendant to market the property and, if a buyer were found, to enter into a sale, rather than effecting any immediate legal or equitable transfer between the parties. A narrow construction of the statutory requirement for writing was adopted, supported by historical context and authority.

Appeal from Romford County Court (Mr Recorder Salter QC, decision dated 14 August 2003). Permission to appeal to the Court of Appeal was granted by Jonathan Parker LJ limited to the question under section 2. The Court of Appeal dismissed the appeal on 29 March 2004 and refused permission to appeal to the House of Lords. Neutral citation: [2004] EWCA Civ 379.