Nweze & Anor v Nwoko

Section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 is confined to contracts in which an interest in land is the actual subject of a sale or disposition. A compromise is not within the provision merely because it requires property to be marketed and later sold to a third party. The statutory reference to an interest in land concerns a legal or equitable interest, not practical control over property. The statutory writing requirement is an exception to ordinary enforceability of oral contracts and should not be construed more widely than necessary. An arrangement may nevertheless fall within Section 2 where it permits a party to call for an actual transfer of land to a nominated buyer, analogous to an option.

The Nwezes appealed from a decision of Mr Recorder Salter QC in Romford County Court. After a dispute concerning the balance due on a property transaction, the parties made an oral compromise requiring Nwoko to market the property, sell it with vacant possession at the best available price, and pay the net proceeds to the Nwezes after discharging the mortgage.

The Recorder held that the original oral sale agreement was unenforceable under Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, but that the compromise was outside Section 2 and could be specifically enforced. Permission to appeal was limited to whether the compromise was a contract for the sale or other disposition of an interest in land.

The Court of Appeal unanimously dismissed the appeal.

1. Statutory scope. Section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 applies where an interest in land is the actual subject of the contract for sale or disposition. The compromise did not itself transfer or dispose of an interest between vendor and purchaser. It required Nwoko to market the property and, if a buyer was found, to enter into a future sale contract and account for the proceeds. It was therefore outside Section 2.
2. Meaning of interest. The Nwezes’ practical power to require the property to be marketed was not an interest in land in the legal or equitable sense contemplated by Section 2(1). The Recorder’s use of the word sell in the specific-performance order could not alter the true nature of the compromise.
3. Jelson. In a different arrangement, such as that considered in Jelson Ltd v Derby County Council [1999] 39 EG 149, Section 2 might apply where contractual conditions enabled a party to compel an actual transfer of land to a nominated buyer, akin to an option. That transaction was distinguishable. The court also considered the signature aspect of the Jelson decision open to question, since Section 2(3) requires the signatures of the contracting parties.
4. Statutory context. Sedley LJ observed that the historical wording in Section 4 of the Statute of Frauds 1677 and Section 40 of the Law of Property Act 1925 supported the narrower construction. Carnwath LJ explained that the 1989 Act made a radical change to the substance of the law, but did not widen the category of transactions covered. This was consistent with Yaxley v Gotts [2000] Ch 162.

The compromise was accordingly enforceable, and the order for specific performance stood. Permission to appeal to the House of Lords was refused. Costs were summarily assessed at £19,000, payable within 28 days.

• Court of Appeal (Civil Division) — [2004] EWCA Civ 379: appeal dismissed; the order for specific performance upheld.
• Romford County Court — Mr Recorder Salter QC: held the oral compromise outside Section 2 and ordered specific performance.