Courtney v Corp Ltd

For a contract disposing of an interest in land, section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 requires all expressly agreed terms to be incorporated in one contractual document. Section 2(2) permits incorporation by reference, so a signed offer letter may incorporate detailed terms and conditions contained in another document. A lender’s unilateral waiver of a date inserted for its benefit is not an express variation requiring fresh compliance with section 2. A valuation condition does not necessarily prevent formation of the contract. Later evidence about value does not excuse non-performance, and a lender cannot rely on its own failure to provide funds to say that the facility lapsed.

The claimant, a property developer, sought damages for breach of contract and misrepresentation after the defendant financier failed to provide promised bridging finance for the purchase of two properties. The parties had signed letters dated 10 December 2003 offering facilities subject to formal terms and conditions, valuation and security requirements.

The Central London County Court gave judgment for the claimant for £15,000 and interest of £1,500. The defendant appealed, principally arguing that the agreement was unenforceable under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. Further grounds concerning valuation, alleged breach by the claimant and lapse of the offer were to be considered only if the principal appeal failed.

Disposition. Lady Justice Arden gave the principal judgment. Lord Justice May and the President of the Family Division agreed. The appeal and the application for further permission to appeal were dismissed.

1. Section 2 formalities. Section 2(1) requires a contract for the sale or other disposition of an interest in land to be in writing and to incorporate all terms expressly agreed by the parties in one document. Section 2(2) permits terms to be incorporated by reference to another document. The requirement concerns the contractual document, not necessarily a single physical sheet.
2. Incorporation of the Facility Letter. The signed letters of 10 December 2003 were the contractual documents. Their reference to formal terms and conditions incorporated the defendant’s standard Facility Letter. Although the contract was contained in two documents, all expressly agreed terms were incorporated and section 2 did not invalidate it. The court distinguished Firstpost Homes v Johnson [1995] 4 All ER 355, where the document containing the contract was not the document signed.
3. Waiver of the performance date. There was no express agreement to vary the date by which the facility was to be provided. The lender had instead waived a term inserted for its benefit by encouraging the claimant to believe that performance would still occur. Section 2 applied only to terms expressly agreed between the parties and did not invalidate that waiver. McCausland v Duncan Lawrie Ltd [1996] All ER 995 was distinguishable because it concerned an express agreement to vary a specific completion date.
4. Valuation and security. The valuation wording enabled the lender to obtain a satisfactory valuation; the existence of the contract did not depend on a valuation being obtained. The later expert valuation went to damages, not contract formation or breach. The requirement for a first legal charge, together with related security terms and events of default, was sufficiently contained in the signed letter and incorporated Facility Letter.
5. Additional grounds. The claimant’s opinions about the properties’ value and marriage value were not warranties of fact, and there was no finding of dishonesty or breach of the relevant warranty. The later valuation did not trigger the withdrawal clause, and the lender could not rely on its own failure to provide the funds to establish that the facility had lapsed. The additional grounds therefore had no real prospect of success.

The defendant was ordered to pay the claimant’s appeal and permission-application costs on the standard basis, excluding mediation costs, with an interim payment of £10,000.

• Court of Appeal (Civil Division): In [2006] EWCA Civ 518, the appeal and the application for further permission to appeal were dismissed.
• Central London County Court: HHJ Mackie QC gave judgment for the claimant on 21 April 2005 for £15,000 and £1,500 interest.