Simpole v Chee & Anor

Ratification may validate a contract for the sale of land despite the principal not having personally signed it. An agent may sign in the principal’s name without indicating the agency, and ratification may operate retrospectively for the purposes of section 2(3) of the Law of Property (Miscellaneous Provisions) Act 1989. Ratification may be inferred from conduct, including retaining sale proceeds with knowledge of the transaction, provided the conduct unequivocally adopts the transaction. Where these requirements are met, the contract may be specifically enforced.

The claimant sought specific performance of an agreement for the sale of a let residential property. The first defendant, named as seller, denied signing the agreement and disputed that the purported signature was authorised. The claimant argued that the signatory had actual authority or, alternatively, that the first defendant had ratified the signature by retaining part of the sale proceeds and acting with knowledge of the sale.

The second defendant, who had conducted the transaction, had judgment entered against him in default. The first defendant counterclaimed, accepting that the counterclaim would fail if the claimant succeeded. The central issues were whether actual authority existed and, if not, whether the requirements of section 2(3) of the Law of Property (Miscellaneous Provisions) Act 1989 were satisfied by ratification.

1. The court was not satisfied that the unidentified person who signed the sale agreement in the first defendant’s name had actual authority. The claimant’s inability to identify the signatory, combined with the speculative evidence about who it might have been, made it difficult to infer actual authority (paras [15]–[17]).
2. The court accepted that an agent may sign the principal’s name without indicating the agency, that ratification may make a contract for the sale of land effective retrospectively for the purposes of section 2(3) of the Law of Property (Miscellaneous Provisions) Act 1989, and that a forged signature may be ratified. Those propositions were distilled from London County Council and Agricultural Food Products Limited, [1955] 2 QB 218, Koenigsblatt v Sweet, [1923] 2 Ch 314, and McKenzie v British Linen Company, (1881) 6 App Cas 82 (paras [8]–[10]).
3. Ratification may be express or implied from conduct. The conduct must provide clear and unequivocal evidence that the principal adopted or recognised the transaction. Receipt or retention of money with knowledge of the contract will normally constitute ratification, although conduct capable of another explanation will not suffice. Where reliance is placed on silence or inaction, a reasonable period for deliberation may be relevant (para [28]).
4. By the end of February 2011, the first defendant had ratified the signature. The evidence included his knowledge that the property had been sold, his receipt and retention of £110,000, the acknowledgment that repayment would be required if he retained the property, and the absence of repayment. Ratification had occurred before any later correspondence could render the conduct equivocal (paras [25]–[30]).
5. Specific performance of the sale agreement was decreed. The counterclaim was dismissed. The first defendant was ordered to pay the claimant’s costs, assessed on the standard basis if not agreed, together with £17,000 on account of costs (paras [30]–[32]).