Matchmove Ltd v Dowding & Anor

A complete oral agreement for the acquisition of land may give rise to a common intention constructive trust despite the writing requirement in section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989. The claimant must have relied on an express agreement to their detriment, making it unconscionable for the legal owner to deny the agreed ownership.

Section 2(5) cannot be used to enforce an agreement in principle which awaits a binding contract or leaves essential terms unresolved. An intended later formality is not itself fatal where the parties intended their complete agreement to bind immediately. A contractual exclusion relating to one parcel of land does not ordinarily exclude agreed terms concerning a distinct parcel merely because both parcels formed part of an earlier indivisible agreement.

The respondents agreed orally with the appellant’s controlling director to buy a building plot and an adjoining meadow for £200,000. A written contract was subsequently completed for the plot, but not for the meadow. The respondents nevertheless paid the meadow’s full price and incurred further expenditure in reliance on the oral agreement.

HHJ McCahill QC held that the appellant held the meadow on constructive trust for the respondents and ordered its transfer. The appellant challenged that decision on the grounds that the oral transaction fell outside section 2(5) of the Law of Property (Miscellaneous Provisions) Act 1989 and that Special Condition 6 of the plot contract excluded reliance on the earlier agreement. The central questions were whether a constructive trust arose despite the statutory formality requirement and whether the written condition defeated the respondents’ equitable claim.

1. The appeal was dismissed. The judge correctly held that the appellant held the meadow on common intention constructive trust for the respondents. The case therefore fell within section 2(5) of the Law of Property (Miscellaneous Provisions) Act 1989.

2. A common intention constructive trust may arise where there is an express agreement about ownership, reliance on that agreement, consequent detriment and circumstances making it unconscionable for the defendant to deny the claimant’s ownership. The judge had found a complete oral agreement which both sides intended to bind them immediately. Its essential terms identified the property, total price and deposit. The respondents relied on it by making the initial payment and undertaking several further acts, including contributing to the cost of litigation concerning access to the meadow.

3. The statement in Herbert v Doyle [2010] EWCA Civ 1095 did not establish three independent circumstances in which section 2(5) was unavailable. It described the related features of Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55: an agreement in principle which awaited a formal contract, left further terms unresolved and was not intended to bind immediately. No constructive trust arose in Cobbe because the claimant expected to acquire an interest only through a legally enforceable contract.

4. The prospect of later documentation did not prevent a trust in the present circumstances. The parties regarded their agreement as binding despite any remaining technical formality. Their friendship and conduct supported that finding. The potential right-of-way dispute did not make the oral agreement conditional or prevent the respondents’ beneficial interest from being subject to the possible encumbrance.

5. Special Condition 6 of the written plot contract did not exclude the respondents’ rights concerning the meadow. The condition concerned the plot and excluded other terms relating to that parcel. It did not exclude terms concerning a distinct parcel, even though both parcels had formed part of a single indivisible oral agreement. It was consequently unnecessary to determine issues under the Unfair Terms in Consumer Contracts Regulations 1999.

1. Court of Appeal (Civil Division): The appeal was dismissed. The court upheld the declaration that the appellant held the meadow on trust for the respondents and the order requiring its transfer: [2016] EWCA Civ 1233.

2. High Court of Justice (Chancery Division): HHJ McCahill QC held that the agreement concerning the meadow was enforceable through proprietary estoppel and constructive trust despite the absence of a written contract. On 18 February 2014 he declared that the appellant held the meadow on trust for the respondents and ordered its transfer. No neutral citation is stated in the judgment.