Dondore Incorporated & Anor v Fetaimia & Anor

An oral agreement to transfer shares in a company owning property may be enforceable where the evidence establishes certainty, completeness and an intention to create legal relations. Payment directed by a creditor to a third party discharges the debt as effectively as payment to the creditor. Where occupation is granted for money or money’s worth, the arrangement may be a licence within the Protection from Eviction Act 1977. Unless excluded by the Act, termination requires written notice containing the prescribed information and at least four weeks’ notice. A notice that omits the prescribed information or gives only one day’s notice is invalid.

The registered owner of a London flat and its sole shareholder sought possession, mesne profits and related relief against a family occupying the flat. The occupiers contended that they had agreed to acquire the shares in the owner company and had paid the agreed price through a company acting on their instructions. They also counterclaimed for declarations concerning the shares, repayment of other alleged business payments, return of property and an insurance payment.

The central issues were whether an oral agreement existed, whether the share price had been paid, and whether the notices to quit validly terminated the occupiers’ right to remain.

1. Share agreement and payment. The court found that the parties agreed that Mrs Fetaimia would acquire the shares in Dondore Incorporated for £900,000. The agreement was sufficiently certain and complete, and the parties intended to create legal relations. The joint instruction of solicitors to implement the transaction was inconsistent with the suggestion that it was merely an informal arrangement between friends.
2. Payment made by WMS to WAGL was payment at Mr Hitt’s direction. It therefore discharged the defendants’ obligation to pay the share price. Three transfers totalling €1,081,032, together with the Payment Certificate issued by Mr Hitt, established payment in full. Mrs Fetaimia was beneficially entitled to the shares, which Mr Hitt held for her.
3. The claimants’ case that the transfers related to gold transactions was rejected. The alleged partnership agreements were not genuine, and the contemporaneous evidence supported the defendants’ account. The counterclaim for repayment of eight further payments failed because the payments were made by WMS and no sufficient basis for repayment was established.
4. Notices to quit. The court further held, as an alternative ground, that the defendants’ occupation was under a licence granted for money or money’s worth. It was not an excluded licence under section 3A of the Protection from Eviction Act 1977. Under section 5(1), the notices had to be given at least four weeks before taking effect and had to contain the information prescribed by the Notices to Quit etc (Prescribed Information) Regulations 1988. Both notices failed those requirements and were invalid.
5. The possession, mesne profits, conversion and property-return claims were dismissed. The defendants received a declaration as to the shares and an order for £15,700 plus interest in respect of the insurance payment.