Singh v Redford

A contract may be binding before formal documents are executed where the parties’ words and conduct objectively show an intention to create legal relations and agreement on the terms regarded as essential. The involvement of solicitors and an expectation of formal documentation are important but not determinative. A new lease intended to be granted by a landlord, following surrender of the seller’s existing lease, did not make the arrangement an agreement for disposition of land between the buyer and seller under the Law of Property (Miscellaneous Provisions) Act 1989.

Restitution for unjust enrichment requires enrichment, enrichment at the claimant’s expense, unjustness, and absence of defences. Retention is not unjust merely because a transaction fails commercially, particularly where the claimant assumed the business risk and the defendant was not at fault. Duress need only be a contributory cause of a transfer.

Mr Singh claimed repayment of sums paid to Mr Redford towards the proposed purchase of a fish and chip shop. Although solicitors negotiated draft sale and lease documents, neither the sale agreement nor the new lease was executed. Mr Singh contended that no binding contract had been formed, that consideration had failed, and that Mr Redford was unjustly enriched by retaining the payments.

Mr Redford denied liability, relying on the parties’ conduct and the transfer of operational control. He counterclaimed for the balance of the purchase price, sums paid under an abortive settlement allegedly procured by threats, and rent paid while the claimant was responsible for the premises. The central issues were whether a binding sale contract had arisen, whether restitution was available, and whether the settlement payments were made under duress.

1. Binding agreement. No contract for the sale of the business was formed at the initial stage. The first payment secured an agreement that the business would be withdrawn from the market while formal arrangements were pursued. Subsequently, however, the parties’ conduct objectively demonstrated a different intention. By June 2012 they had agreed the price, the transfer of control, allocation of income and outgoings, use of the trading name, and the essential lease arrangement. The further payments and handing over of the keys showed that execution of formal documents and completion of detailed negotiations were not preconditions to contractual liability.
2. Land disposition. The proposed arrangement involved surrender of Mr Redford’s lease and grant of a new lease by the landlord to the purchaser. It was not an agreement between Mr Redford and the claimant for disposition of an interest in land. Section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 therefore did not prevent formation of the business-sale contract.
3. Restitution. The claim for repayment of the purchase price failed. The court applied the objective contractual principles stated in RTS Limited v Molkerei Alois Muller GMBH [2010] 1 WLR 753, but rejected the submission that solicitor involvement ordinarily prevented a binding agreement on these facts. The court also held, alternatively, that retention was not unjust. The claimant had accepted the ordinary risks of the business venture, the business had deteriorated under his management, and the defendant had not misrepresented the planning position or caused the failure.
4. Counterclaim. Duress need only be a contributory cause of the transfer, not its sole or operative cause. The £20,200 paid under the abortive settlement was therefore recoverable, applying Barton v Armstrong [1976] AC 104. The defendant was also entitled to £5,000 as the unpaid balance of the purchase price and £1,650 for rent paid on the claimant’s behalf. Judgment was entered for £26,850, plus agreed interest and costs, payable within 28 days.