Shill Properties Limited v Anne Bunch

A land-sale contract is enforceable under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 only where the statutory writing and signature requirements are met. An exchange under Law Society Formula B is ineffective if the buyer’s solicitor does not hold a signed contract at the time of exchange.

A representation that a purchaser is a cash buyer ordinarily means that the purchaser intends or expects to buy without secured finance. If knowingly false and materially influences the seller’s decision, it may constitute fraudulent misrepresentation. An undue-influence claim based on an estate agent’s conduct requires proof that the agent acted on the purchaser’s behalf.

The claimant sought specific performance of an agreement to purchase the defendant’s home. The defendant disputed the validity of the exchange and relied on three principal defences: non-compliance with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, fraudulent misrepresentation that the claimant was a cash buyer, and undue influence.

The court considered whether the claimant’s solicitor held a signed contract when contracts were purportedly exchanged under Law Society Formula B, whether the stated price and purchaser were correct, whether the cash-buyer representation was fraudulent and causative, and whether the estate agent acted as the claimant’s agent.

1. Validity of exchange. Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 requires a land-sale contract to be in writing, to incorporate the expressly agreed terms, and to be signed by or on behalf of each party. Formula B required each solicitor to hold the relevant signed contract at exchange. The claimant’s solicitor did not hold a signed contract on 7 December 2018. The statutory requirements were therefore not satisfied and no valid exchange occurred.

2. The arguments that the price was £940,000 and that Safety Investments Limited was the true purchaser were rejected. The evidence showed that the contractual price was £840,000 and that the claimant, rather than Safety, was the purchaser at the date of exchange.

3. Fraudulent misrepresentation. The ordinary meaning of cash buyer was a purchaser intending or expecting to buy without secured finance. The claimant’s representation was false because its intention and expectation were to use secured finance. The representation was made fraudulently because the claimant knew it was not a cash buyer. It materially influenced the defendant’s decision to contract. Accordingly, even if a valid exchange had occurred, the defendant would have been entitled to set aside the contract.

4. Undue influence. The evidence did not establish that the estate agent acted on the claimant’s behalf. The defence therefore failed at the first hurdle.

5. The claim for specific performance was dismissed because there had been no valid exchange. The fraudulent-misrepresentation defence provided an independent alternative ground.

First-instance decision. The judgment records an earlier interlocutory order concerning the claimant’s late witness statements, which was upheld on appeal by Leech J’s order dated 30 March 2023, but the present judgment was a trial decision on the merits.