Matchmove Ltd (Appellant v Mark Dowding and Another (Respondents

Hearing date: 16 November 2016

Approved Judgment

Sir Terence Etherton Mr, Lloyd Jones LJ and

Introduction

This is the judgment of the Court.

This is a dispute between former friends as to the effect of an oral agreement to purchase property comprising a building plot ("Plot 1") and a 10 acre meadow ("the Meadow"). Following that oral agreement, a written contract was concluded for Plot 1, but no such contract was concluded for the Meadow. His Honour Judge McCahill QC sitting as a Judge of the High Court held in a judgment delivered orally on 19 December 2013 that the agreement to sell the Meadow was enforceable through proprietary estoppel and constructive trust notwithstanding the absence of a written contract. Accordingly, he made an order on 18 February 2014 declaring that the Defendant (Matchmove) held the Meadow on trust for the Claimants (Mr Dowding and Ms Church) and ordering Matchmove to transfer the Meadow to Mr Dowding and Ms Church. Permission to appeal was refused by the judge and by McCombe LJ on paper, but at an oral hearing Vos LJ granted Matchmove permission to appeal on two grounds: first, that the judge was wrong to hold that the case fell within section 2(5) of the Law of Property (Miscellaneous Provisions) Act 1989 ("the 1989 Act"); and secondly, that the judge wrongly construed an express term of the contract for Plot 1, Special Condition 6, as not preventing Mr Dowding and Ms Church from relying upon the informal agreement with respect to the Meadow.

The facts in outline

There were a substantial number of issues at trial. As a result, the trial lasted 18 days, and the judge's very full and careful judgment (as subsequently perfected by him) runs to 442 paragraphs. Fortunately, the facts which are relevant to the arguments on the appeal can be shortly summarised, although we will need to set out certain of the judge's findings in more detail below.

Matchmove's moving spirit is Martin Francis. Mr Francis is a property developer who also dealt intermittently in cars. Mr Dowding is a builder turned car dealer. Ms Church has been Mr Dowding's partner for many years, and they have three children together. Mr Francis and Mr Dowding were friends from 1992 to 2007, when they fell out.

In 2002 Mr Francis began negotiations with a Mr Grist for the purchase of a plot of land ("the Land") and the Meadow, which lay to the rear of 49 Court Farm Road, Longwell Green, Bristol. Mr Francis' intention was to divide the Land into two plots, Plot 1 and a second plot ("Plot 2"), and sell them separately. At that stage Mr Grist did not want to sell the Land until he had obtained planning permission to erect a house on it. Planning permission was granted in June 2003.

By late 2003, there was what the judge initially described as a "common understanding" and later described as an "agreement", evidently reached orally, between Mr Francis and Mr Dowding and Ms Church that Mr Dowding and Ms Church would purchase Plot 1 and the Meadow from Mr Francis for £200,000. £120,000 was for Plot 1 and £80,000 was for the Meadow. The Meadow was important to Mr Dowding and Ms Church because Ms Church wished to keep horses on it.

On 21 April 2004 Matchmove completed the purchase of the Land and the Meadow from Mr Grist. Also in April 2004 Mr Dowding and Ms Church paid Matchmove (in part, by transferring a car) sums totalling £66,600 towards the purchase price for Plot 1 and the Meadow. The judge considered that it was probable that these sums helped to fund Matchmove's purchase of the Land and the Meadow.

From at least 2004 until October 2006 there was a dispute between Matchmove and a Mr and Mrs Wiltshire as to whether the latter had the benefit of a right of way over the Meadow. This dispute led to the commencement of legal proceedings, but in October 2006 Mr and Mrs Wiltshire abandoned their claim. In September 2005 Mr Dowding and Ms Church paid Mr Francis £5,000 as a contribution to the legal costs incurred in connection with this dispute.

In February 2005 planning permission was granted for the construction of three-bedroomed houses on each of Plot 1 and Plot 2. These permissions were granted in the name of a Mr and Mrs Jukes, who were intending to purchase Plot 2, but Mr Dowding and Ms Church cooperated with Mr and Mrs Jukes in making the applications.

In April 2005 the parties instructed solicitors to deal with the conveyancing. The correspondence between the solicitors was headed "subject to contract". On 27 April 2005 Matchmove's solicitors sent Mr Dowding and Ms Church's solicitors a draft contract for the sale of Plot 1 and the Meadow. Unfortunately, this has subsequently been lost.

In May 2005 Mr Francis permitted Mr Dowding and Ms Church to start building a house on Plot 1. He also permitted Mr and Mrs Jukes to start building a house on Plot 2.

In a letter to Mr Dowding and Ms Church's solicitors dated 24 June 2005 Matchmove's solicitors stated:

"Further to this matter our client is currently involved in a dispute concerning the meadow which was being sold to your client. He has been advised not to proceed with the sale of the meadow until the position has been resolved.

We are therefore instructed that the sale to your clients will be merely of [Plot 1] … Please confirm that you are similarly instructed."

Contracts for the sale of Plot 1 were exchanged on 5 September 2005. The purchase price was £120,000 and the deposit (stated to have been received before exchange) was £66,600. Special Condition 6 provided:

"The buyer admits that he has inspected the property and that he enters into this agreement solely as a result of his inspection of the property, and on the basis of the terms hereof, and not in reliance on any warranty, statements, representation otherwise whether oral or implied, and whether made by or on behalf of the seller other than written replies by the seller's solicitors to enquiries made by the buyer's solicitors prior to the date hereof."

On the same day Matchmove exchanged contracts with Mr and Mrs Jukes for the sale of Plot 2. Completion of both contracts occurred the next day. Mr Dowding and Ms Church paid the balance of £53,400 due in respect of Plot 1.

In June 2005 Mr Dowding and Ms Church sold their existing house at 15 Castle Farm Road, Hanham, Bristol and moved into what the judge described as an "extension" they had had built.

Mr Dowding and Ms Church made payments totalling £80,000 for the Meadow between October 2005 and November 2006. By the time the last payments were made, the right of way dispute with Mr and Mrs Wiltshire had been resolved. In the meantime, Mr Dowding and Ms Church had moved into the completed house on Plot 1 (now known as 1 Cleeve Court) in March 2006.

The parties fell out in January 2007. In February 2007 Mr Francis wrote to Mr Dowding and Ms Church saying they could only have half the Meadow, and enclosing a cheque for £40,000. Mr Dowding and Ms Church did not cash the cheque. No written contract for sale for the Meadow (or conveyance of the Meadow) was completed.

Mr Dowding and Ms Church commenced these proceedings as long ago as June 2008 seeking inter alia a declaration that Matchmove held the Meadow upon trust for them. Matchmove denied that any binding agreement had been concluded with respect to the Meadow and relied upon section 2(5) of the 1989 Act. It also counterclaimed for possession of the Meadow.

The judgment below

The judge's findings which are central to the appeal are mainly, although not exclusively, to be found in a section of the judgment headed "'Subject to contract' and Special Condition Six of the contract of purchase of plot 1". In the first part of this section of the judgment, at [102]–[111], the judge set out Special Condition 6 and his reasoning and conclusions with respect to the issues concerning that condition. In the second part, at [112]–[121], he dealt primarily with Matchmove's reliance upon the "subject to contract" legend which appeared in the solicitors' correspondence, but he also touched upon section 2 of the 1989 Act.

In the first part the judge said at [103]:

"This is not, and was not, an unusual term in modern contracts, even though it was a special condition in that contract. In my judgment, it was concerned with preventing reliance on any warranty, statement or representation in respect of the property to be purchased, in this case plot 1. I consider that, as a matter of construction, it did not refer to or relate to the meadow."

In the second part the judge said:

"112. Similarly, despite the Defendant's counsel's written and oral arguments to the contrary, I am satisfied that, once solicitors became involved with the conveyancing process in April 2005 with all correspondence thereafter headed 'Subject to Contract', that this label had no bearing at all on the Claimants and the Defendants [sic].

113. By the time the solicitors became involved in April 2005, Martin Francis and the Claimants had already concluded what they regarded as their...