Summary

A written agreement that one party would sell a property to another at a certain price had not on its face been a deed, and although the language of the agreement and the fact that it was signed and witnessed indicated that it had been intended to have legal effect those factors did not indicate that the parties had intended the agreement to have the extra status of being a deed.

Facts

The claimant executor (H) claimed that the defendant (Q) had no interest in the freehold of a property owned by the deceased, and Q claimed that the deceased had granted him an option to purchase the property or, alternatively, that there had been an agreement that he would be offered the opportunity to purchase the property that H was estopped from denying. Q had been the tenant of the property, which was used a pharmacy, for several years. After a fire at the property Q had paid for improvement works. Some years later Q had obtained a valuation of the property, and Q and the deceased signed a handwritten endorsement of an agreement "to the sale/purchase" of the property at a certain price within a specified time. Q and the deceased had both signed the agreement with their full names and addresses and their signatures had been witnessed. After the deceased's death, Q notified H that he had a written agreement to purchase the property. It was common ground that there had been no consideration for the agreement, and that therefore the option was not enforceable unless it was a deed. H argued that the agreement did not make it clear on its face that it was a deed, did not describe itself as a deed, or otherwise indicate that it had been intended to be a deed; that Q had not done anything that amounted to the exercise of the option before it expired; and that the agreement was not binding as the deceased had lacked mental capacity when she signed it. Q argued that he and the deceased had reached an express understanding that he would be able to acquire the property when he wanted to at a price that took account of the fact that he had paid for the improvement works.

Held

(1) Under the Law of Property (Miscellaneous Provisions) Act 1989 s.1 documents could be deeds without using the word "deed"; but on the other hand a document was only to be held to be a deed if it was clear from the wording of the document itself that it had been intended to be a deed. The language of the agreement and the full, witnessed signatures were indications that the agreement was intended to be a formal one with legal effect. However, those factors did not, singly or together, indicate that the parties had intended it to have the extra status of being a deed, and it was not clear from the face of the documents that it was a deed. (2) If the agreement had been enforceable, Q's contact and correspondence with H had not amounted to an exercise of the option. (3) On the medical evidence, the deceased had been suffering from mental incapacity at the time of signing the agreement, but H had not established that Q had been aware of that fact. (4) On the evidence, the deceased had not made any agreement with Q that he would be able to acquire the freehold at a price that reflected the fact that he had paid for the improvement works.

Judgment for claimant