Summary

The defendant's evidence that he and the claimant had orally agreed that the latter would not exercise an option in certain circumstances, which circumstances still prevailed, was sufficiently credible to preclude summary judgment being granted in favour of the claimant.

Facts

Claimant's ('M') application for summary judgment under CPR Part 24 on his claim for specific performance, damages and ancillary relief in respect of a contract for the sale to him by the defendant ('Standish') of the leasehold interest in a hotel. In November 1993 the parties entered into two agreements whereby: (a) M agreed to manage the hotel on behalf of Standish; and (b) M was granted an option to buy Standish's leasehold interest in the hotel ('the lease') for £750,000, or to buy the entire issued share capital of Standish, again for £750,000. In 1995 and 1996 Standish bought three properties adjacent to the hotel for short-term and office lettings, which again would be managed by M. Its case was that it had done so only as a result of M's oral agreement with the beneficial owner of Standish ('K') that he would not exercise the option to buy the lease whilst Standish remained the owner of the other properties. The rationale for this agreement was said to be that K did not wish to have to manage the other properties himself if he did not also have the hotel. In 2001 M exercised the option to buy Standish's leasehold interest. Standish now accepted that the terms of the option had been validly complied with, but contended that M was estopped from exercising the option by the terms of his oral agreement with K. The alleged oral agreement only emerged in the course of the later rounds of the witness statements served on behalf of Standish. M denied that there had been any such agreement, and further contended that the doctrine of proprietary estoppel could not in any event be relied upon in the circumstances of the present case to circumvent the requirements of s.2(1) Law of Property (Miscellaneous Provisions) Act 1989 regarding the need for any such agreement to be in writing.

Held

(1) Although the agreement on which Standish now relied had only been raised very late in the day and in circumstances where one might well have been expected it to have been at the forefront of Standish's opposition to M's claim for specific performance, the court was satisfied, albeit just, that there was sufficient credibility to Standish's case to allow the matter to go to trial unless there was some legal principle that clearly defeated a case based on the agreement. (2) It was clear from the decision of the Court of Appeal in Yaxley v Gotts (2000) Ch 162 that the precise relationship between proprietary estoppel and s.2 of the 1989 Act had yet to be definitively stated. In such circumstances it was impossible to say that there was a "knock out" legal argument that would leave Standish with no real prospect of success.

Application dismissed.