Herbert v Doyle concerned a dispute between the owners of two adjoining properties.  The parties had agreed verbally that, provided Mr Herbert satisfied a number of conditions, Mr Doyle would transfer a number of parking spaces to Mr Herbert who in turn would transfer to Mr Doyle a number of other parking spaces.  Other terms were agreed between the parties in emails and during meetings which took place over several years.

The transaction between the parties wasn’t documented as required by Section 2 of the Law of Property (Miscellaneous) Provisions Act 1989 (by incorporating all of the terms into one contract).

The Court of Appeal concluded that in spite of the absence of formalities, there was sufficient certainty for the Court to imply a constructive trust (which would fall outside the requirements imposed by Section 2) of the property to be transferred to Mr Doyle.  Mr Doyle was therefore held to be beneficially entitled to the parking spaces in dispute.

On the face of it this judgement appears to be an example of the a fair result being achieved albeit by a circuitous route. 

It should be noted however that by the time the case reached the Court of Appeal, the costs of Mr Doyle were in the region of £300,000 and those of Mr Herbert some £50,000.  It’s quite possible that these fees (and the litigation which gave rise to them) could have been avoided had the parties drawn up a simple conditional contract when terms were originally discussed and agreed.

The complexity of the case (there had been less than three judgements and a further hearing before the case arrived at the Court of Appeal) conceals some fairly simple principles:

• All pre contract correspondence between parties and their advisers should be headed ‘subject to contract’;
• Any Heads of Terms should have a proviso added to them to make it clear that they wont be binding pending the completion of legal formalities; and
• If there is any doubt as to what parties to a transaction have agreed, the costs incurred in litigating any dispute can far outweigh both the value of the subject matter of the dispute and the legal fees which would have been incurred at the outset to put in place a clear and enforceable agreement.

If you require any further information or wish to discuss any of the issues raised by this blog, please email mark.withers@parissmith.co.uk