The case of Anderson Antiques (UK) Ltd v Anderson Wharf (Hull) Ltd and another [2007]it was referring to the ownership of an equitable interest in a development site.

The plaintiff company owned several pieces of land that included a development site (“the Site”). The second defendant was an experienced property developer and the sole director and shareholder of the first defendant company. The company was incorporated as a single purpose vehicle with the sole purpose of acquiring and developing the Site.

In September 2006, a meeting took place between a representative of the claimant, A, and the second defendant (at the second defendant’s home). According to the defendants, at that meeting the parties reached an oral agreement whereby the claimant agreed, once the first defendant had secured the completion of various preparatory work and secured the necessary funding, to sell the site to the first defendant for £2 millions. .

The plaintiff accepted that A had visited the home of the second defendant but denied that any such verbal agreement had been reached. According to the plaintiff, any discussion related to the Site had been limited to the second defendant’s assertion that the first defendant could match a rumored offer on the Site. An attendance note from the claimant’s lawyer and relating to a telephone conversation with A that had taken place the day after the meeting supported the claimant’s version of events.

Subsequently, the claimant attempted to sell the Site through an informal bidding process. Lawyers for the defendants filed a written complaint about the accuracy of the content of the sale details. However, they had no problem with the sale in light of the alleged oral agreement.

In the course of subsequent correspondence, the defendants’ attorneys agreed that they had no legal interest in the Site. Respondents had two bids rejected in the bidding process. In February 2007, the defendants filed notices against the Site’s registered title, on the grounds that they had a equitable interest in the Site arising from the alleged oral agreement of sale, and the expenses incurred in detrimental reliance on that agreement.

The plaintiff issued proceedings by which she claimed:

§ A statement that the defendants had no interest in the Site;

§ The cancellation of notifications against the registered titles of the Site; and

§ Damages under section 77 of the Land Registration Act 2002 (“the Act”).

The defendants filed a counterclaim for restitution and the plaintiff requested summary judgment.

Two main issues were to be determined by the court:

§ First, whether Defendants’ case that an equitable interest in the Site had arisen by virtue of prejudicial reliance on the alleged arrangement had any real prospect of success; and

§ Second, if not, if the second defendant was personally liable for any compensation awarded pursuant to s.77 of the Law.

The court ruled that in this case, the defendants had failed to demonstrate the existence of an oral agreement for the sale of the Site to the first defendants. The alleged oral agreement asserted by the defendants was simply inconsistent with the evidence presented in court, as well as the conduct of the defendants.

In particular, the defendants’ lawyers had admitted in correspondence that they had no legal interest in the Site, and the defendants had not objected to the plaintiff’s attempt to sell the Site by competitive bidding. In any event, even if there had been such an oral agreement, the first defendant’s attempts to bid on the Site during the bidding process had been an acceptance of the plaintiff’s repudiating breach of that agreement. In such circumstances, the defendants’ case had no real prospect of success.

Regarding the personal responsibility of the second defendant, under article 77 of the Law, the main responsibility corresponds to the party that submits the application to the Land Registry. In this case, that party had been the first defendant.

However, the first defendant had simply been a single purpose vehicle, and it was clear that the second defendant had acted on behalf of the first defendant in filing the application. He had been the second defendant who had instructed attorneys in the course of the litigation, and had made the legal statement in support of the claim before the Property Registry. In such circumstances, the second defendant had clearly arranged for the request for notices against the plaintiff’s title and therefore liability under s.77 of the Act would also rest with him personally.

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© RT COOPERS, 2007. This Information Note does not provide a comprehensive or complete statement of the law relating to the subjects discussed nor does it constitute legal advice. Its sole purpose is to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.