Morrall and another v Krause and another

Written contract — Defendants buying freehold property and agreeing to grant plaintiffs 999-year lease of ground-floor flat — Plaintiffs seeking specific performance — Defendants contending for oral variation to written agreement — First instance decision in favour of defendants — Whether variation without part performance or in writing relevant to issue of original contract — Plaintiffs’ appeal allowedBy a written contract in October 1987, the defendants (“K”) agreed to purchase from the first plaintiff (“M”) the freehold property at 34 Surrey Road, Bournemouth, Dorset. By special condition F, K contracted to grant M a 999-year lease of the ground-floor flat at a peppercorn rent. K was also to carry out specified work to the remainder of the building and on completion and sale of those units, K would pay £6,000 to M, in addition to the balance paid of £44,000. Alterations were to be made within eight months in accordance with a letter of August 24 1987. M contended that those conditions had not been complied with; there had been no lease granted and K had failed to carry out the works specified. Specific performance was sought of the agreement. K resisted the claim, arguing that there had been an agreement for a relocation of the ground-floor flat to smaller premises albeit still on the same floor and that M would allow access for those works. At the county court hearing, K was undefended and in the course of questioning by the judge, he averred that there had been an oral variation of the agreement on March 3 1987, which was a firm and binding one to the effect that M would relocate to the smaller flat. That point was not put to M and the judge found in favour of K. M appealed. Held The appeal was allowed. 1. The evidence from the correspondence showed that the matter between the parties was still subject to negotiations so that there had not been a firm and binding oral variation of the written agreement. 2. The judge had found that the phrase “ground-floor flat” was not capable of specific performance in that the premises to be let had yet to be ascertained. However, that was a unit which had been in existence at the time of the original contract, it was for a term certain and the rent had been fixed at a peppercorn rent. The elements of specific performance of the grant of the lease were therefore ascertained. 3. If the contract was silent as to the covenants to be included, there was an implied term that the “usual covenants” were to be included and the contract rectified accordingly. Failure to agree on any covenant could be settled by a master of the High Court. 4. Where a term was introduced by way of variation after a written contract, the original contract remained enforceable and the parol variation was to be disregarded where the variation contended for was not in writing and there had been no part performance. The question of whether there had been a subsequent variation — if there had been one — was therefore quite irrelevant to the question of specific performance of the original contract. 5. The court did not wish to lay down standards of formality in the county court. The appeal court understood that K had been unrepresented in the county court, but there had to be a certain minimum of formality none the less. Evenhandedness between the two sides was essential and too much latitude should not be given to a defendant appearing in person. 6. Because of the death of M, it would not be fair to order a retrial. Linda Sullivan QC and Christopher Parker (instructed by Hillearys) appeared for the appellants; James King-Smith (instructed by Field Seymour Parkes, of Reading) appeared for the respondents.