Bird & Bird wins important property case

04 mars 2005

Despite no written contract High Court grants compensation when property deal aborted

International law firm Bird & Bird has won an important case in the High Court, the result of which will have significant implications for parties who make oral agreements concerning property.

The case concerns property developer Jim Cobbe who had an oral agreement with the owner of a block of flats in Knightsbridge to develop it and share the total sale value. After planning permission to develop the property was granted, the owner reneged on that understanding.

The legal background to this case is that all contracts for the sale or other disposition of an interest in land must be made in writing. What makes this one particularly interesting is that on 25 February, Mr Justice Etherton awarded Mr Cobbe rights over the property worth half the difference between its value with and without planning permission, despite no written contract.

Mr Cobbe had spent a lot of time and money getting the planning permission in reliance on his oral agreement with the owners. When that permission was granted, the value of the property went up considerably. The judge ruled that, because of his efforts, Mr Cobbe should receive a share in that increase.

Bird & Bird lawyer, Peter Emanuel, who worked on the case, said:

“In the property world, it is not unusual for people who have agreed to act on the basis of an unwritten understanding to feel that they are free to walk away whenever they want to. This judgment makes it clear that, in appropriate cases, the Courts will not allow someone to back out of such an understanding and if they do that they will compensate the injured party. This judgment may also have wider implications for all property dealings and should be treated as a very welcome decision”.

DLA Piper Rudnick Gray Cary advised Yeoman’s Row Management Ltd.

For more information, please contact Peter Emanuel on +44 20 7415 6000 or Larry Cattle on +44 20 7415 6156.