Court of Appeal: joint purchase of property valid despite one unaware purchaser26th July 2016
A contract naming husband and wife as joint purchasers entered into without the wife’s knowledge, signature or consent has been deemed to be valid.
When purchasing property jointly, the normal scenario is that both purchasers are aware of the contract and enter into it intentionally. This was not the case in a recent trial that led to a Court of Appeal judgment in Marlbray Ltd v Laditi and another (2016).
The facts in Marlbray Ltd v Laditi and another (2016)
The husband, Dr Laditi, signed a contract naming himself and his wife, Mrs Laditi, as joint purchasers to the contract. His wife did not know about this contract and did not know her husband had entered into it, either on his own or jointly with herself. Further, her husband had no authority to contract on behalf of her. Dr Laditi paid the deposit and exchanged contracts.
The contract did not complete owing to Dr Laditi being unable to raise the balance of the purchase price. As a result the developer rescinded the contract and the deposit was lost.
Included within the contract was the term “Where two or more persons constitute the Purchaser all obligations contained in this Agreement on the part of the Purchaser shall be joint and several obligations on the part of such persons.”
The trial – First instance
The issue for the trial judge was whether or not the contract was void given the husband entered into it without the authority of his wife. The trial judge held the contract was not valid; there was no binding contract. The reasons for this decision were:
- Mrs Laditi had not instructed solicitors to execute the contract, nor had she given her husband the authority to do this on her behalf.
- Mrs Laditi had not ratified the contract at a later date.
- The trial judge relied on Suleman v Shahsavari when coming to this decision.
Court of Appeal
Unhappy with this decision, the seller/developer appealed to the Court of Appeal. The appeal was allowed to a limited extent. The Court of Appeal held that a binding contract had been entered into between the developer and Dr Laditi, but not between the developer and Mrs Laditi. The developer could, therefore, enforce the terms of the Contract as between it and Dr Laditi, but not with Mrs Laditi.
In coming to this decision the Court of Appeal agreed with the trial judge in that, as Mrs Laditi had not given her husband the authority to sign the contract on her behalf, she should not be bound by it. In addition, as the contract specified that all obligations between joint purchasers are “joint”, the husband would have been equally bound by the contract in any event.
For further information, please contact the Real Estate Disputes Team at Hamlins.