RAEL HODES v JACK FRANKEL
[2023] EWHC 442 (Ch)
John Dilworth & Anor v Wosskow Brown Solicitors LLP & Ors
22 April 2024
[2024] EWHC 903 (Ch)
High Court
A solicitor firm borrowed money and then claimed they later swapped some of the debt for shares in another company. The court decided there was no proof of a legally binding agreement to do this, so the firm still owes the money.
Key Facts
- •Two loan agreements were made in 2010 between the Dilworths and Wosskow Brown Solicitors LLP (WBS), secured by personal guarantees from WBS partners.
- •WBS defaulted on the loans in 2020.
- •WBS argued that the loans were discharged or partially discharged in 2017 by an agreement to exchange part of the loan debt for shares in John Banner Centre Limited (JBCL).
- •The 2017 agreement was allegedly oral, but some written correspondence exists.
- •The Dilworths denied the existence of a binding 2017 agreement.
Legal Principles
Actual and apparent authority are independent, but may coexist.
Freeman Lockyer v Buckhurst Park Properties [1964] 2 QB 480
In assessing witness evidence, particularly regarding recollections of conversations, reliance should be placed on documentary evidence and probable facts.
Blue v Ashley [2007] EWHC 1928
An agreement lacks certainty and is not a binding contract if it is too vague or incomplete. The court will not make an agreement for the parties. Whether an agreement is complete depends on the parties' intention to be bound.
RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Company KG (UK Production) [2010] UKSC 14; Pagnan SPA v Feed Products Ltd [1987] 2 Lloyd's Rep 601; Foley v Classique Coaches Ltd [1943] 2 KB 1
A contract will not be binding if negotiations are still ongoing, and if important terms are still under negotiation; restitution may be available.
Whittle Movers Ltd v Hollywood Express Ltd [2009] EWCA Civ 1189
An agreement to agree is not an enforceable contract.
Barbudev v Eurocom Cable Management Bulgaria EOOD and others [2012] EWCA Civ 548
In determining whether a contract has been concluded, one must look at the correspondence as a whole. Parties may intend to be bound forthwith, even if further terms remain to be agreed. The failure to agree further terms does not invalidate the contract unless it makes the contract unworkable or void for uncertainty.
Pagnan SPA v Feed Products Ltd [1987] 2 Lloyd's Rep 601
Outcomes
The court found that no binding 2017 agreement existed.
The evidence showed ongoing negotiations, with key terms (e.g., guaranteed exit strategy for shares, personal guarantees) not fully agreed. The parties' common intention was that a formal written agreement was a precondition to a binding contract.
The Dilworths are entitled to repayment of the outstanding loan amounts from WBS and the guarantors.
The 2017 agreement was not found to be binding, leaving the original loan agreements enforceable.