PROPERTY: Shaw v Hutton-Shaw [2006] EWCA (Civ) 1235

24 NOV 2006

(Court of Appeal; May, Arden and Wall LJJ; 24 November 2006)

The couple had cohabited for some years, first in England, then in France. The home in England, which had been in joint names, was sold, and the money placed in a bank account in the man's sole name. Later some of the money was used to purchase a property in France in the woman's sole name, and the rest used to buy furniture and a car. Subsequently, because of advice (possibly incorrect) about French inheritance law, the couple signed a loan agreement, under which the whole of the proceeds of sale were said to have been lent to the woman by the man, and to be repayable on demand to the man. This was intended to protect the man in the event of the woman predeceasing him. After the separation a second agreement was drawn up by the woman, with help from a friend, in which the woman agreed to pay the man a lesser sum and to pay all outstanding debts out of proceeds of sale of property in France, and the man agreed to cease all legal actions against the woman. The agreement, signed by both parties, formed the basis of a French court order. The man then sued the woman in England for payment under the loan agreement, arguing that the second agreement had not included the words in full and final settlement. The man accepted in court that he would not be entitled to the full sum under the loan agreement, only to half of the proceeds of sale of the English property. The judge allowed the claim to half the proceeds of sale of the English property, but gave credit for the money paid under the second agreement.

Given the couple's reasons for executing the loan agreement, it was clear that it did not evidence a loan repayable on demand, but a loan repayable in certain circumstances, including the death of the woman. It was clear that the parties meant the second agreement to be in satisfaction of all their claims in respect of the property, including claims arising in respect of the proceeds of sale of the English property; that meant that the loan agreement would no longer be enforceable if an event occurred in which it was to be enforced. Neither institute nor maintain would be a sensible interpretation of the word cease. The words in full and final satisfaction had not been used, but those were a lawyer's words, whereas this agreement had been drafted by non-lawyers.

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