Date 22 September 2006
Yeomans Row Management Ltd –v- Cobbe [2006] EWCA Civ 1139
The doctrine of proprietary estoppel has in the recent past been held to qualify as a property interest capable of binding a successor in title as an overriding interest under the Land Registration Act 1925. The actual remedy granted under a successful action of estoppel depends upon the particular facts of each case.
The recent Court of Appeal case cited above highlighted the use of proprietary estoppel as a means of securing property interests, notwithstanding the lack of any firm contractual obligations. The case is summarised below.
The Facts
Cobbe, a property developer, orally agreed to purchase a property from Yeomans. The property was to be redeveloped by Cobbe into six town houses. The purchase price was agreed at £12 million. Whilst Cobbe was to retain the profit, this was subject to an overage agreement whereby both parties would share equally in the gross proceeds of sale of the property, over £24 million.
Yeomans’ sole director, Mrs X, made representations upon which Cobbe relied, namely that if Cobbe were to obtain the relevant planning permission, Yeomans would proceed with the agreement and subsequent sale of the property to Cobbe. Cobbe honoured his part of the arrangement (incurring approximately £200,000 in time, labour and skill) and planning permission was granted.
Yeomans reneged on its agreement, putting the price of the property up to £20 million. Cobbe advanced a claim against Yeomans, under the doctrine of proprietary estoppel. The claim was upheld by trial judge. The remedy awarded to Cobbe was a lien for 50% of the increase in value of the property, as a direct result of planning permission having already been granted. Yeomans appealed against the decision, disputing the principles upon which proprietary estoppel had been granted and the form of relief awarded.
Somewhat surprisingly however, in a separate judgment, the trial judge varied the remedy awarded, extending the lien to Mrs X’s leasehold interest in her private flat (which was contained within the property), as well as her freehold interest in the property. Both Yeomans and Mrs X appealed against this decision, contending that Cobbe had not performed all or substantially all of his duties under the arrangement and therefore he could not have expected to obtain the interest as promised to him by Yeomans.
On appeal, Mummery LJ in giving his judgment held that the principles upon which the doctrine of proprietary estoppel was based, did not require the claimant to have fully performed his obligations. “The focus of the doctrine is on the unconscionable conduct of the defendant and its effects. It is not the same thing as seeking to enforce an agreement.” It was held that in any event Cobbe had performed substantially all of his obligations under the agreement, but was precluded from completing the remainder by Yeomans themselves. Furthermore, it was not necessary to establish an immediate or future interest in the property, where there is the promise of a contract (albeit one where the terms were yet to be clearly ascertained).
In giving his judgment, Mummery LJ did not accept the contention that the agreement was ‘subject to contract’ enabling either party to withdraw at any time without any repercussions.
Discussions further centred around the nature of proprietary estoppel and the terms of relief, citing earlier case law (Jennings –v- Rice [2002] EWCA Civ 159).
The relief granted to Cobbe in the form of the lien of 50% in the increase in the value of the property was held to appropriate, given that Cobbe had expended substantial monies in part performance of his obligations and Yeomans appeal on this basis was dismissed. However, the appeal by Mrs X as to the inappropriateness of the lien over her personal interest in her flat, as comprised within the property, was upheld as there was no legal basis upon which Mrs X’s personal property ought to have been charged to secure any sums due from Yeomans.
Conclusion
It would seem that the law of proprietary estoppel now appears to be somewhat of a panacea for all ailments in the law of real property, particularly given the outcome of recent case law. Furthermore, it would seem that the remedy of estoppel will lie at the heart of resolving more and more property disputes. The case summarised above clarifies some recurring issues about the principles upon which proprietary estoppel is based and the grant of relief thereunder, establishing the overriding equitable objective of the doctrine of proprietary estoppel.
This is an important case given that most property transactions (particularly commercial property) are entered into ‘subject to contract’, whereby each party has some sort of obligation prior to signing on the dotted line. It would be prudent for both companies and individuals entering into such negotiations to seek detailed advice prior to completing any such arrangement.
For queries relating to the above or any other property related issue, please contact Lynsey Newman by telephone on 01727 798092 or by email at lynsey.newman@salaw.com
© SA Law 2006
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