In Cobbe v Yeomans Row Management Ltd and others [2005] EWHC 266(Ch); [2005] PLSCS 36, a developer who had spent considerable time and money obtaining planning permission, in reliance upon an oral promise by the owner of the subject property that the site would be sold to him once permission had been obtained, has been awarded a half share in the increase in value of the property that was attributable to the grant of the planning permission.
The court found that a “proprietary estoppel” had arisen in favour of the developer. For proprietary estoppel, a means of creating or altering property rights through the exercise of the court’s equitable discretion, where it would be unconscionable to allow a party to rely upon its strict legal rights, to arise:
• the property owner must induce or permit the claimant to believe that the claimant has, or will be given, an interest in the property;
• the claimant must act to its detriment in reliance on this belief; and
• the property owner must subsequently behave unconscionably by denying the claimant the interest that the owner had encouraged the claimant to believe that it would have.
It is unlikely, in view of the distinction that the judge drew between this case and those where negotiations were conducted from the outset on a “subject to contract” basis, that this case will trigger many compensation claims from aggrieved parties. However, the claimant was described as an experienced property professional and no explanation was given as to why he had not protected his position by seeking a conditional contract or an option agreement. It does seem likely, therefore, that the claimant’s success will encourage others to invite the courts to exercise their discretion, notwithstanding section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.
Suzanne Dray is a solicitor at Mayer, Brown, Rowe & Maw LLP
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In Cobbe v Yeomans Row Management Ltd and others [2005] EWHC 266(Ch); [2005] PLSCS 36, a developer who had spent considerable time and money obtaining planning permission, in reliance upon an oral promise by the owner of the subject property that the site would be sold to him once permission had been obtained, has been awarded a half share in the increase in value of the property that was attributable to the grant of the planning permission.
The court found that a “proprietary estoppel” had arisen in favour of the developer. For proprietary estoppel, a means of creating or altering property rights through the exercise of the court’s equitable discretion, where it would be unconscionable to allow a party to rely upon its strict legal rights, to arise:
• the property owner must induce or permit the claimant to believe that the claimant has, or will be given, an interest in the property;
• the claimant must act to its detriment in reliance on this belief; and
• the property owner must subsequently behave unconscionably by denying the claimant the interest that the owner had encouraged the claimant to believe that it would have.
It is unlikely, in view of the distinction that the judge drew between this case and those where negotiations were conducted from the outset on a “subject to contract” basis, that this case will trigger many compensation claims from aggrieved parties. However, the claimant was described as an experienced property professional and no explanation was given as to why he had not protected his position by seeking a conditional contract or an option agreement. It does seem likely, therefore, that the claimant’s success will encourage others to invite the courts to exercise their discretion, notwithstanding section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.
Suzanne Dray is a solicitor at Mayer, Brown, Rowe & Maw LLP
