The House of Lords’ decision in Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55; [2008] 31 EG 88 (CS) appears to have restricted reliance upon the doctrine of proprietary estoppel to rescue oral agreements for the sale of land. The lords conceded that the courts may allow more latitude in a domestic or family context but doubted whether the doctrine of proprietary estoppel could be used to circumvent the requirement for written contracts in commercial property transactions. The decision signals the lords’ belief that the courts have been too generous in the way in which they have applied the doctrine of proprietary estoppel and reaffirms the importance of written contracts for the sale of land.
What then are we to make of the decision in Herbert v Doyle [2008] EWHC 1950 (Ch); [2008] PLSCS 235? This concerned an oral agreement for an exchange of land to facilitate a mews-style development. The land in question comprised parking spaces, which were to be exchanged for spaces elsewhere.
The House of Lords’ decision in Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55; [2008] 31 EG 88 (CS) appears to have restricted reliance upon the doctrine of proprietary estoppel to rescue oral agreements for the sale of land. The lords conceded that the courts may allow more latitude in a domestic or family context but doubted whether the doctrine of proprietary estoppel could be used to circumvent the requirement for written contracts in commercial property transactions. The decision signals the lords’ belief that the courts have been too generous in the way in which they have applied the doctrine of proprietary estoppel and reaffirms the importance of written contracts for the sale of land.
What then are we to make of the decision in Herbert v Doyle [2008] EWHC 1950 (Ch); [2008] PLSCS 235? This concerned an oral agreement for an exchange of land to facilitate a mews-style development. The land in question comprised parking spaces, which were to be exchanged for spaces elsewhere.
The builder, who was not a developer by trade, accepted that the agreement was not in writing and did not comply with the provisions of section 2 of the Law Reform (Miscellaneous Provisions) Act 1989. He relied upon section 2(5), which excepts implied, constructive and resulting trusts from the requirements of section 2, and claimed that a proprietary estoppel arose in his favour because the landowners had allowed him to proceed with the development, and to encroach upon their parking spaces, in reliance upon the promised exchange.
The judge distinguished the decision in Cobbe on the ground that the agreement in that case was incomplete. He ruled that he could still give effect to a proprietary estoppel by recognising or imposing a constructive trust, if all the requirements were satisfied for a claim in proprietary estoppel to succeed.
The judge accepted that it will now be extremely difficult for a promisee to rely upon the doctrine of proprietary estoppel in cases where the parties: (i) are legally advised and the negotiations are expressly stated in writing to be “subject to contract”; or (ii) have failed to resolve a fundamental point of principle that has been expressly raised. However, the judge ruled that this case did not fall within either of these categories. The parties were not legally represented and had agreed that the development could proceed if all the terms of their agreement were satisfied. Consequently, the agreement was not “subject to contract” in the sense that the parties could withdraw from it at will.
The agreement was subsequently varied, but the judge refused to allow this to bar the builder’s claim. However, he did rule that the position may have been different had the parties hd abandoned their original agreement in favour of a fresh contract (in respect of which no promises were made).
A brave decision indeed. However, the builder will have to meet all his obligations under the oral agreement to obtain title to the parking spaces, or pay damages of £5,145 for encroaching onto his neighbours’ land.
Allyson Colby is a property law consultant
