Category Archives: Estoppel

Promissory estoppel could not outflank statutory requirements for variation of land sale contracts

Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (the 1989 Act) says:

“(1) A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each

(5) … nothing in this section affects the creation or operation of resulting, implied or constructive trusts.”

In Dudley Muslim Association v Dudley Metropolitan Borough Council [2015] the starting point was that the Dudley Muslim Association (“DMA”) were under an obligation to re-transfer land to the Council in the event of non-completion of a Mosque development by a contractual deadline.

They alleged that the Council had made representations that they be allowed an extension of time beyond the Scheme getting planning permission and that this amounted to a variation of the contract or was the basis of a promissory estoppel.

The Court of Appeal held that an obligation to re-transfer land to the Council was a contract for the disposition of an interest in land and therefore caught by section 2 (1).

Although the obligation to re-transfer was in the nature of a covenant, it made no difference. It was an executory (and initially conditional) commitment to transfer the freehold to the Council in exchange for a specified sum of money. So the obligation to transfer was within the scope of section 2.

Any variation of a contract that falls within the scope of section 2 must itself comply with the required formalities of that section: McCausland v Duncan Lawrie Ltd [1997]. The DMA could not show that the correspondence from the Council alleged to be the source of the estoppel did comply.

McCausland left open the possibility that estoppel might get round the section, though it would be surprising if one could do by promissory estoppel what one could not do by informal contract.

An “estoppel by convention” arises where parties to a transaction act on an assumed state of facts or law, where that assumption is either shared by both, or, made by one party and acquiesced in by the other party. Here, so long as the assumption is communicated by each party to the other, then each is prevented, or estopped, from denying the assumed facts or law if it would be unjust to allow them to go back on the assumption. Godden v Merthyr Tydfil Housing Association (1997) subsequently held that an allegation of an estoppel by convention could not circumvent section 2.

A “proprietary estoppel” involves something being done by a person which that person believes will give him rights in or over land. For example, putting up a building or making improvements to the land. Here the landowner may be estopped from denying the right or title which that person has assumed to exist. Yaxley v Gotts [2000] held that a proprietary estoppel claim could be brought despite section 2 (1) because such a claim fell within the exception in section 2 (5). But the observations of Lord Scott in Cobbe v Yeoman’s Row Management Ltd [2008] later cast doubt on this:

“The proposition that an owner of land can be estopped from asserting that an agreement is void for want of compliance with the requirements of section 2 is, in my opinion, unacceptable. The assertion is no more than the statute provides. Equity can surely not contradict the statute.”

Though the observations were made as an aside and were not essential to the decision, three other Law Lords in the case had agreed with Lord Scott’s speech.

In the present Dudley case, the Court of Appeal was prepared to assume, for the purposes of argument, that a claim in proprietary estoppel is capable of outflanking section 2. But only because it might fall within the express exception within subsection (5) which was itself part of section 2.

A “promissory estoppel” usually involves a promise, given by one party during the performance of a contract, not to hold the other party to the strict terms of the original contract.

Where, as here, a defence was raised based not on proprietary estoppel but on promissory estoppel there was no question of a constructive trust of land arising. Furthermore since the DMA already owned the land, there was no relevant property which was capable of being held on constructive trust for the DMA.

Unless a case fell within section 2 (5), to admit a defence based on promissory estoppel would be effectively to repeal the section by judicial legislation.

So, even if the DMA had been able to plead and prove a defence of promissory estoppel it would not have overcome the extension of time being void for non compliance with the formalities required under section 2 (1) of the 1989 Act.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Constructive trust used to validate verbal land contract

In Ghazaani v Rowshan [2015] Mr Rowshan owned a Leeds property. Dr Ghazaani relied on the doctrine of constructive trusts and/or proprietary estoppel and contended that Mr Rowshan held the Leeds property on constructive trust for him and should be compelled to transfer it to him.

There was an oral agreement under which Dr Ghazaani and Mr Rowshan agreed to exchange the Leeds property for a Tehran apartment together with an equality payment.

There was never any intention to enter into a formal written agreement. Dr Ghazaani and Mr Rowshan were quite content to proceed to completion on the basis of the oral agreement they had reached. At least by November 2011 all of the terms had been agreed between the parties. There were no further terms to be agreed between them.

Being an oral agreement normally Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 would make that agreement void – certainly as regards the Leeds property. It had been a matter of debate how far proprietary estoppel and constructive trusts could be used to get round the hardship and potential for injustice in this section.

In November 2011 Mr Rowshan granted Dr Ghazaani possession of the Leeds property and instructed a tenant of part of it to pay rent to Dr Ghazaani.

Between 2011 and 2012 Dr Ghazaani carried out significant alterations to the first floor of the Leeds property and had converted it into residential accommodation. Dr Ghazaani had spent £10,490 for the labour and a substantial amount was also spent on the materials. Dr Ghazaani retained possession of the first floor flat. He had 3 daughters and it had been occupied from time to time by two who were studying at Leeds University. The Transfer of the Tehran apartment to Mr Rowshan was made by a Transfer registered in November 2011. The 500 million IR equality money was paid to Mr Rowshan.

The High Court said Dr Ghazaani has made out his case for a constructive trust and/or proprietary estoppel and, in the exceptional circumstances, it would be unconscionable for Mr Rowshan to refuse to complete the Transfer of the Leeds property to Dr Ghazaani.

The parties should be put in the position they would have been if the contract had been concluded in November 2011.

So the court ordered Mr Rowshan to Transfer the Leeds property to Dr Ghazaani.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Council estopped from saying compulsory purchase claim time barred

A claim for compensation for compulsory purchase is subject to the 6 year time limit in the Limitation Act 1980 but when does that time limit run from?

In the High Court case of Saunders v Caerphilly County Borough Council (2015) the claimant argued that the 6 years only started when the Lands Tribunal quantified the award.

But the authority successfully argued that it ran from them giving notice to enter as that triggered the right to “compensation to be awarded by the Lands Tribunal”.

However the court found that the authority was bound, in fairness, by the doctrine of estoppel not to hold the claimant to the time limit.

Historically the claimant had in fact applied to the Lands Tribunal in time but the authority had prevailed on the claimant to withdraw that application based on certain assurances about the claimant’s compensation claim being entertained.

A letter from the authority’s head of legal services in 2008, was clear indication that if the outstanding points were not agreed, they would be referred to the Lands Tribunal. Implicit in that communication was that no limitation point would be taken.

Moreover the authority suggested that the parties should continue to negotiate and that commencing proceedings at that stage would serve no productive purpose.

That was the basis upon which negotiations carried on until 2012, when the authority firstly raised the limitation issue and reserved its rights in respect of it.

Thereafter, the claimant had been entitled to a reasonable time to consider his position, and instruct new solicitors.

So the court ruled that the claim should be admitted out of time.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Brothers had operated all family properties and businesses as co-owners

The recent case of Bhushan & Ors v Chand [2015] concerned a family property dispute.

In the early period it was a traditional family under the close control of the head of the household, initially the husband and after his death his wife. All the sons of the family continued to pay over their wages to their mother who controlled the family’s money. The family home was transferred into her name, and it’s successor was bought in her name.

The mother received money from various sources and simply mixed it and applied it as she thought fit for the family’s benefit, either for daily expenses or in acquiring assets she expected to benefit her sons later.

The High Court said the mixing of funds under her control would make her the beneficial owner of the money each of her sons paid to her.

When an asset such as a house was bought with that money, the ownership of that asset would depend on her intention as expressed at the time, and was not to be treated as relating back to the respective contributions to the mixed fund.

It was the defendant brother’s case that he was or had been entitled either to the whole or some ascertainable share of the beneficial interest in the assets purchased from that fund merely because of his having paid an indeterminable part of the price out of his wages. The High Court said that was insufficient.

But neither had the claimant brothers established a general intention that there be common ownership of all the assets bought from the outset.

The High Court said insofar as assets were bought in his name from that fund, the prima facie position would be that they were legally and beneficially his, if no contrary intention at the time of purchase was proved.

However, if such a property was later sold and the money paid back to the mother, then ownership of that money would vest in her, again, subject to a contrary intention at that time being proven.

In that early period, there was no sufficient evidence of a contrary intention.

But later as the children grew older the evidence of what the family actually did overwhelmingly supported them having agreed to work together in business and build up assets in common.

All of the claimant brothers worked in the joint enterprise family clothes business much more consistently with being owners than with them being four unpaid employees dependant on generosity from a lead family member.

Investments were purchased from the funds of the family business for each brother without regard to their ostensible ownership of the business. The proceeds of those investments were used to buy properties which were not always owned by the same family members. Rental income from properties and cash accumulated were aggregated and applied without distinction as to their origin.

Whatever the distinctions as to ownership presented to outsiders, these did not correspond with the way the properties, businesses and their income were treated between the family members.

The nominal ownerships of the family businesses and the rental properties bore no relationship to the way in which the income and proceeds derived from them were used.

The decisions to use those funds were taken by family members other than the ostensible owners. Those members did not do so as assistants or secretaries to any lead family member.

When a major financial issue arose from the compulsory purchase of one of the properties, it was described to the professionals acting as being owned by all five and the proceeds obtained were predominantly reinvested in a club owned on the same basis.

Finally, there was evidence of arrangements between the brothers, supporting the existence of a common intention trust in that the defendant had acknowledged the existence of such an arrangement by discussing the division of assets, and, by beginning to compile his own list of the assets to be divided.

Anyone wanting to show a common intention constructive trust must have relied to his detriment on the agreement he, or she, argues existed.

That was easy here as each of the brothers himself worked in the various businesses bought or established, in circumstances where, prima facie, he would not otherwise be entitled to any reward from those businesses or interest in the assets.

In the circumstances it was unnecessary to go on to consider the doctrine of proprietary estoppel or the precedents set by the court decisions based on the previous case of Pallant v Morgan.

In any case the facts would not fit easily with Pallant v Morgan since there was no suggestion that one or more brothers had the opportunity to acquire particular properties but had instead stood back in favour of another.

An agreement for joint ownership fitted more easily with a common intention trust than a promise of an interest in the property of another.

Their respective cross entitlements under that ownership remained to be settled – being complicated by the fact that for some time the defendant had been operating the club and the other brothers had been operating the other businesses.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Ongoing partnership: all partner tenants need to apply for statutory lease renewal

Where joint tenants want to renew their lease under the Landlord & Tenant Act 1954, the word “tenant” prima facie means all the joint tenants in whom the lease is vested.

So where the lease is vested in partners, the request and claim for a new tenancy would have to be made by all the tenant partners and cannot be validly made by one alone.

However section 41A of the 1954 Act permits an exception to the rule in the case of partnerships where not all of the joint tenants continue to use the leased premises for the purpose of the partnership business.

So, under section 41A(1), there are four conditions which require to be fulfilled:

1. the lease up for renewal must be vested in at least two joint tenants;

2. the property must include premises occupied for the purposes of the business;

3. the business must at some time during the tenancy have been carried on by all the joint tenants as partners; and

4. the business must now be carried on by at least one of the joint tenants, either on their own or in partnership with one or more other people AND no part of the property held under that lease may be occupied under the tenancy for a business carried on by the other joint tenant or tenants.

In the Court of Appeal case of Lie v Mohile [2014] the freehold was owned by the defendant who was one of the two partners. The claimant was the other. The defendant had leased the property to himself and the claimant for the partnership business.

The defendant had attempted to dissolve the partnership by notice of dissolution in 2011 but the notice had been ineffective and the partnership had continued.

The Court agreed with the County Court that the first three of those conditions were satisfied, but the fourth was not because in fact, the partnership continued to subsist and to operate from the premises so that the premises continued to be occupied by both partners for the purposes of the partnership business.

So it could not be said that the business was carried on “by one or some only of the joint tenants” (section 41A(1)(d)).

The claimant said that the defendant was estopped from raising the validity of the claimant’s renewal application on this ground late in the proceedings when he could and should have raised it much earlier.

However the Court said this preliminary issue went to the root of the Court’s jurisdiction to grant a new tenancy and so could not be barred out by an estoppel on the grounds the claimant relied on.

So the Court dismissed the claimant’s claim for a lease renewal.

Court ordered removal of Land Registry Caution in advance of full hearing

The effect of registering a caution against the first registration of unregistered property has tended, in practice, to be that it cannot be sold.

Furthermore the process to challenge the registration of the caution takes a considerable length of time.

If an application is made to remove the caution, the court must consider whether the respondents have a seriously arguable case for obtaining ownership of, or a proprietary interest in, that property, when the case comes to trial.

The court must also consider whether either or both parties would be adequately compensated by an award of damages for:

– the loss of the property or that proprietary interest if the caution is wrongly ordered to be removed; or

– the loss of a selling opportunity, perhaps in a falling market, if the caution is wrongly ordered to remain

in advance of a full trial of the issues.

If neither can be adequately compensated in that way, the court must decide “where the balance of convenience lies”.

In the High Court case of Williams v Seals & Ors [2014] the respondents claimed an interest in some Derbyshire farm property under the Inheritance (Provision for Family and Dependents) Act 1975 and by proprietary estoppel. They lodged a caution against first registration to prevent the property from being sold free of their claims.

The claimant was the sole executrix and beneficiary under a Will bequeathing the property and now applied to get the caution removed.

The respondents’ statement of means in support of their claim under the 1975 Act showed that they had very limited means. Mr Seals stated in his witness statement that he had no assets of any real value.

The claimant had not put any evidence before the court of her financial resources, but the respondents’ evidence indicated their belief that she was independently wealthy and the sole freehold owner of two properties in Ashbourne which were free of mortgage.

The fact that respondents were asking that the claimant’s property remain subject to the caution pending the full court hearing of these issues created an obvious difficulty where (as here) the owner was proposing an imminent sale of the property. Since in the meantime the respondents had not given the claimant any undertaking to pay damages or afford other protection in the event that the caution was ordered to be cancelled at the full hearing but had frustrated a sale in the meantime.

If the caution were not cancelled and the farm and other land could not be sold, then pending a full trial of the action the risks to the estate were threefold:

1. loss of interest on the sale price in the meantime;

2. expenditure to maintain the property and

3. the possibility of a decline in market value.

Were the respondents to fail in their claims, there was no evidence to suggest that the respondents would be in a position to meet a claim to compensate the claimant estate for any of those losses which it might suffer as a result of the caution remaining in place. On the other hand, it appeared likely that the claimant would be able to compensate the respondents for any loss resulting from the cancellation of the caution.

This conclusion was a major factor in leading the court to order the caution to be cancelled and so permit the sale of the farm to proceed.

This blog as been posted out of general interest. It does not replace the need to get bespoke legal advice in indvidual cases.

Estoppel based on promise of permanent home

In the Court of Appeal case of Southwell v Blackburn [2014] the Appellant and the Respondent had set up home together in Droitwich, in 2002. The Respondent, a divorcee with 2 daughters, had given up a secure tenancy of a property in Manchester, which she had spent roughly £15,000 on, based on his representations that she would have a long term home and the same security as a wife. The Appellant funded the purchase of the house with the equity from his old house and a repayment mortgage in his sole name which he alone repaid.

When the relationship broke down 10 years later the Respondent unsuccessfully claimed that the Appellant held the Droitwich house under a constructive trust for the benefit of both of them in equal shares. But the judge at first instance found she had an enforceable equity, in the Droitwich house, by operation of proprietary estoppel to the tune of £28,500.

It’s notable that the representations he made to her were specific as to the nature and extent of the “long term commitment” he gave her “to provide her with a secure home” but were not specific as to ownership of their new home.

The judge at first instance found that he had led the Respondent to believe she would have an entitlement which would, on any breakdown of the relationship, be recognised in the same way as the contribution of a wife to the assets of a marriage would be recogised on a marital breakdown. Without that she would not have given up her secure tenancy in Manchester.

His promise had not been of a half share in the house, but he had given her a promise of security, which he had failed to fulfil, and it would be unconscionable for the Appellant not to try to put her back in much the same position as she was before she gave up her own house.

The case is also significant in that much the larger part of her award was quantified not on what she spent on the Droitwich house but on what she had spent on the Manchester house, they not cohabited in, and that she had given up.

On top of her spending on her old home that she had given up, she had spent £4,000 – £5,000 as her contribution to setting up the new house with the Appellant. The Respondent had been relieved of her liability to pay rent in Manchester and had lived rent-free in Droitwich but her practical support had assisted him to increase his earnings by at least one major career promotion. The value of the new house had increased from £240,000 to £320,000. Allowing for inflation £20,000 was adjusted to the £28,500 she was awarded. That figure reflected the prejudice she had been subjected to by the Appellant not fulfilling his promise and should allow her to get back to her 2002 position.

The detriment to the Respondent had not been that she embarked upon a relationship with the Appellant but that she had abandoned her secure home in which she had invested, and she had then invested what little else she had in the Droitwich home even though she had no legal title to it.

It was that detrimental reliance which made the Appellant’s promise irrevocable and led to the conclusion that he could not conscionably go back on the assurance about her having a long term secure home.

This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.

Right to have and keep gates shut could bind successors

In the Court of Appeal case of Bradley & Anor v Heslin & Anor [2014] what was claimed was a right to maintain gates across the entrance to a joint drive, and a right to open and close those gates at all times and for all purposes connected with the enjoyment of one of the properties, No. 40 Freshfield Road Formby, Merseyside.

The claimant and respondent’s respective predecessors were Mr Thompson and Mr Ewing. Mr Thompson had done work on Mr Ewing’s land including designing and erecting gate pillars and gates, building boundary walls to the driveway, laying out and edging the driveway, planting the hedge and tarmacing the end of the driveway.

The work undertaken considerably exceeded maintenance of the shared portion of the driveway.

There was now a neighbour dispute between their successors as to Mr Thompson’s successors’ rights to close the gates.

Also it was extremely unlikely that Mr Thompson would have done that work on Mr Ewing’s land without any discussion with Mr Ewing, or that Mr Ewing would just stand by and permit it to happen.

Mr Bradley had confirmed orally that Mr Thompson had told him that he had tacitly agreed with Mr Ewing to build the gateposts but there was no direct evidence of any express formal agreement or of any specific terms.

However it could only be inferred that the building of the northern and southern pillars flanking the driveway and the installation of working gates and the other work must have been done with the express agreement of Mr Ewing and that both Mr Thompson and Mr Ewing benefited from the arrangement.

It was evident that the gates had not been not erected with the intention that they be purely ornamental and would never be shut. Mr Thompson had an aggressive dog. One purpose of the gates was to prevent it going onto the road.

It could be inferred that the gates were regularly closed for that reason.

However it could not be inferred that the default position was that the gates were always shut as the dog would probably have been chained or kept in the house as well.

When shut, the gates must have interfered somewhat with Mr Ewing’s freedom to go to and fro.

However there being no evidence of disagreement supported the view that that hindrance was consensual and reasonable.

Doubtless Mr Thompson had constructed the northern gate pillar at his own expense, to his design in his chosen location, and hung from it gates which he operated according to his need. Altogether they contributed to a coherent and unified frontage design which made the entire frontage appear to be part of Mr Thompson’s property.

Mr Thompson had gone far beyond just discharging an obligation to share the cost of maintaining a jointly used driveway. His work and contributions had given Mr Ewing extensive and enduring benefits – even if the agreement had been “tacit”.

Thereafter Mr Thompson acted as an owner of the northern pillar and gates would be expected to act and Mr Ewing did not act as such owner.

Mr Thompson had done so because he reasonably understood that he would be entitled to do so.

That such was the understanding of Mr Thompson must have been known to Mr Ewing who must have intended Mr Thompson to be so entitled in return for all the work that Mr Thompson did at his own expense on property that belonged to Mr Ewing.

If in 1979 Mr Ewing had demolished the northern pillar or painted it pink that would not have been regarded as conscionable. Equity would have estopped Mr Ewing from exercising such rights as registered proprietor of the ground on which Mr Thompson had built the pillar.

If such an estoppel originally governed the relationship between Mr Ewing and Mr Thompson then it continued to bind their successors.

Mr Thompson’s successors could assert rights to ownership of the northern pillar as (assumed) registered proprietors of it. The frontage appeared a unified whole and to be the frontage to No.40. The owners of No.40 were in actual occupation of the pillar so their equitable rights to it were protected as an old overriding interest under the Land Registration Act 1925.

Accordingly, the northern pillar belongs to the Bradleys as owners of No. 40.

As to the ownership of the gates that hung between the pillars, they belonged to the owners of No.40 as well. Mr Thompson had paid for them: and they hung between pillars which belonged to him and had since devolved to his successors as owners of No.40.

When (if ever) may the gates be closed?

It was not intended that the gates should be purely ornamental. Whilst there was no direct evidence of such agreement, the fact that they were used as soon as they were erected evidenced a “tacit” agreement between Mr Ewing and Mr Thompson that the gates were to be functional.

The owner of the property that had the right of way had gated the way and thereby interfered with the landowner’s rights.

If the gates were closed whenever those owners wanted to pass through them, then they would be seriously inconvenienced, as would their predecessors in title have been.

So for the Bradleys to close the gates over the driveway would be a trespass over the Heslins’ land, unless they had a right to do so: which right would be in the nature of an easement. The right to hang and close a gate could be a right capable of being an easement and could be acquired by grant or prescription or as here result from a proprietary estoppel. It was simply the right to occupy airspace by hanging a gate over the land forming a driveway which was quite capable of being an easement that made life better for the property that benefited from it.

It was compatible with being an easement as it did not amount to a claim to the whole beneficial use of the driveway, nor did it render the Heslins’ ownership of the driveway illusory.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Borrower estopped from challenging mortgage witnessing and Mortgagee’s right to dispose of goods

In the High Court case of Campbell v Redstone Mortgages Ltd [2014] the claimant (“Miss Campbell”) had executed a mortgage over her property, Milkup Bank Farm, Willington, Crook, County Durham, DL15 0RN (“the Property”). Her signature on the mortgage was apparently witnessed. Following recent cases on the point Miss Campbell now said that the witness was not present when she signed the mortgage.

The respondents (“Redstone”) were now the lender under the mortgage.

Clauses G6.1 and 6.2 of the mortgage conditions said:

“6.1 If we [ie Redstone] or a receiver take possession of the Property, you [ie Miss Campbell] must, on Notice, remove all of your furniture and belongings. If you have not done so within 7 days of the Notice, we may as your agent remove, store or sell any items left behind.

6.2 Neither we nor the receiver will be responsible for any resulting loss or damage to your possessions. You must reimburse us for all the expenses of dealing with your furniture and goods. If we sell any of them we will pay you what’s left after deducting those expenses. …”

The main issues were:

1. Was Miss Campbell entitled to have the mortgage set aside because the witness was not in fact present when she signed the mortgage meaning that the mortgage did not comply with s.1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 (“the mortgage issue”)?

The High Court said Miss Campbell’s claim on the mortgage issue was hopeless. It was far too late now to be challenging the mortgage. There was the undisputed fact that she had been lent £500,000. There had been extensive proceedings since then. There had been an action for possession. Whatever fresh evidence Miss Campbell might have wished to rely upon could have been obtained with reasonable diligence before the Possession Order was made. In fact possession had been granted.

Miss Campbell would in any event be estopped from asserting that the mortgage was not properly executed as a deed because Redstone had throughout the original possession proceedings accepted mortgage arrears from Miss Campbell, resulting in the dismissal or suspension of many warrants of possession.

The case was easily distinguishable from the recent cases Miss Campbell now tried to rely on as saying she could not be estopped and that the mortgage had to be set aside.

Briggs v Gleeds [2014] and Bank of Scotland Plc v Waugh & others [2014] were cases where the deeds were not even superficially properly executed as deeds.

This case was similar to the Court of Appeal case of Shah v Shah [2002], in that it at least appeared that Miss Campbell’s signature was attested by a witness. In Shah the signatories had also been estopped from denying the validity of deeds even though the relevant witness had not been in the room when they signed.

2. Was Redstone liable to pay Miss Campbell damages as a result of the steps it took when it was involuntary bailee of her chattels (“the damages issue”)?

When Redstone repossessed the Property, and became mortgagee in possession of the Property, it became an involuntary bailee of those chattels left at the Property.

As involuntary bailee, Redstone had to do what was right and reasonable in the circumstances of the case.

In disposing of the chattels was what Redstone did right and reasonable in all the circumstances of the case including:

– the relevant mortgage conditions; and
– warnings given by Redstone that it intended to dispose of the chattels and three successive additional time orders made by the court)?

On 12 February 2014, 28 February 2014 and 14 March 2014 the court had ordered Redstone to afford access to Miss Campbell and others to remove their goods from the Property.

On the occasion of the third order the Judge told Miss Campbell it would be the last chance for her and others to collect their goods. Nevertheless they did not remove their chattels from the Property.

At no time had Redstone or its agents interfered with or hindered their rights to collect their chattels. In fact Redstone made every attempt to facilitate the removal of those chattels.

Accordingly, Redstone had been entirely justified in commencing to clear the Property and dispose of the goods on 1 April 2014.

Furthermore given the amount and different nature of goods left at the Property, the fact that they appeared to have no intrinsic value, and that the deficit on the mortgage account was over £730,000, the most sensible appropriate and cost effective way for Redstone to deal with the goods had been to dispose of them as opposed to putting them into storage or selling them.

What Redstone did with the goods left at the Property when it took possession was right and reasonable, in the circumstances. So Redstone had no liability to pay Miss Campbell, or other owners of chattels left on the Property, damages.

This blog has been posted as matter of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Detrimental reliance meant informal land promise enforceable

Wherever a claimant acts in reliance on a promise to his detriment, the principal issues are generally whether: (i) the principle of promissory estoppel or proprietary estoppel applies; and (if the claim involves land), whether (ii) the claim is barred by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (“the 1989 Act”), for a lack of the formalities required by the 1989 Act to support agreements for the sale of land.

The approach of the courts is to look at all the circumstances to decide how to achieve the minimum equity required to do justice, and to provide a remedy based either on the expectations of the parties, where the parties’ mutual understandings are obvious or some lesser remedy where those expectations are uncertain or extravagant or much greater than the detriment suffered by the claimant.

There are a wide range of reliefs available and it is not necessarily a case of providing compensation for either the detriment or the reliance or the expectation. The available discretion is wider than that and the remedy must be proportionate, taking into consideration the promise, and the benefit to the promisor and the detriment incurred by the claimant.

In Seward v Seward and another (2014) the claimant and his brother were the two sons of the defendants. Collectively, they owned and farmed 101 acres of land at Chudleigh, Devon.

The farm was then split between the claimant and his brother. The defendants retained some ownership.

It was later proposed to be sold for £830,000.

The claimant applied to court for a declaration that the defendants held the farm on trust for him absolutely.

The claimant had transferred to his brother his half share in another property that the brothers jointly owned, against the defendants’ promise that he would receive the whole of the farm after the first defendant’s death. The claimant was now enforcing that promise.

The defendants said they had never made the promise and that in any event the claimant had received from them gifts of land and financial support which would have satisfied any such promise.

The High Court said the claim fell within the doctrine of proprietary estoppel.

A representation had been made to the claimant and it would be unconscionable for the parents to go back on that representation. He had relied on that representation to his detriment by giving up half the jointly owned property in reliance on the promise that he would, in the future, receive a property worth a lot more. His detrimental reliance on that representation meant it could not be revoked.

Here the representations were as to future benefits and these might be affected by, and the promise conditional upon, unforeseen future events. But subject to that qualification, the remedy was to place on the land a remedial constructive trust. Equity was sufficiently flexible to allow this.

The remedy sought here was quite distinct from the enforcement of a contractual agreement, it was a promise, which was enforceable on the basis of a constructive trust founded on facts which had created a proprietary estoppel. Section 2 of the 1989 Act contained an express saving provision for constructive trusts so it was not a promise rendered void and unenforceable by that section.

The benefits actually received by the claimant had been insufficient to satisfy the equity which arose in his favour. Here the minimum equity required to do justice to the claimant was to award him the entire beneficial interest in the property.

The defendants were ordered to execute a declaration of trust of the property in favour of the claimant, but the defendants, and the survivor of them on death, were allowed to live there as long as they wished or required.

If the property needed to be sold, they would have to get the claimant’s agreement to it.

The claimant’s interest would then be transferred to any alternative accommodation which might be purchased and to the balance of any proceeds of sale.

This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.