Tag Archive for 'proprietary estoppel'

Estoppel - needs something to estop

Published
by
NL
on 4 August 2008
in Housing law
. 2 Comments

I’m not going to do a report on this one as it is a) epic, b) unprecis-able and thankfully c) pretty much off topic for housing law. But anyone who, like me, is a bit of an equity hobbyist on the side, the House of Lords judgment in Yeoman’s Row Management Limited (Appellants) and another v Cobbe (Respondent) [2008] UKHL 55 is a must read on proprietary estoppel and constructive trust.

The upshot is that

Proprietary estoppel requires, in my opinion, clarity as to what it is that the object of the estoppel is to be estopped from denying, or asserting, and clarity as to the interest in the property in question that that denial, or assertion, would otherwise defeat.  If these requirements are not recognised, proprietary estoppel will lose contact with its roots and risk becoming unprincipled and therefore unpredictable, if it has not already become so. [28]

and 

a claim for the imposition of a constructive trust in order to provide a remedy for a disappointed expectation engendered by a representation made in the context of incomplete contractual negotiations is, in my opinion, misconceived and cannot be sustained by reliance on unconscionable behaviour on the part of the representor.[38]

But there is lots of juicy stuff in there. Well, juicy if you are an equity geek, and I am, on the side.

Constructive trust and dodgy RTB

Published
by
NL
on 12 July 2008
in Housing law
. 0 Comments

There is an all too common situation. A tenant with the right to buy is offered a capital sum and the mortgage payments for the (in this case) three years needed to avoid repaying the RTB discount on transfer. In the meantime, they either get to stay or hand over control of the property to the shadow. Recent RTBs have provisions in the lease to make this more difficult, as well as a much reduced discount, but there remain a lot of sharks circling.

McGuane v Welch [2008] EWCA Civ 785 was an appeal of a County Court judgment awarding an equitable interest of 100% in a lease of the property concerned to Mr Welch (W), against the title of Mr McGuane (M), the erstwhile tenant.

I’ve not got time to do a detailed report, but the appeal succeeded, largely on the basis that there was an express trust, not a constructive trust, and that the claimant did not come to equity with clean hands. In particular the Claimant had engaged a not entirely reliable solicitor, May & Co, supposedly to act for the Defendant in the arrangement. They never met their supposed client or advised him directly in person or in writing. One trusts the SRA have taken note.

The Defendant pleaded the whole arrangment being the act of “a poor and ignorant man”, (Creswell v Potter (1968) [1978] 1 WLR 255, Backhouse v Backhouse [1978] 1 WLR 243). But the judgment left the erstwhile tenant liable to repay all the monies that the Claimant had spent on the property in mortgage and refurb, so effectively meaning a plague on both your houses.

There are a number of issues in this judgment that I want to return to - in particular the requirement for ’stamped’ trust deed and transfer for admission as evidence, and the way in which express trust is dealt with. But that will have to wait for a fortnight or so. No time now, I’m afraid.

In the meantime, it is clear that the Court deeply disapproves of the ‘transaction’, but absent evidence or argument on breach of statute, can’t say much more.

Proprietary Estoppel yet again

Published
by
NL
on 11 December 2007
in Housing law
. 2 Comments

Blimey, who declared this Estoppel month? The latest is Powell & Anor v Benney [2007] EWCA Civ 1283. Although the case itself is not that interesting, the judgment is worth a look as it gives a clear overview of the Court of Appeal’s current thinking in this area. The only judgment is by Sir Peter Gibson.

Some points:

The distinction between a ‘bargain’ form of estoppel in which relief should vindicate the Claimant’s expectations and a ‘non-bargain’ form in which relief is open to a wider judicial discretion including proportionality with detriment, as proposed by Robert Walker LJ in Jennings v Rice, is followed in this case. However, interest is expressed in a critique of this distinction by Simon Gardner in ‘The remedial discretion in proprietary estoppel – again” in (2006) 122 LQR 492.

The bargain form is potentially close to constructive trust in that an effectively contractual arrangement has been reached which would be effective save for s 2 of the Law of Property (Miscellaneous Provisions) Act 1989, such that fulfilling the expectation is akin to establishing the beneficial ownership. Akin, but not the same. The Court adopts Lord Justice Walker’s comment in Stack v Dowden that:

I have to say that I am now rather less enthusiastic about the notion that proprietary estoppel and ‘common [intention]‘ constructive trusts can or should be completely assimilated. Proprietary estoppel typically consists of asserting an equitable claim against the conscience of the ‘true’ owner. The claim is a ‘mere equity’. It is to be satisfied by the minimum award necessary to do justice (Crabb v Arun District Council [1976] Ch 179, 198), which may sometimes lead to no more than a monetary award. A ‘common intention’ constructive trust, by contrast, is identifying the true beneficial owner or owners, and the size of their beneficial interests.

The Court is firm that where the claim is against the conscience of the ‘true’ owner, it is satisfied by the minimum award necessary to do justice. Where the elements of a common intention constructive trust are not made out, it cannot simply be used or pleaded interchangeably with proprietary estoppel, as apparently happened in this case.

Gardner argues that a wider judicial discretion should be available in all proprietary estoppel cases. On the case as pleaded here, the Court couldn’t pursue this further, but I think the indication that this is the direction in which it is leaning is clear, particularly in the distinction drawn against constructive trust.

What is more clearly indicated is that a detrimental reliance on a promise must be clearly established. Any benefit also obtained can and should be considered against the detriment (at least in a non-bargain case). The scale of the detriment is key and must be carefully pleaded.

Anyone looking to claim proprietary estoppel should be thinking very carefully about both pleadings and evidence, I’d say.

Constructive Trust and Proprietary Estoppel again

Published
by
NL
on 29 November 2007
in Housing law
. 18 Comments

In James v Thomas [2007] EWCA Civ 1212, the Court of Appeal fine-tuned some points on constructive trust and proprietary estoppel, with reference to shares in property. To note from Sir John Chadwick’s main judgment:

A constructive trust can arise some years after the purchase of the property by the sole title holder alone. There is no requirement for the claimed beneficial interest to arise at the time of purchase. However, in this situation, without an express post-acquisition agreement, the Court will be slow to to infer an agreement from conduct alone.

Contribution to mortgage capital repayment per se is not necessarily enough to infer agreement ot a beneficial interest.

It is not necessary for a specified share or part of the property to be mentioned in an assertion that a beneficial interest in the property would be given by the defendant to the claimant. It is sufficient that the property at issue is identifiable, pace Lissimore v Downing [2003] 2 FLR 308.

The judgment is also worth reading when considering what kinds of acts and statements, in what kind of context, will not give rise to a constructive trust or an estoppel.