The mechanics of proprietary estoppel

What is the difference between, on the one hand, Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55 and, on the other hand, Thorner v Majors [2009] UKHL 18?  The standard answer is that Cobbe involved commercial parties who, well, ought to have known better than to rely on an incomplete agreement (no unconscionability), whereas, in Thorner, we were dealing with the delightfully taciturn farmers of the Quantock Hills (unconscionability in the circs).

In Ely v Robson [2016] EWCA Civ 774, the Court of Appeal had to deal with a situation between two cohabitants who had fallen out after a 16 year relationship.  The principal issue was over the ownership of a house bought after the relationship began.  It had been purchased in Mr Ely’s sole name.  Ms Robson claimed a half share in the property.  There were at least three other properties and there were corresponding claims between the parties as to the ownership of those properties.  That was in 2005, after Mr Ely had sought to evict Ms Robson and her relations from the property that they had jointly occupied (along with Ms Robson’s elderly relative).  There were lengthy proceedings which were leading to a two day trial in September 2007.

However, in August 2007, they met in Poole Park to see if they could resolve the differences without lawyers.  Mr Ely couldn’t afford to continue to pay his lawyers and, the Judge held, after that meeting Mr Ely’s solicitors wrote to Ms Robson’s solicitors outlining the agreement that had been reached between them.  I won’t go into the precise terms of the agreement, but, in brief, Mr Ely agreed not to pursue his claims against the other properties; the former joint home was to be held on trust as to 80% for Mr Ely and 20% for Ms Robson, and Ms Robson could stay in the property until her elderly relative no longer lived there.  What is important (to me) about this letter is that it concluded with the following:

Given the complexity of the agreement we have advised our client to seek Counsel’s advice in drawing up a settlement agreement and associated trust deed.

Our clients are considering simplifying the above deal in light of the tax implications and practical difficulties in drafting the trust deed.

Before proceeding please confirm that our [sic] client agrees that the above accurately reflects the terms of the proposed settlement.

Ms Robson’s solicitors did not respond.  Both solicitors jointly sent to the court a letter asking for the trial dates to be vacated and relisted because they “… are both relatively close to reaching a settlement.  In the circumstances, it appears that more time will be required for the parties to correctly set out in writing the terms upon which they agree to settle this matter“.

Ms Robson’s elderly relative passed away, and Mr Ely commenced the proceedings in reliance on the agreement he thought had been reached.  Ms Robson disputed that there was any agreement at all and maintained her original position.  On the facts, the trial judge found in favour of Mr Ely.

Now, as Kitchin LJ noted, this was an unusual claim because Mr Ely, who was relying on the estoppel (or constructive trust), was actually the sole legal owner.  One, therefore, had to suspend reality and assume that Ms Robson had indeed had a 50% share in the formerly jointly occupied property at the outset, which the 2007 “agreement” had disturbed.  Of course, the 2007 agreement was unenforceable as it did not comply with the requisite formalities (ie s 2, LP(MP)A – see our earlier extended discussions on the relationship between estoppel and s 2 here and here).

Ms Robson’s counsel argued, consistently with Cobbe, that the 2007 solicitor’s letter was insufficiently precise to found an estoppel.  This raises quite an interesting question, on which students have laboured since Cobbe and Thorner: when is an agreement sufficiently commercial in order for the parties to fall into a Cobbe type scenario?  Part of the problem for Ms Robson was that her version of events at Poole Park had been disbelieved by the judge, which meant that she faced an uphill struggle on appeal.  However, Kitchin LJ found that this was not a commercial transaction:

I of course recognise that the terms of the letter of 14 August contemplate the drawing up of a written agreement and a deed of trust. I also accept that the letter of 30 August says that the parties are “relatively close to reaching a settlement”. But in my judgment neither letter precludes the possibility that the parties had in the course of their meeting in Poole Park in fact agreed the terms of a compromise of their respective claims and that they intended those terms to be binding upon them. This was not a commercial transaction. It was rather an attempt by two persons who had for a number of years happily lived together to resolve the costly litigation that had followed their estrangement. Furthermore, the terms set out in the letter of 14 August are in my judgment sufficiently clear to be capable of forming the basis of a binding agreement and Mr Dilworth did not identify any other matters or issues upon which the parties had still to agree.

If one assumes that Cobbe and Thorner lie at opposite ends of a continuum, where does this case sit?  Somewhere in the middle and, for me, actually at the Cobbe end.  After all, both had enjoyed at least four properties, which were in issue; both had the benefit of legal advice which set out in clear terms the agreement and its attendant uncertainties (which was clearly communicated to the court in the 2007 vacation letter); the agreement was clearly incomplete and, if counsel had advised against the agreement because of the taxation implications and complexities of the document, then one might have assumed that the agreement would not have occurred.  The parties had been cohabitants, of course, but surely that single fact should not override the broader context?

In fact, Kitchin LJ appears to base his answer to the case, in favour of Mr Ely, primarily not on principles of proprietary estoppel but on the basis of a constructive trust on the terms outlined in his solicitors’ letter: “… from the time they met in Poole Park, Ms Robson and Mr Ely had a common understanding as to the extent of their respective interests in 6 Torbay Road and thereafter Mr Ely acted to his detriment in reliance upon that understanding. Accordingly, whatever Ms Robson’s interest in 6 Torbay Road may have been prior to that meeting, I am satisfied that thereafter Mr Ely held the property on constructive trust for them both and that Ms Robson’s interest was limited to the interest defined in the declaration that the judge made. Put another way, it would in my judgment be unconscionable for Ms Robson to assert to the contrary and she is estopped from so doing.”

So, the judgment is confused here as well – are the principles of certainty of trust the same as the certainty required in the representation sufficient to found an estoppel?  That isn’t necessarily something that follows (particularly not after Lord Walker dissociated himself from the assimilation fallacy).

And, I can’t leave this without railing against the utter iniquity of the law. Not only is it completely and utterly devoid from reality, but it is also utterly unfair in failing to recognise the labour of Ms Robson. The uncertainty in the law that lead to this case in the first place is, in and of itself, a real disgrace and a failure of Parliament to legislate for cohabitants in the position of this couple. Separation is awful; even worse, when there are children involved (as here); and that is compounded by the adversarialism and uncertainty inherent in this area of law, which may sit easily in the halls of academe but not in real life; there are no winners in any of this. #grrr

Posted in Housing law - All, Trusts and Estoppel and tagged , , .

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