Yeoman's Row Management Ltd. & Anor v Cobbe

Proprietary estoppel may arise from an assurance that a defendant will enter a future contract. The assurance need not itself be contractually enforceable or contain every contractual term, provided it is not too vague to create a practical expectation. The doctrine focuses on reliance and unconscionable conduct. A subject to contract qualification ordinarily preserves a right to withdraw, but later conduct may still create an estoppel. Relief is discretionary and must reflect expectation, detriment, unconscionability and proportionality. Where work performed under a commercial joint venture substantially enhances property, reimbursement or a quantum meruit may be inadequate; a share of the enhanced value may satisfy the equity. Land-contract writing formalities do not apply to a distinct estoppel claim that does not enforce an oral contract.

Mr James Cobbe negotiated orally with Yeoman’s Row Management Ltd for the purchase and redevelopment of a block of flats. He obtained detailed planning permission after being encouraged to believe that the agreed commercial terms would be honoured in a formal contract. The company then withdrew and demanded a substantially higher price.

Etherton J held that the company was estopped from withdrawing and granted Mr Cobbe a lien securing half the increase in the property’s value attributable to the planning permission. In a later judgment, the judge varied the order to provide for valuation with vacant possession and to extend the lien to Mrs Lisle-Mainwaring’s separate leasehold interest. The appeals concerned liability, the proper relief, and the jurisdiction to make those variations.

Disposition. The Court of Appeal unanimously dismissed Yeoman’s Row Management Ltd’s appeal against the Main Judgment. It allowed Mrs Lisle-Mainwaring’s appeal to the extent necessary to set aside the extension of the lien to her separate leasehold interest, and dismissed Mr Cobbe’s cross-appeal. The constructive-trust issue was not determined.

1. Liability. Proprietary estoppel is concerned with unconscionable conduct and its effects, rather than enforcement of an agreement. The claimant need not have fully performed the proposed bargain. An assurance need not be sufficiently certain to constitute an enforceable contract, provided it is not so vague or uncertain that it cannot create a practical expectation. There is no material distinction between a promise to enter a contract for the sale of land and a promise to grant an interest in land where the assurance is sufficiently clear.
2. Subject to contract. The arrangement was not expressly subject to contract. That expression ordinarily reserves the right to withdraw before formal contracts are exchanged. However, even its use would not necessarily prevent proprietary estoppel if subsequent representations and encouragement created a belief that the defendant would not withdraw.
3. Unconscionability and section 2. The trial judge was entitled to find unconscionability from the continued encouragement of expenditure, the defendant’s knowledge of the claimant’s reliance, the deliberate timing of the withdrawal after planning permission increased the property’s value, and the retention of the resulting benefit. The Law of Property (Miscellaneous Provisions) Act 1989, section 2, did not apply because no concluded land-sale agreement was being enforced; the estoppel arose from inducement, reliance and unconscionable conduct.
4. Relief. Mummery LJ and Dyson LJ confirmed the court’s wide discretion to satisfy the equity. Relevant matters include the expectation created, detriment, the degree of unconscionability and proportionality between expectation and detriment. Reimbursement or a full quantum meruit would fail to reflect the commercial joint venture and would leave the company disproportionately advantaged. The award of half the increase in value attributable to planning permission was a rational and permissible form of expectation-based relief.
5. Variation. The court could clarify the order so that valuation proceeded on the vacant-possession basis already apparent from the judgment. It could not, however, impose a lien over Mrs Lisle-Mainwaring’s separate property when no personal claim or proprietary-estoppel cause of action had been pleaded or established against her.

• Court of Appeal (Civil Division): Dismissed the appeal against the finding of proprietary estoppel and the principal relief; set aside the extension of the lien to Mrs Lisle-Mainwaring’s leasehold interest; dismissed the cross-appeal.
• High Court of Justice, Chancery Division: Etherton J’s Main Judgment upheld the proprietary-estoppel claim and granted a lien securing half the increase in value attributable to planning permission. His Second Judgment varied the order to provide for vacant-possession valuation and to extend the lien to the leasehold interest in Flat 50.