Hunt v Soady

A conditional promise to transfer an interest in land will not support proprietary estoppel or a constructive trust where the conditions are not performed within a reasonable time. A clear subsequent assertion of the promisor’s continuing beneficial interest may terminate or withdraw the promise before detrimental reliance occurs. Payment of mortgage arrears by a co-borrower in sole occupation is not necessarily detriment where payment discharges a joint liability, avoids repossession and secures the payer’s own occupation. A claim based on improvements or acquiescence cannot succeed where it was not pleaded and the evidence does not establish the works, their cost or their effect on value.

The proceedings concerned a property bought jointly by the parties and initially held as beneficial joint tenants. The joint tenancy was later severed. One party sought an order for sale and division of the proceeds. The other counterclaimed for sole beneficial ownership, relying on an alleged provisional agreement that payment of mortgage arrears and release from the mortgage would be followed by transfer of the other party’s interest.

The county court ordered sale of the property, directed division of the proceeds and dismissed the counterclaim based on contract, proprietary estoppel and constructive trust. The appeal concerned whether the alleged promise had been accepted or remained effective, whether payment of arrears and property modifications constituted detrimental reliance, and whether it was unconscionable for the promise to be withdrawn.

The appeal was dismissed. Lord Justice Mummery gave the principal judgment. Lord Justice Lawrence Collins and Sir Paul Kennedy agreed.

1. Contract. The county court was entitled to hold that no concluded contract had been made. The proposal was conditional and had to be accepted and performed within a reasonable time. The absence of an express deadline did not give the recipient an unlimited period. The proposal had lapsed and was, in any event, brought to an end by the later notice asserting the continuing beneficial interest.
2. Reliance and detriment. Even assuming that a clear representation or promise had been made, the conditions were not performed. The mortgage arrears were largely unpaid for a substantial period and the other party was not released from the mortgage. After the December 2001 letter clearly asserting the beneficial claim and proposing either a lump-sum transfer or sale, subsequent conduct could not reasonably be treated as reliance on the original promise.
3. Payment of arrears. Payment of the arrears was not detriment sufficient to found proprietary estoppel or make withdrawal unconscionable. The liability to the bank was joint and several. The payer occupied the property as his home without paying occupation rent and made the payments to avoid enforcement of the possession order and preserve his own occupation. The failure to obtain a mortgage release had instead caused detriment to the other party.
4. Constructive trust and improvements. The constructive trust claim failed for the same reasons: the conditions were not performed and there was no relevant detriment or unconscionability. A further claim based on improvements and acquiescence could not be entertained because it had not been pleaded. In any event, there was insufficient evidence of the works, their cost, timing or effect on the property’s value.

The respondent was awarded the costs of the appeal, subject to the usual provisions for publicly funded parties and detailed assessment.

• Court of Appeal (Civil Division): The appeal from the order of His Honour Judge Thompson QC dated 4 April 2006 was dismissed. The county court’s order for sale and division of proceeds, and dismissal of the counterclaim, stood.