HSBC Trust Company (UK) Ltd. v Quinn

An option to purchase land must be supported by consideration or made by deed. Under Law of Property (Miscellaneous Provisions) Act 1989, a document is a deed only if its face makes clear that it is intended to have that status; formal language and witnessed signatures are insufficient by themselves. An option is exercised only where the communication would leave a reasonable recipient in no doubt that the right is being exercised and that the parties are thereby bound. Proprietary estoppel requires proof of an assurance or understanding, reliance and detriment. A claimant’s expenditure on improvements, together with a general expectation of later purchase, does not establish an equity without reliable evidence of the relevant assurance.

HSBC, as executor of Mrs Bray’s estate, sought declarations that Mr Quinn had no interest in a pharmacy property beyond his rights under a lease. Mr Quinn claimed alternatively that Mrs Bray had granted him an option to purchase the freehold for £375,000, or that he was entitled to relief based on proprietary estoppel or constructive trust arising from an alleged 1984 understanding concerning an extension to the premises.

The contractual claim relied on handwritten agreements made in 1998, 2003 and 2004. The issues included whether the 2004 agreement was a deed, whether any option had been exercised in time, and whether Mrs Bray had capacity. The central issue on the equitable claim was whether she had assured Mr Quinn that he could acquire the property at a discounted price in return for funding the extension.

1. Contractual claim dismissed. The 2004 agreement, if effective, operated as an option because it imposed no obligation on Mr Quinn to purchase. It was unsupported by consideration and therefore enforceable only if made by deed.
2. Under section 1 of the Law of Property (Miscellaneous Provisions) Act 1989, the document had to make clear on its face that it was intended to be a deed. Its formal wording, full names and addresses, and witnessed signatures showed an intention to create a legally binding document, but did not show an intention to give it the additional status of a deed. The 2004 agreement, and the earlier agreements, therefore did not qualify as deeds.
3. In any event, no option had been exercised in time. The applicable test, drawn from Rennie v Westbury Homes Ltd [2007] EWHC 164 (Ch) and Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, was whether the communication left the reasonable recipient in no doubt that the right was being exercised. Mr Quinn’s assertions that he had an agreement, requests to send documents, and request that HSBC reconsider the price did not communicate a decision to exercise the option and become bound to purchase.
4. Mrs Bray lacked capacity when the 2003 and 2004 agreements were signed, but HSBC did not prove that Mr Quinn knew of her incapacity. This ground therefore would not independently have made the agreements voidable against him.
5. The proprietary estoppel and constructive trust claims also failed. Although Mrs Bray probably agreed to the extension and may have been sympathetic to Mr Quinn’s wish eventually to purchase, the evidence did not establish an assurance or agreement that he could buy at a discounted price. His unreliable and inconsistent evidence, the absence of contemporaneous confirmation, the terms of the 1998 agreement, and the later wills and documents did not support the alleged assurance.
6. The judge made no concluded determination on whether the company or Mr Quinn suffered the relevant detriment, or whether the legacy in Mrs Bray’s will would have satisfied any equity, because no equity was established. The parties were directed to address the appropriate form of order and consequential matters.