Kim & Anor v Chasewood Park Residents Ltd

A statement in a circular will not found promissory or proprietary estoppel unless, construed in context, it is a clear and unambiguous representation or promise. Language describing possible benefits of a future acquisition may state aims or potential outcomes rather than create an obligation. Reliance must sufficiently correspond to what was represented; reliance on a different transaction or legal effect will not raise the equity. Promissory estoppel is ordinarily suspensory and may be withdrawn on reasonable notice unless withdrawal is unconscionable. Proprietary estoppel relief is permanent, but it need not secure a rent-free lease where the equity does not justify that result. The circulars created no safe foundation for estoppel and the appeal was dismissed.

The appellants were tenants of a flat whose superior reversion was acquired by the respondent residents’ company. They had contributed to the acquisition after circulars described the potential benefits, including the absence of ground rent and the grant of longer leases.

The Central London County Court rejected their defence and counterclaim based on promissory and proprietary estoppel. The judge found no material reliance because Mrs Kim misunderstood the legal effect of the proposed acquisition, and held that any promissory estoppel was suspensory. The appeal concerned the construction of the circulars, reliance, the permanence of any estoppel, and whether section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 applied.

1. Appeal dismissed. Lord Justice Patten gave the principal judgment, with Lord Justice McCombe and Lord Justice Kitchin agreeing.
2. Construction of the representation. A representation founding estoppel must be clear and unambiguous. The court must construe it in its context. The August 2006 circular was sent before any acquisition, when neither the success of the purchase nor the company’s future financial position was known. Its description of the benefits of owning the reversion was therefore a list of potential benefits, not a promise or guarantee that participating tenants would receive rent-free leases. The statement about ground rent contrasted the position of participating and non-participating tenants and did not bind the company to waive rent under a future lease. The representation could not safely found either promissory or proprietary estoppel. This was decisive.
3. Reliance. In any event, the Kims did not materially rely on the representations. Mrs Kim believed that she was acquiring part of the freehold and would cease to be a tenant. That was materially different from the promise alleged. Reliance on a different promise or legal effect does not establish the necessary nexus between representation and reliance.
4. Further observations. Promissory estoppel is generally suspensory. The company could resile on reasonable notice unless it was unconscionable to do so. Its financial reasons, willingness to refund the contribution, and the limited significance of the ground rent made withdrawal permissible. Although proprietary estoppel relief is permanent, the equity did not require a rent-free lease. The company was required to offer only a new lease on its standard terms, or refund the contribution and leave the existing lease in place.
5. The court expressed no view on whether the proprietary-estoppel claim was affected by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.

• Court of Appeal (Civil Division): dismissed the appeal.
• Central London County Court, sitting at the Mayor’s and City of London Court before Mr Recorder Hill-Smith: rejected the estoppel defence and counterclaim and treated any promissory estoppel as suspensory.