Pinisetty v Manikonda & Anor

In a transactional case concerning an informal agreement for the transfer of land, equity cannot make an incomplete agreement enforceable merely because the owner has acted unconscionably. Where material terms, including arrangements for replacing or discharging an existing mortgage, remain uncertain and require further agreement, neither proprietary estoppel nor constructive trust will ordinarily provide a proprietary remedy.

A presumption of undue influence may arise where a solicitor acting for the owners has a personal and financial interest in the transaction. The transaction remains avoidable unless the party seeking to uphold it rebuts the presumption.

The claimant appealed from HHJ Walden-Smith’s decision dismissing her claims for a declaration of constructive trust and proprietary estoppel concerning property owned by the defendants. The judge accepted that the claimant had made substantial payments, but held that the oral agreement was incomplete and that the transaction was potentially voidable for undue influence.

The claimant argued that the agreement could be enforced in equity, or that the court could infer a reasonable time for completion and do justice by ordering a sale. The defendants supported the judge’s reasoning and cross-appealed against an extension of time granted to the claimant.

1. Appeal dismissed. The case was transactional rather than familial. The applicable principles were those in Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55, as applied in Herbert v Doyle [2010] EWCA Civ 1095.
2. The oral agreement was insufficiently complete to support specific performance, proprietary estoppel or constructive trust. The uncertainty was not confined to the completion date. More importantly, the parties had not agreed how or when the claimant would replace or assume responsibility for the defendants’ mortgage. Those matters required further agreement. The court could not fill the gaps by implying terms as to what would be reasonable. Unconscionable conduct alone could not establish either proprietary estoppel or constructive trust.
3. The judge was also entitled to uphold the alternative finding of undue influence. The defendants’ solicitor, Mr Desari, had a relationship of trust and confidence with them and stood to benefit personally by being relieved of potential liabilities as guarantor. The transaction therefore called for explanation and the presumption of undue influence arose. It was for the claimant, seeking to uphold the transaction, to rebut that presumption. The evidence did not do so.
4. Both independent grounds supported dismissal. The court did not need to resolve whether the property had been sold at an undervalue.
5. The cross-appeal concerning the claimant’s extension of time was academic once the substantive appeal failed. Nevertheless, applying the three-stage approach in Denton v White [2014] EWCA Civ 906, the court would have extended time because the delay, viewed in context, was neither serious nor significant and refusal would have imposed a formalism without meaningful practical effect. The respondents’ cross-appeal was dismissed.

• High Court (Queen’s Bench Division): Appeal from the order of HHJ Walden-Smith of 13 July 2016 dismissing the proprietary claims while accepting entitlement in principle to reimbursement or restitution. The appeal was dismissed.