ALI ROJOB & Anor v RONABIR DEB

Where parties make an informal, quasi-contractual arrangement concerning land, proprietary estoppel may arise from a sufficiently clear assurance, reasonable reliance causing detriment, and unconscionability. In that category of case, the court will ordinarily vindicate the claimant’s expectation, although convincing countervailing factors may justify a lesser remedy. The court must assess detriment and countervailing benefits in the round and maintain proportionality. An assurance to permit repurchase of property at a fixed price is sufficiently proprietary if fulfilment requires transfer of the property and payment of money. A later attempt to resile from an open-ended assurance may be unconscionable where the claimant transferred the property at an undervalue and assumed mortgage obligations in reliance on it.

The claim concerned a family home transferred by the claimants to a close family friend in 2008. The defendant raised mortgage finance, paid the claimants £205,000, and the claimants continued living in the property while making the mortgage repayments. The parties agreed that the claimants or their family could buy the property back for the same price when they could raise the necessary funds.

The defendant alleged that the buy-back right was limited initially to two years and later to three. The claimants denied any time limit and relied on proprietary estoppel and constructive trust. The central issues were whether the buy-back agreement was time-limited, whether the elements of proprietary estoppel were established, and how any equity should be satisfied.

1. Factual findings. The agreement in principle was made between the claimants and the defendant at a March 2008 dinner. The defendant agreed to acquire the property using bridging finance and to permit the claimants or their sons to buy it back at the same price. The precise sum of £205,000 was settled later during implementation. No time limit was discussed or agreed. The defendant’s later failure to mention any time limit in extensive correspondence and discussions in 2015 and 2016 was powerful evidence that none had been agreed.
2. Proprietary estoppel. The elements were a sufficiently clear assurance, reasonable reliance causing detriment, and unconscionability, following Thorner v Major [2009] 1 WLR 776. The analysis is retrospective, looking back from the point when the assurance falls to be performed, and the ingredients cannot be treated as watertight compartments. Detriment need not be financial and must be assessed as part of the broad inquiry into unconscionability.
3. The assurance was sufficiently clear. The claimants had transferred the property at materially below market value and assumed responsibility for the mortgage repayments in reliance on the promise that they could repurchase it for £205,000. Their continued occupation was a benefit, but it was obtained at the cost of surrendering equity and undertaking mortgage risk. The question was to be assessed in the round rather than by a precise comparison of mortgage payments and market rent.
4. The arrangement was quasi-contractual, falling within the first category identified in Jennings v Rice [2003] 1 P & C.R. 8 and Davies v Davies [2016] 2 P & C.R. 10. The court retained a discretion, but there was a strong reason to fulfil the clear expectation where the claimant had performed their side of the bargain. The expectation was not disproportionate to the detriment.
5. Remedy and orders. It would be unconscionable for the defendant to resile from the assurance and seek to profit from the arrangement. The equity was therefore satisfied by requiring the defendant to transfer unencumbered freehold title to the claimants on payment of £205,000 together with sums required to redeem the mortgage, subject to a maximum of £215,000. The claimants were to bear the transfer costs. The constructive trust claim did not require determination, and the defendant’s section 2 point under the Law of Property (Miscellaneous Provisions) Act 1989 was not pursued.

First-instance decision. No prior appellate decision was stated in the judgment.