Land – Proprietary estoppel – Oral agreement – Claimants purportedly entering into oral agreement to transfer land to defendants in return for waiver of obligation to pay debt – Claimants seeking possession of land – Defendants claiming proprietary estoppel – County court holding proprietary estoppel had arisen and granting defendants licence to use land as part of garden – Claimants appealing – Whether judge erring in law – Appeal dismissed
The claimants owned White Hart Farm, Barton-upon-Humber, north Lincolnshire and a large area of the surrounding land and roads leading to and from the property. In September 2011, they sold a barn to the defendants for conversion into a dwellinghouse (Lea Farm). The transfer included a further barn building and a small area of land around it across an existing road which led to White Hart Farm.
Under the transfer, the claimants granted the defendants a right of way over an access road, on terms that the defendants would resurface that road. When the resurfacing work had been done to their satisfaction, the claimants agreed to pay the defendants £7,000. In March 2012, the claimants agreed to transfer two additional pieces of land to the defendants (the green land and the grey land) in return for the waiver of their obligation to pay their debt. The agreement was never put in writing but the defendants fenced, cleared and seeded the green land.
By mid-2013 a dispute arose concerning the defendants’ use of the further barn for alleged commercial purposes in breach of a covenant in the transfer. The claimants brought proceedings in the county court which included a claim for possession of the green and grey land and damages for trespass. The defendants resisted those claims on the basis of an alleged proprietary estoppel, and sought a declaration that they should be entitled to an irrevocable licence to occupy and use the land. The court rejected the claim holding that a proprietary estoppel had arisen which should be given effect as if the claimants had granted a licence to the defendants to use the land as part of the garden to their house, which was irrevocable whilst at least one of them remained alive and continued to own the house. The claimants appealed.
Held: The appeal was dismissed.
(1) Section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 provided that a contract for the sale or other disposition of an interest in land could only be made in writing and by incorporating all the terms expressly agreed in one document or, where contracts were exchanged, in each. Section 2(5) expressly made an exception for resulting, implied or constructive trusts. The section was aimed at problems in the formation of contracts for the sale of land, whereas the purpose of an estoppel was to remedy unconscionability in the assertion of strict legal rights. Accordingly, it was doubtful that section 2 was intended to affect the operation of proprietary estoppel. But, even if it did, section 2 could only operate as a bar to the grant of equitable relief to the extent that such relief had the effect of enforcing, or otherwise giving effect to, the terms of a contract for the sale or other disposition of an interest in land that the statute rendered invalid and unenforceable. Where the alleged proprietary estoppel was not raised to enforce the terms of a contract for sale or other disposition of an interest in land, there was no reason why section 2 should operate as a bar to the grant of equitable relief.
(2) Proprietary estoppel could not be used to make an agreement enforceable which statute had declared to be void. However, the defendants were not asserting a proprietary estoppel in an attempt to enforce the agreement that had been reached in March 2012 but to defeat the claim for possession against them by the claimants. Their pleaded case was that the equity which they contended had arisen operated to prevent the claimants seeking to assert their legal right to possession and should be given effect by a declaration that they be entitled to a licence to occupy the green land for their lives or until they sold Lea Farm. The county court ordered relief by way of an irrevocable licence to that effect. although there was no estoppel in relation to the grey land whose extent and use had never been fully agreed. That satisfied the equity that had arisen, but did not contradict the terms or policy of section 2 as regards the validity of contracts for sale of land (even if that section were applicable). Section 2 did not inhibit the grant of equitable relief on the basis of a proprietary estoppel provided that such relief did not amount to enforcing a non-compliant contract. Accordingly, the judge’s approach was not prohibited by section 2: Cobbe v Yeoman‘s Row Management Ltd [2008] 3 EGLR 31, Thorner v Major [2009] 2 EGLR 111 and Sahota v Prior [2019] EWHC 1418 (Ch); [2019] PLSCS 119 considered.
(3) To establish an equity by estoppel it had to be unconscionable for the landowner to act in such a way as to defeat the expectation that the claimant had been encouraged or induced to believe. The court should take a broad view of unconscionability and look at the matter in the round, as the judge had. There was no requirement that the facts of a case had to be “exceptional” before a proprietary estoppel could be found to exist: Herbert v Doyle [2010] EWCA Civ 1095; [2011] 1 EGLR 119 considered.
The parties had reached a composite agreement under which the defendants waived the debt of £7,000 as consideration for the sale of both pieces of land. The unconscionability upon which the judge found the estoppel to exist related to the promise made to the defendants in respect of the green land upon which they relied to their detriment in performing work to improve that land. There was no uncertainty preventing the grant of equitable relief. The estoppel operated to prevent the claimants from claiming possession of the green land; the extent of which had been defined, as had its permitted use. The claimants could not sensibly complain of the relief where they had been provided with the benefit of waiver of their entire debt, and yet the defendants had only been given equitable relief in respect of the green land. The judge’s approach was not unfair to the claimants in that regard.
Neil Cameron (instructed by Adie Pepperdine Ltd, of Lincoln) appeared for the claimants; Andrew Vinson (instructed by Stephensons Solicitors) appeared for the defendants.
Eileen O’Grady, barrister
Click here to read a transcript of Howe and another v Gossop and another
