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Yeomans Row v Cobbe
Yeomans and s2 of 1989 Act
Assurance and reliance - Thorner

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Assurance and reliance - Thorner

Nature of assurance and reliance

Thorner v Major
[2009] UKHL 18

Summary

In this claim by a nephew in respect of his uncle's estate the nephew has established that he was entitled to his uncle's farm on the basis of a proprietary estoppel.

Basic facts

The claim was based on the grounds that the uncle had made assurances to the nephew that the farm would be left to him after his death. The nephew had relied on those assurances by working for a period of some 28 years on the farm and thereby suffering a detriment. The trial judge had found that there was a sufficient assurance to give rise to the estoppel. The CA had overturned that decision on the ground that the judge had not found that the assurance was intended to be relied upon and that there was no material upon which he could have made such a finding.

House of Lords

The CA was wrong to overturn the decision of the first instance judge. He was entitled to come to the conclusion that he reached.

Yeomans Row v Cobbe distinguished

The other recent decision of the HL on proprietary estoppel, Yeomans Row v Cobbe, was distinguished. In Cobbe there was no doubt about the physical identity of the property. However, there was total uncertainty as to the nature or terms of any benefit (property interest, contractual right, or money), and, if a property interest, as to the nature of that interest (freehold, leasehold, or charge), to be accorded to Mr Cobbe. In this case, the extent of the farm might change, but there was no doubt as to what was the subject of the assurance, namely the farm as it existed from time to time. Accordingly, the nature of the interest to be received by the nephew was clear: it was the farm as it existed on the uncle's death. Further, in Cobbe the relationship between the parties was at arm's length and commercial, and the person raising the estoppel was a highly experienced businessman and the parties had consciously chosen not to enter into a contract. Each party knew they were not bound by a legal relationship. (Lord Neuberger, paras 94-97).


No proprietary estoppel

Tenant carrying out works

Haq v (1) Island Homes Housing Association and (2) London Borough of Tower Hamlets
[2011] EWCA Civ 805

Summary

There was in this case no proprietary estoppel in circumstances where the existing tenant carried out major works to the property with the knowledge of the landlord prior to the execution of the agreement for a new lease.

Facts

The Claimant Tenant (T) leased a property from D2 which was run as a convenience store. T wanted to enlarge the store and obtained planning permission with D2’s support. After the expiry of the contractual term negotiations started for the new lease of the larger premises. The negotiations focused on preparing:
  • a licence to carry out the works

  • a surrender of the old lease and agreement for a new lease, and

  • the terms of the new lease.
T was represented by solicitors at all times. Agreement was reached on all material aspects of these agreements. There was to be a new lease for 30 years.

The draft documents were incomplete at the time the works commenced. D2 cleared the part of the premises to make way for the expansion and the keys were handed over for that part. The works started without the agreements having been executed. The works were expected to take 20 weeks but took almost a year. No attention was paid to executing the agreements. Eventually T reopened the shop.

D2 then transferred its interest in the property to D1 who refused to execute the lease. T was a statutorily protected tenant but was not entitled to a 30 year term on renewal. T brought a claim arguing that D1, by virtue of D2’s actions was estopped from denying her right to the lease as agreed with D2.

Court of Appeal

The County Court was wrong to find that there was an estoppel preventing D1 denying T’s right to a lease on the terms of the draft lease between D2 and T. D2 had done nothing more than grant T a temporary licence, implied from its conduct, to start the work. It did not, by the same conduct, waive the requirement that the documents should eventually be signed and exchanged. D2 had not said or done anything that could amount to a clear and unequivocal representation either that it would not require the intended formal legal documents to be finalised and executed or that it would in no circumstances withdraw before that stage.

D2 did not waive the subject to contract status of the negotiations by allowing T to start work without the licence to carry out the works or the agreement for the lease having first been signed and exchanged. If negotiations are proceeding on an explicitly subject to contract basis, it is not open to one party alone to convert their status from being ‘subject to contract’, so that if agreement has been reached it may be regarded as binding even if the formal documents contemplated has not yet been signed and exchanged. That process must itself require agreement, so it has to be bilateral, and not unilateral. Although D2 acted in a sporadic and dilatory fashion in attempting to finalise the documents, there was nothing in its conduct on which T could fairly or reasonably rely as precluding D2 from insisting on its legal rights, so as to confine T to the statutory renewal rights as extended, once the works had been done, to the enlarged holding.

T commenced the works prior to the handing over to him of the keys. Therefore he did not act in reliance on the hand-over of the keys in commencing the works or committing himself to the expenditure. There was no reliance despite the fact that had D2 insisted on the documents being in place before the start of the works T may well have deferred the start of the works. Attorney-General of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] AC 114 followed.

Comment

This case shows the importance of properly identifying the reliance alleged and the nature of the estoppel in proprietary estoppel cases.

At first instance the judge failed correctly to identify a valid reliance by T on D2’s representations. On a correct interpretation T had relied on what his solicitors told him about D2’s intentions. Looked at objectively T was represented by solicitors and D2 at no stage made any representations that could have led T’s solicitors to hold a belief that D2 had waived its entitlement to enforce its legal rights. The fact that T may have believed that the agreement had been finalised was the relevant consideration.

The claim that an estoppel had arisen was founded on D2’s representations by its conduct in letting T into occupation to carry out the works. This was held to be wrong and the waiver of the right to insist that the licence to carry out the works was signed did not extend to a waiver of the legal right to insist that negotiations were subject to contract until the documents were executed. This finding is consistent with the dicta of Lord Walker in Stack v Dowden [paragraph 37] that: “proprietary estoppel operates as the assertion of an equitable claim against the conscience of the 'true' owner. It is satisfied by the minimum award”. In this case the minimum equity needed was that D2 was estopped from requiring a written licence to carry out the works. D2, and therefore D1, was not estopped from withdrawing from the subject to contract negotiations.

It is clear from this case that the strict approach to analysing proprietary estoppel claims following Cobbe v Yeomans Row Management Limited [2008] 1 WLR 1752 is being put into practice.


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