Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 imposes strict requirements in respect of contracts for the disposition of interests in land. But implied, resulting and constructive trusts are not affected by the requirements: section 2(5).
Are claims based on proprietary estoppel exempt too? In Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55, Lord Scott noted that section 2(5) does not mention proprietary estoppel and suggested that the law of equity should not be allowed to contradict a statute. But the courts have subsequently sought to mitigate the severity of Lord Scott’s comments by distinguishing between “commercial” and “family” contexts – although, if the doctrine can be applied in a family context, it might seem logical to be able to apply it in a commercial context too.
Howe v Gossop [2021] EWHC 637 (Ch) concerned an agreement made by parties dealing at arm’s length. But they were not experienced commercial property businessmen, who would necessarily have known that they would not be legally bound in the absence of a formal contract. Mr Howe had sold land to Mr Gossop for conversion into a dwelling house, together with rights of access over a roadway that needed to be resurfaced. It was agreed that Mr Gossop would carry out the work and, when it was done, would be paid £7,000 for so doing. But, following completion of the work, Mr Howe offered to transfer two additional pieces of land to Mr Gossop instead. The parties shook hands and, although they had not identified the precise extent of one of the parcels or agreed the use to which it could be put, Mr Gossop proceeded to fence, clear and seed both areas – after which Mr Howe reneged on the deal and sought damages for trespass.
The High Court took the view that section 2 is aimed at problems in the formation of contracts for sale of land, whereas the purpose of an estoppel is to remedy unconscionability in the assertion of strict legal rights. The court doubted whether section 2 was intended to affect proprietary estoppel at all. And, if it did, it operated as a bar to the grant of equitable relief if and to the extent that such relief would have the effect of enforcing, or otherwise giving effect to, the terms of a contract for sale that was invalid.
The judge explained Cobbe as a case in which a developer was attempting to use the doctrine of proprietary estoppel to enforce the terms of an unwritten contract for the sale of land. But where the doctrine is not being raised in order to enforce the terms of a contract for the disposition of an interest in land, there is no reason for section 2 to prevent the grant of equitable relief: Sahota v Prior [2019] EWHC 1418 (Ch); [2019] PLSCS 119.
Mr Gossop was not asserting a proprietary estoppel in order to enforce the parties’ unwritten agreement; he was seeking to defeat Mr Howe’s claim for possession. And, although there was no estoppel in relation to the land whose extent and use had never been fully agreed, Mr Gossop was entitled to an irrevocable licence to occupy and use the other parcel as a garden for so long as he continued to own the dwelling that it served.
Allyson Colby is a property law consultant
