Sale of land – Appellant vendor remaining in occupation of house after sale – Respondent purchaser defaulting on mortgage – Receivers appointed by mortgagee ob obtaining possession order against appellant – Appellant asserting right to remain in property by virtue of proprietary estoppel – Whether defence of proprietary estoppel defeated by section 2 of Law of Property (Miscellaneous Provisions) Act 1989 – Whether case suitable for summary determination – Appeal allowed
In 2007, the appellant sold an area of freehold land to the respondent developer and his business partner for £750,000. The land comprised two separate title numbers, one in respect of the house, outbuildings and garden and the other for adjacent agricultural land. The documentation provided for various rights of pre-emption and overage in favour of the appellant, who remained in occupation of the house and garden after the sale. The parties signed a “tenancy agreement” purporting to grant to her a 12-month assured shorthold tenancy at a monthly rent of £1; however, a tenancy at such a rent could not be an assured shorthold tenancy within the Housing Act 1988.
The respondent became the sole registered owner of the property and took out a mortgage secured on it. No action was taken to realise the development potential of the land. The respondent defaulted on the mortgage and receivers were appointed under the Law of Property Act 1925. They served notice to quit on the appellant, as agents for the respondent, and subsequently brought possession proceedings when she refused to leave.
By her defence and counterclaim, the appellant asserted that she was entitled to remain in the property by virtue of proprietary estoppel. She contended that she had sold the property to the respondent for considerably less than its market value in reliance on various representations to the effect that, inter alia,: (i) she could remain in the house for as long as she wanted; (ii) title to the house and garden would be transferred to her; and (iii) she would share in the profits of any development of the surrounding land.
A possession order was made at a hearing in the county court. The judge held that the defence of proprietary estoppel was defeated by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, since the appellant was alleging an agreement for the acquisition of an interest in land that did not comply with the formality requirements of that section. The appellant appealed; the central issue was whether proprietary estoppel, in cases involving a sale of land, had survived the enactment of section 2.
Held: The appeal was allowed.
Since the county court judge had decided the possession claim at the hearing, pursuant to CPR 55.8(1)(a), rather than giving case-management directions allocating it to the fast-track or multi-track procedure pursuant to CPR 55.8(1)(b), the hearing had equated to a summary judgment application and was not a “trial” within the meaning of the CPR: Forcelux Ltd v Binnie [2009] EWCA Civ 854; [2010] HLR 20 applied. The respondent’s argument had essentially been that the defence of proprietary estoppel could not succeed as a matter of law, such that the claim was not “genuinely disputed on grounds which appear to be substantial” within CPR 55.8(2).
There was no binding authority to decide the point of law at issue because observations in previous cases were obiter: Yaxley v Gotts [1999] 2 EGLR 181, Thorner v Major [2009] UKHL 18; [2009] 2 EGLR 111, Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55; [2008] 3 EGLR 31; [2008] 35 EG 142; [2008] 36 EG 142 and Herbert v Doyle [2010] EWCA Civ 1095; [2010] NPC 100 considered. Moreover, claims based on proprietary estoppel or constructive trust would always be fact-sensitive. A distinction had also to be made between commercial cases, where the parties expected to receive a formal contract, and domestic cases, where the parties might not seek legal advice but simply want to obtain an interest in the property in question: Cobbe applied.
The instant case was properly to be regarded as commercial in nature. The facts pleaded in the appellant’s defence might not tell the story in sufficient detail to resolve the matter. Since there was no binding authority on the issue and the facts were not sufficiently clear for the case to be suitable for summary determination on the documents, the claim was genuinely disputed on grounds that appeared to be substantial within the meaning of CPR 55.8(2). The appropriate course was therefore to set aside the county court judge’s decision and remit the case for trial.
John McDonnell QC and Clare Roberts (instructed by Fisher Jones Greenwood LLP, of Colchester) appeared for the appellant; Francis Moraes (instructed by Wragge & Co) appeared for the respondent.
Sally Dobson, barrister
