Proprietary estoppel – Beneficial interests in property – Unmarried couple – Appellant and respondent living together in property held in respondent’s sole name – Relationship breaking down – Extent of parties’ beneficial interests in property – Appellant claiming beneficial half-share – Whether parties reaching agreement for different interests so as to give rise to proprietary estoppel – Appeal dismissed
The appellant and the respondent were an unmarried couple who, from 1987, lived in a property in Poole, Dorset, which the respondent held in his sole name. In about 2005, the appellant’s aunt moved in, and the appellant’s elderly mother also came to stay from time to time.
The parties became estranged and the respondent asked the appellant to move out. She refused to do so, with the result that, in 2007, the respondent issued a claim for possession. By a counterclaim, the appellant asserted she and the respondent owned the beneficial interest in the property in equal shares according to the common intention of the parties.
In August 2007, before the possession claim was heard, the parties met in a park to try to settle their respective claims. The respondent’s solicitor then sent a letter to the appellant’s solicitor purporting to set out the terms of the settlement so agreed. These included the respondent holding the property on trust for himself for life, with a remainder of 80% to his heirs and assigns and 20% to the appellant, with the appellant to have the right to occupy the property for as long as either her aunt or her mother were alive and the respondent to have a power of sale thereafter. Shortly afterwards, the parties’ solicitors wrote to the court indicating that the parties were close to reaching a settlement and requesting that the trial date be vacated.
In 2014, the respondent applied for a declaration as to the parties’ shares in the property and an order for sale pursuant to section 14 of the Trusts of Land and Appointment of Trustees Act 1996. He relied on the agreement set out in the solicitors’ letter of August 2007. The appellant denied that any such agreement had been reached.
The judge found, on the evidence, that an agreement had been reached in the terms asserted by the respondent. He recognised that the correspondence contemplated the drawing up of a formal settlement agreement and associated trust deed but he held that that was merely a matter of mechanics and that there was sufficient clarity and certainty for a proprietary estoppel to arise, on which the respondent had relied by not pursuing his original possession claim.
The appellant appealed. She argued that there was no proper basis for the judge’s finding that she had agreed the matters set out in the August 2007 solicitor’s letter. She further contended that any such agreement was incapable of satisfying the requirements of section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 and could not give rise to a proprietary estoppel. She submitted that the proposed terms of the agreement were uncertain and incomplete, further terms relating to the parties’ interests had yet to be agreed, the whole agreement had to be committed to writing and the necessary formalities complied with, and the parties did not expect the agreement to be immediately binding.
Held: The appeal was dismissed.
(1) The case was an unusual one because the respondent, who was the party seeking the declaration, was already the legal owner of the property, whereas proprietary estoppel, at least as generally understood, described the equitable jurisdiction by which a court could interfere in cases where the assertion of a strict legal right would be unconscionable. The court assumed for the purposes of the appeal that, as the appellant claimed, the respondent had from the outset held the property on trust for them both; the court then considered whether the judge was entitled to hold that the events of 2007 had the consequences for which the respondent contended, namely that the appellant’s interest in the property was thereby limited to the interest defined in the declaration which the judge had made.
(2) The judge had been entitled to find on the evidence that an agreement had been reached in the terms set out in the August 2007 solicitor’s letter. While the terms of that letter contemplated the drawing up of a written agreement and a deed of trust, and while the later letter from the parties’ solicitors to the court indicated that they were “close” to reaching a settlement, those matters did not preclude the possibility that the parties had, in the course of their meeting in the park, in fact agreed the terms of a compromise of their respective claims which they intended to be binding on them. This was not a commercial transaction but was rather an attempt by two persons who had for a number of years happily lived together to resolve the costly litigation that had followed their estrangement.
Furthermore, the terms set out in the August 2007 solicitor’s letter were sufficiently clear as to be capable of forming the basis of a binding agreement. The appellant had not identified any other matters or issues on which the parties had still to agree. In all the circumstances, the judge had been entitled to find that the parties intended their oral agreement to be binding, that they both understood and intended that it should be acted on, and that all that remained to be done was to put in place the mechanics necessary to achieve their stated objectives: Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55; [2008] 1 WLR 1752; [2008] 3 EGLR 31 and Herbert v Doyle [2010] EWCA Civ 1095; (2010) 13 ITELR 561; [2011] 1 EGLR 119 applied.
The judge had also been entitled to find that the respondent had relied on the oral agreement, including by not pursuing his possession claim in respect of the property and by permitting the appellant to continue to live in the property during the lifetimes of her aunt and her mother.
(3) Accordingly, from the time when they met in the park, the parties had a common understanding as to the extent of their respective interests in the property and, thereafter, the respondent had acted to his detriment in reliance on that understanding. As a result, whatever the appellant’s interest in the property might have been previously, thereafter the respondent held the property on constructive trust for them both and that the appellant’s interest was limited to that defined in the declaration made by the judge. It would be unconscionable for the appellant to assert to the contrary and she was estopped from so doing.
Noel Dilworth (instructed by Wayne Leighton Solicitors, of Edgeware) appeared for the appellant; Jody Atkinson (instructed by Slee Blackwell Solicitors LLP, of Taunton) appeared for the respondent.
Sally Dobson, barrister