Section 2 of Law of Property (Miscellaneous Provisions) Act 1989 – Claimant expending money on planning permission in reliance upon oral agreement to buy land from defendant – Defendant refusing to proceed – Defendant relying upon non-compliance with 1989 Act – Claimant alleging constructive trust – Whether claimant had an arguable case for such trust – Claim struck out
In May 1997 Ravenocean Ltd (R) and Gardner (G) orally agreed that G would, in certain events, sell a parcel of land to R for £40,000. In reliance upon that agreement, and allegedly with the knowledge of G, R obtained planning permission for a development on that land, at a cost of £3,500. Following G’s refusal to proceed, R commenced an action for specifice performance of the agreement, with an alternative claim for a declaration that G held the land on constructive trust to convey it to R upon payment of the agreed price. G moved to strike out the claim on the ground, inter alia, that the alleged contract had failed to comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. The master, having held that no claim lay for specific performance, went on to decide that the alternative claim should not be struck out, as the claimant had an arguable case based upon Yaxley v Gotts [1999] 2 EGLR 181. G appealed.
Held: The appeal was allowed.
In order to establish a constructive trust of the kind alleged, it was not enough to show that the claimant had acted to its detriment in reliance upon the agreement. The court had to be satisfied that the remedy sought accorded with the claimant’s expectation, as manifested by the steps it had taken. The obtaining of the planning permission bore no comparison with the detrimental steps taken by the claimant in Yaxley. The company had, at best, no claim greater than a restitutionary claim for £3,500, such sum representing the value of the planning permission that now subsisted for the benefit of G.
Russell Stone (instructed by PEP Honke, of Uxbridge) appeared for the appellant; Adrian Davies (instructed by Shah Solicitors, of Sudbury Hill) appeared for respondent claimant.
Alan Cooklin, barrister
