Sale of land – Sale and leaseback – Proprietary estoppel – Appellant seeking possession of respondents’ home on expiry of assured shorthold tenancy – Respondents being assured they could occupy property during lifetime – Judge concluding appellant estopped from asserting right to possession – Appellant appealing – Whether assurances binding on appellant – Whether section 2 of Law of Property (Miscellaneous Provisions) Act 1989 applicable – Appeal dismissed
The respondents had purchased their property over 35 years ago and had lived there ever since. They got into financial difficulties and their home was in the course of being repossessed. They saw an advertisement by a company offering a sale and rent back transaction under which they would be able to carry on living in their home. A director of the company visited the respondents’ home and they executed a TR1 Form of Transfer of the property in blank with the transferee not identified. Although they were not aware of it, the actual transferee was the appellant. The respondents thereafter occupied the property under an assured shorthold tenancy which ran for a period of five years. When they questioned the length of the tenancy agreement, they were assured that it was just to make sure that they paid the rent.
The property was registered in the appellant’s name. When the respondents were unable to contact the appellant to carry out repairs to the property, they spent £7,400 carrying out the repairs themselves. After expiry of the five-year term the appellant sought possession of the respondents’ home pursuant to section 21 of the Housing Act 1988. The judge held that there had been a sale at an undervalue, the company had acted as agent for the appellant, the respondents had relied on the company’s assurances to their detriment and the appellant was estopped from seeking possession on the grounds of proprietary estoppel. Accordingly, the appellant was estopped from asserting any right to possession, save for non-payment of rent, during the respondents’ lifetime or for so long as they wished to reside in the property.
The appellant appealed contending that: (i) the judge had been wrong to find that the company’s assurances were binding on her as it had not been possible for her to ratify the company’s actions; and (ii) the judge had been wrong to hold that section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, which required all the terms of a contract for the sale of land to be in writing, did not apply.
Held: The appeal was dismissed.
(1) Where the appellant was specifically relying on the terms of transactions apparently entered into by the company on her behalf, without visiting the property, without contacting the respondents or without otherwise making any enquiries herself, she was not entitled, as a matter of equity, to disassociate herself from an assurance made on her behalf of which her joint venturer, at least, must have been aware when the arrangements were entered into. Although the principles of ratification were not necessarily relevant, it was clear that, where a transaction was ratified by a principal who did not trouble himself to find out the detailed terms, he was bound by those terms; and where a matter was left entirely to an agent, the whole transaction might be ratified despite irregularities of which the principal had no knowledge. Those points were relevant, at least by analogy, and extended, in principle, to representations which induced a transaction to be entered into. The appellant was not entitled in equity to avoid being bound by the assurances given by the company, which induced the respondents to transfer their home, by the absence of a finding that she knew about those assurances.
(2) Section 2 of the 1989 Act rendered void any contract for the disposition of land if it was not in writing or did not incorporate all the terms expressly agreed (subject to irrelevant exceptions). What was made void was the agreement for the sale or other disposition of land. Proprietary estoppel could not be used to get around that, but other legal consequences might attach to the circumstances surrounding any such transaction, where recognition of those consequences did not amount to an effective enforcement of an agreement that would be void under section 2, namely, an agreement for sale or other disposition. Furthermore, section 2 applied to contracts. In this case, there were two written documents: the first was an actual transfer of the land (the TR1 form). The second was a tenancy agreement, but it operated as the grant of a tenancy rather than an agreement to grant one in the future. The first document at least (the TR1 form) was not a contract for the sale or disposition of an interest in land. Both documents were actual dispositions. There was no indication that there was a prior contract in either case; indeed, in the case of the sale it did not appear that there was an effective agreement about the price, which was a key ingredient for a contract to be valid. In any event, any contract for sale or agreement to grant a lease in future would in all likelihood have been merged into the transfer or tenancy document. The respondents were not thinking in terms of contracts but about their ability to continue to occupy their home. They were led to believe that they would be able to do so. What the respondents relied on was an assurance or representation which induced them to sign the TR1 form pursuant to which the property was transferred, and later induced them to do work on their property. The grounds of appeal referred explicitly to section 2 of the 1989 Act and not to other provisions relating to the creation or transfer of interests in land, such as section 53 of the Law of Property Act 1925, which, in any event, did not include a provision requiring all the terms agreed between the parties to be incorporated. Accordingly, the judge had not erred in law in finding that section 2 of the 1989 Act did not apply to prevent the respondents’ claim and the respondents could remain in their home on the basis specified in the judge’s order: Yaxley v Gotts [2000] Ch.162 and Cobbe v Yeoman’s Row Management Ltd [2008] 3 EGLR 311 considered.
John Jessop (instructed by Hamstead Law Practice, of Birmingham) appeared for the appellant; the respondents appeared in person.
Eileen O’Grady, barrister
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