THE LIMITS OF PROPRIETARY ESTOPPEL

Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55, [2008] 1 WLR 1752

In Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55, [2008] 1 WLR 1752 the House of Lords held that a property developer who had entered into an oral agreement to purchase a block of flats from its owner was not entitled to claim an interest in the land either on the basis of proprietary estoppel or a constructive trust but that he was entitled to bring a personal claim to recover the reasonable value of the services which had been provided. The developer could not bring a claim in contract because the agreement had been made orally and was void. Further, the developer’s knowledge of the fact that the contract was not binding was held to be an important reason not to grant him a remedy in proprietary estoppel. He had taken a risk in entering into an agreement which he new was not binding and estoppel could not be invoked to rescue him when the other party withdrew from the negotiations. The case is notable for two reasons. First, the House of Lords has cut back on the scope of proprietary estoppel, in particular by emphasizing that unconscionable behaviour on the part of the defendant will not, of itself, suffice to establish a proprietary estoppel. Second it emphasizes the important role that a personal claim may play in protecting the interests of a party who acts on the basis of an agreement which is not legally enforceable.