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Family Law

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08 AUG 2016

Ely v Robson [2016] EWCA Civ 774

Ely v Robson [2016] EWCA Civ 774
(Court of Appeal, Sir Brian Leveson, President of the Queen’s Bench Division, Kitchin LJ, 26 July)

Property – Beneficial interests – Appeal – Proprietary estoppel

The appeal from a determination of the beneficial interests in a property was dismissed.


The man and woman were in a relationship and moved into a property purchased in the man's sole name with the assistance of a mortgage. The woman made no contribution to the purchase price. When the relationship ended they remained together with their two children. From time to time the woman's mother and aunt also lived at the property.

When the woman failed to comply with the man's request for her to move out he issued a claim for possession. The woman counterclaimed and asserted that she had a half-share beneficial interest in the property based upon their common intention.

Prior to trial, the parties met with their solicitors in an attempt to settle. The woman claimed the discussions came to nothing because she would not accept anything less than an equal beneficial interest in the property. The man, however, claimed that they agreed that the woman would have a 20% interest and a right to occupy the property for as long as her aunt and mother were alive. The apparent compromise was recorded in a solicitor's letter. The trial date was directed to be relisted for a later date to give them more time to finalise the settlement.

The trial was not relisted and the court records indicated that a letter had been received stating that the case had been settled. However, neither the woman nor her solicitors had a record of such a letter and the court file no longer existed. The woman's aunt and mother died. The man applied for declaratory relief as to the beneficial interests in the property and an order for sale pursuant to s 14 of the Trusts of Land and Appointment of Trustees Act 1996. He relied on the purported agreement set out in the solicitor's letter. Directions were given for the trial of the preliminary issue of whether the parties had reached a binding settlement.

The judge accepted that the correspondence contemplated the drawing up of a formal settlement but those matters were merely the mechanics whereby the stated objectives would be realised. He found that there was sufficient clarity for proprietary estoppel to arise, that the agreement was unambiguous, it was intended to be taken seriously, it was the woman's intention that the man should act upon the agreement and that he had acted upon the agreement by not pursuing his claim. A declaration was granted that the man and woman owned beneficial interests in the property of 80% and 20& respectively. The woman appealed.

The appeal was dismissed. The judge had been entirely justified in rejecting the woman's account which was belied by the contents of the solicitor's letter. The terms of which had been sufficiently clear to have been capable of forming a binding agreement. The judge's finding that the man had relied on the agreement by not pursuing his claim and to permit the woman to continue living at the property was unassailable.

Case No: B5/2015/3248
Neutral Citation Number: [2016] EWCA Civ 774

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM SWINDON COUNTY COURT
HIS HONOUR JUDGE BLAIR QC A01BH315

Royal Courts of Justice
Strand
London
WC2A 2LL

Date: 26/07/2016


Before:

THE PRESIDENT OF THE QUEEN'S BENCH DIVISION
LORD JUSTICE KITCHIN

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Between:

Graham Timothy Ely
Respondent (Claimant)

 – and –

Vanessa Margot Robson
Appellant(Defendant)

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Noel Dilworth (instructed by Wayne Leighton Solicitors) for the Appellant
Jody Atkinson (instructed by Slee Blackwell Solicitors LLP) for the Respondent

Hearing date: 7 July 2016

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Judgment

Lord Justice Kitchin
:

Introduction

[1] This is an appeal by the defendant, Ms Robson, against the order of His Honour Judge Blair QC made on 12 October 2015 whereby he made a declaration as to the extent of the beneficial interests which she and the claimant, Mr Ely, held in a property at 6 Torbay Road in Poole in Dorset.

The background

[2] Mr Ely met Ms Robson in 1986. At that time he was recently widowed and was the father of three sons aged 11, 13 and 14. Not long thereafter, Mr Ely moved with his sons into a property which Ms Robson owned at 37 Ashley Road in Poole and he and Ms Robson began to live together.

[3] In 1987 Mr Ely purchased 6 Torbay Road with the assistance of a mortgage. The property was conveyed into his sole name. Ms Robson made no contribution to the purchase price. Mr Ely and Ms Robson moved into the property and in due course they had two daughters, Alicia who was born in 1995 and Bryony who was born in 1998.

[4] In 1989 Ms Robson purchased another property at 89 Bournemouth Road in Poole. Mr Ely has always maintained that he contributed around £16,000 towards the purchase price but this has never been accepted by Ms Robson.

[5] Unfortunately the close relationship between Mr Ely and Ms Robson did not last and in 2005 they became estranged. Nevertheless, they continued to live together at 6 Torbay Road with their two daughters and, for a time, Mr Ely’s three sons. In addition, Ms Robson’s aunt, Vera Ellis, moved into the property. From time to time Ms Robson’s elderly mother, Mrs Peggy Robson, also came to stay.

[6] After the relationship had broken down, Mr Ely asked Ms Robson to move out of 6 Torbay Road but she refused. Accordingly, on 8 February 2007, Mr Ely issued a claim for possession. Ms Robson defended the claim and also counterclaimed, asserting that she and Mr Ely owned the beneficial interest in 6 Torbay Road in equal shares, and that this reflected their common intention.

[7] The claim and counterclaim were listed for trial on 13 and 14 September 2007. But in August 2007, so Judge Blair found, Mr Ely met Ms Robson in Poole Park to try to settle their respective claims. No solicitors were present. What happened in the course of this meeting has been bitterly disputed by the parties, as I shall explain. In outline, Ms Robson maintained that their settlement discussions came to nothing because she would not accept anything less than an equal share in the beneficial interest in 6 Torbay Road. Mr Ely, on the other hand, claimed (and Judge Blair accepted) that at this meeting they agreed a compromise of their respective claims to save both of them from incurring yet further legal costs.

[8] The terms of that compromise were, so Judge Blair held, set out in a letter sent by Mr Ely’s solicitors to Ms Robson’s solicitors on 14 August 2007. The essence of the agreement was that Mr Ely would hold 6 Torbay Road on trust for himself for life, with a remainder of 80% to his heirs and assigns and 20% to Ms Robson; that Ms Robson would have the right to occupy 6 Torbay Road for as long as either Vera Ellis or Peggy Robson were alive; that Mr Ely would have the power to sell 6 Torbay Road following the termination of Ms Robson’s right to occupy it; and that Mr Ely would relinquish any claim to an interest in 37 Ashley Road or 89 Bournemouth Road. The letter reads in material part:

“… As you are aware our clients have been discussing settlement and have suggested terms of compromise, details of which we set out below.

1. Whilst your client continues to live at Torbay Road, both parties jointly share the outgoings and other costs of the property (including, but not limited to mortgage repayments, utility bills and taxes) and that they likewise share the costs of their daughters’ upbringing (including but not limited to schooling, clothing, holidays and gifts).

2. If your client leaves the property she ceases to contribute to the mortgage and household payments but will solely pay the whole of the costs of raising their two daughters.

3. Subject to the trust matters referred to below, your client renounces any and all other claims she has on Torbay Road.

4. Our clients renounces [sic] any and all other claims he has on Bournemouth Road and Ashley Road.

5. Save for the costs of implementing the terms of the proposed agreement (which we suggest our [sic] shared equally between our respective clients) there be no further order as to costs.

6. It is proposed that our client declares a trust upon the following terms:

(i) He remains sole legal owner and trustee of 6 Torbay Road.

(ii) Your client will have a 20% beneficial interest in remainder in 6 Torbay Road, realisable on our client’s death.

(iii) Your client has a right to occupy 6 Torbay Road for as long as either Vera Ellis or Peggy Robson live.

(iv) Our client will have the right of appointment up to 80% of the trust funds together with the right to re-mortgage the property.

(v) Our client as trustee to have power to sell 6 Torbay Road whereupon your client’s right of residence is terminated.

(vi) Vera Ellis have a right of residence for life but to acquire no capital interest in the property.Given the complexity of the agreement we have advised our client to seek Counsel’s advice in drawing up a settlement agreement and associated trust deed.Our clients are considering simplifying the above deal in light of the tax implications and practical difficulties in drafting the trust deed.Before proceeding please confirm that our [sic] client agrees that the above accurately reflects the terms of the proposed settlement.”

[9] On 30 August 2007 a letter written on the headed notepaper of Ms Robson’s solicitors but signed by the solicitors to both parties was sent to the court. It reads, so far as relevant:

“We refer to the above matter which is listed for trial on 13th and 14th September 2007, in the Southampton County Court.

The Claimant and Defendant have been negotiating a settlement of this matter and are both relatively close to reaching a settlement.

In the circumstances, it appears that more time will be required for the parties to correctly set out in writing the terms upon which they agree to settle this matter. However, the trial drawers [sic] nearer and therefore the parties request that the trial listed for 13th and 14th September be vacated and relisted for the first available date after 1st October 2007.

The parties believe that they will be able to finalise terms of settlement before the end of September 2007 and therefore respectfully request that this trial is vacated. Accordingly, we would ask that this letter is placed immediately before a District Judge for an order to be made on the terms suggested. We would further point out that the parties apologise for any inconvenience that may be caused to the court by this request. However, this request is made having regard to the overriding objectives of the court and with a view to saving potential costs of the trial….”

[10] The court duly acted on that letter. On 5 September 2007 Deputy District Judge Smith vacated the hearing date and directed that the case should be relisted on the first available date after 1 October 2007.

[11] The matter was not, in the event, relisted for trial. The court file no longer exists but the court’s computerised log indicates that in January 2008 the court received a letter from or on behalf of Ms Robson indicating that the case had settled. However, Ms Robson’s solicitors have no record of any such letter and Ms Robson maintained that she did not send one either.

The present claim

[12] Subsequently, Mrs Ellis and Mrs Peggy Robson died and so, on 24 July 2014, Mr Ely issued this claim for declaratory relief as to the parties’ shares in the equitable interest in 6 Torbay Road and for an order for the sale of the property pursuant to s.14 of the Trusts of Land and Appointment of Trustees Act 1996. He asserted in the claim form that he and Ms Robson had reached an agreement on the terms set out in the letter of 14 August 2007.

[13] The claim was originally issued as a Part 8 claim because Mr Ely did not know whether Ms Robson would resist it. She did not file an acknowledgement of service, but she did attend at a directions appointment on 1 December 2014. At that hearing it was directed that unless Ms Robson filed evidence in response to the claim within four weeks she would be barred from taking any further part in the proceedings.

[14] On 30 December 2014 Ms Robson filed a witness statement in which she asserted that Mr Ely’s claim was dishonest and continued, at [15]:

“We had a number of conversations about my position and security vis a vis the Property [6 Torbay Road]. On each occasion the Claimant always reassured me that “what is mine is also yours”. And when I specifically challenged him as to whether this included the Property and he insisted that it did, I was led to believe that I had an equal share in the Property along with the Claimant. In the first few years were living together I would say that I had this conversation with the Claimant on probably an annual basis as I felt it was a very important matter that had to be discussed. On each occasion when we had this conversation the claimant made it clear that we shared the Property on an equal basis.”

[15] Ms Robson also denied that she and Mr Ely had reached a final agreement in August 2007 or at any other time. She accepted that they had had settlement discussions but maintained that they had not reached a final agreement because they appreciated that any such agreement would need to be in writing and Mr Ely had indicated that it would be a matter on which he would need to take legal advice. She continued that they agreed to vacate the hearing so that settlement discussions could continue and also agreed that the matter should be relisted for the first available date in case the negotiations failed. She also said that they did not explore the possibility of settlement any further and it became clear to her that Mr Ely did not wish to pursue his claim for possession and could not afford to continue paying his solicitors.

[16] Mr Ely disputed all of these assertions in his own responsive witness statement dated January 2015. He maintained that Ms Robson had made no contribution to the purchase price of 6 Torbay Road and no real contribution to household expenses or to the maintenance of the property. He also denied that he had ever made any suggestion to Ms Robson to the effect that she had any interest in any of his assets. As for the 2007 proceedings, he was clear that he and Ms Robson had reached a binding agreement for their disposal. There was, in his view, no need to explore the issue of settlement further and there was no need for a trial because they had reached a binding agreement and he trusted Ms Robson to keep her word.

[17] On 28 January 2015 directions were given for the case to proceed under CPR Part 7. On 10 February 2015 Mr Ely served particulars of claim seeking a declaration that he held 6 Torbay Road on trust for himself for life with a remainder of 80% to his heirs and assigns and 20% to Ms Robson. Mr Ely’s alternative case, on the assumption the settlement agreement was not binding, was that Ms Robson had no interest in 6 Torbay Road or right to reside there and further, that Ms Robson held 89 Bournemouth Road on trust for them both in such shares as the court might think fit having regard to the contribution which he had made towards its purchase price. Mr Ely also advanced a yet further alternative case that he and Ms Robson had reached an agreement that all of their property and assets would be owned by them equally and that declarations should be made to that effect.

[18] Ms Robson responded with a defence and counterclaim dated 11 March 2015. As foreshadowed in her witness statement, she alleged that it was, from the outset, the common intention of the parties that they should own 6 Torbay Road in equal shares as their family home. She continued that, once they had moved into the property, she contributed to the costs and expenses of the family by taking financial responsibility for the upkeep of the property, the needs of the children and the general housekeeping costs. She also disputed that Mr Ely had made that any contribution to the purchase price of 89 Bournemouth Road and asserted that he had no interest in that property or 37 Ashley Road. Turning to the events of 2007, Ms Robson contended that the letter of 14 August 2007 had been sent to her solicitors in an attempt to settle proceedings but that, after the hearing date had been vacated, no further discussions took place between them and it became clear to her that Mr Ely did not wish to pursue his claim because he was unable to pay his solicitors’ costs. She therefore sought a declaration that Mr Ely owned 6 Torbay Road on trust for them both in equal shares or in such other shares as the court might determine.

[19] Mr Ely served a reply and defence to counterclaim dated 30 March 2015 in which he denied the various assertions made by Ms Robson and maintained that, in reliance upon the representations which she had made to him that she would abide by the terms of the settlement agreement, he had not pursued his claim for possession and had permitted her to remain in 6 Torbay Road. Accordingly, he continued, if the settlement agreement lacked the necessary formalities than it nevertheless took effect by way of constructive trust or gave rise to a proprietary estoppel and that it would be unconscionable for Ms Robson to resile from her representations and she was estopped from doing so.

[20] On 12 June 2015 the claim was allocated to the multi-track and directions were given for the trial of a preliminary issue as to whether the parties had reached a binding settlement in 2007. It was in this way that the matter came on for hearing before Judge Blair on 16 September 2015.

The trial and judgment

[21] The trial of the preliminary issue before Judge Blair took one day and in the course of it he heard evidence from Mr Ely and from Ms Robson. He also heard evidence from a Mr Barry Collier and from Mr Ely’s son, Matthew. This evidence was, so the judge found, supportive of Mr Ely’s evidence. At the end of the hearing and having heard full submissions, the judge gave an ex tempore judgment.

[22] The judge summarised the evidence given by Mr Ely and Ms Robson. Mr Ely maintained, just as he had in his witness statement, that he and Ms Robson had reached a binding agreement in Poole Park and that the terms of that agreement were set out in the letter from his solicitors of 10 August 2007. Further, Mr Ely continued, Ms Robson represented to him that she would abide by the terms of that agreement and she never at any time suggested to him that the contents of the letter of 10 August 2007 misrepresented their agreement. He then relied upon her agreement and representation by not pursuing his claim for possession and by permitting her to continue to live in 6 Torbay Road.

[23] Ms Robson’s case as elaborated by her in her evidence was completely different. She said that the contents of the 10 August 2007 letter did not represent in any way an agreement which she had reached with Mr Ely as result of a face-to-face discussions in Poole Park. It was, she said, generated by Mr Ely and his solicitors without any input from her at all. Further, she did have a meeting with Mr Ely in Poole Park but that meeting took place after 10 August 2007. She continued that she made it perfectly clear to Mr Ely at that meeting and at other times that she and Mr Ely owned equal shares in the beneficial interest in 6 Torbay Road and that she would not agree to the terms of settlement set out in the 10 August 2007 letter. Mr Ely was not interested in negotiating with her on any other terms and so, as the judge summarised her evidence, the litigation ‘fizzled out’ when Mr Ely could no longer afford his solicitors’ bills. She also maintained that she did not write to the court in January 2008 to the effect that the case had settled.

[24] Judge Blair rejected Ms Robson’s evidence and accepted the evidence given by Mr Ely. There were, he thought, a number of aspects of Ms Robson’s evidence that simply did not make sense. First, the contents of the 14 August 2007 letter were entirely consistent with Mr Ely’s evidence. Further, if, as Ms Robson asserted, the letter was not based upon a negotiation which had in fact taken place then it was inconceivable that Ms Robson or her solicitors would not have replied to it making that clear. Secondly, if, as Ms Robson also asserted, she had always made clear to Mr Ely that they owned the beneficial interest in 6 Torbay Road in equal shares and her negotiations with Mr Ely had got nowhere then her solicitors would not have signed the joint letter to the court of 30 August 2007 saying that the parties were relatively close to reaching a settlement and believed they would be able to finalise terms before the end of September 2007.

[25] That brought the judge to a consideration of the consequences of these findings. He recognised that the correspondence contemplated the drawing up of a formal settlement agreement and associated trust deed but these matters were, in his view, merely a matter of the mechanics whereby the parties’ clearly stated objectives would be realised. He recorded, with apparent approval, the submissions of counsel for Mr Ely that there was here sufficient clarity for a proprietary estoppel to arise; that the agreement was unambiguous; that both parties intended the agreement to be taken seriously; that it was clearly Ms Robson’s intention that Mr Ely should act upon their agreement; and that Mr Ely did act upon their agreement by not pursuing his claim. The judge expressed his conclusion in this way at [56]:

“… There was certainty here in the negotiated settlement carried out between the claimant and defendant. What was left to do was purely a matter of mechanics to achieve their clearly stated objectives about their interests in the property. I find that the defendant did lead the claimant to believe that she was agreed on those objectives and those principles. The claimant relied on that by not pursuing his claim for a declaration that she had no interest whatsoever in the home. He acted to his detriment in that. The state of the agreement between them, in my view, was perfectly plain. Equity will come to his aid, therefore, in those circumstances ….”

[26] 
The judge then proceeded to make a declaration substantially in the terms sought by Mr Ely.

The appeal

[27] Upon this appeal Mr Noel Dilworth appeared on behalf of Ms Robson. He submitted that the judge failed fully to appreciate that Mr Ely’s case was based entirely upon the discussions which took place in Poole Park before 14 August 2007. Further, whatever the outcome of those discussions, they were incapable of amounting to a binding agreement which satisfied the requirements of s.2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 (the “1989 Act”). Then, founding himself primarily upon the decision of the House of Lords in Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55, [2008] 1 WLR 1752 and the decision of the Court of Appeal in Herbert v Doyle [2010] EWCA Civ 1095, 13 ITELR 561, Mr Dilworth submitted that it was clear both from the letter of 14 August 2007 and the joint letter to the court of 30 August 2007 that the proposed terms of the agreement were uncertain and incomplete; that further terms relating to the parties’ interests had yet to be agreed; that the whole agreement had to be committed to writing and the necessary formalities complied with; and that the parties did not expect the agreement to be immediately binding. It was, Mr Dilworth continued, incumbent upon the judge to address what it was that converted the discussions referred to in the correspondence into an agreement sufficient to found a constructive trust or proprietary estoppel falling within the scope of s.2(5) of the 1989 Act.

[28] Mr Dilworth also submitted that the judge had no proper basis for his finding that Ms Robson led Mr Ely to believe that she agreed the matters set out in the letter of 14 August 2007. Further, he continued, if, as Ms Robson had asserted, she and Mr Ely owned the beneficial interest in 6 Torbay Road in equal shares then any assessment of the effect of the events of August 2007 upon that interest would require an analysis of the whole course of dealing between the parties including, most importantly, their subsequent behaviour, but no such analysis was ever carried out.

[29] Mr Jody Atkinson, who appeared on behalf of Mr Ely, as he did below, submitted that the judge had been invited to find that the circumstances of this case gave rise both to a proprietary estoppel and a constructive trust. He acknowledged that the reasoning of the judge appeared to be focused upon proprietary estoppel but submitted that his conclusions also supported the imposition of a constructive trust. That aside, he submitted that the judge was entitled to make the findings that he did on the evidence and that his reasoning and conclusions are unimpeachable.

[30] In considering these rival submissions I would observe at the outset that this is an unusual case in that Mr Ely, the party seeking the declaration, was already the legal owner of 6 Torbay Road. In these circumstances and as Lord Justice Lewison observed in giving Ms Robson permission to appeal, it is not easy to see how the judge thought the case was one of proprietary estoppel because, at least as generally understood, the term describes the equitable jurisdiction by which a court may interfere in cases where the assertion of a strict legal right would be unconscionable. Moreover, Mr Ely has always disputed that, prior to 2007, Ms Robson owned any share in the beneficial interest in 6 Torbay Road and it is far from clear to me that her claim to such an interest constituted an interest in land to which s.2(1) of the 1989 Act could have any application. Nevertheless, I am prepared to accept for the purposes of this appeal that, as Ms Robson claimed, Mr Ely had from the outset held 6 Torbay Road on trust for them both and to consider whether the judge was entitled to hold as he did that the events of 2007 had the consequences for which Mr Ely contended, namely that Ms Robson’s interest in 6 Torbay Road was thereby limited to the interest defined in the declaration that he made.

[31] I begin with the two decisions upon which Mr Dilworth particularly relied. Cobbe concerned a dispute between Mr Cobbe, a property developer, who wished to develop a property owned by Yeoman’s Row Management Ltd. Mr Cobbe made an oral “agreement in principle” with Yeoman’s Row, acting by its director, Mrs Lisle-Mainwaring, to purchase the property but there remained some terms still to be agreed. Pursuant to that agreement and encouraged by Mrs Lisle-Mainwaring, Mr Cobbe made and prosecuted an application for planning permission and spent a considerable amount of time and money in so doing. The application was successful and planning permission was obtained. Then Mrs Lisle-Mainwaring sought to renegotiate the core financial terms of the agreement.

[32] Lord Scott of Foscote (with whom Lord Hoffmann, Lord Brown of Eaton-Under-Heywood and Lord Mance agreed) addressed the argument that the circumstances gave rise to a constructive trust in these terms at [36] to [37]:

“36. The circumstances of the present case are that the property in question was owned by the appellant before any negotiations for a joint venture agreement had commenced. The interest in the property that Mr Cobbe was expecting to acquire was an interest pursuant to a formal written agreement some of the terms of which remained still to be agreed and that never came into existence. Mr Cobbe expended his time and money in making the planning application in the knowledge that the appellant was not legally bound. Despite the unconscionability of the appellant's behaviour in withdrawing from the inchoate agreement immediately planning permission had been obtained, this seems to me a wholly inadequate basis for imposing a constructive trust over the property in order to provide Mr Cobbe with a remedy for his disappointed expectations. This property was never joint venture property and I can see no justification for treating it as though it was.

37. The unconscionable behaviour of Mrs Lisle-Mainwaring is, in my opinion, not enough in the circumstances of this case to justify Mr Cobbe's claim to have acquired, or to be awarded by the court, a beneficial interest in the property. The salient features of the case that preclude that claim are, to my mind, that the appellant owned the property before Mr Cobbe came upon the scene, that the second agreement produced by the discussions between him and Mrs Lisle-Mainwaring was known to both to be legally unenforceable, that an unenforceable promise to perform a legally unenforceable agreement—which is what an agreement 'binding in honour' comes to—can give no greater advantage than the unenforceable agreement, that Mr Cobbe's expectation of an enforceable contract, on the basis of which he applied for and obtained the grant of planning permission, was inherently speculative and contingent on Mrs Lisle-Mainwaring's decisions regarding the incomplete agreement and that Mr Cobbe never expected to acquire an interest in the property otherwise than under a legally enforceable contract. In these circumstances the imposition of the constructive trust on the property and the pro tanto divesting of the appellant's ownership of it seems to me more in the nature of an indignant reaction to Mrs Lisle-Mainwaring's unconscionable behaviour than a principled answer to Mr Cobbe's claim for relief.”


[33] Lord Walker of Gestingthorpe (with whom Lord Scott and Lord Brown agreed) considered the case in terms of proprietary estoppel and expressed his conclusion in this way at [91]:

“91. … Mr Cobbe’s case seems to me to fail on the simple but fundamental point that, as persons experienced in the property world, both parties knew that there was no legally binding contract, and that either was therefore free to discontinue the negotiations without legal liability – that is, liability in equity as well as at law, to echo the words of Lord Cranworth LC in Ramsden v Dyson LR 1 HL 129, 145 - 146…. Mr Cobbe was therefore running a risk, but he stood to make a handsome profit if the deal went ahead, and the market stayed favourable. He may have thought that any attempt to get Mrs Lisle-Mainwaring to enter into a written contract for the grant of planning permission would be counter-productive. Whatever his reasons for doing so, the fact is that he ran a commercial risk, with his eyes open, and the outcome has proved unfortunate for him. It is true that he did not expressly state, at the time, that he was relying solely on Mrs Lisle-Mainwaring’s sense of honour, but to draw that sort of distinction in a commercial context would be as realistic, in my opinion, as to draw a firm distinction depending on whether the formula “subject to contract” had or had not actually been used.”

[34] Lord Walker also made clear (at [93]) that Mr Cobbe could not obtain any further assistance from the doctrine of constructive trust.

[35] Herbert v Doyle concerned a dispute between Mr Herbert, who owned a large house and garden, and Mr Doyle and Mr Talati, who owned an adjacent property from which they conducted their dental practice and which had a number of car parking spaces. Mr Herbert wished to develop his property but in order to do so he needed to acquire some of the parking spaces owned by Mr Doyle and Mr Talati. The parties eventually made an oral agreement the essential terms of which were that Mr Doyle and Mr Talati would transfer to Mr Herbert certain parking spaces and pay him a sum of money and he would transfer to them a number of car parking spaces on his property and grant to them certain leases in respect of other parts of his property. Mr Herbert then pressed on with his development and subsequently applied for an order requiring Mr Doyle and Mr Talati to transfer to him the parking spaces as agreed. Mr Doyle and Mr Talati refused to do so, claiming that the agreement was subject to contract and that the necessary formalities had not been complied with. The trial judge rejected that argument but held that Mr Herbert was only entitled to the parking spaces if he transferred the other parking spaces and granted the leases to Mr Doyle and Mr Talati as he had promised. Mr Herbert refused to do so. Mr Doyle and Mr Talati were then given permission to amend their defence and counterclaim to allege that if they performed their side of the agreement then Mr Herbert would be bound to perform his side of it too. The judge held that the parties had come to an agreement, made orally, which created a constructive trust over their respective parts of the property, and so Mr Herbert held the leases and the freehold of the car parking spaces on constructive trust for Mr Doyle and Mr Talati.

[36] On appeal counsel appearing for Mr Herbert relied heavily upon the decision of the House of Lords in Cobbe and argued that the agreement as found by the deputy judge did not comply with the requirements imposed by s.2(1) of the 1989 Act and did not have sufficient certainty to give rise to a constructive trust falling within the scope of s.2(5) of that Act. Further, the parties had sufficient experience to know that they were acting at their own risk. The agreement was, he continued, incomplete and subject to contract.

[37] Arden LJ, with whom Jackson LJ and Morgan J agreed, gave careful consideration to the decision in Cobbe and then explained at [57]:

“57. In my judgment, there is a common thread running through the speeches of Lord Scott and Lord Walker. Applying what Lord Walker said in relation to proprietary estoppel also to constructive trust, that common thread is that, if the parties intend to make a formal agreement setting out the terms on which one or more of the parties is to acquire an interest in property, or, if further terms for that acquisition remain to be agreed between them so that the interest in property is not clearly identified, or if the parties did not expect their agreement to be immediately binding, neither party can rely on constructive trust as a means of enforcing their original agreement. In other words, at least in those situations, if their agreement (which does not comply with section 2(1)) is incomplete, they cannot utilise the doctrine of proprietary estoppel or the doctrine of constructive trust to make their agreement binding on the other party by virtue of section 2(5) of the 1989 Act.”

[38] Applying those principles to the facts as found by the judge, Arden LJ held that the respective property interests of the parties were sufficiently certain at the time they were agreed and remained sufficiently certain notwithstanding the parties’ further dealings together. Furthermore, the judge was entitled to find that the agreement was not subject to contract and was not binding in honour only. The appeal was therefore dismissed.

[39] With these principles in mind I must now return to the submissions made by Mr Dilworth on this appeal. To recap, Mr Dilworth’s central argument is that it is clear from the letters of 14 and 30 August 2007 that further terms relating to the agreement concerning the parties’ equitable interests in 6 Torbay Road were yet to be agreed; that the parties intended that the terms upon which they defined their interests in 6 Torbay Road should be embodied in a formal agreement; and that the parties did not expect the terms they had discussed to be immediately binding.

[40] I find myself unable to accept these submissions. In my judgment it is important to have in mind the nature of the case which Ms Robson advanced and the substance of the evidence she gave. Her oral evidence was not to the effect that she and Mr Ely had met in Poole Park, that they had settlement discussions, that some progress was made but that there was more to be done. It was rather to the effect that she did not meet Mr Ely in Poole Park until after she had received the letter of 14 August 2007, that the contents of that letter had been generated by Mr Ely and his solicitors without any input from her and that although they did have some discussions after receipt of the letter, she made it clear that she was not interested in a settlement on the terms it contained. Moreover, she continued, she also made it clear to Mr Ely that they owned the beneficial interest in 6 Torbay Road in equal shares.

[41] The judge rejected Ms Robson’s account and I am satisfied that he was entirely justified in so doing. He had the benefit of seeing and hearing Ms Robson and Mr Ely give their evidence and Ms Robson’s account was belied by the contents of both the letter of 14 August and the joint letter to the court of 30 August 2007. I am also satisfied that the judge was in these circumstances entitled to accept the evidence given by Mr Ely. I of course recognise that the terms of the letter of 14 August contemplate the drawing up of a written agreement and a deed of trust. I also accept that the letter of 30 August says that the parties are “relatively close to reaching a settlement”. But in my judgment neither letter precludes the possibility that the parties had in the course of their meeting in Poole Park in fact agreed the terms of a compromise of their respective claims and that they intended those terms to be binding upon them. This was not a commercial transaction. It 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 letter of 14 August are in my judgment sufficiently clear to be capable of forming the basis of a binding agreement and Mr Dilworth did not identify any other matters or issues upon which the parties had still to agree. In all of these circumstances I have come to the conclusion that the judge was entitled to find as he did that the parties did intend their oral agreement to be binding; that they both understood and intended that it should be acted upon; and that all that remained to be done was to put in place what the judge described as the mechanics necessary to achieve their stated objectives.

[42] Thereafter, so the judge found, Mr Ely relied upon the oral agreement by not pursuing his claim in respect of 6 Torbay Road or his claims in respect of 37 Ashley Road and 89 Bournemouth Road, and by permitting Ms Robson to continue to live in 6 Torbay Road during the lifetimes of Vera Ellis and Peggy Robson. These findings too are, in my judgment, unassailable.

[43] In my judgment it follows that, from the time they met in Poole Park, Ms Robson and Mr Ely had a common understanding as to the extent of their respective interests in 6 Torbay Road and thereafter Mr Ely acted to his detriment in reliance upon that understanding. Accordingly, whatever Ms Robson’s interest in 6 Torbay Road may have been prior to that meeting, I am satisfied that thereafter Mr Ely held the property on constructive trust for them both and that Ms Robson’s interest was limited to the interest defined in the declaration that the judge made. Put another way, it would in my judgment be unconscionable for Ms Robson to assert to the contrary and she is estopped from so doing. In reaching this conclusion I have also given careful consideration to Mr Dilworth’s further submission that the judge could not properly reach the conclusion he did without analysing the whole course of dealing between the parties, including, importantly, their subsequent behaviour. However, it has never been suggested that, at any time after their meeting in Poole Park, the parties reached any further or other common understanding concerning their respective interests. To the contrary, both parties continued to act consistently with the terms of the agreement they had reached on that day until the events giving rise to this claim and the reassertion by Ms Robson of her original claim.

[44] For all of these reasons, I would dismiss this appeal.

Sir Brian Leveson P:

[45] I agree.
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