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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Whittaker v Kinnear [2011] EWHC 1479 (QB) (10 June 2011) URL: http://www.bailii.org/ew/cases/EWHC/QB/2011/1479.html Cite as: [2011] EWHC 1479 (QB) |
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QUEEN'S BENCH DIVISION
ON APPEAL FROM COLCHESTER COUNTY COURT
His Honour Judge Lochrane
Case No: 00001423
Strand, London, WC2A 2LL |
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B e f o r e :
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Alvina Whittaker (Defendant) |
Appellant |
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- and - |
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Anthony David Kinnear (acting by his agents on Gershinson and Louise Brooks of Allsop LLP being Receivers appointed under the Law of Property Act 1925) (Claimant) |
Respondent |
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Francis Moraes (instructed by Wragge & Co, London) for the Respondent
Hearing dates : 6 May, 2-3 June 2011
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Crown Copyright ©
Mr Justice Bean :
"10. The agreement had been reached by the Claimant making representations to the Defendant, which she relied upon, thereby also acting to her detriment."
Particulars:
(i) The Claimant knew that the Defendant had no money but wanted to continue to live at the property;
(ii) The Claimant stated he was able to develop the property around the house;
(iii) The Claimant agreed that the house part of the property should remain occupied by the Defendant at all times;
(iv) The Defendant agreed to sell the property to the Claimant for £750,000, as against its true worth of £1,250,000 but subject to conditions;
(v) Those conditions were that
- the Defendant could and would continue to live in the house for as long as she wanted
- the Claimant represented to the Defendant, which she accepted, that title to the house and garden would be transferred to her in lieu of profits on development of parts of the Property
- the Defendant had security of occupation of the house and garden;
- the Claimant would obtain planning permission to develop the property (but not the existing house and garden)
- The Claimant would share the profit of any development as to 30% thereof to the Defendant as set out in an overage agreement
- If the Claimant wanted to sell the title of the house and garden he would first offer it to the Defendant at a price as set out in a written agreement
- the Claimant would and did enter into a written agreement headed 'Tenancy Agreement' which reflected his agreed obligations but was not intended to be a tenancy within the Housing Act 1988 as it was for an expressed nominal 'rent';
- That the Claimant would have and maintain buildings insurance including against subsidence and the repair of utility pipes.
11. In these circumstances, the Defendant acted to her detriment.
Particulars:
(i) The Defendant transferred the legal interest to the Claimant and Mr Nicolls;
(ii) The Defendant transferred it at a considerable undervalue, being £500,000 (the true value was £1.25 million and the consideration was £750,000).
(iii) The Claimant represented to the Defendant, which she accepted, that title to the house and garden would be transferred to her in lieu of profits on development of parts of the Property.
12. Furthermore, the representations made by the Claimant were untrue.
Particulars:
(i) The Claimant has failed to maintain the fabric of the property in that there is water ingress into the house from the roof (which has become defective);
(ii) The Claimant has failed to maintain the water supply to the house in that there is a leak in the supply pipe in the field leading to the house from the road.
(iii) These defects were notified in writing to the Claimant by letter from the Defendant's solicitors in December 2009.
(iv) The Claimant represented to the Defendant, which she accepted, that title to the house and garden would be transferred to her in lieu of profits on development of parts of the Property.
13. By reason of the matters set out above, the Defendant has rights in and over the property which has raised an equity by reason of proprietary estoppel.
Particulars:
(i) The Defendant has acted upon the representations to her detriment as set out above and is therefore entitled to remain in the property for as long as she wants;
(ii) Her reasonable expectation relying upon the Claimant's representations was that the titles to the house and garden, located within the property, would become hers;
(iii) The minimum equity to do justice to her equity would be to vest title of the house and garden, together with ancillary rights, in her.
14. Further and in any event, at the time of the sale by the Defendant to the Claimant, there was a limitation on the title which was passed from her to him.
Particulars:
(i) This limitation is that her title was always subject to her equitable rights granted and agreed with the Claimant.
(ii) The Claimant acquired no more than a title to the property subject to the Defendant's equitable rights;
(iii) Those equitable rights have priority over the legal interest by mortgage of Heritable Bank granted by the Claimant;
(iv) The Defendant's rights arose prior to registration of the Heritable Bank's rights under the mortgage and are protected by the Defendant's actual occupation;
(v) The consequence is that upon registration, those rights are not postponed to the mortgage for they are protected by the operation of section 29(2)(a)(ii) and paragraph 2, schedule 3 of the Land Registration Act 2002."
The Nature of the Hearing before the Judge
"(1) At that hearing, or any adjournment of it, the court may (a) decide the claim; or (b) give case management directions.
(2) Where the claim is genuinely disputed on grounds which appear to be substantial, case management directions given under paragraph (1)(b) will include the allocation of the claim to a track or directions which will enable it to be allocated.
(3) Except where (a) the claim is allocated to the fast track or the multi-track or (b) the court orders otherwise, any fact that needs to be proved by the evidence of witnesses at the hearing referred to in paragraph (1) may be proved by evidence in writing."
Special Condition 7
"The parties shall on completion enter into an Assured Shorthold Tenancy agreement in the form annexed hereto, and the parties acknowledge that the tenancy shall be capable of renewal in the event that the planning process is unduly delayed."
The termination issue
"The landlord gives you notice to quit and give vacant possession of the property on the next date being at least four weeks from the service of this notice on which a complete period of your license or your tenancy expires."
"The landlord requires possession of the Property at the end of that period of your tenancy which will end next after the expiration of two months from the service upon you of this notice."
Overriding Interest
Proprietary Estoppel/Constructive Trust
"Section 2 of the 1989 Act declares to be void any agreement for the acquisition of an interest in land that does not comply with the requisite formalities prescribed by the section. Subsection (5) expressly makes an exception for resulting, implied or constructive trusts. These may validly come into existence without compliance with the prescribed formalities. Proprietary estoppel does not have the benefit of this exception. The question arises, therefore, whether a complete agreement for the acquisition of an interest in land that does not comply with the section 2 prescribed formalities, but would be specifically enforceable if it did, can become enforceable via the route of proprietary estoppel. It is not necessary in the present case to answer this question, for the second agreement was not a complete agreement and, for that reason, would not have been specifically enforceable so long as it remained incomplete. My present view, however, is that proprietary estoppel cannot be prayed in aid in order to render enforceable an agreement that statue has declared to be void. The proposition that an owner of land can be estopped from asserting that an agreement is void for want of compliance with the requirement of section 2 is, in my opinion, unacceptable. The assertion is no more than the statute provides. Equity can surely not contradict the statute. As I have said, however, statute provides an express exception for constructive trusts."
"In the present case the policy behind the Commission's proposals was as clearly stated as its intention that the proposals should not affect the power of the Court to give effect in equity to the principles of proprietary estoppel and constructive trusts. Even if the use to be made of the Commission's report is to be confined to identifying the defect in the law which the proposals were intended to correct, in a case such as the present it is unrealistic to divorce the defect in the law from the policy adopted to correct it. The Commission's report makes it clear that in proposing legislation to exclude the uncertainty and complexities introduced into unregistered conveyancing by the doctrine of part performance, it did not intend to affect the availability of the equitable remedies to which it referred."
"It is unprofitable to trawl through the authorities on domestic arrangements in order to compare the forms of words used by judges to describe the claimant's expectations in cases where this issue (hope or something more?) was not squarely raised. But the fact that the issue is seldom raised is not, I think, coincidental. In the commercial context, the claimant is typically a business person with access to legal advice and what he or she is expecting to get is a contract. In the domestic or family context the typical claimant is not a businessperson and is not receiving legal advice. What he or she wants and expects to get is an interest in immovable property, often for long term occupation as a home. The focus is not on intangible legal rights but on the tangible property which he or she expects to get. The typical domestic claimant does not stop to reflect (until disappointed expectations lead to litigation) whether some further legal transaction (such as a grant by deed or the making of a will or codicil) is necessary to complete the promised title."
"10. As I said in Kinane v Mackie-Conteh [2005] WTLR 345, the policy of section 2(1) of the 1989 Act is "to protect the public by preventing parties from being bound by a contract for the disposition of an interest in land unless it has been fully documented in writing." It needs to be repeated loud and clear that this is the rule which Parliament had laid down in section 2 of the 1989 Act, and that is a rule admitting of few exceptions under section 2…………..
56. The distinction between proprietary estoppel and constructive trust must…..be kept in mind, but it appears from Cobbe that, in some situations at least, both doctrines have a requirement for completeness of agreement with respect to an interest in property. Certainty as to that interest in those situations is a common component. A relevant situation would be where the transaction is commercial in nature. In my judgment, the transaction in the present case should be treated as commercial in nature since the parties were dealing at arm's length, and they had ready access to the services of lawyers had they wished to use them.
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. [emphasis added]
"A constructive trust does not only arise from an express or implied agreement or understanding. It can also arise in a number of circumstances in which it can be said that the conscience of the legal owner is affected. For instance, it may well be that facts which justified a proprietary estoppel against one of the parties in favour of the other would give rise to a constructive trust. However, in agreement with Lord Walker, I do not consider it necessary or appropriate to discuss proprietary estoppel further in this case.
It is hard to identify, particularly in the abstract, the factors which can be taken into account to infer an agreement or understanding, and the effect of such factors. Each case will be highly fact-sensitive, and what is relevant, and how, may be contentious, whether one is considering actions, discussions or statements, even where there is no dispute as to what was done or said."
Conclusion