Summary

If, following an oral agreement, the parties still intended to make a formal agreement setting out the terms on which one or more of the parties was to acquire an interest in property, or if further terms for that acquisition remained to be agreed between them so that the interest in property was not clearly identified, or if the parties did not expect their agreement to be immediately binding, neither party could rely on constructive trust as a means of enforcing their original agreement.

Facts

The applicant (H) sought permission to appeal against a High Court judgment that an agreement he had made with the respondents (D) concerning land had given rise to a constructive trust in their favour. H and D owned the freeholds of adjacent properties. D leased part of H's property. H wanted to build on his property, but to do so needed to exchange some of D's parking spaces for others on his property. The parties made an oral agreement containing nine conditions and H proceeded with the development. A dispute arose over the parking spaces and H brought proceedings to require D to complete the exchange. The judge found that the agreement had not simply been for an exchange. Instead, he held that if H was willing and able to satisfy the other terms which had been agreed, it would be unconscionable for D to resile from their agreement by refusing to transfer the spaces to him; but if H was not willing and able to satisfy those terms, then it would not be unconscionable for D to retain those spaces unless and until those other terms were satisfied. However, H decided not to exercise that right to obtain a transfer of the spaces by complying with all the other terms of the agreement. D then counterclaimed that if they transferred the spaces and paid the sum in the agreement for H to create an extension to the part of his property that they leased, then he was bound to transfer to them his parking spaces and to grant a lease to them of that extension and another building. The judge found that although there was no written contract for the purposes of the Law of Property (Miscellaneous Provisions) Act 1989 s.2(1), there was, for the purposes of s.2(5), a constructive trust relating to the spaces, the extension and the other building in favour of D as they had relied on the oral agreement to their detriment by allowing H's development to encroach on to their parking spaces. H submitted, among other things, that the judge's decision was not compliant with Cobbe v Yeoman's Row Management Ltd (2008) UKHL 55, (2008) 1 WLR 1752 because the agreement had not been sufficiently certain and there were matters outstanding to be agreed.

Held

If, following an oral agreement, the parties still intended to make a formal agreement setting out the terms on which one or more of the parties was to acquire an interest in property, or if further terms for that acquisition remained to be agreed between them so that the interest in property was not clearly identified, or if the parties did not expect their agreement to be immediately binding, neither party could rely on constructive trust as a means of enforcing their original agreement. In those situations, if their agreement, which did not comply with s.2(1), was incomplete, they could not utilise the doctrine of proprietary estoppel or the doctrine of constructive trust to make their agreement binding on the other party by virtue of s.2(5), Cobbe applied (see para.57 of judgment). There was no doubt, on the findings made by the judge, that D had relied to their detriment on H's assurance since the effect of their acceptance of his assurance was that he had proceeded to build with an allocated parking space encroaching partly on to one of their parking spaces. Likewise, on the judge's findings the agreement was not subject to contract (para.67). There was no doubt as to the identification of the extent of D's interest in the extension or the other building and there was sufficient clarity about the rest of the agreement (paras 68-77). There had been no evidence before the judge showing that the parties knew that their agreement was incomplete (para.80).

Application granted in part, appeal dismissed