Cobbe v Yeoman's Row Management Ltd

Ratio Decidendi

Hechos

Mr Cobbe, an experienced property developer, reached an oral 'in principle' agreement with Yeoman's Row Management Ltd that, if he obtained planning permission to redevelop a block of flats the company owned, the company would sell him the property at a core price and share the uplift in value. The agreement was expressly not intended to be legally binding — in effect 'subject to contract'. Relying on it, Cobbe spent 18 months and considerable expense successfully obtaining planning permission; the company then went back on the arrangement and demanded a much higher price.

Resumen de la sentencia

The House of Lords held that Cobbe could not establish a proprietary estoppel or constructive trust entitling him to an interest in the property, but was entitled to a quantum meruit for the value of his services and to reimbursement of his expenses. Lord Scott (with whom the House agreed) held that proprietary estoppel could not be used to obtain property rights that the parties had intended would be created only by a future formal contract. Cobbe, a sophisticated commercial party, knew the arrangement was not binding and that either side could withdraw; he had consciously taken the commercial risk that the company might not proceed, so it was not unconscionable, in the relevant estoppel sense, for the company to rely on the absence of a concluded contract. There was no assurance of a certain interest in identified property on which he was entitled to rely. The decision significantly narrowed proprietary estoppel in the commercial, 'subject to contract' context, and is generally contrasted with the domestic case Thorner v Major decided shortly afterwards.

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