Howe & Anor v Gossop: Court of Appeal judgment on proprietary estoppel

This recent case highlights the section 2 Law of Property Act requirement that a contract for sale of land can only be made in writing does not prevent an equitable claim for a verbal proprietary estoppel.

The background

Mr and Mrs Howe own White Hart Farm, and a large area of the surrounding land. In 2011 they sold a barn to Mrs Gossop and it was converted into a house. Under the terms of the transfer, Mr and Mrs Howe granted Mrs Gossop a right of way over another road if Mrs Gossop resurfaced the access road by the end of 2012. They also agreed to pay Mrs Gossop £7,000 if it was completed to their satisfaction.

After the work was completed, by the agreed deadline, Mr Howe met Mr Gossop and offered to transfer two additional pieces of land to Mr and Mrs Gossop in return for the waiver of their obligation to pay £7,000. Mr Gossop agreed and started to undertake work on the additional land including clearing a considerable amount of builder’s rubble, importing topsoil, sowing grass seed, and fencing.

After a disagreement Mr and Mrs Howe took court action against Mr and Mrs Gossop and made a claim for damages for trespass and a possession order. In defence of the claims Mr and Mrs Gossop argued proprietary estoppel and sought declaration that they should be entitled to an irrevocable licence to occupy and use the land.

At the trial Mr Gossop confirmed that the meeting with Mr Howe concluded with a verbal agreement sealed by a handshake. This was supported by the evidence of Sean Howe (the son of the appellants), who gave evidence following a witness summons. Nothing was written down at the meeting and no written agreement was completed.

The key point

Mr and Mrs Howe argued that section 2 Law of Property Act 1989 defeats the proprietary estoppel claim.  It states “A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each.”

The judgment and appeal

The trial judge held that a proprietary estoppel had arisen which should be given effect as if Mr and Mrs Howe had granted a licence to Mr and Mrs Gossop to use the land as part of the garden. The licence being irrevocable whilst at least one of them remained alive and continued to own the adjacent house.

An appeal by Mr and Mrs Howe was dismissed in March 2021 as the judge upheld the court finding that a proprietary estoppel had arisen. The House of Lords case of Thorner v Major [2009] was followed and Cobbe v Yeoman’s Row Management Limited [2008] was distinguished.

The reasoning

The court found that all the elements of proprietary estoppel were present:

1. The owner of the land must have encouraged the claimant by words or conduct (that could be active or passive) to believe that the claimant has or will in the future enjoy some right or benefit over the owner’s property that is not merely personal in nature; and that the claimant must have reasonably believed that those words or that conduct was seriously intended to create that right.
2. The claimant must have acted to his detriment in reliance on the belief that he has or will acquire some right over the owner’s land.
3. It must be unconscionable for the owner to act in such a way as to defeat the expectation that the claimant had been encouraged or induced to believe.” [§20]

It held that the relief granted by the judge was not barred by section 2 because it did not amount to enforcement of the terms of the verbal agreement reached in March 2012.

“Section 2 is aimed at problems in the formation of contracts for sale of land, whereas the purpose of an estoppel is to remedy unconscionability in the assertion of strict legal rights.” [§ 48 -55]

Comments

The section 2 requirement for a written agreement does not prevent resulting, implied or constructive trusts (subsection (5) expressly makes an exception) and as this Court of Appeal case highlights nor does it prohibit equitable relief for proprietary estoppel.

Judgment: Howe & Anor v Gossop & Anor [2021]