House of Lords

Published September 8, 2008

Cobbe v Yeoman’s Row Management Ltd and Another

Before Lord Hoffmann, Lord Scott of Foscote, Lord Walker of Gestingthorpe, Lord Brown of Eaton-under-Heywood and Lord Mance

Speeches July 30, 2008

Where the claimant had entered into an oral agreement with defendants in connection with the redevelopment of their property, their unconscionable behaviour in withdrawing from the agreement once planning permission for the redevelopment had been obtained did not result in a proprietary estoppel or a constructive trust in favour of the claimant.

The House of Lords allowed an appeal by the first defendant, Yeoman’s Row Management Ltd, from the Court of Appeal (Lord Justice Mummery, Lord Justice Dyson and Sir Martin Nourse) ([2006] 1 WLR 2964), who had dismissed an appeal by the first defendant and the third defendant, Mrs Zipporah Lisle-Mainwaring, from Mr Justice Etherton ([2005] WTLR 625). The judge had held that claims against them by Mr James Cobbe in proprietary estoppel and constructive trust succeeded. The second defendant, Mr Robert Lisle-Mainwaring, the third defendant’s husband, died after the commencement of the proceedings.

Mr Nicholas Dowding, QC and Mr Timothy Morshead for the defendants; Mr Thomas Ivory, QC and Ms Myriam Stacey for Mr Cobbe.

LORD SCOTT said that the substance of the agreement had been that Mr Cobbe, at his own expense, would apply for planning permission to demolish a block of flats owned by the first defendant and erect six houses in its place; that on the grant of permission and the obtaining of vacant possession the property would be sold to him or his nominee company for an up-front payment of £12 million and that he or the company would then develop the property and sell the houses and pay the first defendant 50 per cent of the amount, if any, by which the gross proceeds of sale exceeded £24 million.

The oral agreement reached in principle had not covered everything that would have been expected in due course to be dealt with in a formal written contract.

The outstanding matters would not have been expected to be difficult matters on which to reach agreement but had all been matters for future discussion, and the outcome of future negotiations had always an inherent uncertainty.

Planning permission had been obtained, but Mrs Lisle-Mainwaring, on behalf of the first defendant, had then announced her dissatisfaction with the financial terms of the agreement and demanded an up-front payment of £20 million and suggested that the first defendant’s share of the proceeds of sale of the development should become 40 per cent of the amount by which the gross proceeds exceeded £40 million.

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