Cobbe v Yeoman's Row Management Ltd [2008] UKHL 55 is a House of Lords case in English land law and relates to proprietary estoppel in the multi-property developer context.
The court of final appeal awarded the project manager £150,000 on a quantum meruit basis for unjust enrichment because Yeoman's Row had received the benefit of his services without paying for that.
The court found a non-binding agreement in principle, entirely subject to the owner's final say to take into account for example their view of the market; this was the basis on the facts on which the parties were proceeding.
By late 2003 the company had decided to pull out, and to ask for more money up front, but still deliberately gave Cobbe the impression that they would continue.
Etherton J found on proprietary estoppel in Mr Cobbe's favour, and awarded £2m, equal to half of the increase in value of Yeoman Row's freehold caused by the grant in the planning permission.
The House of Lords held Mr Cobbe had no proprietary estoppel claim, nor had he acquired an interest under a constructive trust.
The remedy to which, on the facts as found by the judge, Mr Cobbe is entitled can, in my opinion, be described neither as based on an estoppel nor as proprietary in character.
It is relevant to notice that the amendments to Mr Cobbe's pleaded prayer for relief, made when the specific performance and damages for breach of contract claims were abandoned, include the following : "(4) Alternatively, a declaration that [the appellant and Mrs Lisle-Mainwaring] are estopped from denying that [Mr Cobbe] has such interest in the Property and/or the proceeds of sale thereof as the Court thinks fit."
Both Etherton J and Mummery LJ regarded the proprietary estoppel conclusion as justified by the unconscionability of Mrs Lisle-Mainwaring's conduct.
My Lords, I can easily accept that a subject-to-contract reservation made in the course of negotiations for a contract relating to the acquisition of an interest in land could be withdrawn, whether expressly or by inference from conduct.
It would be an unusually unsophisticated negotiator who was not well aware that oral agreements relating to such an acquisition are by statute unenforceable and that no express reservation to make them so is needed.
Mr Cobbe was an experienced property developer and Mrs Lisle-Mainwaring gives every impression of knowing her way around the negotiating table.
Mr Cobbe did not spend his money and time on the planning application in the mistaken belief that the agreement was legally enforceable.
The reality of this case, in my opinion, is that Etherton J and the Court of Appeal regarded their finding that Mrs Lisle-Mainwaring's behaviour in repudiating, and seeking an improvement on, the core financial terms of the second agreement was unconscionable, an evaluation from which I do not in the least dissent, as sufficient to justify the creation of a "proprietary estoppel equity".
The advantage was unconscionable because immediately following the grant of planning permission, she repudiated the financial terms on which Mr Cobbe had been expecting to be able to purchase the property.
This is not, in my opinion, a case in which a remedy can be granted to Mr Cobbe on the basis of proprietary estoppel.Lord Walker noted that in Gillett, the young farm manager did not take any legal advice and believed the assurances to be binding, whereas in the commercial context, a business person will have access to advice, and the focus is not on intangible legal rights, but on tangible property one expects to get.
Crabb v Arun District Council, the facts of which are well known, is a difficult case, not least because of different views taken by different members of the Court (Lord Denning MR, and Lawton and Scarman LJJ).
In the present case, by contrast, the judge found (in para 68 of his judgment, quoted above) that all the critical commercial terms had been agreed in principle.
In my opinion none of these cases casts any doubt on the general principle laid down by this House in Ramsden v Dyson, that conscious reliance on honour alone will not give rise to an estoppel.
When a claim based on equitable estoppel is made in a domestic setting the informal bargain or understanding is typically on the following lines: if you live here as my carer/companion/lover you will have a home for life.
Mr Ivory made a virtue of that point, arguing that the absence of any active negotiations between September 2002 and March 2004 shows that the parties did not expect to encounter any difficulty in agreeing these matters.
When examined in that way, Mr Cobbe's case seems to me to fail on the simple but fundamental point that, as persons experienced in the property world, both parties knew that there was no legally binding contract, and that either was therefore free to discontinue the negotiations without legal liability—that is liability in equity as well as at law, to echo the words of Lord Cranworth quoted in para 53 above.
Mr Cobbe was therefore running a risk, but he stood to make a handsome profit if the deal went ahead, and the market stayed favourable.