Generally speaking, English law does not enforce a promise made by one person to another on its own without other requirements being present. The law does recognise a defence that prevents someone from suing someone else if they promised that they would not, but, that doctrine always acts as a shield and not a sword.
However, the position is different when it relates to promises concerning property (called proprietary estoppel in lawyer-talk), that is, a promise made by one person to another that the receiver would obtain a benefit in land, the receiver then relies on that promise to his detriment and then the promise-maker unconscionably reneges on the promise. Then, in such circumstances, the court will step in to remedy the unjustness or, as us lawyers like to call it, the ‘unconscionability’ of the situation.
Case in Point…
Our Matt Champ acted for a client, let’s call him Sam (“S”) who was in a relationship with, lets call her Amy (“A”). Amy’s grandmother (“G”) owned a property and entered into a written agreement that promised that S and A could purchase the property for the then current price and the added value of the works that S and A would carry out would not be used against them to increase the asking price.
On that basis, S (who had a good job and was looking for a mortgage on his own) invested all of his life’s savings and added around £92,500.00 to the value of the property with his works. Unfortunately, the relationship between S and A did not last.
Once the relationship was over, G told S that S could purchase the property but only for the increased price caused by his improvement works. The problem was that, by that time, S had developed health issues which meant that he could not work and so could not have obtained a mortgage. G wanted S to leave but S couldn’t as he had put his entire life savings into the works on the property and had nowhere else to go.
S spoke to Matt and proceedings were issued for damages including the increase in the value of the property which were vigorously defended by G on a number of grounds which would mean, if successful, S would not have received anything.
The matter came before District Judge Thomas (as he then was) in Medway County Court for a three-day trial.
DJ Thomas found that S had carried out the works and paid for them all himself without assistance from A, all of which was known at the time by G who just stood by and allowed the works to continue. The property had been increased by £92,500.00 and it would be entirely unconscionable for S not to receive damages as a result of G breaking her promise because he was not now in a position to purchase the property due to his health issues.
However, DJ Thomas found that, as S, by his own admission, had always intended to purchase the property with A with each owning 50% of the property, any damages awarded to him should be reduced by 50%. DJ Thomas further stated that such an approach would protect any claim that A might want to make in respect of the promise that was also made to her.
DJ Thomas allowed a figure for equitable rent to G, as S had been living in the property for free whilst the proceedings were disposed of and awarded S the balance. Despite the balance being five figures, DJ Thomas found, regardless of G having acted ‘extraordinarily’ by defending the case and not even attempting to settle what the judge found was ‘always a case of proprietary estoppel’, there was not apparently clear winner and clear loser and so DJ Thomas made no order as to costs. The effect of that was that S had to pay his own legal fees.
An appeal was immediately lodged against the order of DJ Thomas on three principal grounds:
| 1) | Whilst S had always intended to own the property 50/50 with A, that was on the basis that S and A remained in a relationship which they were not and never would be again. As a result, the judge had to ‘stand back and look at the matters in the round’ as they were before the court at the time of the hearing. |
| In circumstances where the court had found that S had undertaken and paid for all of the works and where he had only received 25% of the increase in the property with the rest being retained by G, that was not an equitable or fair result. It did not remedy the unconscionability that the court had found that S had suffered at G’s hands. | |
| 2) | The judge trying to protect A (who had been served with the proceedings but had decided not to get involved in them) was wrong. It was not for the court to speculate as to what the rights of third parties who were not before the court might be. It was also wrong on the basis that A could not necessarily satisfy the legal test needed to make any such claim (she had arguably not relied to her detriment on G’s promise as S had spent all the money for the works). A could still make a claim against S if she so wished and so did not need protecting. |
| 3) | S had plainly won the case and there was no good reason for the judge to depart from the usual rule that the loser pays the winner’s costs. S had made offers where G had made none, S was receiving a five-figure sum in compensation that he was only receiving because he had issued proceedings and S had proven his case which had been defended by G on all grounds and had lost. It was clear that S had won the case and, where the judge had described the conduct of G as ‘extraordinary’ in defending the claim, it was only proper for S to have his costs paid by G. |
The permission to appeal hearing came before Record Howlett in April 2024 who agreed with S’ position and granted permission to appeal on all three grounds. The appeal was listed to be determined in early September 2024.
Due to Matt’s negotiating with the solicitors acting for G after permission to appeal was obtained, the matter was settled shortly before the appeal hearing on more than acceptable terms for Matt’s client (which must remain confidential).
What Matt says:
I’m over the moon to have resolved this for my client. It was a strange case because you do not often appeal when you win but we thought the judge misapplied the law with which Recorder Howlett agreed as he clearly thought there was a real chance that we were right.
I do agree with DJ Thomas that this was a sad case but the right outcome has been achieved and, hopefully, everyone can put this behind them and my client can look forward to welcoming his first child without this hanging over him.
Matt worked with Barnaby Hope of Selborne Chambers throughout these proceedings. Barnaby was Counsel at the trial and, with Matt, drafted the grounds of appeal which ultimately led to the successful conclusion.
