Back

Our offices will be closed over the Easter weekend from 5:30pm on Thursday 28 March. We will reopen as usual at 9am on Tuesday 2 April.

Get in Touch Menu

House of Lords overturns decision in Yeomans v Cobbe

06 November 2008

In November 2006, we reported on a Court of Appeal decision that seemed to widen the scope for claimants to secure a substantial interest in property, even without a written agreement.

The case was Yeomans Row Management Ltd v Cobbe and the claim was based on the legal principle of ‘proprietary estoppel’. Now the House of Lords has overturned the decision.

The facts of the case were: Mr Cobbe verbally agreed to buy and redevelop a block of flats owned by Yeomans. At his own expense, Cobbe would apply for planning consent for the development. When granted, Yeomans would sell him the property for £12m and on completion of the work, Cobbe would make an overage payment of 50 per cent of any gross sale proceeds in excess of £24m.

Planning consent

The longstop date by which planning consent was to be obtained was unclear. There were no formal heads of terms and no solicitors were instructed.

Cobbe spent about £200,000 in obtaining planning consent and held regular meetings with Yeomans to discuss progress. On the day after consent was granted, Yeomans told Cobbe that the verbal agreement had lapsed as consent had not been obtained by the alleged longstop date: they tried to renegotiate the price.

Cobbe issued proceedings, claiming an interest in the property (or the proceeds of its sale). The Court of Appeal upheld an earlier decision awarding Cobb a sum in excess of £5m. The House of Lords took a different view. Case law on proprietary estoppel shows that claimants’ expectations differ depending on their circumstances. In a commercial context, they are typically business people who have access to legal advice: they expect to get a contract.

Legal liability in discontinued negotiations

As both Cobb and Yeomans were experienced in the property world, they knew that there was no legally-binding contract and either party was free to discontinue negotiations without legal liability. Therefore Cobbe was not entitled to proprietary estoppel. Yeomans’ ‘unconscionable’ behaviour was not enough to justify Cobbe’s claim to have acquired a beneficial interest in the property.

Instead, the Lords said that Cobbe was entitled to a common-law remedy for unjust enrichment – Yeomans having been unjustly enriched by obtaining the value of Cobbe’s services without paying for them. Cobbe was entitled only to a sum that covered the cost of obtaining planning consent plus an appropriate fee for his services.

The moral of the story is, don’t make arrangements on the back of a fag packet or the shake of a hand: ensure that the terms of any agreement are properly documented and enforceable.

Partner Nigel Whittaker heads our commercial property department and acts for clients UK-wide. 

Contact us

Disclaimer: All legal information is correct at the time of publication but please be aware that laws may change over time. This article contains general legal information but should not be relied upon as legal advice. Please seek professional legal advice about your specific situation - contact us; we’d be delighted to help.
Contact
Nigel Whittaker BA (Hons)
Partner
View profile
Related services
Share this article
Resources to help

Related articles

Willans plays role in Winchcombe Arts and Community Hub

Real estate

Our real estate team has advised a local charity on its purchase of Winchcombe Methodist Church as part of their plan to open a brand-new arts, youth and community hub.…

Willans
Solicitors

Charity land: A widening of the pool

Real estate

We previously reported on the new Charities Act 2022. The first wave of provisions in relation to charity land are now in force, with more expected to be in force…

Charlotte Cowdell BA (Hons), LLB
Associate, solicitor

RAAC: How the concrete crumbles

Real estate

The discovery of failing reinforced autoclaved aerated concrete (RAAC) in schools just before the beginning of term certainly caught the attention of the public and the media. The problem of…

Emma Thompson LLB (Hons)
Associate, solicitor
Contact us