Cobbe v Yeomans Row Management Ltd & Ors, Rev 1, Court of Appeal - Chancery Division, February 25, 2005, [2005] EWHC 266 (Ch)

Resolution Date:February 25, 2005
Issuing Organization:Chancery Division
Actores:Cobbe v Yeomans Row Management Ltd & Ors, Rev 1
 
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Neutral Citation Number: [2005] EWHC 266 (Ch)

Case No: HC04C02359

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 25 February 2005

Before :

MR JUSTICE ETHERTON

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Between :

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Joseph Harper Q.C. and Myriam Stacey (instructed by Bird & Bird) for the Claimant

Jonathan Seitler Q.C. and Joanne Wicks (instructed by DLA Piper Rudnick Gray Cary UK LLP) for the Defendant

Hearing dates: 18, 19, 20, 24, 25, 27 January 2005

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Draft 4 March 2005 17:20 Page 1

Index

Para

Introduction 1-10

Recent Procedural Developments 11-12

Background Facts 13-41

The Evidence 42-47

Proprietary Estoppel 48-170

Preliminary 48-50

Mr Cobbe's Case 51-55

The Defendants' case 56-61

Findings of fact 62-84

Analysis 85-129

The relief 130-147

The 1989 Act s.2 148-169

Decision 170

Constructive Trust 171-223

Restitution 224

The Claim against Mrs Lisle-Mainwaring 225-228

Decision 229-232

Mr Justice Etherton:

Introduction

  1. These proceedings concern a block of 11 flats at 38-62 Yeoman's Row, London, SW3 2AH (``the Property'').

  2. The First Defendant, Yeomans Row Management Limited, is registered at HM Land Registry as the proprietor of the Property.

  3. The Second Defendant, Robert Lisle-Mainwaring (``Mr Lisle-Mainwaring'') is the sole shareholder and a director of the First Defendant. His wife, Zipporah Lisle-Mainwaring (``Mrs Lisle-Mainwaring''), the Third Defendant, is the secretary of the First Defendant.

  4. The Claimant, James Cobbe (``Mr Cobbe''), is a property developer.

  5. Mr Cobbe claims that in the latter part of 2002 he reached an agreement with Mrs Lisle-Mainwaring, as agent of the First Defendant, that he would, at his own expense, apply for planning permission and conservation area consent (together ``planning permission'') for the development of the Property by its demolition and the erection in its place of a terrace of 6 houses, and upon such planning permission being obtained and vacant possession of the Property being achieved, the Property would be sold to Mr Cobbe for an immediate payment of £12m and, following completion of the development, ``overage'' of 50% of the gross proceeds of sale of the new houses in excess of £24m.

  6. Mr Cobbe claims that, pursuant to that agreement and in reliance upon it, he spent considerable time and money in applying for planning permission to develop the Property and in securing the grant of such permission on 17 March 2004 (the ``Planning Permission'').

  7. The First Defendant and Mrs Lisle-Mainwaring deny that any legally enforceable or complete agreement was ever reached with Mr Cobbe for the development or sale of the Property. They assert that any expense incurred by him was entirely at his own risk.

  8. Mr Cobbe accepts that, by reason of the Law of the Property (Miscellaneous Provisions) Act 1989 (``the 1989 Act'') s.2 he is unable to obtain an order for specific performance of the alleged agreement or to claim damages in place of, or in addition to, specific performance.

  9. He claims, however, to be entitled to an interest in the Property or its proceeds of sale by virtue of a constructive trust or proprietary estoppel, or to a payment in restitution, by reason of the steps taken by him in reliance upon the agreement, arrangement or understanding which he believed existed between himself and the Defendants and the unconscionable conduct of the First Defendant, acting by Mrs Lisle-Mainwaring, in encouraging or permitting Mr Cobbe to take such steps and, despite the grant of the Planning Permission, refusing to implement the agreement, arrangement or understanding.

  10. The First Defendant counterclaims for an order for removal of a notice in respect of the Property, which Mr Cobbe caused to be registered on 22 July 2004 at HM Land Registry to protect his claim to an interest in the Property or its proceeds of sale.

    Recent Procedural Developments

  11. At the outset of the trial, on the application of Mr Lisle-Mainwaring, I dismissed all claims against him and ordered his removal from the proceedings on the ground that there was no sustainable cause of action against him personally.

  12. By a consent Order dated 27 January 2005, upon the First Defendant undertaking not to dispose of or otherwise deal with the Property until judgment or further order, I ordered that the First Defendant shall apply to HM Land Registry to remove the notice registered by Mr Cobbe against the Property.

    Background Facts

  13. The following is a summary of sufficient of the background facts to understand the context in which the proceedings have been brought. It is not intended to include every fact or matter to which I was referred or on which the parties relied at the trial.

  14. Mr and Mrs Lisle-Mainwaring have lived in a flat in the Property (``Flat 50'') since 1983. In about 1986 they decided to attempt to purchase Flat 50 and the Property. They formed the First Defendant in 1995 as a vehicle to purchase the Property. Initially, they each owned 50% of the First Defendant. In 1998 Mrs Lisle-Mainwaring purchased Flat 50, and the First Defendant purchased the Property. In December 2003 Mrs Lisle-Mainwaring transferred her half share of the First Defendant to Mr Lisle-Mainwaring.

  15. From the outset the Property was viewed by Mr and Mrs Lisle-Mainwaring as a potential development site. At the time the First Defendant acquired the Property, however, there were five Rent Act protected tenants in occupation, including a particularly elderly tenant.

  16. Mr Cobbe, as I have said, is a property developer. He has had considerable experience over many years in the acquisition and sale of land and in carrying out developments. He has undertaken development projects in Ireland, where he lives, and London.

  17. In early February 2001 Mr Cobbe was introduced to Mrs Lisle-Mainwaring by an agent acquainted with her, Jonathan Money.

  18. At that time, and in all subsequent communications between Mrs Lisle-Mainwaring and Mr Cobbe, Mrs Lisle-Mainwaring appeared to be the person who made decisions about any possible sale of the Property. Mr Cobbe had the impression that she was, in fact, the owner of the Property. It is common ground that her husband played no independent role in any discussions about the sale or development of the Property.

  19. In February or March 2001 Mrs Lisle-Mainwaring and Mr Cobbe reached an agreement in principle (``the First Agreement'') that, if vacant possession of the Property were obtained, and Mr Cobbe obtained planning permission for the demolition of the Property and the erection of 6 new houses in its place, the Property would be sold to Mr Cobbe or to a company nominated by him. There is a dispute between the parties as to whether the purchase price was to be £13.25m (as Mr Cobbe alleges) or £14.25m (as Mrs Lisle-Mainwaring and the First Defendant allege). Those terms were never recorded in writing, whether in the form of heads of agreement or otherwise.

  20. The First Agreement was not progressed to any material extent. Vacant possession was not obtained, and no application for planning permission was made. From July 2001 to June 2002 there was no direct contact between Mr Cobbe and Mrs Lisle-Mainwaring.

  21. Mr Cobbe and Mrs Lisle-Mainwaring met again in early August 2002. At that and subsequent meetings in 2002 a second agreement in principle was reached (``the Second Agreement''). The substance of the Second Agreement was that Mr Cobbe would apply, at his own expense, for planning permission for the demolition of the Property and the erection, in its place, of a terrace of six houses; and that, upon the grant of planning permission and the securing of vacant possession by Mrs Lisle-Mainwaring, the Property would be sold to Mr Cobbe or a company nominated by him for an immediate payment of £12m together with overage of 50% of the gross proceeds of subsequent sales over £24m. The parties are in dispute as to whether Mr Cobbe said he would obtain planning permission by Easter 2003 (as Mrs Lisle-Mainwaring alleges, but Mr Cobbe denies) and as to precisely what was said about a ``long-stop'' date for obtaining planning permission. Mrs Lisle-Mainwaring's evidence is that she told Mr Cobbe that he could have until Christmas 2003 to obtain planning permission, after which ``all bets were off''. In his witness statement Mr Cobbe stated that it was agreed that he should ``try and obtain'' planning permission by 31 December 2003, but this was ``an aspirational date... of no particular significance''.

  22. Both Mrs Lisle-Mainwaring and Mr Cobbe envisaged that the gross proceeds of subsequent sales would be such that overage would indeed be payable under the Second Agreement. Mr Cobbe envisaged that gross sales would be about £36m, with overage payable under the Second Agreement of £6m.

  23. Mr Cobbe envisaged that his own gross profit would be approximately £5m.

  24. No formal heads of agreement were drawn up in respect of the Second Agreement, and no solicitors were instructed to draft contractual documentation.

  25. Between August 2002 and March 2004 Mr Cobbe set about obtaining detailed planning permission and progressing the plans for development of the Property. In addition to devoting a considerable amount of his own time to the project, he retained a number of professional people for that purpose. They included Paul Davis & Partners (``PDP''), architects, to act as his agents in the design and supervision of the development of the Property and to make all necessary arrangements to secure the grant of planning permission, CNP Consultants (``CNP''), surveyors, Delva Patman & Partners (``DPA''), rights of light experts, KMCS Ltd (``KMCS''), construction and property...

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