Author Archive

Proprietary estoppel and oral land contracts: the last word?

September 26, 2021

Howe v Gossop ([2021] EWHC 637) addressed the question as to whether proprietary estoppel can be relied upon where the claim arises out of an oral agreement concerning land.

The problem is that such an agreement is only enforceable if the formalities requirements in section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 have been satisfied. There are concerns as to whether it would be legitimate to allow oral land agreements to be the basis of a successful proprietary estoppel claim. In that case, proprietary estoppel appears to undermine the formalities rules.

In Howe v Gossop, the court resolved this conundrum with the proposition that proprietary estoppel claims can arise out of oral agreements concerning land so long as the relief sought does not amount to the enforcement of the oral agreement.

Facts

Mr and Mrs Howe sold land and buildings near their farm to Mrs Gossop. The terms of the transfer required Mr and Mrs Howe to pay GBP7,000 to Mrs Gossop for road resurfacing work carried out at Mrs Gossop’s expense.

Mr and Mrs Howe and Mr and Mrs Gossop subsequently orally agreed that the Howes would transfer two parcels of land (the ‘Green land’ and the ‘Grey land’) to the Gossops in return for a waiver of the obligation to pay GBP 7,000.

The Gossops carried out work on the Green land and the Grey land. Then relations between the parties broke down. The Howes brought proceedings to recover possession of the Green land and the Grey land.

The Gossops relied on proprietary estoppel in their defence, seeking a declaration that they were entitled to an irrevocable licence to occupy and use the land. They only raised this defence in relation to the Green land because the parties had not clearly delineated the Grey land. The defence succeeded in the court below.

Appeal

The Howes argued that a proprietary estoppel claim could not succeed because the agreement was not in writing as required by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. They argued that a claim based on an oral land contract could only succeed in exceptional circumstances (relying on passages in the House of Lords decision Cobbe v Yeoman’s Rowe Management Ltd and the Court of Appeal decision in Herbert v Doyle).

Decision

Snowden J. rejected the appeal. There was no requirement that the case be exceptional before proprietary estoppel can be relied on ([65]).

He distinguished cases in which proprietary estoppel was being used, in effect, to secure specific performance of an oral contract from cases where proprietary estoppel was being used as a defence to an action for possession.

The Gossops sought an irrevocable licence rather than specific performance of the contract and so there was no clash with the formalities requirements for land contracts ([50] and [53]).

Nor did it matter that the parties attempted to arrange for the agreement to be embodied in a written contract ([79]).

Snowden J. does not appear to rule out entirely the use of proprietary estoppel to enforce an oral land agreement but this would only be possible where there was some additional (unspecified) factor:

‘if a claimant is seeking relief that amounts to enforcement of a non-compliant contract, he needs to point to something else as the basis for an estoppel based on unconscionability.’ ([66])

Kinane v Mackie-Conteh ([2005] EWCA Civ. 45) is given as an example. In these cases, ‘some additional representation or conduct by the defendant’ is needed ([70]).

The fairness of the decision

Snowden J. pointed out that the Howes could not complain of being unfairly treated; the Gossops waived the GBP7,000 debt and got only equitable relief in return ([76]).

Michael Lower

Recovering pre-payment of purchase price where the agreement was never completed

September 11, 2021

In Hui Tze Ha v Ho Yuet Lin ([2021] HKCFI 1901) D and P entered into a written agreement on 18 September 1992 under which D agreed to sell property in Kowloon to P for HK$1.2 million. P paid a ‘deposit’ of HK$1 million. The agreement was never completed. Time for completion was of the essence.

P died in 2001. In March 2016, P’s estate brought proceedings to recover the deposit of HK$1million. In October 2016, D counterclaimed that she was entitled to forfeit the deposit and a declaration that the agreement was terminated by virtue of P’s repudiatory breach in failing to take the steps necessary to complete.

Deputy Judge MK Liu said that when neither party took the necessary steps to complete on the contractual completion date, the effect was that each party then had a reasonable time to complete (Camberra Investment Ltd v Chan Wai Tak, Chong Kai Tai Ringo v Lee Gee Kee).

Deputy Judge ML Liu held that D elected to treat the agreement as at an end when she brought her counterclaim for a declaration to this effect in October 2016 (drawing on the principles set out in Chao Keh Lung v Don Xia).

The payment of HK$1 million out of a total agreed consideration could not be treated as a deposit (Polyset Ltd v Panhandat Ltd). It was a payment in advance ([33]).

P’s estate’s unjust enrichment claim arose when the contract was terminated in October 2016 ([37]).

D was ordered to repay the HK$1 million ([46]).

Michael Lower

Online Property Law seminar – 6 October

August 17, 2021

Professor Steven Gallagher will speak on  Non-fungible Tokens and Digital Art: what are they and what do you get if you buy one? Link here.

When is an occupation rent payable?

August 14, 2021

In Cheung Lai Mui v Cheung Wai Shing ([2021] HKEC 2263) the Court of Final Appeal was asked to consider whether the obligation to pay an occupation rent only arose when there was an ouster or where partition proceedings or some analagous process (such as sale and division of the proceeds) had been initiated.

The alternative view, rejected by the Court of Final Appeal, was that there is a new ‘modern’ approach in which an occupation rent is payable whenever this is equitable.

P, D1 and D2 were co-owners of a house. P had a two-thirds share in the tenancy in common of the house and D1/D2 were co-owners of the remaining one-third share.

P occupied one floor of the house herself. The other two floors were let out and P received the rent. There was no ouster of D1 or D2. Were they entitled to an occupation rent and an account of the rental income received and retained by P?

The Court of Final Appeal rejected this claim:

‘We conclude that the authorities considered above do not establish any new, free-standing “modern approach” such as that urged by the respondents and favoured by the Court of Appeal. Claims by one co-owner against a co-owner in occupation for payment of occupation rent or for an account of rent can only arise in accordance with the principles laid down in the established authorities. Unity of possession precludes such claims otherwise than in cases of ouster (including “constructive exclusion” as in domestic violence cases); or where an operative agreement renders the co-owner in occupation an agent or bailiff so as to come under a duty to account to the other. Where partition or analogous proceedings have been instituted, apart from cases of ouster, equity may recognise a defensive equity in favour of one of the co-owners regarding expenditure appropriately incurred and may, in the process of equitable accounting, require the other, viewed as a seeker of equity required to do equity, to be debited with an occupation rent to set off the expenditure incurred, thus reciprocally balancing the parties’ interests in the distribution of the realised proceeds of the co-owned property.’ (at [104])

There is no right to an occupation rent or to an account of rental income unless there is ouster (including constructive ouster) or agreement. Where a partition or order for sale has been sought or a sale has taken place, the court can order payment of an occupation rent or account for income as part of an equitable accounting exercise.

Michael Lower

Proprietary estoppel: Does detrimental reliance need to be incurred before the death of the promisor?

July 12, 2021

In Cheung Lai Mui v Cheung Wai Shing ([2021] HKEC 2263) the Court of Final Appeal had to consider whether, in proprietary estoppel cases, detrimental reliance had to be incurred before the death of the landowner who gave the assurance. If it did, they had to consider whether this requirement was satisfied in the present case.

The dispute concerned land in a village in the New Territories. The landowners in question were three brothers, each with a one third share in the land. D3 was the only grandson of the three brothers’ father.

There was a common understanding between the brothers, from the 1970s onwards, that D3 would inherit the land.

Knowing of this, D3, a building contractor, began building a wall around the property in the 1980s. D3 did further work in the early 1990s.

The death of the last of the brothers was in 1999. D3 erected two buildings and did improvement work at the property after 1999.

D3 inherited a one third share of the land. P was the executrix / administratrix of the other two thirds. She sought an order for sale of the land under the Partition Ordinance.

There were two questions:

(1) Did D3’s detrimental reliance have to have been incurred before the death of the brothers?

(2) If so, was the work that he did in the 1980s and early 1990s substantial enough to amount to detrimental reliance?

The Court of Final Appeal held that the detriment had to be incurred before the death of the landowner ([31]).

Where there were co-owners, the detriment had to be incurred before the last of the co-owners who gave the assurance ([33]).

Post-death events might be relevant to the form that the relief should take ([32]).

Implicitly, the Court of Final Appeal accepted that D3’s work before 1999 was detrimental reliance.

D3’s claim succeeded.

P held the two-thirds share on constructive trust for D3 who became, therefore, the sole beneficial owner ([38]).

Michael Lower

Philanthropy in the Age of COVID-19: Asian and Global Perspectives – Online conference – 22 July 2021

June 11, 2021

You might be interested in this online conference on Philanthropy in the Age of COVID-19: Asian and Global Perspectives (the fourth conference in the “Modern Studies in the Law of Trusts and Wealth Management” series).

The workshop is co-organised by the Centre for Commercial Law in Asia at Singapore Management University, the University of York, and the Asian Law Centre at Melbourne Law School, The University of Melbourne.

Details and registration link HERE.

The Home Ownership Scheme and beneficial ownership. 16 June 2021. Ms Phoebe Woo.

June 1, 2021

Dear All,

You are invited to a meeting of the online Property Law Discussion Group at 12.15pm on 16 June (Wed).

The speaker is Ms Phoebe Woo (BA and LLB. HKU; LL.M. Cambridge University; HKU Pre-doctoral Fellow).

Her topic is: ‘The Home Ownership Scheme and beneficial ownership’.

Participation is open to everyone with an interest in Property Law. It seeks, among other things, to give a platform for the work of Law students and alumni in the early stages of their careers. The Group hopes to have at least one or two meetings a month, perhaps more.

We can talk about any Property Law issues of interest to you.

There will be a brief 5 – 10 minute presentation and then discussion. The meeting will last for 30 – 45 minutes.

If you would like to attend, kindly register here by 5 pm, 15 June 2021.

We look forward to seeing you at the discussion group.

Best regards,

Faculty of Law,

CUHK

The seven deadly sins of trustee decision making – online seminar 23 June

May 28, 2021

Mr. Andrew Lynn will give the next in the CUHK Law Property Law seminar series on 23 June at 6pm (HK time).

Details and registration link here.

Michael Lower

Family and Wealth Disputes and the Lawyer’s Toolkit in Planning and Litigation – Property Law seminar (online) – 26 May 2021

May 20, 2021

CUHK Law is delighted to invite you to an online seminar by Professor Tang Hang Wu of Singapore Management University on Family and Wealth Disputes and the Lawyer’s Toolkit in Planning and Litigation at 6pm (Hong Kong time) on 26 May.

Registration link here.

Property Law Online Discussion – Ms Yasmine Zahir – Property claims for cultural property – 26 May 2021

May 20, 2021

A reminder of the meeting of the online Property Law Discussion Group at 12.15pm on 26 May (Wed).

The speaker is Ms Yasmine Zahir, Barrister-at-law, Liberty Chambers. Her topic is: ‘Treasure Hunting for the Golden Buddha’ and her presentation looks at property claims for cultural property.

Participation is open to any students and alumni with an interest in Property Law. The Group hopes to have at least one or two meetings a month, perhaps more.

We can talk about any Property Law issues of interest to you.

There will be a brief 5 – 10 minute presentation and then discussion. The meeting will last for 30 – 45 minutes.

If you would like to attend, kindly register here by 5 pm, 25 May 2021.

You might also want to sign up for the forum at Property Law Discussion Group | iipl (cuhk.edu.hk) to stay in touch and participate in online discussions.

We look forward to seeing you at the discussion group.

Best regards, 

Faculty of Law

The Chinese University of Hong Kong