Lloyd's Maritime and Commercial Law Quarterly
THE DEATH OF PROPRIETARY ESTOPPEL
Yeoman’s Row v. Cobbe
In Yeoman’s Row Management Ltd v. Cobbe,1 the House of Lords considered a particular variant of a general commercial problem: (i) A and B enter into negotiations as to a potential bargain; (ii) B undertakes work in reliance on a contract’s being concluded between A and B; but (iii) no contractual deal is made. In the absence of a contract, when, if at all, can B bring a claim against A?
1. The facts and claims
The appellant company (“YRML”) was the registered proprietor of a freehold of land in Knightsbridge with redevelopment potential. The company was controlled by Mr and Mrs Lisle-Mainwaring, who held a long lease over one of the 13 flats on the property. Mr Cobbe, an experienced property developer, entered into lengthy negotiations with Mrs Lisle-Mainwaring (“L-M”), who acted on behalf of YRML. Those discussions culminated in an oral agreement, the substance of which was as follows: (i) Mr Cobbe, at his own expense, would apply for planning permission to demolish the existing block of flats and to erect, in its place, a terrace of six houses; (ii) upon the grant of planning permission and the obtaining of vacant possession, the property would be sold to Mr Cobbe, or to a company nominated by him, for an up-front payment to YRML of £12 million; (iii) Mr Cobbe, or the nominee company, would develop the property in accordance with the planning permission and (iv) would sell the six houses and pay to YRML 50% of the amount, if any, by which the gross proceeds of sale exceeded £24m.2
The trial judge, Etherton J, found that neither Cobbe nor L-M thought that their oral agreement was legally binding. They intended that, if planning permission were granted, then YRML would enter into a formal agreement with Cobbe or a company nominated by him. That agreement would include not only the core terms forming the oral agreement but also further terms, yet to be negotiated (including, for example, some form of security for Cobbe’s duty to pay YRML the agreed overage). Although Cobbe believed that that oral agreement was binding in honour on both parties, he envisaged that, if L-M decided not to proceed before planning permission was granted, he would be reimbursed his reasonable expenditure. On that basis Cobbe spent considerable time and effort and incurred considerable expense between late 2002 and March 2004 in applying for planning permission. However, by late 2003 L-M had formed an intention not to comply
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