Conway v Conway & Anor

Factual and Procedural Background

The Claimant owns a large property known as Church Farm, including a part called the Barn. The Defendants, a married couple, orally agreed to purchase the Barn for £150,000 in or around March 2019, intending to convert it into a family home. The Claimant asserts that this agreement included a buy-back option allowing him to repurchase the Barn, while the Defendants deny such an option was ever agreed. The Defendants undertook extensive renovation works, spending over £200,000, with some assistance from the Claimant. Disputes arose when attempts to formalize the sale failed due to disagreement over the alleged buy-back option.

The Claimant issued a claim seeking declarations and injunctions to prevent the Defendants from entering the Barn or Church Farm. The Defendants filed a defence and counterclaim relying on proprietary estoppel to enforce the sale without the buy-back option, seeking transfer of the Barn and injunctive relief. The trial was heard over three days in February 2024. During the trial, additional solicitor file documents were disclosed, clarifying that the buy-back option was never part of the original agreement. The court was asked to determine whether the Defendants were entitled to enforce the oral agreement and whether proprietary estoppel applied, considering statutory formalities for contracts concerning land.

Legal Issues Presented

1. Whether the Defendants can rely on proprietary estoppel to enforce an oral agreement for the sale of land that does not satisfy the statutory formalities under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.
2. Whether the Defendants have established the factual elements necessary to prove proprietary estoppel, including representation, reliance, and detriment.
3. The precise terms of the oral agreement between the parties, including the existence or absence of a buy-back option and the extent of rights of way.
4. If proprietary estoppel is established, what form of relief is appropriate, specifically whether specific performance or minimum equitable relief should be granted.

Arguments of the Parties

Claimant's Arguments

• The oral agreement for the sale of the Barn was subject to a buy-back option in favour of the Claimant, which was not reflected in contemporaneous solicitor documents.
• Proprietary estoppel cannot be used to enforce an agreement that fails to comply with the writing requirements of section 2 of the 1989 Act.
• The Defendants’ counterclaim based solely on proprietary estoppel must fail as no alternative claim for unjust enrichment or compensation was properly pleaded or supported.
• The Defendants cannot obtain relief beyond what is specifically pleaded in their counterclaim, and any attempt to do so would be an abuse of process.
• The Claimant disputes the extent of the Defendants’ claimed rights of way and the alleged monthly payments of £600.
• Failure to provide full disclosure of solicitor files was criticized, though no adverse inference was drawn against the Claimant.

Defendants' Arguments

• The parties reached an oral agreement for the sale of the Barn without any buy-back option.
• The Defendants relied on the oral agreement and spent substantial sums renovating the Barn in the belief that the sale was concluded.
• Proprietary estoppel applies, entitling the Defendants to equitable relief despite the absence of a written contract complying with section 2.
• The Defendants seek specific performance of the oral agreement as the minimum relief necessary to satisfy the equity arising from proprietary estoppel.
• They contend the Claimant holds the Barn on constructive trust in their favour, which is exempt from the formalities under section 2(5).
• The Defendants assert they were to enjoy extensive rights of way across Church Farm as part of the agreement.
• The Defendants deny owing monthly payments of £600 and instead paid £500 per month for 10 months plus costs for a septic tank installation.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Gestmin SGPS S.A. v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm)	Evaluating competing evidence with emphasis on contemporaneous documents over oral evidence.	Used to assess the credibility of parties' oral evidence against solicitor file documents, concluding no buy-back option was agreed.
Guest v Guest [2022] UKSC 27	Granting minimum equitable relief necessary to satisfy proprietary estoppel.	Guided the court’s decision to grant specific performance as the minimum relief to do justice between parties.
Cobbe v Yeoman's Row Management Ltd [2008] UKHL 55	Section 2 of the 1989 Act prohibits enforcement of oral contracts for sale of land; proprietary estoppel cannot render void agreements enforceable.	Considered in relation to whether proprietary estoppel can enforce an oral sale agreement; court found it cannot be used to enforce void contracts.
Howe v Gossop [2021] EWHC 637 (Ch)	Proprietary estoppel can arise even if s. 2 formalities are not met, particularly where relief is not specific performance but e.g., a licence.	Distinguished from the present case as relief sought here is specific performance, not a licence; informed the court’s analysis on relief.
Yaxley v Gotts [2000] Ch 162	Interaction of proprietary estoppel and constructive trusts with s. 2 formalities; constructive trusts exempt from s. 2 requirements.	Supported the Defendants’ argument that constructive trust principles can apply and are not barred by s. 2 formalities.
Whittaker v Kinnear [2011] EWHC 1479 (QB)	Proprietary estoppel can survive s. 2 formalities; factual context crucial in determining estoppel or constructive trust.	Used to endorse the viability of proprietary estoppel in commercial contexts despite s. 2 formalities.
Thorner v Major [2009] UKHL 18	Three elements of proprietary estoppel: representation, reliance, detriment; equity prevents unconscionable conduct.	Provided the foundational test for proprietary estoppel applied by the court to the facts.
Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416	The importance of mediation in dispute resolution.	Referred to in relation to the court’s concern about the Defendants’ refusal to mediate.
Other authorities cited:	Herbert v Doyle [2010] EWCA Civ 1095; Thandi v Saggu [2023] EWHC 2631 (Ch); Dowding v Matchmove Ltd [2017] 1 WLR 749; Muhammed v Ary Properties Ltd [2016] EWHC 1698 (Ch)	Supported legal analysis on proprietary estoppel, constructive trusts, and s. 2 interaction.

Court's Reasoning and Analysis

The court began by examining the statutory formalities under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, which require contracts for sale of land to be in writing with all terms incorporated and signed by the parties. The Claimant’s claim relied on an oral agreement that allegedly included a buy-back option, but contemporaneous solicitor documents and correspondence showed no such option was agreed until very late in the negotiations, undermining the Claimant’s oral evidence.

The court applied the principles from Gestmin, emphasizing the importance of contemporaneous documents in evaluating oral testimony, and found the Claimant and his agent’s evidence unreliable regarding the buy-back option. The Defendants’ evidence, supported by independent witnesses and solicitor files, was preferred.

On the legal issue of proprietary estoppel, the court reviewed case law including Cobbe and Howe, noting that while s. 2 prohibits enforcement of oral contracts for land sale, proprietary estoppel can still provide equitable relief if unconscionability is established, provided the relief does not enforce the void contract but satisfies the equity minimally.

The court found the Defendants satisfied the three elements of proprietary estoppel: there was a clear representation or assurance of sale, they relied on it by undertaking extensive renovations, and they suffered detriment in doing so. The Claimant’s attempt to impose a buy-back option after the fact was unconscionable.

The court rejected the Claimant’s argument that the Defendants could not claim relief beyond their pleaded counterclaim, noting the Defendants’ primary claim was for proprietary estoppel relief, not unjust enrichment, which was not pleaded.

Regarding the terms of the oral agreement, the court accepted the Defendants’ version that no buy-back option existed, that they were entitled to an extended right of way over Church Farm, and that the £500 monthly payments (not £600) were made as agreed. The court applied the concept of an "open contract" to imply necessary terms.

Finally, the court concluded that specific performance of the oral agreement was the appropriate remedy, as the Barn was the Defendants’ family home and lesser relief would be insufficient to do justice. Compensation or other forms of relief would unnecessarily prolong proceedings.

Holding and Implications

The court held that the Defendants’ counterclaim based on proprietary estoppel succeeded and the Claimant’s claim was dismissed.

The court ordered specific performance of the oral agreement for the sale of the Barn to the Defendants, enforcing the terms as found without the buy-back option. The Claimant was restrained from interfering with the Defendants’ rights under the agreement.

The implications are that proprietary estoppel can provide equitable relief to enforce oral agreements for land sale that fail statutory formalities, provided the relief granted does not contradict the statute by enforcing void contracts but satisfies the equity minimally and justly. No new precedent was set beyond application of established principles. The decision emphasizes the importance of contemporaneous documentation and full disclosure in property disputes.