The House of Lords yesterday handed down an important judgment about proprietary estoppel and its role in pre-contractual negotiations. The appellant company succeeded in its appeal against the Court of Appeal’s finding that a proprietary estoppel had been created by the company’s actions in withdrawing from negotiations after the respondent had spent a considerable time and effort in bringing obtaining planning permission for the redevelopment of the company’s property having agreed (orally) in principle to acquire the property for that redevelopment.
In his leading opinion, Lord Scott held that the respondent was well aware that he did not have an enforceable agreement, and that the unconscionability of the appellant in withdrawing from the negotiations at a late stage was not sufficient to create a proprietary estoppel in the respondent’s favour. It was further held that no constructive trust had arisen in the respondent’s favour on the facts of the case.
The House held that the respondent was entitled to a quantum meruitpayment for his services in obtaining planning permission.
Timothy Morshead was instructed by DLA Piper UK LLP as junior counsel for the appellant (led by Nicholas Dowding QC) and Myriam Stacey was instructed by Bird & Bird as junior counsel for the respondent (led by Thomas Ivory QC).
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