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Proprietary estoppel as a substitute for partperformance?

October 23, 2010

Christine Davis, in a 1993 article (Estoppel: An adequate substitute for part performance?, (1993) 13 Oxford
Journal of Legal Studies 99), explored the question as to whether proprietary estoppel could replace the
doctrine of part performance. This was a question that seemed especially urgent in the UK at that time because
of the then recently introduced section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. This
provides that [a]contract for the sale or other disposition of an interest in land can only be made in writing
and only by incorporating all the terms which the parties have expressly agreed in one document or, where
contracts are exchanged, in each. (s. 2(1)). Section 2(5) provides that nothing in the sectionaffects the creation
or operation of resulting, implied or constructive trusts. Section 2(5) does not expressly save proprietary
estoppel.
Section 2(1) leaves no room for part performance since there will be no valid contract at all (nothing to be saved
by part performance) in the absence of a written document that satisfies section 2. Could proprietary estoppel
replace part performance? One question is whether this should be possible as a matter of policy since simply
replacing one equitable doctrine with another would seem to subvert the whole point of section 2. On the other
hand the Law Commission consultation documents that preceded section 2 did suggest that there would still be
room for proprietary estoppel. This is a question that the English Court of Appeal considered in Yaxley v
Gotts([2000] Ch 162)and inCobbe v Yeomans Row Management Ltd([2008] UKHL 55).
Davis suggests that, in any event, proprietary estoppel is not a completely adequate substitute since it clearly
could not be invoked by sellers since the only promise made to them was that they would receive the purchase
price and proprietary estoppel is not available; this is a simple debt claim. Davis points out that personal
remedies based on restitution might have a part to play (as they did later inCobbe).
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World Food Fair in the Court of Appeal: PartPerformance


October 7, 2010

In the Court of Appeal decision inWorld Food Fair Ltd v Hong Kong Island Development Ltd([2005] HKLRD 665)
the parties were negotiating for the grant of a lease of premises in a shopping mall. They had agreed many of
the principal terms of the lease. The tenants then paid a deposit of $200,000. They were allowed to enter the
premises and to carry out alteration works. The court had to decide whether there was a concluded agreement.
If there was the court had to decide whether it was enforceable notwithstanding the failure to comply with s.3(1)
of the Conveyancing and Property Ordinance. The Court of Appeal found that there was a concluded agreement
and that the payment of the deposit and going into possession were sufficient acts of part performance. The
decision was overturned by the Court of Final Appeal on the basis that there was in fact no concluded contract.
That being so, the question of part performance did not need to be considered in the Court of Final
Appeal([2007] 1 HKLRD 498).
Posted inFormalities,Part peformance|1 Comment

Part performance: Steadman vSteadman


September 25, 2010

Section 3(2) of the Conveyancing and Property Ordinance states that section 3 (laying down the formalities to be
observed in the case of land contracts) does not affect the law relating to part performannce.
The equitable doctrine of part performance makes an oral contract concerning land enforceable. The idea is that
sometimes a party to an alleged land contract might have performed actions that indicate the existence of the
land contract. In these circumstances, it can be inequitable for the other party to be allowed to use section 3(1)
of the Conveyancing and Property Ordinance as a defence in an action to enforce the contract. The modern
statement of the requirements of part performance are found in the House of Lords decision in Steadman v
Steadman([1976] AC 536, HL).

InSteadman v Steadman, the parties marriage had broken down. The wife had applied for a declaration that the
matrimonial home was jointly owned and an order for sale. The husband was making maintenance payments to
the wife and he had applied for a variation of the maintenance order. Negotiations took place at the door to the
courtroom and it was agreed that the wife would sell her interest in the house to her husband for GBP1500. He
also agreed to pay GBP100 in respect of arrears of maintenance payments. The agreement was explained to the
court which made orders implementing what the parties had agreed concerning maintenance. The husband paid
the GBP100 and his solicitors prepared a deed to transfer the wifes interest in the house to the husband. The
wife, however, refused to sign the deed and relied on the English equivalent of s.3(1) of the Conveyancing and
Property Ordinance. The husband argued that she was legally bound to transfer her interest in the matrimonial
home to him since there had been acts of part performance of the oral agreement. The husband succeeded.
In essence, the House of Lords held that part performance is available where the alleged acts of part
performance point on the balance of probabilities to some contract between the parties and either showed the
nature of the contract or were consistent with the oral agreement alleged. There was some inconsistency of view
between the members of the House of Lords as to whether the acts relied on had merely to point to the
existence of a contract or whether they had to point specifically to the existence ofa contract concerning land.
There was also a difference of aproach as to which of the acts that had been performed were relevant.
Lord Simon of Glaisdale provided an explanation as to why he thought that it was enough that the acts showed
on the balance of probabilities that some contract (not necessarily a land contract) had been entered into:
The law here is not logical: it represents the compromise of the two principles to which I have referred near the
outset of this speech. If the contract alleged is such that it ought not to depend on oral testimony, it is this
contract, not merely some contract, that the acts should prove. If the plaintiff has so performed his obligations
under the contract that it would be unconscionable for the defendant to plead the statute, it is immaterial
whether or not the plaintiffs acts prove the contract let alone some other contract. But it is this sort of
illogical compromise, doing some deference to each of two competing and inconsistent principles, in which
English law abounds. There is no reason to disturb it so long as it does subsantial justice (at 562)
The equitable doctrine of part performance does not require the court to find some acts that point to the
existence of a contract and only then to hear oral evidence of the alleged contract. It looks at the acts and the
alleged contract side by side when deciding whether the acts are acts of part performance.
Michael Lower

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