BP0153338

The question demands to critically analyse the statement of Louise Tee. According to
him, after the enactment of s2 of Law of Property (Miscellaneous Provisions) Act 1989
(LP (MP) A), formalities for making contracts for the sale of land have been strict from
its predecessor.1

In his point of view, there are many innocent persons who form an oral agreement and
fail to comply with these formalities and the formalities given in s53 (1) (b) 2. This
unfairness, however can be removed with the use of doctrines of constructive trust
and proprietary estoppel on enforcing oral contracts that do not comply with the former.
Moreover, Law commission Report3 has made a clear understanding of the use of the
doctrine of proprietary estoppel when enforcing oral contracts.

This essay will look into the courts’ approach towards the doctrines as well as discuss
cases that are relevant to the arguments built.

S2 (5)4 has allowed the courts to grant constructive trust on oral agreements. The
confusion created through the 17th century until 1989 has been cleared out with the
enactment of the 1989 Act. Before this, a contract for sale made was unenforceable
until there was some evidence of it; either in writing or by part performance. However,
there was a confusion left as to what constituted as an enforceable written agreement
or a part performance. As a result, pre-contractual negotiations would be
unnecessarily uncertain and hazardous.5

S2 (1) states 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 contract are exchanged.” 6 In addition,
the contracts need to be signed on behalf of each party involved.7 As a result, there is
only one document containing all the terms that the parties have agreed upon.8

In North Eastern Properties v Coleman9 ,Biggs J, states “the reported cases in which
the courts have sought to interpret and apply section 2(1) of the 1989 Act demonstrate
that because of the rigorous disciple which it imposes upon parties to land contracts,
it does indeed enable persons who have genuinely contracted to do just that. It
enables parties to land contracts who have changed their minds to look around for
expressly agreed terms which have not found their way into final form of land contract
which they signed, for the precise purpose of avoiding their obligations. On the ground
that the lack of discipline of their counterparty, or even their own lack of discipline, has
rendered the contract void.”

Nonetheless, this has been criticized by many, including Lord Neuberger, who in an
extra-judicial indictment stated, “now that the law commission, by the needlessly
meddling, Parliament, with misconceived drafting, and the courts through inconsistent

1
Law of Property Act 1925 (LPA 1925)
2
LPA 1925
3
No. 164, Transfer of Land Formalities for Contracts for Sale etc. of Land (1987)
4
LP(MP) A 1989
5
Law commission Report No. 164, Transfer of Land Formalities for Contracts for Sale etc of Land (1987)
6
LP (MP) A 1989
7
S2 (3) LP (MP) A 1989
8
The Solicitors' Journal, Volume 27 (1883) pp 575-580
9
[2010] 1 WLR 2715 CA

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 BP0153338
decision, have had their wicked ways with section 2, we are worse off than we ever
were with section 40.”10

These strict formalities, in doubt, create certainty and protection for the parties
involved, however, they also create injustice for naïve parties that enter into oral
agreements.11 In defence, s4012 allows contracts to be valid without evidence and has
been considered as a blunt instrument of justice.13 As a result, the doctrine of part
performance has been abolished.

Where a person (X) allows another person (Y) to act to Y’s detriment in reliance on a
belief that Y will acquire an interest in X’s property under an agreement which X knows
is not a valid contract, X would be estopped from denying that he is bound by the
agreement between them. As it is seen here that a person will try to take advantage
of the rule laid down in section 2.14

This is what happened in Yaxley v Gotts15 . The claimant and Mr. Gotts Sr. had
agreed that Gotts Sr. would acquire the freehold of a large house, already divided into
flats, and the claimant who was a builder would carry out the work and act as a
managing agent for the defendant. In return for his services the claimant would get the
ground floor of the house, which he would divide, into two flats. However, there was
no written agreement between the parties involved. After some time, the legal title of
the property was transferred the Gotts Jr. As the property was registered in his name,
no interest was granted to the claimant. After four years had passed, the claimant was
excluded from the property even though he was entitled to the ownership of the
property.

The judges, at first instance, granted a rent-free lease of the entitlement for 99 years
on the bases of proprietary estoppel. Even though the Court of Appeal upheld the
award, it was not however, on the same grounds. According to them, the claimant
could not rely on the estoppel in the case, the alternative was of assisting those who
act in reliance of an informal agreement which was in another equitable concept. The
remedy was awarded under the doctrine of constructive trust.

In Shah v Shah16, estoppel was used for s1.17 The contract in this case, was made
without the presence of any witnesses.

In the Obiter dicta of the case Cobbe v Yeaoman’s row Management18, Lord Scott
expressed, “Proprietary estoppel cannot be prayed in the aid in the order to render
enforceable an agreement that statute has declared to be void. The proposition that
an owner of land can be estopped from asserting that an agreement is void for the
want of compliance with the requirement of s2 is, in my opinion, unacceptable. The

10
Neuberger, “The stuffing of Minerva’s Owl? Taxonomy and Taxidermy in Equity” 2009 68 CLJ.
11
Land Law (2nd Edition) Elizabeth Cooke, University of Reading, pp. 73-105
12
LPA 1925
13
Ben McFarlane, Nicholas Hopkins, Sarah Nield, Land Law: Text, Cases, and Materials, pp. 307-390
14
Judith-Anne MacKenzie, Aruna Nair, Textbook on Land Law
15
[1999] EWCA Civ 3006 Court of Appeal
16
[2002] QB 35
17
LP (MP) A 1989
18
[2008] UKHL 55

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 BP0153338
assertion is no more that the statute provides. Equity can surely not contradict that
statute.”19 However, the decision was made in favour of the claimant.

In the case of Shirt v Shirt20 a son could not rely on the estoppel to claim possession
of the family farm because the agreement between him and his father was vague and
unspecific.21 It can be seen that the courts are reluctant to use the operation of
estoppel as S2 (5)22 does not, expressly, mention the operation of estoppel arising as
a result of failure to comply with s2.

Lewison LJ, in Dudley Muslim Association and Dudley Metropolitan Borough

council23, stated that, proprietary estoppel cases are, in true nature, always decided
as constructive trust issues.

As stated above s2 (5) expressly states that there can be an operation of constructive
trust in connection with the contracts that do not comply with formalities. For this
reason, the courts can impose constructive trust under equity law, where they believe
that the conduct of a party has been unconscionable.24

Matchmove Ltd v Dowding25 is another case of an oral agreement regarding land.

The High Court held that the oral agreement to sell the meadow was enforceable
through proprietary estoppel and constructive trust despite the absence of a written
contract. The ‘subject to contract’ label on the correspondence was not material
because it ‘followed the agreement which the parties had already made and which
they regarded as immediately binding’.26

In Ely v Robson27, the courts held that Mr Ely would hold the property on constructive
trust for himself and Ms Robson, whose interest was limited to the terms set out in the
agreement and it would be unconscionable for her to assert otherwise, and she was
estopped from so doing.

In Kinane v MacKie- Coneth28 the courts used the doctrine of proprietary estoppel
and constructive trust to validate a mortgage that failed to meet any of the formality
requirement usually required for the creation of legal and equitable mortgage.

Lord Neuberger here stated “… one must, I think, avoid regarding [s 2 (5) of the 1989
Act] as an automatically available statutory escape route from the rigours of section
2(1) of the 1989 Act, simply because fairness appears to demand it. A provision such
as section 2 … was enacted for policy reasons which, no doubt, appeared sensible to
the legislature … Accordingly … the Court should not allow its desire to avoid what

19
Mark P. Thompson, Modern Land Law
20
(2010)
21
Martin Dixon, Moder Land Law
22
LPMPA 1989
23
[2016] 1 P&CR 10
24
Ben McFarlane, Nicholas Hopkins, Sarah Nield, Land Law: Text, Cases, and Materials, pp. 307-390
25
[2016] EWCA Civ 1233
26
http://communities.lawsociety.org.uk/property/news-and-updates/property-commentary/is-an-oral-contract-for-the-sale-of-
land-enforceable/5060160.fullarticle
27
[2016] EWCA Civ 774
28
[2005] EWCA Civ 45

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 BP0153338
might appear a rather harsh result in a particular case to undermine the statutory
policy”.29

With reference to Yaxley v Gotts30, we will now discuss public policy and the
bypassing of s2 LP (MP) A 1989. Regardless of the convenient factual conclusions of
Beldam and Clarke LJJ, the Court of Appeal did consider whether, and to what extent,
proprietary estoppel remedies survive s2. The court accepted that equitable remedies
were not, in principle, barred from every case where formalities under s2 had not been
complied with.31

Moreover, Walker LJ observed that any contention that estoppel could face a ‘no go
area’ in s2 must be ‘unsustainable’ given the wide circumstances in which estoppels
might apply.32 However, the judges did recognise and accept the fact that equity
cannot validate a transaction that the Parliament had decreed to be void. 33

Walker LJ observed that there was much common ground between the doctrines of
proprietary estoppel and constructive trust with two concepts ‘coinciding’ in the case
of Gissing v Gissing34 type of constructive trust. This overlap between estoppel and
constructive trust was ‘of central importance’ to the appeal.35 He also agreed that the
Law Commission Report, being old law, could not be conclusive as to how the enacted
s2 should be applied. He turned to s2 (5)36, which excludes resulting, implied and
constructive trusts from the formalities’ requirements as means for providing justice.

In conclusion to this essay, it is pertinent to note that the parliament must ensure the
certainty and the safety of the buyer and the seller of any piece of land within the scope
of the Law of Property (Miscellaneous Provision) Act 1989 and the Law of Property
Act 1925. As seen through the series of cases, the courts use these two doctrines of
equity, where possible within the statutory limits, to grant justice to the people who do
not comply with the formalities.

‘I BP0153338 declare that this piece of work contains [1654] words. I have read
and fully understood the University Policy relating to Academic Misconduct as
cited on the VLE.’

29
Kinane v MacKie- Coneth
30
[1999] EWCA Civ 3006 Court of Appeal
31
Proprietary estoppel, constructive trust and Section to of the Law of Property Miscellaneous Provisions Act 1989, Imogen
Moore
32
Halsbury Laws of England, 4th edition, Vol 16, pp 174
33
Proprietary estoppel, constructive trust and Section to of the Law of Property Miscellaneous Provisions Act 1989, Imogen
Moore
34
[1971] 1 AC 886
35
Halsbury Laws of England, 4th edition, Vol 16, pp 176
36
LP(MP)A 1989

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 BP0153338
Bibliography
Acts
 Law of Property (miscellaneous Provisions) Act 1989
 Law of Property Act 1925
Books
 Mark Davys, Land law
 McFarlance, The Law of Proprietary Estoppel
 Judith-Anne MacKenzie, Aruna Nair, Textbook on Land Law
 Martin Dixon, Moder Land Law
 Mark P. Thompson, Modern Land Law
 Judith Bray, Unlocking Land Law.
 Ben McFarlane, Nicholas Hopkins, Sarah Nield, Land Law: Text, Cases, and
Materials
 Land Law (2nd Edition) Elizabeth Cooke, University of Reading
Cases
 Yaxley v Gotts
 North Eastern Properties v Coleman
 Shah v shah
 Cobbe v Yeaoman’s row Management
 Shirt v Shirt
 Dudley Muslim Association v Dudley Metropolitan Borough council
 Matchmove Ltd v Dowding
 Ely v Robson
 Gissing v Gissing
 Kinane v MacKie- Coneth
Articles and Journals
 Law commission Report No. 164, Transfer of Land Formalities for Contracts for
Sale etc of Land (1987)
 Neuberger, “The stuffing of Minerva’s Owl? Taxonomy and Taxidermy in
Equity” 2009 68 CLJ.
 Proprietary Estoppel and Formalities in Land Law and the Land Registration
Act 2002: A Theory of Unconscionability 1
 Proprietary estoppel, constructive trust and Section to of the Law of Property
Miscellaneous Provisions Act 1989, Imogen Moore
 Halsbury Laws of England, 4th edition, Vol 16, pp 174
Websites
 Google Scholar
 Lexis Nexis
 WestLaw
 Law Tel
 E Law Resources
 lawsociety.org.uk
 www.familylaw.co.uk

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