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Home » Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55

Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55

Court: House of Lords

Citation: [2008] UKHL 55

Area of Law: English Land Law – Proprietary Estoppel – Unjust Enrichment – Constructive Trust

Cobbe v Yeoman’s Row Management Ltd is a landmark House of Lords case that clarified the limits of proprietary estoppel in commercial land transactions. The ruling has become a significant authority on how informal arrangements between sophisticated parties in a business context are treated in equity, especially where proprietary rights and oral agreements are concerned. The case also explores the role of unjust enrichment as an alternative remedy in the absence of a binding contract.

Facts of Cobbe v Yeoman’s Row Management Ltd

In Cobbe v Yeoman’s Row Management Ltd, Mr Cobbe, a project manager and property developer, claimed to have entered into an oral agreement with Yeoman’s Row Ltd (YRML), the owner of a valuable residential property in Knightsbridge, London.

The subject property consisted of 13 flats located at 38–62 Yeoman’s Row, SW3 2AH. The informal understanding between the parties included a redevelopment plan where the existing flats would be demolished and replaced by six high-end terraced houses.

Mr Cobbe agreed to obtain the necessary planning permission at his own expense. In return, it was orally agreed that once planning consent was secured and vacant possession was obtained, YRML would sell the freehold to Mr Cobbe for £12 million. Furthermore, the agreement stated that the six new properties would be sold, and any proceeds above £24 million would be divided equally between Mr Cobbe and YRML.

Although both parties understood the deal to be “in principle” and not yet binding, Mr Cobbe proceeded to invest time and money from 2002 to 2004 in securing planning permission. During this time, YRML and Mrs Lisle-Mainwaring, one of its directors, continued to give Mr Cobbe the impression that the agreement would be honoured.

By March 2004, Mr Cobbe successfully obtained planning permission, significantly increasing the value of the property—by some £4 million—before any development work had commenced.

Subsequently, YRML reneged on the agreement and demanded £20 million upfront, abandoning the earlier terms. Mr Cobbe then brought proceedings, claiming breach of contract, proprietary estoppel, constructive trust, and unjust enrichment.

Procedural History

The trial judge, Etherton J, found in favour of Mr Cobbe on the grounds of proprietary estoppel and awarded him £2 million—half of the uplift in the property’s value caused by the planning permission. This decision was upheld by the Court of Appeal, consisting of Mummery and Dyson LJJ and Sir Martin Nourse.

However, on appeal to the House of Lords, the earlier judgements were overturned. The House held that Mr Cobbe had no entitlement under proprietary estoppel or constructive trust but awarded him £150,000 based on quantum meruit for unjust enrichment.

Issues

The central legal issues considered by the House of Lords in Cobbe v Yeoman’s Row Management Ltd were:

  1. Whether an oral agreement made in a commercial context and lacking legal certainty could form the basis of a claim in proprietary estoppel.
  2. Whether detrimental reliance on informal assurances, in the absence of a binding contract, was sufficient to establish estoppel in a transaction involving experienced parties.
  3. Whether the conduct of YRML, specifically its withdrawal after the grant of planning permission, constituted unconscionable behaviour warranting equitable relief.
  4. Whether Mr Cobbe had any equitable proprietary interest or claim under a constructive trust.
  5. Whether Mr Cobbe could claim unjust enrichment for the services rendered in obtaining planning consent.

Cobbe v Yeoman’s Row Management Ltd Judgement

The House of Lords in Cobbe v Yeoman’s Row Management Ltd unanimously dismissed Mr Cobbe’s proprietary estoppel and constructive trust claims, but allowed a limited claim in unjust enrichment. Lord Scott, with whom Lords Hoffmann, Walker, Brown and Mance agreed, delivered the leading judgement.

Proprietary Estoppel

The court concluded that proprietary estoppel was not applicable. According to Lord Scott, proprietary estoppel arises only where there is:

  • A clear and unequivocal assurance of a proprietary right;
  • Reliance on that assurance;
  • Resulting detriment; and
  • Conduct that would make it unconscionable for the other party to go back on their word.

However, in Cobbe v Yeoman’s Row Management Ltd, the oral agreement was expressly understood by both parties to be non-binding and “subject to contract.” Mr Cobbe knew that the arrangement lacked legal enforceability and nevertheless proceeded with full awareness of the risk. The agreement had not been committed to writing, as required under the Law of Property (Miscellaneous Provisions) Act 1989 section 2.

Lord Scott criticised the lower courts for treating Mrs Lisle-Mainwaring’s conduct as unconscionable without fulfilling the essential ingredients of estoppel. He rejected the idea that unconscionability alone could ground an estoppel without a defined proprietary right or a clear assurance. The judgement warned against turning proprietary estoppel into a general remedy for morally questionable conduct in commercial negotiations.

Lord Walker echoed this view, noting that unlike in domestic cases such as Gillett v Holt, commercial parties like Mr Cobbe are presumed to understand legal risks and have access to legal advice. Mr Cobbe’s belief that Mrs Lisle-Mainwaring was honour-bound to proceed did not equate to an assurance that could ground estoppel.

Constructive Trust

Similarly, the court found that there was no constructive trust. Mr Cobbe’s claim that the property should be held on trust due to the breakdown of the oral agreement failed, as there was no shared intention to create such a trust, nor any basis in equity to impose one in this context.

Unjust Enrichment

However, the House did find in Mr Cobbe’s favour on the issue of unjust enrichment. While he had no legal or equitable right to the property or its profits, YRML had received the benefit of his services in obtaining planning permission without compensating him.

As a result, the House awarded Mr Cobbe £150,000 on a quantum meruit basis, representing a reasonable value for the work and expense he had incurred. This was significantly less than the £2 million originally awarded.

Conclusion

In its final ruling, the House of Lords in Cobbe v Yeoman’s Row Management Ltd drew a clear line between enforceable legal rights and informal expectations in the commercial sphere. Mr Cobbe was denied a proprietary claim, despite having relied heavily on an oral agreement, because he knowingly proceeded without securing a binding contract. The court awarded compensation only to the extent that YRML had been unjustly enriched by Mr Cobbe’s efforts.

The decision reinforces the importance of formalising agreements—particularly in property transactions—and confirms that proprietary estoppel cannot be used to remedy failed commercial negotiations based merely on goodwill, hope, or honour.

Ultimately, Cobbe v Yeoman’s Row Management Ltd is a cautionary tale for developers and businesspersons: equity will not rescue those who knowingly run commercial risks without legal safeguards.