Cobbe v Yeoman's Row Management Ltd

Facts

Mr Cobbe, a developer, claimed that Yeoman’s Row Ltd had sat by and encouraged him to go to great expense in obtaining planning permission for a development, and should not be able to resile from an originally agreed oral contract price for development work. Yeoman’s Row Ltd was controlled by Mr and Mrs Lisle-Mainwaring, and owned Knightsbridge land with 13 flats at 38-62 Yeoman’s Row, London, SW3 2AH. They wanted to knock them down and build six terraces. Mrs Lisle-Mainwaring orally agreed with Mr Cobbe he would (1) at his own expense apply for planning to demolish the existing flats and put up the six house terrace (2) after planning permission, and getting vacant possession the company would sell him the freehold for £12m (3) Mr Cobbe would develop the property as with the permission (4) the six houses would be sold and half the proceeds in excess of £24m would be given over. Both knew nothing was, as yet, binding. Still Mr Cobbe spent a lot of time and effort between 2002 and 2004 applying for planning. By late 2003 Mrs Lisle-Mainwaring had decided to pull out, and to ask for another £12m up front, but she deliberately gave him the impression that they would continue. Mr Cobbe got planning in March 2004, and the value was rising so fast it had increased by another £4m without work having even begun. Mrs Lisle-Mainwaring then said she wanted £20m up front. He claimed breach of contract (doomed to fail, because of LPMPA 1989 s 2) and proprietary estoppel, constructive trust or unjust enrichment.

Etherton J found on proprietary estoppel in Mr Cobbe’s favour, and awarded £2m, equal to half of the increase in value of Yeoman Row’s freehold caused by the grant in the planning permission. The Court of Appeal, Mummery LJ, Dyson LJ and Sir Martin Nourse, upheld this decision.

Judgment

The House of Lords held Mr Cobbe had no proprietary estoppel claim, nor had he acquired an interest under a constructive trust. However he did have a claim for unjust enrichment, because Yeoman’s Row had received the benefit of his services without paying for him. He was awarded £150,000, which reflected the application expenses, and a reasonable fee for professional services. Lord Hoffmann agreed with Lord Scott.

Lord Scott gave the following judgment.

Lord Walker noted that in Gillett, the young farm manager did not take any legal advice and believed the assurances to be binding, whereas in the commercial context, a business person will have access to advice, and the focus is not on intangible legal rights, but on tangible property one expects to get. A domestic claimant does not reflect on potential litigation. He asked, ‘would it be conscionable for Mrs Lisle-Mainwaring to withdraw (subject only to reimbursement) at a stage when 99% of the work necessary to obtain planning permission had been done, and success was virtually certain, but unconscionable to do so once success had actually been achieved?’ This shows the risk Mr Cobbe took on. But he ran a commercial risk with his eyes open. This was commerce.

Lord Brown and Lord Mance concurred.