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Yaxley v Gotts [2000] Ch 162

Proprietary estoppel and constructive trusts.

Facts:

The claimant, Yaxley, made an oral agreement with the defendant that Yaxley would refurbish and convert a house belonging to the defendant into flats and in return the claimant would own the ground floor flat. However, the defendant arranged for his son to buy the property and refused to convey the ground floor flat to the claimant, denying any agreement had been made. 

Issues:

The defendant argued that the oral contract was void as it did not comply with the formality requirements of s.2 of the Law of Property (Miscellaneous Provisions) Act 1989, which stated that all contracts for land must be in writing. They also contended that consequently the remedy of estoppel was inappropriate. 

Held:

The Court of Appeal found in favour of Yaxley. The court held that under s.2(5) of the 1989 Act constructive or resulting trusts of land do not need to be in writing. Walker LJ said that estoppel should not be used to circumvent a statue. However, where there was a finding of an estoppel there would also be a constructive trust. As the two remedies are indistinguishable he used a trust analysis to find the agreement did not need to be in writing and so was valid. However, Beldam LJ disagreed and held that these public policy considerations were not enough to prevent a claim of estoppel. Therefore, he said that estoppel was the correct remedy despite s.2(1) of the 1989 Act. Consequently, the court ordered that Yaxley be given a 99 year lease or the equivalent sum in order to satisfy his equitable interest. 


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