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4.1 Varieties of PE

PE claims have been accepted in situations that are very different from each other, both in terms of O’s behaviour, and in terms of the relationship between O and R. In what follows I want to show that, while the court enforces LPA obligations in all these different cases, the reasons why O is called upon to take that level of responsibility over her representation can be very different. The factual scenarios that typically give rise to a PE claim are traditionally divided into three groups: ‘common expectation’, ‘imperfect gift’, and ‘acquiescence’.58 I believe that liability in the acquiescence cases is based on a different principle, and I therefore leave the cases in this category aside for now. As for the other two categories, in which O made a representation in words or conducts, I prefer to classify them according to what R seeks to secure from O: bargain/joint venture or gift.

a) Bargain

The dual goal of PE to reinforce a valuable practice and protect R from harm is most prominent in bargain or joint venture situations. Here, R and O embarked on a way to start a new collaboration, like land development in Cobbe or a new pub in Pridean; or they may wish to give their existing relationship a new direction—like upgrading a lease in order to build up R’s business as planned by R in Haq v Island Homes; or they may just work towards extending their proprietary relationship, e.g. by renewing a lease as in Keewalk Proceedings Ltd v Waller.59 In situations of that kind, we saw, it would be good for both parties to have recourse to a buffer zone between the no-return point of enforceable promise, i.e. formal contract, and an (almost) obligations-less stage. In this buffer zone we can find the right conditions for R to make investments that promote the envisaged cooperation while leaving O more time to decide whether she wants to part with an irreplaceable property interest.60

When R is in court claiming PE, the hope for cooperation has already been thwarted. The point of contention between the parties is whether O communicated to R a commitment to the envisaged deal that could reasonably have led O to

58See for instance Gray and Gray 2009 para. 10.189.

59Respectively: Cobbe v Yeoman’s Row Management Ltd 2008; Pridean Ltd v Forest Taverns Ltd 1996; Haq v Island Homes Housing Association and another 2011; Keewalk Proceedings Ltd v Waller

2002.

60In Haq v Island Homes Housing Association and another 2011, for example, R started works to build the new supermarket before the sluggish lawyers finalized the agreement. Her diligence would have enabled her to open the store sooner and pay the higher rent as set in the proposed deal (on the facts, the CA found that there was no reliance on O as the encouraging representation was made by R’s lawyers rather than by O). Similarly, in Cobbe v Yeoman’s Row Management Ltd 2008 without the major work done by the survivor the development would not have gone ahead. In a controversial decision, the HL found that the representation was not one that R can reasonably rely on, and awarded him only quid pro quo monetary remedy. On my interpretation of PE, even if Cobbe’s PE claim were accepted, he could not get what he wanted, i.e. his share of the profit from the development as orally agreed with O (unless, on the facts, that was the only way to compensate him for his reliance, see Section 4.2).

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believe that he could safely start working to promote it (for instance, invest in the premises he is about to lease, take a risk in mortgaging his own house, or even start operating from the site and begin to build a brand for himself ).61 Many times, especially when R is advised by lawyers, he would know that if O wanted to make a promise, i.e. take on herself a full commitment to the deal, she would come up with a formalized agreement ready for him to sign. But that does not mean that before the deal is sealed O cannot assume a smaller-scale obligation to encourage the advancement of the cooperation. Thus, R may still legitimately understand O as indicating that he can act in reliance on the prospective deal, and rest assured that she will bear the costs of such actions even if she eventually chooses not to transfer the coveted proprietary right(s) to him. He will argue, in other words, that O communicated to him a commitment that falls short of a promise, but goes well beyond the minimum that is required of a negotiating party by tort and contract law.

O, on her part, will deny that the relationship between R and herself has ever entered such a normative zone, and claim that in acting in the hope that the deal will go ahead, R has taken upon himself the risk that it will never materialize.62 In that spirit, we can interpret the courts’ insistence that a ‘gentlemen’s agreement’ cannot form the basis for PE as saying that where O makes it clear that R can only rely on ‘her word of honour’, she expresses a reluctance to take any obligations upon herself, be it a promise or LPA.63 If she wishes to change her mind, the consequences will be limited to the way such U-turns injure one’s honour or reputation. Thus, in spite of the language often used by the courts, the undertaking which is enforced by PE in bargain situations is of an LPA kind, not a promissory kind. In the pre-contractual stage representations ought to be read as inviting reliance, not as commitment to make them true. In addition, the suggested analysis of R’s claim reflects much better the essence of the remedy which the courts award to successful PE claimants. For, as we shall see in Section 4.2, the remedy for PE in fact features requirements and limitations that clearly set it apart from the standard remedy for enforceable promises.

b) Gifts

Another popular setting for PE claims is that of failed gifts. In these cases, the moral duty of O is indeed to keep a promise she made, but the law only enforces on her a more basic kind of moral obligation, i.e. LPA; and justly so. In the gift situation, we

61As R did in, respectively, Brewer Street Investments Ltd v Barclays Woollen Co. 1954; van Laethem

vBrooker & Caradoc Estates 2005; Gonthier v Orange Contract Scaffolding Ltd 2003.

62In Pridean Ltd v Forest Taverns Ltd 1996, for example, Aldous LJ said that ‘the pertinent question to ask is—what was the expectation that the appellants were allowed or encouraged by the respondent to assume?’ On the facts, he accepted O’s answer, namely ‘an expectation that the negotiations would lead to the joint venture company or it would be purchased if the parties could agree terms’. O, in other words, committed to negotiate seriously, but nothing more.

63See Jorden v Money 1854, 221–3; Ramsden v Dyson 1866; Thorner v Major 2009, 53; Matthews 2010, 33

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typically find an R who laboured under the assumption that O will keep a promise she made to leave him some property in her will. R’s expectation often leads him to spend many years in the service and company of O, where it is clear from the circumstances that the promise was, at least, a major component of his motivation for doing so. Alas for R, O refuses to fulfil her promise, or dies without complying with the strict rules of testamentary gifts that govern the legal enforcement of the moral obligation to keep it. To decide R’s PE claim, the court needs to ascertain whether it was reasonable of R to ‘place trust and confidence in [O]’s unwritten oblique promises and indications’.64 In situations of this kind it would be totally unrealistic to expect R to ask for a guarantee that his reliance will be compensated for if the promise is not fulfilled. As the Lord Neuberger notes in the context of Thorner: ‘formal contractual rights and obligations were simply not the staff of the relationship between Peter [the uncle—O] and David [the nephew—R]’. It only seems natural that equity will provide a solution for people who have reasonably relied on a promise (or a series of them) in circumstances where they cannot be expected to use the legal tool that normally ensures the enforceability of the obligation to fulfil it.

A good example can be found in the recent PC case of Henry and Mitchell v Henry: Geraldine Pierre (O), a wealthy landowner from the Caribbean island of St Lucia, allowed Calixtus’s grandmother to build a house on her land and live there. Calixtus (R) was born in the house and continues to live there to this day. O visited R’s plot daily and treated him like her son. R testified that O ‘stated many times to me . . . that she would leave the land for those that worked the land and for those that cared for her in her home country’. The plot provided food for R and his family, as well as for O. Upon her death O left the plot to her niece Theresa, and Calixtus claimed that PE arose in his favour. The question before the Privy Council was whether R had indeed acted to his detriment. Sir Jonathan Parker thought that he did. R remained working on the land (unlike other farmers who left for the big city), cared for O and provided food for her, and thus he effectively deprived himself of the opportunity for a better life elsewhere; that was enough to establish a detriment and usher in the equity of PE.65

The gift cases, then, deal with situations that are very different in kind from the bargain/joint venture ones. Although R is expecting to receive property rights in return for his loyalty, assistance, and company, there is no deal in which goods are exchanged for services.66 What R has is an explicit but merely oral promise to give

64Neuberger 2009, 542.

65Henry and Mitchell v Henry 2010, 62; cf. Cook v Thomas and another 2010 where Lloyd LJ rejected the PE claim of R who moved in with her mother when she lost her previous accommodation, even though she and her partner kept the mother company and did some work in the house ([74], [103]).

66The arrangements are mostly a species of what James Penner called ‘mutual agreements’ under which parties to personal relationship promote their mutual interests, to distinguish from ‘bargain’ agreements in which each party is supposed to serve his or her own interest by complying with the agreement (see Penner 1996b, 335–8). However, as you would expect from an attempt to arrange human affairs in neat categories, there are cases around that fit neither, or both, categories. In some PE gift cases, for example, a personal arrangement between the parties comes close to an exchange of