Freeholder Estopped from Claiming Possession

By Sebina Noreen Malik

Ms Sahota, the claimant was estopped by Mrs Justice Falk from possession of the property during the lifetime of Mr and Mrs Prior, the defendants, save for non-payment of rent from the defendants.

Background

The defendants, in their sixties had purchased and occupied the property for over 35 years. They faced financial difficulties and their home became under threat of repossession. They approached a company who had advertised it would provide a sale and rent back and that the defendants would be permitted to continue to live in the property for the rest of their lives provided rent was paid on time. The defendants also received assurances that repairs would be undertaken to the property by the company.

A director of the company visited the defendants at their home and the defendants were led to believe that the claimant was a director of the company. The director failed to tell them that the purchaser of the property was in fact another person. A TR1 Form was executed with the transferee not identified.  The defendants agreed to sign a five-year tenancy agreement following assurances that the length of the agreement was a formality and would not prejudice the defendants so long as they paid the rent.

Further, the director falsely claimed that the price paid for the property would be based upon an independent valuation. The defendants were advised that the property had been valued at £90,000 although the transfer document showed a price in the sum of £130,000 being the mortgage valuation obtained by the claimant. In fact, the defendants only received the sum of £52,000 to cover the amount of debts from the sale.

Later, the defendants asked the claimant to carry out necessary repair works required to the property, however the claimant refused to carry out the repairs. The defendants then carried out the repairs and improvements themselves at a cost of approximately £7,400 as they believed they could reside in the property for their lifetime.

At the end of the five-year tenancy, pursuant to section 21 of the Housing Act 1988, the claimant sought possession of the property, however the claimant was estopped from claiming possession. The claimant appealed.

Falk J explained that the claimant had made no contact with the defendants and had permitted the company to arrange the transaction on her behalf. The claimant was not ‘entitled to disassociate herself from an assurance made on her behalf’ upon which the defendants had placed reliance. The defendants had been induced to transfer the property to the claimant at an undervalue and the defendants later incurred costs on repair works. She was therefore bound by the assurances the company director had made to the defendants.

Decision

The claim failed on the grounds of proprietary estoppel. The claimant was prevented from recovering possession of the defendants’ home during their lifetime, because of an assurance on which they relied when they transferred the property, and which induced them to sign the TR1 Form.

The appeal was dismissed on the basis of Her Honour Judge Hampton’s order.

• Estoppel: Proprietary estoppel.
• Regulated activities: sale and rent back activities.

Case: Sahota v Prior [2019] EWHC 1418 (Ch) (9 May 2019) (Falk J).

By |2019-07-31T08:46:28+00:00July 29th, 2019|Categories: Uncategorized|0 Comments