Holiday Inns Inc v Broadhead: 1974

The parties negotiated for a lease, but never signed a contract. The plaintiff expended considerable sums to try to get planning, and once acquired it sought to buy the land, and claimed that Mr Broadhead had taken an unconscionable advantage, entitling the plaintiff to relief in equity. The defendant had repeatedly assured the plaintiffs that he would stand by his word.
Held: Goff J said: ‘while they [i.e. the plaintiff] have never suggested that the understanding, arrangement or bargain was sufficiently precise to be enforceable as a contract, they claim to be entitled to relief in equity.’ and ‘In my judgment the authorities clearly establish that there is a head of equity under which relief will be given where the owner of property seeks to take an unconscionable advantage of another by allowing or encouraging him to spend money, whether or not on the owner’s property, in the belief, known to the owner, that the person expending the money will enjoy some right or benefit over the owner’s property which the owner then denies him. This arises where the person expending the money does so under a mistaken belief that the property is his own, that belief being known to the other, as in Ramsden v Dyson (1866) LR 1 HL 129, but mistake is not an essential element of a claim to relief of this nature. The authorities also establish, in my judgment, that this relief can be granted although the arrangement or understanding between the parties was not sufficiently certain to be enforceable as a contract, and that the court has a wide, albeit of course judicial, discretion to what extent relief should be given and what form it should take.’ and ‘Mr Waite [counsel for the defendants] . . rested his case on what he described, and rightly described, as the crucial question whether there was present a belief on the part of the plaintiffs, induced by Mr Broadhead’s words or silence, that they would receive a sufficient interest in the land to justify the expenditure. He said this was an arrangement between commercial men dealing with each other at arm’s length with their eyes open, and so the plaintiffs must be taken to have elected as a matter of commercial judgment to run the risk that Mr Broadhead might, as I add he clearly did, have private reservations undisclosed at the date of the expenditure which might frustrate the conclusion of the anticipated bargain, and indeed they might have similar reservations themselves. I am wholly unable to draw any such inference or conclusion. Mr Wilson’s [the head of the plaintiff] evidence, which I accept, was that he thought this was a gentleman’s agreement which would be honoured. Mr Tigrett [the plaintiff’s representative] in his evidence, which I also accept, said that no reservations or thought of backing our ever occurred to him, and the whole tenor of Mr Broadhead’s conduct and letters was calculated to make the plaintiffs believe that if planning permission were obtained they would have a straight 3 and 1 lease on the standard terms. I am satisfied and find as a fact that both Mr Wilson and Mr Tigrett believed that and Mr Broadhead well knew that they did. His failure to inform them of his true state of mind was deceitful and unconscionable. ‘ The plaintiff had made out a clear case for relief. The plaintiff’s equity was best satisfied by a declaration that the site was held upon trust for sale, and, as to the proceeds of sale, after paying various costs and expenses, on trust for the plaintiff and defendants in equal shares.

Judges:

Goff J

Citations:

(1974) 232 EG 951

Jurisdiction:

England and Wales

Citing:

CitedRamsden v Dyson HL 11-May-1866
The Vice-Chancellor had held that two tenants of Sir John Ramsden, the owner of a large estate near Huddersfield, were entitled to long leases of plots on the estate. They ostensibly held the plots as tenants at will only, but they had spent their . .

Cited by:

CitedCobbe v Yeomans Row Management Ltd and Others ChD 25-Feb-2005
Principles for Proprietary Estoppel
A developer claimed to have agreed that upon obtaining necessary planning permissions for land belonging to the respondents, he would purchase the land at a price reflecting its new value. The defendant denied that any legally enforceable agreement . .
CitedYeoman’s Row Management Ltd and Another v Cobbe HL 30-Jul-2008
The parties agreed in principle for the sale of land with potential development value. Considerable sums were spent, and permission achieved, but the owner then sought to renegotiate the deal.
Held: The appeal succeeded in part. The finding . .
Lists of cited by and citing cases may be incomplete.

Land, Contract

Updated: 07 December 2022; Ref: scu.223729