Part performance, the constructive trust
andproprietaryestoppelIn Hong Kong, a failure to comply with the
formalities contained in section 3(1) of the Conveyancing
andProperty Ordinance will mean that a concluded oral agreement is
unenforceable. All may not be lost,however, for the party who
wishes to enforce the agreement. Equity offers three overlapping
ways in whichthe agreement might be saved or in which the
disappointed party might get some remedy as a result ofthe other
partys decision not to honour the agreement. These are; part
performance, the commonintention constructive trust and proprietary
estoppel.
Part performance makes the oral agreement enforceable where
there have been some acts for which (onthe balance of
probabilities) the agreement is the most likely explanation. The
common intentionconstructive trust comes into existence when the
parties have reached an agreement as to the beneficialownership of
the property and the claimant has acted on that agreement or
assurance that he or she is tohave an interest to his or her
detriment.Yaxley v Gotts([2000] Ch 162 CA (Eng)) andBanner Homes
Groupplc v Luff Developments Ltd([2000] Ch 372 CA (Eng) are both
examples of agreements that were giveneffect to in this way.
In essence, a successful proprietary estoppel claim is available
in very similar circumstances to thecommon intention constructive
trust. It relies on the claimants detrimental reliance on an
assurance thathe or she would have some interest in the land. One
significant difference between the two is that in thecase of a
proprietary estoppel claim, the claimant is to be given the minimum
remedy to satisfy theequity. The claimant may or may not be given
an interest in land.
