Proprietary estoppel is a mode of acquiring rights in land informally (the usual formality requirements are not necessary).
This type of estoppel can act as a ‘sword’ rather than merely a ‘shield’ (unlike in contract law).
Acting as a Shield EG: landowner suing for trespass, but defendant has been assured that they would not be a trespasser and that right is now being denied. [1]
Acting as a Sword EG: A works on B’s land and has been promised by B that they will get some right in return, but have in fact not been.
The courts take the view that estoppel is not some species of contract. [2] Often, if the doctrine of proprietary estoppel is successfully argued, a trust will be imposed instead of a contractual remedy.
(3) Elements of Proprietary Estoppel: [3]
(Implied or Express) Promise or Assurance:
The claimant needs to objectively prove an assurance given by the defendant that they presently have or will receive a right in the defendant’s land, [4] or that the defendant would refrain from exercising their legal rights over the land over the claimant.
Therefore, the defendant’s actions must objectively demonstrate a commitment to grant the right, which may be made orally or through conduct. Whether the defendant actually intended to make such an insurance is irrelevant – a landowner cannot defeat estoppel merely because they did not intend the assurance if any reasonable person would have believed they made one.
In Crabb v Arun DC, C and A were neighbours negotiating over a right of way. No contract was concluded, but A put a gate in their fence where the planned access point might go. Relying on this, C sold off part of the land to a third-party, leaving no right of way to access C’s land except via the gate.
The court held that C had relied on A’s conduct and a reasonable person would do the same, so C had a claim under proprietary estoppel. They were awarded an easement.
In Thorner v Major, D worked on P’s farm for 30 years. D believed he would inherit P’s farm upon P’s death but had never expressly been told this. P had listed D to inherit the farm in his will, but this was later retracted, and P died intestate. D argued that P’s conduct over the long time period was sufficient for D to inherit due to estoppel.
The HL held that D did have a proprietary estoppel claim. It is possible for a representation to be made by conduct alone, so long as that conduct conveys the message to a reasonable person sufficiently clearly that the claimant was to have a proprietary interest in the land. The claimant was awarded legal title.
Walker LJ: ‘to establish a proprietary estoppel the relevant assurance must be clear enough’
Estoppel cannot be used simply to circumvent to formality requirements. [5]
In Cobbe v Yeoman’s Row, C and D agreed that C would by D’s land for £12m, redevelop it into housing and then share the profits when those were sold. C got planning permission, which increased the value of the land. D then demanded £20m for the deal to go ahead.
The HL held that their agreement was not legally binding and therefore the parties were free to continue negotiating. There was no estoppel granted.
‘as persons experienced in the property world, both parties knew that there was no legally binding contract, and that either was therefore free to discontinue the negotiations without legal liability… Mr Cobbe was therefore running a risk.’
Reliance:
The claimant must have (subjectively) relied upon the defendant’s assurance.
They must show that they had put themselves in a position they would otherwise not be in on the faith of the agreement; but for the assurance, they would not have put themselves in the same position.
This can be problematic where the claimant has done something they might have done anyway, regardless of the promise or assurance.
If the assurance is clear and the detriment has been suffered, the burden of proof is on the defendant to prove that the claimant did not rely on their assurance.
In Greasley v Cooke, D assured C she would have a ‘home for life’ but was left nothing in D’s will. C cared for D’s family member when she might’ve got a job elsewhere.
The CA held that the burden was on D to prove that C did not rely on the assurance. They were unsuccessful on this, so C did rely.
Denning MR: ‘The burden is not on her but on them to prove that she did not rely on their assurances. They did not prove it, neither did their representatives.’
In Wayling v Jones, W worked in J’s businesses for little pay. J assured W that he would inherit a hotel upon J’s death. J did not provide for this in their will. W admitted that he would’ve worked for L regardless of pay (out of love).
The CA held that the test is not what would have happened had the promise never being made, rather it is what would’ve happened had J gone back on their promise. If J said that they would no longer give the property to W, it is reasonable that he would stop working or demand fair pay. Therefore, W did rely.
Detriment:
The claimant must show that they have suffered some detriment in their reliance on the defendant’s assurance. So long as the detriment is not minimal or trivial, it may take any form. [6]
Detriment is judged at the moment when the person giving the assurance seeks to go back on it.
Example Types of Detriment:
In Henry v Henry, A promises B that he can live on his land and take whatever food they need if they care for A. Later, A promises B that they will inherit the land. A does not put this in their will.
The PC state that countervailing benefits are to be taken into account. However, B accepted a lower quality of life (manual labour and caring responsibilities) from lost work opportunities. Therefore, B suffered a detriment.
Unconscionability:
Some judges and academics believe that a fourth element of successful proprietary estoppel claims is unconscionability for the defendant to go back on their assurance.
‘it does in my opinion play a very important part in the doctrine of equitable estoppel, in unifying and confirming, as it were, the other elements. If the other elements appear to be present but the result does not shock the conscience of the court, the analysis needs to be looked at again.’ [11]
‘Unconscionability is at the heart of the doctrine, and the existence of unconscionability is the reason why the lack of formality can be excused.’ [12]
Others believe that this is not an element in itself; it is merely a general principle that motivates the law. [13] The simple fact that the defendant is seeking to retract their assurance that has been relied upon is unconscionable.
‘the ‘all-important’ criterion of unconscionability, the raison d’être of estoppel, becomes a mere shadow of the other three components.’ [14]
As an equitable remedy, the claimant must behave equitably. This encompasses the notion of clean hands. If the claimant has acted unconscionably, they cannot establish estoppel. [15]
Satisfying the Equity:
If the elements (above) are met, the claimant acquires ‘equity by estoppel’ or ‘mere equity’. Essentially, this is a power to sue. The court will then decide how this will then be remedied (satisfying the equity).
Remedy:
The courts have always considered the remedy to proprietary estoppel cases to be discretionary: they may award a payment of money, a personal right, or a proprietary right. The only thing that the court cannot award is more than the claimant was assured.
In Jennings v Rice (old law), J worked for R (as a gardener at first, then as her carer). Rather than pay for J’s labour, she promised to leave her property in her will. R died intestate. J argued that he was either entitled to R’s full estate (valued at £1.3m) or, at least, a sum equivalent to the value of the house and its furniture (£435,000).
The court, finding proprietary estoppel, awarded £200,000 (the value of full-time nursing care over the unpaid years).
Walker LJ: A larger award was said to be ‘out of all proportion’ to the detriment J had suffered.
(old law) ‘Proportionality lies at the heart of the doctrine of proprietary estoppel and permeates its every application… In particular there must be a proportionality between the remedy and the detriment which is its purpose to avoid… This does not mean that the court should abandon expectations and seek only to compensate detrimental reliance, but if the expectation is disproportionate to the detriment, the court should satisfy the equity in a more limited way’. [16]
Criticism:
Proportionality test is uncertain.
This makes it difficult to advise clients and encourages litigation.
Risks arbitrary decisions, which vary between judges.
Some argue the law ought to only make up the detriment, thus removing the element that is the cause of the action / case. [17]
Arguments in Favour:
The courts will now do whatever is necessary to remove unconscionability.
The court is not simply giving effect to expectation, or the detriment suffered.
There will be an assumption (but not presumption) that expectation should be met, but this will not be awarded when the promisor can prove this is ‘out of all proportion’ to the detriment suffered.
In Guest v Guest, D owned a farm and promised A (his son) that A would inherit the farm to run the business after his parent’s death. A suffered detriment in reliance on that promise: working long hours for little pay and not taken opportunities to work elsewhere. D and A fell out and D purported to disinherit A.
The SC award A the £1.3m farm and business: the parent have a choice to either give A the legal title to a portion of the farm on their death, or pay him the market value of that portion now (discounted to account that A is receiving the land earlier than promised).
Briggs LJ at [13]: ‘the notion that the problems about framing an appropriate remedy in proprietary estoppel cases can all be solved by identifying either compensation for detriment or fulfilment of expectation… as the true purpose of the remedy, is misconceived. The true purpose… is dealing with the unconscionability constituted by the promisor repudiating his promise’
Briggs LJ at [61]: The remedy is ‘aimed at preventing or remedying the unconscionability of the actual or threatened conduct of the promisor, with the effect, but not the aim, that it tend[s] to satisfy the expectations of the promisee’
Briggs LJ at [70]: A court will ‘normally start with the assumption (not presumption) that the simplest way to remedy the unconscionability constituted by the repudiation is to hold the promisor to the promise’
Briggs LJ: Where the expectation would be ‘out of all proportion’ to the detriment, the court must ‘do the best it can’ (at [79]) to ‘put right’ the disproportionality (at [76]). This does not mean that we limit the remedy to compensation for detriment (at [76]).
Leggatt LJ (dissenting): The majority rule undermines contract law and the formality rules. The role of the law should be to protect claimants from detriments – expectation should only be given effect to where the detriment to too difficult to quantify and the expectation is not clearly larger than the detriment.
It ‘provide[s] no principled basis for identifying the “equity” that arises when a claim is established or what the law regards as an unconscionable result … the aim which the court is seeking to achieve in exercising the discretion must be fixed by the law itself, not left to the choice of the judge in the individual case’
[178]: ‘Describing failure to keep such a promise as “unconscionable” cannot justify disregarding law laid down by Parliament’
Effects on Third Parties:
Equity by estoppel is capable of binding successors (if the equity exists before disposition, even if the court hasn’t yet issued a remedy). [20]
Whether it will bind depends on the application of the priority rules.
Equity can be overreached, so long as there are 2 (or more) joint tenants of the freehold estate. [21]
These rules can create problems of how equity would be satisfied if a third party (not the promisor) now owns the freehold. This issue is yet to be addressed by the courts.
Resources:
References:
[1] EG: Wormall v Wormall [2004] EWCA Civ 1643 [2] EG: Farrar v Miller [2018] EWCA Civ 172 at [58] [3] Taylors Fashions Ltd v Liverpool Victoria Trustees Ltd [1982] QB 133 [4] Thorner v Major [2009] UKHL 18 at [5] (Hoffmann LJ) [5] Law of Property (Miscellaneous Provisions) Act 1989, s2 [6] Lothian v Dixon (2014) [7] EG: Kinane v Mackie-Conteh [2005] EWCA Civ 45 [8] EG: Ottey v Grundy [2003] WTLR 1253; Lloyd v Dugdale [2001] EWCA Civ 1754; Thorner v Major [2009] UKHL 18 [9] EG: Campbell v Griffin [2001] EWCA Civ 990 [10] EG: Suggitt v Suggitt [2011] EWHC 903 (Ch); Guest v Guest [2022] UKSC 27 [11] Cobbe v Yeoman’s Row [2008] UKHL 55 at [92] (Walker LJ) [12] Dixon, Modern Land Law (12th edn, Routledge 2021) 392-393 [13] See McFarlane, The Law of Proprietary Estoppel (2nd ed, 2020) para 5.63 [14] Dixon, Modern Land Law (12th edn, Routledge 2021) 400 [15] EG: Yeo v Wilson (Bullying by C); Murphy v Rayner (Undue Influence by C); Gonthier v Orange Contract Scaf- folding Ltd (Fabricated Documents) [16] Davies v Davies [2016] EWCA Civ 463 at [38] (Lewison LJ) [17] See Robertson, ‘The Reliance Basis of Proprietary Estoppel Remedies’ [2008] Conv 295 [18] See Robertson, ‘The Reliance Basis of Proprietary Estoppel Remedies’ [2008] Conv 303-305 [19] SeeJennings v Rice [2002] EWCA Civ 159 at [45] (Walker LJ) [20] Land Registration Act 2002, s116 [21] See Birmingham Midshires v Sabherwal (2000) 80 P&CR 256; Mortgage Express v Lambert [2015] EWCA Civ 555
Cases Mentioned:
Crabb v Arun District Council [1976] Ch 179
Thorner v Major [2009] UKHL 18
Cobbe v Yeoman’s Row [2008] UKHL 55
Greasley v Cooke [1980] 1 WLR 1306 (CA)
Wayling v Jones (1995) 69 P&CR 170
Henry v Henry [2010] UKPC 3
Jennings v Rice [2002] EWCA Civ 159
Guest v Guest [2022] UKSC 27
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