Proprietary Estoppel Notes

“Estoppel” - old English law concept where someone is stopped from going back on their promise where it would be unconscionable to do so

• Different from ‘Promissory Estoppel’ in Contract – much stronger: can be used as a sword to create rights – not just a shield to defend a claim: relates to property rights and doesn’t just relate to a possible contract situation, you need detriment for proprietary estoppel

• Commenced in the modern day in leading case of Ramsden v Dyson

  • Subsequently in Wilmott v Barber

• Requirements set out in these cases – the ‘probanda’

1. C (claimant) must have made a mistake about his rights

2. C must have spent money or done some act because of the mistake

3. O must be aware of his own rights

4. O must also be aware of C’s rights

5. O must have encouraged C, either directly or indirectly, by not asserting his own rights

• Historically you had to fit your claim within this strict straightjacket – now more flexible

• Another classic case – Dillwyn v Llwlyn, 1862 – imperfect gift perfected through estoppel : son relied on father’s promise of a farm on which he could build

• More modern case - Inwards v Baker – 1965 – Son had equity by estoppel to stay on the land – Denning – ‘the court will not allow that expectation to be defeated, when it would be inequitable to do so’

  • Denning says it is binding on a 3^rd party who has notice

  • Remedy: effectively a licence for life

• Over time – debate as to whether all 5 probanda had to be satisfied

  • E.g.Crabb v Arun District Council: Despite not strictly complying with the 1^st probanda – the court held that the elements for an estoppel were present

• More modern cases have shown more flexibility than the 5 probanda in Wilmott v Barber:

  • Taylor’s Fashions Ltd v Liverpool Victoria Trustees Ltd: simplified the test – Oliver J acknowledge that the probanda should not necessarily be seen as strict rules

    • 1^st instance case but accepted as the law: don’t have to fit your case in the preconceived formula in Wilmott - main principle in unconscionability.

    • ‘whether, in all the circumstances of the case, it was unconscionable for the defendant to seek to take advantage of the mistake which, at the material time, everybody shared’

  • Principle of the decision in Gregory v Mighell

    • No specific requirement that the landlord should know or intend that the expectation which he has created or encouraged is one to which he is under no obligation to give effect

Elements of Estoppel

• Not clear exactly when estoppel will apply – based on equitable principle

• Robert Walker LJ in Gillett v Holt: No watertight compartments: must look at all the circumstances

• However, claimant must satisfy several requirements to make a claim based on estoppel – unconscionability plays an underlying ‘unifying’ role (per Lord Walker, Cobbe)

1. There must be a representation , expectation or assurance

• Differences btw commercial and family cases

• Recent examples (both HL):

  • Cobbe (2008) : makes it difficult to use estoppel in commercial context

  • Thorner v Major: estoppel still strong in family cases

• Crabb v Arun DC: quasi-commercial example in easement situation – see above – also shows that estoppel can arise when someone promises someone else that they will have a future right

Incomplete negotiations or transactions

• Incomplete transactions are not intended to be binding

• Courts have made it clear that reliance on incomplete negotiations will not, by itself give rise to an estoppel claim

  • Attorney-General of Hong Kong v Humphrey’s Estate - claimant was allowed into occupation of premises while the terms of the contract were being negotiated

    • Negotiations were explicitly made ‘subject to contract’, and thus the claimant failed in an estoppel claim despite suffering significant detriment

Promises to leave property by will

• Gillett v Holt

  • Gillett worked his whole life on Holt’s farm (for 30/40 years) under assurance he would get it on Holt’s death

    • 7 occasions where Holt gave statements which led Gillett to believe that he would get the farm on Holt’s death

    • Gillett won the farm on estoppel

  • Assurance was sufficiently clear: it had been repeated over a long period, sometimes in public and was unambiguous - CA held that there was no need for further assurance that the assurances given were irrevocable

• Thorner v Major

  • Similar facts to Gillett v Holt - Thorner helped his cousin Holt on the farm, and oblique assurances were given that the farm would be his

    • Despite lack of directness in conversation, assurance was held to be ‘clear enough’ in the circumstances – as the men were deemed to be taciturn and undemonstrative

    • Didn’t matter that it hadn’t been made completely clear what the farm consisted of etc.

“Subject to Contract” means NO Estoppel

• Cobbe v Yeoman’s Row Management (commercial example – takes stricter approach than in above cases)

  • As the parties were businessmen the court didn’t allow a claim in estoppel - the claimant had merely taken a risk and both parties knew that the negotiations were subject to contract

  • Judges concerned about introducing uncertainty into commercial negotiations

  • Distinction between commercial and family cases – requirement in commercial context for an assurance as to a specific proprietary right (stricter approach)

  • Case seemed to leave estoppel with a very narrow application

  • Although claim failed, claimant...

Buy the full version of these notes or essay plans and more in our GDL Land Law Notes.