#19934 - Proprietary Estoppel - Land Law

Proprietary Estoppel

Proprietary estoppel: mode of acquiring rights in land informally. E.g. don’t need a contract, don’t need to have registered, not many formalities

• As long as you can prove you have a proprietary estoppel claim, you can acquire a property right in someone else’s land

• A classic example is where A works on B’s land, and has been promised by B that they will get some right in return.

• Law prevents the injustice from happening

• Unlike other forms of estoppel, it acts as a ‘sword’ and not just as a ‘shield’ – i.e. it creates a positive right, rather than preventing someone enforcing a pre-existing right or alleging some fact.

• Quite a young area of law which is created by courts huge amount of debate on what the law is and what the law should be

Formalities

• Section 2, Law of Property (Miscellaneous Provisions) Act 1989:

  • s2(1): ‘A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document.’

  • s2(5): ‘… nothing in this section affects the creation or operation of resulting, implied or constructive trusts.’

• Often, a successful invocation of the doctrine of proprietary estoppel will lead to the imposition of a trust

• But not always. Judges take the view that proprietary estoppel is not some species of contract: Farrar v Miller [2018]

Overview of a claim

• 3 elements that need to be shown for a successful proprietary estoppel claim to arise:

1. A promise or assurance (express or implied) by the D that the C either has or will acquire some right in the D’s land.

2. Reliance by the C on that promise.

3. Detriment suffered by the C on the basis of that reliance.

• If (1)-(3) are made out, then the claimant acquires what is called an ‘equity by estoppel’ or a ‘mere equity’.

  • C has the power to sue and go to court

• A court can then determine how to ‘satisfy’ the equity’ – i.e. what ultimate remedy will be awarded.

1. Assurance

• C needs to prove an assurance that they will receive or presently have a right in D’s land.

• Thorner v Major [2009]

  • Lord Hoffmann:‘It was enough that the meaning he conveyed would reasonably have been understood as intended to be taken seriously as an assurance which could be relied upon. If David did then rely upon it to his detriment, the necessary element of the estoppel is in my opinion established.’

• Apply an objective test: how would a reasonable person in the C’s position understand the D’s actions?

• The D’s actions must objectively demonstrate a commitment to grant the right.

• An assurance can be made through conduct, as in Crabb v Arun District Council [1976]

  • Facts: Crabb and Arun DC were neighbours, negotiating over a right of way. No contract was concluded, but A had put a gate in their fence where A & C had planned the access point might go. C argues that this was an assurance that he would have a right of way. In reliance on this, C sold off part of the land to a third party, and left no way to access C’s land except via the purported right of way over A’s land.

  • Held: this is sufficient. Lord Denning said that the reason is that an objective person would understand that a promise would be made. When a lot of money is spent on a gate in the fence, no reasonable person would think that they would not grant an easement there

• Thorner v Major [2009]

• Facts: David worked on Peter’s farm for 30 years for low pay. He believed he would inherit the farm on P’s death, but had never expressly been told this. Instead, D argued that P’s conduct over a long period of time was sufficient. P had, for example, given D a bonus and said ‘that’s for my death duties’.

• They were said to be ‘taciturn and undemonstrative men committed to a life of hard and unrelenting physical work’ (at [59]). Given the facts and background of the parties, an objective person would understand these words to be sufficient. But with a different context, it probably would not be sufficient

  • In a PQ, we need to use the facts given to interpret the words and actions of parties

• Held: ‘I would prefer to say (while conscious that it is a thoroughly question-begging formulation) that to establish a proprietary estoppel the relevant assurance must be clear enough’ (per Lord Walker).

• Cobbe v Yeoman’s Row [2008] UKHL

• Claim denied

• Facts: C and D agreed that C would buy D’s land (for 12m), redevelop it into housing, and then sell those houses. The profits were to be shared. C then got planning permission for the development, which increased the value of the land. D demanded 20m to go ahead with the deal. C argued that they have acquired a claim in proprietary estoppel over the land, which prevents D from going back on the promise

• Context: commercial nature of the deal. C & D are experienced property developers and should know about S2 of 1989 Act, which says the contract has to be in writing never put into writing so it suggests that it wasn’t meant to be legally binding. An objective person in their situation would know about the Act and would know that if they wanted it to be legally binding, they would’ve put it in writing

• Lord Walker at [91]: ‘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.’

2. Reliance

• C must show that they have relied on the D’s assurance. i.e. that they have put themselves in a position they would not otherwise be in, on the faith of the assurance.

• A difficulty arises where the C has done something they might have done anyway, such as care for a family member.

• Has the assurance played a role in the C putting themselves into this position?

• A ‘but for’ test?

• Greasley v Cooke [1980]

  • Facts: C assured she’d have a ‘home for life’ but was left nothing in D’s will. She had cared for D’s family member, when she might have got a job elsewhere. Argued that C did not rely on the promise of ‘home for life’. They were saying that C has not put herself in a position had the promise not been made

    • 1. This is something you do out of love for someone

    • 2. She was doing this before the promise was made

  • Held: Lord Denning MR, at 713: ‘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.’

    • D can’t do it, just like how C cannot positively prove she did not rely on them

    • The presumption is not rebutted, C’s claim succeeds

  • This is the law and it has been followed but this authority is flimsy

    • Idea that we flip the burden of proof in civil litigation is odd. Offends a basic principle of justice - on the C to claim every element of their claim (C has to positively prove the 3 facts)

    • Binding authority till SC confirms this or overrules it

• Wayling v Jones (1995) 69 P&CR 170.

  • Facts: W worked in J’s business for little pay (pocket money). J assured W that he would inherit a hotel on J’s death, but J’s will did not provide for this (the hotel was actually not one of J’s as he had sold it and seemed like he forgot to update his will). In cross-examination, W admitted that he would have worked for J anyway even if the promise was not made, out of love. J rebutted the presumption and argued that there was no reliance

  • The test is not what would have happened had the promise never been made. It is rather what would have happened had W gone back on his promise.

  • Held: we don’t ask what would have happened if no promise had been made. Instead, we ask what W would have done if J told him that he was not going to give the hotel. CoA said that W would not have continued to work for pocket money

  • Reliance was made out.

3. Detriment

• The issue of detriment must be judged at the moment when the person who has given the assurance seeks to go back on it.

• A wide variety of things can count as detriment. It may be financial expenditure, lost opportunities to work elsewhere, expended labour, or adopting a generally lower quality of life. It is ‘not a narrow or technical concept’: Gillett v Holt [2001] (Robert Walker LJ)

• Countervailing benefits are taken into account. So, if the C has been given a place to live for free or at a low rent, that may reduce or eliminate any detriment:

  • Henry v Henry [2010]

    • Facts: Henry is promised by his relative that he could live on her land rent-free and could take food left from the land after she took what she needed. If Henry took care of her as she got older, he could inherit some of the land. She dies and leaves nothing in the will. Henry argues that he has proprietary rights in the land because of his detriment

    • Held: Privy council say that we have to take into account countervailing benefits they rejected Henry’s claim as he had been living rent-free and benefiting, and all he had to do was care for his relative

    • Analysis: they failed to give weight to the fact that Henry had a lower quality of life doing this turned down the opportunity to move and would have done less manual labour. However, when we take this into account, the benefits did not outweigh the drawback

    • We have a wide notion of detriment: lower quality of life and how benefits he gets reduces the detriment but does not eliminate the detriment

4. The role of unconscionability?

• Some judges and commentators would add a fourth element which the C must prove for a successful proprietary estoppel claim: that it would be ‘unconscionable’ for the D to go back on their assurance.

  • Law steps in to...