Proprietary Estoppel Notes

Proprietary Estoppel Notes

What is proprietary estoppel?

In general, the term ‘estoppel’ is used to refer to situations in which a party is prevented (stopped, or estopped) from denying the truth of a particular matter of fact or of law. Proprietary estoppel, then, is a means by which a party (B) can gain some protection against an owner of land (A) even if B has no contract with A and even if A has not formally given B a property right in relation to A’s land.

Proprietary estoppel is different from other forms of estoppel, however. Unlike promissory estoppel, proprietary estoppel is not merely a means by which B can prevent A from asserting a right against B. Proprietary estoppel is a means by which B can acquire a right against A: it can be used not only as a ‘shield’ to defend B from A, but also as a ‘sword’ to impose a duty on A, owed to B. An equity by estoppel is a proprietary interest in land – it is capable of binding third parties.

• In Crabb v Arun DC D reneged on a promise to build a second right of way from C’s land. C sold a portion of their land in reliance on this promise, and C was left landlocked without a right of way.

  • Held: D was estopped

    • It would be inequitable for D to renege on his promise – the promise induced C to act to C’s detriment.

    • Lord Denning said that “Promissory estoppel can only be used as a defence and not to found a cause of action whereas proprietary estoppel can so be used”.

• In Thorner v Major P owned a farm which P’s brother D worked on for years without being paid. D believed that upon the death of P, D would inherit the farm. There was no explicit assurance, however D’s belief arouse after 15 years of P’s encouraging conduct

  • Held: P’s estate was under a duty to transfer the farm to D

If the requirements of proprietary estoppel are satisfied with respect to B, B will acquire an equity by estoppel.

Proprietary estoppel itself does not convey the relevant right in property to B; rather, the court might choose to order A to give the property right to B on the basis of estoppel.

McFarlane (2015) organises the doctrine as having three distinct strands:

1. A’s acquiescence (acceptance of something without protest) in B’s mistaken belief as to B’s current rights

   1. In Ramsden v Dyson Lord Carnwath said that

      1. “if a stranger builds on my land supposing it to be his own, and I, perceiving his mistake, abstain from setting his right and leave him to persevere in his error, a Court of equity will not allow me afterwards to assert my title to the land on which he had exp[ended money on the supposition that the land was his own. It considers that when I saw the mistake into which he had fallen, it was my duty to be active and state my adverse title”

2. A’s representation to B of an existing state of affairs

3. A’s promise to B (as in Thorner v Major)

What are the requirements for proprietary estoppel?

It should be noted that the rules for the acquiescence-based strand of proprietary estoppel are rather different to those of the other two.

Requirements for Acquiescence-Based Proprietary Estoppel

Fry J set out the requirements for the acquiescence-based strand in Wilmott v Barber:

“the principle applies where B adopts a particular course of conduct in reliance on a mistaken belief as to B’s current rights and A, knowing of B’s belief and the existence of A’s own inconsistent right, fails to assert that right against B”

The requirements can thus be stated as

1. B has made a mistake as to their current rights

   1. This requirement is sourced from Ramsden v Dyson

      1. It was denied in Lester v Woodgate, however this is only a Court of Appeal decision, while Ramsden is House of Lords

2. B acts to his detriment in reliance on this mistaken belief

3. A has knowledge of B’s mistaken belief

4. A has knowledge of his own inconsistent right

5. A fails to assert his own right

Requirements for Promise/Representation-Based Proprietary Estoppel

NOTE: Walker LJ in Gillett v Holt asserted that the doctrine of proprietary estoppel cannot be treated as subdivided in to three or four watertight compartments. The idea that equity is to prevent unconscionable conduct permeates all the elements of the doctrine.

Lord Walker said in Thorner v Major that the doctrine is based on three main elements, despite these often being stated in slightly different terms:

1. A representation or assurance made to B – A must assure B that B has or will acquire a right in A’s land

   1. A must assure B that B has or will acquire a right in identified property – the exact land needs to be sufficiently certain (Thorner v Major)

      1. This is not a strict requirement – the farm varied in size over time in Thorner v Major, however assurances relating to ‘the farm’ were sufficient

   2. The right does not need to be a proprietary right, it can be personal (Plimmer v Mayor of Wellington)

   3. The assurance does not need to be clear and unequivocal like in the case of promissory estoppel

      1. In Thorner v Major an explicit assurance was never made by A, a number of oblique remarks implying that C would receive the farm were sufficient

         1. Lord Walker said in that case that what will be ‘clear enough’ will depend upon the context

            1. It must be an assurance that in its context is so certain that it is reasonable for the other party to rely on it

               1. This is an example of the requirements all bleeding in to one another (see Walker LJ above)

            2. In Walton v Walton, Lord Hoffmann distinguished between the requirements of a contract and proprietary estoppel in terms of certainty. An assurance which is not certain enough to be contractually binding might still be enough to form the basis of an estoppel claim

               1. Because proprietary estoppel does not impose an immediate duty in the same way that contractual obligations do the difference in certainty can be justified

   4. Per Lord Hoffmann in Thorner v Major, whether or not A has made an assurance does not depend up whether A subjectively intended to make an assurance, but rather whether the...

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