Chpater 9: Family Homes Flashcards

Question

Actual intention

Answer 1

In both cases the court is seeking to establish the actual intention of the parties, whether express or inferred based on the ‘whole course of conduct’.

Answer 2

(e) Intention can be ambulatory, meaning a beneficial interest can be established, or the presumption of joint tenancy rebutted, after acquisition (if circumstances change).

Answer 3

Once common intention (and, in sole ownership cases detrimental reliance) has been established, it is necessary to quantify the interests of the parties. Again, this involves taking into account ‘the whole course of conduct’ in order to reach a conclusion as to the appropriate shares.

Answer 4

(a) If an express intention as to quantification can be established, the court will give effect to that intention. (b) If an express intention cannot be established, the court will attempt to infer an intention based on the conduct of the parties. (c) As a last resort, if it is not possible to ascertain the actual intention of the parties as to quantification of their shares, the court will impute an intention for ‘fair shares’ based on all the ‘whole course of conduct’.

Answer 5

Cohabitees who purchase a family home in joint names do not always specify their respective equitable entitlements. In the absence of an enforceable express trust over the property, it is presumed that they are equitable joint tenants. This reflects their legal ownership of the property and the maxim that ‘equity follows the law’ (Stack v Dowden [2007] UKHL 17).

Answer 6

As the parties have chosen to purchase the property in joint names, this presumption is very hard to rebut, and requires strong evidence of a common intention that they were intended to be anything other than joint tenants in equity too. We will now consider the decision in Stack v Dowden and the application of the principles stemming from that key case.

Answer 7

In Stack v Dowden Lady Hale stated that the starting point in all family homes cases is that ‘equity follows the law’. * If land is owned by more than one party, the legal title can only be held as a joint tenancy. * In the absence of an express trust, it is presumed that equitable title is also held as a joint tenancy

Answer 8

Following on from Stack v Dowden, in Jones v Kernott [2011] UKSC 53 the Supreme Court confirmed the two-step approach in joint legal ownership cases: (a) Rebutting the presumption: Did the parties have a common intention to hold the property other than as joint tenants? (b) Quantification: If the parties are not joint tenants, they must be tenants in common. But in what proportions?

Answer 9

To establish that legal title does not reflect beneficial ownership of the home, it is necessary to rebut the presumption that equity follows the law. There are two broad scenarios to consider

Answer 10

(a) The person seeking to rebut the presumption may simply argue for a beneficial tenancy in common in equal shares. This is most likely in cases involving a dispute about beneficial ownership of the land after the death of one of the legal owners. If the property was held as joint tenants, it will pass to the other owner(s) by survivorship. For a share of the property to pass to the deceased person’s estate, it is necessary to demonstrate that they were tenants in common.

Answer 11

(b) More often, the person seeking to rebut the presumption will be seeking to argue that the parties are beneficial tenants in common in unequal shares. This will often be the case where the couple have separated and are disputing their respective entitlements to the home, with one (or both) arguing for a greater than 50% share.

Answer 12

As the starting point is just a presumption, it is possible to rebut it by adducing evidence that the parties were not intended to be equitable joint tenants. Lady Hale in Stack v Dowden concluded that the presumption could be rebutted by evidence of the parties’ shared intention, which may be ascertained in the light of the whole course of conduct (known as the ‘holistic’ approach).

Answer 13

* Advice or discussions the parties had which may indicate their intention * The reason legal title was registered in particular names * The purpose for which the parties acquired the house * The nature of the relationship * Whether the parties have children * How the house was financed * How the parties arranged other finances and divided responsibility for household expenses

Answer 14

Lady Hale made clear in Stack that the presumption will not be rebutted lightly in cases of joint legal ownership. It is for the party seeking to rebut the presumption to adduce the relevant evidence, which is a ‘heavy burden’ requiring ‘unusual facts’.

Answer 15

Although she did not indicate the weight to be attributed to any of the individual factors, it is clear from the subsequent case of Jones v Kernott that the court is looking for the actual intention of the parties. The best evidence of that intention will therefore be evidence relating to express agreements or discussions as to beneficial ownership.

Answer 16

In the absence of any such express discussions, it seems clear from Stack itself that financial factors are of particular importance to this exercise. (Indeed, financial considerations were so essential to the analysis in Stack itself that Lord Neuberger, dissenting, reached the same conclusion as the majority by applying a resulting trust analysis.)

Answer 17

Once common intention has been established, it is necessary to quantify the interests of the parties. Again, this involves taking into account ‘the whole course of conduct’. As with Step 1, the primary search is for the actual intention of the parties (whether express or inferred). The court’s aim is to determine the proportions in which the parties actually intended to hold the land.

Answer 18

However, as a last resort, the court will impute an intention for ‘fair shares’ based on the ‘whole course of conduct’. The same factors are taken into account at this stage of the process. Clearly, an express agreement or discussion as to the parties’ respective shares is the best evidence of what they intended. If there is such evidence, this is how the shares will be quantified. In the absence of an express agreement as to quantification, the case law again indicates that financial factors will carry the greatest weight.

Answer 19

Although it was made clear in Stack v Dowden that the presumption will only be rebutted in exceptional cases, Stack itself was one of those cases. So what were the unusual facts in Stack that prompted the House of Lords to award Ms Dowden a 65% share and Mr Stack a 35% share in a home that they owned as legal joint tenants?

Answer 20

* The couple were in a relationship for 27 years and raised four children together. * Whilst they purchased their shared home in joint names and both contributed (albeit unequally) to the deposit and mortgage, they otherwise kept their finances rigidly separate. * Throughout their relationship they kept separate bank accounts and made separate savings and investment transactions. They maintained financial independence throughout their relationship. This was held to be indicative that they did not intend a beneficial joint tenancy or to have equal shares in the house.

Answer 21

Exactly what will be deemed sufficiently ‘unusual’ to depart from the presumption of joint tenancy remains unclear. In Stack the court was persuaded the presumption was rebutted by the rigid separation of the couple’s finances. Yet Stack also made clear that the law has moved on from the very restrictive approach adopted in the 1990s and that financial matters alone are not the only factors to be taken into account. The case law suggests that the courts will only depart from the presumption in exceptional cases.

Answer 22

Fowler v Barron [2008] EWCA 377 demonstrates that unequal financial contributions alone are not enough. If a couple choose to buy a home in joint names, it does not matter that only one of them has made financial contributions to that house. Further evidence is required to rebut the presumption of joint tenancy. In Fowler itself, the Court of Appeal held that a man who had paid the deposit, all mortgage payments and all direct outgoings was unable to rebut the presumption of joint beneficial ownership. Fowler v Barron can be compared with Adekunle v Ritchie [2007] BPIR 1177, where the claimant did successfully rebut the presumption of joint tenancy.

Answer 23

Facts: A mother and her youngest son (who lived with her) bought a house in joint names. In order to purchase the house, it was necessary to have the mortgage in their joint names as the mother was unemployed and could therefore not obtain a mortgage alone.

Answer 24

Held: The presumption was rebutted on the basis that the primary purpose of the acquisition was as a home for the mother, even though the son also lived there and contributed to the mortgage. There was no intention that they should be beneficial joint tenants, especially when the woman would have wanted all her sons to benefit on her death from her only significant asset. If they were joint tenants, the house would pass to the youngest son by survivorship.

Answer 25

Jones v Kernott is a significant case, being a Supreme Court case decided just a few years after Stack v Dowden. In addition to clarifying some of the points made in Stack (most notably the question of whether and when it is possible to impute intention) it is an interesting case in its own right because of the conclusion that intention can be ambulatory.

Answer 26

What this means is that it is possible for the common intention of the parties to change over time. In some cases, such as in Jones v Kernott itself, it may be concluded that the parties had a common intention to hold the property as joint tenants when it was first acquired but that intention changed at a later date (such as following the end of the relationship). At that date, their interests in the property ‘crystallise’ and subsequent events (eg capital growth of the land) are considered when quantifying their respective interests

Answer 27

Facts: Ms Jones and Mr Kernott purchased a property in joint names. The deposit was paid from the sale of Ms Jones’ previous home in her sole name with the balance raised by a mortgage in their joint name. From 1985-1993 they jointly contributed to household expenses and took out a joint loan to build an extension (with Mr Kernott doing some work on the extension).

Answer 28

The couple separated in 1993 and cashed in a joint life assurance policy which they divided equally. Mr Kernott used his 50% share to buy a new home in 1996 and Ms Jones used her shareto pay the mortgage on the property, which she lived in for 14.5 years, paying all expenses herself. Mr Kernott made no further contributions towards the mortgage or expenses on the home (or the couple’s two children) during this period and was able to purchase his property because of this.

Answer 29

Held: The court noted that at acquisition the couple intended to share jointly. The separation was not enough of itself to infer a change to common intention. However, their later action in cashing in the policy, together with the prolonged absence of Mr Kernott from the home and his lack of contribution during that time was evidence that they no longer intended to share their assets equally.

Answer 30

(a) The starting point is that equity is presumed to follow the law. (b) This presumption can be displaced by evidence that: (i) The common intention was different at the time of acquisition; or (ii) Although the presumption could not be rebutted at the time of acquisition, the parties later formed a different common intention. (c) Common intention is deduced objectively from conduct. The court should consider what each party would reasonably have understood to be the actual intention of the other, based on such conduct.

Answer 31

The majority (Lady Hale and Lords Walker and Collins) were willing to infer that the couple had intended Mr Kernott’s interest to crystallise when he moved out. This was because it was at this point that Mr Kernott stopped contributing to the mortgage and the parties divided the life assurance policy equally between them.

Answer 32

After this, they no longer intended to share the property equally. He no longer contributed to their shared house (or even to the maintenance of their children). The fact that he was no longer contributing (along with his share of the proceeds of the insurance policy) enabled him to fund the purchase his own property.

Answer 33

The majority reasoned that Mr Kernott would have the sole benefit of any capital gain on his own property, leaving Miss Jones to receive the sole benefit of any such gain on their previously shared home. Given the increase in value of the property since the relationship broke down, along with her sole contributions to the mortgage since his departure 14 years previously, she received 90% of the house and he received a 10% share

Answer 34

Jones v Kernott provides good insight into the considerations relevant to quantification. However, there were disagreements within the Supreme Court as to the role of imputation. Lady Hale and Lord Walker stressed that, even at this stage, the primary aim should be to infer the intention of the parties based on the whole course of conduct and Lady Hale’s non-exhaustive list of factors. However, they accepted that as a ‘fallback’ position, the court may be required to impute an intention to the parties based on ‘what their intentions as reasonable and just people would have been had they thought about it at the time’

Answer 35

The minority disagreed that imputation was permissible at all while Lord Collins was not concerned with the conceptual difference between inference and imputation. As both inference and imputation require the court to take account of the whole course of conduct (and Lady Hale’s non-exhaustive list of factors), some might agree with Lord Collins that there is little practical difference between them. However, the distinction remains relevant, with the Court of Appeal confirming in Barnes v Phillips [2015] EWCA Civ 1056 that imputation can only occur at the quantification stage, but not when rebutting the presumption of joint tenancy.

Answer 36

Sometimes cohabitees live in a family home that is only registered in the name of one of the parties. This may be because that person bought the home before they entered into the relationship or there may be some other reason why it was considered appropriate to only register the house in their name. (Many older cases involve land being purchased as a home for a man and woman to live in as a couple, but only the man was registered as the legal owner.)

Answer 37

In the absence of an enforceable express trust over the property, the legal owner will be the sole beneficial owner unless the other person is able to establish an interest under a common intention constructive trust. We will now consider the use of common intention constructive trusts to determine beneficial ownership of homes owned by a sole legal owner, in light of the decision in Stack v Dowden [2007] UKHL 17

Answer 38

In Stack v Dowden Lady Hale stated that the starting point in all family homes cases is that ‘equity follows the law’. Although the case involved property held in joint names, the broad principles established in the case are also applicable to sole legal owners. Applying this principle to sole legal ownership, the starting point is that a sole legal owner of land will be the sole beneficial owner unless there is an enforceable trust over the property.

Answer 39

Since Stack v Dowden there has been a series of cases applying the principles to sole legal ownership cases. The following two-step process has emerged from these cases: (a) Establishing an interest: (i) Did the parties have a common intention for the non-legal owner to acquire a beneficial interest? (ii) Has that person relied on this to their detriment? (b) Quantification: If the non-legal owner can establish an interest, what is the quantum of that interest as a proportion of the property?

Answer 40

There are two traditional routes to a common intention constructive trust: (a) Evidence of an express common intention as to the shared ownership of the property, followed by detrimental reliance by the non-legal owner. Once an express common intention was established, a relatively wide range of conduct would satisfy the requirement of detrimental reliance.

Answer 41

(b) In the absence of an express common intention, the court could also infer common intention from the parties’ conduct, again followed by detrimental reliance. In such cases, detrimental reliance would typically be inferred from the same conduct as the common intention. It was generally considered that only financial contributions (to the purchase, mortgage or household) would be sufficient for such purposes. In Stack, Lady Hale indicated that the court should not take such a restrictive approach and should consider the ‘whole course of conduct’. While earlier case law remains useful, it must be considered in light of Stack

Answer 42

In order to establish an equitable interest, the non-legal owner will need to demonstrate common intention for them to acquire an interest in the land. As noted above in relation to joint legal ownership cases, Lady Hale in Stack v Dowden indicated that common intention should be ascertained in the light of the whole course of conduct (known as the ‘holistic’ approach). Although the extension of this principle to sole legal owner cases was obiter in Stack itself, it is now very clear that this approach also applies to such cases. Lady Hale’s non-exhaustive list of factors is therefore also informative when considering sole legal ownership cases.

Answer 43

Although the holistic approach means that the court is now required to take into account a wider range of factors, the best evidence of common intention will still be express agreement or discussions regarding the ownership of the house.

Answer 44

The following principles (emanating from pre-Stack case law) remain useful when considering express discussions the parties had about the property: * When assessing common intention, statements should be about shared ownership not merely about shared occupation. * Common intention to share ownership may be evidenced by the legal owner providing an excuse as to why their partner may not be jointly registered as the legal owner. Compare the words used in the following examples from case law (bearing in mind that the words must be interpreted in the context of the individual case).

Answer 45

* ‘Half yours’ (Hammond v Mitchell [1991]1 WLR 1127) * ‘50:50 (Clough v Killey [1996] 72 P&CR D22)

Answer 46

‘Family home’ (Lloyds Bank v Rosset) ‘benefit […] both of us’ (James v Thomas [2007] EWCA Civ 121) ‘You will be looked after’ (Thomson v Humphrey [2009] EWHC 3576 (Ch))

Answer 47

As we have already seen, common intention may also be evidenced by the legal owner providing an excuse as to why their partner may not be jointly registered as legal owner. * ‘you’re too young’: In Eves v Eves [1975] 1 WLR 1338 an excuse was made that the partner couldn’t own property because she was under 21. * ‘[…] it’s your divorce’: In Grant v Edwards [1986] Ch 638 it was suggested that sharing legal ownership would prejudice the partner’s divorce.

Answer 48

However, recent case law suggests that inferences should not be drawn too readily from an excuse. In Curran v Collins [2015] EWCA Civ 40, the Court of Appeal concluded that a common intention to share the beneficial ownership could not be inferred where the legal owner had made an excuse in order to avoid having an argument, rather than to prevent their partner obtaining an intended interest in the shared home.

Answer 49

Although Stack v Dowden is the seminal case in this area, the groundwork for the decision was laid by the Court of Appeal in Oxley v Hiscock [2004] EWCA Civ 546. In this case (which related to sole legal ownership) the court suggested that the court could determine shares of the property based on what it considered fair in light of the parties’ ‘whole course of dealing’ in relation to the property.

Answer 50

Lady Hale, drew on this case in her landmark judgment in Stack, endorsing Lord Walker’s view that the ‘law has moved on’ from a focus on financial contributions. The application of the Stack holistic approach to inferring intention in sole ownership cases was confirmed by the Privy Council in the sole ownership case of Abbott v Abbott [2007] UKPC53, in which Lady Hale reiterated that the law had ‘substantially moved on’.

Answer 51

Many of the cases decided before Stack rejected the relevance of factors such as the performance of household duties, staying at home to look after children, contributions to utility bills or doing repair and maintenance jobs around the house. Although Stack seemed to widen the factors that could be taken into account, a series of cases decided shortly after it still seemed to take quite a restrictive approach to inferring common intention.

Answer 52

The court’s view in these cases seemed to be that what was done was because the parties were making their lives together and was not referable to a common intention as to ownership of the property. See Thomson v Humphrey in which the court declined to infer common intention as a result of an individual caring for family, Walsh v Singh [2009] EWCA 3219 (Ch) where a woman gave up her career or Morris v Morris [2008] EWCA Civ 257 where a woman worked without pay.

Answer 53

In contrast, in Graham-York v York [2015] EWCA Civ 72, a woman lived in an abusive and controlling relationship with her partner. The judge held that during the 33 years she lived with him her financial contributions to the household did ‘not amount to much’ although she did cook all the family meals and cared for their daughter. Inferred common intention was found and she was awarded a 25% share in the property.

Answer 54

Prior to Stack (see eg Burns v Burns [1984] 1 All ER and Le Foe v Le Foe [2001] 2 FLR 970) it was suggested that indirect financial contributions such as paying substantial contributions to family expenses to enable the other party to pay the mortgage, should be taken into account. However in James v Thomas (decided shortly after Stack) a woman had made very substantial improvements to the property (including heavy labour) and gave up her job to work for the man’s business, thereby making it easier for him to make mortgage payments (which came from thei joint account). Despite this, common intention was not inferred.

Answer 55

Both Lord Walker and Lady Hale suggested in obiter in Stack that making substantial improvements which significantly added value to the property would be capable of creating an interest. This was applied by the High Court in Leeds in Aspden v Elvy [2012] EWHC 1387 (Ch). Common intention was inferred by a man’s substantial contributions in work and money (around £65,000- £70,000) in converting a barn which substantially increased the land’s value. The weight given to each of the factors (ie the work and the financial contribution) by the court in Aspden was unclear.

Answer 56

If the claimant is able to establish the relevant common intention, they must also establish detrimental reliance. In Grant v Edwards Nourse LJ considered that amounted to conduct which is ‘otherwise inexplicable’. He noted that there was a clear distinction between conduct such as merely moving into a house and a small woman wielding a 14 lb sledgehammer (the conduct of the successful claimant in Eves v Eves). The latter involved conduct which the ‘[claimant] could not reasonably have been expected to embark unless [s]he was to have an interest in the house’.

Answer 57

Browne-Wilkinson LJ provided a more expansive definition, considering that once common intention is established ‘any act done by her to her detriment relating to the joint lives of the parties is […] sufficient’. The case predates Stack v Dowden and it might be argued that this wider interpretation is more consistent with the holistic approach of Lady Hale. His judgment was referred to with approval by the Court of Appeal in Parris v Williams [2008] EWCA Civ 1147. Browne-Wilkinson LJ provided a more expansive definition, considering that once common intention is established ‘any act done by her to her detriment relating to the joint lives of the parties is […] sufficient’. The case predates Stack v Dowden and it might be argued that this wider interpretation is more consistent with the holistic approach of Lady Hale. His judgment was referred to with approval by the Court of Appeal in Parris v Williams [2008] EWCA Civ 1147.

Answer 58

* In Eves v Eves (1975) heavy DIY was considered to amount to detrimental reliance. * Similarly in Clough v Killey (1996) renovations to the house counted. * In Grant v Edwards (1986) payment of substantial expenses (including payment of the mortgage) was conduct which the women would not otherwise have embarked upon without an interest in the home

Answer 59

* In Lloyds Bank v Rosset (1991) decorating did not amount to detrimental reliance. * In Burns v Burns (1983) giving up work and to look after children was not enough. * In Thomson v Humphrey (2009) looking after the family and playing the ‘traditional wife’ was not enough

Answer 60

As we have seen, once a common intention constructive trust is established, the court is required to quantify the size of the non-legal owner’s interest, using the following framework: (a) If there is evidence of express common intention as to the shares this ought to be conclusive (b) In the absence of such an intention, the same approach is taken as in joint ownership cases; the court ought to strive to infer the common intention (c) If this is not possible they may impute an intention for ‘fair shares’ in light of the ‘whole course of dealing’

Answer 61

Although early post-Stack cases on sole ownership did not clearly differentiate between the acquisition and quantification stages, it is now very clear from cases such as Capehorn v Harris [2015] EWCA Civ 955 that the two stages are distinct. Likewise any uncertainty as to whether and when the court may impute an intention to the parties has been clarified by the Court of Appeal in Barnes v Phillips [2015] ECWA Civ 1056, confirming that imputation is only permissible at quantification stage.Although early post-Stack cases on sole ownership did not clearly differentiate between the acquisition and quantification stages, it is now very clear from cases such as Capehorn v Harris [2015] EWCA Civ 955 that the two stages are distinct. Likewise any uncertainty as to whether and when the court may impute an intention to the parties has been clarified by the Court of Appeal in Barnes v Phillips [2015] ECWA Civ 1056, confirming that imputation is only permissible at quantification stage. The question of when imputation is permissible remains controversial, especially as the lower courts seemed quick to impute shares in the early cases following Jones v Kernott.

Answer 62

In Aspden v Elvy the High Court considered the contributions of both money and physical labour by Mr Aspden and imputed an intention that he should have a 25% share of the home. Judge Behrens considered that this represented a ‘fair return for the investment of £65,000-£70,000 and the work carried out by Mr Aspden’. He acknowledged that the figure was ‘somewhat arbitrary’ but said that it was the best he could do with the available material.

Answer 63

The willingness of lower courts to impute shares at the quantification stage has given rise to concerns (as expressed by Lord Neuberger in his dissent in Stack v Dowden) that the process has become unprincipled, and arguably a smokescreen for judicial discretion.

Answer 64

Facts: The couple in this case had a dysfunctional relationship and Mr York was both controlling and violent. The Court of Appeal rejected Miss Graham-York’s argument that her interest should have been quantified at 50%, upholding the trial judge’s allocation of a 25% share.

Answer 65

Held: Imputing an intention for ‘fair shares’ the Court of Appeal reiterated that this must be ascertained in light only of the parties’ dealings with the property stating that the ‘the court is not concerned with some form of redistributive justice’. The Court of Appeal held that it is not the role of the court to reallocate property rights based on other matters (such as the presence of domestic violence in the relationship), which have no link to the acquisition of the property.

Answer 66

(a) Under Stack v Dowden the starting point in all family homes cases is that equity follows the law. The starting point is that equitable title reflects legal title. In other words: - A sole legal owner is the sole beneficial owner - Joint legal owners are presumed to be equitable joint tenants (b) In sole legal ownership cases, an individual seeking to establish a beneficial interest will need to establish that they have acquired an interest under a common intention constructive trust. This requires proof of: (i) A common intention that they should have a beneficial interest; and (ii) Detrimental reliance upon that intention. (c) In joint legal ownership cases, an individual seeking to establish that they are not beneficial joint tenants will need to rebut the presumption with reference to the common intention of the parties. There is no need to show detrimental reliance.

Answer 67

(d) In both cases the court is seeking to establish the actual intention of the parties, whether express or inferred based on the ‘whole course of conduct’. (e) Intention can be ambulatory, meaning a beneficial interest can be established, or the presumption of joint tenancy rebutted, after acquisition (if circumstances change). (f) Once common intention (and, in sole ownership cases detrimental reliance) has been established, it is necessary to quantify the interests of the parties. Again, this involves taking into account ‘the whole course of conduct’ in order to reach a conclusion as to the appropriate shares.

Answer 68

(g) If an express intention as to quantification can be established, the court will give effect to that intention. (h) If an express intention cannot be established, the court will attempt to infer an intention based on the conduct of the parties. (i) As a last resort, if it is not possible to ascertain the actual intention of the parties as to quantification of their shares, the court will impute an intention for ‘fair shares’ based on all the ‘whole course of conduct’.

Answer 69

Proprietary estoppel is an equitable doctrine which enables a person to informally acquire property (or personal) rights. Its objective is to prevent unconscionable conduct. It enables a court to do justice by modifying the parties’ strict legal rights. It is a very flexible doctrine. Unlike promissory estoppel, proprietary estoppel is a cause of action: it is the basis of a claim. It is not limited to the status of a defence

Answer 70

A successful proprietary estoppel claim gives rise to an ‘equity.’ The court determines how to ‘satisfy’ the equity, ie the court determines what remedy is appropriate. The court enjoys a broad discretion in selecting the remedy. It can satisfy the equity by awarding the claimant a personal right or a property right (including a right under a trust).

Answer 71

(a) In the first situation, A mistakenly believes that they have a right in land which is owned by B and, in reliance on that belief, act to their detriment in circumstances where B is aware of their mistake but does not attempt to correct it or prevent them acting to their detriment. This situation is commonly described as an ‘acquiescence’ case.

Answer 72

(b) In the second situation, B assures A that they have or will acquire a right in relation to B’s property and, in reliance on that assurance, A acts to their detriment. This situation is commonly described as an ‘assurance’ case.

Answer 73

Facts: The claimant and the defendant started living together as man and wife in 1964. They lived in the claimant’s house. In 1973, their relationship broke down. The claimant, who was having an affair with another woman, moved out of the house. He told the defendant: ‘The house is yours.’ He repeated this statement many times. In reliance on this statement, the defendant made various repairs and improvements to the house. She also redecorated and purchased new carpets, curtains and furniture. In total, the defendant spent £700 (of her £1,000 savings) on the house and its furnishings. The claimant never transferred the house to the defendant.

Answer 74

In 1976, the claimant initiated proceedings to recover possession of the house from the defendant. By way of counterclaim, the defendant made a proprietary estoppel claim against the claimant. Held: The claimant had made an assurance to the defendant that the house was hers and the defendant acted to her detriment in reliance on that assurance. Accordingly, the defendant had established an equity by way of proprietary estoppel. The most appropriate way to satisfy the equity was to order the claimant to transfer the house to the defendant. Thus, the defendant was entitled to the house.

Answer 75

Facts: In 1938, the defendant moved into the house of a widower to work as a maid. The widower had four children, including a son, Kenneth. In 1946, the defendant and Kenneth started to live together as man and wife. The widower died in 1948. The defendant was not paid any wages after his death. She did not seek alternative employment because Kenneth and his brother (who had jointly inherited the house) assured her that she could live in the house for the rest of her life

Answer 76

In reliance on this assurance, the defendant continued to look after the family who lived in the house until Kenneth’s death in 1975. In particular, she cared for Kenneth’s mentally ill sister, which was a ‘hard and unpleasant task’, for very many years. She was not paid for her services. On Kenneth’s death, the family members who inherited the house commenced proceedings to recover possession from the defendant. The defendant counterclaimed, relying on proprietary estoppel.

Answer 77

Held: Since the defendant had looked after the family for 27 years for no pay and on the faith of the assurances which Kenneth and his brother had made to her, she had established an equity by way of proprietary estoppel. The equity was satisfied by giving her a licence to occupy the house rent-free for the rest of her life

Answer 78

In Thorner v Major [2009] UKHL 18, the House of Lords identified the three main elements of a proprietary estoppel claim: (a) An assurance made to the claimant. (b) Reliance by the claimant on the assurance. (c) Detriment to the claimant in consequence of their reliance.

Answer 79

Moreover, as proprietary estoppel is based on ‘the fundamental principle that is equity is concerned to prevent unconscionable conduct’ (Gillett v Holt [2001] Ch 210) the claimant must also demonstrate that it would be unconscionable for the defendant to resile from the assurance: Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55. This notion of ‘unconscionability’ unifies and confirms the other elements

Answer 80

The first element of a proprietary estoppel claim is an assurance made by the defendant to the claimant. The assurance must be an assurance (a promise) that the claimant has or will acquire a right in property owned by the defendant: Thorner; Southwell v Blackburn [2014] EWCA Civ 1347. Thus, an assurance by the defendant that they will grant the claimant an easement over their land is a qualifying assurance. But an assurance by the defendant that the claimant will always be financially secure is not because it does not relate to any property owned by the defendant: Layton v Martin [1986] 2 FLR 227. Until relatively recently it was not clear how certain an assurance is required to be for the purposes of proprietary estoppel. This issue was addressed and resolved by the House of Lords in Thorner.

Answer 81

Facts: The claimant, David, worked on his cousin’s, Peter’s, farm for almost 30 years without payment. Peter and David were part of a community of farmers who were ‘taciturn and undemonstrative men’ and who communicated obliquely and allusively. In particular, Peter was a man of very few words who only communicated in an indirect manner. For example, if Peter said to David, ‘what are you doing tomorrow?’ he meant (and David would understand him to mean) ‘would you come and help on the farm tomorrow?’

Answer 82

On Peter’s death, David brought a proprietary estoppel claim, alleging that Peter had made an assurance that he would give David the farm by his will. The principal issue was whether David could establish the alleged assurance given that Peter had never explicitly said that he would give the farm to David.

Answer 83

* In 1990 Peter gave David documents relating to two assurance policies on Peter’s life. He said to David: ‘That’s for my death duties.’ * On various occasions, Peter mentioned features of the farm which were only relevant to a person who was to have a continuing involvement with the farm (because they had no other relevance at the time they were mentioned.)

Answer 84

Held: The House of Lords reinstated the decision of the trial judge that, in light of the context, the features relied on by David amounted to an assurance by Peter that he would give the farm to David by his will. David’s claim was successful and he was awarded the farm.

Answer 85

* The assurance need not be explicit. It can be inferred from indirect statements. * The relevant assurance must be ‘clear enough’ and whether it is clear enough ‘is hugely dependent on context.’ (Lord Walker conceded that this is ‘a thoroughly question-begging formulation’.) * The task of the court is to ascertain how the defendant’s words would have been reasonably understood by the claimant in the context in which they were spoken. Since David and Peter belonged to the same community of taciturn, undemonstrative men, ‘they were well able to understand one another’.

Answer 86

It is sufficient if what Peter said was ‘clear enough.’ To whom? Perhaps not to an outsider. What matters, however, is that what Peter said should have been clear enough for David, whom he was addressing and who had years of experience in interpreting what he said and did, to form a reasonable view that Peter was giving him an assurance that he was to inherit the farm and that he could rely on it.

Answer 87

The second element of a proprietary estoppel claim is reliance by the claimant on the defendant’s assurance. This means that there must be ‘a sufficient link’ between the defendant’s assurance and the claimant’s detrimental conduct: Wayling v Jones [1995] 2 FLR 1029; Gillett. This is effectively a causation requirement: Campbell v Griffin [2001] EWCA Civ 990. The assurance does not have to be the sole cause of the claimant’s detrimental conduct. It is sufficient if it is a cause of that conduct: Wayling.

Answer 88

The case law relating to reliance is not entirely consistent. Some cases have held that, if the claimant would have acted in the same way if the assurance had not been made, the proprietary estoppel claim fails on the reliance element. Other cases have held that this is not fatal to the claim.

Answer 89

Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd (note) [1982] QB 133 (an acquiescence case) is an example of the former. The claimant argued that the installation of a lift in retail premises was an act of detrimental reliance. Oliver J rejected the argument (and the proprietary estoppel claim) on the basis that the claimant would have installed the lift anyway because, in view of its target customers (the elderly), its business had not been commercially viable in the absence of a lift. Taylors can be contrasted with Wayling.

Answer 90

Facts: The claimant’s boyfriend (D) owned a hotel. D asked the claimant, a trained chef, to help him run the hotel. And D assured the claimant that he would give him the hotel by his will. The claimant worked very hard for four years making a success of the hotel. He was paid ‘little more than pocket money’. On D’s death, the hotel was inherited by his relatives. The claimant brought a proprietary estoppel claim against D’s estate.

Answer 91

During cross-examination, the claimant stated that he would have worked in the hotel even if D had not made the assurance because D needed him and because he loved D. The trial judge held that this was fatal to the proprietary estoppel claim because it demonstrated that the claimant’s detriment was not reliant on D’s assurance.

Answer 92

Held: The Court of Appeal allowed the claimant’s appeal. It reasoned that since D had made the assurance, the only relevant question was what the claimant would have done if D had told him that he had changed his mind. During his evidence in chief, this question had been put to the claimant, who answered that he would have left D and stopped working in the hotel. On the strength of this answer, the court held that the claimant had relied on D’s assurance. Leggatt LJ said: ‘it was because the plaintiff relied on the promise that he would have left if he had learned that it was not going to be kept’. The Court of Appeal awarded the claimant the proceeds from the sale of the hotel.

Answer 93

There is one final point to note in relation to the reliance element. If the defendant makes an assurance to the claimant and the claimant acts in a manner which is detrimental, it is presumed that the claimant relied on the assurance: Greasley; Wayling. The effect of the presumption is to transfer the burden of proof (in relation to reliance) to the defendant. Where the presumption applies, the defendant must prove that the claimant did not rely on the assurance.

Answer 94

The third element of a proprietary estoppel claim is detriment to the claimant in consequence of their reliance on the defendant’s assurance. In Gillett, the Court of Appeal considered this element at length. Robert Walker LJ said that: * Detriment is not a narrow or technical concept * Detriment ‘must be approached as part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances’ * Countervailing benefits can be taken into account when assessing whether the claimant’s reliance was detrimental.

Answer 95

Also explained that the court must determine whether conduct is detrimental on the assumption that the defendant will dishonour the assurance.

Answer 96

Imagine that B assures A that B will give A a commercial farm and that, in reliance on that assurance, A does not make any provision for their pension because they believe that they will be given an income-yielding farm. On one view, A’s failure to make such provision is not detrimental: A has saved an expense. However, once it is assumed that B is going to dishonour the assurance, A’s failure to make such provision is clearly detrimental because A will be less well off in their old age.

Answer 97

The most obvious examples of detriment are expenditure (see Pascoe above) and the provision of services without payment or for less than their market value (see Greasley and Thorner above). However, detriment is not limited to expenditure, services or other quantifiable financial detriment. For example, in Gillett the court held that the claimant had acted to his detriment by subordinating himself to the defendant and allowing the defendant to make significant choices concerning the claimant and his family such as, for example, where and how the claimant’s children should be educated. A claimant also acts to their detriment if they pass up opportunities to better themselves or to live a better life, eg by choosing to not pursue educational, employment or business opportunities: Gillett; Henry v Henry [2010] UKPC 3.

Answer 98

Facts: The claimant and the defendant were romantically involved. The defendant assured the claimant that if she and her two young children moved into his house, they would always have a secure home there. In reliance on this assurance, the claimant and her children moved into the house. The relationship between the claimant and the defendant subsequently deteriorated and the defendant excluded the claimant and her children from the house. The claimant brought a proprietary estoppel claim and was awarded £28,500

Answer 99

Held: She had acted to her detriment by (amongst other things) giving up a secure rented home which she had spent some £15,000 to £20,000 fitting out and furnishing

Answer 100

Even in cases where the claimant establishes assurance, reliance and detriment, their claim will not succeed if the court considers that it would not be unconscionable for the defendant to dishonour the assurance: Cobbe; Southwell. This involves an ‘objective value judgment’ of the defendant’s behaviour by the court. The claim will only succeed if the defendant’s behaviour ‘shock[s] the conscience of the court’ (Cobbe)

Answer 101

There are undoubtedly cases where circumstances which would seem likely to give rise to an equity fail to do so when viewed in the light of the continuum of the relationship as evaluated at the point at which the promisor seeks to renege on his assurance. In effect, by dint of the ‘unconscionability’ requirement, the courts enjoy a residual discretion to dismiss a proprietary estoppel claim even if the claimant establishes assurance, reliance and detriment. Many commentators are troubled by such an open-ended discretion

Answer 102

* In nearly all the reported cases the presence of assurance, reliance and detriment has been sufficient to establish that it was unconscionable for the defendant to dishonour the assurance; and * Very few cases have failed on this basis. * In other words, the discretion is very sparingly exercised. Sledmore v Dalby (1996) 72 P&CR 196 is an example of a case where a claim did fail for want of unconscionability.

Answer 103

Facts: A and B (the claimant) were a married couple. They had an adult daughter, C, who was married to D (the defendant). A and B allowed C and D to live in a cottage which was owned by them. In 1976, A and B assured C and D that they would give them the cottage. In reliance on this assurance, D made various structural and decorative improvements to the cottage. The sum spent by D on the improvements was less than £1,000, but it was substantial in relation to the value of the cottage at the time. A died in 1980 and C died in 1983. D continued to live in the cottage rent free after C’s death. In 1991, B asked D to vacate the cottage, but D refused to do so. B initiated proceedings to recover possession of the cottage. D defended the proceedings, arguing that he had acquired an equity by way of proprietary estoppel.

Answer 104

Held: Although A and B had made an assurance to D, and D had relied on that assurance to his detriment, it was not unconscionable for B to dishonour the assurance and recover possession of the cottage

Answer 105

The Court of Appeal supported its conclusion by reference to the following factors: * D had enjoyed the benefit of rent-free accommodation for more than 15 years. * D had enjoyed the benefit of his expenditure on the cottage (by living there for many years). * D was making minimal use of the cottage. He lived with his new partner. He only slept at the cottage – at most once or twice a week – when it was convenient to do so for the purposes of his employment. * D was employed and was able to pay for his own accommodation. * B was impecunious and was in receipt of state benefits. * B had only sought to recover possession of the cottage from D because she was desperate. Her own home was at risk of being repossessed and sold by a secured creditor.

Answer 106

Where a claimant establishes a proprietary estoppel it generates an ‘equity’. The court must ‘satisfy’ the equity by fashioning an appropriate remedy. The overriding objective is to award a remedy that avoids an unconscionable result: Guest v Guest [2020] EWCA Civ 387. In fashioning the remedy, the court must have regard to all the circumstances of the case, including (of course) the claimant’s expectation and detriment: Jennings v Rice [2002] EWCA Civ 159; Guest.

Answer 107

The court has a broad and flexible (but not unfettered) discretion in fashioning the appropriate remedy: Guest. This is apparent from the range of remedies which have been awarded, which includes orders directing a defendant to: * Transfer ownership of property to the claimant; * Hold property on trust for the claimant; * Grant the claimant a property right over their property (eg an easement); * Grant the claimant a personal right over their property (eg a licence); * Pay a sum of money to the claimant.

Answer 108

Although the court enjoys a broad discretion in fashioning an appropriate remedy, the discretion is not unfettered. There are (at least) three principles which regulate the exercise of the discretion. These principles were (re)stated by the Court of Appeal in Jennings.

Answer 109

Facts: The claimant, who was married and in full-time employment, visited Mrs Royle (R) almost every evening and weekend over a 10-year period. R was in her eighties and largely incapacitated. The claimant ran errands for R, looked after her house and its garden and helped her to dress and to go to the toilet. After a burglary, the claimant slept at R’s house every night for three years. The claimant did not receive any payment from R. But she frequently told him: ‘this will all be yours one day,’ referring to the house and its furniture. R died intestate.

Answer 110

The claimant successfully brought a proprietary estoppel claim against R’s estate. The value of R’s estate was £1.3 million. The value of the house and its furniture was £435,000. The trial judge satisfied the claimant’s equity by ordering R’s executors to pay him a sum of £200,000.

Answer 111

Held: The remedy awarded by the trial judge was entirely appropriate. And the judge had rightly rejected the claimant’s argument that he was entitled to the whole of R’s estate or, alternatively, to the house and its furniture.

Answer 112

The Court of Appeal supported its judgment by reference to three principles which regulate the exercise of the remedial discretion in proprietary estoppel cases

Answer 113

The remedy should not exceed the claimant’s expectation. Since R had only assured the claimant that she would give him the house and its furniture, that was the maximum extent of any potential remedy. Thus, the judge was correct to reject the claimant’s argument that he was entitled to the whole of R’s estate.

Answer 114

The court may award a remedy which satisfies the claimant’s expectations, but it is not required to do so (and in some cases it would be inappropriate to do so). As Aldous LJ said: ‘If the conscience of the court is involved, it would be odd that the amount of the award should be set rigidly at the sum expected by the claimant.’ Thus, the judge had not fallen into error when he rejected the claimant’s argument that he was entitled to the house and its furniture.

Answer 115

As Robert Walker LJ said: ‘The essence of the doctrine of proprietary estoppel is to do what is necessary to avoid an unconscionable result, and a disproportionate remedy cannot be the right way of going about that.’ He added that ‘the court must also do justice to the defendant.’ Thus, the judge had correctly rejected the claimant’s argument that he was entitled to the house and its furniture because such a remedy would have been disproportionate to the claimant’s detriment.

Answer 116

Which was noticed earlier, is an interesting case in relation to remedy because it illustrates some of the (more unusual) factors which the court can consider.

Answer 117

The court was of the view that the defendant’s equity could be satisfied in two ways: by giving her a licence to occupy the house for the rest of her life or by giving the house to her. The court choose the latter option. In doing so, it was particularly influenced by the following factors:

Answer 118

The claimant was rich compared to the defendant and the defendant had spent approximately 70% of her savings repairing, improving and furnishing the house.

Answer 119

The claimant had demonstrated a ‘ruthless’ streak in his efforts to exclude the defendant from the house. And it was important to protect the defendant from future manifestations of his ruthlessness. In particular, the court was concerned that, if it gave the defendant a licence, the claimant would invent excuses for entering the house and interfering with her enjoyment with a view to driving her out. The court was also concerned that he would sell the house with a view to destroying the defendant’s rights. (A licensee cannot enforce a licence against a purchaser from the licensor.)

Answer 120

* Proprietary estoppel is an equitable doctrine by which a claimant can informally acquire property (or personal) rights. * In ‘assurance’ cases, the claimant must prove assurance, reliance, detriment and unconscionability. * The assurance must relate to a right in or over identified property. * Detriment is not a narrow concept and it includes expenditure, the provision of services and many other types of conduct.

Answer 121

* Reliance is a causal connection between the assurance and the detriment. * A proprietary estoppel claim is only available if the defendant’s conduct is unconscionable and shocks the conscience of the court. * The court has a broad discretion to fashion a remedy. * The remedy should be fashioned so as to avoid an unconscionable result.

Answer 122

In the 1990s, there was a concerted effort by some commentators and judges to assimilate proprietary estoppel and common intention constructive trusts. Robert Walker LJ was the leading judicial advocate of this project: see, for example, Yaxley v Gotts [2000] Ch 162. However, on his elevation to the House of Lords, Lord Walker recanted and in Stack v Dowden [2007] UKHL 17 he identified the principal conceptual distinction between proprietary estoppel and common intention constructive trusts

Answer 123

Proprietary estoppel typically consists of asserting an equitable claim against the conscience of the ‘true’ owner. The claim is a ‘mere equity’. It is to be satisfied by the minimum award necessary to do justice […] which may sometimes lead to no more than a monetary award. A ‘common intention’ constructive trust, by contrast, is identifying the true beneficial owner or owners, and the size of their beneficial interests