Proprietary estoppel Flashcards
Crabb v Arun District Council [1976] Ch 197 (CA
proprietary estoppel - common expectation
Reasoning:
Stages of inquiry to establish proprietary estoppel
- Is there an equity established?
- What is the extent of the equity, if one is established?
- What is the relief appropriate to satisfy the equity?
Establishing equity from conduct
- There was both direct and indirect encouragement by D to a belief by C in the existence of a right of way
- Direct: a gap was left in the fence built, which accorded exactly with the non-binding agreement
- Indirect: D gave no indication of going back on the agreement
Detrimental reliance
- Detrimental reliance was present in the form of selling the land in the expectation that there would be a right of way
Considerations:
- Contrast this case to[Yeoman v Cobbe],where it was held that proprietary estoppel does not arise in the course of negotiations – the difference is that in this case there was subsequent conduct that confirmed the representations made
- This case offers a usefulcomparison of promissory and proprietary estoppel:
- the formeris not a cause of action and can only arise from a clear and unequivocal promise (see[Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co [1972] AC 741]
- the latter is a cause of action and can arise from mere words or conduct
Held: Grant of a right of way under proprietary estoppel
> Lord Denning: “Short of an actual promise, if he, by his words orconduct, so behaves as to lead another to believe that he will not insist on his strict legal rights –knowingor intending that theother will act on that belief– and he does so act, that again will raise an equity in favour of the other: and it is for a Court of Equity to say in what way the equity may be satisfied. The cases show that this equity does not depend on agreement but on words or conduct.” = proprietary estoppel can arise by conduct
**Lord Scarman: ‘**If the plaintiff has any right, it is an equity arising out of the conduct and relationship of the parties. In such a case I think it is now well settled law that the court, having analysed and assessed the conduct and relationship of theparties, has to answer three questions. First, is there an equity established? Secondly, what is the extent of the equity, if one is established? And, thirdly, what is the relief appropriate to satisfy the equity’
Facts: C and the council (D) reached a non-binding agreement for a right of way over D’s land but no formal contract was reached. A gap was left in a fence D later put up and a gate was installed at the planned access point. C sold off part of his land, with the remained being landlocked save for the right of way. D repudiated the agreement. Subsequently the defendants closed the gap in the fence and refused to allow the plaintiff access to the road unless he paid GBP 3,000 for such right. The plaintiff sought a declaration that he was entitled to such right of access and an injunction to enforce that right.
Cobbe v Yeoman’s Row Management Ltd [2008
commercial setting = high hurdle - proprietary estoppel
Lord Scott: It was attempt to circumvent statutory requirements for a contract to sell land (section 2): ‘…proprietary estoppel cannot be prayed in aid in order to render enforceable an agreement that statute has declared to be void… Equity can surely not contradict the statute…’
Lord Walker: “in a commercial context, the claimant is typically a business person with access to legal advice”
Held:
(1) The remedy to which, on the facts, C was entitled could be described neither as based on an estoppel nor as proprietary in character.To treat a “proprietary estoppel” as requiring neither a proprietary claim by the claimant nor an estoppel against the defendant but simply unconscionable behaviour was a recipe for confusion. In a subject to contract context, the would-be purchaser’s expectation of acquiring an interest in the property in question was subject to a contingency that was entirely under the control of the other party to the negotiations ⇒ so purely speculative
(2) The unconscionability of Y’s behaviour in withdrawing from the inchoate agreement immediately after planning permission had been obtained was a wholly inadequate basis for imposing a constructive trust over the property in order to provide C with a remedy for his disappointed expectations.
HELD (HL) no PE claim, BUT Cobbe was awarded compensation for his work
Reasoning
Assurance is missing:
- Only a promise to enter into a contract in the future with terms to be agreed on = nothing to rely on
- It was attempt to circumvent statutory requirements for a contract to sell land (section 2): ‘…proprietary estoppel cannot be prayed in aid in order to render enforceable an agreement that statute has declared to be void… Equity can surely not contradict the statute…’ (Lord Scott)
Facts: Y had been formed to purchase a property consisting of a block of flats with potential for residential development. One of the flats was occupied by Y’s director. Y and C reached an oral agreement in principle for sale of the land to C. The substance of the agreement was that C, at his own expense, would apply for planning permission; Y would sell the property to C or to a nominated company for an agreed up-front price of £12m; C would then, at his own expense, develop the land in accordance with the planning permission and sell off the residential units; and C would pay to Y 50 per cent of the amount by which the gross proceeds of sale exceeded £24m. Pursuant to that agreement, C expended considerable sum of money and time to obtain the planning permission. Y then sought to re-negotiate the core financial terms and refused to proceed on the basis of the originally agreed financial terms. C instituted proceedings claiming that he was entitled to an interest in the property by virtue of a constructive trust or proprietary estoppel. The Court of Appeal regarded the finding that Y’s behaviour in repudiating, and seeking an improvement on, the core financial terms was unconscionable as justifying the creation of a proprietary estoppel. The issue was what relief, in the circumstances, C should have been granted.
Thorner v Major [2009] UKHL 18
proprietary estoppel
Considerations:
- Lord Neuberger distinguished Thorner from Cobbe. The first ground was that
the claim in Cobbe failed because it was uncertain what right, if any, the claimant had been promised in the property (uncertainty in the subject matter) ; whereas in Thorner there was no doubt that David had been promised the farm as it existed on Peter’s death. Second, the relationship between the parties in Cobbe was commercial and the claimant was a highly experienced businessman; whereas in Thorner the relationship between Peter and David was familial, and neither had much commercial experience.
Spotlight on assurance in THorner v Major
*What words/conduct objectively would have meant to a bystander, taking into account the subjective context and relationship
*Whether ‘the meaning [the promisor] conveyed would reasonably have been understood to be taken seriously as an assurance which could be relied upon’ para [5] (Lord Hoffmann)
*‘two countrymen leading lives that it may be difficult for many city-dwellers to imagine, taciturn and undemonstrative men committed to a life of hard and unrelenting physical work… The evidence showed a continuing pattern of conduct by Peter for th remaining 15 years of his life and it would not be helpful to try to break down that pattern into discrete elements.’ para [59] (Lord Walker)
Spotlight on unconscionability
*To be judged from the moment the promise is repudiated, looking back (Walton v Walton, Spencer v Spencer)
*It is the element that confirms and unifies the assurance, reliance, and detriment elements (Gillett)
*‘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’ Lord Walker in Cobbe para [92]
*HELD (HL): it sufficed that were words or conduct which in context and looking at the parties’ relationship would reasonably be understood by the promisee to be an assurance
- On the first issue, Lord Walker noted (at para.54) that there was some authority for the view that the “clear and unequivocal” test did not apply to proprietary estoppel. His Lordship preferred to say (at para.56) that in order to establish a proprietary estoppel the relevant assurance must be “clear enough”. What amounts to sufficient clarity will depend on the context. It was noted (at para.59) that the context of the present was unusual in that it involved two “taciturn and undemonstrative” countrymen. In that
context it was held (at para.60) that the trial judge had been entitled to find that Peter’s assurances, objectively assessed, were sufficiently clear and were intended to be relied upon - On the second issue, Lord Walker held (at para.62) that whilst the extent of the farm was liable to fluctuate, the common understanding of Peter and David was that Peter’s assurance related to “whatever the farm consisted of at Peter’s death”. It was noted that the same would have applied, barring any restrictive language, under s.24 of the Wills Act 1837 if Peter had made a specific devise of the farm.
Facts: David Thorner was a Somerset farmer who, for 29 years, worked without pay on a farm owned by his father’s cousin, Peter. From 1990 to 2005 Peter encouraged David to believe that he would inherit the farm. In particular, in 1990 Peter handed David two assurance policies on his life saying “That’s for my death duties”. In the event Peter died intestate, so his estate fell to be divided between his siblings under the rules of intestacy. David issued proceedings claiming a beneficial interest in the farm under the doctrine of proprietary estoppel. Successful at first instance and reversed on appeal.
Guest v Guest [2022] UKSC 27
proprietary estoppel - see Lord Brigg’s Framework
This case finally settled a long-standing ‘lively controversy’ (at [60]): Is the primary aim of proprietary estoppel to compensate the claimant for the detriment he suffered in reliance of an unfulfilled promise (which is unenforceable due to want of formality), or to give effect to the expectation?
Quotes: Lord Briggs
‘One of the principal functions of equity is to put right injustice to which the law is otherwise blind, by restraining the rigid application of legal rules where their implementation would be unconscionable.’
*HELD (High Court): Andrew had raised an equity, to be satisfied by a lump sum (cash payment reflecting the value of what was promised) => The appeal to the SC regarded the quantum
Held: Lord Briggs (with Lady Arden and Lady Rose concurring) is of the view that when proprietary estoppel is engaged, the starting position is that the court should try to satisfy the promisee’s expectation, rather than compensating them for the detriment that they have suffered as a result of the promise being rescinded.
3 to 2 split
Lord Briggs (leading judgement) : Held Andrew’s remedy should reflect his EXPECTATION LOSS
Parents to CHOOSE between giving effect to this:
-Now (£1.3m cash to Andrew)
-OR later (trust giving Andrew a right to part of the farm after death of both parents)
In summary, Lord Briggs argued that a court should approach a claim under proprietary estoppel following a framework (see revision notes)
NB: Lord Leggatt (dissent): Held Andrew’s remedy should reflect his DETRIMENT LOSS bc it has the most potential to make justice according to the aim of equity. Prevent detriment from going back on the promise => the remedy has to do what the aim of PE is for.
£600k cash = lost wages plus interest
Facts: The claimant, Andrew Guest, had worked for over thirty years on his parents’ farm for very low wages, and had been promised a sufficient, if undefined, part of it on their deaths. This would have enabled him to set up his own viable business. Andrew relied on this promise to his detriment by accepting the low wages, and would not have done so but for his father’s encouragement. Father: ‘It’s my farm, when you take over you can do what you want’ . A Working on the farm from age 16 (1982) = place himself in a vulnerable position + detriment
They fell out, and consequently Andrew’s parents removed the provisions in their wills giving him an interest in the farm. The elements of a representation, detrimental reliance, and that it was unconscionable to go back on the representation were made out, so the issue was which remedy was appropriate and why. At first instance, and upheld by the Court of Appeal, Andrew was awarded a version of the expectation measure, namely a lump sum of money. This meant the farm would have to be sold in order to raise the money.
Bibby v Stirling
proprietary estoppel - acquiescence
Holding: When S’s widow claimed the land, CA HELD she had an equity entitling her to remain there for her life
*‘…might [H] reasonably have concluded that [S] was relying on him not to reclaim possession unless he needed the land, and was assuming this would not be for many years?’
= rationale=> party haviong not spoken up for their right
Facts: H owned a strip of land and allowed S to use it for a yearly fee. After two years, S built a greenhouse on the strip without complaint from H
Gillet v Holt
proprietary estoppel - imperfect gift
Robert Walker LJ
In relation to the nature of proprietary estoppel:
“it is important to note at the outset that the doctrine of proprietary estoppel cannot be treated as subdivided into three or four watertight compartments. Both sides are agreed on that, and in the course of the oral argument in this court it repeatedly became apparent that the quality of the relevant assurances may influence the issue of reliance, that reliance and detriment are often intertwined, and that whether there is a distinct need for a ‘mutual understanding’ may depend on how the other elements are formulated and understood. Moreover, the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round.”
‘’The question of detriment should be approached as part of a broad inquiry as to whether repudiation of an assurance was unconscionable. A quantifiable financial detriment was not required, so long as the detriment was substantial.’’
*HELD (CA) Gillett had an equity by estoppel: ordered transfer of the land (freehold title)
Rather than narrowly quantifying wages etc, the detriment looked at in the round was the missed opportunity by him and his wife to better themselves in other ways (p.235).
= The detriment is not only about being in the worst position in the past but looking at the missed opportunity. Detriment is not merely disappointment must be something serious.
Facts: G left school at 15 to work on H’s farm – H became G’s ‘surrogate family’, influenced/controlled social life and sons’ schooling. Several promises were made over time in informal casual conversation to effect that G would inherit the farm and take over the business
Davies v Davies
proprietary estoppel
Proprietary estopppel is a sword AND a shield.
NB: - detrimental reliance need not include expenditure of money on land (Suggit v Suggit). ‘’it is necessary to consider what alternative course or courses might have been open to” the claimant’’ (eg.Davies v Davies - gave up on a lucrative job opportunity)
*1st case HELD (CA): Eirian had raised an equity on the basis of proprietary estoppel; parents to pay her £1.3 million
*2nd case CA OVERTURNED its own previous decision and AWARDED £500,000 => the court makes a more minue and detailed calculation (reflects the low expectations she had in life)
FIRST CASE [2014] EWCA Civ 568
*1985: Eirian Davies is promised farm if she works for it, but told ‘don’t kill the goose that lays the golden egg’
*1989: leaves farm when parents disapprove of her choice of partner
*Returns in 1990s, new dispute when partnership arrangement never comes through
*Returns again in 2006. Dispute arises when she realises that she was not mentioned on her parent’s will.
SECOND CASE [2016] EWCA Civ 463
Parents appealed against the £1.3 million quantum.
Habberfield v Habberfield = cowshed cinderella
proprietary estoppel
HELD (CA): case was at the ‘quasi-bargain’ end of the spectrum/sliding scale
*‘all the Habberfield family had a temper’. Lucy is told that if she works and stays on the farm => she will inherit. She will be left vulnerable if the promise is wiothdrawn + incurs a detriment.
*Lucy and Sarah have a fight in the milking parlour. Lucy’s ‘detriment was incapable of reduction to pounds and pence’ para [47]
*Awarded lump sum of £1.2 million (expectation loss)
*…BUT, as so much cash was not available without selling the farm, Lucy’s monetary claim was to be secured by requiring the elderly mother to sell in order to meet the monetary claim.
It does not do justice to anyone but Lucy as the farm has to be sold.
Howe v Gossop [2021] EWHC 627 (Ch)
PE - Rationalising the use of PE in commercial situations
the High Court held that even where an agreement did not comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, proprietary estoppel could still arise, and the facts did not have to be “exceptional” for estoppel to exist.
*Oral contract for the sale of agricultural land, sealed by a handshake in the pub
*Dispute before parties were able to put contract in writing as required by section 2
*Courts draw a line between using estoppel to try to enforce a defunct contract, and using it to stop reneging unconscionably on a promise
Haq v Island Holmes
PE - Rationalising the use of PE in commercial situations
HELD: she is entitled to her statutory rights for renewal nothing more. no claim; Council had not represented anything to Mr Haq nor given any insurance to Mr. Haq.
*‘Equally, given the subject to contract status of the negotiations and the continuing attention given, even in a sporadic and dilatory fashion, to finalising the state of the draft licence, there was nothing in the Council’s conduct on which Mr or Mrs Haq could fairly or reasonably rely as precluding the Council from insisting on its legal rights, so as to confine Mrs Haq to the statutory renewal rights as extended, once the works had been done, to the enlarged holding.’
H is the tenant of commercial premises for 15 years. Renewal of lease.
