Proprietary Estoppel

Question 1

What is unique about proprietary estoppel? Justify this unique trait.

Answer 1

Proprietary estoppel is both a shield and a sword as it is capable of by itself conferring a right on the promisor (Crabbe). Thorner justifies this on the basis of the doctrine’s limited scope - it applies only in relation to identified land belonging to the promisor.

Question 2

Why do MHN suggest that the label “estoppel” is misleading when applied to proprietary estoppel?

Answer 2

Technically an estoppel merely prevents A from doing something but proprietary estoppel, by imposing a duty on A, can compel A to do something

Question 3

Is PE an exception to the formality requirements imposed by the LP(MP)A on disposition of interests in land?

Answer 3

Yes, notwithstanding Lord Scott’s dicta in Cobbe that PE could not render enforceable an agreement that S.2 LP(MP)A has declared to be void, for equity could not contradict statute. In Whittaker Bean J, noting the position of the Law Comm that formalities rules were not intended to affect the operation of PE or CT, held that “proprietary estoppel has survived the enactment of S.2 of the LP(MP)A”.

Question 4

Is PE an exception to the formality requirements imposed by the LP(MP)A on disposition of interests in land?

Answer 4

Yes, notwithstanding Lord Scott’s dicta in Cobbe that since equity could not contradict statute, PE could not render enforceable an agreement that S.2 LP(MP)A has declared to be void. In Whittaker Bean J, noting the position of the Law Comm that formalities rules were not intended to affect the operation of PE or CT, held that “proprietary estoppel has survived the enactment of S.2 of the LP(MP)A”.

Question 5

What are the three stages in the life of a PE claim?

Answer 5

i. 3 (possibly 4) PE core elements satisfied on the facts
ii. Inchoate equity (a right to go to court) arises by estoppel
iii. C seeks relief from the court, which decides how to satisfy the equity

Question 6

What are the core elements of proprietary estoppel, and what is the r/s between them?

Answer 6

1. A ASSURED B of an existing or future right in A’s land.
2. B reasonably RELIED on B’s assurance.
3. B would now suffer a DETRIMENT as a consequence of his reasonable reliance if A were not under a duty to B.

Question 7

Thorner (3 requirements for an assurance to found a PE claim)

Answer 7

I. The representation may be express or implied by indirect statements and conduct or even by passive acquiescence, so long as they reasonably conveyed to B the meaning that B would have a right in A’s land.
II. The assurance must be clear.
III. The assurance given to B must relate to identified property owned or about to be owned by A.

Question 8

What was the test advanced in Thorner for the clarity of the representation?

Answer 8

Lord Neuberger endorsed the test in Walton – “The promise must be unambiguous and must appear to have been intended to be taken seriously…it must be a promise which one might reasonably expect to be relied upon by the promisee”.

He also supported the “clear and unequivocal” test, but his emphasis on its flexible and practical application effectively emasculate the test.

Question 9

Is it always necessary to found a claim of PE that the assurance thoroughly defines the land in which A claims an interest?

Answer 9

Uncertainty over the nature and terms of the property interest will generally be fatal to a claim of PE (Cobbe) but uncertainty over the character and extent of the property may not be, for it is not necessary that the precise extent of the property should always be strictly defined (Thorner).

Question 10

Ramsden (+ gloss added in Thorner)

Answer 10

A’s knowing acquiescence in B’s mistake may be sufficient assurance.

Lord Walker implied in Thorner that B must actually be aware that A is standing by and failing to intervene, for otherwise it is difficult to speak of “reliance” or “assurance”.

Question 11

Cobbe (1 guideline, 2 ratios)

Answer 11

The court should be very reluctant to introduce uncertainty into commercial transactions by over-ready use of equitable concepts such as fiduciary obligations and equitable estoppel

Ratio -

1. Where the parties are commercially experienced and in an arm’s-length r/s and could have been expected to enter into a contract, but consciously chose not to, PE is NA.
2. Neither A’s unconscionable conduct nor B’s conscious reliance on A’s honour is sufficient to found a PE claim.

Question 12

What is the r/s between Cobbe and

(i) Crabbe
(ii) Thorner

Answer 12

While in Crabbe PE was found in a commercial negotiation context, Cobbe explained this on the ground that A’s act of erecting the gates allowing access by B was so unequivocal that it put the matter beyond the negotiation stage

Question 13

What is the r/s between Cobbe and

(i) Crabbe
(ii) Thorner

Answer 13

(i) While in Crabbe PE was found in a commercial negotiation context, Cobbe explained this on the ground that A’s act of erecting the gates allowing access by B was so unequivocal that it put the matter beyond the negotiation stage.
(ii) In Thorner the the r/s between A and B was familial and personal, the parties lacked commercial experience and neither had even begun to contemplate entering into a contract over ownership of A’s farm; it was unreal to suppose that B should have asked A for a legal commitment.

Question 14

Greasley

Answer 14

Once it is shown that a representation was calculated to influence the judgment of a reasonable man, the presumption is that he was so influenced; it is no answer for A to merely speculate that B would have acted the same way anyway.

Question 15

Greasley

Answer 15

Once it is shown that a representation was calculated to influence the judgment of a reasonable man, the presumption is that he was so influenced.

Question 16

Wayling (+ comments by MHN)

Answer 16

Once the Greasley presumption is raised it is not sufficient for A to show that B would have acted the same way if the promise had not been made; A must show that B would have done so if the promise, once made, had been withdrawn.

MHN – this unusually relaxed interpretation of “reliance” was probably adopted to give full effect to the true nature of A and B’s r/s (similar to the approach to constructive trusts in the family home context) and is probably NA in a commercial case.

Question 17

Thorner (2 comments on reliance)

Answer 17

1. It is NOT necessary that A must have known or foreseen the particular act of reliance.
2. Events subsequent to the reliance may be taken into account in determining the reasonableness of the reliance.

Question 18

Gillett v Holt (2 broad comments on the requirement of detriment)

Answer 18

It is not the reliance itself that must be detrimental; the question is whether given B’s reliance he would suffer detriment w/o a PE claim against A.
The requirement of substantial detriment must be approached as part of a broad inquiry as to whether repudiation of an assurance is unconscionable in all the circumstances.

Question 19

Gillett v Holt (2 broad comments on the requirement of detriment)

Answer 19

(a) It is not the reliance itself that must be detrimental; the question is whether given B’s reliance he would suffer detriment w/o a PE claim against A.
(b) The requirement of substantial detriment must be approached as part of a broad inquiry as to whether repudiation of an assurance is unconscionable in all the circumstances.

Question 20

Gillett v Holt - how are we to determine whether the requirement of substantial detriment is met? (3 points)

Answer 20

a. There must be a sufficient causal link between the assurance relied on and the detriment asserted.
b. Whether the detriment exists is to be judged at the moment when the person who has given the assurance seeks to go back on it.
c. Whether the detriment is sufficiently substantial is to be tested by whether it would be unjust or inequitable to allow the assurance to be disregarded (a test of unconscionability).

Question 21

Where B has benefited from his reliance on A’s assurance, will he always fail the requirement for detrimental reliance?

Answer 21

Henry (UKPC) - in such cases the question is whether the benefits of reliance outweigh the prejudice to B if A were wholly free to renege on his promise.

Question 22

What is the role of unconscionability in PE? (Cobbe/Dixon/Southwell)

Answer 22

Lord Walker in Cobbe – the role of unconscionability is as part of the context. It unifies and confirms the first three requirements; if the first three requirements appear to be present but the result does not shock the conscience of the court, the result needs to be assessed again.

Dixon disagrees - he argues that the elements of assurance, reliance and detriment alone do not explain why these elements must impose a duty on A to B. Thus, as Taylor Fashions and Walker LJ’s judgment in Gillett suggest, unconscionability must be an independent requirement.

Southwell - acknowledged that the 3 core elements might not be sufficient to give rise to the equity, but later seemed to elide unconscionability and DR.

Question 23

What are the four possible configurations of A’s duty to B?

Answer 23

1. A must honour his commitment.
2. A must ensure B suffers no detriment from A’s failure to honour his promise.
3. A must pay B the value of any benefit he has received at B’s expense.
4. A must do whatever the court thinks necessary to avoid unconscionable conduct.

Question 24

Jennings v Rice (3 points on satisfying equity)

Answer 24

(i) The extent of B’s expectation is the starting point, for it indicates the maximum extent of the equity, but the court is not bound to fulfill it.
(ii) The court has discretion to make an award that is proportionate both to B’s expectation and the detriment B suffered and is not bound to fulfil B’s expectation
(iii) The overall aim is to do what is necessary to avoid an unconscionable result.

Question 25

Based on Jennings v Rice, when is the court more or less likely to satisfy B’s expectation?

Answer 25

More likely - Where A and B have reached a mutual understanding in reasonably clear terms that does not amount to a contract

Less likely - Where B’s expectations are uncertain, extravagant, out of all proportion to the detriment B has suffered or at a level not justified by the assurance relied upon

Question 26

Jennings v Rice (3 points on satisfying equity)

Answer 26

(i) The extent of B’s expectation is the starting point, for it indicates the maximum extent of the equity, but the court is not bound to fulfill it.
(ii) The court has discretion to make an award that is proportionate both to B’s expectation and the detriment B suffered.
(iii) The overall aim is to do what is necessary to avoid an unconscionable result.

Question 27

What is the significance of Scarman LJ’s reference in Crabbe to the “minimum equity to do justice, as interpreted in Jennings v Rice?

Answer 27

Scarman LJ’s statement does not require the court to be constitutionally parsimonious, but it recognises that the court must, in seeking to do justice to C, also DO JUSTICE TO D and that the focus is not on satisfying C’s expectations but SATISFYING THE EQUITY.

Question 28

Based on Jennings v Rice, when is the court more or less likely to satisfy B’s expectation? Which situation subsisted in Jennings itself?

Answer 28

More likely - Where A and B have reached a mutual understanding in reasonably clear terms that does not amount to a contract

Less likely - Where B’s expectations are uncertain, extravagant, out of all proportion to the detriment B has suffered or at a level not justified by the assurance relied upon; e.g. here where B’s expectation far exceeded what he might reasonably charge for the services he provided free to A on the basis of A’s assurance.

Question 29

Suggitt

Answer 29

B’s expectation treated as the default option; court will satisfy the equity by fulfilling B’s expectation unless the expectation is uncertain, extravagant or “out of proportion to the detriment suffered”.

Question 30

Suggitt (criticism by Mees)

Answer 30

B’s expectation treated as the default option; court will satisfy the equity by fulfilling B’s expectation unless the expectation is uncertain, extravagant or “out of proportion to the detriment suffered”.

Mees - anomaly that C may be in a stronger position if he can show that his expectation was lower, since he is less likely to fall afoul of the proportionality principle

Question 31

How does Gardner interpret Jennings v Rice?

Criticism by Mees?

Answer 31

The requirement for “proportionality between the expectation and the detriment” is meaningless; the court probably means that there must be proportionality between the expectation, the detriment and the award - i.e. the award should be pitched somewhere between the expectation and the detriment.

Mees - There is no principled way of determining the extent to which either the expectation or the detriment should impact upon the remedy. It is illogical that the award can be made proportional to two different values.

Question 32

What was the purpose of PE, according to Ottey?

Answer 32

Arden LJ in Ottey merely said that the purpose of PE is neither to enforce a promise nor reverse a detriment, but unhelpfully failed to clarify what the purpose was.

Question 33

What does Robertson think should be the basis of recovery in PE claims?

Answer 33

Robertson thinks it should be the minimum equity principle, which requires that, in fashioning a remedy to give effect to PE, the court must go no further than is necessary to prevent detriment, or reliance-based harm.

Question 34

What does Robertson think should be the basis of recovery in PE claims?

Answer 34

Robertson thinks it should be the minimum equity principle, which requires that, in fashioning a remedy to give effect to PE, the court must go no further than is necessary to prevent detriment, or reliance-based harm. Since reliance interest is usually the smaller, it should be the default measure, but in the odd case where the expectation interest is smaller then it should be fulfilled in accordance with the minimum equity principle.

Question 35

What does Robertson think should be the basis of recovery in PE claims?

Answer 35

Robertson thinks it should be the minimum equity principle. Reliance and expectation loss are both essential elements of the equity and thus once either one is prevented or compensated, the equity disappears – the reliance loss, usually smaller, will be satisfied before the expectation loss.

Since reliance interest is usually the smaller, it should be the default measure, but in the odd case where the expectation interest is smaller then it should be fulfilled in accordance with the minimum equity principle.

Question 36

If A’s registered land is sold to C after a court order has been made, when does B’s right bind C?

Answer 36

1. The court order must have given B an equitable proprietary right (via the doctrine of anticipation).
2. Either B’s right binds C under the normal priority rules of S.29 OR C has behaved inequitable so as to bring himself under a new direct duty to B.

Question 37

If A’s registered land is sold to C before a court order has been made, when does B’s right bind C?

Answer 37

S.116 LRA An “estoppel” or “mere” equity (i.e. a right to go to court, which is all that B has before a court order) is a property right and thus capable of binding a registered disponee if protected by a Notice or actual occupation.