PROPRIETARY ESTOPPEL Flashcards
Crabb v Arun DC
FACTS
R owned land with access to a road owned by O (a local authority) at point A. When R wanted to sell his land as two separate plots, he had to secure an extra right of access to the road from one of the plots at a different point, est one of them become landlocked. R and O agreed in principle that a right of access would be granted at point B. O constructed a new substantial gate at point B. R went on to sell the part of the land with access point A so that the remaining plot was dependent on point B for access to the road. O decided to retreat from the understandings with R, and resealed access point B
Crabb v Arun DC
HELD
- O will grant R a free easement of right of way
- They did not have an agreement in writing yet, but the easement was earned on the basis that he relied on a representation (in the sense that he sold the first lot) by the council that he will be granted an easement
- Equity is giving us a property right without writing
Factual elements of proprietary estoppel
- D has made a representation to C on the basis of which the claimant could understand that a property right is coming their way and they rely on this to their detriment
- Equity will only award property rights without formalities when there is serious unconscionability
- We want the court’s conscience to be shocked
Requirements of a successful claim of proprietary estoppel
In order to get a property right without writing, you must show unconscionability and …
- Representation: a statement or action (which can include silence or inaction) by the defendant, who ought to appreciate that the claimant is likely to rely on it
- Reliance: an act by the claimant in the reasonable belief that he has or will get an interest in land, induced by that statement or action
- Detriment: to the claimant if the defendant is entitled to resile from her statement or action
All the circumstances must be analysed “in the round [Gillet v Holt & Anor]”
- It is an ex post and ad hoc doctrine that gives a lot of discretion to the judges
Remedy for proprietary estoppel
- In response to a successful proprietary estoppel claim, the court may transfer, change the nature of, or altogether abolish proprietary rights
- This is done without requiring first that the parties abide by the strict rules of formality that normally govern transactions of that kind, so as to ensure the stability and clarity of proprietary rights
- PE disrupts the good order of property law
Three types of PE
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Imperfect gift: usually argued for by an R who had extensive intimate relationships with O.
- Focusses on the way the claimant’s failure to complete the gift belies the legitimate expectations R had as a result of the very specific relationships they had
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Common expectation: O and R have consistently dealt with each other in such a way as reasonably to cause R to rely on a shared supposition that she would acquire rights of some kind in O’s land
- Common supposition that a property right will be transferred
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Acquiescence: R acts to his detriment in the mistaken belief that he has an interest in the land which in fact belongs to O. O realises what is happening and does not correct R’s mistake
- The representation can also be given by omission
Thorner v Major
FACTS
Peter Thorner (O) was a farmer. David Thorner (R) was O’s cousin’s son. R worked on O’s farm for 30 years without pay. R expected to inherit O’s farm. O died intestate
Thorner v Major
HELD
David got the farm
It is possible for a representation to be made by conduct alone, so long as that conduct conveys the message to a reasonable person sufficiently clearly that the claimant was to have a proprietary interest in the land
The way he conducted himself around David was enough, considering he was not a loud man, to create an expectation in David
Haq v Island Homes
FACTS
R started works to build a new supermarket before the lawyers finalised the agreement. He was allowed to enter the premises and carry out substantial building works prior to the final conclusion of an agreement for a new lease
Why R acted in that way: his diligence would have enabled him to open the store sooner, and pay the higher rent as set in the proposed deal
Haq v Island Homes
HELD
R did not rely on O’s representation. R committed himself to the building contract before the parties arrived at the “agreement in principle” and before they obtained from O the keys that allowed them access to the new premises
Economic justification for common intention PE
- In most exchanges, the parties have opportunities to make pre-contractual investments that render the bargain more valuable
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Obstacle in the way of the ideal pre-contractual investment decisions: a holdup trap (where one party to a contract has leverage of the other party in a way that causes the other to pay more than the contract is worth in return for a smaller share in the profits)
- This is not efficient because the payment does not reflect the economic relationship between the parties, but the circumstances that created ransom
- The circumstances that create the holdup problem is that in many cases the most efficient way to progressing towards a transaction is that the parties making precontractual investments
- The result is a chilling effect
- The solution: PE that ensures that the investor will get her investment back if the deal is aborted and O is unconscionable
- The result is a chilling effect
Reliance + common intention PE
- The test of whether R’s expectation is worthy of protection is put in terms of reasonableness: he must show that O’s representation could have reasonably been interpreted as inviting reliance:
- The detrimental reliance must be on the basis of the representation
- Cobe: “it is not enough to hope, or even to have a confident expectation, that the person who has given assurances will eventually do the proper thing”
Crown Melbourne v Cosmopolitan Hotel
FACTS: R argued that his landlord is bound to grant him a further 5 years lease once the initial term had expired. In spite of there being no written contract to this effect, R argued that O assured him during the pre-contractual negotiations that he would be ‘looked after at renewal time’
HELD: “the statement … is not capable of conveying to a reasonable person that the tenants would be offered a further lease”
Causal link between the representation and detriment element
- If we are very relaxed ab out the representation, there will be an opposite hold-up problem
- The buyer will look for any representation that the contract will make a huge investment on the basis of a tiny representation, and they will be able to blackmail the other party
- In Haq v Island Homes, the fact that they committed themselves to the building contract before reaching an agreement in principle with O, and before they obtained from O the keys to the new premises shows that the pre-contractual investment was not done in reliance on O’s representation; rather, it was done out of hope
- This requirement is crucial for the proper function of the doctrine, as without it, R may be tempted to make substantive investment on a hint of commitment on O’s part in order to secure the deal
- An opposite ‘hold up’ problem is created: O will refrain from making efficiency-increasing representation out of fear that R will exploit it to make risk-free over-investment
Role of conscionability
- View 1: the reference to conscience is merely a fancy way of disclosing that Equity intervenes in the situation
- It does not do any work and does not need to be proved
- View 2: “reference to unconscionability in this context is unhelpful, unnecessary, and unsatisfactory [per Handley J (extra-judicially)]”
- View 3: conscionability is an essential element of PE
- Crabb v Arun: “the court … cannot find any equity … unless it is prepared … to say that it would be unconscionable and unjust to allow the defendant to set up their undoubted rights against the claim being made by the plaintiff”
