Week 2- Licenses and proprietary estoppel

Question 1

What are bare licenses and how do they differ to contractual licenses?

Answer 1

The permission to be on ones land derives from a contract, as opposed to an informal promise as arrises under a bare license. This could be express (express invitation to be on my land) or implied (ie we contract to conduct business in the office on my land, its implied that you can be there, ie business efficacy). Must keep within the confines of the contractual license, and an open-ended contractual licence which reserves be the power to end the license at any time can be enforced against the licensee at any time, much like a bare license.
-The difference arises where a time is dictated, for up until the time, any revocation of this contract is a breach of contract, and in this interim time you cannot be a trespasser on my land (so long as you are still within the confines of the original contract).

Question 2

What are licenses coupled with an interest?

Answer 2

Usually granted by law, they allow one to enter another’s property without being a trespasser for the purposes of retrieving or repossessing items off of that land eg repossessing a car where one has defaulted on its payment.

Question 3

What is the classic definition given of a license given in Thomas v Sorrell, and what does it say about the nature of the right provided under the license?

Answer 3

Vaughan C.J.: ‘A dispensation or licence properly passeth no interest, nor alters or transfers property in any thing, but only makes an action lawful, which without it had been unlawful”

Shows that historically rights arising under license are personal and not proprietary.

Question 4

Facts and significance of Tanner v Tanner 1975 regarding the establishment of an implied contractual license?

Answer 4

Facts- Mrs Tanner was turned out of the shared property owned by Mr Tanner (although they never got married) when Mr Tanner married another woman, offered Mrs Tanner £4000 to leave and pay unpaid maintenance. Mrs Tanner believed she would be able to stay until her twin daughters finished school, but Mr Tanner sought to revoke this permission early.

Significance- Mrs Tanner was successful upon appeal, and Lord Denning held that there was an implied license in favour of Mrs Tanner which entitled her to occupy the property until the daughters finished school, or until the property was not reasonably required by her anymore.
Denning MR: “There was, it is true, no express contract to that effect, but the circumstances are such that the court should imply a contract by him… But it was not determinable in the circumstances in which he sought to determine it, namely to turn her out with the children and to bring in his new wife with her family. It was a contractual licence of the kind which is specifically enforceable on her behalf, and which he can be restrained from breaking, and he could not sell the house over her head so as to get her out in that way.”

Question 5

Facts and significance of Chandler v Kerley 1978 regarding reasonable revocation of a contractual license?

Answer 5

Facts- X and D bought a house, and after getting divorced sold it to P, for substantially less than the asking price, with whom D was in a relationship. D and her children continued living there. P later demanded that D leave and sued for possession.

Significance- CA found that there was a contractual license, terminable upon reasonable notice, which gave her sufficient time to re-house herself and her children. In this case, 12 months was appropriate.

Lord Scarman: It is unlikely that P intended to house another man’s wife and children indefinitely but was likely that he intended to allow her to live their while they were in a relationship. Therefore, it was the implied intentions of the parties that P could reside there until a notice was given to her to leave, and this notice had to be reasonable.

Question 6

Facts and significance of Winter Garden theatres regarding the effect of a contractual license on the licensor and the rights/ obligations imposed upon him?

Answer 6

Facts- Winter garden theatre allowed MP to use theatre for 6 months, with an option to renew for another 6 months, and then Pay weekly payments for its use. WG sought to revoke the contractual license, but no express terms were stipulated. MP sought an injunction against this, successful in the Court of Appeal. On appeal to the House of Lords, WG contended that the license was not perpetual and they had the right to terminate with reasonable notice.

Significance- HL held the license could be terminated.
-An injunction can be granted to uphold the sanctity of a bargain where it would be inequitable to determine a contractual license early, but equally a contractual license can be terminated with reasonable notice where no express stipulations are made to the contrary, such as in this case where no rights were expressly imposed upon WG to allow a certain number of weeks past the 12 months to be paid for by MP.

• MP had failed to prove that the notice given to them was unreasonable, and it was not in breach of contract for WG to revoke the contract.
• Lord Porter: “The Court of Appeal, however, has held and the respondents maintain that no such principle is to be applied, even prima facie, in construing a licence. That contract, they say, must be construed in the light of its own terms and with no leaning towards revocability or irrevocability… It is one thing to say that a limited and temporal licence remains in force until the particular object for which it is given is fulfilled or the definite period of time has elapsed, it is quite a different matter to allege that a licence once given in general terms can never be terminated. To my mind the whole historical development of the law is against such a contention.”

Question 7

Facts and significance of Hounslow LBC v Twickenham Garden 1971 regarding trespass and contractual license termination?

Answer 7

Facts- H LBC sued for trespass against D after D continued to work on their land despite the plaintiffs revoking the contractual license

Significance- The court refused to grant the council relief. The licence was a contractual licence. Following Hurst v Picture Theatres Ltd [1915] 1 KB 1 the court held that in such a contract there is an implied duty by the plaintiff not to revoke the licence while the contractual period is in force. It did not matter that the right to enter the land was only secondary to the contract. Natural justice did not apply to the notice periods under the contract. However, on the facts the plaintiff had not shown that the contract had been validly terminated.
- It was an implied term of the contract that the license not be revoked whilst the contracted labour term continued.

Question 8

How does Verrall v Great Yarmouth BC 1981 apply the dicta in Winter Gardens?

Answer 8

Facts- Great Yarmouth Borough Council agreed to rent out the Wellington Pier Pavilion in April 1979 to the National Front for its two-day national conference in October. Then Labour won the balance of control on the council in May insisting the new administration revoke the NF’s licence. Verrall, the party’s deputy chairman, sued on his own behalf and for the NF members for performance of the contract.
Judgment.

Significance- Lord Denning MR held that the contract had to be upheld, and was specifically enforceable. Since the case of Winter Garden Theatre Ltd v Millennium Ltdhe said, ‘it is clear that once a man has entered under his contract of licence, he cannot be turned out. An injunction can be obtained against the licensor to prevent his being turned out.’
-Specific performance thus granted.

Question 9

How does specific performance operate?

What is it the default remedy for?

Answer 9

Specific performance appears to be the default equitable remedy for improper revocation of a license, allowing the licensee to stay on the land if he is already there, or compelling the licensor to allow the licensee to enter the land if he is not. Even if specific performance is not obtainable, the license will still be treated as valid, and any attempt to evict the licensee from the property as if he were a trespasser will leave the licensor open to a charge for assault. It might be surprising that a licensee can simply ignore a repudiation and proceed on the basis as if the license remained operative. This is simply a recognition of the equity maxim that ‘equity looks upon done as what ought to be done’.

Question 10

What is the position on contractual licenses binding third parties following King V David Allen and Clore v Theatrical productions?

How was the decision to prevent the contract license from being binding upon the third party purchaser phrased in each case?

Answer 10

Both cases allude to the idea that rights granted under contractual license are personal rather than proprietary, and thus not binding upon third parties.

In the Clore v theatrical productions, the court stated that there were no circumstances in which X can be bound by B’s rights against A, because there was no “contractual nexus” between B and X, whilst King v David Allen case proceeded on the basis that nothing more than a personal obligation between A and B had been created, as per Lord Buckmaster.

The burden of the contract does not pass with the title to the land, but this may be somewhat varied with the passing of the Rights of third parties act 1999

Question 11

Facts and decision in Errington v Errington?

How did lord denning fuse law and equity in this decision and how did he describe the position of the rent paying licensees?

Answer 11

A father provided that his house would go to his son and daughter in law if they re-paid the instalments on the house to the building society each week. The father began paying the instalments again when the couple could no longer pay. Upon his death, the father left the house to his widow, and soon after, the son left the daughter in law. The widow sued the daughter in law for possession of the house.

The daughter was allowed to remain in the house, and thus the contract was binding upon the mother as a third party, despite the contractual license remaining in force short of making the daughter a tenant, as the unilateral contract remained in force.

The limit is where the daughter stops paying, and the father’s estate has to pick up the bill. Then she would lose her right to stay. The couple were on a licence, short of a tenancy but a contractual, or at least equitable right to remain, which would grow into good equitable title as soon as the mortgage was paid. The rule that a licence could always be revoked at will was ‘altered owing to the interposition of equity.’

Question 12

What was wrong with everything Lord Denning said in Errington v Errington?

Answer 12

Namely, from the availability of the equitable remedy of specific performance available to a licensee against a licensor looking to repudiate a license prematurely it followed (to Lord Denning) that the right under the license was an equitable right to remain in possession, capable of binding third parties. His analysis skipped the connection between the availability of equitable remedies and the conclusion that this made the respective right proprietary, and thus capable of binding third parties. This does not logically follow, and therefore it is no surprise that Lord Denning’s view was not endorsed in Ashburn v Arnold

He also ignored the numerus clausus principle: Denning LJ argued that “contractual licences now have a force and validity of their own”; he tried to reason that the fact that the licensee has equitable remedies (specific performance or injunctions) against the licensor means that they have an equitable right to remain that is capable of binding third parties. However, this reasoning clearly misses a step, as he fails to explain how equitable remedies which are available to enforce a personal right necessarily make the right in question proprietary. Regardless, the numerus clausus principle prevents the creation of any new rights in rem after 1925 except by Parliament; there is a ‘fixed list’ of proprietary rights, which even Denning LJ in the Court of Appeal could not add to.

Question 13

How did Ashburn v Arnold treat Lord Denning’s reasoning in Errington?

Answer 13

• The defendants claimed that, even if the tenancy was not sufficient to create a right which the purchaser would be subject to, their contractual license and the right imposed by said license would be binding upon a purchase for value with notice.
• “It is convenient to pause at this point because, although there are later cases in what may be regarded as this series, there is none in which a contractual licence is held to bind a third party in the absence of a finding that the third party took the land as a constructive trustee. It is therefore appropriate to review how the law stands, or ought to stand, in the absence of such a finding.”
• “The far-reaching statement of principle in Errington was not supported by authority, not necessary for the decision of the case and per incuriam in the sense that it was made without reference to authorities which, if they would not have compelled, would surely have persuaded the court to adopt a different ratio. Of course, the law must be free to develop. But as a response to problems which had arisen, the Errington rule (without more) was neither practically necessary nor theoretically convincing. By contrast, the finding on appropriate facts of a constructive trust may well be regarded as a beneficial adaptation of old rules to new situations.”

Question 14

Why was a constructive trust imposed by Lord Denning in Binions v Evans?

Note it has somewhat been disapproved of in Anstalt and Lyus, for reasons relating to the decline of the remedial constructive trust, but still there is room for clarification?

Answer 14

• “Two members of the Court of Appeal classified X ‘s rights as proprietary which, as the title was unregistered, meant that they would bind any purchaser with notice.7 Lord Denning M.R., however, considered her rights to be those of a contractual licensee, and thus (at least on a conventional analysis) non-proprietary. What particularly concerned Lord Denning M.R. was that the fact that B bought the property expressly subject to X ‘s rights and paid less because of her rights; this meant that the “court will impose” on B “a constructive trust” for X ‘s benefit: “for the simple reason that it would be utterly inequitable for the plaintiffs to turn X out contrary to the stipulation to which they took the premises.”8 The constructive trust is justified by the unconscionability of B ‘s claim for possession; an unconscionability that from later remarks it seems he would find even if there had not been a *Conv. 400 reduced price paid, as an express stipulation would be enough9 or, even, notice alone.10 The case sent out a message: the constructive trust can be used to make personal rights enforceable against third parties who are behaving inequitably.”

Lyus v Prowsa 1982 tells us that mere notice of a contractual license is not enough to impose a constructive trust- although more suggestions in Anstalt have been made regarding the limited yet potential instances where notice coupled with more will impose a constructive trust binding upon a third party.

Question 15

What was wrong with Lord Dennings reasoning in Binions v Evans for imposing constructive trust?

Answer 15

Lord Denning made the most influential (but incorrect) points at 367 where he concedes that the license operates as a right in rem, firstly because the license was for the remainder of Mrs Evans life, and older authorities had treated licenses for life as rights in rem. This was correct in older authorities but only because a license for life was a beneficial interest for life under a trust, which was a right in rem- Lord Denning had already rejected this trust analysis, so this could not have supported his decision to find that the license was a right in rem rather than a right in personam.

-Secondly, at 368, the land being transferred to someone expected to honour the contractual license, they hold the property on a constructive trust in favour of that beneficiary, and this can always be implied when the licensee is in actual occupation. Lord Denning effectively said that notice of a contractual license converts it from a right in personam to a right in rem. However, this is again disputed, firstly because a right in rem is such a right from its creation, not from the imposition of a constructive trust ie it should already have been in operation from the creation of the contractual license, which didn’t seem to be applied in Lord Denning’s reasoning. Secondly, it is fanciful to think that a third party would be bound by this promise, only if the relevant detailed requirements are satisfied ie its registration or qualifies as an overriding interest.

Question 16

What were Lord Wilberforces criteria in Ainsworth about proprietary rights and where do they fail with regards to contractual licenses?

Thus why are contractual licenses personal rather than proprietary when applying Lord Wilberforce’s criteria?

Answer 16

Before a right or an interest can be admitted into the category of property, or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability. The wife’s right has none of these qualities, it is characterised by the reverse of them.

Such rights might be definable, but regarding third parties, they are unregistered and burdensome to discover, won’t be assumed by third parties, may be uncertain regarding the stipulated terms relating to their termination.

Question 17

Facts and significance of re Sharpe 1980?

Answer 17

Facts- An aunt loaned Sharpe, her nephew, money for the purpose of buying a leasehold-premises. This was a shop with living accommodation situated above it. It was agreed between them that the Aunt could live there with Sharpe and his wife as long as she liked. The aunt paid some of this purchase price, as well as for decorations and various fittings for the property. However, Sharpe became bankrupt and the trustee in bankruptcy wanted to sell the property. This resulted in the Aunt putting forward her claim to an interest in the property. The main issue in this case was whether there was a resulting trust created by the Aunt paying some of the purchase price for the property and whether she had an interest in this property.

Held- It was held that the Aunt had no equitable interest in the property and there was no resulting trust. The money that the Aunt had provided to her nephew was intended to be a loan and was not a form of gift. This meant that the money was not to be seen as a contribution to the purchase price of the property, which did not allow for a trust to be created that would have given her an interest in the property. However, the loan agreement regarding staying in the property for as long as she liked, did mean she had a contractual right of occupation in the property until the loan was repaid to her.

Question 18

Facts of Ashburn v Arnold?

Answer 18

Facts- D was granted a licence of a shop in an agreement in 1973

• The original owner of the shop sold the shop to C
• Under the terms of the sale contract, C took its freehold subject to the contractual rights of D against the original owner
• It was decided that D had a lease on the facts, but a point had been argued by counsel for D that if there had been no lease a contractual licence would have bound C
• The appeal by the third party was dismissed on other grounds, as the licensees had since become tenants, an overriding interest under s70(1)(g) of the 1925 act, and the third party took ownership subject to this overriding interest.

Question 19

Facts and significance of IDC v Clark regarding the difference between easement and license, and the how the courts will construe seemingly unclear agreements relating to both?

Answer 19

The phrase ‘grant licence’ in a deed was one which would not have been used by any experienced conveyancer as a means of granting an easement. Accordingly, where there was nothing sufficiently pointing clearly in any other direction, the phrase in a professionally drawn deed created a personal
licence, not an easement that was binding on successors in title and assignees of an underlease.

Held, dismissing the appeal, the use of the words “grant licence” in the deed, which had been drafted by a professional conveyancer, was inappropriate to create an easement as the word licence had been used for over 300 years to refer to a permission which did not carry with it any interest in land. The fact that clause 4 provided that references to the parties included references to the successors in title was insufficient to suggest that the right created was intended to be a permanent one binding the property. Nor was the importance attached to the right, the indefinite terms in which it was expressed or the absence of any power to determine the right on reasonable notice sufficient to demonstrate that the parties intended the right to have an indefinite existence.

Question 20

Facts and significance of Chattey v Farndale 1998 regarding notice of proprietary rights and the potential for a constructive trust being imposed?

Answer 20

Facts- C contract to lease a flat under construction, dependent on the vendor obtaining requisite planning permission. Vendor became insolvent after borrowing from bank, C wanted his deposit back from F, a third party who now owned the development, and F refused because no interest in the land had yet passed to C, so no constructive trust imposed.

“In my judgment Blackburne J. was right in the conclusion to which he came that whereas the Registrar is duty bound to note on the title to the underlease when registered the rights of those purchasers whose contracts were signed before the application for registration he is not entitled to include a similar note in respect of those contracts signed after that date. The consequence is that the rights of Mr Chattey have priority over those of Farndale but the rights of Mr Strebel do not. Accordingly I answer Issue 3 in the negative… In my view the crucial distinction between that case and this is the finding that the trust was also imposed on the second defendants by the terms of their contract. There is no finding in this case that there is imposed on Farndale a constructive trust similar to that which the judge found to be imposed on PWD… In my view these observations apply as much to the position of the second defendant in Lyus v. Prowsa as to Farndale in this case. The fact that they had notice of the prior contracts or obligations was insufficient to impose an obligation on them and unless there was such an obligation it could not be a fraud on their part to rely on the provisions of the Land Registration Act 1925 as conferring on them an unincumbered title.”

Question 21

What is the main argument in favour of third parties being bound by contractual license/imposing a constructive trust?

What circumstances, following Anstalt v Arnold, might it be appropriate to allow a third party to be bound?

Answer 21

Unconscionability at the expense of the licensee/ upholding the sanctity of a deal made in the licensees favour.

Also the constructive trust may be a good analysis when it would be unconscionable to turn out the licensee, especially in a circumstance where not only does the third party have notice of the license but they have taken the property at a discounted price with this in mind.

Question 22

in what circumstances, following Ashburn Ansalt v Arnold, might a constructive trust be imposed?

How does this fit with the decision/ dicta in Binions v Evans?

Answer 22

Where the conscience of the third party has been affected so as to make him aware of the incumbrance. The courts are even more likely to impose this if the third party has gained some benefit eg a lower purchase price because they are aware of the third parties right.

Thus the potential overruling of the constructive trust analysis in Binions may, in limited circumstances, actually still be applicable.

Question 23

What are the criticisms of unconscionability as a policy reason for enforcing licenses against third party purchasers. as well as wider reasons against letting third parties be bound by contractual licenses/ constructive trusts? (especially those made by Bright)

Answer 23

Why a third party should be bound- Unconscionability argument to achieve some sort of justice, but this is quite weak and defeated by the fact that any statute which dictates that notice of Bs right by X is not enough to bind X to that obligation should not render X’s subsequent reliance on this statute as unconscionable. Ie Law of Property act s199. Something more than affecting the conscience of the purchaser third party can be required.
-What that “something more” is will depend upon the circumstances. In some cases the “something more” stems from wrongful conduct by B in relation to the transfer itself, the fact that B is knowingly interfering with X ‘s rights. In Midland Bank v. Green (not a constructive trust case), the mother should be held liable, not as a matter of property law, but in tort because she bought the property for the sole purpose of defeating the son’s unprotected interest.

Unconscionability itself is often an arbitrarily enforced concept with no uniform underlying basis, just a label for achieving a result which the courts deem to be most fair.

-Arguments against the imposition of constructive trusts binding upon third parties: “There is another reason to doubt the legitimacy of this constructive trust. These trusts appear to be open-ended; they arise not in particular fact situations involving unconscionability but, seemingly, in any situation where there is third party “unconscionability”, and they arise at the discretion of the court and prospectively. This looks very much like a remedial constructive trust.39 Whereas the institutional constructive trust is “an institutional obligation attaching to property in certain specified circumstances”40 and “in accordance with settled principles of equity”,41 a remedial constructive trust “is a trust imposed by law whenever justice and good conscience require it …”.42 As English courts repeatedly deny that the remedial constructive trust forms part of English law,43 we should perhaps be wary in accepting these cases as correctly founded in constructive trust”

Question 24

Facts and significance of Crabb v Arun DC 1976 regarding proprietary estoppel?

Answer 24

Facts- Crabbs estate was accessible by two access points, A and B. He sold the northern part of the land, which he accessed by point A, due to a formalised easement (B was only used by Crabb because the council informally allowed him to). After he’d sold half the land, he believed he was entitled to use the gate set up by the council at B, so he padlocked it. It was subsequently replaced with a fence, and Crabb asked them to reopen the fence, which the council would only do for £3000. He sued the council, alleging he was allowed to use the gate.

Significance- On appeal, Lord Denning held that the promise was enforceable despite no consideration and the informality of the agreement.
Denning: “-If he makes a binding contract that he will not insist on the strict legal position, a Court of Equity will hold him to his contract. Short of a binding contract, if he makes a promise that he will not insist upon his strict legal rights - then, even though that promise may be unenforceable in point of law for want of consideration or want of writing - then, if he makes the premise knowing or intending that the other will act upon it, and he does act upon it, then again a Court of Equity will not allow him to go back on that promise…Short of an actual promise, if he, by his words or conduct, so behaves as to lead another to believe that he will not insist on his strict legal rights - knowing or intending that the other 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.”
“In the circumstances it seems to me inequitable that the Council should insist on their strict title as they did: and to take the highhanded action of pulling down the gates without a word of warning: and to demand of Crabb £3,000 as the price for the easement. If he had moved at once for an injunction in aid of his equity - to prevent them removing the gates - I think he should have been granted it. But he did not do so. He tried to negotiate terms, but these failing, the action has come for trial.”

Crabb has irretrievably altered his position on the basis of the relationship.

Question 25

What are LJ Scarman’s criteria for methodically approaching the issue of proprietary estoppel?

Answer 25

“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 the parties, has to answer three questions. First, is there equity established? Secondly, what is the extent of the equity, if one is established? Thirdly, what is the relief appropriate to satisfy the equity?”

Question 26

What did Lord Denning say in Greasley v Cooke regarding evidence of reliance? Was this unanimous?

Answer 26

Facts- Cooke was promised that she could remain in a ‘home for life’ by her partner and her boss, who lived together. After her partner died, Cooke wished to remain in the house, whereas the owners of the house wanted to remove her. Cooke claimed proprietary estoppel.

Significance- Cooke did not have to prove reliance, it was assumed she had acted to her detriment by staying there without looking for a new job.
Lord Denning- “Applying those principles here it can be seen that the assurances given by Kenneth and Hedley to Doris Cooke — leading her to believe that she would be allowed to stay in the house as long as she wished — raised an equity in her favour. There was no need for her to prove that she acted on the faith of those assurances. It is to be presumed that she did so. There is no need for her to prove that she acted to her detriment or to her prejudice.

Further to this, the burden of proof was extended in relation to reliance/ detriment; once there was proof of a representation that was likely to influence the representee, made with the intention to influence him, the burden of proof fell on the representor to rebut this presumption- according to Lord Denning’s interpretation of proprietary estoppel at least.

This was not shared unanimously among the lords however.

Question 27

Facts and significance of Taylor fashions v Liverpool Victoria trustees?

What legal principle does this case represent?

Answer 27

Facts- TF held leases on two business premises, and both companies holding these leases asked their landlords to renew the leases. All parties believed that the two leases were accompanied by a statutory right to renew when the initial lease came to an end, so TF and the other company spent money renovating the premises, but the trustee company refused to renew the lease when they learnt of their rights. The plaintiffs claimed their initial allowance that they could renew was enforceable, and D should be estopped from going back on this.

Significance- In this case, estoppel was not available on the facts due to a common mistake and no element of enticement to believe the mistake. No unconscionability was made out.
Contrary to Fry J’s assertion, Oliver J asserted that proprietary estoppel is not restricted to cases where the defendant knows his rights, and that it is not possible to formulate strict and rigid rules

The inquiry which I have to make therefore, as it seems to me, is simply whether, in all the circumstances of this case, it was unconscionable for the defendants to seek to take advantage of the mistake which, at the material time, everybody shared, and, in approaching that, I must consider the cases of the two plaintiffs separately because it may be that quite different considerations apply to each.
Oliver J clarified that Willmott was only a case applicable to situations where someone had stood by without protest as his rights were infringed”

Question 28

Facts and significance of Cobbe v Yeomans 2008 regarding proprietary estoppel, and the potential variation of the requirements of estoppel for commercial entities?

Answer 28

Facts- Cobbe claimed that the landowner, the defendant, had sat by and encouraged him to go to great expense acquiring planning permission for a development, and should not be able to renege on their agreement to continue building with Cobbe.

Significance- Cobber had “ran a commercial risk with his eyes open. This was commerce”
Cobbe was awarded £150,000 on a quantum meruit basis, but no proprietary estoppel was made out.
Lord Scott: “The pleadings do not answer these questions. The terms of the oral “agreement in principle”, the second agreement, relied on by Mr Cobbe are pleaded but it is accepted that there remained still for negotiation other terms. The second agreement was, contractually, an incomplete agreement. The terms that had already been agreed were regarded by the parties as being “binding in honour”, but it follows that the parties knew they were not legally binding. So what is it that the appellant is estopped from asserting or from denying? The appellant cannot be said to be estopped from asserting that the second agreement was unenforceable for want of writing, for Mr Cobbe does not claim that it was enforceable; nor from denying that the second agreement covered all the terms that needed to be agreed between the parties, for Mr Cobbe does not claim that it did; nor from denying that, pre 18 March 2004, Mr Cobbe had acquired any proprietary interest in the property, for he has never alleged that he had.”

• Unconscionability is not an independent test, as per Lord Walker: “equitable estoppel is a flexible doctrine which the court can use in appropriate circumstances, to prevent injustice caused by the vagaries and inconstancy of human nature. But it is not some sort of joker card to be used whenever the court disapproves of the conduct of a litigant who seems to have the law on his side. Flexible though it is, the doctrine must be formulated and applied in a disciplined and principled way”. As such, the claimant must show the key elements of representation, reliance and detriment as one strand of the test.

Commercial parties being treated more harshly, more commercial awareness expected.

Question 29

Facts and significance of Gillett v Holt regarding the nature of the detriment suffered in estoppel and the link between reliance and detriment?

Answer 29

Facts- Holt had made many representations to Gillett about his eventual inheritance of the farm, but in 1995 Holt tried to sack Gillett and remove him and his wife from the farm, and remove him as a beneficiary under his will. Gillett claimed proprietary estoppel to remain in possession of the land he had worked, and to be given compensation or land in the main farm.

Significance- The Court of Appeal reversed the previous decision and held that G could rely on promissory estoppel. Robert Walker LJ held that Mr Gillett was entitled to a share of the property and could not simply be ejected:
“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 assurances of 1975 “were intended to be relied on, and were in fact relied on.”

“The overwhelming weight of authority shows that detriment is required. But the authorities also show that it is not a narrow or technical concept. The detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial… There must be sufficient causal link between the assurance relied on and the detriment asserted… 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 - that is, again, the essential test of unconcsionability. The detriment alleged must be pleaded and proved…”

Question 30

How was unconscionability applied and affirmed affirmed in Thorner v Major?

Why was the case so factually specific?

What are the key points, as per Lord Walkers three criteria for establishing the existence of proprietary estoppel?

Answer 30

Facts- Thorner for his cousin for 30 years unpaid, working long hours under the belief that he would inherit the farm. There was no explicit promise or assurance, and the farm was left to thorner and others before the will being destroyed after a falling out, and so the property passed by statute to others. Thorner claimed proprietary estoppel, which was rejected in the court of appeal, so he appealed to the house of lords.

Significance- Whether statement or conduct is sufficiently clear to give rise to an estoppel must be considered in the retrospective context including the character and relationship of the parties
The subject matter of a proprietary estoppel as to be certain from the date it arises but its extent can fluctuate until it crystallises on the date the proprietary estoppel takes effect. The House of lords thus found in favour of Thorner:
Lord Walker held the elements for a proprietary estoppel are (1) a promise or representation by the defendant that the claimant has or will acquire some right in relation to the defendant’s land (2) the claimant’s reasonable reliance on this promise/representation (3) detriment suffered by the claimant by reason of his reliance on that promise/representation

Question 31

Facts and significance of Henry v Henry regarding proportionality and remedies?

Answer 31

Facts- T had bought the land from an elderly relative (G) shortly before G died. C had been living on and cultivating the land for more than 30 years. It was his case that G had promised to leave the land to him upon her death, and that, by working on the land and taking care of G until she died, he had relied on that promise to his detriment.

Significance- Privy council found in favour of the plaintiff for the detriment suffered.
ON The issue of detriment: proportionality goes to the root of proprietary estoppel. Determining the potential disadvantages/ detriment of one party compared to benefits which they might have accrued from reliance. “He should have weighed any disadvantages which Calixtus Henry had suffered by reason of his reliance on Geraldine Pierre’s promises against any countervailing advantages which he had enjoyed by reason of that reliance. Had he done so, he would have brought into account on, as it were, the debit side of the account the evidence contained in paragraphs 5, 6 and 7 of Calixtus Henry’s witness statement… As to the relationship between reliance and detriment in the context of the doctrine of proprietary estoppel, just as the inquiry as to reliance falls to be made in the context of the nature and quality of the particular assurances which are said to form the basis of the estoppel (as in Thorner v Major), so the inquiry as to detriment falls to be made in the context of the nature and quality of the particular conduct or course of conduct adopted by the claimant in reliance on those assurances.

Cant engage in a complete reassessment when a third party becomes involved- may consider them in a proprietary estoppel claim and the effect of ss116 of the LRA 2002, how do we prioritise the third party or the person engaging in claiming for proprietary estoppel.

Question 32

What 3 approaches can the courts take in regard to remedies for proprietary estoppel?

Answer 32

• They can provide the expectation measurement ie the value of what was expected when the party relied upon a promise
• They can provide the reliance based award ie the detriment they suffered or what they did on reliance of an assertion.
• They can exercise proportionality, as they did in Jennings v Rice, and award on a somewhat quantum meruit basis and exercise discretion in providing a proportional reward with regards to any mitigating benefits obtained. This was also done in Habberfield v Habberfield.

Question 33

Facts and significance of Jennings v Rice regarding remedies for estoppel?

Answer 33

Facts- “J began to work as a part time gardener for Mrs Royle in 1970. Over the years he did more for her including taking her shopping and running her errands. In the late 1980s Mrs Royle stopped paying him but provided a deposit of £2000 for him and his wife to buy a house. By things said by R, J believed he would be entitled to some or all of R’s house upon her death, although nothing was put in writing and no assurances were specific. R died intestate with an estate worth £1.3 mn, and prior to this J had stayed on her living room sofa for almost three years as she was increasingly dependent on him.

Significance- £200,000 awarded to J on the basis of proprietary estoppel- the full estate was disproportionate and excessive compared to the work he did for her. This was affirmed by the court of appeal, who considered the starting point for whether a full expectancy should be awarded to the representee, or if this should be departed from as in the present case.
The starting point is the value of the expectation, not the value of the reliance. From here, the court has the discretion to award a lesser sum/ lesser amount of property, considering the value of the claimants reliance and whether a full award would be disproportionate.
Aldous LJ said: “reliance and detriment are two requirements of proprietary estoppel and that the basis of the estoppel is, as lord Denning said in Crabb, the interposition of equity. If the conscience of the court is involved, it would be odd that the amount of the aware should be set rigidly at the sum expected by the claimant.”
Thus a more limited remedy may be more appropriate in certain circumstances.

The closer the case is to a bargain, the more likely that the court is to compensate for the expectation ie services rendered in return for a quantifiable expectation held by the victim.

Question 34

What is the name of the case providing authority regarding the use of equity and inchoate equities to achieve satisfactory remedies for estoppel?

What is inchoate equity and how does the factor of time play into this?

Answer 34

Sledmore v Dalby.
Facts- The claimant leased her house to her daughter and son-in-law (the defendant). The claimant represented to the defendant that the house would belong to them. After the daughter died, the defendant lived in the house rent-free with his children, equating to 17 years, though after a time their residency became infrequent. The claimant tried to regain possession of the house after she fell into dire financial straits. The defendant resisted possession on the grounds of proprietary estoppel.

Issues: A person will have an inchoate ‘equity’ in land if they can establish proprietary estoppel: that the land-owner made an unequivocal representation of proprietary entitlement to an individual, which that individual relied on to their detriment, such that it would be unconscionable for the land-owner to renege on his assurance. The court has a wide discretion as to what remedy to grant to satisfy this equity: whatever is necessary to do the minimum justice required.
The issue in this case was what factors may be considered when determining what the minimum justice of the case requires, and whether the court is entitled to grant no remedy at all.

Held: The Court of Appeal held in the claimant’s favour. When determining how to satisfy the equity, the court held the following factors relevant: the time which had passed since the equity arose, the fact that the defendant made little use of the property, and the fact that the claimant truly needed the property.
Taking these into account, no remedy needed to be granted to the defendant to do minimum justice in this case. This meant that the defendant had no proprietary interest with which to resist the possession claim, and the claimant could be granted possession of the house.

It may be possible that enough of a gain has been made so the inchoate claim has been spent and nothing more is to be done- once again goes back to the issue of proportionality.

Question 35

What does s116 of the LRA 2002 say?

Answer 35

S116- from that point in time before a claim is brought, the equity is inchoate and binds a successor in title. Equity crystalises later on if the court awards a proprietary right over the property after the claimant had realised his right.

Proprietary estoppel and mere equities

It is hereby declared for the avoidance of doubt that, in relation to registered land, each of the following—
(a)an equity by estoppel, and

(b)a mere equity,

has effect from the time the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority).

Question 36

Explain how the case law has developed from Binions v Evans/ Errington v Errington to Arnold Anstalt and Lyus v Prowsa?

Answer 36

Lord Denning attempted to re-formulate an assertion that licenses can be personal in nature through the imposition of a constructive trust in favour of a license holder. In Binions v Evans, the notice of a license and an assertion that a disposition would be subject to the rights of other licensees was enough to impose a constructive trust in favour of the incumbent licensee.

This was overruled in the cases of Arnold Anstalt and Lyus v Prowsa- in the former, dispelling Lord Denning’s assertions in both Errington and Binions, it was decided that contractual licenses can (in almost all circumstances) neither arise through a constructive trust when notice to a purchaser is given, nor through simply giving effect to the contractual term purporting to perpetuate the license of the licensee as against a third-party. Errington may have been correct on its facts because the equitable Right to remain so long as mortgage instalments were paid perhaps worked on a contractual analysis regarding unilateral contracts, but Denning’s reasoning in the wider context of land law was unsound.

Question 37

How can the decision in Crabb v Arun be distinguished from the decision in Yeoman v Cobbe?

Answer 37

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, whereas only an agreement in principle had been reached in Yeoman.

Question 38

How can Thorner v Major be distinguished from Cobbe on the basis of the establishment of estoppel?

Answer 38

Identity of the property
In Cobbe there was total uncertainty as to the subject of the benefit (whether it was a proprietary right, a contractual right or money) and its extent (freehold, leasehold or charge): [94]
In this case, the extent of the farm might change but there is no doubt that the subject of the assurance was the farm as it existed from time to time:
As in the case of the floating charge, while the subject of the equity can be identified the moment it comes into existence, the precise extent of the equity fell to be determined when the equity crystallised, namely on D’s death: [95]
Nature of relationship
In Cobbe the relationship was arm’s length commercial, and the parties have consciously chosen not to contract: [96]
In this case the relationship was familial and neither had contemplated entering into a formal contract: [97

Question 39

What does Lord Walker say about the dangers of overextending proprietary estoppel in Yeoman v Cobbe??

Answer 39

• Unconscionability is not an independent test, as per Lord Walker: “equitable estoppel is a flexible doctrine which the court can use in appropriate circumstances, to prevent injustice caused by the vagaries and inconstancy of human nature. But it is not some sort of joker card to be used whenever the court disapproves of the conduct of a litigant who seems to have the law on his side. Flexible though it is, the doctrine must be formulated and applied in a disciplined and principled way”. As such, the claimant must show the key elements of representation, reliance and detriment as one strand of the test.

Question 40

Which recent British case restates the importance of proportionality in remedying a proprietary estoppel claim, such as the arguments made out in Henry v Henry (Privy council case)?

What comments were made about proportionality?

Answer 40

Habberfield v Habberfield
The case also restated the importance of proportionality. A claimant’s expectation was not determinative of the relief which should be granted. Instead, the relevant question was whether the award was out of all proportion to the detriment. As Lord Justice Lewison wrote in his judgment:

‘The relevant comparison for the purposes of proportionality is a comparison between detriment and remedy. Nevertheless, proportionality is not a question of mathematical precision. Like all cases in which the court decides how to satisfy an equity, it must exercise a judgmental discretion, and may do so in a flexible way.’

The Lord Justices agreed that, to raise the £1.2 million, the farm would have to be sold. This was despite the fact that the sale would deprive the Defendant of her home; it was evidenced, though, that the Defendant had sufficient means to rehouse herself and meet any shortfall in income. The Claimant was 51 years of age. An immediate award was necessary so that she could begin farming on her own account. In addition, the breakdown of the familial relationships made a clean break especially attractive.

Question 41

How do courts approach the cases of bargain v non-bargain cases in deciding how to provide a remedy in proprietary estoppel cases?

Answer 41

In bargain cases, where the victim bargains with the other party for a certain expectation upon the completion or refraining of an action, the courts will reward this expectation without exercising discretion.

However, the courts, following Jennings v Rice, will exercise discretion in finding a sufficient ground between the detriment suffered (often unquantifiable) and the expectation held by the victim due to this detrimental reliance on the representation regarding the rights in land.

In Jennings v Rice, the expectation of the entire estate was disproportional to the work he had done, pro bono for the woman, and £200,000 was deemed a correct sum of money to be paid on a Quantum Meruit basis.