#4644 - Proprietary Estoppel - GDL Land Law

“Estoppel” - old English law concept where someone is stopped from going back on their promise where it would be unconscionable to do so

• Different from ‘Promissory Estoppel’ in Contract – much stronger: can be used as a sword to create rights – not just a shield to defend a claim: relates to property rights and doesn’t just relate to a possible contract situation, you need detriment for proprietary estoppel

• Commenced in the modern day in leading case of Ramsden v Dyson

  • Subsequently in Wilmott v Barber

• Requirements set out in these cases – the ‘probanda’

1. C (claimant) must have made a mistake about his rights

2. C must have spent money or done some act because of the mistake

3. O must be aware of his own rights

4. O must also be aware of C’s rights

5. O must have encouraged C, either directly or indirectly, by not asserting his own rights

• Historically you had to fit your claim within this strict straightjacket – now more flexible

• Another classic case – Dillwyn v Llwlyn, 1862 – imperfect gift perfected through estoppel : son relied on father’s promise of a farm on which he could build

• More modern case - Inwards v Baker – 1965 – Son had equity by estoppel to stay on the land – Denning – ‘the court will not allow that expectation to be defeated, when it would be inequitable to do so’

  • Denning says it is binding on a 3^rd party who has notice

  • Remedy: effectively a licence for life

• Over time – debate as to whether all 5 probanda had to be satisfied

  • E.g.Crabb v Arun District Council: Despite not strictly complying with the 1^st probanda – the court held that the elements for an estoppel were present

• More modern cases have shown more flexibility than the 5 probanda in Wilmott v Barber:

  • Taylor’s Fashions Ltd v Liverpool Victoria Trustees Ltd: simplified the test – Oliver J acknowledge that the probanda should not necessarily be seen as strict rules

    • 1^st instance case but accepted as the law: don’t have to fit your case in the preconceived formula in Wilmott - main principle in unconscionability.

    • ‘whether, in all the circumstances of the case, it was unconscionable for the defendant to seek to take advantage of the mistake which, at the material time, everybody shared’

  • Principle of the decision in Gregory v Mighell

    • No specific requirement that the landlord should know or intend that the expectation which he has created or encouraged is one to which he is under no obligation to give effect

Elements of Estoppel

• Not clear exactly when estoppel will apply – based on equitable principle

• Robert Walker LJ in Gillett v Holt: No watertight compartments: must look at all the circumstances

• However, claimant must satisfy several requirements to make a claim based on estoppel – unconscionability plays an underlying ‘unifying’ role (per Lord Walker, Cobbe)

1. There must be a representation , expectation or assurance

• Differences btw commercial and family cases

• Recent examples (both HL):

  • Cobbe (2008) : makes it difficult to use estoppel in commercial context

  • Thorner v Major: estoppel still strong in family cases

• Crabb v Arun DC: quasi-commercial example in easement situation – see above – also shows that estoppel can arise when someone promises someone else that they will have a future right

Incomplete negotiations or transactions

• Incomplete transactions are not intended to be binding

• Courts have made it clear that reliance on incomplete negotiations will not, by itself give rise to an estoppel claim

  • Attorney-General of Hong Kong v Humphrey’s Estate - claimant was allowed into occupation of premises while the terms of the contract were being negotiated

    • Negotiations were explicitly made ‘subject to contract’, and thus the claimant failed in an estoppel claim despite suffering significant detriment

Promises to leave property by will

• Gillett v Holt

  • Gillett worked his whole life on Holt’s farm (for 30/40 years) under assurance he would get it on Holt’s death

    • 7 occasions where Holt gave statements which led Gillett to believe that he would get the farm on Holt’s death

    • Gillett won the farm on estoppel

  • Assurance was sufficiently clear: it had been repeated over a long period, sometimes in public and was unambiguous - CA held that there was no need for further assurance that the assurances given were irrevocable

• Thorner v Major

  • Similar facts to Gillett v Holt - Thorner helped his cousin Holt on the farm, and oblique assurances were given that the farm would be his

    • Despite lack of directness in conversation, assurance was held to be ‘clear enough’ in the circumstances – as the men were deemed to be taciturn and undemonstrative

    • Didn’t matter that it hadn’t been made completely clear what the farm consisted of etc.

“Subject to Contract” means NO Estoppel

• Cobbe v Yeoman’s Row Management (commercial example – takes stricter approach than in above cases)

  • As the parties were businessmen the court didn’t allow a claim in estoppel - the claimant had merely taken a risk and both parties knew that the negotiations were subject to contract

  • Judges concerned about introducing uncertainty into commercial negotiations

  • Distinction between commercial and family cases – requirement in commercial context for an assurance as to a specific proprietary right (stricter approach)

  • Case seemed to leave estoppel with a very narrow application

  • Although claim failed, claimant received “quantum meruit” (a reasonable amount) for the time/money expended

2. The claimant must suffer detriment

• Claimant must prove detriment - something sufficient to render conduct ‘unconscionable’

• Doesn’t have to be financial:

  • Gillett v Holt – detriment is not a narrow or technical concept - as long as it is substantial

• Detriment viewed retrospectively

• Context in which the expenditure or loss occurred is important

• Examples of detriment:

  • Spending money on building work – Dwyllyn

  • Selling Land – Crabb

  • Providing labour and not furthering career elsewhere – Gillett

  • Looking after a family their whole life – Greasley v Cooke

3. The detriment must be suffered in Reliance on the Assurance

• Coombes v Smith: Claimant did not act in reliance on any assurance as to property rights – cannot claim estoppel if would have suffered the detriment even had the assurance not been made

• Contrast with mixed motives case: Campbell v Griffin – mixed motives do not prevent estoppel

  • Lord Walker: ‘the promises relied upon do not have to be the sole inducement for the conduct; it is sufficient if they are an inducement’

  • It was sufficient to establish that the promises were made and that there was conduct by the plaintiff of a nature that inducement could be reasonably inferred

Does the owner have to know about the reliance?

• Owner doesn’t have to know or intend reliance as long as his words could reasonably be understood as intended to be taken seriously

• Objective test in Thorner v Major

Unconscionability

• Test set out by Oliver J in Taylors Fashions v Liverpool Victoria Trustees

• Unconscionability is insufficient in itself (per Edward Nugee QC in Re Basham deceased – must establish the other three requirements

• Cobbe (HL): for estoppel to occur, the conscience of the court must be shocked

  • Lord Walker: didn’t regard unconscionability as a separate element of estoppel, but rather a state of mind

The Effect of Proprietary Estoppel: an Inchoate Equity

• Estoppel gives rise to an ‘equity’ which allows the claimant a right to ask the court for a remedy

• But the equity may bind a purchaser even though it is not itself an interest in the land

  • Needs to be protected in order to be binding

    • In registered land:

      • S32 Notive or

      • Overriding interest under Sched 3 para 2 if claimant is in actual occupation

    • Unregistered land:

      • Doctrine of notice applies: Ives v High

Remedy awarded is up to the discretion of the court

• 2 approaches:

  • Expectation approach – e.g. Dillwyn v Llwelyn

  • Compensate the claimant for the detriment he has suffered

• In Baker v Baker – no award can exceed the claimant’s expectations

  • Broadly followed but exception in Crabb v Arun DC...