DENNING LAW SCHOOL– ABDULQADIR NAEEM

PROPRIETARY ESTOPPEL

The doctrine of proprietary estoppel operates in two stages. First, the claimant must prove
that the estoppel is present. Second, the court must identify the remedy.

The classic statement of the doctrine was made in Lord Kingsdown’s dissenting speech in
Ramsden v Dyson [1866]:

“If a man, under a verbal agreement with a landlord for a certain interest in land, or, what
amounts to the same thing, under an expectation, created or encouraged by the landlord,
that he shall have a certain interest, takes possession of the land, with the consent of the
landlord, and upon the faith of such promise or expectation, with the knowledge of the
landlord, and without objection by him, lays out money upon the land, a court of equity will
compel the landlord to give effect to such promise or expectation.”

Kingsdown’s dictum is frequently quoted with approval, but the scope of the doctrine has
been considerably extended in recent times.

The doctrine of proprietary estoppel can be used as a shield and a sword and mitigates the
difficulties that flow from the laws related to formalities. Proprietary estoppel can be pleaded
to acquire any interest in land or otherwise which was informally given, and this doctrine has
been created by equity to ensure justices provided. Firstly, PE can provide a defense to an
action by a landowner who seeks to enforce his strict rights against someone who has been
informally promised some right or liberty over the land. Secondly, can generate a new
property interest in favor of the claimant. It represents the creation of rights by reason of
equity acting on an individuals conscience and is the antidote to unconscionable reliance on
formality rules.

S.2 of the Law of the (Miscellaneous Provisions) Act 1989 requires contracts of land to be
in writing. Initially, proprietary estoppel was extremely difficult to prove due to its stringent
requirements (Willmott v Barber). In this case Fry LJ identified the so called “five
probanda” of PE which were as follows:

o The claimant must have made a mistake as to their legal rights over some land
belonging to another;
o The true landowner must know of the claimants mistaken belief;
o The claimant must have expended money or carried out some action on the
faith of that mistaken belief;
o The landowner must have encouraged the expenditure by the claimant, either
directly or by abstaining from enforcing their legal rights;
o The owner of the land over which the right is claimed must know of the
existence of their own rights and that these are inconsistent with the alleged
rights of the claimant.

However, these requirements were softened with time in view of stricter requirements of
formalities.

To prove proprietary estoppel, four factors needs to be proven – Taylor Fashions v.

ii. Reliance
iii. Detriment
iv. Unconscionability

It was held in Gillet v Holt and Jennings v Rice that the four points cannot be looked at in
isolation, therefore the courts should take a holistic approach in determining proprietary
estoppel.

1. Assurance / Representation:

An assurance can be expressed or implied and the law is very wide in this regard. What is
fundamental is that the assurance has to be “clear enough” and this depends on the context
but has to relate to an identifiable land. A representation can involve a single, clear statement
that the claimant would acquire rights in property or an impression formed over time, which
the defendant knows that the claimant has formed (Gillett v Holt [2001])

In the case of Thorner v Major a general assurance that land will be given to the claimant in
a family context sufficed.

However, in the case of Cobbe, an agreement that was oral and binding in honour
(gentleman’s promise) in a commercial context did not give rise to proprietary estoppel.

It was held in Re Basham and again in Wayling v Jones (1993) that the doctrine applied to
the situation where a person encourages another to act to their own detriment on the
understanding that they will inherit certain property on that person’s death. This approach
has been endorsed by the House of Lords in Thorner v Major [2009].

In most cases, the representation has related to a particular property in which the claimant
has an existing interest. However, the court in Re Basham [1986] granted PE even where the
claimant lived in her own house at some distance from the deceased’s house and refused to
restrict the operation of the doctrine in this way.

Matharu v Matharu: the claimant was successful, even though the owner does not seem to
have made any promise or representation encouraging her to believe what she believed. Fact
were that a father allowed his son and daughter-in-law to use the house as their family house.
She mistakenly believed that the house belonged to her husband and her parents-in-law had
encouraged that belief. She was granted a licence for her life or for as long as she wished to
live at the property.

2. Reliance:

The courts will infer reliance based on the conduct of the claimant. This can be done by
finding a sufficient link between assurance and the detriment.

It was held in the case of Campbell v Griffith that a person can also have a dual motive and
so long as one such motive is based on the assurance, a claim for proprietary estoppel will be
successful.

3. Detriment:
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The detriment may be monetary or otherwise and the courts have established a general
presumption that whenever there is reliance there will always be detriment unless proved to
the contrary by the defendant – Greaseley v Cooke.

In the case of Campbell v Griffith, improving the land and devoting time and care to the
owner was detriment.

In the case of Ottey v Grundy, foregoing an opportunity amounted to a detriment.

It is not necessary that the detriment relates to the land – Jennings v Rice.

4. Unconscionability :

This is a question of fact and in present times everything is based on proving bad conscience
– The need for the claimant to prove unconscionability has become the central factor in
proprietary estoppel claims (Thorner v Major).

Remedies:

The range of remedies awarded by courts to satisfy an estoppel equity is great, ranging from
compensation to licences to leases to freeholds.

In the case of Burrows and Burrows v Sharpe (1991), as it was impractical for the parties
to live together, monetary compensation was given under proprietary estoppel.

In the case of Crabb v Arun District Council [1976] right of way was awarded.

In the case of Griffiths v Williams (1977) a non-assignable lease of life was awarded.

In the case of Pascoe v Turner, fee simple was awarded.

There appear to be two methods by which courts have calculated the appropriate remedy;
sometimes courts appear to be giving effect to the claimant’s reasonable expectations, and in
other cases courts appear to have complete discretion as to the choice of remedy. However, it
now appears that courts are combining both approaches by considering the claimant’s
expectations and then ensuring that there is proportionality between the detriment and the
remedy awarded. In Jennings v Rice the court considered both approaches and held that it
was not appropriate to grant a remedy merely on the basis of the claimant’s expectations, nor
could the court have absolute discretion. According to Lord Justice Walker ‘It cannot be
doubted that in this as in every other area of law, the court must take a principled approach
and cannot exercise a completely unfettered discretion according to the individual judge’s
notion of what is fair in any particular case.’ In view thereof, the remedy granted should be
proportionate to the detriment and the courts have established a principle that minimum
equity should be awarded so as to prevent floodgates (Jennings v. Rice).

In the case of Sledmore the courts did not award anything when proprietary estoppel was
successful as the benefit which the claimant received was equivalent to the detriment he
faced as he was living rent free in the apartment which he had spent money.
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In the case of Gillet v Holt, a person worked on a farm for 40 years based on an assurance
that the land will be transferred in his will, upon refusal he claimed proprietary estoppel and
was successful – Freehold granted.

In Hunt v Soady [2007], where there had been a provisional agreement that one beneficial
tenant in common (H) would transfer her beneficial interest to the other (S), proprietary
estoppel could not operate since that agreement had not been acted on by the other party
either in good time or to his detriment; it was not unconscionable for H to go back on her
representation, particularly given the substantial change in circumstances since the time of
the provisional agreement.

In Holman v Howes [2007], a divorced couple bought a property together, being optimistic
about reconciliation and joint occupation. They both contributed to the purchase price but the
legal title was put into the sole name of the ex-husband. He then left the house but the ex-
wife continued to live there. On application for an order to determine their beneficial shares,
with the ex-husband also seeking an order for sale, the court held that assurances had been
made that the ex-wife could occupy the property for as long as she wanted. Since there was
detrimental reliance by the ex-wife, the requirements of proprietary estoppel were satisfied
and thus in order to satisfy this equity there should be no order for sale without the ex-wife’s
consent.

In James v Thomas [2007] where there was insufficient evidence of a common intention that J
should have a beneficial interest in the property and assurances made by T to J were vague as to the
extent of any beneficial interest which J might expect, neither a constructive trust interest nor one via
proprietary estoppel could arise. The parties had lived together for 15 years in a property held in T’s
sole name; J had helped T with his business and together they had conducted extensive renovations of
the property. The assurances which were found to be too vague were that the renovations would be
for the benefit of both parties and that J would be provided for on T’s death.

In Powell v Benney [2007], the appellants (P) had looked after B’s cousin (H) and improved
his properties for their own use after H became unable to look after himself properly and
gave them the keys to the premises. H had promised the properties to P upon his death but he
died intestate due to his ‘will’ being invalid. The court held that there was not a strong
enough causal link between the promise and the work carried out for P to receive the entire
properties as satisfaction for the equity; although P had incurred some expense in improving
the premises, they had not been required to do so by H. Thus the case was a ‘non-bargain’
proprietary estoppel claim; Jennings v Rice applied. To transfer the properties to P would be
out of all proportion to the detriment P had suffered, and so the trial judge’s award of
£20,000 was upheld.

In Cobbe v Yeoman’s Row Management Ltd [2008], the House of Lords showed that the exceptions
to s.2 LP(MP)A 1989 are narrower than previously thought. A property developer reached an oral
agreement in principle with an owner to buy its property and then spent considerable sums in
obtaining planning permission. The owner then refused to proceed on the agreed terms and enter into
a binding contract. The House of Lords reversed the decision of the Court of Appeal and held that the
developer was not entitled to a remedy based on proprietary estoppel or a constructive trust, but only
to a quantum meruit payment for his services in pursuing and obtaining planning permission. Since
neither party had thought that the agreement between them had been enforceable, Y could not be
estopped from relying upon s.2 to show that the agreement was unenforceable. The agreement
between the parties was a ‘gentlemen’s agreement’ and was too uncertain as to its terms to constitute
a contract. The lower courts had pushed proprietary estoppel too far.
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In Henry v Henry [2010]: the Privy Council considered an appeal from St Lucia in a proprietary
estoppel case. T bought the land from an elderly relative (G) just before the latter’s death. G had
promised to leave the land in her will to C, who had lived on it and cultivated it for over 30 years.
The trial judge had dismissed C’s claim on the basis that he had not suffered a detriment, he had
received a benefit from the land for over 30 years and T was a registered proprietor who had given
value for the land and so took free of C’s claim. The Court of Appeal, however, did find that C had
suffered detriment and hence had an equity which bound T as an overriding interest (St Lucia has a
similar land registration system to England and Wales). On appeal, T argued that since her purchase
of the land had not been unconscionable, she should not be bound by any equity which had arisen in
favour of C. The Privy Council held that the trial judge had misdirected himself as to detriment by
failing to weigh up C’s disadvantages and advantages resulting from the promise (Jennings v Rice
applied). The Court of Appeal had also been mistaken in its approach to detriment. Hence the Privy
Council had to consider that issue afresh, and found that C had deprived himself of a better life
elsewhere by remaining on the land; that detriment had not been outweighed by the advantages he
took from his ‘hard life in which he has to struggle to make ends meet’ occupying the land. The
resulting estoppel equity was satisfied by awarding C half of T’s share of the plot of land (i.e. a
quarter of the total); proportionality is at the heart of proprietary estoppel. The Privy Council looked
at the effect of an estoppel equity on third parties, and noted obiter that there may be cases in which
the circumstances of a third party purchase might require a claimant’s equity to be reassessed, even
though the claimant has an overriding interest.

General Comment

Section 116 Land Registration Act, 2002 provides that an equity by estoppel ‘has effect from
the time the equity arises as an interest capable of binding successors in title’. Thus, it is
confirmed that an uncrystallised estoppel ‘equity’ can bind a transferee if protected as
required by the normal rules of registered or unregistered land. In registered title land it can
be protected by entry on the register or, coupled with actual occupation, is capable of
overriding a disposition. But, once the court has granted a remedy, then whether a transferee
is bound will depend on the nature of the remedy granted. For example, if the remedy is a
freehold or an easement then it will bind a transferee, but if it is a licence or financial
compensation, then it will not.