Proprietary Estoppel
1. What is proprietary estoppel?
Denning MR in Moorgate Mercantile v Twitchings – “…a principle of justice and
equity. it comes to this: when a man, by his words or conduct, has led another to
believe in a particular state of affairs, that he will not be allowed to go back on it
when it would be unjust or inequitable for him to do so.”
An informal method by which proprietary rights can arise.
Can be a cause of action.
Distinction between proprietary estoppel and common intention constructive trust:
Have to show detrimental reliance even in context of joined name common
intention constructive trust.
If C wants freehold title – if you establish common intention constructive
trust, C would not get the title, would only get a trust, even if she gets a trust,
and the trust is collapsed, would only ever get a share over the fee simple.
2. What approach should be taken?
Conventional approach = no matter what the remedy, the equity by estoppel binds L.
Paul Matthews in Brake v Swift doesn’t take this route.
Whether it is capable of binding third parties depends on what remedy would
be granted to vindicate equity by estoppel.
If it would be vindicated through grant of licence or monetary award rather
than property right, then the equity by estoppel does not bind third parties.
If vindicated through a property right, then does bind third parties.
Reasons in favour of Swift view:
Seems to make more sense within structure of property law – if not getting
property right, why should that bind third parties just by reason of calling it
an equity by estoppel?
Reasons for other view:
That is what LRA 2002 says – s.116 says it binds third parties.
3. Test for Proprietary Estoppel:
Thorner v Major:
1. Representation or assurance
2. Reliance on the assurance
3. Detriment due to the reliance
4. Unconscionability
a. Representation or Assurance:
There must be a representation or assurance made to the claimant that they
will have the rights in the defendant’s land.
Does not have to meet all the strict criteria that an agreement would require
under contract law.
An assurance need only be “clear enough” for the parties involved to
understand it.
Thorner v Major
Threshold likely to be lower in a domestic context.
Does it have to be a promise for a property right?
e.g., “this will be yours”.
In Thorner v Major – said something vague – Court said from this we
can infer that you were probably promised a right to land at some
point.
One of the features of these cases = parties are never particularly
clear about what is being promised, because they don’t think they
need to be.
, Even though not promised any particular property right, if
they had got round to it, would have been given one (e.g., a
lease) – intended to give right over land even if it wasn’t set.
Two contrasting cases:
Crabb v Arun DC – claim succeeded.
C and the council (D) reached a non-binding agreement for a
right of way over D’s land, but no formal contract was
reached. A gap was left in a fence D later put up and a gate
was installed at the planned access point. C sold off part of
his land, with remainder being landlocked save for the right
of way. D repudiated the agreement, took down the gate and
built a wall over the gap.
There was both direct and indirect encouragement
by D to a belief by C in the existence of a right of
way.
A gap was left in the fence built, which accorded
exactly with the non-binding agreement and D gave
no indication of going back on the agreement.
Lord Denning MR: “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.”
Yeoman’s Row Management Ltd v Cobbe – claim failed:
Owner of land D and developer C entered into a non-binding
oral agreement that D was to sell land to C at a certain price
upon C obtaining planning permission. C obtained planning
permission at considerable time and cost. D then sought to
renegotiate the terms, seeking for an increase in price.
Held that proprietary estoppel is unlikely to arise
from promises made during commercial negotiations
prior to contract formation.
Distinguished Crabb v Arun DC on the basis that in
that case the council’s erection of the gate was an act
so unequivocal that it led to C irretrievably altering
his position, putting the matter beyond negotiation.
The court should be slow to introduce
uncertainty into commercial transactions by
over-ready use of equitable concepts.
b. Reliance:
Test = Wayling v Jones
Not just but for test – not just about what would happen if promise
not made.
Test = what would have happened if D had told C that she could live
in the house, but then told her that he wasn’t planning on sticking to
that promise.
Look different:
May have always planned on working on D’s land – but if
find out that he is a dishonest man, may not wish to work
there anymore.
Burden is on the defendant to prove that C would have done something else.
Greasley v Cooke – presumption of reliance.
c. Detriment:
Very broad conception of detriment.
1. What is proprietary estoppel?
Denning MR in Moorgate Mercantile v Twitchings – “…a principle of justice and
equity. it comes to this: when a man, by his words or conduct, has led another to
believe in a particular state of affairs, that he will not be allowed to go back on it
when it would be unjust or inequitable for him to do so.”
An informal method by which proprietary rights can arise.
Can be a cause of action.
Distinction between proprietary estoppel and common intention constructive trust:
Have to show detrimental reliance even in context of joined name common
intention constructive trust.
If C wants freehold title – if you establish common intention constructive
trust, C would not get the title, would only get a trust, even if she gets a trust,
and the trust is collapsed, would only ever get a share over the fee simple.
2. What approach should be taken?
Conventional approach = no matter what the remedy, the equity by estoppel binds L.
Paul Matthews in Brake v Swift doesn’t take this route.
Whether it is capable of binding third parties depends on what remedy would
be granted to vindicate equity by estoppel.
If it would be vindicated through grant of licence or monetary award rather
than property right, then the equity by estoppel does not bind third parties.
If vindicated through a property right, then does bind third parties.
Reasons in favour of Swift view:
Seems to make more sense within structure of property law – if not getting
property right, why should that bind third parties just by reason of calling it
an equity by estoppel?
Reasons for other view:
That is what LRA 2002 says – s.116 says it binds third parties.
3. Test for Proprietary Estoppel:
Thorner v Major:
1. Representation or assurance
2. Reliance on the assurance
3. Detriment due to the reliance
4. Unconscionability
a. Representation or Assurance:
There must be a representation or assurance made to the claimant that they
will have the rights in the defendant’s land.
Does not have to meet all the strict criteria that an agreement would require
under contract law.
An assurance need only be “clear enough” for the parties involved to
understand it.
Thorner v Major
Threshold likely to be lower in a domestic context.
Does it have to be a promise for a property right?
e.g., “this will be yours”.
In Thorner v Major – said something vague – Court said from this we
can infer that you were probably promised a right to land at some
point.
One of the features of these cases = parties are never particularly
clear about what is being promised, because they don’t think they
need to be.
, Even though not promised any particular property right, if
they had got round to it, would have been given one (e.g., a
lease) – intended to give right over land even if it wasn’t set.
Two contrasting cases:
Crabb v Arun DC – claim succeeded.
C and the council (D) reached a non-binding agreement for a
right of way over D’s land, but no formal contract was
reached. A gap was left in a fence D later put up and a gate
was installed at the planned access point. C sold off part of
his land, with remainder being landlocked save for the right
of way. D repudiated the agreement, took down the gate and
built a wall over the gap.
There was both direct and indirect encouragement
by D to a belief by C in the existence of a right of
way.
A gap was left in the fence built, which accorded
exactly with the non-binding agreement and D gave
no indication of going back on the agreement.
Lord Denning MR: “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.”
Yeoman’s Row Management Ltd v Cobbe – claim failed:
Owner of land D and developer C entered into a non-binding
oral agreement that D was to sell land to C at a certain price
upon C obtaining planning permission. C obtained planning
permission at considerable time and cost. D then sought to
renegotiate the terms, seeking for an increase in price.
Held that proprietary estoppel is unlikely to arise
from promises made during commercial negotiations
prior to contract formation.
Distinguished Crabb v Arun DC on the basis that in
that case the council’s erection of the gate was an act
so unequivocal that it led to C irretrievably altering
his position, putting the matter beyond negotiation.
The court should be slow to introduce
uncertainty into commercial transactions by
over-ready use of equitable concepts.
b. Reliance:
Test = Wayling v Jones
Not just but for test – not just about what would happen if promise
not made.
Test = what would have happened if D had told C that she could live
in the house, but then told her that he wasn’t planning on sticking to
that promise.
Look different:
May have always planned on working on D’s land – but if
find out that he is a dishonest man, may not wish to work
there anymore.
Burden is on the defendant to prove that C would have done something else.
Greasley v Cooke – presumption of reliance.
c. Detriment:
Very broad conception of detriment.
