Friday 17 February 2012

Proprietary Estoppel

Should the Doctrine of Proprietary Estoppel be Based on the Notion of Unconscionability Alone?

It is possible to trace proprietary estoppel right back to the 17th century and for many years; there have been many attempts to lay down a definitive test for it. During the well known case of Wilmot v Barber, five criteria were laid down, these were known as the five probanda, however, these conditions were so restrictive that development of the doctrine was essentially impossible, the conditions were soon dismissed as they were unable to adapt to the many different situations in which proprietary estoppel can arise, flexibility was restored by the judgement in the High Trees case[1]. In following years, a wider approach was adopted, in which unconscionability became the main underlying principle. In the case of Taylors Fashions Ltd, Oliver J expanded upon the doctrine which was originally laid out in Wilmot v Barber, stating that ‘it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he had allowed or encouraged another to assume to his detriment.’[2]

It is now recognised that there are three main criteria that need to be satisfied for a proprietary estoppel claim to succeed, Lord Walker says that there must be an assurance made to the claimant, a reasonable reliance on that assurance by the claimant which leads to a detriment suffered by the claimant in consequence of that reliance, meanwhile, the notion of unconscionability runs throughout these criteria. Lord Scott once commented that ‘unconscionability…plays a very important part in the doctrine of equitable estoppel, in unifying and confirming as it were, the other elements.’[3] Due to the fact that unconscionability plays sucha major role within the doctrine, proprietary estoppel ‘has wide application, but its boundaries are uncertain and its effects are not entirely clear.’[4]

The first element that is required for an estoppel claim is encouragement. The belief of the claimant must have been encouraged by the defendant; this can be done explicitly or implicitly. For example, if the defendant were to useprecise wording to assure the claimant, then he will be explicitly encouraging him, this can be demonstrated by the cases of Inwards v Baker[5],where the claimants father suggested he build a bungalow on his land, and Pascoe v Turner[6],where the claimant repaired a house relying on a man’s promise that the house was now hers. Passive encouragement is where a defendant realises that the claimant has made an assumption, yet does nothing to intervene.  The encouragement must be that the claimant had or would have a right over certain land or property; this can either be through a gift or a contract. This was the case inLayton v Martin, where the claimant said that the deceased encouraged her to live with him as his mistress with the understanding that he would make a financial provision for her in his will.

 During the case of Thorner v Major[7], Lloyd LJ clearly focused on the important question of whether there was a promise on the part of the defendant or a mere statement of current intention. However, Lloyd LJ’s emphasis on the idea of whether the representation was ‘intended to be relied on’ might lead to the assumption that he believed that a proprietary estoppel claim should fail if the defendant had not subjectively intended that the claimant should rely on the representation. ‘As a matter of principle, it seems clear that no successful proprietary estoppel claim should be possible in the testamentary context unless the defendant’s representation can reasonably understood to involve a promise, explicit or implicit, that the claimant will ultimately inherit on the testators death.’

Robert Walker LJ once commented that, ‘The whole point of estoppel claims is that they concern promises, which, since they are unsupported by consideration, are initially revocable, what later makes them binding, and therefore irrevocable, is the promisee’s detrimental reliance on them. Once that occurs, there is simply no question of the promisor changing his or her mind.’[8] In a later case, he also said that ‘even when a promise or assurance is in terms linked to the making of a will, the circumstances may make clear that the assurance is more than a mere statement of present (revocable) intention, and is tantamount to a promise.’[9]
The next element is reliance, to be able to raise a proprietaryestoppel; the claimant must show that he has relied on the defendant’s encouragement to his detriment. ‘The claimant must have spent money or acted in a way which he would not have done if the landowner had not built up an expectation in his mind.’[10]In the case of Inwards v Baker[11], the son built a bungalow on his father’s field upon his father’s suggestion and relying on his fathers promise, similarly , in the case of ER Ives Investment v High[12], High allowed the foundations of neighbouring flats to remain and built a garage facing the forecourt of the flats because he expected a right of access.However, the encouragement doesn’t have the only cause of the reliance, as in the case ofAmalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd[13].  In order to prove this reliance, the courts will simply presume that it exists, provided that the claimant has acted to his detriment, during the case of Brikom Investments, Lord Denning stated that ’once it is shown that a representation was calculated to influence the judgement of a reasonable man, the presumption is that he was so influenced.’[14]However, this presumption will, of course, be reversed if contrary evidence is proven. It will be believed that there has been a reliance in some of the following situations; where the claimant has suffered a personal disadvantage as in the case of Wayling v Jones, where the claimanthelped in the running of a business. Where a claimant works as a carer to their detriment, as demonstrated byJennings v Rice, where the claimant cared for an elderly lady and began living in her home without payment for almost 28 years, on the reliance that he would inherit the family home. Over the years the courts have ‘come to focus on the general fairness of the circumstances and whether or not the defendant would be taking an unconscionable advantage of the claimant.’[15]

Next, the claimant must have suffered a detriment, ‘There is no doubt that for a proprietary estoppel to arise the person claiming must have incurred expenditure or otherwise have prejudiced himself or acted to his disadvantage.’[16]Most detriments involve money payments, such as the case of Jones v Jones[17] which involved the part payments of the purchase price supporting a claim to license to reside in the property. As well as this, labour on behalf of the claimant can also be a detriment, for example building a house, building an extension, or decorating, as in the case of Sharpe[18]. It does not have to be a substantial detriment for a claimant to make a claim, it can be small acts, such as making mortgage payments, as in the case of Preston & Henderson v St.Helens MBC[19] , or caring for relatives as in Piquet v Tyler[20] and Campbell v Griffin[21] where the claimant was assured by an elderly couple that she would have a home for life. When it comes to awarding a remedy for an estoppel, the weight of detriment may become relevant. Recent cases now suggest that, for this element to be satisfied, the representee must be left unconscionably disadvantaged by reliance on the relevant assurance.

Finally, unconscionability must be established. Detriment is now linked with unconscionability as much as it is linked with reliance.  This was recently confirmed by Lord Scott in Yeoman’s Row Management v Cobbe[2008] ‘Unconscionability in my opinion plays a very important part in the doctrine of equitable estoppel, in unifying and confirming, as it were, the other elements.’[22] There are many factors which the courts must examine, these include, whether the claimant has delayed in seeking a remedy as delay defeats equities. Whether there has been any relevant misconduct on the part of the representee as he who comes to equity must come with clean hands. Whether the representee had access to other means of protecting or safeguarding his position as in Lloyds Bank plc v Carrick[23]. Whether there are or have been counter-balancing advantages for the representee that may counter act any disadvantage allegedly suffered, as in the case of Sledmore v Dalby.[24]

Although unconscionabililty is highly important, many scholars argue that it must always be used in conjunction with the other three criteria as it is much too broad to be used on its own, it is a common interest that ‘the only work the concept of unconscionability should do in the law of proprietary estoppel is to point to what is necessary, by way of remedy, to protect the reliance interest. No more and no less is required.’[25] Similarly in the recent case of Thorner v Major it was identified that the three elements are needed, it was said that ‘These elements would, I think, always be necessary but might, in a particular case, not be sufficient.’ Hudson points out the problems that may arise if only unconscionability was to be taken into account, he says that ‘there is a disjunction of our good conscience and our notion of good conscience which is legally actionable.’[26] He gives the example of a friend promising to telephone another friend, but really has no intention of telephoning them, this would seem to be unconscionable as lying is not the behaviour of an honest person, however, it would not be considered to be legally actionable.  This is the reason that detrimental reliance is necessary, ‘none of the jurists actually intends to capture all unconscionable behaviour; only unconscionable behaviour which falls into established catagories.’[27]
However, there have been some exceptions where it has appeared that there has been no criteria and a claim for proprietary estoppel has been based mainly on the suggestion of unconscionability, for example the recent case of Herbert v Doyle[28]. In this case no certain interest was ever formulated, the defendant argued that due to this, the three ingredients were never present. However proprietary estoppel was awarded, it was held that the first agreement they made was enough to create an assurance. Sometimes ‘unconscionability alone is discussed because factors other than detrimental reliance are decisive.’[29]
Proprietary estoppel and unconscionability, up until the recent case of Yeoman’s Row, have had a very broad scope, it is ‘this unconscionability that frees the court from the strictures of the formalities requirements imposed by statute.’[30]However, Thorner v Major is important as it appears to retreat from the restrictive approach to proprietary estoppel favoured by the House of Lords in Yeoman’s Row, which ‘disturbed the emerging understanding of proprietary estoppel as being based on the prevention of unconscionability’[31] This decision was carefully analysed in the later case of Thorner v Major were the assurances that were made were oblique, yet proprietary estoppel was still awarded. It is now accepted that unconscionability shall be used alongside the three ingredients, in the case of Gillet v Holt, the courts approach was that ‘ estoppel claims should not be dissected too closely by analysis of the three “ingredients” but should be looked at in total to see if the denial of the claimants right is unconscionable.’[32]Similarly, Dixon is of the opinion that ‘even if the claimant has relied to detriment on an assurance there can be no proprietary estoppel without unconscionability.’[33] As well as this, In the case of Gillet v Holt, Lord Walker said ‘It is important to note at the outset that the doctrine of proprietary estoppel cannot be treated as sub-divided into three or four watertight compartments.’[34]

On the whole it can be seen that the judgement of Lord Scott was indeed correct, ‘proprietary estoppel cannot be the route to it unless the ingredients for a proprietary estoppel are present’, without the three elements, the doctrine is blown wide open and becomes much too broad. Although it can be seen that unconscionable behaviour is unfair to the claimant, if claims succeeded on this alone, it would be unfair to the defendant. It can be difficult to the courts to make fair decisions, it is for this reason that they should stick to guidelines, if proprietary estoppel was based on unconscionability alone, then it would become unclear to what the law was. The three ‘ingredients’ provide a basis for precedent whilst the notion of unconscionability satisfies the need for flexibility.  Lord Goff summed up the essence of estoppel during his speech in the case of Johnson v Gore Wood & co, where he said ‘In the end, I am inclined to think that the many circumstances capable of giving rise to an estoppel  cannot be accommodated within a single formula, and that it is unconscionability which provides a link between them’[35]The case law seems to suggest that you simply cannot have one without the other, unconscionability and detrimental reliance are intertwined and constantly developing. ‘The two cases do not justify confidence that the House of Lords has yet come fully to grips with the considerable complexities of proprietary estoppel.’[36]


[1]Central London Property Trust Ltd v High Trees House Ltd [1956] 1 All ER 256
[2]Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd; Old Campbell Ltd v Liverpool Victoria Trustees Co Ltd [1981] 1 All ER 897
[3]Yeoman’s Row Management v Cobbe [2008] UKHL 55
[4]Law Com No.278, Sharing Homes, p.33
[5]Inwards and Others v Baker [1965] 1 All ER 446
[6]Pascoe v Turner [1979] 2 All ER 945
[7]Thorner v Major and Others              [2009] UKHL 18
[8]The Limits of Proprietary Estoppel; Thorner v Major [2009] CFLQ 367
[9]Gillet v Holt [2002] Ch 210
[10]P.SparksA New Land Law  (2nd Ed, Hart Publishing, 2003) p.483             
[11]Inwards and Others v Baker [1965] 1 All ER 446
[12]ER Ives Investment v High [1967] 2 QB 379 CA
[13]Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1981] All ER 577
[14]Brikom Investments v Carr [1979] QB 476, 483, CA
[15]A.HudsonEquity and Trusts (6th Ed, Routledge Cavendish, 2010)  P.599
[16]Greasley and Others v Cooke [1980] 3 All ER 710
[17]Jones v Jones [1977] 1 WLR 438
[18]Sharpe v  Sharpe [1980] 1 WLR 219
[19]Preston & Henderson v St.Helens MBC [1989] 58 P&CR
[20]Piquet v Tyler [1978] CLYB 119
[21]Campbell v Griffin [2001] EWCA Civ 990
[22]Yeoman’s Row management v Cobbe [2008] UKHL 55
[23]Lloyds Bank plc v Carrick [1996] 4 All ER 630
[24]Sledmore v Dalby [1996] 72 P&CR 196
[25]E.Bant&M.HardingExploring Private Law (Cambridge University Press, 2010) p.15
[26]A.HudsonEquity and Trusts (6th Ed, Routledge Cavendish, 2010) P.586 
[27]A.HudsonEquity and Trusts (6th Ed, Routledge Cavendish, 2010) P.586
[28]Herbert v Doyle and Another           [2010] All ER (D) 126
[29]E.CookeThe Modern Law of Estoppel (Oxford University Press, 2000) P.87
[30]M.DixonPrinciples of Land Law (4th Ed, Cavendish Publishing, 2002)P.331           
[31]A.HudsonEquity and Trusts (6th Ed, Routledge-Cavendish, 2010) P607
[32]M.DixonPrinciples of Land Law (4th Ed, Cavendish Publishing, 2002)P.332           
[33]M.DixonPrinciples of Land Law(4th Ed, Cavendish Publishing, 2002)P.332 
[34]Gillet v Holt [2002] Ch 210
[35]Johnson v Gore Wood & Co (No.1)  [2002] 2 AC 1
[36]The limits of proprietary estoppel: Thorner v Major [2009] CFLQ 367

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