Proprietary estoppel
Proprietary estoppel is a means of creating a proprietary interest in land in the absence of following the correct formalities. The doctrine of proprietary estoppel can be used to create freehold ownership, a lease, a licence or an easement. Proprietary estoppel operates on the unconscionable behaviour and can be used to award an interest in land as a remedy where it would be unconscionable for the holder of the legal title to deny the claimant's entitlement. Proprietary estoppel requires the claimant to establish an equity. It is then for the court to satisfy the equity by awarding an appropriate remedy:
Crabb v Arun DC [1976] Ch 179 Case summary
As confirmed in:
Yaxley v Gotts [2000] Ch 162 Case summary
Establishing an equity
Early cases recognised the doctrine of proprietary estoppel as a means of creating a proprietary interest in land where the necessary formalities had not been complied with. A broad approach was used to establish the equity:
Ramsden v Dyson (1866) LR 1 HL 129
Dillwyn v Llewellyn (1862) 4 De GF & J 517 Case summary
A further approach was introduced for establishing an equity for proprietary estoppel. This involved establishing the five probanda identified by Fry J in Wilmott v Barber:
Wilmott v Barber (1880) 15 CH D 96
This five probanda approach was applied in the following cases:
Crabb v Arun DC [1976] Ch 179 Case summary
Coombes v Smith [1986] 1 WLR 808
Swallow Securities v Isenberg [1985] 1EGLR 132
Kammins Ballroom v Zenith Instruments [1971] AC 850
E & L Berg Homes v Grey (1979) 253 EG 473
Matharuv Matharu [1994] 2 FLR 597
However, the broader approach was applied in the following cases:
Appleby v Cowley, The Times April 14
Almalgamated Investment and Property Co Ltd v Texas Commerce International bank [1982] QB 84
Re Basham [1986] 1 WLR 498
Taylors Fashion Ltd v Liverpool Victoria Trustees [1982] QB 133 Case summary
The Modern approach
Oliver J restated the broad approach in Taylors Fashion Ltd v Liverpool Victoria Trustees [1982] QB 133 Case summary. This was approved by the Court of Appeal in Habib Bank v Habib Bank AG Zurich [1981] 1 WLR 1265 and was applied by the Privy Council in Lim Teng Huan v Ang Swee Chuan [1992] 1 WLR 1306. Under the modern approach there are three requirements to establish an equity for proprietary estoppel:
1. An assurance giving rise to an expectation that the claimant would have an interest in land
2. The claimant must demonstrate reliance on the assurance
3. The claimant must have acted to their detriment as a result of the assurance.
1. An assurance
An assurance may be active or passive. An active assurance can be by words or conduct of the owner that leads the claimant to believe that they will have an interest in the house:
An express active assurance can be seen in
Pascoe v Turner [1979] 1 WLR 431 Case summary
Griffiths v Williams (1977) 248 EG 947
Re Basham [1986] 1 WLR 498
Gillet v Holt [2000] 2 All ER 289 Case summary
An active assurance by conduct can be seen in
Inwards v Baker [1965] 2 QB 29 Case summary
Passive assurance
A passive assurance is where the claimant is mistaken in his expectation that they would gain an interest in the land and the owner stands by and does nothing to change their belief:
Scottish and Newcastle Plc v Lancashire Mortgage Corp Ltd [2007] EWCA Civ 684
Shaw v Applegate [1977] 1 WLR 970
The assurance must be clear and unambiguous:
Yeoman's Row Management v Cobbe [2008] EWHC 2810
Although this is not always strictly enforced:
Thorner v Major [2009] UKHL 18
Clarke v Corless [2010] EWCA Civ 338
Gill v Woodall [2010] EWCA Civ 1430
It is questionable as to whether the assurance should be irrevocable:
Taylor v Dickens [1998] 3 FCR 455
Gillet v Holt [2000] 2 All ER 289 Case summary
Lloyd v Sutcliffe [2007] EWCA Civ 153
The assurance must relate to an interest in the property:
Layton v Martin [1986] 2 FLR 227
The assurance must not be obtained by dishonesty:
Murphy v Rayner [2011] EWHC 1
An innocent misrepresentation can be used as an assurance, but the innocence of the owner will be relevant in assessing the equities between the parties:
Qayyum v Hameed [2009] EWCA Civ 352
2. Reliance on the assurance
The claimant must show that they had relied on the assurance. This is generally shown through changing their conduct
Attorney Genereal of Hong Kong v Humphrey's Estate [1987] AC 114
The assurance need not be the only reason for acting to their detriment:
Evans v HSBC Trust [2005] WTLR 1289
In most instances it is relatively easy to establish reliance and the courts have come close to adopting a presumption of reliance where there exists a representation:
Greasley v Cooke [1980] 1 WLR 113
Lim Teng Huan v Ang Swee Chuan [1992] 1 WLR 1306
Evans v HSBC Trust [2005] WTLR 1289
However, despite the relative ease of establishing reliance, where there has been no causal connection between the change of conduct and the assurance the courts have found that there is no reliance:
Coombes v Smith [1986] 1 WLR 808
3. Detriment or change of position
The claimant must act to their detriment or significantly change their position:
ER Ives Investment v High [1967] 2 QB 379 Case summary
Re Basham [1986] 1 WLR 498
Gillet v Holt [2000] 2 All ER 289 Case summary
Suggitt v Suggitt [2012] EWCA Civ 1140
Examples of detriment or change of position
Expenditure of money to improve the land:
Voyce v Voyce (1991) 62 P & CR 290
Inwards v Baker [1965] 2 QB 29 Case summary
Work undertaken to improve the land:
Inwards v Baker [1965] 2 QB 29 Case summary
The claimant improves their own land:
Rochdale Canal Co v King (1853) 16 Beav 630
The claimant does not seek alternative employment:
Gillet v Holt [2000] 2 All ER 289 Case summary
Regarding non-financial detriment, it can be more difficult to establish an equity:
Coombes v Smith [1986] 1 WLR 808
However, non-financial detriment has been recognised as giving rise to an equity:
Re Basham [1986] 1 WLR 498
Jones v Jones [1977] 1 WLR 438
Greasley v Cooke [1980] 1 WLR 113
Campbell v Griffin [2001] EWCA Civ 990
When assessing detriment the courts will also take into account any benefits received:
Watts v Story (1984) 134 NLJ 631
Powell v Benney [2007] EWCA Civ 1283
Satisfying the equity
Once an equity has been established by the claimant, the court must assess the appropriate remedy to award. This is a matter of deciding which interest in land to award or whether to award monetary compensation. In so doing the courts have a wide discretion to do what is just and equitable to satisfy the equity. The courts will have regard to the expectation of the claimant, but the interest they expected is not always the one awarded. A number of other factors to be taken into account were identified in Jennings v Rice [2003] 1 P & CR 8. The courts will consider the proportionality between the expectation and the detriment.
Some examples of remedies which have been awarded include:
Conveyance of the freehold:
Dillwyn v Llewellyn (1862) 4 De GF & J 517 Case summary
Pascoe v Turner [1979] 1 WLR 431 Case summary
Gillet v Holt [2000] 2 All ER 289 Case summary
Lease:
Yaxley v Gotts [2000] Ch 162 Case summary
Transfer of equitable ownership:
Lim Teng Huan v Ang Swee Chuan [1992] 1 WLR 1306
Occupational right:
Inwards v Baker [1965] 2 QB 29 Case summary
Greasley v Cooke [1980] 1 WLR 113
Compensation:
Gillet v Holt [2000] 2 All ER 289 Case summary
Campbell v Griffin [2001] EWCA Civ 990
Powell v Benney [2007] EWCA Civ 1283
An easement:
ER Ives Investment v High [1967] 2 QB 379 Case summary