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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

 
 

 
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:
 
 
 
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
 
 
 
 
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


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:
 
 
 
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:
 
 
 
 
 
 
 

Proprietary estoppel