Proprietary Estoppel – One Day All This Will Be Yours
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Dictionary Definition:
a) Estoppel: Shorter Oxford Dictionary – “a bung or cork”
b) Estop:
S.O.D.
“to stop, prevent (rare)”
House of Lords Decisions:
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Cobbe v Yeoman’s Row (not “The Death of Proprietary Estoppel”)
a) Yeoman‟s Row had been formed to purchase a property consisting of a block of flats with
potential for residential development.
b) One of the flats was occupied by Yeoman's director.
c) Yeoman and Cobbe reached an oral agreement in principle for sale of the land to Cobbe.
d) The substance of the agreement was that:
i)
Cobbe, at his own expense, would apply for planning permission;
ii)
Yeoman would sell the property to Cobbe or to a nominated company for an agreed upfront price of £12m;
iii) Cobbe would then, at his own expense, develop the land in accordance with the planning
permission and sell off the residential units; and
iv) Cobbe would pay to Yeoman 50 per cent of the amount by which the gross proceeds of
sale exceeded £24m.
e) Pursuant to that oral agreement, Cobbe expended considerable sum of money and time to
obtain the planning permission.
f)
Yeoman then sought to re-negotiate the core financial terms and refused to proceed on the
basis of the originally agreed financial terms.
g) No proprietary Estoppel: - neither estoppel, nor proprietary!
i)
Nothing “proprietary” about the arrangement. Merely an understanding that a contract
would be entered into.
ii)
All agreements subject to contract, so Yeoman‟s freedom of manoeuvre expressly agreed
and accepted throughout.
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Thorner v Major [2009] 1 WLR 776
a) At death in 2005, Peter had owned a farm of substantial value and also had considerable
savings.
b) He had made a will in 1997 leaving the residue of his estate, including his farm, to David (1
st
cousin, once removed)
c) He had subsequently destroyed the will and died intestate.
d) David had worked at P's farm for no remuneration from 1976 onwards.
e) By the 1980s, he had come to hope that he might inherit the farm.
f)
No express representation had ever been made.
g) David relied on various hints and remarks made by P over the years, which he claimed had
led him to believe that he was to inherit the farm.
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h) In 1990, P had handed D a bonus notice relating to two policies on P's life, saying "that's for
my death duties".
i)
David's case: at that point his hope had become an expectation.
j)
David had the benefit of proprietary estoppel because
i)
he had reasonably understood P's words and acts as an assurance that he would inherit
the farm and
ii)
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Peter had intended them to be understood in that way.
Legal Definition:
a) Er… no: “synthesis and unification, however desirable as objectives, have their dangers”
b) Uglow v Uglow [2004] WTLR 1183 Mummery LJ:
i)
“The general principles expounded in those cases are relevant to the instant case in the
following respects—
(1) The overriding concern of equity to prevent unconscionable conduct permeates all
the different elements of the doctrine of proprietary estoppel: assurance, reliance,
detriment and satisfaction are all intertwined.
(2) The broad inquiry in a case such as this is whether, in all the circumstances, it is
unconscionable for a testator to make a will giving specific property to one person, if
by his conduct he has previously created the expectation in a different person that he
will inherit it.
(3) The expectation may be created by
(a) an assurance to the other person by the testator and intended by him to be relied
upon that he will leave specific property to him;
(b) consequent reliance on the assurance; and
(c) real detriment (not necessarily financial) consequent on the reliance.
(4) The nature and quality of the assurance must be established in order to see what
expectation it creates and whether it is unconscionable for the testator to repudiate
his assurance by leaving the property to someone else.
(5) It is necessary to stand back and look at the claim in the round in order to decide
whether the conduct of the testator had given rise to an estoppel and, if so, what is
the minimum equity necessary to do justice to the claimant and to avoid an
unconscionable or disproportionate result.
(6) The testator's assurance that he will leave specific property to a person by will may
thus become irrevocable as a result of the other's detrimental reliance on the
assurance, even though the testator's power of testamentary disposition to which the
assurance is linked is inherently revocable.”
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So – four typical elements to an estoppel claim:
i)
Assurance/Promise
ii)
Reliance/detriment
iii) Unfairness
iv) Remedy
b) But Proprietary Estoppel must relate to some identified property, and to some interest in it
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2 interrelated aspects to any estoppel claim:
i)
Making out the claim
ii)
Justifying an appropriate award.
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Background:
Courts must consider carefully the strength of evidence against somebody
who is dead and not able to answer for himself.
(a) Re Hodgson (1885) 31 Ch D 177, cited with approval Re Cummins [1971] 2 All
ER 782, pp. 786-7:
ii)
No legal requirement for corroboration, although the court will want to look for it.
(a) “If the evidence of the living man brings conviction … then there is no rule of law
which prevents that conviction being acted upon”.
iii) Civil standard of proof (balance of probabilities) – but the court wants to see convincing
evidence.
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At least two types of Case?
a) Commercial relationships, where legal arrangements inchoate
b) Domestic wing-and-prayer arrangements.
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Assurances
Must be sufficiently clear
a) Cobbe: Cobbe had spent his money and time well aware that the agreement was not legally
enforceable. He had not been encouraged in the belief that Yeoman would abide by the
agreement. Cobbe's belief or expectation was always speculative.
b) Thorner:
i)
Lord Walker:
(1) Approval of Hoffmann LJ in Walton v Walton [1994] CA T/s 479 ...:
i.
“The promise must be unambiguous and must appear to have
been intended to be taken seriously.”
(2) “I would prefer to say (while conscious that it is a thoroughly question-begging
formulation) that to establish a proprietary estoppel the relevant assurance must be
clear enough. What amounts to sufficient clarity, in a case of this sort, is hugely
dependent on context.”
ii)
Lord Neuberger: must be “clear and unequivocal” but
(1) Words/conduct must be assessed in context.
(2) Wrong to be “unrealistically rigorous”.
(3) If representation ambiguous but reasonable for person to rely on it, ambiguity does
not scupper claim, but Court may interpret it in the way least favourable to him.
iii) Actual representations were far from either clear or unequivocal. There were, in fact,
none: “clear and unequivocal statements played little or no part in communications
between the two men”.
iv) Oblique/allusive/vague may therefore be enough.
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10 Further points
a) Must be clarity about extent of the land/interest, though size/boundaries of farms may change,
and extent crystallises on death/repudiation.
b) Assurances may allow for circumstances and/or relationships to change.
c) Intention of Promisor irrelevant. Reasonable understanding of acts/words by Promisee is what
counts.
11 Other Examples:
a) Gillett v. Holt [2001] Ch 210 Not a will case, but principles the same. Wealthy farmer
(defendant) takes a shine to young lad (Claimant). Asks his parents if he can leave school at
15 to start work at farm. Repeatedly promises him his farming business. Claimant works, over
40 years, at average wage. Provides Defendant with a surrogate family. Lives on the farm.
Defendant executes will in Claimant‟s favour. Defendant goes off Claimant, takes a shine
(“something of an obsession”) to a young lawyer. Summarily dismisses Claimant, revokes will,
makes new will in favour of young lawyer and starts transferring assets to him. Claimant relied
on at least 7 clear & repeated promises – incl. speech at christening of Gillett‟s son!
b) Suggitt v Suggitt [2011] EWHC 903 (Ch);
i)
The son‟s “own evidence as to the promises or assurances made by his father is opaque
to say the least. His claim is that his father promised him it would “all” be his one day.
(1) “no farmer pays their son, as it will all be theirs one day”.
(2) He was sent to agricultural college so that he could learn the skills “to run the farms in
the future”.
(3) When his ideas for running the farm were rejected, he was told by his father “You can
do what you want when the farm is yours”.
ii)
The father was telling everyone else that his son was lazy.
iii) It was also not always readily apparent whether what Frank was expressing was his
intentions or wishes as opposed to a statement of something he definitely would do. “If
John proves himself, he will get the farm”
iv) However, what is important at the end of the day is not what he said to others but what he
said to John
v) Looking at matters in the round on the totality of the evidence, … it is more likely than not
that Frank did make some kind of repeated promise or assurance to John that led him
reasonably to expect that someday at least the farmland (and by implication if not
expressly somewhere to live) would definitely be his following his, Frank's, death.
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12 Remedy – “Satisfying the Equity” Once the court has decided that it is all terribly unfair, what
should it do? Not covered in House of Lords cases
a) “Minimum equity to do justice” Crabb v. Arun District Council [1976] Ch 179, approved
in Gillett v. Holt. Sometimes – wrongly – abbreviated to “minimum equity”
b) Walker LJ’s dichotomy (possibly no longer believed by him to be valid):
i)
If the assurances and reliance are defined with reasonable clarity and have a consensual
character falling not far short of a contract the court will vindicate the expectations “as far
as possible”
ii) If the assurances are vague or the expectations uncertain, then, then the expectations will
be both a starting point and a cap on the award
13 Leading Authority - Jennings v Rice [2003] 1 P&CR 8
a) Estate of >£1m, house worth >£400,000, assurance vague: he would be alright, she would
see to it, “all this” would be his one day.
b) Gardener believed he would get all or part of her estate on her death (but house and furniture
minimum expected).
c) Cost of full time nursing care would have been £200,000. cost of house to be bought by
gardener would have been £150,000.
d) Award of £200,000 to the Deceased‟s gardener who had cared for her unpaid upheld
e) “In this as in every other area of the 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.”
f)
No rule that the expectation should be fulfilled
g) Not aiming to compensate C for his detriment (379D-E)
h) But - Most essential requirement is proportionality between the expectation and the detriment
(381D)
i)
The value of the equity will depend upon all the relevant circumstances including C‟s
expectation and detriment (at 381 D)
j)
Factors – clarity of assurance, Knowledge/extent of detriment.
14 So? - work out the maximum equity = the promise/expectation
a) Then consider what the minimum is that would do justice.
b) Consider the need for a clean break.
c) Possibly increase the minimum, if the deceased‟s estate or Defendants have been
unpleasant, since the dispute started.
15 Examples from cases e.g.
a) RSPCA v Gill (first instance) [2009] EWHC 834 (Ch)
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i)
Only vague assurances: while at school: “you have always got the farm”. Later: “you have
rd
the farm to fall back on”. On engagement “Will he make a farmer?” To 3 parties: “After
all it will all be hers one day.”
ii)
Yorkshire farming tradition.
iii) Expectation of inheritance.
iv) Daughter not abused of expectation.
v) Worked strenuously on farm (while holding down own job) and devoted herself to her
parents.
vi) Lost income and pension rights because not devoted to career = £185,000.
vii) Farm & farmhouse given, including farming equipment and money in business account
16 .Suggitt v Suggitt [2011] EWHC 903 (Ch)
i)
400 acres (subject to contract farming arrangements & IHT), and 1 house.
ii)
Not the money in the business accounts, the other farmhouses, or the other assets
iii) Incl. incidental machinery and outbuildings used, if separable from houses in which others
live.)
whole of the net estate of Deceased – but on the incorrect
b) Re Basham
understanding that the court should give the Claimant what was promised.
c) Pascoe v. Turner
gift of the house itself. Would probably have given her a life interest
or licence for life, if the Defendant had not been so unpleasant.
d) Taylforth v. Harper
half the value of farmhouse and one farm (deceased owned two or
three farms).
e) Gillett v. Holt
large farmhouse, 105 acres & £100,000 (but not the whole farming business,
or all the land).
f)
Campbell v. Griffin
Claimant (who started as a lodger in 1 of 4 rooms only) promised a
life interest. That would be “disproportionate”. A trust would also create expense and
difficulties (e.g. over who repairs and to what extent). Claimant given £35,000 out of value of
£160,000 (but with local authority charge for £64,000).
g) Ottey v. Grundy
Promise was life interest in houseboat, absolute ownership of flat in
Jamaica (value of these approx = £250,000). Given £100,000.
h) Wayling v. Jones
Promise: hotel – given hotel (worth £72,000 + interest).
17 If all else is lost … Quantum Meruit/Unjust Enrichment
a) Cobbe v Yeoman. Yeoman had to pay Cobbe the disbursements he had himself paid out to
secure planning permission, plus a fee for obtaining planning permission appropriate to a
successful developer.
Tom Dumont
Radcliffe Chambers
11 New Square Lincoln‟s Inn London WC2A 3QB DX: LDE 319
Tel: 020 7831 0081 Fax: 020 7405 2560
[email protected] www.radcliffechambers.com
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“LOOK WHAT YOU MADE ME DO”
Reliance and Detriment as elements of Proprietary Estoppel
1. Estoppel – Injurious reliance
Representation – Reliance – Detriment
Eg Thorner v Major [2009] [15][29] Unconscionability?
Proprietary Estoppel – representation (inc by silence) as to ownership/acquisition of property
Cause of Action
2. Unconscionable = Unfair
“Here it is being used (as in my opinion it should always be used) as an objective value judgment on
behaviour (regardless of the state of mind of the individual in question). As such it does in my opinion
play a very important part in the doctrine of equitable estoppel, in unifying and confirming, as it were,
the other elements. If the other elements appear to be present but the result does not shock the
conscience of the court, the analysis needs to be looked at again.”
Lord Walker Cobbe v Yeoman’s Row Mgt [2008] [92]
And..
“.. the doctrine of proprietary estoppel cannot be treated as subdivided into three or four watertight
compartments..the quality of the relevant assurances may influence the issue of reliance, that reliance
and detriment are often intertwined, and that whether there is a distinct need for a "mutual
understanding" may depend on how the other elements are formulated and understood. Moreover the
fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the
elements of the doctrine. In the end the court must look at the matter in the round.”
Robert Walker LJ Gillett v Holt [2001] 225C-D
But..
“My Lords, unconscionability of conduct may well lead to a remedy but, in my opinion, proprietary
estoppel cannot be the route to it unless the ingredients for a proprietary estoppel are present.”
Lord Scott (and HL maj) Cobbe v Yeoman’s Row Mgt [2008] [16]
In practice, and principle, establish/disprove
Representation (inc by silence), Reliance and Detriment
3. Reliance and Detriment: “Look what you made me do”
Reliance = Causation from representee‟s pov
Correlative concept from representor‟s pov = Inducement
2 requirements
Actual reliance
Reasonable reliance ie: is rep‟or taking responsibility?
4. Reasonable Reliance = reasonable for representee to understand representor intended
representation to be relied on
Thorner v Major CA (2008) [54], HL (2009) [5,15,17,22,29,50,56,74-8] esp [56]:
„I respectfully concur in the way Hoffmann LJ put it in Walton v Walton [1994] CA Transcript No
479 ...:
“The promise must be unambiguous and must appear to have been intended to be taken seriously.
Taken in its context, it must have been a promise which one might reasonably expect to be relied
upon by the person to whom it was made.”‟
But Cobbe
Question is – is the rep‟or taking responsibility for the reliance?
Not if promise “in honour” only/ “subject to contract”, even if intended rep‟ee to act, rep‟ee knew did so
at own risk
Result- estoppel easier in domestic than commercial context
5. Actual reliance
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Need not be sole inducement
Need not be dominant inducement
Need not even be „but for‟ inducement
(but less important – less relief?)
What is the test?
Cf misrepresentation: must play “a real and substantial part, though not by itself a decisive part in
inducing the Plaintiff to act”
JEB Fasteners Ltd v Marks, Bloom & Co [1983] 1AER 583, 589a
Defence
Wayling v Jones (1993) at 175,176 suggests to disprove reliance need to show representee would
have acted the same way even if rep‟or resiled
Even without rep would have acted as did out of kindness/love and affection
(see also Campbell v Griffin(2001), Ottey v Grundy (2003), [56]) : Chun v Ho (2003))
Other ways to disprove reliance:
Claimant did not: Hear rep/ Believe rep/ Interpret rep in relevant sense/ Act on rep before withdrawn
Or relied exclusively on own check/advice (SB 5.2.7)
Rebuttable Presumption of Reliance
If Court finds reliance reasonable and detriment proved actual reliance is presumed unless disproved.
Brikom Inv v Carr [1979] 483 Greasley v Cooke [1981]
6. Detriment
Detriment is not presumed - must be proved.
Thorner v Major (2009) [15] [29] [60] Steria Ltd v Hutchison (2007) [128-131] Neuberger LJ Gillett v
Holt (2001) at 232 Stevens & Cutting Ltd v Anderson (1990) 97,99, Jones v Watkins (1983) not follg
Greasley v Cooke (1981) on this
Assess detriment “at the moment when the person who has given the assurance seeks to go back on
it” Gillett at 232.
Position A = position of representee if representor allowed to go back on assurance.
Position B = position representee would be in if he had not relied on assurance.
Is A worse than B?
EG of no detriment
Fisher v Brooker (2008) CA [65-6] and (2009) HL [63, 68, 69]:
Prop estoppel defence failed for want of detriment
Ds failed to prove acted to detriment because believed C asserting no claim to copyright
EGs of detriment
Expenditure on land: waste of money if not your land
Sale of another part of land reducing overall value
Looking after family or family members without payment
Giving up career or educational opportunities
Turning down or giving up other more advantageous accommodation
Working for no wages or below market wages
Need for net detriment
Take account of corresponding benefits, e.g. benefit of rent free occupation outweighing detriment of
expenditure eg Clarke v Swaby (2007) PC
May be by inactivity – rep caused failure to protect/improve position
May involve loss of a chance
Eg Greenwood v Martins Bank (1933) Fung Kai Sun v Chan Fui Hing (1951)
Strover v Strover (2005)
Possible exception to detriment requirement – where representee, in reliance on rep, has given
advantage to representor without detriment to self - analogy with Pallant v Morgan equity - adopted in
Singapore.
David v Deutsche Bank [2010] [40]
“Broad enquiry”,
“Not a narrow or technical concept”
“Whether the detriment is sufficiently substantial is to be tested by whether it would be unjust or
inequitable to allow the assurance to be disregarded. The detriment alleged must be pleaded and
proved.” Gillett v Holt (2001)at 232
Piers Feltham
Radcliffe Chambers
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