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Modern Land Law

(2004), the defendant successfully pleaded estoppel to an action in trespass brought against her by her father. Second, as indicated already in this chapter, proprietary estoppel can have a much more dramatic effect. There is no doubt that, if successfully established, it can generate new property interests in favour of a claimant. As is commonly stated, proprietary estoppel can be a sword in the hands of a claimant who has relied on an assurance by a landowner that they will be given some right or privilege over the land.23 A court of equity will ‘satisfy’ the estoppel by awarding the claimant that right or interest which they deem appropriate, although the court will rarely, if ever, go beyond the maximum the claimant was informally promised24 and will seek to do that which remedies the unconscionability suffered by the claimant.25 This means that proprietary estoppel can result in the creation of an interest in land without the need for any formality in the dealings between landowner and claimant. It represents the creation of rights arising from the action of equity on an individual’s conscience and is the antidote to unfair over-reliance on formality rules.

9.5 Conditions for the operation of proprietary estoppel

Proprietary estoppel has had a role in English property law for many decades, being another example of the intervention of equity to mitigate the consequences of lack of compliance with the formality requirements of the common law or statute. At one time, the conditions for the operation of proprietary estoppel were fairly strictly drawn and these were codified by Fry LJ in Willmott v. Barber (1880). He identified the so-called ‘five probanda’ of proprietary estoppel and, as can be seen, they required the claimant to jump a high hurdle to be successful. As Fry LJ specified, the following had to be established:

1The claimant must have made a mistake as to their legal rights over some land belonging to another.

2The true landowner must know of the claimant’s mistaken belief.

3The claimant must have expended money or carried out some action on the faith of that mistaken belief.

4The landowner must have encouraged the expenditure by the claimant, either directly, or by abstaining from enforcing their legal rights.

5The owner of the land over which the right is claimed must know of the existence of their own rights, and that these are inconsistent with the alleged rights of the claimant.

23Crabb v. Arun DC (1976).

24Orgee v. Orgee (1997).

25Jennings v. Rice.

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Perhaps we should not be surprised that these conditions were onerous because a successful claim of proprietary estoppel could result in the creation of an interest in land that not only affected the immediate estate owner in his current or planned use of the land, but also future purchasers of the land. Indeed, the informal way in which the estoppel has by definition arisen, means that it is not certain that any intending purchaser or mortgagee would or could be aware of the existence of the estoppel-generated adverse right. After all, the right has been created without a deed or written instrument or registration. However, since these early days of estoppel there have been many social and economic changes in the use of land and in the structure of land ownership26 and when combined with a tightening of the formality rules themselves (e.g. section 2 of the Law of Property (Miscellaneous Provisions) Act 1989), it was perhaps inevitable that proprietary estoppel would grow in importance and its defining features would change.

In the result, and as a reflection of modern conditions, the original criteria for establishing an estoppel have been largely abandoned and the modern approach is to be much more flexible about the way in which an estoppel can arise. According to Oliver J in Taylor Fashions v. Liverpool Victoria Trustees

(1982), a claimant will be able to establish an estoppel if they can prove an assurance, reliance and detriment in circumstances where it would be unconscionable to deny a remedy to the claimant. This has confirmed that the emphasis in cases of proprietary estoppel has shifted away from an examination of the actions of the landowner and has become more focused on the behaviour of the claimant. Moreover, as we shall see, Gillett v. Holt (2002) and Jennings v. Rice (2002) make it clear that these four features of estoppel – assurance, reliance, detriment and unconscionability – are not to be seen as isolated features, but that each case must be looked at ‘in the round’27 in order to determine whether the landowner should be able to go back on his assurance to the claimant about the use of land. We are to adopt an holistic approach to establishing proprietary estoppel.

Before examining in more detail the conditions necessary to establish an estoppel in modern land law, it is important to appreciate that it is not a universal remedy that can cure every defect in formality. If it were, there would be little point in having formality rules at all. As the court of first instance emphasised in Prudential Assurance v. Waterloo Real Estate (1998), estoppel is a drastic remedy and it is a major step for a court to award a claimant a proprietary right over another’s land in the absence of due formality, even more so if the effect of the estoppel is to compel a transfer of ownership of the land itself.

26For example, shared family ownership of property; occupation by extended family groups.

27See also Ottey v. Grundy (2003) for a successful claim on this basis and Murphy v. Burrows (2004) for an unsuccessful claim on this basis.

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So, in Taylor v. Dickens (1997) and Uglow v. Uglow (2004), the claimant had been promised property in a will, but when the promise was not honoured, the court rejected the claim that the property should be transferred under proprietary estoppel; in Evans v. James (2000) proprietary estoppel did not cure the absence of a valid contract between the parties relating to the transfer of land; in Slater v. Richardson (1980), the claimants were unable to rely on estoppel after having failed to observe the formalities of the Agricultural Holdings Act 1986; in Canty v. Broad (1995), the claimants, having failed to conclude a contract for the sale of land in accordance with section 2 of the LP(MP)A 1989, were unable to claim the land by estoppel; and in Yeomans v. Cobbe (2008), the House of Lords refused to allow estoppel to effectively enforce an oral agreement that both parties knew was “binding in honour” until it was reduced to writing.28 By way of contrast, the claimant was partially successful in Matharu v. Matharu (1994), using estoppel as a means to live in a property for the rest of her life; in Wayling v. Jones

(1993), Gillett v. Holt (2000), Jennings v. Rice (2002), Ottey v. Grundy and Thorner v. Curtis (2007) the claimants established a right to particular land promised by the deceased, but not left to them by will; in Sleebush v. Gordon (2004) the claimant had succeeded to half the interest in a property on the death of her husband but was successful in recovering the other half by way of estoppel even though it had been left by will to another; in Bibby v. Stirling (1998) the claimant used estoppel to establish a right to use a greenhouse erected on the defendant’s land; in Flowermix v. Site Developments (2000) a contract that was void for uncertainty (as to the extent of land concerned) was nevertheless effectively enforced by reliance on the estoppel rules; in Joyce v. Rigolli (2004) the Court of Appeal was prepared to use estoppel to enforce a contract for the disposition of land that was completely devoid of writing; and in Kinane v. Alimamy Mackie-Conteh (2005), the Court of Appeal used proprietary estoppel and constructive trust29 to validate a mortgage that failed completely to meet any of the formality requirements usually required for either legal or equitable mortgages.

These are just a sample of the numerous cases where estoppel is pleaded. Of course, many of the cases where the plea was unsuccessful can be explained on the basis that, say, the assurance was never made, or the detriment was never suffered or there was no unconscionability. However, to apply the Taylor Fashions criteria mechanically is to miss the point. Estoppel is available to cure absence of formality when, but only when, it would be unconscionable for the defendant to rely on the lack of formality to defeat the claimant – Hopper v. Hopper (2008). Unconscionability is at the heart of the doctrine and the existence of unconscionability is the reason why the lack of formality can be excused. This is examined in more detail but it is mentioned at the outset to reinforce the link between formality and the plea of estoppel.

28Applying AG for Hong Kong v. Humphreys (1987).

29On which see below.

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9.5.1 The assurance

Proprietary estoppel is a flexible doctrine that acts on the conscience of a landowner. Accordingly, the landowner must have made some kind of assurance to the claimant that either he would refrain from exercising his strict legal rights over his own land or, more commonly, that the claimant might have some present or future right over that land. It is clear, however, that the assurance must be as to some property right over land, otherwise it is a mere personal assurance - Yeoman's v. Cobbe (2008). A typical example is where a landowner assures the claimant that ‘you may live in my house’ or ‘use my land as a short cut’. Occasionally, the assurance can be much more dramatic, as where the landowner promises to bequeath property to the claimant on his death, as in Wayling v. Jones (1993) and Gillett v. Holt (2000). Importantly, the form this assurance takes is irrelevant and often it is given orally or in the context of a written transaction that is not itself enforceable as a contract to transfer an interest in land (as apparently in Flowermix). However, the assurance must be such as to generate unconscionability if withdrawn, so in Murphy v. Burrows (2004) the fluid and uncertain nature of the parties’ relationship meant that the assurances were not actionable as estoppels. That said, the assurance may be express30 or implied, as where a landowner refrains from preventing the claimant using his land in a particular way,31 or the landowner by actions rather than words effectively assures the claimant about a right in land.32 Indeed, somewhat remarkably, it seems from JT Developments v. Quinn (1991) that an estoppel can arise even though the assurance was given in circumstances where there was clearly no intention to create binding obligations between the parties, as where the parties had attempted to negotiate a contract governing use of the land, but had failed. Again, in Lim Teng Huan v. Ang Swee Chuan (1992) and in Flowermix, a written, though unenforceable agreement was held to constitute the requisite assurance, with the consequence that the unenforceable agreement was indirectly given effect through the intervention of proprietary estoppel, even though this appears to be enforcing a contract that the parties have not put into effect properly through their own fault. Similarly, in Kinane v. Alimany Mackie-Conteh (2005) the borrower had agreed by letter to charge his land as security for a loan, but the written instrument did not meet with the formality requirements of section 2 of the 1989 Act as both borrower and lender did not sign it. It failed, therefore, as an equitable mortgage, but the Court of Appeal were prepared to use estoppel to support the creation of the mortgage and so give the lender his proprietary remedies when the loan was not repaid.

30For example, in Ottey v. Grundy, in a letter of intent or Gillett v. Holt repeated publicly on many occasions. See also Salvation Army Trustees v. West Yorkshire CC (1981).

31Ramsden v. Dyson (1866).

32Thorner v. Curtis (2007).

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The Kinane case is, perhaps, the most extreme example of a very liberal approach to proprietary estoppel that has developed in the years following the tightening of the formality rules in the Law of Property (Miscellaneous Provisions) Act 1989. In it, and in Lim Teng Huan, it is difficult to see why the formality rules could be ignored just because the claimant had partly performed the unenforceable contract. In both cases, there is a need to demonstrate why it would be unconscionable to apply the formality rules that apply to other transactions. Indeed in Yeoman's v. Cobbe (2008) the House of Lords make it clear that it is not permissible to use proprietary estoppel to circumvent the formal requirements of section 2 of the 1989 Act. Consequently, in that case, the claim of estoppel failed. In fact, the pendulum of estoppel swings back and forth. In some other cases, such as Matharu v. Matharu (1994), it is suggested that the narrow Willmott v. Barber criteria should be used once again and in Uglow v. Uglow (2004) the retraction of an assurance was not unconscionable (and so no estoppel existed) because the factual situation existing when it was withdrawn was wholly different from when it was given.33 Similarly in Orgee v. Orgee (1997), Hurst LJ (who sat in Matharu) while reiterating the modern approach of assurance, reliance and detriment, did make it clear that a crucial element in determining whether an actionable assurance had been made was whether the defendant (i.e. the landowner) had encouraged or acquiesced in the belief held by the claimant and on which the claimant then relied to his detriment. This assurance might be ‘unilateral’ in that it was offered freely by the landowner, but it might also arise from a mutual understanding between the parties about the use of the land. This ‘understanding’ or unilateral ‘promise’ could be express or implied by conduct and it did not have to amount to active encouragement so long as it amounted to knowing acquiescence. Crucially, however, according to Orgee, a landowner could not be held to have generated an estoppel in favour of the claimant unless the landowner knew (or ought to have known) that the claimant believed he had a right to the land and, by words or conduct, the landowner had encouraged, or not dispelled this. For example, if A promises B the right to park a car on A’s land, but B takes this as a promise to give him the land, which belief is neither encouraged nor acquiesced in by A, no estoppel involving transfer of the land can arise (although a right to park the car might). So, in Slater v. Richardson (1980), the defendants were wholly unaware of the claimant’s belief and had done nothing to encourage it. However, we must be wary in seeking to place limitations on the estoppel doctrine. Most definitely, Orgee does not suggest that the promise or ‘understanding’ must amount to a contract or anything like it; rather, it expresses the idea that a landowner can be required to recognise the rights of another over his land, however informally created, only when the landowner is in some way

33The claimant was assured he would inherit on death, but the property was left by the will to another. However, when it was given, the assurance was based on the assumption that the parties' business relationship would continue. This had long ceased.

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responsible for the situation. Even then, we must remember the emphasis in Gillett v. Holt and Jennings v. Rice to treat each case ‘in the round’ and so no forensic dissection of the ‘assurance’ requirement is likely to find favour with a court if, on all the facts, the claimant should succeed.

Allied to the above point is the fact that the assurance given must be specific enough to justify the drastic effects of an estoppel. So, a statement that the defendant would welcome the claimant as his tenant is not an ‘estoppel generating assurance’ that a tenancy will be given (Slater), and an understanding between claimant and defendant that the former could be given an agricultural tenancy is not an ‘estoppel-generating assurance’ that he shall have one (Orgee). Likewise, in Century UK v. Clibbery (2004), the vague nature of the alleged discussions between landowner and claimant were too unspecific (even if true) to generate an estoppel, in Lissimore v. Downing (2003) the alleged representations did not relate to any specific property and in Gordon v. Mitchell (2007), the landowner merely had made vague statements about what might happen to the land on his death. Consequently, it will be rare for the court to find that an assurance has been made in the context of negotiations between parties intending to complete a fully binding contract, especially if the negotiations are expressly ‘subject to contract’.34 So also, as is obvious, the assurance must be given to the person claiming the estoppel: in Sledmore v. Dalby (1996), the assurance had been given to the claimant’s wife (now deceased), and had been fulfilled, and so the claimant could not rely on it.

To conclude, then, the cases tell us that the assurance must be in the way of an understanding or unilateral promise between claimant and defendant, be given to the claimant personally and amounting to the promise of some right or interest, either taking effect immediately or in the future, in relation to the land. In times past, the assurance has been in respect of some limited right in or over the land, but it is clear that estoppel now encompasses claims to full or part ownership of the land itself. In Orgee v. Orgee (1997), a further ground for dismissing the claim was that the assurance was silent as to the specific attributes of the right allegedly promised. The claim was for an agricultural tenancy and the court appeared to suggest that an estoppel would not be given because the terms of the tenancy (e.g. the scope of the repairing obligations) were never the subject of a mutual understanding. This, it is respectfully submitted, is going too far. It should be enough that the claimant was assured of some clear right over the defendant’s land: a share or ownership, lease, easement, licence, and so on. It should not be necessary for the claimant to prove the terms of the lease, easement, and so on. This would be to emasculate the doctrine of proprietary estoppel and is just as unjustified as the generous approach typified by the Kinane, Lim and Quinn cases.

34 Edwin Shirley Productions v. Workspace Mana Ltd (2001).

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9.5.2 The reliance

As we have seen, the ‘assurance’ may be entirely informal, but whatever form it takes, it is essential that it produces an effect on the claimant. The claimant must ‘rely’ on the assurance, in that it must be possible to show that he was induced to behave differently because the assurance had been given. Of course, in practice this can be very difficult to prove and a court may well be prepared to infer reliance if that is a plausible explanation of the claimant’s conduct. Thus, in Greasley v. Cooke (1980), the Court of Appeal held that if clear assurances have been made and detriment has been suffered, it is permissible to assume that reliance has occurred. Likewise, in Wayling v. Jones (1993), the Court of Appeal looked only for a ‘sufficient link’ between the assurance made and the detriment incurred by the plaintiff, the existence of which would throw the burden of proof onto the defendant to show that there had, in fact, been no reliance. Conversely, Thorner v. Curtis (2007) makes the point that where the assurance is not express, there must be clear and substantial evidence of reliance – as there was in that case. The crucial point seems to be that there will be no reliance only if it can be shown that the claimant would have done the detrimental acts completely irrespective of the defendant’s conduct. In Orgee v. Orgee (1997), for example, it was clear that much of the plaintiff’s alleged detriment was ordinary expenses that would have been incurred normally and in any event. However, even this must not be taken too far. In Campbell v. Griffin (2001), the claimant had been a lodger and over time had taken on the responsibility of caring for his ‘landlords’, an elderly couple. There was clear evidence of relevant assurances about the property. At trial, the claimant admitted that he would have assisted his landlords out of ordinary human compassion rather than in clear reliance on their promises. Nevertheless, the Court of Appeal upheld the estoppel claim, noting that a dual motive for action (the assurance plus normal human compassion) does not thereby diminish the fact that reliance has occurred. This might seem overly generous, but it would be harsh indeed to dismiss a claim simply because the claimant was not, after all, a thoroughly selfish individual who was prepared to help only because of what was on offer. A further example of this is provided by Chun v. Ho (2001) where Miss Chun successfully established a claim in estoppel35 to a share in a business and its property because her actions in giving up her career and establishing a life with the property owner to the disgust of her family36 could not be explained solely on the basis of her love for him. There must have been some reliance on his clear assurances about the business. Evidently then, the existence of reliance is critically dependant on the peculiar facts of each case and is not to be discounted

35She also claimed constructive trust and the court drew no distinction between the claims.

36He was serving a prison sentence in Hong Kong.

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merely because of family or emotional ties between claimant and landowner that might otherwise explain a course of action. Equally clear is the point made by the Court of Appeal when upholding the estoppel claims in Gillett and Jennings: assurance, reliance and detriment are necessarily interwoven and the court should not approach them forensically as if they were entirely separate requirements. The case must be viewed in the round.

9.5.3 The detriment

Equity has always been wary of ‘volunteers’; that is, claimants who seek to enforce a promise even though they have given nothing in return. Similarly, proprietary estoppel cannot be established unless the claimant can prove that he has suffered some detriment in reliance on the assurance. Not surprisingly, so long as the detriment is not minimal or trivial, it may take any form. For example, it may be that the claimant has spent money on the land or advanced money to the landowner in reliance on the assurance,37 or has physically improved the land in some way or has devoted time and care to the needs of the landowner38 or has forsaken some other opportunity.39 Indeed, as Campbell v. Griffin and Jennings v. Rice show, it is not necessary that the detriment be related to land at all, or the land in dispute.40 It may be, for example, that the claimant has spent their money in other ways, on the faith of an assurance that they would have somewhere to live or an inheritance to enjoy. It is even true that detriment in this technical sense can exist even though the claimant has derived some benefit from his association with the landowner. In Gillett, Mr Gillett might be thought to have done rather well out of his relationship with Mr Holt as the former owned valuable shares in the farm company and held property in his own right. Nevertheless, he still incurred the detriment of lost opportunities. The point is simply that an estoppel cannot be established unless there has been some detrimental reliance, for that is what makes a retraction of the assurance potentially unconscionable.41 Sufficient detriment is always a question of fact and many claims fail because there was neither an assurance nor detriment. This should be no surprise as people do not usually act to their detriment unless they are certain that they have been promised something concrete. Consequently, detriment itself, however extensive, is not enough. In Taylor v. Dickens (1997), the plaintiff worked for a number of years without pay in the expectation that he would inherit from the deceased. The deceased changed her will and left everything to another. Detriment was clear enough but, according to the trial

37Kinane v. Alimany Mackie-Conteh (2005).

38Campbell v. Griffin (2001).

39Ottey v. Grundy; Lloyd v. Dugdale (2001).

40In Ottey one disputed property was in Jamaica and see Wayling v. Jones (1993).

41Gillett v. Holt (2000).

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judge, there was no assurance that the deceased would never change her will and so the claim failed for lack of an enforceable assurance. This case was settled before an appeal but now looks harsh in the light of the decisions in Gillett, Grundy, Jennings and Thorner. Even so, it remains the case that an unencouraged detriment is not sufficient to found an estoppel. Finally, in case there is doubt, Lloyd v. Dugdale (2001) makes it clear that the detriment must be incurred by the person to whom the assurance is made. There is no concept of ‘derivative detriment’ and so Mr Dugdale had to prove (as he did successfully) that the detriment was incurred by him personally and not on behalf of his company (a separate legal entity).

9.5.4 Unconscionability

It is clear that Oliver J in Taylor Fashions regarded unconscionability as the very essence of a claim of proprietary estoppel. Indeed, in the great majority of cases, the simple fact that the landowner is seeking to retract an assurance given and relied upon will be unconscionable. In Gillett, at first instance Carnwath J put the matter succinctly by noting that ‘[n]ormally it is the promisor’s knowledge of the detriment being suffered in reliance on his promise which makes it “unconscionable” for him to go back on it’ and this was reiterated by the Court of Appeal in the same case. As noted above, it is this unconscionability that frees the court from the strictures of the formality requirements imposed by statute42 and allows the claimant to succeed. So, an oral agreement deliberately made ‘subject to contract’, as in Canty v. Broad (1995),43 or a void executory contract (i.e. one which might never be binding as to substance)44 or a conditional assurance whose conditions are not fulfilled,45 cannot be enforced via estoppel, because there is no unconscionability in relying on the absence of formality in these circumstances, even if there has been reliance and detriment. So also, the common understanding that a person is free to change their will makes it difficult to plead unconscionability when a will is changed or property left to another in a new will,46 although unconscionability may exist if the assurance is withdrawn after it is repeated so often and so loudly that no one could doubt that the landowner meant what they said about the destination of their property on their death, as in Gillett v. Holt and Ottey v. Grundy. In Gillett itself, Mr Holt had promised Mr Gillett over a 40-year period that he (Gillett) would be the beneficiary of

42This may well include the e-conveyancing provisions of the LRA 2002.

43Also AG for Hong Kong v. Humphreys (1987), Secretary of State for Transport v. Christos (2003). See also Yeoman's v. Cobbe (2008) which confirms that void oral contracts cannot be enforced by estoppel.

44Ravenocean v. Gardner (2001).

45Uglow v. Uglow.

46Taylor v. Dickens (1997), Murphy v. Brown, Driver v. Yorke.

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Holt’s will. When Holt changed his will to exclude Gillett, a claim based on estoppel was successful, the Court of Appeal noting that the mere withdrawal of the assurance after such detriment (that is, 40 years of work at less than the market wage) was sufficient to establish unconscionability. This was part of the court’s general approach 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 claimant’s right is unconscionable. Of itself, this formula presents certain difficulties for it appears to define unconscionability purely in terms of assurance, reliance and detriment (i.e. unconscionability exists when the assurance is withdrawn after detrimental reliance) and so the ‘all-important’ criterion of unconscionability, the raison d’être of estoppel47 becomes a mere shadow of the other three components. The case itself can be justified on the ground that (as noted above) the repeated assurances implied that Mr Holt would not exclude Mr Gillett from the will and hence the unconscionability lay in the attempt to plead the formality of the new will in defiance of Gillett’s claim. Clearly, the law must be astute to protect a claimant when there is genuine estoppel, but should not permit estoppel to be an easy way of avoiding the formalities normally required for conducting dealings with land. Thus, the common understanding that there is no contract for the sale of a house until formalised in writing explains why a house owner may accept and reject offers for the house at any point up to exchange of (written) contracts without behaving unconscionably. In the final analysis, unconscionability is, by its nature, a fluid concept and much depends on the facts of each case. It does not mean that the claimant must prove ‘fraud’ by the defendant, although there are elements of fraud in the concept.48 It means, simply (and unhelpfully!), whether, in all the circumstances, the landowner can resile from the assurance he has given and on which the claimant has relied to detriment (Hopper v. Hopper (2008)). Crucially, even if the claimant has relied to detriment on an assurance, there can be no proprietary estoppel without unconscionability, but where there appears to be unconscionability, the courts will find an estoppel without much looking.

9.6What is the result of a successful plea of proprietary estoppel?

The myriad circumstances in which proprietary estoppel can be established necessarily means that the remedy for each successful claimant will vary. Broadly speaking, however, two possibilities are available. First, if the proprietary estoppel is established by a defendant in an action by the landowner for

47Taylor Fashions (1982).

48Orgee v. Orgee (1997).

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