Экзамен зачет учебный год 2023 / Dixon, Modern Land Law

Modern Land Law

recovery of the land or exclusion of the defendant or denial of some right alleged by the defendant, the landowner’s claim will be dismissed and the defendant will be left to enjoy the right that the landowner was seeking to deny. This is estoppel as a shield, and is illustrated by Gafford v. Graham (1998) where the landowner entitled to the benefit of a restrictive covenant was estopped from enforcing it due to his acquiescence in conduct contrary to the covenant by his neighbour. Second, and more importantly for our purposes, if the estoppel is established by a claimant seeking to enforce a right against a landowner in consequence of an assurance, the court can award the claimant such remedy as it deems appropriate, save only that Orgee v. Orgee (1997) suggests that the court cannot award more than the claimant was ever assured. In fact, as is made clear by Jennings v. Rice, the precise reach of the remedy awarded should be tailored to remove the unconscionability suffered by the claimant.

As explained in Crabb v. Arun DC (1976), on a practical level this means that the court can ‘satisfy’ the equity in any manner that is appropriate to the case before it, provided it does the minimum to achieve justice between the parties.49 The remedy may be ‘expectation based’ (the claimant gets that which was promised), ‘reliance based’ (the claimant gets a remedy commensurate with extent of their detrimental reliance) or a mixture of the two provided that the unconscionability is remedied. Crucially, therefore, a court can award the claimant any proprietary or personal right over the defendant’s land, or no substantive remedy at all. For example, in Dillwyn v. Llewellyn (1862) and Pascoe v. Turner (1979), the claimant was actually awarded the fee simple in the land; in Celsteel v. Alton (1987), Bibby v. Stirling (1998) and Sweet v. Sommer (2004), there appears to have been the award of an easement; and in Voyce v. Voyce (1991) there was a complete readjustment of the parties’ rights over the property. Yet although in all of these cases the successful claimant was awarded a proprietary right in the land, it is possible that he will be given only a personal right (a licence) to use the land. On one view, this occurred in Inwards v. Baker (1965) where a father had encouraged his son to build a bungalow on his (the father’s) land, and when the son went ahead, the court appeared to grant the son a licence to use the land for life. Likewise, in Matharu v. Matharu (1994), the claimant’s claim for a share of beneficial ownership was rejected, but she was awarded a licence to occupy for life and in Parker v. Parker (2004) a licence appears to have been awarded as a result of estoppel. Again, there is no reason why any right over land – proprietary or personal – should be awarded at all. For example, in Wayling v. Jones (1993),

49In Wormall v. Wormall (2004), the successful claimant was granted a right to occupy the land for a stated period but on appeal to the Court of Appeal her claim to additional monetary compensation was dismissed. The time limited right to occupy was the minimum necessary to do justice between the parties.

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the claimant was awarded compensation in lieu of a proprietary interest because the relevant land had been disposed of previously, and in Campbell v. Griffin (2001) the claimant was given a charge to the value of £35,000 over the property and was not permitted to remain in possession.50 Similar results were achieved in Jennings and in Ottey and this would have been the judge’s solution in Murphy v. Burrows had he believed that the estoppel was made out in the first place. Interestingly, in Murphy, the judge regards the monetary award as a lesser form of relief – justified in that case by the weak acts of detriment. Certainly, in both Jennings and Campbell, it seems clear that the claimant would have preferred a proprietary stake in the property.

As one can see, the range of remedies available to the court is open ended, and, importantly, does not necessarily have to result in the grant of a traditional proprietary interest at all, as where a licence is granted or a money award made. Of course, this flexibility does produce a measure of uncertainty, both for the claimant and any potential purchaser of the land over which the estoppel is asserted. In fact, the most difficult problems in practice occur when the ‘burdened’ land is sold to a purchaser before the estoppel has been crystallised by decision of the court as in Bibby v. Stirling (1998) and Lloyd v. Dugdale (2001). Naturally, the purchaser is likely to deny that the claimant has any right over the land – after all, there is no written evidence of the right and the purchaser is not responsible for generating the estoppel. In these circumstances, the court is faced with the classic property law issue: whose right to the land should have priority, that of the person alleging the estoppel who by definition has been treated unconscionably, or that of the purchaser who has paid value for land that now might be burdened by an adverse right? In fact, this dilemma hides layers of further questions. First, does the claimant benefit from an estoppel; and second, does that estoppel bind the purchaser? In turn, this second question will depend on both the nature of proprietary estoppel itself and (assuming estoppel is ‘proprietary’ in character) whether the appropriate rules of registered and unregistered land have been observed.

9.7The nature of proprietary estoppel and its effect on third parties – issues of doubt

Prior to the Land Registration Act 2002, the nature of proprietary estoppel was not easy to determine and there were two major strands of thought. On one view, proprietary estoppel was itself an interest in land, although necessarily an equitable interest because of the informal way it arose. In other words, it was irrelevant how the court satisfied the equity (e.g. by easement,

50 The house was to be sold and the claimant paid out of the proceeds.

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fee simple or licence), because the estoppel was proprietary in nature and itself capable of binding a purchaser of the land. Thus, a purchaser buying land over which there was a potential estoppel could find the land subject to an adverse right if the claimant could prove that the former owner had ‘created’ an estoppel in his favour. Support for this view was derived from the argument that ‘estoppel licences’ were interests in land and from cases such as Ives v. High (1967) and Inwards v. Baker (1965) where the ‘bindingness’ of estoppel appears to be accepted. In the latter case, the court indicated that the claimant should be awarded a licence to occupy the land as a result of an estoppel, which could then bind a third party and the same solution was adopted in Greasley v. Cooke (1980) and in Re Sharpe (1980).51 Likewise, in

Habermann v. Koehler (1997) and Birmingham Midshires v. Saberhawal (1999), the Court of Appeal intimated, without deciding, that if the claimant could establish an estoppel, it might amount to an overriding interest under the then applicable section 70(1) of the LRA 1925, thus indicating its proprietary status.52 However, it is also true that both Inwards and Cooke could have been justified on other grounds (i.e. that the claimant should have had a life interest under a settlement53) and Bibby v. Stirling (1998) is probably an example of an existing easement binding the burdened land. Likewise, in Williams v. Staite (1979), another case often cited in support of this view, the matter was assumed, rather than argued. Significantly, however, in Lloyd v. Dugdale (2001), the Court of Appeal took the view that if the claimant had been in actual occupation of the property, his right arising by estoppel would have bound the purchaser (Lloyd) as an overriding interest under the then applicable section 70(1)(g) of the LRA 1925.54 This was, prior to the Land Registration Act 2002, the clearest evidence that estoppels were themselves proprietary.

The second view did not see proprietary estoppel as a right in itself but, rather, as a method of creating rights: a means to an end, not the end itself. On such a view, the estoppel was regarded as a process whereby rights in, or over, land were created, rather like a contract or a deed but much less formal. Consequently, it was not the fact of estoppel that was relevant, but the right that was created by the court when it satisfied the estoppel. So, for example, if the estoppel gave rise to a lease, a freehold, an easement or any other proprietary right, then there was no doubt that a third person buying the land

51In Re Sharpe, the court accepted that the estoppel (the ‘equity’) could bind a trustee in bankruptcy.

52The argument would be equally applicable to paragraphs 2 of Schedules 1 and 3 of the LRA 2002.

53Dodsworth v. Dodsworth (1973).

54Consequently, were it not for the unfortunate circumstance that Mr Dugdale’s company was in actual occupation rather than he personally, he would have succeeded in his claim against the purchaser because his estoppel would have bound as an overriding interest.

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over which the right took effect might be bound by it, being bound in the same way that any lease, freehold or easement would bind. The essence of the matter was that the estoppel had generated a proprietary right and it was the right that was binding, not the estoppel. The obvious consequence of this was, however, that if the estoppel generated a personal right (i.e. a licence or a money award) that licence or award was incapable of binding a purchaser, simply because it was personal and the method of its creation (estoppel) was irrelevant. For some commentators, this alternative view of proprietary estoppel had much to commend it, not least that it maintained a clear distinction between proprietary and personal rights and did not fetter a court in its discretion. If, for example, the court wished to ensure that a future purchaser of the ‘burdened’ land was bound by an estoppel, it could have awarded the claimant a proprietary right arising from it. If the court wished to ensure that the estoppel was effective only against the maker of the assurance, it could have awarded a personal remedy. However, it is true that there was little judicial support for this theory, and not only because the effect of an estoppel on a third-party purchaser was rarely a live issue in the courts. It had the great disadvantage that a right so painstakingly established by the claimant, stemming from the landowner’s unconscionability could be defeated pro tanto by the simple device of conveying the land to another.

9.7.1 Estoppels after the Land Registration Act 2002

While there may have been doubts and arguments about the nature of proprietary estoppel before the entry into force of the Land Registration Act 2002, these doubts have been resolved by express provision in the Act itself. Section 116 provides that:

[F]or the avoidance of doubt that, in relation to registered land … an equity by estoppel … has effect from the time the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority).

This import of this section is clear enough and is spelled out in the Law Commission Report on which the Land Registration Act 2002 is based. It means that an uncrystallised estoppel (the ‘equity by estoppel’) has proprietary character with the consequence that if the normal priority rules of registered conveyancing are satisfied (‘rules about the effect of dispositions on priority’), the estoppel will bind a third party. In practice, this means that we must examine the precise circumstances in which it is alleged that an estoppel is alleged to bind a third party. There appears to be three possibilities.

1The landowner (A) generates an estoppel in favour of B. Before B can sue A to determine the precise remedy he will receive, A sells the land to P. The uncrystallised estoppel – the equity by estoppel – is declared by section 116 to be proprietary and so it has the potential

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to bind P. Whether in fact it binds P depends on the normal rules of registered conveyancing. Thus, B would either have to have entered the estoppel against A’s registered title by means of a Notice55 or, as is more likely, claim an overriding interest by reason of actual occupation. If neither are true – as of Mr Dugdale in Lloyd v. Dugdale – the purchaser takes the land free of the uncrystallised estoppel as provided by section 29 of the LRA 2002 even though it is proprietary. Of course, if the transferee is not a purchaser – perhaps A gifts the land to his daughter or leaves it by will – then the transferee is bound by the estoppel because it is a proprietary right and has priority (section 28 of the LRA 2002).

2The landowner (A) generates an estoppel in favour of B. B sues A and the court awards an estoppel remedy in the nature of an orthodox proprietary right such as a lease, easement, or the like. It is highly likely in such a case that the court order will be carried out by the formal grant of the right so awarded; for example, A grants a formal lease or easement to B or conveys the freehold and the register of title of the burdened land is changed accordingly. In such cases, the formal grant of the right will be registered and so the claimant will be protected against any future transferee of the land. If by some rare chance the land is transferred by A to a purchaser (P) before the court order is carried out, B nevertheless has a proprietary right that might bind P. This is because B has a specific proprietary right (a lease etc.) and if this is to bind P, the right must be protected in the manner appropriate to registered title as specified by the LRA 2002.56 Note, however, that the fact that a court has ordered that B should be given a specific property right makes it highly unlikely that a transfer would take place before this right is formally granted.

3The landowner (A) generates an estoppel in favour of B. B sues A and the court awards an estoppel remedy in the nature of a personal remedy against A, such as a money award or a licence. In such cases, the estoppel has been crystallised and A is under an obligation to ensure that B receives that which the court has ordered. If A then sells to P, a strict reading of section 116 means that P cannot be bound by ‘the equity by estoppel’ because the ‘equity by estoppel’ no longer exists. It has been satisfied by the court order.

55Probably, a Unilateral Notice. A well advised claimant might try to register their estoppel as a means of crystallising their claim. The entry of the Notice is likely to be challenged by the landowner, thus requiring the estoppel claim to be judicially determined.

56Again, usually this will be because the right qualifies as an overriding interest by reason of actual occupation.

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This is, indeed, perfectly understandable if the award against A was a money award; after all why should P have to pay out the award when it was ordered against A! The issue appears more troublesome if B is given a licence over A’s land, for on this reasoning the licence will be defeated by a transfer to P – the estoppel is satisfied and a licence is personal. In fact, however, this is not a surprising result and should not cause eyebrows to be raised. If the court has seen fit to crystallise the estoppel by means of a licence – after all, it had free choice as to remedy – it may well be because B’s claim was not regarded as of sufficient merit to justify the potential carry-over of that remedy against P. The licence or money award might have been chosen deliberately to ensure that no purchaser could be bound.

Of course, if this is a true interpretation of section 116,57 then what is most needed is for a court to consider carefully the precise remedy it gives to a successful claimant.58

9.7.2 Estoppel and e-conveyancing

It has been noted above that the Land Registration Act 2002 has confirmed that estoppel rights are proprietary from the moment the equity arises. There is, however, another way that the LRA 2002 may affect proprietary estoppel. As discussed in Chapter 2, an important element in the scheme of electronic conveyancing is to ensure that the creation of rights in registered land occurs simultaneously with their entry on the register. In essence, for rights subject to electronic conveyancing, the right will not exist at all until it is electronically entered on the register – see section 93 of the LRA 2002. The necessary consequence is that paper deeds and written contracts will be a nullity. They will create nothing at all. Of course, this system will not come into effect overnight, but when it does operate (perhaps within the next five years), it is a fair bet that people will still attempt to create rights by deed or by written contract believing that they are doing all that the law requires. If the land is registered land, they will fail: creation will be possibly only by electronic entry on the register. Given then that proprietary estoppel is a way to create property rights without the normally required formality, it takes no foresight at all to realise that claims in estoppel are likely to boom when the mandatory electronic formality rules take effect. Proprietary estoppel might well become the antidote to a failure to use the e-formalities that are at heart of the 2002 Act.

57Currently, there are no cases that raise this issue.

58An example of this is Parker (9th Earl of Macclesfield) v. Parker where it is not clear whether the claimant is awarded a licence or an estoppel based right. Consequently, in the unlikely event (on the facts) that the property was sold, it would not have been clear whether the purchaser would have been bound by the claimant’s interest.

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9.7.3 Estoppel in unregistered land

Although section 116 of the LRA 2002 necessarily applies only to registered land, the balance of the case law before the Act was in favour of the proprietary status of estoppel. It is certain, therefore, that estoppels are now to be regarded as proprietary in unregistered land. Again, this means that they would be capable of binding a third party on a transfer of an unregistered title.59 As noted, estoppel interests are necessarily equitable. Equitable interests in unregistered land usually must be registered as land charges under the Land Charges Act (LCA) 1972. However, ‘estoppels’ are not within any of the statutorily defined classes of land charge. Consequently, whether an estoppel binds a purchaser of the ‘burdened’ unregistered land will depend on the old ‘doctrine of notice’. For example, in Ives v. High (1967), the Court of Appeal held that an estoppel easement was binding on a third party through the doctrine of notice. Necessarily, this will now be a rare event given that the overwhelming majority of titles are already registered.

9.7.4 An apparently similar, but very different, situation

In the above sections, we have been considering the situation where A’s actions are such that they generate an estoppel interest in favour of B over A’s land, and then A sells that land to a purchaser, P. The issue then is, clearly, whether the right existing between A and B can be binding on P, a third party. However, another possibility exists which appears to be very similar, but which is logically and legally different. Thus, A may act so as to generate an estoppel in favour of B over A’s land, and A again may sell the land to P. Yet this time, after the sale, P may confirm by words or conduct the continuance of B’s right and so a new estoppel between P and B comes into existence. This is not a case of a pre-existing right binding P, but the generation of a new right by P’s own conduct in favour of B. Indeed, one explanation of Ives v. High (1967) is that A and B had, by their action, created an easement binding on A’s land, and, when the land was sold to P, P so acted as to be estopped from denying the continuance of the right. In effect, this has nothing to do with the transfer of existing rights against a third party, because the alleged ‘third party’ is bound by estoppel due to their own actions: P is bound by his own estoppel, not that which existed between A and B.

9.8 Proprietary estoppel and constructive trusts

It will be apparent from the above analysis of the principles of proprietary estoppel that the doctrine has much in common with that branch of constructive

59That transfer will, of course, trigger compulsory registration of the title, but the position of the new owner (and potential first registrant) will be judged according to the principles of unregistered conveyancing and then, on first registration, by the LRA 2002.

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trusts considered in Chapter 4 – that is, constructive trusts concerning the acquisition of an equitable interest in another person’s land. As we know, an estoppel is triggered by an assurance, relied on to detriment where it would be unconscionable for the assurance to be withdrawn, and a ‘common intention’ constructive trust is triggered by an express promise or assurance as to ownership which is relied on to detriment. The similarities are obvious and in an increasing number of cases such as Ottey v. Grundy (2003), Oxley v.

Hiscock (2004) and Kinane v. Alimamy Mackie-Conteh (2005), the court is content to rely on either (or both) doctrines in pursuit of a just outcome. This tendency was always latent in constructive trust cases,60 but it was given prominence by the Court of Appeal in Yaxley v. Gotts (1999).

In Yaxley, the claimant originally alleged an estoppel against Mr Gotts because of an agreement between them concerning ownership of land and its redevelopment. The Court of Appeal allowed the claim, but on the basis that Mr Yaxley was the beneficiary under a common intention constructive trust that was in some way linked to the estoppel. The case clearly raised questions concerning the relationship between the doctrines – questions that the judgments themselves do not answer. However, in Stack v. Dowden (2007), the House of Lords reconsidered the role of constructive trusts in co-ownership cases61 and Lord Walker – who had given the leading judgment in Yaxley v. Gotts – noted that he was ‘now rather less enthusiastic about the notion that proprietary estoppel and ‘common interest’ constructive trusts can or should be completely assimilated.’ Bearing that warning in mind, the following is a very tentative attempt to compare and contrast the two doctrines. However, it should be noted at the outset that some of these comparisons and contrasts are not certain, not logical and not necessarily justifiable. They are a template for discussion:

1Both constructive trusts and proprietary estoppel are triggered by an assurance (express promise), reliance and detriment. In consequence, there are many cases where a claimant could plead either doctrine and in many cases they do. It is generally thought, however, that estoppel is available in a wider range of circumstances because of the reference to common intention in constructive trusts and because of the use of estoppel in claims between persons who stand in no emotional relationship.62

60See the remarks in Grant v. Edwards, Re Basham and Lloyds Bank v. Rosset.

61See Chapter 4.

62This remains true even though Stack v. Dowden has made it possible to find a qualifying common intention in a wider range of circumstances than was previously the case (see Chapter 4).

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2The constructive trust is often said to arise from a ‘common intention’ between the parties, whereas an estoppel might be thought to arise from a ‘unilateral’ promise. This is the basis of Arden LJ’s distinction between the doctrines in Kinane and she emphasised the mutually shared nature of the common intention constructive trust. However, it is not at all clear that constructive trusts really do result from a shared intention relating to the land and that estoppels always do not. The suggestion that constructive trusts are ‘mutual’ whereas estoppel is ‘unilateral’ is not proven, albeit superficially attractive.

3The constructive trust tends to be relied on in matrimonial or quasi-matrimonial disputes concerning the family home. Proprietary estoppel tends to be used for all other cases, both as between strangers and between persons in other family or friendship arrangements. This may be merely historical or traditional and without any logical base. Alternatively, it may not. In Oxley v. Hiscock, Chadwick LJ came close to stating that proprietary estoppel was a better ground for deciding the shared home cases, but this may have been overtaken by the rather more negative attitude of the House of Lords in Stack, preferring as they do reliance on a broad-based concept of constructive trust.

4Both the constructive trust and proprietary estoppel are a means of enforcing an ‘informal’ promise by a landowner made in favour of a claimant. They are methods by which a person may acquire an interest in land without having been granted that interest in writing or by deed and hence are exceptions to the need for ‘formality’ in land transactions.

5The constructive trust is statutorily exempt from the normal formality requirements for transactions involving land – section 53(2) exempts it from the requirements of section 53(1) of the LPA 1925 and section 2(5) exempts it from the requirements of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. There is no statutory exemption for proprietary estoppel. In consequence, courts may feel on safer ground when relying on constructive trust (as for example in Yaxley). Likewise, there is a need to explain why claims of proprietary estoppel are exempt from these formality requirements (there is no statutory approval) and this is usually done by reference to the criterion of ‘unconscionability’. This

may explain why ‘unconscionability’ is more overtly central in estoppel claims.

6The lack of statutory approval for proprietary estoppel has led some courts to suggest that when an estoppel is made out, that it is

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supported or protected behind a constructive trust. This suggested in Yaxley and appears also in Ottey and in Jiggins v. Brisely. However, it appears an unnecessary and confusing addition to an already confused debate and appears to have been rejected by Lord Walker in Stack. If proprietary estoppel can generate property rights without formality – as it patently and historically obvious – then it has no need of the shelter of a constructive trust to explain its validity. It is a creature of equity and needs no statute.

7A successful plea of constructive trust results in an equitable share of ownership for the claimant with the legal owner holding the land under a ‘trust of land’ governed by the Trusts of Land and Appointment of Trustees Act 1996. A successful proprietary estoppel may be ‘satisfied’ by the award of any proprietary right, any personal right (including a money award) or no right at all. In this sense, proprietary estoppel is more flexible and this understandably holds attraction for some judges. This difference in the outcome of each claim seems to have been at the heart of Lord Walker’s acceptance in Stack that they should not be assimilated.

8A constructive trust is certainly proprietary (it gives an equitable interest behind a trust of land), and now, following Lloyd v. Dugdale (2001) and section 116 of the LRA 2002, so is the uncrystallised estoppel.

9It is sometimes said that a successful claim to a constructive trust is akin to a claim of right (i.e. an interest will be awarded), whereas a successful claim of estoppel is more discretionary (i.e. an interest may be awarded). However, such a distinction may be more apparent than real. Both are equitable doctrines and a court may refuse to grant relief (or will modify the quantum) where it is not ‘deserved’. It may be simply that courts are more open about their discretion in estoppel cases. Indeed, the decision in Oxley that the court should strive to reach a fair and reasonable quantification of a beneficial interest under a constructive trust, now confirmed by Stack, illustrates clearly that constructive trusts also contain a large element of discretion.

10It has been said that the evidentiary requirements for the two concepts are different, in that a constructive trust can be more difficult to prove. Rarely is this acknowledged but it may be a sensible deduction from the results in cases. On the other hand, it could be (merely) a reflection of the fact that a constructive trust usually leads to the award of a proprietary right whereas estoppel does not always have this outcome and courts always require more proof where a claim to a proprietary right is concerned.

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