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Proprietary Estoppel I Law of Real Property 1 2018-2019 Lecture 12 Proprietary Estoppel • “If a stranger begins to build on my land supposing it to be his own, and I, perceiving his mistake, abstain from setting him right, and leave him to persevere in his error, a Court of equity will not allow me afterwards to assert my title to the land on which he had expended money on the supposition that the land was his own.” Per Lord Cranworth LC in Ramsden v Dyson (1866) LR 1 HL 129, 140- 141 • The term estoppel is used to refer to circumstances in which a person is prevented or estopped from denying the truth of a particular matter of fact or law - Roger Smith, Introduction to Land Law (p.30). • A proprietary estoppel may arise in the following cases: (i) Incomplete gifts (ii)Reasonable (common) expectation of acquisition of right (iii)Unilateral Mistake – Wilmot v Barber • By this doctrine the courts of equity a) have created an inroad into the equitable maxim, “equity does not aid a volunteer”; b) circumvented the requirements of the Statute of Frauds, to perfect an imperfect gift by awarding specific performance where there is no consideration and/or written evidence to buttress a claim for an interest in land; c) Side-stepped the statutory requirements for testamentary disposition; and d) also departed from the general rule that estoppel can only operate as a shield (or a defence) but not as a sword. • This is one of those cases where there has been evolution of a doctrine. Previously, it was necessary to show that the “five probanda” had all been met in order to claim proprietary estoppel. This requirement was relaxed in relation to the majority of cases, and now only applies strictly to cases of unilateral mistake. Otherwise it is a mere guideline. • The five probanda (Wilmot v Barber) • Claimant’s mistake; • Claimant’s expenditure • Defendant’s knowledge of own legal right • Defendant’s knowledge of claimant’s mistake • Defendant’s active or passive encouragement THE MODERN APPROACH •The underlying principle is unconscionability. •Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd. – Oliver J – “‘[t]he inquiry which I have to make therefore, as it seems to me, is simply whether, in all the circumstances of this case, it was unconscionable for the defendants to seek to take advantage of the mistake which, at the material time, everybody shared ….” THE MODERN APPROACH • In Cobb v. Yeoman’s Row Management Ltd. unconscionability is both subjective and objective. It includes “an objective value judgment on behaviour (irrespective of Claimant’s state of mind).” The following must be established (Thorner v. Major): 1. Defendant’s Assurance (or acquiescence) 2. Claimant’s Reliance 3. Claimant’s Detriment ASSURANCE (i) making an express or implied promise or (iii) encouraging claimant’s belief passively and by remaining silent (acquiescence) or (ii) encouraging claimant to believe that he will obtain such an interest by words or conduct (representation). ASSURANCE Express or Implied promise •The promise (or other type of assurance) must precede the detriment and reliance. •It must be shown that it was one which the claimant reasonably believed to have been seriously intended by the defendant (owner) as capable of being relied on by the claimant. ASSURANCE Express or Implied promise •The promise must relate to some right in respect of land that the defendant owns or intends to acquire. •If the claimant relies on a belief as to the defendant’s future conduct, a proprietary estoppel claim can arise only if A made an express or implied promise to the claimant that the defendant would act in that way. • Dilwyn v. Llewellyn (1862) 45 E.R. 1285, at p.1286 “If A puts D into possession of a piece of land and tells him, ‘I give it to you that you may build a house on it’, and D on the strength of that promise, with the knowledge of A, expends a large sum of money in building a house accordingly I cannot doubt that the donee acquires a right from the subsequent transaction to call on the donor to perform that contract and complete the imperfect donation that was made”. • In Dilwyn v. Llewelyn: With the encouragement and knowledge of his father, the son spent £14,000 to build a house on the father's land. The father signed an unsealed memo purporting to convey the land to the son. But in the father's will it was discovered that all his real estate was devised on trusts for others. The son succeeded in getting a conveyance of the fee simple interest • In Thorner v Major: • David worked long hours on cousin Peter’s farm for over 15 years unpaid (had assisted unpaid for 15 years before that) • There was no express promise that he would inherit the farm, but there were many implied references to things that David should do after Peter was gone • In fact, Peter made a will to this effect, but destroyed it after falling out with another beneficiary • The House of Lords held that the only thing that mattered was whether a reasonable person could have relied on the conduct that looked like an assurance. Acquiescence or “standing by” Also called “passive assurance” •Where claimant adopts a course of conduct on a mistaken belief as to claimant’s current rights, and defendant, knowing of claimant’s belief, of the fact that claimant’s belief is mistaken, and of defendant’s own right, fails to take a reasonably available opportunity to assert his or her right against claimant. • Ramsden v Dyson (1866) L.R. 1 H.L.129, at 140-141, per Cranworth, L.C. – “If a stranger build on my land, supposing to be his own, and I, knowing it to be mine, do not interfere, but leave him to go on, equity considers it to be dishonest in me to remain passive and afterwards to interfere and take profit.” • Proprietary estoppel arises in some family cases • Clarke v Kellarie (1970) is a Caribbean case. Clarke had leasehold property. Allowed her brother-in-law to live there. After he built a house, Clarke sought to evict him. Had visited often during construction without saying anything. Court granted lifelong licence to K on condition he paid rent. RELIANCE • The claimant must have been induced to act in a certain way based on the assurance or promise made by the defendant • When a representation is made that is intended to influence the mind of the recipient and would have influenced the mind of a reasonable person, there is a presumption that any possible detrimental actions were performed in reliance on the representation. The burden of proof shifts to the defendant to show that there is no causal link between the representation and the alleged detrimental reliance (Greasley v Cooke) DETRIMENT • B must establish that on the faith of the representations or assurances of A he acted to his detriment or altered his position for the worse (Owusu, p. 190). • The detriment need not consist of the expenditure or money or other quantifiable financial detriment, so long as it is something substantial. • In Trenchfield v. Leslie, it was held that Leslie had acted to her detriment (by doing repairs on the house) based on the assurance that she would get the house on his death. • In many cases detriment involves improving the land in question. e.g. building a house in Dillwyn v Llewellyn DETRIMENT • Other actions may constitute detriment including: a) undertaking work benefitting the fee simple owner and/or his family – Greasley v Cooke. Here the promise was that she would be permitted to live there for life. In taking care of the house and the mentally ill sister – she had acted to her detriment. b) helping in a business or farm and giving up the chance of other opportunities or more remunerative work elsewhere: Re Basham and Gillett v. Holt; c) a giving up his job and going to live near A in a house owned by A: Jones v. Jones [1997] 1 WLR 438; SATISFYING THE EQUITY • Once the court finds that PE is established, the question it seeks to determine is what is the “minimum equity to do justice in the circumstances”: Crabb v Arun District Council. • The Courts will determine in each case how the ‘equity may be satisfied’ (Ives (ER) Investments v. High). This speaks to the remedy that is suitable in the circumstances, what is the extent of A’s duty to B? • This may include: a grant of an irrevocable licence for life, a grant of the fee simple, an easement or a right under a will, or a charge or lien on land. • The equitable doctrines are still evolving and there is considerable overlap. • In Thorner v Major, the court considered whether there was a proprietary estoppel or the enforcement of a contract (specific performance) • Lord Scott said he wouldn’t disagree that it was proprietary estoppel, but would feel more comfortable finding that there was a remedial constructive trust. • Greasley v Cooke was decided on the basis of proprietary estoppel, but looks very similar to the part performance cases of Maddison v Alderson and Wakeham v Mackenzie. • In Yaxley v Gotts, the court considered part performance, proprietary estoppel and eventually settled on constructive trust. • Note that the doctrine of part performance no longer applies in England. .
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