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The Law of Proprietary Estoppel Is Evident to Any Attentive Visitor to the United Kingdom’S Supreme Court

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The Law of Proprietary Estoppel Is Evident to Any Attentive Visitor to the United Kingdom’S Supreme Court T H E L A W O F PROPRIETARY ESTOPPEL B e n M c F a r l a n e Professor of Law University College London http://www.pbookshop.com Preview - Copyrighted Material MMcFarlaneBen-Book.indbcFarlaneBen-Book.indb iiiiii 11/8/2014/8/2014 88:35:42:35:42 PPMM Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Ben McFarlane, 2014 Th e moral rights of the author have been asserted First Edition published in 2014 Impression: 1 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Crown copyright material is reproduced under Class Licence Number C01P0000148 with the permission of OPSI and the Queen’s Printer for Scotland Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2013946945 ISBN 978–0–19–969958–2 Printed in Great Britain by CPI Group (UK) Ltd, Croydon, CR0 4YY Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work. http://www.pbookshop.com Preview - Copyrighted Material MMcFarlaneBen-Book.indbcFarlaneBen-Book.indb iivv 11/8/2014/8/2014 88:35:42:35:42 PPMM 1 INTRODUCTION A . Th e Modern Law of Proprietary B . Th e Benefi ts of Identifying and Estoppel 1.01 Separating the Th ree Strands 1.24 1 . Th e A c q u i e s c e n c e - B a s e d S t r a n d 1 . 0 6 1 . U n c o n s c i o n a b i l i t y 1 . 2 8 2 . Th e R e p r e s e n t a t i o n - B a s e d S t r a n d 1 . 0 9 2 . T e r m i n o l o g y 1 . 3 2 3 . Th e P r o m i s e - B a s e d S t r a n d 1 . 1 5 C . Th e Structure of the Book 1.36 A . Th e Modern Law of Proprietary Estoppel Fifty years ago, the term ‘proprietary estoppel’ was essentially unknown. 1 T o d a y , 1.01 the signifi cance of the law of proprietary estoppel is evident to any attentive visitor to the United Kingdom’s Supreme Court. Th e role of that court is surveyed in a permanent exhibition, housed in the basement of its relatively new accommoda- tion without, but within shouting distance of, the Houses of Parliament. One of the displays is entitled: ‘Th e relevance of the Supreme Court to everyday life.’ It asserts, with good grounds if questionable syntax, that: ‘our highest judges make decisions that aff ect not only those involved in a particular case, but also set the guiding principles of http://www.pbookshop.comhow we live our everyday lives’. To support this claim, three cases are described. Th e most recent of these is Th orner v Major . 2 Preview - Copyrighted Material Peter Th orner, a taciturn farmer from Somerset, had indicated to David, his cousin, 1.02 that David would inherit Peter’s farm.3 As a result, David had continued to work on that farm, for very low pay, for a further fi fteen years. When Peter died without having made a valid will, the statutory intestacy rules imposed a duty on Peter’s 1 Th e term seems to have been introduced into general use by R Megarry and P Baker (eds), Snell’s Equity (26th edn, London, Sweet & Maxwell, 1966) 629–33, where the applicable principles are covered in four pages. Th ere have been a number of important developments since then. Th e appear- ance of the term there was infl uenced by the reference to ‘equitable estoppel’ made by Danckwerts LJ in Inwards v Baker [1965] 2 QB 29, 38. In turn, in ER Ives Investment Ltd v High [1967] 2 QB 379, 399, his Lordship referred to the term ‘proprietary estoppel’ as used in Snell’s Equity . 2 [2009] UKHL 18, [2009] 1 WLR 776. 3 Th e facts of the case are set out in more detail at 2.82. 1 MMcFarlaneBen-Book.indbcFarlaneBen-Book.indb 1 11/8/2014/8/2014 88:35:45:35:45 PPMM Chapter 1: Introduction administrators to hold the farm for the benefi t not of David but of other relatives of Peter, closer to him in blood if not in life. Th e House of Lords confi rmed, however, that proprietary estoppel operated to impose a duty on Peter (and now on his admin- istrators) to transfer to David the farm and associated assets. Th e decision meant not only that David was around £2.1 million better off than he would have been had no estoppel claim been possible 4 but also that, in the words of the Supreme Court’s exhibition’s display: ‘if a verbal promise is made to someone who subsequently relies on that promise to their own detriment, that promise can be enforced under the prin- ciples of fairness and equity’. 1.03 In setting out the law of proprietary estoppel, one of the principal aims of this book is to provide a more precise account of the principle applied in Th orner v Major . In order to do so, it is necessary to identify, and distinguish between, three distinct strands of proprietary estoppel, each of which has diff erent requirements. Th e fi rst of these is based on A’s acquiescence in B’s mistaken belief as to B’s current rights; the second on a representation of an existing state of aff airs made by A to B; the third, applied in Th orner , is based on A’s promise to B. 1.04 At an abstract level, it can be said that these three distinct strands have a common aim: each operates to ensure that A does not act in such a way as to leave B to suff er a detriment as a result of B’s reasonable reliance on A. It is therefore possible to provide a general formulation of the modern law of proprietary estoppel that is broad enough to encompass all three strands of the doctrine. In Th orner, for example, Lord Walker noted the scholarly consensus that proprietary estoppel: 5 is based on three main elements. a representation or assurance made to the claimant; reliance on it by the claimant; and detriment to the claimant in consequence of his (reasonable) reliance. 1.05 Th is general formulation, however, cannot be, nor was intended to serve as, a test that can be applied to determine the practical operation of proprietary estoppel http://www.pbookshop.com Preview - Copyrighted Material 4 Th e Court of Appeal had been ‘told that the eff ect of [the order of the fi rst instance judge, later restored by the House of Lords], in broad terms, would be that David would inherit assets with a net value of some £2.1 million’; that estimate was premised on the farm’s bearing ‘the appropriate proportion referable to it of the overall inheritance tax, with the benefi t of its share of the nil rate band’ [2008] EWCA Civ 732, [2008] WTLR 1289 [27]. In fact, there is a strong argument that David’s estoppel claim reduced the value of the chargeable transfer made by Peter on his death: see 10.11–10.17. Th at argument does not depend on the availability of agricultural property relief: such relief is limited to value attributable to ‘the agricultural value of agricultural property’ (Inheritance Act 1984, s 39A) and it seems that a large part of the value of the farm acquired by David derived from its development potential. Indeed, the coda to Th orner (it is for others to judge whether happy or not) is that in February 2013 the planning committee of Sedgemoor District Council, by a 7–5 vote, approved an application for the construction on the farm site of a Sainsbury’s store with a sales area of 23,000 square feet. 5 [2009] UKHL 18, [2009] 1 WLR 776 [29]. 2 MMcFarlaneBen-Book.indbcFarlaneBen-Book.indb 2 11/8/2014/8/2014 88:35:46:35:46 PPMM A. Th e Modern Law of Proprietary Estoppel to a particular set of facts. 6 Th e main point made in this book is that the specifi c principles established in the cases can be understood only if the three separate, irreducibly dissimilar, strands of the doctrine are carefully distinguished. In particular, principles developed in relation to each of the longer-established acquiescence- and representation-based strands may well be ill-suited to the more recently developed, but more practically important, promise-based strand applied in cases such as Th orner v Major .
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