LAND LAW
LEARNING CYCLE 5- PROPRIETARY ESTOPPEL
Lecture: PROPRIETARY ESTOPPEL
This is a developing area because of the ongoing Guest v Guest case which was taken to the
Supreme Court (it’s worth looking at the arguments heard by the judges on the Supreme
Court website).
This lecture will cover...
Some basics
Establishing the interest
Quantifying the interest
(although similar to the process in constructive trusts, they’re separate doctrines)
A case study (Gillett v Holt)
Some Basics
Again, the question is ‘how should the law respond to informality?’
In s.53(2) of the LPA, nothing is said about proprietary estoppel (it only refers to the section
not affecting the creation or operation of resulting, implied or constructive trusts).
This absence is explained by the fact that estoppel has always been a way of getting
around formalities.
The heterogenous development of proprietary estoppel.
It developed through different kinds of avenues: proprietary estopped could arise
from a mistake of law, assurance...
The role of unconscionability.
This has a fundamental role in proprietary estoppel: it’s the basis of the doctrine.
However, it also has an oversight role.
The two important questions:
1) Has the interest been established?
2) How should the interest be satisfied?
We’re quite good on the first question as we have clear principles to answer it.
However, the principles for the second question are less clear.
Yeomans Row v Cobbe (2008)
,On CERTAINTY:
Proprietary estoppel is a flexible response that land law has to informality, but must be
counterbalanced by the critical importance of certainty in property transactions.
As said by Lord Walker:
“Flexible though it is, the doctrine must be formulated and applied in a disciplined and
principled way. Certainty is important in property transactions.”
This means, in certain cases, certainty will trump flexibility.
Cobbe was one such case where one was dealing with a businessperson who entered
into an arrangement on a handshake, an arrangement involving multi millions of
pounds which were at stake.
The House found that this was a commercial arrangement, and consequently
formalities should’ve been used instead of handshakes and gentlemen’s agreements
(so it is context specific- think about the difference between commercial-type and
domestic-type transactions, the latter often involving farms for example).
On UNCONSCIONABILITY:
Lord Walker says that:
“Equitable estoppel is a flexible doctrine which the Court can use, in appropriate
circumstances, to prevent injustice caused by the vagaries and inconstancy of human
nature. But it is not a sort of joker or wild card to be used whenever the Court disapproves
of the conduct of a litigant who seems to have the law on his side.
The point here is that, just because behaviour seems to be wrong, immoral or
unconscionable, doesn’t mean that you have a proprietary estoppel equity: it must
be underpinned by a claim to a proprietary right (it’s not a wildcard).
Differences between Constructive Trust and Proprietary Estoppel
So, as said before, we are post-assimilationist regarding CTs and PE; this is because of...
1) Different principles and criteria for relief
With PE, what we’re really concerned about is the idea that people should keep
promises (Lewison LJ says, in Habberfield v Habberfield, that “underpinning the
whole doctrine of proprietary estoppel is the idea that promises should be kept”);
however, with CTs, we’re looking towards a common intention between the parties.
Regarding criteria for relief, with CTs we have the approach mandated by the
Supreme Court in Kernott v Jones (i.e., looking for common intention); however,
with PE, it is different and uses more of a sliding scale.
2) Rule of thumb
CTs are about the acquisition of the home.
However, PE is much more general and is about the ownership of the home (i.e., a
proprietary right in the home).
, BUT we are not in “portable palm tree” territory (Weekes QC), and both are principled
jurisdictions (i.e., not entirely flexible).
RAISING THE EQUITY
i.e., Has the claimant established a proprietary claim to give rise to PE?
The Criteria
There is a ‘triptych’ relationship between representation, reliance and detriment, all of
which are related to each other.
For example, if you have a really strong assurance/representation, then your
detrimental reliance doesn’t need to be as great.
1) REPRESENTATION (ASSURANCE)
This has to be about PROPERTY.
(For example, as seen in many of the cases, a farmer says to a family relation ‘when I die,
this will all be yours’ = representation.)
One of the issues here is about certainty, and how much certainty is required.
This is highlighted in the difference between Yeomans Row v Cobbe and Thorner v
Major (2009), the other House of Lords decision.
In Thorner, the representation essentially was ‘when I die, this farm will be yours’; but the
problem with that was, during the course of the farmer’s life, the shape and nature of the
farm changed (through buying and selling different bits of land).
So the argument was that, in fact, this promise was inherently uncertain, and
therefore couldn’t be a property right (after all, property rights must be certain).
However, because the representation was about the farm itself, which would come
to fruition upon the farmer’s death, and we knew what the farm was when this
happens, Lord Walker disagreed with the argument that “it was not certain
enough”.
It is also about CONTEXT.
You would distinguish the farmer cases from Cobbe where the assurance (representation)
was ‘incomplete’ (i.e., the assurance was that the parties would enter into a further
commercial arrangement).
This was said to be non-proprietary (even though the arrangement effectively was
about real property).
The distinction between Cobbe and Thorner is thought to depend on their different
contexts.
