Land Law: Proprietary Estoppel

Proprietary Estoppel

The Requirements

Proprietary estoppel grants individuals protection against a landowner in circumstances where they have no pre-existing contractual or proprietary rights. It is a creature of equity. Unlike other forms of estoppel, such as promissory estoppel, it is both a defence and a cause of action.

There are three requirements to establish proprietary estoppel: Thorner v Major [2009] UKHL 18

  1. The landowner must have given the individual a valid assurance;
  2. The individual must have detrimentally relied on that assurance;
  3. It must be unconscionable to allow the landowner to go back on their assurance.

These three elements are often intertwined: Davies v Davies [2016] EWCA 463.

Valid Assurance

Firstly, the landowner must give the individual a commitment that they will get a property right. It must be an assurance which the individual could reasonably rely upon: Thorner v Major [2009] 1 WLR 776.

The assurance must be sufficiently clear and unequivocal. While legal terminology is not necessary, it must be clear what is being promised: Davies v Davies [2016] EWCA 463. Less certain language is necessary in domestic cases compared to commercial ones: Ely v Robson [2016] EWCA Civ 774.

The right promised must relate to identified land: Thorner v Major [2009] 1 WLR 776. Generic promises that the individual will be ‘looked after’ without reference to a piece of land will not suffice.

Provided it is reasonable for the individual to rely on the representation, a strict promise is not necessary. It may be enough that the landowner encouraged the individual to believe they would get a right: Hoyl v Cromer Town Council [2015] ESCA Civ 782.

Silence can be equivalent to an assurance. This is so where a) the individual suffers detriment in the mistaken belief that they have or will obtain a property right; b) the landowner says nothing; and c) the landowner is aware of the mistake: Thorner v Major [2009] 1 WLR 776.

Reliance

Secondly, the individual must rely on the assurance to their detriment.

Whether there is detriment is judged at the time when the landowner seeks to go back on the promise: Davies v Davies [2016] EWCA 463.

The detriment must be ‘substantial’, but it can take any form: Davies v Davies [2016] EWCA 463. The arrangement does not need to be wholly detrimental – it can have benefits: Gillett v Holt [2000] EWCA Civ 66. However, there may be no detriment if the pros completely outweigh the cons: Henry v Henry [2010] UKPC 3.

It does not need to be financial detriment: Greasley v Cooke [1980] 1 WLR 1306. This might include unpaid/lowly paid work, for example. It can even include deliberate omissions: e.g. where the individual gives up the opportunity to seek better prospects: Gillett v Holt [2000] EWCA Civ 66.

Proving Reliance: In ‘Reliance and Estoppel‘ [1995] 111 LQR 389, Cooke argues that the courts sometimes ask: ‘would C have acted the same if they had known D would break their promise?’; instead of ‘would C have acted the same had the promise not been made?’. The courts have not been consistent with this, however.

  • For example, in Wayling v Jones [1995] 2 FLR 1029, the claimant worked for the landowner very cheaply, believing he would inherit their hotel. However, he admitted that he would have worked cheaply even if he had not been promised the hotel, as they were in love. Despite this, his proprietary estoppel claim succeeded. The court reasoned that if he had known the landowner intended to break the promise, the claimant would have left.
  • By contrast, in Coombes v Smith [1986] 1 WLR 809 the claimant was in a romantic relationship with the landowner. She left her husband for him, and the couple had a child. The court found that the claimant had not relied on any assurance because her reason for acting was love, not the expectation that any property entitlement.
Unconscionability

Finally, it must be unconscionable for the landowner to go back on the promise. Factors relevant to unconscionability include:

The strength of the causal link between the assurance and the detrimental reliance: Davies v Davies [2016] EWCA 463.

The extent of the detriment, as compared to any benefits the individual has enjoyed due to their reliance: Henry v Henry [2010] UKPC 3.

Whether there has been any change in the parties’ circumstances justifying reneging on some or all of the assurance: Uglow v Uglow [2004] EWCA Civ 987.

Remedies

Satisfying the Equity

If the individual establishes proprietary estoppel, they gain an ‘equity of redemption’: a right to go to court to get a remedy. The courts must then ‘satisfy’ this with some sort of remedy. This could mean satisfying the individual’s expectation and giving them the property right promised. Or, it could mean giving them some lesser property right, a non-property right (such as a licence), or monetary compensation. In rare cases, the individual might not be entitled to anything.

The key principle: the courts will satisfy the equity with whatever remedy avoids an unconscionable result: Davies v Davies [2016] EWCA 463.

When choosing a remedy, the courts will take into account: Davies v Davies [2016] EWCA 463.

  • The clarity of the assurance;
  • The extent of the detriment suffered;
  • The extent of any benefits obtained;
  • What remedy is proportionate to the detriments and benefits.

The caselaw contains three inconsistent approaches:

  1. The court should aim to fulfil the assurance, unless it would be disproportionate. The individual should normally be granted what they were promised: see Suggitt v Suggitt [2012] EWCA Civ 890.
  2. The court should try to compensate the individual for the detriment they have suffered (minus any benefits). There is no presumption that the individual is entitled to have the assurance fulfilled, though this might be necessary to repay the detriment: see Habberfield v Habberfield [2019] EWCA Civ 890.
  3. The remedy should try to achieve something in between approaches 1 and 2.

Some judges have been reluctant to settle on one approach, to keep this area of law flexible: Guest v Guest [2020] EWCA Civ 387. In Davies v Davies, Lewison J suggested that Approach 1 is most appropriate where the assurance was very clear and there was a long-standing and significant detriment.

Proprietary Estoppel and Third Parties

If the individual obtains a proprietary remedy, such as a freehold transfer or a lease, it is capable in principle of binding third-party successors-in-title. This does not mean the resultant property right automatically binds third parties: apply the usual rules of disposition and priority.

More controversial is the case where a third-party obtains the land before the individual goes to court. Does the ‘inchoate equity’ give the individual any rights against third parties?

  • If the land is registered, the inchoate equity attaches to the land as soon as the three requirements are met and so is capable of binding successors-in-title under the normal priority rules: Land Registration Act 2002, s.116. Notably, an inchoate equity can be an overriding interest for these purposes: Henry v Henry [2010] 1 All ER 988.
  • For unregistered land, the position is unclear.

The following questions currently remain unanswered:

  • If an individual sues the third-party in proprietary estoppel and is granted a non-proprietary remedy, who must fulfil the remedy? For example, if the court says the claimant’s equity is satisfied by a compensation payment of £5000, can the claimant make the third party pay? Or only the person who made the assurance?
  • If the goal of the remedy is to avoid unconscionability, must the court take into account the fact that the third party did not make the assurance, and so has not acted unconscionably towards the individual?