Proprietary Estoppel Flashcards
(14 cards)
Elements of proprietary estoppel?
- Assurance
- Reliance
- Detriment
Creating unconscionability
Here, equity will intervene by recognising B has an equity, and use the court’s discretion to fashion a remedy.
Crabb v Arun District - application of general rule, subdivided plot
Crabb subdivided his land and needed a right of access for one plot or it would be landlocked.
Discussions with council, who put up a gate.
Relying on this, he sold one plot, but then council pulled down the gate - plot 2 landlocked again.
Held: Crabb had an equity by estoppel, and court ordered grant of a right of access.
Bibby v Sterling - reliance where there is no assurance, just acquiescence?
H owned strip of land, allowed S to use it for a yearly fee. S builds greenhouse without complaint from H.
S’ widow claims the land - CA hold she has an equity entitling her to remain there for life - she was relying on him not to reclaim possession unless he needed the land, assuming this would not be for many years.
Gillett v Holt - Farming (transfer of freehold)
G left school, worked on H’s farm who effectively adopted him.
Promises made, G would inherit.
Held that he had an equity by estoppel, ordered transfer of freehold.
Rather than quantify wages, the detriment here was the missed opportunity to better himself elsewhere.
Thorner v Major - Unclear assurances?
C worked on farm without pay. Only unclear assurances made - will left land to C but it was destroyed.
Held: Sufficed that there were words or conduct which (in context and looking at relationship) would reasonably be understood by the promisee to be an assurance.
Consider:
What words/conduct objectively would have meant to a bystander, taking into account subjective context and relationship.
Davies v Davies - Effect of arguments/friction?
C promised farm if she works for it - argues with parents about choice of partner and leaves.
Returns twice.
Held: She had an equity, parents to pay £1.3m, reduced to 500k on appeal - since she didn’t always hold up her end
How to judge unconscionability? Gillett and Cobbe
Arises generally where the 3 elements are present, unifying them (Gillett)
If the other elements appear present but result does not shock the conscience of the court, analysis needs to be looked at again (Cobbe).
Habberfield v Habberfield - Expectation vs Detriment Loss
Lucy works for parents’ farm for 30 years - Promises made by father.
Lump sum of £1.2m awarded - expectation loss awarded (value of farm) - required mother to sell the farm to pay.
Guest v Guest - How should damages be calculated - expectation vs detriment
Comments made over time to the effect that C would take over the farm, worked on it for 30 years.
Fell out over business disagreements, C disinherited.
Held that there was an equity, but SC had to decide quantum.
Majority: Expectation loss (1.3m cash or trust giving effect to his right)
When proprietary estoppel engaged, starting position is that the court should try to satisfy the promisee’s expectation. If the full promise would be disproportionate (ie because others also have claims or because the detriment was smaller), then remedy may be limited.
Minority - Detriment loss - 600k - Where there is more than 1 solution to avoid detriment, the court should adopt the approach which imposes the least burden on the defendant.
Clear rules necessary to transfer property, mere promise does not fulfil those conditions, and we would be disregarding law laid down by Parliament. Therefore remedy should focus on detriment.
Lord Briggs in majority dismissed this, saying that whilst detriment is necessary, it should not be the measure of quantum since it is the repudiation of the promised expectation which constitutes the unconscionable wrong.
Should proprietary estoppel be available in commercial disputes?
- Freedom of contract
- Risk taking/arms length dealings
- Rules out reasonable reliance? How can you reasonably rely on these types of assurances?
- Better legal advice as they are businesspeople.
Cobbe v Yeoman’s Row Management Ltd
High hurdle for PE in commercial disputes
C and D negotiated joint development, had a gentleman’s agreement. C engages architect and gets planning permission, D sells him land.
YRML then doubled price after C did the things required - negotiations broke down.
HELD: No PE claim, Cobbe awarded compensation for his work.
The assurance was only a promise to make a contract in the future - no promise of land or money to rely upon. Unconscionability alone is never enough. He was running a commercial risk with his eyes open to the risk - no PE.
Haq v Island Homes
Where an agreement is ‘subject to contract’, very difficult to get PE.
Waiver of need for documentation is not a waiver of the requirement of ‘subject to contract’
Howe v Gossop
Oral contract for sale of agricultural land, sealed by handshake in pub.
Dispute before contract put into writing.
Held: All elements of proprietary estoppel were present.
Furthermore, although s2 LPA says that sale of land requires a contract, this does not limit operation of trusts, nor proprietary estoppel - which aims to remedy unconscionability in the assertion of strict legal rights.
Should PE be available in commercial disputes?
McFarlane:
- Would incentivise parties to undertake pre-contractual work by providing them with effective remedies should this go wrong, meaning both parties get a bigger slice of the final cake
- If uncompensated by effective remedies, we may see the hold-up problem - A can take advantage of B’s existing sunk costs and raise price, knowing B cannot afford to back out.
- In principle, no reason why equity should intervene in farming/property cases but not one where there is a multi-million pound deal at stake - what is it about land that attracts such a massive remedy which money cannot?
Counter - it is proprietary estoppel after all, and the doctrine of promissory estoppel already exists for contract with its own limits. Also comm contracts are commercial parties, more aware of risks and thus reliance in these cases is less reasonable.
Counter:
- Parties in these contracts have effective lawyering and know about the implications of their dealings - they are taking commercial risks with their eyes open (Cobbe)
However, counter this - is it fair to distinguish and stereotype farmers as less legally aware/legally knowledgable, when farms themselves are multimillion pound entities? Arguably same rules should apply to both.
- Neuberger - Argument that parties are bound by honour is problematic - introduces morality into law. Although we have conscionability, these are separate - you can dishonourable but still conscionable. Thus he argues before PE claim established, C must show they thought they had a legal right - approving Cobbe.
Arguably this is an artificial distinction however - the law on equity works largely on one’s conscience, which is informed by morality and the overall view of what is good for society and what is beneficial - so morality and ethics have a necessary role to play and it isn’t bad that they come in.
- Undermines certainty in land law - equity and proprietary estoppel add an additional layer of inclarity and uncertainty by doing away with rigid legal principles, which create certainty in favour of arbitrary and often unclear promises. S2 LPMPA makes it clear contracts for sale of land can only be in writing - this provides security for those with land that they can only lose their interest if they sign it away. PE effectively punishes and criminalises words as if they are the same as a binding promise made in signed writing, causing over-caution and perhaps a chilling effect.
