The Edge of Land Law Lies Proprietary Estoppel - Essay Example

 The doctrine of proprietary estoppel has its roots in equity. Historically, the purpose of proprietary estoppel is to provide a remedy for those who have acted in the belief that they would acquire some rights in or over land, having been led to this belief implicitly or explicitly by the owner of the land1. The court ultimately determines whether it is conscionable for the owner of the land to go back on their representations2. Unlike other estoppels, proprietary estoppel goes further and can be utilised as a tool to enforce or grant a property right de facto3. Moreover, proprietary interest in land may be acquired in equity under estoppel without the need for writing and Cooke comments that “the courts have consistently, with very few exceptions, protected the claimant’s exceptions in interest when responding to estoppel, and protect individuals so far as it is possible and that they should continue to do so”4. However, whilst the equitable justification for the doctrine of proprietary estoppel is clearly meritorious, the ad hoc development of the doctrine has been attacked, with some commentators labelling it as a “loose cannon”. The focus of this analyse is to critically evaluate the doctrine of proprietary estoppel and consider whether it has as the above statement become nothing more than an “amalgam of ideas rather than a deliberately constructed doctrine” in contemporary land law. The doctrine of proprietary estoppel was first recognised by the House of Lords in Ramsden v Dyson5, which involved a yearly tenant who had been led to believe that the landlord would grant him a 60 year lease on the property. On this basis, the plaintiff erected a building on the land, however the landlord refused to grant him the lease. The tenant brought a claim to enforce his rights in equity. Whilst the court acknowledged the right to enforce property rights under the doctrine in proprietary estoppel, it was asserted that it should only be enforced in narrow circumstances to avoid floodgate claims based on oral promises6. Whilst dissenting, Lord Kingsdown’s statement below was echoed by the court in highlighting the need to permit estoppel claims within a narrow framework and exceptional circumstances: “if a man, under a verbal agreement with a landlord for a certain interest in land, or what amounts to the same thing, under an expectation, created or encouraged by the landlord that he shall have a certain interest, takes possession of such land with the consent of the landlord, and upon the faith of such a promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, the court of equity will compel the landlord to give effect to such a promise or expectation”.7To this end, it is arguable that the equitable roots of proprietary estoppel were clearly intended to operate as a narrowly applicable doctrine in cases involving unconscionability, thereby undermining the assertion that it is a “mere amalgam of ideas”. This is further supported by the judicial rationale in the leading case of Wilmott v Barber8 where the Court of Appeal went further and established what has been coined the “Wilmot v Barber Probanda9”, which sets out five elements that must be present before an estoppel will be granted10. These criteria according to Fry J “are necessary to establish that it would be tantamount to fraud for individuals to assert their strict legal rights”11. These five elements were as follows: the plaintiffs must have made a mistake as to his legal rights; he must have spent money or relied on mistaken belief; the defendant must be aware of the true position; the defendant must be aware of the plaintiff’s mistake; the defendant must have encouraged the plaintiff’s expenditure or other act of reliance12. The set of guidelines were clearly intended to define the parameters of this equitable doctrine and indeed continued to be applied in proprietary estoppel cases long after, however more recently has been argued that “it did not constitute a comprehensively applicable formula13”. Whilst the five probanda was clearly intended to set out an applicable and consistent framework for the applicability of the estoppel doctrine, the principles set forward in the Wilmot case were extremely similar to the constructive trust format, thereby undermining the purpose of estoppel as a form of recourse. Moreover, the ad hoc and somewhat inconsistent application of the test has arguably rendered proprietary estoppel a “loose cannon”. For example, in the case of Crabb v Ann District Council14, the defendant owned two plots of land, with only one having access to the road. When he sold this plot of land he assured the buyer orally that access to the road would be granted, however he failed to reserve the right to access when selling the other plot. The court commented that in order to “satisfy the equity several years earlier they would have ordered the plaintiff to pay something for the easement which they were recognising15”. However, owing to the defendants’ subsequent “unconscionable” conduct, this meant that compensation was no longer payable and the equity was by its very nature akin to a “deserted wife’s equity” giving rise to an equitable property right per se16. Lord Denning further adopted the approach favoured recently by focusing on the concept of detrimental reliance. However, this was arguably confused by referring to both promissory and proprietary estoppel17. Alternatively, Scarman relied upon the Willmott v Barber probanda and as such, the council was estopped from asserting their legal rights. Nevertheless, the divergence in judicial justification for ultimately reaching the same decision clearly begs the question as to whether proprietary estoppel is in fact a doctrine or a patchwork quilt of various ideas applied on a case by case basis. Alternatively, the very nature of proprietary estoppel is clearly rooted in “unconscionability”, which arguably requires a case by case determination. As such, this clearly creates a tension between the equitable need for justice and the legal need for certainty. However, the leading decision in the case of Taylor Fashions v Liverpool Trustees Co Ltd18, saw the courts take a broader and relaxed approach to the Wilmott v Barber probanda by asserting that “it would be unconscionable for a party to be permitted to deny that which, knowingly, or unknowingly, he has allowed or encourage another the assume to his detriment19.” Whilst not disregarding the five probanda completely, the judicial rationale clearly permitted a greater degree of flexibility, and created the broader approach with three interrelated elements; namely, representation, reliance and detriment. Arguably, the Taylor decision obfuscates the distinction between proprietary estoppel and constructive trusts. For example, the leading case of Lloyds Bank plc v Rosset20 highlighted the essential requirements for the imposition of a constructive trust asserting its foundation in the common intention of the parties to share the properties. Lord Bridge further asserted in this case that “intention” could be express or inferred from conduct21. In this case, in order to obtain a mortgage, the Defendant had convinced the Claimant to sign a disclaimer on the understanding that they would marry and occupy the property together. In reliance on this, the Claimant had paid £12,500 into the Defendant’s bank account and she had spent thousands on improvements to the property. It was held that there was clearly an intention to share the property, which resulted in the property being held on constructive trust. Furthermore, Lord Bridge highlighting the reasoning in Gissing v Gissing22 asserted the concept of detrimental reliance in order for there to be a constructive trust. A prime example of this is the case of Eves v Eves23, where the defendant told the claimant that the only reason the house was being put in his sole name was as she was under 21. In reliance on this promise, the claimant redecorated the house and undertook significant works to the house. As a result, she was awarded a quarter shares in the proceeds of sale. It is difficult to see how these decisions differ in terms of the practical result to the form of proprietary estoppel propounded in the Taylor case. The first element of the broader approach postulated by the Taylor decision is representation and practical application of this is evident in the case of ReBasham24 where it was stated that “where a claimant acts on the encouragement of the owner, this can be seen as a representation25”. In this case, the plaintiff had spent money on the property under the belief that the deceased had promised her that he would leave it to her in the will. It was further asserted “if the belief that B will leave the whole of his estate to A is established by sufficiently cogent evidence, I see no reason in principle or authority why the doctrine of proprietary estoppel should not apply so as to raise an equity against B in favour of A extending to the whole of B’s estate26.” Again, it is difficult to see how the rationale of this decision differs from the common intention constructive trust. On the other hand, whilst the judicial rationale has clearly blurred the distinctions with trust law principles, the doctrine of estoppel would appear to go further and acknowledge rights outside the narrow confines of proving “contribution” to the property. For example, in the case of Pascoe v Turner27, the doctrine of estoppel was utilised by the Court of Appeal to transfer the estate to the plaintiff. Additionally in the case of Matharu v Matharu28 the daughter in law continued to live in her in-laws house after the breakdown of a marriage and the death of the son. The Court of Appeal nevertheless held that she had rights under the doctrine of proprietary estoppel and was entitled to remain the property. The second element of the Taylor proprietary estoppel test is that of reliance and is closely linked to the third element of detriment29. It must be demonstrated that the claimant relied upon the representation to the extent that they were influenced or induced, which again clearly has distinct parallels with constructive trust30. Additionally, this has created problems in practice in proving reliance. As Lord Denning commented in the case of Greasley v Cooke31, “once it is shown that a representation was calculated to influence the judgment of a reasonable man, the presumption is that he was so influenced.32” This undermines Taylor, where Oliver J indicated that it was for the claimant to establish reliance. However, the courts often go to great lengths in awarding the substance of the representation of entitlement originally made to the claimant33. This contrasts with constructive trust cases, as notwithstanding the widening interpretations of trust law to accommodate relationship breakdown, the constructive trust is limited by reluctance to acknowledge indirect contribution, which has worked primarily against women in practice34. Moreover, the courts’ approach has been positively inconsistent in relation to indirect contributions in constructive trust cases. With regard to detriment, in the case of Grant v Edwards35, Lord Edwards stated that detriment required proof that “he or she acted to his or her detriment of significantly altered his position in reliance on the representation36”, which again obfuscates the distinction between estoppel and constructive trust. Moreover in the case of Gillett v Holt37, Walker felt that the courts had taken too “narrowly financial a view of the requirement of detriment38” and that it did not solely require quantifiable financial detriment. The Court of Appeal went further by arguing that “the claimant must show that he acted or refrained from acting and that his acts or failure to act would be detrimental….. the principles relating to detriment have not been clarified and it is not easy to ascertain to what extent the court can now take into account matters of personal nature as opposed to matters which have a financial or proprietary element39”. As such, whilst the lines between proprietary estoppel and the common intention trust are clearly blurred, the doctrine of estoppel clearly goes further in widening the ambit of what constitutes “detrimental reliance”. For example, in the case of Ottey v Grundy40, the claimant had given up a career to look after the deceased to her detriment. She was not named in the deceased’s will however, it was held that she went beyond the role of girlfriend, there was reliance upon a promise made, once reliance was made upon the promise, it became irrevocable in equity41. In light of the above analysis, it is submitted that it is far too dogmatic to assert that proprietary estoppel is merely an amalgam of ideas. The equitable roots of the doctrine and the Wilmot probanda clearly demonstrate an intention to enforce a narrow and consistent legal framework to protect against unconscionable conduct. However, the very subjective nature of what constitutes unconscionable conduct does not clearly lend itself amenable to a regimented legal framework. Indeed strict adherence to a narrow framework could result in precisely the type of decisions the doctrine is intended to protect. To this end, it is arguable that the very nature of proprietary estoppel intrinsically requires a case by case approach. Instead of acknowledging this however, the courts have instead continued to reshape and reformulate the doctrine of proprietary estoppel to ensure a just decision is reached in each case. Whilst the doctrine clearly goes further than the common intention constructive trust, the ad hoc judicial approach has been somewhat erratic and inconsistent, thereby blurring the distinction and clearly rendering the current status of the doctrine as a “loose cannon”. BIBLIOGRAPHY Eizabeth Cooke, (2006). Land Law. Oxford University Press. M Dixon., (2005). Principles of Land Law. 5th Edition Routledge-Cavendish Publishing. J MacKenzie& M Phillips (2005). Land Law. 10th Edition Oxford University Press. R J Smith (2003) Property Law 4th Edition, Longman R J Smith (2003) Property Law Cases & Materials 2nd Edition, Longman Megarry and Wade., (2007) The Law of Real Property. 7th Edition Sweet & Maxwell Todd and Wilsons., (2007). Textbook on Trusts.8TH Edition. Oxford University Press. Read More