![]() Proprietary estoppel is an equitable doctrine which essentially allows an informal arrangement to be enforced and proprietary rights to be acquired without complying with the formalities. Courts have an equitable jurisdiction to interfere with an owner’s strict legal rights in relation to land when it would be deemed ‘unconscionable’ for that individual to assert their strict legal rights. This essay seeks to critically discuss Lord Scott’s statement in Cobbe v Yeoman’s Row Management Ltd [2008] which states, “… proprietary estoppel cannot be prayed in aid in order to render enforceable an agreement that statute has declared to be void.”[1] It will clearly analyse proprietary estoppel with regards to Lord Scott’s statement, ultimately concluding to what extent the statement is true and the extent to which it is agreed. Proprietary estoppel can be categorised into three broad types of cases, mistake cases[2], expectation cases[3], and imperfect gift cases[4]. Taylor’s Fashions Ltd v Liverpool Victoria Trustees Ltd[5] established the modern approach to proprietary estoppel, this was approved in Habib Bank v Habib Bank AG Zurich [1981][6]and was applied in Lim Teng Huan v Ang Swee Chuan [1992][7]; for an individual to succeed in a proprietary estoppel claim there must be assurance by the owner, reliance by the claimant and a detriment to the claimant, which all leading to the question of whether it would be unconscionable for the defendant to take advantage of the mistake. Assurance can be active or passive, active assurance is expressed or displayed by the owner which leads to the claimant believing they have an interest in the property. Expressly ‘active’ agreements are applied in numerous cases, in Gillet v Holt [2000][8] where Gillet left school before completing college to work on Holt’s farm for over 40 years due to Holt assuring him that he would inherit the farm upon his death, due to faults in their relationship, Holt changed his will. The court estopped Holt from denying Gillet’s rights to the farm. Other cases which display this are Pascoe v Turner [1979][9], Griffiths v Williams (1977)[10], and Re Basham [1986][11]. Active assurance is seen in the late case of Inwards v Baker [1965][12] where a father encouraged his son to build a bungalow on the land. Passive assurance however is where the claimant is mistaken in their belief of gaining interest in land while the owner does nothing, this will amount to an estoppel as seen in Scottish and Newcastle Plc v Lancashire Mortgage Corp Ltd [2007] [13].One of the major issues which lead to failure of proprietary estoppel in Cobbe was that of passive assurance by the owner. In this case the claimant and a landowner had an informal agreement to which Cobbe obtained planning permission for the development of the owner’s land. Under the informal deal, the owner would later sell the land to Cobbe at a calculated amount so that he would profit on the increased value of the land as result of the planning permission being granted. The agreement was not binding, it was more of an ‘informal gentleman’s agreement’. After Cobbe obtained the planning permission, the landowner refused to proceed with the ‘promised’ transfer. The claimant then claimed the land by proprietary estoppel but the court refused to allow it. Lord Scott said that the claimant acted on a hope or a gamble, instead of an expectation or mistake to his rights; that assurance should be clear and unambiguous. His reasoning behind this is because it was a commercial agreement, both parties would have known that the proper formalities to enforce such was not sufficed by their negotiations. The assurance that the owner would act in a certain way would not necessarily be enough in a commercial context. However, where there is a genuine expectation in a commercial case, the claim would succeed. In Crabb v Arun DC [1976][14] claimant was assured that their council would build an easement to their land, so that the land can be divided and sold separately without leaving one part of the land landlocked. The council erected a fence with an opening for the assured easement to confirm their intentions. No formalities were met. The claimant relied to his detriment, leaving his land landlocked on the assurance to sell part of his land. The council later filled the gap and demanded £3000 for the easement to be erected. In this case the council was estopped from refusing to build easement because any sum that could have reasonably been demanded for the cost of construction was set-off against the detriment suffered by the claimant; the net cost being £0, with the Council being required to construct the easement. Consequently, where a proprietary estoppel claim is recognised, the court will evaluate the extent of the equity created and how best to satisfy it, even if it means enforcing an agreement declared void by statute. The judgement of Crabb was confirmed in Yaxley v Gotts & Anor [1999].[15]The difference between these two cases is the establishment of a definite assurance, whereas in Cobbe it was a hope or an expectation. Moving away from commercial examples of the success of assurance in proprietary estoppel, the courts are keener to permit agreements statutes declared void if it is by means of family or informal agreements. This is because the claimants who suffered loss may not have had the sufficient capacity to understand that certain formalities should have been put into place for their benefit. There is a predominance of agriculture related cases surrounding this topic. In Thorner v Major [2009] [16]the claimant worked without pay on their cousin’s farm for 40 years on the understanding that they would inherit the farm eventually. This case established that there was no need to have a mistake on the claimant, only that of a belief on the existence of the right. Essentially, the claimant should’ve believed that there is an interest in the land that the owner was committed to creating. Judgements in Thorner was then followed by Clarke v Corless [2010][17] and Gill v Woodall [2010][18] Comparing Thorner and Cobbe, one may notice that there is considerable contradiction between the two since Thorner appears to signify a departure from the restrictive approach to proprietary estoppel established by Cobbe. Nevertheless, in Thorner, Lord Scott didn’t clearly abandon the views he voiced in Cobbe and, indeed, made certain observations on the relationship between proprietary estoppel and 'the remedial constructive trust'. One of the major issues arisen is that of certainty. Lord Walker, Rodger and Neuberger all described the facts of the case as unusual due to the oblique nature of the representation. The issues relating to certainty raised was by Lloyd LJ was whether there was a promise by defendant or a mere statement of current testamentary intention, whether the promise was necessary and should the claimant believed the promise to be legally binding on the defendant. One of the main difficulties arising is that while one may feel sympathy for a trusting claimant in the family context, it would not be acceptable to provide the same remedy to an experienced property developer such as Cobbe. He simply would have known that it was not a legally binding commitment. After considering the cases of Cobbe and Thorner, one would raise the question as to why Cobbe failed but Thorner succeeded. While the temptations exist to rely on the labels of ‘commercial and ‘domestic’, they are not sufficient explanations. The factual limit between 'commercial' and 'domestic' cases is far from secure and requires an explanation, by reference to principle, of the precise features of the two sets of cases which are to be regarded as justifying differential treatment. The decision in Cobbe itself can be reconciled with Thorner on the basis that the promise in Cobbe was insufficiently certain in a different way, in that it was to enter into an agreement in relation to the sale of the disputed land on terms which remained to be agreed fully (and which could not be settled by the courts by reference to any past pattern of dealings between the parties). Cases which followed Thorner show that the strict approach in Cobbe is not always enforced.[19] Other factors of assurance are that it must relate to an interest in land or property[20], it must not be achieved by dishonesty[21] and that innocent misrepresentation is still assurance, however the innocence of the owner would be examined to assess equity[22]. In hopes that detrimental reliance is established by the court to render the owner’s conduct as unconscionable, the detriment must essentially result from reliance on the mistake or assumption[23] or expectation (informal and domestic only), however, assurance does not need to be the sole reason they act to their detriment.[24] To drastically change their position, a claimant should act to their detriment.[25] Cases such as Dillwyn v Llwelyn [26]and Voyce v Voyce [1991] [27]show detrimental reliance due to expenditure of money on building or to improve land. However, in Coombes v Smith [1986] [28]there was no proprietary estoppel because there was no real assurance, she was expected to live there till the child became 18, due to a non-financial detriment, it was more problematic to establish equity, while obiter in Maraj v Chand[29], a woman giving up her home to live with a man who promised her a home is detrimental reliance, thus her receiving proprietary rights. However, it depends on individual circumstances. For detrimental reliance to succeed the owner should have directly encouraged or acquiesced in what the claimant had done, however the owner does not necessarily have to know exactly what the claimant is doing in reliance general knowledge suffices. The last question asked before awarding proprietary rights due to all the factors being satisfied is that of unconscionability. The following seeks to settle the issues arising out of Lord Scott’s statement, whether proprietary estoppel can enforce an agreement that statute declares void. As seen in the cases analysed, the courts often use their discretion in the decision of awarding proprietary rights as remedies. This does not necessarily mean that they will all the time, they may also award licences, cash and sometimes even nothing. An often misconception is that proprietary rights are estoppels; proprietary estoppel gives rise to an equity[30], for this equity to be binding it would need to be protected by law using the accurate formalities. Under Registered land a s.32 Notice LRA 2002 would be applied or if the claimant is in actual occupation, an overriding interest under Schedule 3 paragraph 2 LRA 2002 would be applied. As seen in Baker v Baker [31]the claimant cannot be awarded more than what is expected, although sometimes it does.[32] The courts often use two approaches in deciding remedies, the expectation approach and the detriment approach. The expectation approach is more seen in business cases[33] and should have been seen in Cobbe if judgement was different, whereas, detriment approach is utilized in family cases. In Crabb it was noted that the claimant would not necessarily get what they expect. As established in Jennings v Rice[34], one of the leading cases on remedies, the expectation and detriment should be proportionate, thus, assuming the expectation is present, spending £10,000 on someone else’s property isn’t detrimental, while spending £10,000 of life savings on property is detrimental. Although the judgement in Cobbe is still currently followed in recent cases such as Micheal v Phillips [2017][35] and Achom and others v Lalic and others - [2014][36] there is a clear line which is drawn to separate where equity does not step in to enforce an agreement void by statute. The mere definition of proprietary estoppel, is it “allows an informal arrangement to be enforced and proprietary rights to be acquired without complying with the formalities”. It can be agreed that contrasting Cobbe and Thorner clearly displays this, where a commercial party (which is aware that the agreement is void at law due to experience and knowledge) act on an expectation or hope instead of direct assurance, equity does not favour them. Few may prejudice the unfairness for commercial parties who would have suffered detriment or financial loss however as seen in the case of Cobbe, while they did not get what they expected, they were awarded £150,000 due to quantum meruit. Concluding, Lord Scott’s judgement with regards to Cobbe is that of pragmatism. He acknowledged that holding individuals commercially experienced to the same standard as that in family disputes was not equitable. His statement is only agreed however only with regards to commercial parties attempting to abuse proprietary estoppel for agreements they knew void. [1] (Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55, [2008] 1 WLR 1752, para 29, per Lord Scott of Foscote.) [2] Dillwyn v Llwelyn [1862]- father offered son a farm in which he can build because he wanted the con close by, the land was not transferred to the son, regardless the son built a home which was encouraged by the father. Father died and relatives challenged the will, however due to the son’s expenditure and the father’s acquiescence, estoppel was established rewarding the son with equitable right to the land. [3] Where the claimant and owner acted in a way that the claimant had a reasonable right to suppose that he had acquired a right in the owner’s land [4] Owner assured claimant that a gift would be made but then tried to rely on lack of formalities to deny gift. [5] Taylor’s Fashions Ltd v Liverpool Victoria Trustees Ltd [1982] QB 133 [6] Habib Bank v Habib Bank AG Zurich [1981] 1 WLR 1265 [7] Lim Teng Huan v Ang Swee Chuan [1992] 1 WLR 1306 [8] Gillet v Holt [2000] 2 All ER 289 [9] Pascoe v Turner [1979] 1 WLR 431 [10] Griffiths v Williams (1977) 248 EG 947 [11] Re Basham [1986] 1 WLR 498 [12] Inwards v Baker [1965] 2 QB 29 [13] Scottish and Newcastle Plc v Lancashire Mortgage Corp Ltd [2007] EWCA Civ 684 [14] Crabb v Arun [1976] [15] Yaxley v Gotts & Anor [1999] EWCA Civ 3006 Court of Appeal [16] Thorner v Major [2009] [17] Clarke v Corless [2010] EWCA Civ 338 [18] Gill v Woodall [2010] EWCA Civ 1430 [19] Clarke v Corless [2010] EWCA Civ 338; Gill v Woodall [2010] EWCA Civ 1430 [20] Layton v Martin [1986] 2 FLR 227 [21] Murphy v Rayner [2011] EWHC 1 [22] Qayyum v Hameed [2009] EWCA Civ 352 [23] Attorney General of Hong Kong v Humphrey's Estate [1987] AC 114 [24] Evans v HSBC Trust [2005] WTLR 1289 [25] Suggitt v Suggitt [2012] EWCA Civ 1140 [26] Dillwyn v Llwelyn [27] Voyce v Voyce (1991) 62 P & CR 290 [28] Coombes v Smith [1986] [29] Maraj v Chand [30] Registered Land: s116 LRA 2002; Unregistered land and pre-LRA 2002 registered land, cases are applied. [31] Baker v Baker [32] Ibid. 14 [33] Ibid 10, 26 [34] Jennings v Rice [35] Micheal v Phillips [2017] EWHC 614 (QB) [36] Achom and others v Lalic and others - [2014] All ER (D) 73
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