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Nature and importance
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stoppel gives effect to expectations. Like constructive trusts, it is intended to avoid an owner’s unconscionable (unfair) conduct. In estoppel, the unconscionable con-duct exists if the owner denies the expectation after having encouraged it, provided that the claimant has acted to their detriment. Estoppel is important for two principal reasons. First, it recognises obligations in situations where none would otherwise exist.Next, it plays an important role in circumventing formality requirements, bearing in mind that the creation of nearly every interest in land requires writing or (for legal interests) a deed.
Two examples illustrate how it works. The first is based on the influential nineteenth-century case of Dillwyn v Llewelyn.1A father wanted a son to live close to him and offered him a farm on which he could build a house. The son agreed and spent a very large sum on building. The transaction was recorded in a document, but this had no effect as a deed is required for a legal estate to be transferred. After the father died, the son’s rights were challenged by other relatives. Lord Westbury LC was emphatic that the son’s expen-diture, undertaken with the father’s approval, gave the son an equitable right to the land.
This is a good example of estoppel operating to avoid the formality requirement of a deed.
It might be noted that no claim could have been mounted if the son had not undertaken the expenditure.
In the second example, Richard and Sally are neighbours. Sally is building a large garage, but does not realise that most of it is on Richard’s side of the boundary. Richard is aware of this, but says nothing other than to tell Sally that her half-built garage looks nice. After it is finished, they quarrel and Richard says that Sally must either pull the garage down or allow him to use the part which is on his land. In this situation, the courts will say that Richard acquiesced in Sally’s mistake as to the ownership of the relevant area of land. He will be prevented from asserting ownership of it. This second example shows estoppel being used outside the formalities setting. Estoppel protects expectations regardless of whether a deliberate attempt to create property rights has been made.
1 (1862) 4 De GF&J 517 (45 ER 1285).
Nature and importance
Estoppel is not limited to just the property context. It applies in many different areas, operating to stop a person from asserting rights or arguments. One example (far removed from land law) is that once a point has been settled in litigation between two persons, it cannot be challenged in other proceedings between them. Most students will have encountered the principle of promissory estoppel in the law of contract, based on the High Trees case.2This form of estoppel operates as a defence. The estoppel we are dealing with in this chapter – proprietary estoppel – is much more powerful and has a positive effect.
In Dillwyn, it didn’t merely protect the son from being evicted but conferred a right to the fee simple. This is discussed later in this chapter.
Proprietary estoppel (which we will shorten to estoppel) has roots going back at least to the early nineteenth century. However, the area was overlooked for the best part of a century until it resurfaced in cases in the 1950s. Nearly all the cases in this chapter have been decided in the past 50 years, making it feel more modern than many areas of land law. Indeed, some of the features most discussed today (the remedy being the leading example) have emerged only in recent decades.
Three major issues are considered in this chapter. The first concerns the circumstances when an estoppel will arise. Two specific aspects of this – the use of estoppel to enforce promises and its use in sale negotiations – are discussed as ‘Critical and controversial issues’. The second major issue concerns the remedy which will be given when an estoppel has arisen. It cannot be assumed that effect will always be given to expectations. Suppose Arthur makes an oral (and therefore ineffective) gift of a house, worth £200,000, to Brenda. Brenda spends £3,000 replacing the central heating system. The courts may say that there is an estoppel because of her expenditure on the supposition that the house was hers. However, the benefit of a £200,000 house is so disproportionate to the £3,000 expenditure that the courts may well decide to give another remedy – perhaps the return of the money spent. This area has featured in several very recent cases and will form another ‘Critical and controversial issue’.
The final issue to be considered relates to the proprietary effect of the estoppel: does it bind a purchaser from the person who encouraged the expectation and detriment? In Dillwyn, for example, the person bound was a relative entitled to the land under the father’s will – not the father himself. Estoppel is almost completely derived from case law, but recent legislation confirms that successors in title can be bound by estoppel claims.
This is not the only chapter in which estoppel is mentioned. We will see in Chapter 9 that many of the rules relating to the acquisition of interests in the family home by con-structive trusts are very similar to estoppel. Indeed, there are suggestions that the two areas should be integrated. However, suffice to say now that almost none of the estop-pel cases in this chapter involve a couple agreeing to be joint owners of the family home.
Estoppel also features in Chapter 15 on licences. A licence is a permission to enter or use land; it is thought not to be proprietary. Estoppel is especially interesting in that con-text because it gives effect to non-proprietary rights over land. If a licence protected by an estoppel binds purchasers, then that is a remarkable result. In the present chapter, we consider the simpler (and more typical) situation where there is an expectation of a
2 Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130.
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conventional property right: fee simple (as in the examples at the beginning of this chapter), lease and easement being the most obvious rights.
Main issues and rules
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When will estoppel arise?The basic test
The traditional requirements for estoppel were laid down by Fry J in Willmott v Barber3 over a century ago. Fry J identified five requirements (generally known as probanda).
They may be summarised as follows, describing the owner as O and the claimant (the person who has acted to their detriment) as C:
(1) C must have made a mistake as to his rights;
(2) C must have expended money or done some act (not necessarily on O’s land) because of the mistake;
(3) O must be aware of his right (relevant to its being unconscionable to assert his title);
(4) O must be aware of C’s mistake;
(5) O must have encouraged C’s expenditure, either directly or by not asserting his rights.
It is easy to see that the two examples at the beginning of this chapter satisfy these requirements. However, the perception that they were too restrictive, if applied literally, resulted in a switch of approach in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd.4The case was complex, but it involved an option for a tenant to renew the lease of a shop. Unknown to both tenant and landlord, the option had become void. The tenant (C) argued that detriment had been incurred in the belief (encouraged by the landlord, O) that the option was valid. In this context, the third of the probanda caused difficulty:
O was unaware that the option was void. Oliver J held that the underlying test from the cases was whether ‘it was unconscionable for the defendant to seek to take advantage of the mistake’. This rests the law on general unconscionability ideas, rather than the precise requirements articulated by Fry J. Although it is only a first instance decision, the judgment of Oliver J has been widely accepted and applied: the language of uncon-scionability is now common.
As Oliver J recognised, this does not mean that we can forget about the probanda.
They illustrate the factors that lie at the heart of estoppel. We might say that there are three major components: the mistake made by C (the first of the probanda), detrimental reliance by C (the second of them) and responsibility on the part of O (the last three).
Confirming this, the House of Lords in Cobbe v Yeoman’s Row Management Ltd5 has recently stressed that more than unconscionability is required to prove estoppel. Though
3 (1880) 15 Ch D 96.
4 [1982] QB 133 (decided 1979). The application of the test to the facts is considered at p. 76, below.
5 [2008] 1 WLR 1752; p. 83 below.
Main issues and rules
we will see that the impact of Cobbe has proved to be less dramatic than some thought, this point seems to survive.
The mistake: assumptions and representations
The probanda refer to mistake: C has made a mistake as to rights in the land, which has been encouraged by O. The language of mistake can apply to some cases where there is a representation by O. Suppose that David tells his new neighbour Erica that her house has an easement so that she can get access to it over David’s drive. Erica then builds a garage which can be accessed only from David’s drive. Subsequently David denies that there is such an easement and in strict law it turns out that he is right. This is a case in which it is accurate to talk of a mistake by Erica.
However, the law does not stop there. The well-known decision in Crabb v Arun District Council6provides a good illustration. Crabb reached an outline agreement with the Council for an easement of access, though it did not amount to a contract. Crabb started to use the access, encouraged by the Council’s erecting substantial gates. There was alternative access through another part of Crabb’s land. The crucial stage came when Crabb sold off this part, so that the only access to his remaining land was through the new gates. This sale was the detriment incurred by Crabb; he would not have sold the land unless he believed that there would be a right of way over the Council’s land.
In these circumstances, the Court of Appeal held that Crabb could rely on estoppel:
it was reasonable for him to believe that there would be an easement. An important point to note is that he cannot have thought there was already an easement: he was expect-ing (under the outline agreement) to pay for it. Rather, he reasonably thought that an easement had been promised in such circumstances that it would be unconscionable for the Council to refuse to grant the access.
This expansion from mistakes to expectations was probably inevitable. To try to dis-tinguish between a person who believes he has a right and one who believes that there has been a promise to create a right would be almost impossible in practice. The two situations shade into one another and the average layman would not distinguish between them. However, the expansion has been challenged in recent cases. This is considered as a ‘Critical and controversial issue’, with particular stress on how estoppel operates where land contracts are oral or (as in Crabb) not finalised.
Detrimental reliance
Simply because O knows a mistake has been made does not mean that it is uncon-scionable to disappoint expectations. A rule as wide as that would make a mockery of virtually all formality requirements. C must undertake detrimental reliance before O’s conduct can be regarded as unconscionable.
In many of the early cases, the detriment consisted of improving the land in question:
the son’s building a house in Dillwyn provides a good example. However, it has long been clear that other actions constitute detriment. Two examples will be selected from the cases. The first is undertaking work benefiting O or O’s family, sometimes in the form
6 [1976] Ch 179.
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of personal care services. This is illustrated by Greasley v Cooke,7in which Doris, a maid, worked in Arthur’s house. Over time, she formed a relationship with one of his sons (Kenneth) and was assured by him and another son (Howard; the two sons owned the house) that she could stay there for life. She looked after the house and, in particular, looked after a mentally ill sister of Kenneth. Some 30 years later (40 years since Doris arrived), Howard and Kenneth had both died, as had the sister. Arthur’s family now sought to evict Doris, but the Court of Appeal had no hesitation in holding that Doris’s actions sufficed as detriment – no improvement of the house or expenditure of money was required. The second example is Crabb. It will be recalled that the detriment lay in selling off land, which would leave Crabb’s property landlocked without the claimed easement. The detriment contained no benefit for the owner at all.
Though expenditure frequently constitutes detriment, expenditure within a family home is often difficult to assess. This is because people living in homes naturally wish to improve the quality of the environment in which they live, regardless of having any property right. In some cases, the claimed detriment may be no more than an act of gratitude for the past benefit of living there. If rent-free accommodation is valued at £300 a month, then spending £1,000 on, say, carpets, in the course of a year may be difficult to justify as detriment. Alternatively, we might say that there is detriment, but (under principles considered below) no remedy is justified.
Coombes v Smith8 illustrates greater problems. Eileen and Robert, both already married to others, became lovers. When Eileen became pregnant, she left her husband and moved to a house provided by Robert. Although they discussed setting up home together, this never happened. Eileen left her job before the baby was born and there-after undertook some decorating of the house. When they quarrelled some 10 years later, Eileen claimed she was entitled to the house. Facts of this type are found in many cases, which makes it an interesting case. The judge treated Eileen’s actions as being the natural actions of a woman in an unhappy marriage who wished to have a baby and live with her lover: there was no sufficient detriment for estoppel. It might be added that Robert accepted that she could stay there until the child reached 17: Eileen kept possession, but could not claim ownership.
The law here faces a difficulty. It seems hard to say that these sorts of facts cannot count as detriment, but to accept them as detriment would lead to representations being enforceable in a very large proportion of cases where people choose to live together.
Similar conduct includes moving homes and giving up a job to be with another person.
This can be seen as a benefit (emotional as well as having a home without payment) as much as a detriment (loss of existing accommodation and making it more difficult to re-enter employment later). There is no final resolution of those issues, though more recent cases have indicated a more generous approach than seen in Coombes.
A rather different point concerns the element of reliance. Not only must there be detriment, but also it must be referable to the mistake or representation. Taylors Fashions provides an example of a claim’s failing on this basis. The tenant of shop premises had
7 [1980] 1 WLR 1306.
8 [1986] 1 WLR 808 (Parker QC).
Main issues and rules
installed a lift and argued that this was detrimental reliance on an expectation of being able to renew the lease. Oliver J was not much impressed by this. The lease had 18 years to run anyway, so the lift could be said to have been installed to benefit the shop during that period.
At least in the family home context, however, reliance is readily proved. This emerges from Greasley. A factual difficulty was that Doris’s conduct could be explained as much as resulting from her living with Kenneth as from the assurance that she could stay there for life. The Court of Appeal considered that reliance would be presumed: there was no need for Doris to prove why she undertook the detriment.
One type of situation requires a more subtle approach. Suppose Rose moves in with Simon and cares for Simon’s elderly mother, Theresa. After a few years, Simon tells Rose ( younger than him) that she has been so good that he will leave the house to her when he dies. Things remain exactly the same until Simon is killed in a car accident five years later. Simon has not made a will and the house passes to his brother, who seeks to evict Rose. On these facts, Rose did not change her conduct as a result of what Simon had said: her care for Theresa was the same before and after. The courts deal with this by saying that, had Simon later told her that she was not to get the house, Rose might well have been upset and stopped caring for Theresa. The reliance is thus related to Simon’s not withdrawing the promise, rather than to the making of the promise.
The owner’s responsibility
Without some responsibility for C’s mistake, it is not unconscionable for O to deny C’s claim. Most cases involve some sort of promise or representation. This is enough to establish responsibility. Even if there is a common mistake by O and C (so that O is not deliberately misleading C), the active role taken by O justifies finding him liable.
This was the principal issue in Taylors Fashions. Oliver J held that estoppel operated even though the owner of the land was unaware that the option to renew a lease had been rendered void. It is interesting, however, that he considered that in cases of pure acquiescence (not involving any encouragement by O) it would be more difficult to show unconscionability if O were unaware of the true situation. On the facts of Taylors Fashions, there were two quite different claims. One was by the tenant who installed the lift ( T1). The owner had not encouraged this and, indeed, could not object to it as T1 was entitled to make this sort of improvement. This (in addition to the reliance problems considered above) was relevant in rejecting the tenant’s estoppel claim. A second claim was brought by tenants ( T2) of an adjoining lease, the duration of which depended on T1’s disputed option. The fact that the owner had dealt with T2 on the basis of T1’s having such a right was enough to establish the owner’s responsibility: an estoppel was proved.
A rather different point is whether O must be aware of C’s reliance. If the act of reliance is unexpected, then O may be able to argue that it is not unconscionable to assert rights to the land free of C’s claim. This was raised in Crabb, where the Council argued that it was unaware of Crabb’s sale of part of the land. That was rejected on the basis that the Council was aware that he planned to sell off part: this general awareness sufficed. But is it necessary that C has any such knowledge? Suppose that Richard tells
Main issues and rules
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Sally that a house is hers, but without executing a deed of gift. Richard then goes on an extended foreign visit for six months. While he is away, Sally spends large amounts of money in improving and extending the house. Is it not unconscionable of Richard to reclaim the house? Sally’s conduct is what one might expect a person to do with a newly acquired house.
It may therefore be thought that a low level of awareness should suffice: no more than knowledge of circumstances in which detrimental reliance is foreseeable. However, in situations in which there is simple acquiescence (no representation or encouragement) it will be rare for conduct to be unconscionable without knowledge of the detriment. The very essence of liability is based on standing by while the mistaken party expends money in the mistaken assumption. A person who knows only that person has made a mistake will not normally be acting unconscionably.
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The remedyIn contract, remedies are designed to give effect to what has been promised. Does the same apply in estoppel? Giving effect to the promise is supported both by the idea that O cannot unconscionably deny what C has been led to expect and by the earlier cases.
As we will see in the ‘Critical and controversial issues’ section, the position has become far more complex than this. It is clear that more stress is being placed on the detriment in working out what remedy is appropriate. Suffice at present to make two observations.
The first is that the remedy will never exceed what has been promised, whatever the scale of the detriment. The second is that the cases (fully discussed later) show a significant court discretion as regards the remedy, especially if the detriment is disproportionately small in comparison with the expectation.
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Estoppel as a proprietary claimSo far, we have considered estoppel as between O and C. What happens if O sells the land to P? There is no independent unconscionable conduct by P, so C will have to argue that the estoppel claim against O constitutes a proprietary interest binding P. A short introductory point is that estoppel claims are clearly equitable in nature: they are based on equitable principles and lie outside the legal interests listed in section 1 of the Law of Property Act 1925. They can bind purchasers of registered land only if protected by an entry on the register or an overriding interest. It is common for C to be in actual occu-pation, which will usually facilitate an overriding interest.
The earlier cases
Successors in title have consistently been held bound by estoppels. Dillwyn is an early example, involving a person taking title under O’s will. Nevertheless, a few cases and commentators expressed the contrary view.
Land Registration Act 2002, section 116
Section 116 enacts that ‘for the avoidance of doubt’, an equity by estoppel ‘has effect from the time the equity arises as an interest capable of binding successors in title’. It is