What is proprietary estoppel and why might it concern you?

In very general terms estoppels operate to enforce the terms of a promise. Proprietary estoppel may enable someone to claim a beneficial interest in a property. For instance, if Party A promised that a property would pass to the Party B on the Party A’s death, and Party B relied on that promise to his detriment by undertaking a lot of expensive improvement work to the property in the belief that he would ultimately own it, but in fact Party A left it to Party C in his will, then Party B may have a claim against Party A’s estate on the grounds of proprietary estoppel.

An attempt to go back on a promise may be particularly unjust for someone who has relied on that promise and conducted their life accordingly. I have recently been consulted by a disabled client who has been living at his mother’s home for decades in the belief that he would own the property after her death for the rest of his life.  However, on my client’s mother death, ownership of the home passed to his stepfather who wished to sell the property and eject my client without making any alternative arrangements for him. This would cause great injustice as not only did my client not benefit from his mother’s estate, but he was also left in a situation where if his stepfather went ahead with the sale, he would lose his home and have to move out of the area. He was unable to afford rent locally and would lose access to his support network (who help him to manage his disability) and possibly his job, depending on whether he could afford to rent within a reasonable commute. The outcome would be very unfair to him, and that is what a proprietary estoppel aims to prevent – an unfair outcome of this sort.

All of the following elements must be present to trigger a proprietary estoppel claim:

• A representation, promise, assurance or other encouragement of sufficient clarity giving rise to an expectation by the claimant that he would have a certain proprietary interest;
• Reliance by the claimant on that assurance; and
• Detriment to the claimant in consequence of his reasonable reliance (substantial detriment – usually financial)

The question as to whether all these requirements are fulfilled depend upon the specific facts of each case. From the case law, we know that:

• The promise or assurance should be clear enough (Thorner v Major (2009));
• There is no requirement that the person who made the  promise is aware that the other party relied upon it (Joyce v Epsom & Ewell Borough Council (2012)) unless acquiescence is claimed in which case the court will consider the broader context of the case and the mental state of the parties in order to determine whether or not unconscionability has been established (Taylors Fashions Ltd v Liverpool Victoria Trustees Company Ltd (1982));

If the claimant succeeds in establishing proprietary estoppel, the court will determine the extent of their entitlement to the property arising before deciding upon the relief required to satisfy that entitlement (Crabb v Arun District Council (1976)).  The fact that someone can show they have an interest in a property will not mean that the court will simply transfer the property to them.  The court has discretion when it comes to making an award. It will take into account a broad range of factors, including the conduct and circumstances of the parties, the nature of the detriment and whether there are any other claims to the property in question (Jennings v Rice (2003)). The court has the flexibility to choose the most appropriate mechanism to give effect to the interest that has arisen (which could be transfer of land or payment of money or could be another solution such as transfer of part of a business). Ultimately, proprietary estoppel can be a very useful tool in litigation for claimants who wish to establish a beneficial interest in the property. However, it is essential for a lawyer to keep an open mind and assess the situation more broadly as other claims may also be available and may further advance the client’s claim. For instance, resulting, constructive or implied trusts as well as Inheritance Act claims may be appropriate depending on the circumstances of each case.