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Propriety Estoppel

The modern approach to proprietary estoppel has been considered in two recent House of Lords cases: Cobbe v Yeomans Row Management Limited and Thorner v Major The doctrine is based on three main elements a representation or assurance made to the claimant; reliance on it by the claimant; and detriment to the claimant in consequence of his [reasonable] reliance. Lord Walker in Thorner v Major

The test is best summarised as follows: If A, under an expectation created or encouraged by B that A shall have a certain interest in land thereafter, on the faith of such expectation and with the knowledge of B and without objection from him, acts to his detriment in connection with such land, a Court of Equity will compel B to give effect to such expectation.

The doctrine, however, is not treated as subdivided into three watertight compartments. Instead, unconscionable conduct is the fundamental principle that equity is concerned to prevent, and that principle permeates all the elements of the doctrine. i) Representation

The first requirement is that the owner of land induces, encourages or allows the Claimant to expect or believe that he has or will enjoy some right or benefit over the owners property. A representation may be made in a direct, express form by encouraging words or conduct or as a result of an agreement between the parties. These tend to be easier to prove.

However as Lord Neuberger notes in Thorner v Major Perhaps the classic example of proprietary estoppel is based on silence and inaction, rather than any statement or action.

The representation may thus take the indirect form of encouraging the claimant in a pre-existing expectation or of acquiescence by silence or inactivity and allowing the claimant to act to his detriment. In Lester v Woodgate, Pattern J considered in such a case: the landowner's passive and uncomplaining acquiescence in what is done may amount to an assurance that the other party will continue to enjoy rights over his land on which it would be reasonable for that party to rely.

Mere inaction is not sufficient, however. What is required is that: the landowner becomes aware of the work and knows that the other party is carrying it out in the belief that he owns the land in question or has rights over it but fails to object, [and in such a case] his silence will be treated as a species of equitable fraud sufficient to found an estoppel .

According to Lord Walker in Thorner v Major, the representation need not be strictly clear and unambiguous, but must be clear enough as reasonably conveyed to the promisee in the context of the case.

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It follows that provided the person at whom the representation is directed reasonably believed that the representation is true and intended to be acted upon by him, though it is not necessary to prove that the promisor intended that his words or conduct would have that effect or was even subjectively aware that they did so. It is now well established that the promise need not be made irrevocably What later makes them binding, and therefore irrevocable, is the promisee's detrimental reliance on them. Once that occurs, there is simply no question of the promisor changing his or her mind.

Again, however, it seems that CONTEXT IS EVERYTHING. It may be that the promise in was so unambiguous and had been made on numerous occasions at family gatherings, that it was thus more than more than a mere statement of present [revocable] intention, and is tantamount to a promise . Gillet v Holt On the other hand the representation might only be reasonably interpreted as conveying no more than a statement of A's current intention, which can be subject to change with the passage of time, with or without a change of circumstances It might even be a conditional promise as in Uglow v Uglow Finally, the expectations of the claimant must, it now seems, focus on some specific, identified piece of property, or some part of the property the extent of which need not be identified, but which is objectively ascertainable: Thorner v Major.

ii)

Reliance

There is no need to show a mutual understanding or agreement that the Claimant would incur the relevant expenditure or suffer the relevant detriment Instead: There must be a sufficient link between the promises relied upon and the conduct which constitutes the detriment; The promises relied upon do not have to be the sole inducement for the conduct: it is sufficient if they are an inducement; Once it has been established that promises were made, and that there has been conduct by the plaintiff of such a nature that inducement may be inferred then the burden of proof shifts to the defendants to establish that he did not rely on the promises

It is not necessary, however, for the Claimant to show that he would have acted differently if the promise had never been made but only if the representation had been withdrawn: Ottey v Grundy Subject to that, to the list may be added that the reliance must be reasonable in all the circumstances: Thorner v Major. However when evidence is available that the property owner intended the Claimant to rely on his promise as he did, the question of the reasonableness of the reliance is likely to be indisputable: Lester v Woodgate.

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iii)

Detriment

Although taken separately here, reliance and detriment are intertwined. In Henry v Henry Sir Jonathan Parker said: Notwithstanding that reliance and detriment may, in the abstract, be regarded as different concepts, in applying the principles of proprietary estoppel they are often intertwined.

Detriment was defined in Gillett v Holt as follows: Detriment is not a narrow or technical concept: it need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial; The detriment which the promisee must be shown to have suffered falls to be judged at the moment when the promisor proposes to go back on his representation. Whether the detriment is sufficiently substantial is to be tested by whether it would be unjust or inequitable to allow the assurance to be disregarded; and Detriment is the detriment or harm which a claimant would suffer if the promisor were not compelled to adhere to the representation in reliance upon which the claimant had altered his position. Unconscionability

iv)

Lord Walker in Cobbe: That argument raises the question whether "unconscionability" is a separate element in making out a case of estoppel, or whether to regard it as a separate element Here it is being used (as in my opinion it should always be used) as an objective value judgment on behaviour (regardless of the state of mind of the individual in question). As such it does in my opinion play a very important part in the doctrine of equitable estoppel, in unifying and confirming, as it were, the other elements. If the other elements appear to be present but the result does not shock the conscience of the court, the analysis needs to be looked at again. v) Satisfying the Equity

Once an estoppel has been established, the Court must go on to consider how to satisfy the Claimants equity. It is perhaps at this stage that the flexibility of the doctrine is at its most apparent. The Courts approach can be summarised as follows The court takes a principled approach, and does not exercise a completely unfettered discretion according to the individual judge's notion of what is fair in any particular case; The approach to be taken is to ascertain the maximum extent of the claimants equity, and then to determine what the minimum required is to satisfy it and do justice between the parties; The most essential requirement is that there must be proportionality between the expectation and the detriment; It is a question of satisfying the equity rather than satisfying, or vindicating, the claimant's expectations.

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In certain cases however either expectation or detriment alone might be fulfilled: The court might vindicate an expectation: Where the representation was on the basis of mutual understanding or agreement in reasonably clear terms that the claimant would have an identifiable interest in an identifiable property (such as being the sole heir of a house); or Where there are difficulties or uncertainties in quantifying the detriment, for example where it consisted of the provision of care or services, or of pandering to the moods or caprices of an elderly person.

By contrast detriment may be the relevant yardstick: Where the claimants expectations were uncertain, extravagant or out of all proportion to the detriment suffered; or Where the detriment can be quantified with reasonable precision, for example if it consists solely of expenditure on improvements to another person's house, and in some cases of that sort an equitable charge for the expenditure may be sufficient to satisfy the equity

. In any case, the key rule is that the remedy must be proportionate to the detriment suffered

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