Proprietary estoppel and contracts: facts sensitive inquiry

It is strongly arguable that a proprietary estoppel claim can still arise in England in respect of assurances that were intended to be contractually binding. Failure to incorporate the promises into a written agreement and / or to comply with the formalities laid down in section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 may be indicators that there was no assurance or no reliance. Whether this is so or not depends on the context and circumstances of each case. Failure to record the assurance in a formal agreement and / or to comply with section 2 are likely to be of greater significance in the context of a commercial transaction where each party has access to legal advice.

Whittaker v Kinnear ([2011] EWHC 1479) concerned an agreement under which W transferred title to her property to K (a property developer). The price paid was alleged to be substantially less than the market value. W and K were to share the profits from the development of the property. W alleged that there was a further agreement that she could live in the property at a nominal rent until the development had come to fruition and that she was entitled to recover title to part of the property in lieu of profits. The central parts of the arrangement were recorded in a formal contract but not the assurance that she could continue to occupy the property.  She relied on proprietary estoppel as a defence to an action for possession. There was argument as to whether proprietary estoppel (or a constructive trust to give effect to it) could still be invoked after section 2 of the Law of Property (Miscellaneus Provisions) Act 1989. There are dicta in English Court of Appeal and House of Lords  judgments supporting each side of the argument. Bean J took the view that proprietary estoppel is still available in the context of a land contract. Failure, however, to incorporate the promises into a written agreement and / or to comply with the formalities laid down in section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 may be indicators that there was no assurance or no reliance. Whether this is so or not depends on the context and circumstances of each case. Failure to record the assurance in a formal agreement and / or to comply with section 2 are likely to be of greater significance in the context of a commercial transaction where each party has access to legal advice.

Whether there is an estoppel is a question that is highly sensitive to the facts of each case. The case was remitted to the County Court for a more thorough airing of the facts.

Michael Lower

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