Proprietary estoppel: unconscionability is all: a representation is not always necessary but encouragement is

Blue Haven Enterprises Ltd v Tully ([2006] UKPC 17) was an unjust enrichment claim but the Privy Council stated that the relevant principles were the same as for a claim in proprietary estoppel. In 1985, T entered into a contract to sell to R land in Jamaica that was suitable for development as a coffee plantation. There was a dispute and T purported to terminate the contract. In 1988, she agreed to sell the land to Blue Haven and allowed Blue Haven into possession. R knew of the sale. In January 1989, R obtained a judgment effectively requiring T to complete her contract with him and preventing her from selling to anyone else. In 1989, R visited the land and informed Blue Haven of his right to the land. Nevertheless, Blue Haven spent a lot of money to develop the land as a coffee plantation. Subsequently, R obtained an order requiring Blue Haven to give possession of the land to him and he became the registered owner of the land. Blue Haven brought an action for breach of contract against T and for unjust enrichment against R; Blue Haven had paid for development work that R would have had to pay for. This judgment is concerned with the unjust enrichment claim. The Privy Council stated that the relevant principles were the same as proprietary estoppel although no proprietary claim was being asserted.

The claim failed because R had done nothing to encourage any kind of expenditure or mistaken belief by Blue Haven. Quite the reverse was true since R had told Blue Haven of his interest before the expenditure had been incurred.

Lord Scott pointed out that the relevant representation came from T and not from R but that this was not the factor that was fatal to Blue Haven’s claim. There can be circumstances where there is no representation but there is unconscionability:

‘Enrichment of A brought about by improvement to A’s property otherwise than pursuant to some representation, express or implied, by acquiescence or encouragement for which A is responsible would not usually entitle B to an equitable remedy. But the reason would be that A’s behaviour in refusing to pay for improvement s that he had not asked for or encouraged could not, without more, be described as unconscionable.’ (para. 24).

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