Proprietary estoppel: co-habitees

In Liden v Burton ([2016] EWCA Civ 275) B and L co-habited in B’s home for twelve years until they broke up in 2013. B’s home was mortgaged and he was concerned that he would not be able to keep up with the mortgage payments. He asked L to contribute and she made monthly payments to him of GBP 500. She asked him to explain how this was made up and he agreed that GBP 200 of this was ‘towards the house.’ The sum of  these payments ‘towards the house’ came to GBP 28,500.  L made the payments because of her reliance on the relationship (that he would look after her forever) and because of the later assurance that the payment was ‘towards the house’ which she reasonably understood to mean that she was to have an interest in the house. At first instance, the judge found that the elements of proprietary estoppel were present. B held the house on trust under the terms of which the first GBP 32,500  (GBP 28,000 plus interest) of the equity was held on trust for L. The English Court of Appeal (Hamblen LJ giving the main  judgment) upheld the first instance decision.

The assurances about the the long-term nature of the relationship and that the house would be their joint home were confirmed by the assurance that the payments were ‘towards the house’ ([28] – [30]). There was clear reliance and the GBP 200 payments were detriment. ‘The combination of reliance and detriment leads to and justifies the conclusion of unconscionability’ ([32]). The judge had a discretion as to how to satisfy the equity and it could not be said that the trust securing the repayment of the contributions with interest was more than the minimum required to do justice.

Michael Lower

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2 Responses to “Proprietary estoppel: co-habitees”

  1. Henry Woo Says:

    Dear Professor Lower,

    Thank you for the blog post. It is an excellent example of applying proprietary estoppel in real life.

    I just have some trivial questions to ask: Can we say that L’s proprietary interest arose only when B made the verbal commitment of “towards the house”, and L only had license to stay up to that point? I ask because if L had equity from the beginning, could she ask the judge for a higher share of the house?

    On the facts of this case, could L also claim common intention constructive trust, the intention being confirmed when B made that verbal commitment to L? If this argument worked (not sure if it would) could L claim more for her interest in the home (more than proprietary estoppel)?

    Finally, I always think of some twists to work through. What if B and L defaulted on the mortgage payments, and the bank wanted to take possessions? Could L claim overriding interests to stop the bank? My best guess is yes, she should be based on the facts given. But I also read that if the mortgage is of a purchase nature, then the bank will always have priority over parties who claim proprietary interests and who are in actual occupation. Assuming in the Liden v Burton case it was a purchase mortgage, then L would lose out to the bank?

    Thank you for taking the time to read my questions, and for posting a long series of excellent case analyses on the land blog.

    Sincerely,

    Henry S Woo

    Sent from my iPad

    >

    • Michael Lower Says:

      Dear Mr Woo,
      Many thanks for your posting. Like you I have been puzzling over why this was brought as a proprietary estoppel case when the elements of a common intention constructive trust also seem to have been present. It might be because B already owned the house at the time of the arrangement. The answer could be in the report of the first instance decision but I haven’t had the chance to read that yet.
      I agree that the outcome (L getting her money back with interest) will often not have the same value as having a share in the equity of a quite expensive house. Perhaps the difference would not be huge here because her contributions were fairly small and the court could have used these to calculate her share under a common intention constructive trust.
      The estoppel arises when B tries to resile from his assurance. I think that whether the bank is subject to it depends on timing. Here the mortgage preceded the estoppel and so the bank must win. If the mortgage came later then I think that the bank could be subject to it.
      Once again, many thanks for the posting.
      Best wishes,
      Michael Lower

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