When does the proprietary estoppel right arise?

In Walden v Atkins ([2013] EWHC 1387) the court held that a proprietary estoppel claim arises when there is promise, reliance and detriment and not when the maker of the representation goes back on it.

C sold property to DW and MW at a substantial discount to market value. He did so in reliance on DW and MW’s promise that they would ensure that the ownership of the property would revert to him on the death of the survivor of DW and MW.

DW died first and then MW died. MW left the property to E. C brought a claim in proprietary estoppel.

E argued that C had no standing to bring the claim. C had gone into bankruptcy and the effect was to vest C’s property in the trustee in bankruptcy. Did C have a proprietary right at that time?

C argued that the equity did not arise until MW died without giving effect to his promise and this was long after C’s bankruptcy.

The argument failed:

‘On the assumed facts, what happened was that by the sale of 37 Archery to DW and MW in January 1976 at a discount greater than 50% on the then market value, C acted to his detriment in reliance on the promise the subject of the 1975 Agreement. The promise thereby became irrevocable and the estoppel arose’ (at [35] per HHJ Simon Barker QC).

A little later:

‘The equity comes into existence, if at all, as the result of a promise being made to and relied upon by and a detriment being suffered by a promisee. It is at that point that the promise becomes irrevocable, the equity is recognised, and it is this equity to which the definition of property at s.436 IA 1986 is to be applied.’ [(48)]

This is so even though the question of unconscionability, and what may be necessary to undo it, is not considered until the later time when the promise falls to be performed ([45]).

Michael Lower

 

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