Proprietary estoppel in relationship cases: assurance or not?

Cook v Thomas ([2010] EWCA Civ 227) concerned a proprietary estoppel claim by Mr and Mrs Thomas against Mrs. Cook (Mrs Thomas’ mother). Mrs. Cook owned a farmhouse with a small amount of farmland and outbuildings (‘the property’). Mrs. Cook (‘the claimant’) allowed Mr and Mrs Thomas (‘the defendants’) to place the mobile home they lived in on the property. When that was damaged by a storm, the claimant allowed the defendants to move into the farmhouse. The defendants repaired and improved the farmhouse and farmed the land. The parties fell out and the claimant sought to evict the defendants.

The defendants relied on proprietary estoppel. They alleged that they had been given assurances that: (i) they would be allowed to remain in the property during the claimant’s life; and (ii) they would inherit the property on her death. They claimed that their work on the property was carried out in reliance on these assurances.

The first instance judge found that the claimant had given the defendants permission to live in the property and to farm the land. She had not, however, given them any assurance that they had an irrevocable permission to remain. The defendants appealed and the Court of Appeal had to consider whether the first instance judge had been entitled to reach his conclusion that there was no assurance.

The Court of Appeal (Lloyd LJ giving the principal judgment) found that the first instance judge had been entitled to decide in favour of the claimant. The evidence pointed to ‘a limited and informal family arrangement’ ([63]).

The claimant told the defendants that ‘you know this is all going to be yours when I am gone anyway’ ([72]). This did not give rise to a proprietary estoppel: (a) because it was not taken as an assurance but as an indicator of current intent; and (b) because there was no detrimental reliance upon it ([72]).

There was no room to make use of the Greasley v Cook presumption of reliance: ‘In the present case, there is no need for a presumption. The matter was fully investigated in evidence … A presumption is only relevant in the absence of the relevant evidence’ ([77]).

Lloyd LJ acknowledged that, in assessing the defendant’s case, the facts had to be looked at as a whole as at the time when the claimant sought to act inconsistently with the alleged assurances. The judge had to ‘come to a view as to whether the combined effect of what the Claimant had said and done, on the one hand, and the overall conduct of the Defendants on the other, meant that the Claimant could not turn the Defendants out’ ([97]).

There was no evidence to show that the judge had failed to take account of any relevant conduct ([99]): ‘Nothing had been done which was relevant in support of the Defendants’ case, unlike the history in Thorner v Majors [2009] UKHL 18 where the claimant had been helping the deceased voluntarily for years before anything was said to him that could amount to a promise or representation’ ([99]).

The relevant assurances were said to have been contained in four promises alleged to have been given by the claimant to the defendants. The defendants criticised the first judgment for assessing the evidence in relation to each but for not giving a separate analysis of the cumulative effect of the promises. Lloyd LJ rejected this criticism: ‘It was not necessary for the judge, having dealt carefully and at length with the relevant conduct in making his findings as to the sequence of events, to set out any extended analysis of the matter looked at as a whole’ ([101]).

It was legitimate for the judge to have regard to the lapse of time between the alleged representations and the conduct said to amount to detrimental reliance: ‘If there is a noticeable delay, it may be capable of explanation, such as for reasons of lack of funds or otherwise, but absent such a reason given in evidence, a significant delay may well point to a lack of connection between the representation and the acts said to have been done in reliance on it’ ([103]).

Alternative claims for an interest under a common intention constructive trust and in unjust enrichment failed. There was no common intention and the defendants had done the repair and improvement works for their own benefit, to make the house habitable for themselves.

Michael Lower

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Proprietary estoppel and co-habitees: assurance must relate to a specific property

Lissimore v Downing ([2003] EWHC B1 (Ch)) concerned the proprietary estoppel claim brought by L on the break-down of her relationship with D, a rock star and the owner of Astbury hall, a large estate in England. The relationship began in 1993 and lasted for seven years. There was an ‘engagement’ but neither party expected to marry.

D was heavily invested in Astbury Hall, both in financial and in psychological terms. Astbury Hall represented the fruits of many years of hard work. Even before the relationship with L deteriorated, D consulted his solicitors as to the steps to be taken to ensure that L would have no claim to an interest in it.

HH Judge Norris QC outlined the law on proprietary estoppel. He emphasised the basic rule that a representation or assurance must relate either to some specific property ([12]) or to the whole of the representor’s property ([15]).

As regards detriment, the judge said, ‘the conduct must be in some sense prejudicial to the party relying on it, or of such a nature that it raises the inference that it must have been induced by some sort of promise.’ ([20]).

The claim failed because there was no representation; it was understood that L could live at Astbury Hall while the relationship lasted. Commenting on the legal effect of the relationship, HH Judge Norris QC said:

‘The fact that that state of affairs happened to endure for several years cannot of itself impose on Mr Downing an obligation to transfer some of his property when he did not undertake such an obligation at the outset. There may be a promissory estoppel (eg a defence to a claim to leave the property before reasonable notice of the change in the nature of the arrangements has expired): but proprietary estoppel is different’ ([37]).

He went on to note the problems that arise in this type of claim:

‘The advancing of a proprietary claim tends to require the claimant to list how much (s)he did, endowing small acts with a great significance whilst at the same time not recording that party’s true contribution to the relationship.’ ([47]).

L’s proprietary estoppel claim failed. D made no statement that would lead her to believe that she was to have a share in Astbury Hall. Nor did L believe that she had any such share ([51]). D’s statements ‘relate almost entirely to the currency of the relationship’ ([53]).

Nor was there any overall detriment: ‘looking at the matter in the round, balancing the burdens assumed in the relationship against the benefits derived from it, and making the assessment after the breakdown of the relationship, no substantial detriment had been suffered’ ([54]).

There is a distinction between property law and family law claims:

‘What I am being invited to do is to make a property adjustment order on the termination of the relationship, not to define what property rights were created during the relationship’ ([55]).

Michael Lower

 

Proprietary estoppel and co-habitation

In Southwell v Blackburn ([2014] EWCA Civ 1347, CA (Eng)) B and S began to co-habit in 2002. S bought a house in his name and he alone made the mortgage payments. He did not envisage marriage precisely because he knew that B might then have a claim against the house. Several years later, the relationship came to an end and S excluded B from the house. B’s claim that they had a common intention to be equal beneficial owners failed. In the alternative she relied on proprietary estoppel.

There was no specific assurance that B would have any right to the home. S did, however, assure B that he was making a long term commitment to provide B with a secure home. S’s assurance was that B would ‘have the sort of security that a wife would have, in terms of accommodation at the house, and income.’ ([16])

Before moving in with S, B had accommodation rented from a housing association. She spent GBP20,000 fitting and furnishing the house. Relying on S’s assurances, B left that accommodation. Although her income was much less than S’s, B did contribute to the couple’s joint expenses.

The first issue was whether the assurances were enough for proprietary estoppel purposes. It is clear that the assurance must be clear and unequivocal and relate to the property. An assurance that B would be provided with a secure home was sufficient to give rise to an equity (Greasley v Cooke). S’s assurance was not, in substance, conditional on the continuation of the relationship ([7]).

The fact that the common intention constructive trust claim to an equal beneficial share had failed did not mean that there could not be an assurance as to the security of B’s right to accommodation ([10]).

Then there was the question of detriment. B had enjoyed rent-free accommodation and had been able to take a degree that enhanced her earning capacity. Did this mean that the detriment had been dissipated over the course of the relationship?

First, it is true that ‘detriment has to be assessed over the course of the relationship’ ([13]). It was right to have regard to the benefits that had accrued to B as a result of the relationship ([14]). But S had also benefited from B’s contributions ([15]).

There are cases where, looking at the course of the relationship from the point at which the promisor reneges on his promise, the benefit has been dissipated. That said, ‘cases involving couples living together lend themselves .. less readily to an arithmetical accounting exercise’ ([17]). Benefits flowed both ways and were incidents of the relationship ([18]).

As for unconscionability, S contended that the relationship was not a marriage and was not expected to be permanent. Thus, there was no unconscionability about withdrawing the security of accommodation. This failed. The point was that B had incurred detriment in reliance on the assurances:

‘It is the detrimental reliance which makes the promise irrevocable and leads to the conclusion, at the end of a broad inquiry, that repudiation of the assurance is unconscionable.’ ([20]).

The relief that was awarded was a payment to reimburse her for the money that she had spent on the home that she had left and on S’s property.

Michael Lower

 

 

Proprietary estoppel: genuine belief but no assurance

McGuiness v Preece ([2016] EWHC 1518 (Ch)) concerned a son’s claim to land owned by his parents. The parents had established a family business in which their four children worked. The parents transferred the business into a company set up for the purpose. The parents were the majority shareholders until they were bought out by the children when the father decided to retire. The parents retained in their own name the title to the land on which the business was carried on. The father died and ownership of the land passed to his wife. She then died leaving the land to her daughter. One of the sons claimed to have an interest in the land, relying on proprietary estoppel and / or a common intention constructive trust. The claim failed.

Newey J. accepted that the son had a genuine belief that he had or was to have an interest in the land. The claim failed, though, because nothing said or done by or on behalf of the father was a ‘clear enough’ (Thorner v Major) assurance. From a constructive trust perspective, there was no assurance or agreement. Newey J. was sympathetic to the argument that the sale of the business (without the land) was the subject of a contract and so there was no room for equity to play a part. For the sake of argument, however, he was prepared to assume that the contractual context did not preclude reliance on proprietary estoppel and the common intention constructive trust ([79]).

Michael Lower

Proprietary estoppel: alleged representations made by a person who is dead at the time of the trial

In Szeto Chak Mei v Chan Lam Shan ([2016] HKEC 482) P was the adminstratrix of her deceased father’s estate. The estate included a flat in which D1, the deceased’s daughter-in-law had lived for many years (since her marriage to one of the deceased’s sons). P alleged that D1 was a bare licensee of the flat. She terminated the licence and sought an order for vacant possession when D1 continued in possession. D1 claimed that the deceased and (after his death) the deceased’s wife had made representations to her that the title to the flat would be transferred to her. Deputy Judge Cooney SC referred to Yung Shu Wu v Vivienne Sung Wu ((2011) 14 HKCFAR 39): since D1 was alleging a gift or a promise of a gift by a person who was deceased at the time of trial, the claim should be treated with suspicion ([43]). D1 had not persuaded the court that the representation had been made and the proprietary estoppel claim failed.

Michael Lower

When is a statement clear and unambiguous for the purposes of equitable estoppel?

In Kim v Chasewood Park Residents Ltd ([2013] EWCA Civ 239, CA (Eng)) K was one of the flat owners at an estate called Chasewood Park (holding under the terms of a 125 year lease). The reversion (a much longer lease) came up for sale. Chasewood Park Residents Ltd was set up by the Residents’ Association to acquire the reversion. On 24th August 2006, the committee of the Residents’ Association sent out a circular letter to residents inviting them to contribute to the cost of acquisition. The letter summarised the benefits of the scheme and these were said to include the fact that those who participated would no longer need to pay the ground rent (then GBP100 annually) and that the 125 year terms could be extended to much longer terms at minimal extra cost.

K, believing that Chasewood Park would acquire the freehold and that a commonhold scheme would be established, agreed to participate. In fact, the reversion was a leasehold and what was proposed was an extension of the leases. Chasewood Park acquired the reversion and those who had agreed to participate were offered longer terms (as promised) but Chasewood Park said that a ground rent of GBP 100 would continue to be payable under the new leases.

K refused to pay the ground rent. In her defence to Chasewood Park’s claim for the rent arrears, she  argued that Chasewood Park was estopped from including a ground rent in the new leases since the circular letter contained statements that:

1. there would be no ground rent to pay following the purchase of the reversion; and

2. that participating residents would be able to extend their leases at no additional cost except a small fee.

The first, and as it happened determinative, issue was whether there had been a clear and unambiguous representation that participants would not have to pay a ground rent. On this, Patten L.J. said:

‘There is no doubt that in order to found a promissory estoppel (in the same way as any other estoppel based on a representation of fact) the representation or promise must be clear and unambiguous. But this principle raises a number of subsidiary questions. Does it mean that the estoppel cannot arise unless there is only one possible meaning of the words used or is the existence of other possible (but perhaps less probable) meanings not fatal to the creation of an estoppel where the Court can say that it was reasonable for the representee to have interpreted the words used in the way he did? There is also an issue about the test to be adopted by the Court. Few, if any, statements are not capable of being interpreted in more than one way. The Court’s usual role in construing, for example, a contract is to arrive at the legally correct meaning of the words. Their construction is a matter of law and the Court’s function is to resolve any ambiguities in reaching its conclusion. But it is arguable that in the case of estoppel it should not go any further than to identify the existence of any real ambiguities in the language. If the statement is open to more than one reasonable interpretation (one of which is fatal to the estoppel defence) then the representee was not entitled to rely on what was said without further clarification and there is no basis for an estoppel.’ ([23])

There was no clear and unambiguous statement here. The circular letter was simply a list of potential benefits. The suggestions were conditional and set out in an early stage in the scheme. They did not amount to the assurance contended for ([31] and [34]).

Nor had there been the necessary reliance since K had misunderstood the nature of the scheme. She had relied on her understanding that there would be a commonhold scheme and that she would not be a tenant at all. This was not merely a question of the legal mechanism to be put in place to give effect to an assurance. She had relied on an assurance that had not been made ([38] – [40]).

Patten LJ considered whether, had there been a promissory estoppel defence, its effect would have been merely suspensory. Would it have been unconscionable to withdraw any assurance that no ground rent was payable? It would not have been unconscionable. There was nothing to lead to such a conclusion. Chasewood Park had offered to reimburse K’s contribution but she had declined the offer. While Chasewood Park’s offer to reimburse K was not determinative, it reinforced the conclusion that it was not unconscionable to withdraw any assurance that no ground rent was payable ([42]).

Similar reasoning applied if one looked at the matter as a claim based on proprietary estoppel. The conclusion that any promissory estoppel would only be suspensory suggested that relief in proprietary estoppel should not take a form that would result in the permanent removal of a liability to pay ground rent. It would be inappropriate to grant relief in the form of a lease with no ground rent ([45]).

Michael Lower

Constructive trust and proprietary estoppel: how specific must the assurance be?

It is possible for a common intention constructive trust to arise after the property has been acquired and this can be inferred from express agreement or conduct. It needs to be clear, though, that such a common intention has been formed. Contributions made in the absence of such a common intention count for nothing. Proprietary estoppel, too, depends on an assurance that some kind of interest in property will pass (though, clearly, that interest need not be quantified).

In James v Thomas ([2007] EWCA Civ 1212 CA (Eng)) Mr Thomas owned a property. He met Ms James and they cohabited. The property was their family home for many years. Ms James made financial contributions to mortgage instalments and did heavy building work both at the home and as an employee / partner in Mr James construction business. Mr Thomas refused to agree to Ms James’ suggestions that he sell the house and buy another joint home. He assured Ms James that her efforts would benefit them both, He told her that she would be provided for.

The English Court of Appeal held that there was no evidence of a common intention that Ms James should have any proprietary interest in the house. The undeniable fact that she made very significant contributions did not, therefore, result in her having any beneficial interest under a constructive trust. Mr Thomas’ assurances did not amount to an assurance that she would have any interest in the property. So the proprietary estoppel claim failed too.

Michael Lower

Unconscionability and a broad approach to proprietary estoppel

In Gillett v Holt ([2000] 3 WLR 815, CA (Eng) G had worked on H’s farm since he was 16 (for around 40 years by the time of the action). G and his family had a close relationship with H and devoted themselves to his business and personal interests. G had for a long time had a very high degree of responsibility for H’s farm and the farming business. H gave G frequent and public assurances that the farm would one day belong to them. At one time he even made a will leaving the farm and many of his other assets to G. Unfortunately, the relationship between them broke down badly and G was dismissed and the will revoked. G claimed that he was entitled to the farm on the basis of proprietary estoppel. He succeeded in the English Court of Appeal and was awarded ownership of the farm and GBP100,000.

Sir Robert Walker LJ said:

‘[I]t is important to note at the outset that the doctrine of proprietary estoppel cannot be treated as sub-divided into three or four watertight compartments … it repeatedly became apparent that the quality of the relevant assurances may influence the issue of reliance, that reliance and detriment are often intertwined, and that whether there is a distinct need for a “mutual understanding” may depend on how the other elements are formulated and understood. Moreover, the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round.’ (at 225)

It didn’t matter that G was well aware that H could change his will at any time. He had been given an assurance that could be relied on and that he did rely on.

On the question of detriment, the question as to whether or not G had been underpaid for many years was not decisive:

‘The overwhelming weight of the authorities shows that detriment is required. But the authorities also show that it is not a narrow or technical concept. The detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances.’ (at 232)

Gillett v Holt was referred to in Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1 CFA.

Certainty of assurance and of property in proprietary estoppel

In Thorner v Major ([2009]UK HL 18) David Thorner worked without pay on the farm owned by his father’s cousin Peter Thorner. Peter was a man of few words but it was found as a fact that he had given assurances to David that he would inherit the farm. These assurances were in very vague terms but it was found as a fact that in the context of the personalities and relationship involved they were clear enough and had been understood and relied on. Peter died without leaving a will. David claimed the farm on the basis of proprietary estoppel. The House of Lords focused on two issues. First, was there a clear assurance. Second, was there sufficient certainty as to the identity of the property?

The Court of Appeal had decided against David on the basis that the assurance lacked clarity. The House of Lords rejected this.  Lord Hoffman said:

‘It was enough that the meaning he conveyed would reasonably have been understood as intended to be taken seriously as an assurance which could be relied upon.’

The assurance must be ‘clear enough’. It did not have to be clear, precise and unambiguous (per Lord Roger of Earlsferry). Especially when the assurance is oral or to be implied from behaviour then the question as to whether it was clear is a question of fact and is highly context-specific. The first instance judge had found as a fact that Peter had indicated that David would have the farm and also that it was reasonable for David to have understood and relied on Peter’s assurances.

The second question concerned certainty of property. Over the years, the precise identity of the farm had changed from time to time; some land had been sold and other land had been bought. This did not defeat David’s claim:

‘In this case, the extent of the farm might change but .. there is, as I see it, no doubt as to what was the subject matter of the assurance, namely the farm as it existed from time to time .. As in the case of a very different equitable concept, namely the floating charge, the property the subject of the equity could be conceptually identified from the moment the equity came into existence, but its precise extent fell to be determined when the equity crystallised, namely on Peter’s death.’ (per Lord Neuberger of Abbotsbury).

This is not like a case of a commercial agreement where more precision might be expected.