Archive for the ‘relief’ Category

Proprietary estoppel: expectations and proportionality

May 25, 2016

In Davies v Davies ([2016] EWCA Civ 643, CA (Eng)) a couple owned a farm. E, the second of three daughters, lived with the parents for much of the time up to the time of her final falling out with them. E worked for her parents for little money, although her pay increased over time. Around 1985 her parents assured E that the farmhouse would be hers one day. She later fell out with them and moved out.  E was later reconciled with her parents but left the farm a second time after another falling out. E’s father induced her to return by promising that she could live rent free in the farmhouse. During part of the time that she lived away from the farm she worked as a technician for a company that provided livestock reproduction services. She enjoyed this work and was good at it. After a third dispute with her father, he brought proceedings to evict her from the farmhouse. She relied on proprietary estoppel to claim some interest in the farmhouse and / or the business. The Court of Appeal had already considered the threshold question as to whether or not E had established a right to some form of relief and decided that she had (see here ). These proceedings were concerned with the question as to the form that the relief should take.

The parents made an offer to their daughter which was calculated by reference to the detriment that she had suffered in reliance on the assurances made to her. The daughter sought a much larger sum that would reflect the expectations induced by the assurances. Lewison LJ gave the only full judgment. He set out some core propositions about the law of proprietary estoppel ([38]). He referred to the controversy as to whether expectations or detriment should govern the relief ([39]) and the proportionality test in Jennings v Rice and to the idea that in ‘bargain’ type proprietary estoppel  cases the claimant’s expectations represent a starting point([40]). But where to go from there if the expectation is only a starting point? Lewison LJ accepted the following proposition suggested by counsel as a useful working hypothesis:

‘there might be a sliding scale by which the clearer the expectation, the greater the detriment and the longer the passage of time during which the expectation was reasonably held, the greater would be the weight that should be given to the expectation.’ ([41]).

The assurances that had been given envisaged that the daughter would work long-term in the family farming business but she left the business (twice temporarily and then permanently). This was not like the decades-long arrangements in Gillet v Holt or Thorner v Major ([48]). While E had some expectation of inheriting the business, it was relatively vague and so a modest award would suffice ([64]). Modest sums were also in order in respect of the ‘non-financial detrimental reliance’ involved in giving up her work as a technician and moving from her home to the farmhouse ([65] and to reflect the delay in receiving payments relating to past expectations (such as her unmet expectation that she would be a partner in the farming business) ([68]). So a modest uplift from the payment offered by the parents was in order but this would fall far short of a payment that would reflect E’s expectations in full.

Michael Lower

 

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

June 11, 2013

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

Proprietary estoppel. Detriment: balancing advantages and disadvantages. Proportionality of relief.

November 9, 2012

In Henry v Henry ([2010] UKPC 3, PC) G owned a half share in a plot of land. She promised C, her grandson, that he would inherit the property if he cultivated it and looked after her until she died. He satisfied these conditions. C, however, sold the property to T. C claimed to be entitled to the half share on the grounds of proprietary estoppel. The Privy Council looked at whether there had been detrimental reliance (more than simple reliance). C had, it is true, benefited substantially from the arrangement during G’s lifetime (rent-free accommodation and living off the produce of the land). The court had, however, to look at whether there had also been detriment and to conduct a balancing exercise ([53]). This would lead the court in the present case to acknowledge that C had given up opportunities to better his life elsewhere and this outweighed the benefits ([61] – [62]). The claim was made out as against G.

The resulting equity was capable, in principle, of binding a successor such as T (a fact that was confirmed by section 28 of the Land Registration Act (St Lucia)). It was open to T to argue that there was nothing on the facts of the case to make it unconscionable for her to ignore C’s claim but she had not done so.

Proportionality is a relevant factor when granting the relief: ‘Proportionality lies at the heart of the doctrine of proprietary estoppel and permeates its every application.’ ([65] Sir Jonathan Parker) and so C should not get all of G’s half share in the plot but only half of that ([66]).

Proprietary estoppel: disproportionate to fulfil expectations?

October 17, 2012

In Bradbury v Hunter ([2012] EWCA Civ 1298, CA (Eng)) B invited R (his nephew) and D (R’s partner) and their family to move from Sheffield and live with him in his large house in Cornwall. He told them that they would inherit his house after his death if they agreed to move. They did agree to move but R and D discovered that B had changed his mind and did not intend to leave the property to them. They claimed to be entitled to the house relying on proprietary estoppel. R and D succeeded and were awarded the house (but subject to the Inheritance Tax liability atributable to it). B died and his executors appealed. The English Court of Appeal (Lloyd L.J.) said that the case raised no issue of law but only concerned the application of the law to the facts ([6]). It is, nevertheless, an interesting illustration of such a case and the approach to some aspects of proprietary estoppel.

An oral assurance was effective even though R and D had asked for and expected written confirmation that B would not change his mind. There was detriment even though the couple and their family had enjoyed rent-free accommodation in a very pleasant house. They had moved from Sheffield which D had been reluctant to do, provided some care for B and done work to improve the property (though they had benefited from this improvement).

It was not disproportionate to give them the whole house. The difficulty of deciding on whether or not there was a net detriment seems to have been a factor. The first instance judge had looked at the appropriate issues:

‘So long as the judge has the facts clearly in mind, with the material elements of advantage or disadvantage to those concerned, as this judge plainly did, and has understood the law correctly, as, again, this judge did, the parties having been in agreement in their submissions on that, it is inherently difficult to show that the judge has misdirected himself in coming to a conclusion as to the appropriate remedy.’ (Lloyd LJ at [52]).