Proprietary Estoppel Remedies

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Sarah Burgess

Land Law Summative Assessment

“I do not see how it could be right to confer on Miss Carrick indirectly, and by means of a proprietary estoppel binding on the Bank, that which Parliament prevented her from obtaining directly by the contract it has declared to be void.” (Lloyds Bank plc v. Carrick [1996] 4 All ER 630 at 641-42, per Morritt LJ).

How well do Morritt LJ's words reflect the current scope of proprietary estoppel remedies conferred by the courts?

Proprietary estoppel is an equitable remedy which has developed quite considerably over recent years and has provided a further avenue for claiming an informally created interest in land, particularly in the context of the family home. The purpose of proprietary estoppel is to provide a remedy for those who have acted on reliance of a certain belief of entitlement to land, which the true land owner has either encouraged or which was known to the true land owner to be a mistaken belief and not corrected. Subsequently it is up to the court to decide whether it is conscionable for the owner of the land to go back on their representations. Unlike other estoppels, which may be used as a shield but on a sword, proprietary estoppel may create a claim and an entitlement to property rights in or over land. A proprietary interest in land may be acquired in equity under proprietary estoppel without the need for a deed or a written document containing the interest in the property. 

The doctrine of proprietary estoppel was first recognised by the House of Lords in the case of Ramsden v Dyson and Thornton (1866) where a yearly tenant erected a building on the land which he rented in the belief that the landlord would grant him a sixty year lease on that land. The landlord later refused to grant the lease and the tenant subsequently claimed to be entitled to a grant in equity. In this case Lord Kingsdown set out the strict conditions for the existence of an estoppel stating that “if a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord that he shall have a certain interest, takes possession of such land with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a court of equity will compel the landlord to give effect to such a promise or expectation.”

The title quote of the essay is somewhat representative of the current scope of proprietary estoppel remedies conferred the courts. It is representative in the sense that it encompasses the nature of proprietary estoppel stating that Morritt LJ believes it “could not be right” to confer something which has been clearly denied by parliament. This represents the idea of “what is right” which is key to the doctrine of proprietary estoppel, and is a principle which is at the very heart of the entire legal system. However it fails to demonstrate the real aim of the doctrine which is to provide a remedy for those who have acted on reliance of a certain belief of entitlement to land which does not in fact exist but which they have been led to believe due to either the encouragement of the true owner of the land to do so or the withholding of information as to their error by the true land owner. The courts have aimed to, through various rulings, establish a set of criteria which must be met in order for a proprietary estoppel claim to be established and these criteria have developed over time.

The Court of Appeal decision in Willmott v Barber (1880) set out five “probanda” which must be established in order for an estoppel to be granted by the court. These five elements were as follows: firstly the plaintiff must have made a mistake as to his legal rights; secondly the plaintiff must have spent some money or relied on his mistaken belief; thirdly the defendant must be aware of the true position; the fourth requirement was that the defendant must know of the plaintiff’s mistake; and finally the defendant must have encouraged the plaintiff in his expenditure or other act of reliance. The five probanda established in this case continued to be rigidly applied for the next one hundred years after this case which resultantly caused the doctrine of proprietary estoppel to become rather strict and narrow and has resultantly been criticised and its importance and application has declined in recent years. A more relaxed approach was adopted by Oliver J in Taylors Fashions Ltd v Liverpool Victoria Trustees Co. Ltd [1982]. In this case, both parties to a lease were unaware of the true legal position, namely, that the tenants option to renew the lease required registration as a land charge, and was in consequence void against the new landlord for non-registration. The tenant who was seeking to establish an estoppel therefore failed to satisfy the strict requirements of Willmott v Barber, but, in the judges view proprietary estoppel required a broader approach “which is directed rather at ascertaining whether… it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment.” This more relaxed approach has been followed in a number of other cases and received judiciary approval in the case of Gillett v Holt [2001]. Even in the more relaxed approach adopted in this case there are certain essential elements which must be shown to exist before an estoppel can be said to arise. These key elements are as follows; there must be a representation; the representation must be relied upon by the claimant; and the reliance on the representation must lead the claimant to act to his detriment.

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In the case of Lloyds Bank Plc v Carrick [1996] Morritt LJ was wary of applying the doctrine of proprietary estoppel to aid Miss Carrick’s claim of an interest in the property, as he believed it would not be right to bestow on her a right which had already been denied to her by statute. Miss Carrick’s contract for purchase of the property was deemed to be void against the bank as a result of her failure to register her interest in the land as a class C (iv) land charge under the LCA 1972 and thus her interest cannot be ...

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