Proprietary estoppel (formerly estoppel by acquiescence) is a means for property rights to be created to prevent unconscionable conduct. The essential elements include that an owner of land has encouraged, induced or allowed a person to believe they will enjoy some right or benefit over the land; in reliance on that belief, the third party has acted to their detriment to the knowledge of the owner and the owner then seeks to take unconscionable advantage of the third party by denying him the right to the property. Assuming all the key elements are present, the third party has the right to go to court to seek relief (the equitable remedy).
Further guidance is found in the leading authority of Willmott v Barber [1879] 15 Ch.d. 96, wherein Fry J set out his five probanda, ingredients for a claim:
‘A man is not to be deprived of his legal rights unless he has acted in such a way as would make it fraudulent for him to set up those rights. What, then, are the elements or requisites necessary to constitute fraud of that description?
In the first place the plaintiff must have made a mistake as to his legal rights.
Secondly, the plaintiff must have expended some money or must have done some act (not necessarily upon the defendant’s land) on the faith of his mistaken belief.
Thirdly, the defendant, the possessor of the legal right, must know of the existence of his own right which is inconsistent with the right claimed by the plaintiff. If he does not know of it then he is in the same position as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge of your legal rights.
Fourthly, the defendant, the possessor of the legal right, must know of the plaintiff’s mistaken belief of his rights. If he does not, there is nothing which calls upon him to assert his own rights.
Lastly, the defendant, the possessor of the legal right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right.
Where all these elements exist, there is fraud of such a nature as will entitle the Court to restrain the possessor of the legal right from exercising it, but, in my judgment, nothing short of this will do’
Encouragement or Acquiescence
The owner of the land must have encouraged the claimant by his words or conduct that he will have a future right or benefit over the land. An example would be the owner of the land informs the claimant if they work the land they will have a share in the land e.g. when the owner dies.
Acquiescence cases are different, acquiescence occurs whereby a person mistaken as to their rights in the land spends money improving the land (e.g. building a wall or garage) unbeknown to them that it is owned by someone else. The true owner of the land, in the knowledge of the third party’s mistaken belief, stands passively without asserting their rights. In these such situations it may be unconscionable to then require someone to remove what they have built.
Detrimental Reliance
In order to succeed, the claimant will need to establish that he has acted to his detriment, this is to be judged at the moment when the owner of the land seeks to go back on his promise. There are various examples of detriment, these include: expenditures (e.g. carrying out construction on the land), looking after family members of the owner and working unpaid. Countervailing benefits will also be taken into consideration such as when the owner lets the claimant live rent free on the land (does this offset the detriment caused to the claimant). The claimant must have acted in reliance on the owners active encouragement (such reliance is readily inferred once it is shown the owner encourage the claimant and the claimant acted to his detriment.
For a more detailed analysis of detriment see Winter v Clarke Willmott Trust Corporation Ltd [2024] EWCA Civ 699.
Unconscionability
It must then be unconscionable for the owner to be permitted to defeat the expectation that the claimant would have an interest in the land. In assessing unconscionability, the court will look at the relative positions of the parties, the nature of the assurances, whether the detriment was substantial.
The court has emphasised that unconscionability is key, it is the overriding critical factor (not Fry J’s probanda) (see Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1981] 1 All ER 897.
The Relief
The court has a wide discretion in respect of the relief. It can restrain the owner from asserting his legal rights, convey land to the claimant or award damages. However, the court will only do the minimum necessary to do justice, it will therefore not grant a greater right or interest that the claimant believed he would receive. For further reading on relief see Davies v Davies [2016] EWCA Civ 563 and Guest v Guest [2022] UKSC 27.
