What is proprietary estoppel?

Judges sitting in the courts of England and Wales follow the law made by parliament and what is referred to as ‘common law’ which is a reference to legal principles that have developed over time in the cases heard in court.

The courts have an equitable jurisdiction which, where applicable, permits the court to intervene in the interests of justice and fairness. However, the court’s equitable powers are discretionary and subject to limits based on principles established over many years by case law.

One equitable doctrine that frequently crops up in the context of disputed estates is proprietary estoppel.

So, what is proprietary estoppel?

Proprietary estoppel is concerned with promises made in relation to property or land. It is a mechanism used by the court to prevent the holder of legal rights enforcing those rights where it would be unconscionable for them to do so.

Estate disputes are commonly about whether a Will is valid and the court’s decision will determine how an estate should be distributed. Proprietary estoppel claims establish whether a property or land owner, will be estopped (i.e. prevented) from dealing with all or part of their land in the way they want because of promises they previously made or beliefs they have encouraged.

Key ingredients of a proprietary estoppel claim

The key ingredients of proprietary estoppel are:

1. an assurance or promise being made to person A by person B;
2. the promise or assurance is that person A either has, or is going to have, an interest in person B’s property;
3. person A relies on the assurance or promise of person B;
4. person A’s reliance is detrimental to them; and
5. it would be unconscionable for person B to strictly enforce their legal rights against person A.

If the elements listed above are present and there is a causal link between A’s belief and their detrimental conduct, the court may intervene to prevent person B from enforcing their legal rights against person A.

Assurances and promise

The assurance or promise must be sufficiently clear in terms of what is being promised. In some circumstances, it may not be necessary for person B to positively make an assurance or promise for an estoppel to arise. If person A has a belief that they have or will be given an interest in B’s property and B knows about that belief and does nothing to dissuade person A of it, then an estoppel may arise if the remaining ingredients are present.

Reliance

The reliance of person A must be reasonable. Reliance will not be deemed to be reasonable if it was on a very vague assurance or promise that they could not reasonably be expected to rely on.

Detriment

Many cases of proprietary estoppel that come before the court concern disputes in farming families. The classic scenario is where an adult child works on the family farm for little or no remuneration on the promise that the land (or part of it) will one day be theirs; often the promise being that it will be left to the adult child in their parent’s Will.

What constitutes detriment will be a matter of the factual circumstances of each case. The court will carry out a balancing exercise which examines the detriment of person A against the benefit they have received, if any, as a result of the arrangement in place. For example, a claimant (person A) may have been promised an interest in property in return for living with the homeowner and providing them with care. In such a situation, the claimant has enjoyed the benefit of rent-free accommodation but it may be that they have been unable to work, and therefore save money for a deposit for a house of their own, because the claimant has been providing care to the homeowner.

Unconscionability

The principle of unconscionability is at the forefront of the court’s mind when considering proprietary estoppel. If the court concludes that it would be unconscionable for the defendant (or the defendant’s estate) not to compensate the claimant for having relied to their detriment on an assurance or promise made by the defendant, it will usually make an order in favour of the claimant.

The remedy

In the past there has been some debate as to the appropriate remedy to be awarded once the estoppel has been established. Should the court simply award a claimant the value of lost market wages plus interest where they have worked without pay or give effect to the claimant’s full expectation and provide everything that they were promised? In the recent case of Guest v Guest [2023] 1 All ER 695, the Supreme Court settled the uncertainty and held that the remedy should normally meet the expectations of the claimant.

The steps to be taken by the court are as follows:

1. Consider if the breach of promise is unconscionable.
2. Initially approach the remedy with an assumption that the defendant should be held to the promise in the terms it was made.
3. It is open to the defendant to attempt to convince the court that to give full effect to the promise is out of all proportion to the detriment suffered by the claimant. That does not mean that the court will then revert to a very narrow remedy but it will not give a substantially disproportionate remedy.

When can I make a proprietary estoppel claim?

There is no strict time limit in which a claim must be made but a claimant should not unduly delay bringing a claim as any unreasonable delay may lead to the court’s refusal to grant a favourable order.

Points to note

A claimant in a proprietary estoppel claim may bring a claim against a landowner whilst they are still alive or once they have died. In the case of a family fall out, it will often become obvious that the claimant will not benefit in the way previously promised. Alternatively, a claimant may bring their claim after the death of the promisor when it has been confirmed that the claimant does not receive the expected benefit under the will of the promisor.

Claims in proprietary estoppel turn on the individual facts of each case and as with any litigation, there can never be a certain outcome. It is much better for families to have open conversations at an early stage, take legal advice about their current arrangements and future plans, and review periodically to avoid potentially costly and risky litigation later down the line.