What is proprietary estoppel and how to claim?

Is it possible to bring a claim to enforce a broken promise?

Proprietary estoppel is a legal remedy that may be used in some circumstances to prevent a landowner who made a promise or statement to someone that part or all of the property would be transferred to them in the future, from later reneging on that promise.

An estoppel claim could arise where, for example, a father promises to his son that he will give him the family farm and, relying on that promise, the son works on the farm for many years on a low wage. If the father does not subsequently transfer the farm to his son, his son could have an estoppel claim against his father (or his father’s estate).

Where all the elements of the claim are proved the court will consider whether it is unconscionable for the representor to go back on the assurance and whether fairness demands remedy and if so what that remedy should be.

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What are the requirements to claim proprietary estoppel?

To claim proprietary estoppel, it’s necessary to show:

  • a clear promise or assurance has been made
  • the promise or assurance was relied on
  • a reasonable reliance on the assurance or promise caused the claimant to suffer detriment

When can you claim estoppel?

After a person's death if a Will does not reflect a promise made by the deceased before their death (such as a promise to transfer land or property), it may be possible to enforce a promise that is not subsequently fulfilled in a Will. This will need to be raised quickly after the Will has been read as with most disputed Wills cases.

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Is proprietary estoppel flexible?

The aim of any remedy is to give effect to the promise (the expectation), rather than to compensate for the loss. Because proprietary estoppel is an equitable cause of action the remedy is flexible and discretionary. The remedies can range from an award of money to a beneficial interest in land.

What is meant by a ‘promise’ in a proprietary estoppel claim?

There must be an assurance made. The assurance can take a number of forms ranging from express representation to passive encouragement. However the assurance must be sufficiently clear and unequivocal. In many cases the assurance will not be so clear. It may be possible to rely on conduct to constitute an assurance.

An assurance may be given over a period of time, leading the claimant to believe they will receive property, land or a business. The court will hear evidence about how the promise or assurance came about, and the context in which it was made.

What is the difference between a constructive trust and proprietary estoppel?

A common intention constructive trust can arise where there is an express agreement or an implied agreement that can be inferred for a course of conduct and arises where it would be unconscionable for a person who holds an asset to deny that another person has a beneficial interest in that asset.

This can be when another person has wrongfully or unfairly received assets, known as “unjust enrichment”, or, for instance, where the common intention between two or more parties is not reflected by the legal ownership of an asset. That is particularly common in the context of the family home.

Unjust enrichment could arise if one person has received property belonging to another for which they have not paid anything.

A constructive trust can arise, for example, where the parties live together in a property owned by one party in their sole name but subject to a mortgage in both names or where both parties contributed to the mortgage payments.

Another difference lies in the remedies that are given in each cases. If the asset is determined to be held as subject to a constructive trust that asset must be returned to the claimant.

Is proprietary estoppel flexible?

The key difference between the two forms of estoppel is that promissory estoppel focuses on promises by the true owner to the claimant to gain an enforceable right or power, proprietary estoppel focuses on promises or assurances by the true owner to the claimant that they will be granted a proprietary right in the true owner’s land.

How much is a claimant entitled to in a proprietary estoppel claim?

The Court has very wide discretion in respect of the remedies that it can award when they find a claim proprietary estoppel is established. Each case will be considered upon its own particular facts and circumstances. Proportionality lies at the heart of the doctrine of proprietary estoppel. The aim is to prevent “unconscionable conduct”. The remedy will depend upon all circumstances and facts of the case, including a person’s expectation and the detriment suffered. The remedy need not always be financial. The final result must be a just one, having weighed up a person’s expectation against the actual detriment suffered.

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