What is Proprietary Estoppel?

24th October 2019

Proprietary estoppel is an equitable principle that seeks to achieve fairness where there has been an apparent injustice. It is made up of three elements:

  1. A promise giving rise to an expectation of a proprietary interest
  2. Reliance on this promise
  3. Detriment which has been suffered as a consequence of reliance on the promise

These elements are all intertwined, and the court will look at all the circumstances of the case in order to determine whether a promise has been made which falls within this doctrine.

This concept is common in farming families, and the cases below help to illustrate the principles of proprietary estoppel and how it is approached by the courts.

A Clear and Unambiguous Promise

In the case of James and James [2018] an important distinction was drawn between a promise and an intention. Whilst the Claimant’s father had indicated an intention to leave the farm to the Claimant, the Court considered that there was insufficient evidence of a clear promise that could reasonably be relied upon, taking into account the circumstances in which it was made.

In contrast, in the case of Thompson v Thompson [2018], it was established that clear and unambiguous promises had been made to the Claimant by both parents over a number of years, with several witness statements providing crucial supporting evidence of the promises having been made.

These two cases highlight how important it is to ensure that the promise element of a proprietary estoppel claim can be clearly established in order for a claim to potentially be successful. It is helpful to have witness evidence or documentary evidence wherever possible to support your claim.

Detrimental Reliance

There are two key aspects to this; reliance on the promise and the fact that this reliance needs to be to the claimant’s detriment. 

In Habberfield and Habberfield [2019], the Claimant had worked on her parents’ farm for many years for long hours and low wages. Furthermore, she had postponed her working life based on promises from her parents that the farm would one day be hers. This clearly established reliance by the Claimant on promises given by her parents, which were to her detriment from a financial perspective considering the low wages she accepted, as well as a loss of opportunity to establish a career elsewhere. In particular it was mentioned that due to her reliance on promises made by her parents she gave up the opportunity to establish her own farm elsewhere.

In contrast, in James and James [2018], the Court found that the Claimant was paid well for his work and thereby did not suffer any detriment. Furthermore, the Court did not find that the Claimant had postponed his working life in detrimental reliance on promises that had been given as was the case in Habberfield v Habberfield [2019] and therefore the detrimental reliance aspect of the claim was not satisfied.

Proportionality

Where there have been successful claims of proprietary estoppel, the size of the award has varied largely depending on all the circumstances of the case in line with the issue of proportionality. The Court has wide discretion regarding claims for proprietary estoppel and due to this, the outcome of potential claims are often difficult to predict.

Considering the case of Davies v Davies [2016] as an example, the Claimant was initially awarded the sum of £1.3 million, however on appeal this was reduced to £500,000. In revising the sum, the Judge considered whether the award was out of proportion to the detriment that had been suffered, taking into consideration the reasonable expectations of the Claimant. The Judge found that too much weight had been given to the Claimant’s expectations and that considering all the circumstances, a more appropriate award would be £500,000. This is indicative of the exercise of the court’s wide discretion regarding proprietary estoppel claims and the importance of proportionality.

Conclusion

When considering a claim of proprietary estoppel, each of the above three elements must be carefully considered in light of the available past case law.

It is important to remember that proprietary estoppel is an equitable principle that is subject to wide discretion from the courts and as a result of this, the outcome of a claim can often be difficult to predict. It is therefore important to obtain legal advice if you consider that you may have a claim under the doctrine of proprietary estoppel.

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Alison Parry is a Partner located in Manchester in our Commercial Litigation, Will and Trust Disputes department

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