What is Proprietary Estoppel?
Proprietary estoppel is an equitable concept that allows the court to stop one party (Party A) using their legal rights when doing so would be very unfair (unconscionable) to another party (Party B). This arises when Party A makes a promise or assurance (known as a representation) to Party B. Party B relies upon that representation to their detriment (i.e. spends money or turns down a benefit), and it would be ‘unconscionable’ for Party A not to uphold their representation. This could be used as an alternative claim to contesting a will.
An example of this could be where Party A is the owner of a farm and Party B is their relative that works on the farm. Party A may have assured Party B that as thanks for working the farm for so long, they will inherit it when they pass away. Party B relies on this assurance and decides to not look for alternative employment and may be financially disadvantaged because of this. It would then be unconscionable for Party A to not uphold the assurance, and therefore Party B could raise a proprietary estoppel claim.
There are 3 things that are required in order to successfully raise a proprietary estoppel:
- A representation from Party A to Party B
This can be any statement made by Party A to Party B. This statement must be sufficiently clear that Party B does or will have rights in land. A common statement is, for instance: ‘this will be yours one day’.
- Party B relies upon the representation to their detriment
Party B must show that they relied upon the representation to their detriment. If Party B would have acted in a particular way regardless of the representation, then this requirement is probably not met (e.g. Party B continued to work on the farm, but not because of the assurance that they would inherit it one day). Party B must have done something to their detriment relying on the representation, in order for Party A’s conscience to be bound. Detriment can include spending sums improving the subject land, or for instance turning down significant career opportunities to live nearer to, or care for, Party A.
- It would be unconscionable for Party A not to uphold the representation
Party B must also show it would be ‘unconscionable’ for Party A to go back on the representation. The law is still unclear about whether it is the conduct of Party A, or the outcome of Party B not getting what was represented, which is unconscionable. Generally, the court will look at the case in the round. Perhaps the greater the detrimental reliance, and the clearer the representation, the greater the unconscionability. In more simple terms, the higher the value that Party B is seen to have missed out on, the more unfair that not following through with the assurance is seen to be.
If the points above are successfully made out for proprietary estoppel, the court may step in and consider making some form of award to Party B. There is no entitlement to remedy, and the court could decide to make any remedy, although that is unlikely. The court tends to take a holistic view of these claims, viewing them as a whole picture rather than separate components.
Is there a time-limit to bring a claim?
There are no strict time-lines for proprietary estoppel claims. However, the greater the delay in raising proprietary estoppel, the greater the chance the court will find that Party B is too late.
What issues could be faced when bringing a claim for proprietary estoppel?
Proprietary estoppel is known for being tricky to pursue, mainly because the person who allegedly made the representation is either deceased or is denying all knowledge of the representation having been made. In essence, there can be difficulties proving whether the representation was made, and if it was made, what was actually said.
In claims of this nature, there has often been a breakdown in personal relationships which results in hostility and reluctance to compromise.
Courts can struggle to quantify the extent of:
- the claimant’s reliance on the promise; or
- how much they have missed out financially as a result of detriment that occurred due to the promise.
This results in the Courts dealing with proprietary estoppel on a case-by-case basis.
This article covers proprietary estoppel in general terms, it cannot serve as a resource to advise you on whether to proceed with a claim as it will largely depend on the individual facts of your case.
If you are looking to issue or defend a claim for proprietary estoppel or need advice on any of the above issues, please contact Peter Knibbs, a Partner in the Commercial Litigation team at BPE, using this email: [email protected].
It is important for the claimant to acknowledge that the purpose of any award made by the court in these claims is either to enforce the representation made and or to compensate for the detriment that is caused by the reliance. By acknowledging this, it keeps expectations around any potential awards realistic.
