Proprietary Estoppel

Introduction :

The evolution of property law in England and Wales is one of the best reflections of legal developments that trace their roots from the socio-political feudalism, which was established in the midst of eleventh century A.D. Today, the law of property in England and Wales have undergone massive upgrades with the introduction and enactment of statutory instrument such as the Law of Property Act 1925, Trusts of Land and Appointment of Trustees Act 1996 (also known as the TOLATA 1996), Land Charges Act of 1972 and the Land Registration Act 2002. All these legislative enactments have contributed in diminishing the aristocratic characteristic of English land laws. It is the proprietary nature of rights that are attached to the land which makes it distinctive from personal properties, as the right acquired in the form of real estate property is embedded to the land itself as opposed to the person who claims it. It is indeed a fact, especially with regard to the laws pertaining to the ownership and acquisition of real estate, that English law puts a lot of weight on the bureaucratic formalities in the normal course of real estate transaction. However, it will also not be incorrect to state that parallel development and enforcement of equitable rights, such as the doctrine of proprietary estoppel does not fit compatible with the stringent formalistic nature of land laws.

Through this essay, it will be critically evaluated as to what extent these two contradictory principles and practices are helpful in determination of rights and privileges of land ownership. Furthermore, it will also be explored with supporting case laws as to what extent the doctrine of proprietary estoppel affects the certainty of land law, predominantly derived from historical common-law system. Lastly, it will also be analyzed whether such flexibility in land law is capable of fitting in with the increasingly formalized system of property registration and transaction.

Discussion

As indicated in the introductory paragraph, property right in the land is substantially different in nature from the any other contractual or personal right, because it creates an edge for the right holder to exercise his rights against every external entity. The very nature of English land law pertains to the rights and obligations over real estate which have been derived from historical common-law and equitable principles developed by the relevant common law and chancery courts, along with various registration systems which had been in place from time to time. Starting to point to analyze the prevalent law is to support the very idea of formalistic approach, which aims to bring certainty in registration and transaction of land in the jurisdiction. In normal course of registration or transaction, an ownership of transaction is acquired or transferred by way of contract, which has to be duly registered with the relevant office (HM Land registry). Since the country is going through the transition whereby two different titles i.e. registered and unregistered land are already in place, quite a considerable number of legal principles pertaining to rights over land still require litigation before the relevant courts of England and Wales. There are various factors that have been developed by the courts which serve as an indirect way to acquire an interest in land. The prevalent law of the land gives recognition to the doctrine of constructive and resulting trust over the ownership of land. The role of proprietary estoppel is no exception to this.

Proprietary estoppel, particularly with respect to land issues, is a mechanism by way of which one may be entitled to acquire rights over the land. This doctrine comes into play whenever there is an involvement of an assurer, be it a person or artificial entity. Once a clear assurance is given, and it is deemed reasonable for the person to rely on, that he/she has done to his/her detriment, the doctrine of proprietary estoppel comes into play. This doctrine is fairly consistent and similar with the idea of promissory estoppel, which relies on similar three fold approach of assurance, reliance and detriment. The emergence of this doctrine of proprietary estoppel is indeed the most remarkable developments of English land laws. This has provided a gate-way for some litigants who have utilized it as a form of opportunity, and, on the other hand, created an avenue of debate of different academics and jurists. With the enactment of s. 116 of the Land Registration Act 2002, the Law Commission has struggled to accommodate the equitable principle of proprietary estoppel. The relevant section of law states that “It is hereby declared for the avoidance of doubt that, in relation to registered land, each of the following: (a) an equity by estoppel, and (b) a mere equity, has the effect from the time the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority)”it is also noteworthy that the wordings of this clause are exactly the same as the one contained in the draft Bill contained in Law Commission Report No.271. It may be deduced from holistic study of the nature of the two documents that the main focus of the clause is to clarify the ambiguity pertaining to the equitable nature of rights. Briefly stating, the right that a person may acquire by way of proprietary estoppel only comes into effect once the court orders it in his/her favor.

Proprietary estoppel, like every other equitable doctrine, negates the formal procedural common law doctrines in the interest of justice. In other words, by way of this doctrine, a person may claim to restraint the property owner from denying his/her interest. This doctrine can be deduced to be closely related to the common intention constructive trust doctrine, predominantly in situations where any assurance or agreement (of positive nature) pertaining to the land is involved. However, it is noteworthy that the cases that involve constructive trust as the sole point of contention do not entertain the idea of passive encouragement. Proponents of flexible approach to the law are likely to encourage this indirect intrusion of equitable doctrine in the formalistic rule pertaining to land law registrations and transactions of interests therein. This flexible approach may be witnessed from the two judgments of the House of Lords, namely: Cobbe v Yeoman’s Row Management Limited and Thorner v Major. The judgment of Thorner v Turner clearly depicts a definite rule pertaining to the claims that are reliant on future or anticipatory entitlement of benefits in the estate after the demise of the owner. On the other hand, the case of Cobbe v Yeoman was more inclined towards the indirect entitlement of interests in commercial context. To briefly state about the scope of the facts, this case was concerned with the oral assurance with regard to the property sale purchase transaction, involving the total amount of almost 12 million.

In view of the substantial nature of transaction and money involved, the prospective interest holder spent money on different architects and consultants in order to pursue the requisite permissions of construction before the purchase. This equitable may appear to be bringing inflexibility to the set rule, as laid down in Land Registration Act 2002 and Law of Property Act, it, nonetheless, creates a room for the courts to apply the law as per the evolving circumstances. The same test of proprietary estoppel has been used in different many case laws, and it can best be explained by quoting the summarized version of judgment of the case of Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd. In this case, Oliver J commented that:“If A, under an expectation created or encouraged by B that A shall have a certain interest in land thereafter, on the faith of such expectation and with the knowledge of B and without objection from him, acts to his detriment in connection with such land, a Court of Equity will compel B to give effect to such expectation.”(Oliver J, page 152).

This doctrine is essentially important to run parallel with the practice of common-law formalities in land issues because of its compatibility to overcome injustices that may incur due to strict procedural and documentation requirements. This doctrine has also been enshrined in the case law principles settled in the cases such as Gillett v Holt [2001], Jennings v Rice [2002] and Cook v Thomas [2010]. To summarize the same, these case laws portray this doctrine as being useful in the circumstances where unconscionable conduct plays an integral part in the situation. In all these cases pertaining to unconscionable behavior or conduct, foremost concern of the courts was to analyze whether the consequential effect of that particular conduct, in view of the behavior of the promise was tantamount to unconscionable behavior from an objective point of view. In this respect, it may be submitted with some certainty that courts are more inclined towards taking the broader side of the facts into account; it further suggests that in the interest of just outcome, the law allows the courts to override minor discrepancies that might have adverse effect on the aggrieved party.

English courts have not confined their judgments/rulings to the limited interpretation of unconscionable conduct, but they have also extended their learned approach to explicitly define and explain the idea of representation, reliance and detrimental effect. Representation is the foremost ingredient to rely on this doctrine. Courts have been generous in interpreting the idea of representation, which may be indirect or direct depending on the circumstances in question. In one of the cases, the courts have extended the interpretation of representation to mere inaction or silence on part of the statement maker(Thorner v Major). In the same context, Pattern J in the case of Lester v Woodgatestated that:“the landowner’s passive and uncomplaining acquiescence in what is done may amount to an assurance that the other party will continue to enjoy rights over his land on which it would be reasonable for that party to rely. Mere inaction is not sufficient, however. What is required is that … the landownerbecomes aware of the work and knows that the other party is carrying it out in the belief that heowns the land in question or has rights over it but fails to object, [and in such a case] his silencewill be treated as a species of equitable fraud sufficient to found an estoppel.”

In view of the foregoing case law principles and narrations, it is submitted that the context in which particular circumstances arose remains to be the most important factor to determine the interpretation of the terms and applicability of the doctrine of proprietary estoppel. It may be stated in other words that the courts tend to adopt an objective approach, keeping in view the subjective elements of each case brought before them. To quote an example, the court adopted a very expansive approach in the case of Ottey v Grundy, where a conditional promise was also declared to be sufficient to invoke the stated doctrine. As regard the element of reliance is concerned, there is no requirement to prove or show that there existed any common understandings between the parties or that the claimant is going to put oneself to any detriment in view of the same. The essential component is that there must be a reasonably adequate link between the promises that took place between the parties that ultimately induced one to rely on one or more ofthem. Once this element is proven before the competent court of law, the burden of law essentially shifts to the defendant. This was the case in Cook v Thomas [2010], where it was declared in paragraph [77] that such would be the case if there is any absence of evidence, and that there will be no room for any presumption where full investigation has been carried out. Moreover, it is also submitted that the idea of detriment is somewhat interrelated with reliance. In the case of Henry v Henry, the two components i.e. detriment and reliance were held to be intertwined for the purposes of application/invocation of proprietary estoppel. This idea has been profoundly explained in the stated case as: “As to the relationship between reliance and detriment in the context of the doctrine of proprietary estoppel, just as the inquiry as to reliance falls to be made in the context of the nature and quality of the particular assurances which are said to form the basis of the estoppel, so the inquiry with respect to detriment falls to be made in the context of the nature and quality of the particular conduct or course of conduct adopted by the claimant in reliance on those assurances. Thus, notwithstanding that reliance and detriment may, in the abstract, be regarded as different concepts, in applying the principles of proprietary estoppel they are often intertwined.”

The crux of the very idea about prevalence of this doctrine in terms of property laws of the country, and the consistent development of the same idea, parallel to the well-established common-law principles is to combat unconscionable approach on part of the parties. It may be regarded as being an essential component to satisfy equity, as opposed to pose inclination towards the expectations of the claimants. Although this idea appears to be similar, but the difference that may be marked between the expectations of the claimant and the expectation of equity is that, unlike the former, equity demands the combination of factors including detrimental reliance, expectation of the aggrieved party along with the objective and subjective factors of circumstances.

Conclusion

In view of the foregoing, and in the light of all the case law principles set forth, it is submitted that doctrine of proprietary estoppel should be treated as an exception, as opposed to a separate mechanism in entirety. In practice, it is for the courts to invoke the doctrine of proprietary estoppel rather than being a right in its own. The requirements to prove the likely invocation of proprietary estoppel varies from case to case, depending on the facts and circumstances. They may be proven by considering the expressed and implied conducts of the parties involved, whatever may be sufficient to convince the courts. One thing that is certain is that the invocation of this doctrine requires the court to consider the circumstances in toto (entirety), taking into account each and every relevant factor pertaining to the facts of the case.

It will not be wrong to deduce that such a flexible approach is likely to undermine the underlying objective of enactment of Land Registration Act 2002, which aims to mitigate the existence of unregistered interest in every property. However, the parallel development of flexibility of equitable principles alongside the stringent approach of common-law doctrine supports the idea that proprietary estoppel is likely to continue as being part of the property laws, regardless of the strict compliance requirement of electronic registration formalities. Lastly, it is submitted that the same idea may be inferred from the wordings of the relevant section (section 116) of Land Registration Act 2002. All these indications suggest that the avenue of proprietary estoppel in the functioning of property law has deliberately been left functional by the law-makers to avoid unjust outcomes.

Refrences

• Coombes v Smith [1986] 1 W.L.R. 808.
• Crabb v Arun District Council [1976] Ch. 179.
• Dixon, M. (2014). A doctrinal approach to property law scholarship. Who cares and Why?
• Gillett v Holt [2001] Ch 210.
• Jennings v Rice [2002] EWCA Civ 159, [2003] 1 P. & C.R. 8 (p 100).
• Land Registration Act 2002, s 116.
• M Dixon, Modern Land Law (9th ed 2014, Routldge).
• Pascoe v Turner [1979] 1 W.L.R. 431.
• Sledmore v Dalby (1996) 72 P. & C.R. 196.
• Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] Q.B. 133.
• Thorner v Major [2009] UKHL 18, [2009] 1 WLR 776.
• Wayling v Jones (1993) 69 P. & C.R. 170.
• Yaxley v Gotts [2000] Ch. 162.