Property Estoppel

Introduction

Proprietary estoppel provides a means by which interests in land can be obtained informally. Property Estoppel is a remedy which is used to compensate a person (A) who was either actively encouraged by another person (B) to believe that the person he/she (A) has present or future rights/interests in person B’s land.

Example

  1. Alan agreed with his son Mark that he can built a house on Alan’s land and he (Alan) would leave the land to his son. Mark has now built a 3-bedroom house on the land. Alan and Mark quarrelled and now Alan seeks to evict his son from his land and claims that his son (Mark) has no rights on his land.
  2. Mr Holt left his secure tenancy and sold his house 10 years ago in order to care for his friend Major on the promise that upon the death of Major he would inherit Major’s Farm land and agricultural land. Major died last month but he failed to honour his promise
  3. Lisa gave up her own flat to move in with her partner Alex who had previously assured her that she would always have a home with him, upon a disagreement Alex claims that Lisa has no rights to his property

Problem

The problem occurs when the future rights which are promised are not transferred legally. i.e. by fulfilling the legal requirements and as these promises are generally made orally, the promisor finds it easy to withdraw the representation or promise made by him/her.

Under the doctrine of estoppel courts will not allow the lack of legal formalities to be a reason for the promisor to withdraw his promise and courts will compensate any loss suffered by a person who has acted upon such representation

Procedure

The claimant must demonstrate that in the circumstances an estoppel has arisen which requires a remedy. The following procedure must be followed and proved

  1. An assurance or representation by person (B) the land
  2. Reliance on the assurance or representation by person (A)
  3. Detriment/Loss suffered by person (A)
  4. Unconscionability

Step 1

Assurance or Representation (by land owner)

  • The first element which is required to be proved is that there was an assurance or representation by a landowner.
  • An assurance or representation occurs when the owner of the land by words or conduct leads the claimant to expect that he will enjoy some entitlement/some interests or rights in the land.
  • The assurance can be express, (should be clear enough) and can also be implied as well
  • A claimant can rely on an assurance that the property will be left to him/her in the will
  • The doctrine of estoppel is unlikely to be applied in commercial transactions. As courts treat or expect businessmen and women to be shrewd and more responsible in their dealings.
  • It is irrelevant whether the promised land is sold at the time of the hearing, as the court looks backwards from the moment when the promise falls which was due to be performed
  • The appropriate remedy is determined by the court by looking at all the facts of the individual case

Step 2

Reliance on the Assurance or representation

Once the claimant has proved step 1 then he/she needs to prove that he/she has relied upon the assurance. The element of reliance is closely connected with the third requirement that the claimant must have acted to their detriment on the basis of the assurance.

  • Reliance means a change in position by the claimant induced by the assurance or representation
  • Spending money on the land, construction on the land, moving in to care for an older relative or family or friends, leaving secure tenancies or secure jobs, working for low or no wages etc. will amount to change in position based on assurance or representation
  • There must be a causal or direct link between assurance and reliance or Step 1 and Step 2
  • The assurance does not have to be the sole factor as long as it is the dominant factor it would suffice

Example

  1. Alan agreed with his son Mark that he can built a house on Alan’s land and he (Alan) would leave the land to his son. Mark has now built a 3-bedroom house on the land in the expectation that he will live there forever. The expenditure in building a 3 bedroom house will be sufficient to prove reliance as it is a change in the financial position of Mark. There is a causal/ direct link as well as Mark may not have built the house or spent the money on the land if there was no assurance or representation
  2. Mr Holt left his secure tenancy and sold his house 10 years ago in order to care for his friend Major on the promise that upon the death of Major he would inherit Major’s Farm land and agricultural land. Major died last month but he failed to honour his promise. Leaving a secure job, selling his house and working on the farm for 10 years may prove the required reliance
  3. Lisa gave up her own flat/tenancy in order to move in with her partner Alex who had previously assured her that she would always have a home with him, she also has contributed to his application to secure a tenancy from the local council. Upon a disagreement Alex claims that Lisa has no rights in his property.

Leaving her own flat and supporting Alex’s application in order to secure a tenancy will prove the necessary reliance as Lisa has changed her position

Step 3

Detriment

Detriment occurs when the assurance or representation is withdrawn and the claimant who has changed his position in reliance on the assurance is disadvantaged, until then the claimant has no reason to complain, there is a slight overlap between step 2 and step 3 as the change in position will result in detriment if the assurance or representation is withdrawn

The mere fact that an assurance was given does not, of itself, entitle a person to an interest in land, in just the same way that a mere promise to make a gift does not entitle the prospective donee to compel the donor to make it.

However, if the person to whom the assurance was given has acted in some way in reliance upon it, then the representor will be estopped from denying the expectation he had generated. It is the element of detrimental reliance which renders it unconscionable for the landowner to assert his strict rights against the representee

Step 4

Unconscionability

The final step or requirement for a property estoppel is unconscionability. By unconscionability we mean that it must be unconscionable for the landowner/promisor not to honour his/her promise, assurance or representation and rely on a lack of legal formalities as most assurances or representations are made orally and without fulfilling the legal requirements

  • A court will look at all the circumstances of the parties
  • The court will balance the advantages and disadvantages

Remedies

A court may award the following remedies

  • A court may grant the freehold estate/ give all the land to the claimant
  • Grant a lease
  • Grant a licence
  • Grant an easement or right of access
  • Monetary compensation
  • Or any of above combined remedies

Disclaimer

While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legalally does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.