Introduction:
The move towards a stricter application of the equitable doctrines in Gillett v. Holt has been both criticised as a wrong decision and acclaimed for its tendency to resolve some of these conflicts. It criticises Taylor v. Dickens1 but appears to vindicate the decision in Re Basham2. However, one reason it is difficult to be positive about the outcome of cases is that in such a case as Gillett, there arises a ‘proprietary estoppel and constructive trust’3. There have been an increasing number of cases which have rested on the application of these two equitable doctrines and the question is centred on one of them, Gillett, which has provided an opportunity in the Court of Appeal for a modern review of these doctrines. In recent decisions the courts have frequently used the term ‘proprietary estoppel’ as if it were interchangeable with the term ‘constructive trust’4.
Sir Nicolas Browne-Wilkinson V-C observed in Grant v. Edwards5 that ‘ the two principles have been developed separately without cross-fertilisation between them: but they rest on the same foundation and have on all other matters reached the same conclusions’6. In both principles, the claimant (clm) must to the knowledge of the legal owner, have acted in the belief that the claimant has or will obtain an interest in the property. In both, the claimant must have acted to his or her detriment in reliance on such belief. In both, equity acts on the conscience of the legal owner to prevent him from acting in an unconscionable manner by defeating the common intention7.
There are two main differences between the common intention constructive trust and proprietary estoppel. Firstly, that the former relies upon some common understanding or agreement, while the latter is based upon the defendant’s (D) representations. Secondly, that the only result of the operation of common intention is a constructive trust, whereas in the case of a proprietary estoppel the claimant will acquire the ‘minimum equity to do justice’8; the court may award not only an equitable interest in the property, but more appropriate lesser interests, such as a licence to occupy or a charge on the property for money expended9. In this respect, Proprietary estoppel is a more flexible doctrine.
The facts of the case:
The Gillett (G) family had a close personal and business relationship with Holt (H) for over 36 years. Holt had promised Gillett that he would leave his land and related farm business to him in his will. When Holt was 80 years old he formed a close personal relationship with a Mr Wood. Holt changed his will and excluded Gillett totally. Mr Gillett alleged that he was entitled to a substantial part of Holt’s estate by virtue of proprietary estoppel. He alleged that he had accepted a lower salary in Holt’s company to which he devoted his whole working life and had therefore suffered detriment.
The law of the case:
Proprietary estoppel is an equitable doctrine, whereby an owner of real property is prevented from insisting on his strict legal rights in relation to that property, when it would be inequitable for him to do so, having regard to the dealings which have taken place between the parties10.
The requirements of proprietary estoppel have changed over the years, from a fairly strict set of requirements (the ‘five probanda’ of Willmott v. Barber11) to the more flexible modern approach of Oliver J in Taylor Fashions v. Liverpool Victoria Trustees12. He said that it is necessary to ascertain whether, in the particular circumstances, ‘it would be unconscionable for a party to be permitted to deny that which, knowingly, or unknowingly, he has allowed or encouraged another to assume to his detriment’. It shows that there has to be some assurance of an individual’s rights and some detrimental reliance on those rights13.
Thus, the first requirement to a successful claim is the establishment of an unambiguous promise by the defendant to the claimant that he would acquire some interest or benefit over his real property14. The promise could take the form of a written assurance: Dillwyn v. Llewelyn15 or an oral one: Pascoe v. Turner16; Gillett v. Holt. It could include a request to act in a particular manner: Plimmer v. Mayor of Wellington17, or passive encouragement: Ward v. Kirk land18 where the defendant knows that the claimant mistakenly believes he will obtain an interest19. On the evidence in the present case, the judge recorded seven incidents when assurances given by H, which G relied upon20. The argument why G did so much for H was his belief that, although G was not a blood relative of H, H would leave his estate to G on his death21. Therefore, the judge had erred in holding that H’s assurances were incapable of forming the foundation for an enforceable claim based on proprietary estoppel22.
There is a clear distinction between Gillett and Slater v. Richardson. In Gillett, the clm could show no specific shared expectation that the D would ever alter his will to deprive the clm of the land promised. In Slater, the Ds were wholly unaware of the clm’s belief and had nothing to encourage it23.
However, Spencer Bowen and Turner in the Law Relating to Estoppel by Representation, emphasised estoppel arising out of acquiescence can always find an action, unlike promissory estoppel, which is a shield and not a sword24.
The second essential ingredient of the doctrine is that the clm must show that he relied to his detriment on the promise. In the current case, it is clear that G decided to rely on H’s assurances because ‘Ken was a man of his word’25. Plainly the assurances given on this occasion were intended to be relied on, and were in fact relied on25. Thus, in Greasely v. Cooke, the Court of Appeal held that if clear assurances have been made and detriment has been suffered, it is permissible to assume that reliance has occurred. Likewise, in Wayling v. Jones, the Court of Appeal, there must be a link between this promise and the detrimental reliance26.
Proprietary estoppel cannot be established unless the clm can prove that he has suffered some detriment in reliance on the assurance. In the present case, the claimant alleged that his detriment was the acceptance of a salary below the market average for a farm manager but his claim failed because he had not proved himself to have suffered sufficient detriment, in reliance on the D’s assurances, to give rise to a proprietary estoppel27. Similarly, in Taylor v. Dickens, the clm worked for a number of years without pay in the expectation that he would inherit from the deceased. The deceased changed her will and left everything to another. Although detriment was clear enough, there was no assurance that the deceased would never change her will and so the claim failed28. By way of contrast, in Re Basham, the clm had looked after the deceased without pay for many years and the implication of reliance and detriment was overpowering.
The detriment relied on must be more than minimal expenses and must be something substantial and long lasting: Dr Kong Bok Gan v. Wood & Choudhury29. Furthermore, it seems probable that the detriment must be such that it is unconscionable for the defendant to deny the expectation of the claimant30. Finally, there must be a sufficient link between the promises relied upon and the conduct, which constitutes the detriment: Eves v. Eves 31
Ultimately, the test as to whether the detriment is sufficiently substantial to be relied on is determined on the basis of whether it would be unjust or inequitable to allow the owner to renege on the assurance given in the particular circumstances of the case- the test of unconscionability32. It must be shown that it would be unconscionable for the owner of the land to deny the claimant the benefit he has promised him and on which he has relied to his detriment33. This element might be traced back to the earliest exposition of the doctrine in Ramsden v. Dyson34 where Lord Kingsdown opined that the doctrine of estoppel could arise where there was a fostering of an expectation in the minds of the parties which, once acted upon, it would be unconscionable to deny later. Crucially, even if the claimant has relied to detriment on an assurance, there can be no proprietary estoppel without unconscionability35. For example, both Gillett v. Holt and Taylor v. Dickens deny estoppel, on the ground that it is not unconscionable for a person to change their will to deprive a claimant of a promised interest if there is no additional promise not to revoke the will. The unconscionability would exist only if the representation was that the will would not be changed, not if the actual interest was denied by a perfectly legitimate change in the will36. This more strict approach to proof of unconscionability may be the way in which the potential wide scope of estoppel is controlled: Orgee v. Orgee37
Decision of the case:
The Court of Appeal held that Gillett’s claim would fail, as there was no evidence of an irrevocable promise by Holt to leave his estate to Gillett. There was also insufficient evidence of detriment. Although they criticised the earlier case Taylor v. Dickens on some aspects, they followed the earlier decision. In this, the court suggested that although proprietary estoppel could arise in respect of a claim to future property, there must be evidence that the representor made an irrevocable promise to leave the property to the representee. In that case, the claim likewise failed, as there was no evidence that such a promise had been made38.
It seems that the decision in the Gillett case was fair, as G couldn’t prove in any event that he had suffered sufficient detriment in reliance on H’s assurances38. However, there must be a causal link between the promises relied upon and the occurred detriment. In this case, there was disproportionality between the expectation and the detriment
On the other hand, the Court of Appeal in Gillett rejected the reasoning of Re Basham but followed Judge Weeks criticisms in Taylor v. Dickens regarding Re Basham in two aspects39. In the latter case40, where a proprietary estoppel is giving rise to a constructive trust, the claimant thereby obtaining the conveyance of the estate to her. The judgment in Re Basham is also similar to that adopted in Re Sharpe41, although that case is not mentioned in Edward Nugee’s judgment.
It can be argued that the decision would be disproportionate as G has, at least, a moral (and, as I see it, a legal) claim on H’s property. However, the court could achieve the minimum equity to do justice to the parties, in awarding G any proprietary or personal right over H’s property41. For example, in Dillwyn v. Llewellyn42 and Pascoe v. Turner43, the clm was actually awarded the fee simple in the land, in Celsteel v. Alton44 and Bibby v. Stirling45, the grant of an easement, in Dodsworth v. Dodsworth46, a right of occupation until expenditure is repaid; Voyce v. Voyce47, a complete readjustment of the parties rights over the property; Inwards v. Baker48, a licence to use the property for life; in Matharu v. Matharu49, she was awarded a licence to occupy for life50.
This case leads a very controversial principle on the doctrine of proprietary estoppel, which could cause future problems. In this case, the Judge concluded that there was no detriment as he was looking at quantifiable financial detriment, rather than something substantial in the circumstances51. More recently, Lord Justice Aldous, in Anthony Clifford Jennings v. Arthur Thomas Rice52, refused to follow reasoning in Gillett v. Holt but referred to the decision of Edward Nugee QC in Re Basham. It was held that Mr Jennings is entitled to receive compensation under the doctrine of proprietary estoppel. The Judge went on to assess the ‘equity in the present case’ at 200,000 pounds and ordered the estate to pay that to Mr Jennings. Similarly, in Campbell v. Griffin and Others53, where it was held that Mr Campbell’s claim to equity, having regard to the principles of proprietary estoppel, had been established. Robert Walker LJ gave the leading judgment with which the President and Thorpe LJ agreed.
Conclusion:
Although the principle of this case creates inconsistency in some aspects on the application of the doctrine of proprietary estoppel, the decision appears to resolve some of these conflicts in that it criticises Taylor v. Dickens but appears to vindicate the decision in Re Basham. However, the court has a very wide discretion in satisfying an equity arising under the doctrine of proprietary estoppel. As was said in Gillett v. Holt ‘ The aim is, as Sir Arthur Hobhouse said in Plimmer v. Wellington Corporation54, to ‘look at the circumstances in each case to decide in what way the equity can be satisfied’. The court approaches this task in a cartious way, in order to achieve what Scarman LJ in Crabb v. Arun District Council, called ‘the minimum equity to do justice to the claimant’.
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1 (1998) 1 FLR 806
2 (1986) 1 WLR 1498
3 Following Lord Bridge’s suggestion in Lloyds Bank plc v. Rosset (1991) 1 AC 107. This suggests that a remedy in a case need no longer be limited to granting (or not granting) the claimant a share in the equity value of the property.
4 See, Martin J. E, Modern Equity, 16th edition, 2001,p-301
5 (1986) Ch 638 at p 656.
6 The reference to ‘other matters’ appears to be to the elements of detriment and reliance. At much the same time, Nugee QC in Re Basham was drawing on general constructive trust principles to support a conclusion that estoppel could operate on unspecified property. It is interesting that Grant approaches these issues from the constructive trust perspective, whereas Basham does so from that of estoppel. This linking received supports from the Privy Council in Austin v. Keele (1987) 61 ALJR 605 at 609 and the House of Lords in Lloyds Bank plc v. Rosset.
7Furthermore, the common intention constructive trust and proprietary estoppel both look at the intentions of the parties and the way the claimant has acted upon those intentions, although acquiescence has been developed solely within the estoppel framework
8 See, Crabb v. Arun District Council (1976) Ch 179; Pascoe v. Turner (1979) 1 WLR 431
9 See, Penner J E, The Law of Trusts, 2nd edition, 2000, P-129.
10 Hughes v. Metropolitan Railway Co (1877) 2 APP Cas 439); It is not necessary to show a written agreement as the requirements contained in S2 of the Law of Property (Miscellaneous Provisions) Act 1989 need not be satisfied when the elements of proprietary estoppel are made out: Yaxley v. Gotts (2000)
11(1880) 115 Chd; they may be summarized as follows: a) C must have made a mistake as to his rights. b) C must have expended money or done some act (not necessarily on O’s land) because of the mistake. c) O must be aware of his right d) O must be aware of C’s mistake e) O must have encouraged C’s expenditure, either directly or by not asserting his rights. There have been some cases which have continued to follow this approach, such as Matharu v. Matharu (1994); Coombes v. Smith (1986).
12 (1982) QB 133
13 See, Smith R, Property Law, Longman, 3rd edition, 2000,p-156
14 This is described in the earlier cases as ‘encouragement or acquiescence’: Ramsden v. Dyson (1866) LR 1 HL 129.
15 (1862) 4 De G.F & J 517.
16 (1979) 1 WLR 431
17 (1884) 9 App Cas 699
18 (1967) Ch 194
19 On the other hand, the D can not encourage a belief of which he does not have any knowledge as stated by Nourse LJ in Brinnand v. Ewens 1987
20 For example, in one occasion, H held a dinner for Mr. and Mrs. G at which he ‘repeated once again that he would bequeath all his assets’ to G. H also told them in another occasion ‘it is all yours but I would like you to look after all the people who have worked for me’.
21 Similarly in Re Basham
22 Carnwath J in Gillett v. Holt expressed the idea in terms of an understanding between O and Clm or a mutuality of belief. This understanding may be express or implied by conduct and it does not have to amount to active encouragement so long as it amounts to knowing acquiescence then a D can be held to have generated an estoppel in favor of the clm.
23 See, Thompson M P, Modern Land Law, Oxford University Press, 1st edition, p-230
24 See, Watt G, Land Law LLB Cases and Materials, 3rd edition, 1998,p-312
25 On the issue of reliance in Campbell v. Griffin and Others (2001) the judge’s finding was that Mr. Campbell acted ‘ out of friendship and a sense of responsibility’. The Judge did not refer to the Judgment of Balcombe LJ in Wayling v. Jones, in which Balcombe LJ stated as a Principle: once it has been established that promises were made, and that there has been conduct by the clm of such a nature that inducement may be inferred then the burden of proof shifts to the defendants to establish that he did not rely on the promises: Greasley v. Cooke; Grant v. Edwards (1986).
25 However, Robert Walker LJ in Campbell v. Griffin and Others (2001) suggested in the issue of reliance that claimants should be asked hypothetical questions of the ‘what if’ variety but the court is not bound to attach great impotence to the answers to such hypothetical questions. As Lord Denning MR. said in Greasley v. Cooke (1980) ‘No one can say what the claimant would have done if Kenneth and Hedley (the two brothers who owned the property) had not made those statements’
26 Furthermore, the burden of proof onto the D to show that there had, in fact, been no reliance: Wayling v. Jones
27 The matters which G pleaded as detriment, a) his continuing in H’s employment and not seeking or accepting offers of employment elsewhere, or going into business on his own account; b) carrying ort tasks and spending time beyond the normal scope of an employee’s duty; c) taking no substantial steps to secure his future wealth, either by larger pension contributions or otherwise; and d) expenditure on improving The Beeches farmhouse which was, G said, barely habitable when it was first acquired by KAHL in 1971.
28 See, Smith R, Property Law: Cases and Materials, Addison Wesley Longman, 1st edition, 1999,p-234
29 (1998) EGCS 77
30 In Gillett v. Holt, an estoppel cannot be established unless there has been some detrimental reliance, for that is what makes a retraction of the assurance unconscionable.
31 (1975) 3 All ER 768.
32 Oliver J in Taylor Fashions Ltd v. Liverpool Victoria Trustees Co Ltd stated that in the light of the more recent cases the principle ‘ requires a very much broader approach which is directed to ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of some preconceives formula serving as universal yardstick for every form of unconscionable behavior’
33 In Swallow Securities Ltd v. Isenberg, Cumming-Bruce LJ thought that they ‘will probably prove to be the necessary and essential guidelines, to assist the court to decide the question whether it is unconscionable’.
34 (1866) LR 1 HL 129
35 Maudsley / Burn (Burn E H), Land Law: Cases and Materials, Butterworths, 7th edition, 1998,p-257.
36 Lim H / Green K, Cases and Materials on Land Law, Pitman, 2nd edition, 1995,p-367.
37 (1997) EGCS 152
38 See, Megarry Sir R / Wade E C S / Harpum C, The Law of Real Property, Sweet and Maxwell, 6th edition, 1999,p-211.
38 A central element of that doctrine is that there must be proportionality between the remedy and the detriment, which is its purpose to avoid. It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption.
39 The first criticism was that Mr. Nugee’s Judgment omitted the requirement of unconscionability. The second criticism was that ‘ it is not sufficient for A to believe that he is going to be given a right over B’s property if he knows that B has reserved the right to change his mind. In that case, A must show that B created or encouraged a belief on A’s part that B would not exercise that right’.
40 Re Bashem
41 (1980) 1WLR 219.
41 Orgee v. Orgee suggests that the court cannot award more than the claimant was ever assured. Furthermore, in Pascoe v. Turner, it was said the question must be what is the minimum equity necessary to do justice between the parties.
42 (1862) 4 De G.F& J 517
43 (1979) 1 WLR 431
44 (1985) 1 WLR 204
45 (1998) CA
46 (1973) 228 EG 1115
47 (1991) 62 P & CR 291
48 (1965) 2 QB 929
49 (1994) The Times, 13 may
50 Furthermore, in Wayling v. Jones, the clm was awarded compensation in lieu of a proprietary interest because the relevant land had been disposed of previously.
51 See, Lim H / Green K, Cases and Materials on Land Law, Pitman, 2nd edition, 1995,p-176
52 (2002) WL 45443
53 (2001) WL 676695
54 (1884) 9 App Cas 699, 714