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Broken Promises and Proprietary Estoppel

A legal doctrine which can remedy broken promises? It sound too good to be true, but it does exist. Proprietary estoppel is a doctrine which enables justice to prevail when the cause might otherwise seem hopeless.

The key ingredients are:

  1. Assurance. A property owner induces, encourages or allows the claimant to believe that the claimant has or will have some right or benefit over the property. The assurance can take a number of different forms, including express representation, passive or active encouragement, expenditure or alteration of legal position.
  2. Detrimental reliance. The claimant relies on this belief and in doing so acts to his detriment to the knowledge of the property owner. There must be a sufficient link between the assurances relied on and the conduct that causes the detriment.
  3. Unconscionability. The property owner tries to take unconscionable advantage of the claimant by denying the claimant the right or benefit that the claimant expected to have.

These are important because a court must look at the matter for dispute in the round, considering all three elements together. The fundamental principle underpinning this is the prevention of "unconscionable conduct". The detriment, for example, does not have to be financial. If the above elements are present then the court has discretion as to the award that can be made. The court, of course, has the power to fulfil expectations in terms of award. However, these expectations are uncertain, extravagant or out of proportion to the detriment suffered than the court has the power to award in a more limited way.

Some examples

In Davies v Davies, decided earlier this year, the High Court considered a claim in respect of a family dispute about the ownership of a farm. The claimant was the deceased's son, who had been promised that he would inherit the farm on his father's death. His father's Will left it in trust for him until he was 60, when it was to be sold and the proceeds divided between him and his siblings. The son had worked solely on the farm for long hours and low wages and had also invested large sums of his own money on improvements. He had done so in the belief that he would inherit and the court agreed and awarded him the farm.

In Southwell v Blackwell in 2014 the Court of Appeal agreed with an earlier decision which gave the claimant a share of the equity in a home owned by her partner. She was 40, divorced with two daughters and gave up a job and secure rented accommodation on which she had spent a lot of money, to move in with her new partner. The parties discussed the move and the consequences for her. Documents she saw at the time provided for her to receive a lump sum and pension on her partner's death and suggested a real commitment and encouraged and reassured her. The parties' discussions were not specific as to ownership of the home, but specific as to the nature and extent of his commitment to her and the provision of secure accommodation for her. He promised her secure rights of occupation at the house that they were in effect buying together, although in his sole name.

In Lothian v Dixon & Webb in 2014 Mrs L was a cousin of the deceased who in 2010 moved from Scotland to care for her and help her run her small hotel when the deceased became terminally ill, which she did for 2 years. The deceased acknowledged that in requesting she do this, it would be a big upheaval for her, not least as her husband still had a business there. In return she promised Mrs L she would be left the whole of the deceased's estate. The deceased shortly before her death instructed solicitors to make a new will to this effect but died before it has been executed. Her existing 1983 will divided the estate between Mrs L and her sister. The court awarded Mrs L the net estate after the legacies were paid.

In Bradbury v Taylor in 2012 a young couple also succeeded where they had uprooted themselves from Sheffield to Cornwall to look after an elderly relative relying on a promise that he would leave them his house and land, although there were acknowledged benefits to them in having made the move.

In conclusion

There are many instances when it is wise to seek the advice from a solicitor even if it may seem the cause is lost.

The above cases are only very brief summaries, but involved claimants who had made considerable changes to their lives, and generally suffered considerable detriment relying only on trust. Their actions may have been won, when they could just have easily have been lost. The process will however have cost them in many ways including the time lost bringing the matter to a conclusion, and the irretrievable damage to their family relationships.

The cohabitation case is quite unusual, and is significant as it warns of the potential liability should a relationship with a cohabitee break down - even if the property concerned is in one party's sole name and the other party has not made any significant contribution to the purchase price or outgoings.

Prevention is better than cure. Legal proceedings are far more expensive than the costs that would have been involved in taking advice in the first place.