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Confining and defining proprietary estoppel: the role of unconscionability

Published online by Cambridge University Press:  02 January 2018

Martin Dixon
Martin Dixon*
Affiliation:
University of Cambridge
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Abstract

The use of proprietary estoppel to make or support claims to property is now common. Case-law tells us that the concept of unconscionability is central to a successful claim, but little guidance is provided as to what ‘unconscionability’ means or how it is to be established. It is often assumed rather than explained. This paper argues that unconscionability in fact has a reasonably clear meaning within the law of proprietary estoppel and that it can be used to define and confine proprietary estoppel within reasonably clear boundaries. It seeks to explain that proprietary estoppel is at heart an antidote to a lack of required formality in the creation or transfer of property rights and, consequently, that the proper meaning of unconscionability is linked to these formality requirements. Unconscionability is therefore not a cover for unregulated judicial discretion, nor a loose term to describe a general sense of unfairness, but a concept which can be used to discriminate objectively between valid and invalid estoppel claims.

Type
Research Article
Information
Legal Studies , Volume 30 , Issue 3 , September 2010 , pp. 408 - 420
Copyright
Copyright © Society of Legal Scholars 2010

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References

1. Dixon, M Proprietary estoppel and formalities in land law and the Land Registration Act 2002: a theory of unconscionability’ in Cooke, E (ed) Modern Studies in Property Law vol 2 (Oxford: Hart Publishing, 2003)Google Scholar. See now Yeomans Row Management Ltd v Cobbe[2008] UKHL 55, [2008] 1 WLR 1752 and Thorner v Majors[2009] UKHL 18, [2009] 1 WLR 776.

2. Oakglade Investments Ltd v Greater Manchester Passenger Transport Executive[2009] RVR 39. The Lands Tribunal has now become the Lands Chamber of the Upper Tribunal under the Tribunals, Courts and Enforcement Act 2007.

3. Waghorn v Waghorn Decision REF/2006/0271 (unreported) 2 November 2006.

4. Re West Norwood Cemetery[2005] 1 WLR 2176.

5. Manton Securities v Nazam[2008] EWCA Civ 805 provides a recent example in the law of landlord and tenant and Clarke v Coreless[2009] EWHC 1636 (Ch) illustrates estoppel in a neighbour dispute.

6. Re West Norwood, above n 4.

7. Brightlingsea Haven Ltd v Morris[2008] EWHC 1928 (QB).

8. Halifax plc v Popeck[2008] EWHC 1692 (Ch), [2009] 1 P&CR DG3, to the detriment of a second lender.

9. Scottish & Newcastle plc v Lancashire Mortgage Corporation[2007] EWCA Civ 684, (2007) NPC 84.

10. St Pancras & Humanist Housing Association Ltd v Leonard[2008] EWCA Civ 1442.

11. Thompson v Foy[2009] EWHC 1076 (Ch), (2009) 22 EG 119 (CS).

12. Above n 1.

13. [2005] EWHC 1478 (Ch), [2006] 2 FLR 495.

14. Above n 9. The case turned on the equivalent provision as to priority of registered charges under the Land Registration Act 1925.

15. [2007] EWHC 2086 (Ch).

16. Although the particular formality requirements may vary in detail – eg a written contract for a disposition of an interest in land, or a valid will for a testamentary disposition – the real issue is not how estoppel relates to the detail of these formality rules, but rather how the claimant's proprietary interest can arise when the required formality for the impugned transaction is not complied with. Thus, in the absence of formality rules, estoppel would not be needed to explain the claimant acquiring an interest in property because the law would recognise oral grants, oral contracts and oral testamentary dispositions.

17. The general role of unconscionability in estoppel has been analysed, but not its particular relationship to formality rules per se. See, eg, KR Handley ‘Unconscionability in estoppel by conduct: triable issue or underlying principle?’[2008] Conv 382; N Hopkins ‘Understanding unconscionability in proprietary estoppel (2004) 20 JCL 210 and ‘Conscience, discretion and the creation of property rights’[2006] Legal Studies 475; H Delany and D Ryan ‘Unconscionability: a unifying theme in equity’[2008] Conv 401.

18. Above n 1 at [28].

19. He notes that proprietary estoppel could ‘lose contact with its roots and risk becoming unprincipled and therefore unpredictable, if it has not already become so’: at [28]. It might be thought that some of the criticism of Lord Scott's judgment in Cobbe gives insufficient weight to this policy.

20. With, of course, some discussion about how reliance is established – must it be ‘intended’ or is it enough if the fact of reliance was reasonable even if unintended? See also Herbert v Doyle[2008] EWHC 1950 (Ch).

21. Hunt v Soady[2007] EWCA Civ 366; Century (UK) Ltd v Clibbery[2004] EWHC 1870 (Ch).

22. Greasley v Cooke[1980] 1 WLR 1306; Chun v Ho[2003] 1 FLR 23; and see recently Clarke v Coreless, above n 5.

23. [2001] Ch 210.

24. Above n 1 at [100] per Lord Neuberger.

25. See Oliver J's dictum in Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd[1982] QB 133 at 151 that what is required is a ‘broader approach which is directed rather at 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 enquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick of unconscionable behaviour’. Or, in the words of Robert Walker LJ in Gillett v Holt[2001] Ch 210, ‘the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine’. See also Hoffmann J in Walton v Walton in the context of informal promises, quoted with approval in Thorner at [101] per Lord Neuberger.

26. Eg, in Thompson v Foy[2009] EWHC 1076 (Ch), [2010] 1 P&CR 16, Lewison J notes that, following Thorner, as ‘Lord Walker of Gestingthorpe explained (§ 29) the doctrine is based on three elements: a representation or assurance made to the claimant; reliance on it by the claimant; and detriment to the claimant in consequence of his (reasonable) reliance’.

27. Barsanti v Royle Claim No 5BS50359, Bristol District Registry, Chancery Division, 3 April 2006. See also Manton Securities v Nazam[2008] EWCA Civ 805, (2008) NPC 85.

28. Before the Judicial Committee of the Privy Council, [2008] UKPC 30.

29. See also Powell v Benney[2007] EWCA Civ 1283, 151 Sol Jo 1598.

30. [2008] EWHC 228 (Ch), [2008] 1 FCR 557.

31. [2002] EWCA Civ 159, [2003] 1 FCR 501.

32. [2006] EWHC 275 (Ch), [2006] 1 FCR 421.

33. See Turner v Jacob[2006] EWHC 1317 (Ch) where unconscionability is to be determined by looking at all the relevant circumstances and not at individual factors in isolation. It is uncertain what these relevant circumstances were.

34. See, eg, Yeo v Wilson LTL 27 July 1998, Case Ref CH 1997 Y 4026.

35. [2007] EWCA Civ 366.

36. The present author has ventured criticism of this analysis elsewhere – see above n 1.The thrust of the criticism is that it sees unconscionability as merely a function of assurance, reliance and detriment and therefore permits the back door creation of property rights without reference to normal requirements. Neither does it explain those cases where estoppel has been denied despite a promise withdrawn after detrimental reliance – see, eg, the ‘subject to contract’ cases typified by Attorney-General of Hong Kong v Humphrey's Estate (Queen's Gardens) Ltd[1987] 1 AC 114 of which there is more than an echo in Cobbe.

37. This worried Judge Weeks in Taylor v Dickens[1998] 1 FLR 807, for he noted that there is ‘no equitable jurisdiction to hold a person to a promise simply because the court thinks it unfair, unconscionable or morally objectionable for him to go back on it. If there were such a jurisdiction, one might as well forget the law of contract and issue every civil judge with a portable palm tree. The days of justice varying with the size of the Lord Chancellor's foot would have returned’: at 821.

38. As a starting point, see De Soto, Hernando The Mystery of Capital (London: Black Swan, 2001).Google Scholar

39. See, eg, Lord Neuberger ‘The stuffing of Minerva's owl? Taxonomy and taxidermy in equity’[2009] CLJ 537; S Panesar ‘Enforcing oral agreements to develop land in English law’[2009] ICCLR 165; G Fetherstonhaugh ‘Proprietary estoppel and section 2 – where are we now?’[2009] EG 0916, 136. See also [2009] Conv 85.

40. [2007] EWHC 2086 (Ch).

41. See also DS v SS[2006] EWHC 2892 (Fam), [2007] 1 FLR 1123: ‘But a party may not rely on an estoppel to avoid a statutory obligation’: at [56].

42. ‘It is not necessary in the present case to answer this question, for the second agreement was not a complete agreement and, for that reason, would not have been specifically enforceable so long as it remained incomplete. My present view, however, is that proprietary estoppel cannot be prayed in aid in order to render enforceable an agreement that statute has declared to be void. The proposition that an owner of land can be estopped from asserting that an agreement is void for want of compliance with the requirements of section 2 is, in my opinion, unacceptable. The assertion is no more than the statute provides. Equity can surely not contradict the statute’: per Lord Scott at [29].

43. For example, Yeo v Wilson, above n 34; Taylor v Dickens, above n 37. See Newport City Council v Charles[2008] EWCA Civ 1541, [2009] 1 WLR 1884 on the question whether estoppel can be used to frustrate the purpose of a statute, or even be used to uphold that purpose.

44. [2008] EWCA Civ 785, (2008) 40 EG 178.

45. See Law Commission Working Paper No 92, on the proposal to enact what is now s 2, that it ‘appears to us obviously out of the question to exclude the application of these general judicial doctrines (restitution as well as equitable estoppel) in this particular area of sales etc. of land’ at para 35 and see Law Commission Report No 164 The Transfer of Land: Formalities for Contracts of Sale etc. of Land at paras 19–20.

46. [2000] Ch 162.

47. At [92] et seq.

48. Eg Scottish & Newcastle plc v Lancashire Mortgage Corporation, above n 9.

49. Of course, it does help judges in real cases without them having to resort to wider arguments of principle.

50. See also estoppel used as an antidote to s 1 of the 1989 Act (attestation of deeds): Shah v Shah[2001] EWCA Civ 527, [2001] 3 WLR 31.

51. Eg Gillett v Holt, above n 25 (Wills Act 1837); Halifax v Popeck, above n 8 (Land Registration Act 2002); Thompson v Foy, above n 11 (Law of Property Act 1925).

52. [2008] EWHC 1928 (QB). See also Scottish & Newcastle plc v Lancashire Mortgage Corporation, above n 9; Turner v Jacob, above n 33; Kinane v Mackie-Conteh[2005] EWCA Civ 45, (2005) 6 EG 140 (CS).

53. Eg Oates v Stimson[2006] EWCA Civ 548.

54. Thus, where there are no formality requirements – eg short leases – estoppel has no role.

55. Thus, it is no mere coincidence that estoppel claims rise in proportion to the degree of formality required for the creation and disposition of property rights.

56. Thorner v Majors, above n 1, per Lord Walker.

57. At [28] per Arden JJ.

58. Note, however, that when Etherton J found for Mr Cobbe at first instance, he concluded that the defendant regarded herself as bound in honour to enter into a formal agreement: [2005] EWHC 66 (Ch) at [68] and [86]. Could this equate to a formality assurance (ie that formality did not really matter) so as to make withdrawal of the assurance unconscionable?

59. LTL 31 July 2003, Case Ref: Case No A3/02/2510.

60. [2001] EWCA Civ 990.

61. Of course, to some extent, this represents an ex post facto analysis of the facts of these cases as it must be admitted that the decisions did not proceed on this basis. Likewise, the fact that a formality assurance may be implied necessarily poses the risk that the concept could be manipulated to justify an estoppel at the discretion of the court. The point is, however, that the analysis presented here provides a framework for decisions in such cases and a rationale for differentiating between mere unenforceable informal promises and those informal promises deserving of the intervention of equity.

62. [1987] 1 AC 114.

63. Unreported, 20 July 2000.

64. [2001] 23 EG 158.

65. Transcript, No 1997 T No 76.

66. In Cobbe, Lord Scott gives a different explanation of why there can be no estoppel, at [25].

67. In Humphrey's, Lord Templeman said that ‘it is possible but unlikely that in circumstances at present unforeseeable, a party to negotiations set out in a document “subject to contract” would be able to satisfy the court that …some form of estoppel had arisen to prevent both parties from refusing to proceed with the transaction envisaged by the document’. This might be the relevant circumstance.

68. Or through the detriment of lost opportunity – looking elsewhere.

69. Above n 15.

70. Yeo v Wilson, above n 34.

71. Campbell v Griffin, above n 60.

72. McGuane v Welch (2008) 40 EG 178.