Chapter 10 Answers to end of chapter questions

Self-test questions

How will the court approach a claim founded on proprietary estoppel? Explain the stages that it will go through to do this.

Answer: The court will use a two stage process to approach a claim founded on proprietary estoppel. Firstly, it will consider whether an estoppel has actually arisen. It will establish that the three requirements to establish an estoppel have been met. These are:

Assurance: that the legal owner of the property made an assurance to the claimant in respect of the acquiring an interest in the property;
Reliance: that the claimant relied upon this assurance;
Detriment: that the claimant acted to her or his detriment in reliance on the assurance.

Only when these three requirements are met will the court proceed to the next stage, which is working out an appropriate remedy for the claimant.

Omar and Lily have lived together in a house purchased in Omar’s sole name since 2000. The couple have never married, but chose the house together and have redesigned much of it together. Unfortunately, their relationship has broken down and Omar has asked Lily to leave the property immediately, saying that it is his and that he never intended her to own a share of it. Omar is a successful entrepreneur who earns a great deal of money. Lily is an actress and has only worked occasionally during the couple’s relationship, but she has done all of the household chores and cooking during this time. Lily says that she only moved in with Omar because he persuaded her to, saying that she would always have a home with him. She had to leave secure rented accommodation and a very good job in a theatre to do so. Advise Lily as to how she might establish a claim to the property under the doctrine of proprietary estoppel.

Answer: Omar is the sole legal owner of the property. In order to establish that she has a share in the property by means of proprietary estoppel, Lily must firstly establish the estoppel (stage 1). In order to do this she must establish that Omar made an assurance to her that she would have a share in the property, and that she had acted to her detriment or changed her position in reliance on this assurance. It appears that Omar may have made an assurance, if Lily can demonstrate that the assurance was in relation to the property. She relied on that assurance and acted to her detriment in leaving secure rented accommodation. She may also have acted to her detriment in undertaking all the household chores.

If Lily can establish the three elements, an estoppel will have arisen and the court will move on to identify an appropriate remedy for Lily, weighing the balance of the advantage that she has enjoyed (such as rent free accommodation for almost 20 years) with the detriment that she has suffered (which may also include her work in redesigning the property). The court may then award her a share in the property – but it may not. The court’s award of a remedy is entirely at its own discretion.

See 10.1 and 10.2 for more detail, but don’t forget that Lily may be also able to establish that she is entitled to a share of the property by arguing that a constructive trust has arisen. For this, see Chapter 9, and especially 9.5.2.1.

Exam Questions

In a number of recent cases, an appellate court has been required to consider whether a lower court has awarded the right remedy in proprietary estoppel claims. Are any clearer guidelines emerging for lower courts in awarding remedies?

Answer: The wide discretion afforded to the court in respect of remedies can lead to inconsistency in awards made by the court. Over the years, the appellate courts have repeatedly said that they will be slow to interfere with a remedy awarded by the lower courts, because the lower courts will have heard and carefully reviewed all of the evidence in the case (Liden v Burton [2016]). Sometimes this can result in the appellate court upholding some seemingly generous remedies of the lower courts (see, for example, Suggitt v Suggitt [2012]).

Davies v Davies suggests a potentially interesting development in an approach to identifying an appropriate remedy. In that case, the Court suggests that there might be a ‘sliding scale’ approach, where the greater the detriment, and the longer the expectation was held, the greater the weight that should be given to that expectation – and hence, presumably the greater the remedy. Don’t forget though, that these remarks were obiter, and do not form part of the ratio of the case.

See 10.3 and the Davies v Davies case close up in 10.4 for a more detailed discussion.

In a number of cases, judges use the terms ‘constructive trust’ and ‘proprietary estoppel’ interchangeably. Is it now time to merge these two legal concepts?

Answer: Judges certainly do sometimes use the two terms interchangeably. It is easy to see why: the elements of proprietary estoppel (assurance, reliance and detriment) and a common intention constructive trust (express discussions and detriment) are very similar.

In reality, the two concepts are very different, and produce potentially very different legal consequences. The key difference lies in the remedy: if a claimant succeeds in stage 1 of a proprietary estoppel claim – establishing an estoppel – it is then for the court to decide on an appropriate remedy. This may range from the court awarding the claimant nothing at all, where it considers that the estoppel has already been satisfied – to awarding the claimant a share in the property, or even on occasion the property in its entirety, to the claimant. The remedy is therefore unpredictable, and this may influence a potential claimant’s decision to engage in litigation.

With a constructive trust, although there is still a degree of unpredictability as with any litigation, the remedy if a claimant is successful is that she or he will acquire an equitable share in the property.

The timing of the remedy also differs: with proprietary estoppel, the remedy takes effect from the date that it is awarded by the court. With a constructive trust, the remedy is deemed to take effect whenever the events leading to the establishment of the constructive trust took place. This might be many years before the case came to court. This may be highly significant to a claimant, particularly if, for example, she or he is also trying to establish that she or he has an overriding interest in the property.

See 10.5 for the differences between proprietary estoppel and constructive trust and 7.3.3 for a reminder on overriding interests.