Imagine a situation where somebody is led to believe they will receive property, they rely on that promise to their detriment, only to then find the maker of the promise resiles from it and denies the promisee the right or benefit they had come to expect to receive.
For example, let’s say Jack is born on the family farm and is promised the farm by his parents. Jack commits his entire working life to the family business for little to no remuneration. Jack then finds that on the death of his parents, he is left nothing. Is this fair? Does Jack have a remedy?
One possible remedy may be proprietary estoppel.
So what is Proprietary Estoppel and how does it work?
Proprietary Estoppel
Proprietary estoppel is a legal remedy which (whilst not always the case) quite often, crops up in the family and domestic context where land is involved.
However, it is not always the case that it applies to land because, as the doctrine has evolved, so too, has what it applies to.
As well as land, the Courts have held there is no conceptual problem with the doctrine applying to shares in a limited company. Indeed, in Dixon v Global Data Plc, Master Brightwell held a proprietary estoppel claim was made out in relation to share options that had been promised to an employee if he remained working for the company.
At Colman Coyle we are well versed in the doctrine of proprietary estoppel in all its guises.
Mr Adam Palmer and Rana Chatterjee, for example, were recently involved in a sizeable claim involving a share dispute which involved issues of proprietary estoppel.
Mr Palmer has also been involved in several cases in the domestic and family context where proprietary estoppel has arisen in the context of land being promised.
What are the elements of Proprietary Estoppel and how does it work?
Although they bleed into one another, the elements needed to establish a proprietary estoppel claim are threefold:
- a party makes a representation or assurance to another (“the Promise”)
- there is reliance upon that expectation by the receiving party (“the Reliance”)
- the receiving party suffers detriment as a consequence of that reliance (“the Detriment”)
The Promise
It is not necessary for a specific right or a specific piece of land to be promised for proprietary estoppel to arise. However, what amounts to a promise that can give rise to proprietary estoppel is not as straightforward as it may sound. The promise need not be unequivocal, but it does need to be “clear enough”, and what amounts to a promise being “clear enough” will depend heavily on the context of the case.
The Reliance and Detriment
To establish reliance, there needs to be a causal connection between the promises made and the detriment suffered. In other words, a party needs to show they would not have acted in the way they did if the representations had not been made.
The detriment suffered does not need to be financial, provided it is substantial. Going back to Jack, for example, if he sacrificed educational opportunities to work on the family farm and lost the opportunity to lead a different life, this is something that could go into the scales. However, care should be taken here because in assessing the detriment, the Court will also factor in any benefits received. If the benefits received outweigh the detriment suffered, a claim may not succeed.
The Relief
If a party is successful in meeting the limbs set out above, the Court has a wide discretion in what relief it can grant. To do this, it will conduct a two-stage exercise.
As a first step, it will determine whether the repudiation is, in light of the detrimental reliance, unconscionable. Assuming the answer to this is yes, the Court will then seek to grant relief. As to what that relief looks like, this is a matter for the Court and the relief granted will need to be proportionate to the detriment suffered.
In the case of a Will, for example (and going back to our example of Jack), if he was promised land in a Will, this may involve property being transferred to Jack or Jack receiving a lump sum payment.
A Cautionary Tale
To bring a successful claim in reliance on proprietary estoppel is no easy feat. Each claim will turn on its own facts. If you are considering bringing a claim, you will (and should) expect to be tested robustly on your evidence. If, on the other hand, you are defending a claim, by making sure the other side’s case is closely scrutinised and tested may well mean it does not ever leave the starting blocks.
How we can help
At Colman Coyle we are well versed in dealing with claims of this nature, whether that is in making a claim or defending one and involving land or not. We will communicate the costs from the beginning and, if the circumstances are appropriate, we are always open to discussing alternative funding arrangements with you.
If you find yourself in a similar situation and you are looking for advice, please do not hesitate to contact Adam Palmer at adam.palmer@colmancoyle.com and we would be happy to assist.
