The modern law of proprietary estoppel?

1. The House of Lords has finally had the opportunity of reviewing and clarifying(?) the

equity known as proprietary estoppel in two of its recent decisions: Cobbe v

Yeoman’s Row Management Ltd [2008] 1 WLR 1752 and Thorner v Major [2009] 1

WLR 776.

2. Of the two, Thorner is perhaps the more illuminating as it is a decision based upon

facts that, classically, form the basis for most of the reported cases on proprietary

estoppel (i.e. a farmer promising a younger relative that in exchange for his help on

the farm, for little or no remuneration, the farm will be his one day) but Cobbe is of

special significance as it seems to draw a line in the sand. Or does it?

3. Lord Walker of Gestingthorpe, who gave the lead judgment in Thorner, with perhaps

a wry smile, chose to commence his opinion [29] with a quotation from Simon

Gardner, An Introduction to Land Law (2007) page 101

“There is no definition of proprietary estoppel that is both comprehensive

and uncontroversial (and many attempts at one have been neither)."

4. Please note, as well, a revelatory aside of Lord Walker in Thorner [56]:

“I would prefer to say (while conscious that it is a thoroughly question-

begging formulation) that to establish a proprietary estoppel the relevant

assurance must be clear enough. What amounts to sufficient clarity, in a

case of this sort, is hugely dependent on context."

5. But to begin at the beginning, as Lord Walker pointed out in the opening paragraph

[29] of his opinion in Thorner there was general agreement amongst academic writers

that the doctrine is based on three main elements:

(a) a representation or assurance made to the claimant

(b) reliance on it by the claimant

(c) detriment to the claimant in consequence of his (reasonable) reliance.

6. Earlier judicial formulations are to like effect:

(1) As formulated by Mr Edward Nugee QC in Re Basham Deed [1986] 1

WLR 1498 at 1503 and as approved by Robert Walker LJ (as he then

was) in Gillett v. Holt [2001] Ch 210:

“The Plaintiff relies on proprietary estoppel, the principle of

which in its broadest form, may be stated as follows: where one

person, A, has acted to his detriment on the faith of a belief,

which was known to and encouraged by another person, B, that

he either has or is going to be given a right in or over B’s

property, B, cannot insist on his strict legal rights if to do so

would be inconsistent with A’s belief."

(2) Oliver J (as he then was) put the matter in Taylor Fashions Ltd v.

Victoria Trustee Co Ltd (1979) [1982] QB 133n thus:

“If A, under an expectation created or encouraged by B that A

shall have a certain interest in land thereafter, on the faith of

such expectation and with the knowledge of B and without

objection from him, acts to his detriment in connection with

such land, a Court of Equity will compel B to give effect to

such expectation."

7. In its practical application the principle by which it operates is not very different to

common intention constructive trusts: Grant v. Edwards [1986] Ch. 638 and Hiscock

v. Oxley [2004] EWCA Civ 546. Both rely upon certain shared characteristics e.g. a

representation or promise, which is intended to be, or it is known that, it will be, relied

upon and in reliance thereon the promisee acts to his or her detriment.

8. The difference between the principles of constructive trusts and proprietary estoppel

is that the former concerns an agreement arrangement or understanding about the

ownership or sharing the ownership of property, generally (but not exclusively) before

it is acquired, whilst the emphasis of the latter is upon a representation whereby there

is the acquisition of rights in or over property which is already (or about to be) owned

by the promisor. And as we shall see, once proved, the Court must enforce the terms

of the constructive trust whilst in the case of proprietary estoppel it has more


9. One further characteristic of proprietary estoppel to note was described by Hoffman

LJ (as he then was) in Walton v. Walton [1994] CA Transcript No. 479

“21. But none of this reasoning applies to equitable estoppel, because it

does not look forward into the future and guess what might happen. It

looks backwards from the moment when the promise falls due to be

performed and asks whether, in the circumstances which have actually

happened, it would be unconscionable for the promise not to be kept."


10. The person seeking to assert the estoppel (“A") must establish that the person who

owns the property (“O"), or his agent, or his predecessor in title, has represented that

he (A) will obtain an interest in property either by:

(i) making an express promise or

(ii) encouraging A to believe that he will obtain such an interest by words

or conduct or

(iii) encouraging A’s belief passively and by remaining silent i.e.

acquiescence see Snell’s Equity (31st ed) para. 10-17.

11. The promise can be vague or even equivocal, and certainly less than is needed to

enforce a contractual obligation, what however is essential is to show that it was

intended that it should be relied upon or that the promisee was reasonable in so doing:

see Thorner per Lord Walker at [56] and Lord Neuberger at [84] and [85]. It is not

necessary therefore to show that O’s promise was said by him to be irrevocable what

matters is that it was reasonable for A to so act to his detriment: Gillett v. Holt [2001]

Ch 210.

12. A commonly encountered scenario involves the family farm: a son or other relative

stays at home to work on the farm for payment that amounts to little more than pocket

money, in course of time he wishes to marry and proposes to move away to earn a

reasonable wage, he is induced to stay at home with a promise that the farm will be

left to him by Will: Gillett v. Holt, and Uglow v. Uglow [2004] WTLR 1183 CA.

13. Promises to leave businesses comprising of property and other assets made on the

same basis are also common Gillett v. Holt (farm/ agricultural business) Wayling v.

Jones [1995] 2 FLR 1029 (hotel).

14. The cases also show other types of relationships such as a needy older person who

promises to leave his or her estate, or property, or a house for life to A, if he or she

continues to look after O: Griffiths v. Williams [1978] 2 EGLR 121 Jennings v. Rice

[2003] 1 P&CR 8.

15. And note that standing by and thus encouraging A’s belief by acquiescence can also

amount to encouragement e.g. where a landlord and two tenants acted under a

common assumption that an option to renew was void: Taylors Fashions Ltd v.

Liverpool Victoria Trustees Co. Ltd.

16. Of course, it must be the case that normally O knows all of the material facts viz that

the property was his, that A was acting on O’s representation and that he, O, could

interfere. Otherwise O’s behaviour would not be unconscionable. On rare occasions

(which will indeed be very rare) O’s knowledge is not essential if O’s conduct in

encouraging A to act to his detriment would nevertheless make it inequitable that he

should be allowed to stand on his strict rights.

Reliance: Expectation or belief

17. A must have acted in the belief that he either has or would acquire a sufficient interest

in the property to justify acting to his detriment. For instance, the son who stayed on

the farm because he was promised he would inherit it or a housekeeper who was

persuaded to stay to look after O who promised A the house: Wakeham v. MacKenzie

[1968] 1 WLR 1175.

18. The conventional view has always been that there is no room for estoppel where

negotiations are expressly made subject to a “subject to contract" term and such

indeed is the usual outcome of estoppel claims in such circumstances: see note 92

para. 10-19 of Snell for a list of such decisions a view now endorsed by the House of

Lords’ see Lord Scott in Cobbe at [25].


19. Detriment suffered by A is essential to establishing the equity:

“The overwhelming weight of authority shows that detriment is required. But

the authorities also show that it is not a narrow or technical concept. The

detriment need not consist of the expenditure or money or other quantifiable

financial detriment, so long as it is something substantial. The requirement

must be approached as part of a broad inquiry as to whether repudiation of an

assurance is or is not unconscionable in all the circumstances."

per Robert Walker LJ (as he then was) in Gillett v. Holt.

Slade LJ in Jones v. Watkins said:

“the detriment which the representee must be shown to have suffered falls to

be judged at the moment when the representor proposes to go back on his


Dunn LJ in Greasley v. Cooke [1980] 1 WLR 1306 at 1313/1314:

“There is no doubt that for proprietary estoppel to arise the person claiming

must have incurred expenditure or otherwise have prejudiced himself or acted

to his detriment."

20. Balcombe LJ in Wayling v. Jones analysed what, in practical terms, amounts to

detriment. His analysis is quoted with approval by Robert Walker LJ in Gillett v.


“(1) There must be a sufficient link between the promises relied upon and

the conduct which constitutes the detriment –see Eves v. Eves [1975] 1

WLR 1338, 1345C-F, in particular per Brightman J, Grant v. Edwards

[1986] Ch 638, 648-649, 655-657, 656G-H, per Nourse LJ and per

Browne-Wilkinson V-C and in particular the passage where he equates

the principles applicable in cases of constructive trust to those of

proprietary estoppel.

(2) The promises relied upon do not have to be the sole inducement for the

conduct: it is sufficient if they are an inducement – Amalgamated

Property Co v. Texas Bank [1982] QB 84, 104-105.

(3) Once it has been established that promises were made, and that there

had been conduct by the plaintiff 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 [1980] 1

WLR 1306; Grant v. Edwards [1980] Ch 638, 657."

21. Detriment can be divided into expenditure and non expenditure or other detriment.

(i) Expenditure:

(a) the classic decision of Dillwyn v. Llewellyn (1862) 4

De G F & J 517 where A encouraged by O built a house

on O’s land and O failed to transfer the land to A: and

see Inwards v. Baker [1965] 2 QB 29 involving similar


(b) by contributing to the purchase price and providing cash

for repairs Jiggins v. Brisley [2003] EWHC 841;

(c) it can include expenditure by A on his own land in

expectation of obtaining a right over O’s land as where

A built on his own land in expectation of a right to

obtain water from O’s canal: Rochdale Canal Company

v. King (2) (1853) 16 Beav 630.

(2) Other detriment: this takes the form most commonly of the provision

of services or foregoing opportunities elsewhere:

(a) On assurances that A would be granted a right of way

over O’s land, A disposed of part of his land: Crabb v

Arun D.C. [1976] Ch 179;

(b) helping in a business or farm and giving up the chance

of other opportunities or more remunerative work

elsewhere: Re Basham and Gillett v. Holt;

(c) a giving up his job and going to live near O in a house

owned by O: Jones v. Jones [1997] 1 WLR 438;

(d) foregoing other business opportunities to run the family

business for 30 years at a reduced wage Newman v.

Blanton [2002] All ER (D) 107 (Jun);

(e) a soi-dissant actress gave up what the Court thought

was not a promising career to look after an alcoholic

partner: Grundy v. Ottey [2003] EWHC Civ 1176.

Land Registration Act 2002 s. 116

22. By section 116 of the LRA 2002 it is provided as follows:

“It is hereby declared for the avoidance of doubt that, in relation to registered

land, [each of] the following

(a) an equity by estoppel


has effect from the time the equity arises as an interest capable of binding

successors in title (subject to the rules about the effect of disposition on


23. The section builds on the old practice of HM Land Registry which was to permit a

caution or notice to be entered upon notification of the right. The new section

clarified the position by confirming the proprietary nature of such an estoppel by

declaring that it has effect as soon as it arises. The section cannot solve the difficulty

that until the Court makes a declaration the extent of the equity is uncertain – will the

Court grant A an interest in land or merely monetary or some other compensation?

Extent and Satisfaction of the equity

24. Once established how will the court satisfy the equity? One of the few differences

between proprietary estoppel and constructive trusts is that a constructive trust is

founded upon a common intention (i.e. agreement arrangement or understanding) so

once found, the Court must give effect to this common intention, whereas for

proprietary estoppel the courts will simply provide “the minimum equity to do


25. The starting point is to establish what was A’s expectation. That he would inherit the

entire farm, and the live and dead stock, be given the business, O’s residuary estate or

a home for life?

26. In cases such as Wayling v. Jones the promise made by O, the homosexual partner of

A, was that he would leave to A his hotel and in reliance upon those promises A acted

as O’s companion, chauffeur and business associate until O’s death and in exchange

he was given pocket money and some expenses. The Court ordered that the entire

proceeds of sale of the hotel should be transferred to A. In many of the farming cases

especially where the farm in question is a small family farm the order is to transfer the

entire farm together with the live and dead stock.

27. However, since Gillett v. Holt there seems to have developed a new, and stricter,

approach to satisfying the equity. Having placed the doctrine on a clear footing

Robert Walker LJ (as he then was) in the important decision of Jennings v. Rice

[2002] EWCA Civ 159 set about reminding everyone that the job of the Court was to

do “the minimum equity to do justice" (Crabb v. Arun DC). In Jennings O had

promised A in exchange for looking after her, her house and contents which were

valued at £435,000 the Court awarded him £200,000.

28. In short, the issue is one of deciding whether to give effect to the expectation of A or

will justice be done by awarding him something less. So the court will consider:

(a) the conduct of O and A;

(b) the quality of O’s assurances;

(c) the extent and nature of O’s assets

(d) the extent of A’s detriment as for instance in Jennings v. Rice. Where

the Court considered what O would have paid had she employed carers

or gone into a nursing home viz Robert Walker LJ’s “cross check".

29. Therefore although the starting point will be A’s expectation which will be the

predominant consideration when satisfying the equity, that said there appears to be a

clear move away from a position where the Court was simply concerned to fulfil A’s

expectation to a more flexible and proportionate approach.

How is the equity to be satisfied?

30. (a) transfer of property or an interest in property – as the cottage in Re Basham; a

house and farm as well as business assets in Gillett v. Holt. The grant of a

lease Griffiths v. Williams [1978] 2 EGLR 121 or an easement Crabb v. Arun

DC [1976] Ch 179.

(b) monetary compensation as in Dodsworth v. Dodsworth (£700 compensation

for improvements but a licence to occupy until it was paid) and Jennings v.

Rice. In Wayling v. Jones as noted above the court ordered the proceeds of

sale of the hotel be transferred to A. In Gillett v. Holt the Court ordered the

transfer of real property but also damages of £100,000 to compensate Mr

Gillett for his exclusion from all the rest of the farming business.

(c) charge for expenditure: a charge or equitable lien may be ordered to cover A’s

expenditure on or value of his improvements.

Does proprietary estoppel still have a role in commercial transactions?

31. In the light of Cobbe it seems unlikely.

32. Lord Neuberger in Thorner stressed the role of equitable estoppel in “the familial and

personal" [97] and in distinguishing Cobbe from the decision in Thorner he identified

two factors [94] to [96].

33. First, the nature of the uncertainty in two cases is entirely different (the appeal in

Thorner had been defended on the basis that the promise to leave “the farm" was

insufficiently certain in that its extent might change) and secondly the relationship

between the parties in Cobbe “was entirely arm’s length and commercial, and the

person raising the estoppel was a highly experienced businessman." In Thorner,

however, the relationship was “familial and personal." [97].

34. However there are two important cases worthy of note: one pre, and the other post

Cobbe. These cases seem to point to the conclusion that where a proprietary estoppel

can be said to amount to a constructive trust, then, it can have a role in a commercial

transaction. The first is a decision of the Court of Appeal in Kinane v Mackie –

Conteh [2005] EWCA Civ 45 and the other Herbert v Doyle and Talati [2008] EWHC

3423 (CH) (Mr Mark Herbert QC sitting as a Deputy Judge of the Chancery


35. Kinane was cited in argument in Cobbe but not referred to in the opinions. The issue

in the appeal was whether a security agreement was enforceable notwithstanding

section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989. The Court

of Appeal held that it was, on the basis of a constructive trust, so it was within section

2(5) of the 1989 Act i.e. a constructive trust which is an exception to the provision

requiring that contracts concerning land have to be in writing.

36. Neuberger LJ (as he then was) in coming to his conclusion relied heavily upon the

decision in Yaxley v Gotts [2000] Ch 174 in which it had been pointed out by Robert

Walker LJ that “there are large areas where the two concepts [proprietary estoppel

and constructive trusts] do not overlap" but that it was well established that “the two

concepts coincide" “in the area of a joint enterprise for the acquisition of land."

37. In Kinane, Mr Kinane advanced a sum of $80,000 on the strength of a letter of 8

November 2001 which he believed, on the Defendant’s assurances, gave him

adequate security i.e. a mortgage or equivalent. The letter was not sufficient for the

purposes of s. 2(1). He pleaded a proprietary estoppel which could also properly

amount to a constructive trust [45], so as to come within s. 2(5) of the 1989 Act.

38. In coming to his conclusion Neuberger LJ specifically reminded himself that [40]:

“When considering that question, one must, I think, avoid regarding the

subsection as an automatically available statutory escape route from the

rigours of section 2(1) of the 1989 Act, simply because fairness appears to

demand it."

Arden LJ in her judgment considers the same points at some length: see paragraphs

[26] to [28].

39. In Herbert v Doyle and Talati the Learned Judge delayed giving judgment in order to

consider the decision of the House of Lords in Cobbe.

40. The facts were as follows: the claimant alleged that under an oral argument, a

dentists’ practice, which owned nine parking spaces in a car park on a property owned

by him, agreed to transfer certain car parking spaces to him, in return for replacement

car parking spaces. On the strength of this agreement the claimant went ahead and

developed his property.

41. Distinguishing Cobbe and following Kinane the Deputy Judge found that if all the

requirements of a proprietary estoppel were found, and that the estoppel can properly

be said to amount to a constructive trust, then the claim will not fail simply because

all the requirements of section 2 were not met. And this despite Lord Scott’s

admittedly obiter view in Cobbe [29]

“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


That said, he seems to have answered his own point a little further on into the


“As I have said, however, statute provides an express exception from

constructive trusts."

42. So the conclusion seems to be even if it is a “commercial" transaction do not give up

on proprietary estoppel but only, that is, if you can succeed on establishing a

constructive trust as well.