- Published: October 31, 2021
- Updated: October 31, 2021
- University / College: Western Sydney University
- Language: English
- Downloads: 14
This paper is to criticallyanalyse the statement of Lord Scott within Cobbev Yeoman’s Row Management Ltd1 which concerned the operation of the doctrineof proprietary estoppel. Amongst others, Lord Scott within his majority opinionproposed that “… proprietary estoppelcannot be prayed in aid in order to render enforceable an agreement thatstatute has declared to be void.”2As said otherwise, this doctrine cannot be invoked by a claimant due tonon-compliance with statutory controls, specifically the rules contained in theLaw of Property (Miscellaneous Provisions) Act 1989.3This paper will explore the principles of proprietary estoppel and consider therelationship between equity and the statutory controls.
After criticallyanalyzing both perspectives as to whether equity should or should prevail, thispaper will support Lord Scott and conclude that the doctrine should not able torender an enforceable agreement where it does not comply with the statuteregulations within cases of a commercial context. Section 2 of the 19894 Act requires that contractsregarding the creation or transfer of an estate or interest in land mustsatisfy certain provisions. The contract must be in writing, all terms that theparties have expressly agreed must be incorporated into one document andlastly, this contract must be signed by or on behalf of each party to thetransaction. The purpose of thisact is to declare void any agreement purporting to create or dispose of aninterest in land which does not comply with the mandatory formalities. Anexception arises for resulting, implied and constructive trusts according to Section2(5) LPMPA5 however this section doesaccount for proprietary estoppel. Does an agreement for the acquisition of aninterest in land that does not comply with formalities, become enforceablethrough the method of proprietary estoppel? In order to critically evaluatethis, we must firstly explore the nature the doctrine that applies.
Proprietary estoppel is a means of creating an equitable interest withinland6 which may be acquired wherethe correct formalities have not been followed allowing those who have reliedto their own detriment or an assurance made are able to claim to a remedy incourt. An example would be when A encourages B to believe he has a right overA’s land or that A will confer such right on him, and B then, in reliance onthat belief, acts to his detriment and may be entitled to relief – a right in rem. The purpose of this doctrine isbest explained by Lord Denning in Crab vArun7 where the proprietary estoppel is “…to prevent a person frominsisting on his legal right…whether arising under contract, or on his titledeeds, or by statute…when it would be inequitable for him to do so havingregard to the dealings which have taken place between the parties”. This doctrine can operate as both a’sword’ and ‘shield’ where it is coined as a ‘sub-species’ of promissoryestoppel.
8This is to be where the claimant is mistaken to his rights, has costs or conductedsome specific act as a result of the mistake. The owner (defendant) must beaware of both his rights and the claimants mistake. The defendant must haveencouraged the claimants’ expenditure directly or not failing to enforce hisrights. Ramsden vDyson9 is best known as thefoundation of the modern law of proprietary estoppel and is an early interpretationto the doctrine.10In order to succeed in invoking the Ramsden principle, therepresentee has to show the existence of two basic requirements. Firstly, thatthe other party, the representor that is, has raised an expectation which wouldbe such to influence a reasonable man. Secondly, that it would beunconscionable for the expectation not to be fulfilled. However, in the last fewdecades, there has been an increase of cases regarding this doctrine which hasresulted in a wider formulation of requirements of estoppel, suggesting a moreflexible approach.
This moremodern, flexible approach ensuing an effective remedy was presented in Taylor’s Fashions Limited v LiverpoolVictoria Trustees Co Ltd11, founded on the concept ofunconscionability set out by Oliver J. Proprietary estoppel operates on the conceptunconscionable behaviour and can be used to award an interest in land as aremedy where it would be unconscionable for the holder of the legal title todeny the claimant’s entitlement. To summarise, a claimant will be able toestablish an estoppel if they can prove an assurance, reliance and detriment incircumstances in which it would be unconscionable to deny a remedy to theclaimant. In the recent case of Cobbe,the House of Lords emphasized that proprietary estoppel would only exist whereit was clear that the claimant believed he had a certain interest in another’sproperty however it has held here that the claimant only had expectations offurther negotiations to enter into a certain contract, there was no interest inland itself. B claimedhe had reached an agreement with A that, were he to obtain planning permissionin respect of A’s land, A would then sell that land to him. B then successfullyperformed his side of the bargain. However, the alleged agreement had not beenrecorded in writing. Moreover, both A and B had contemplated that a legallybinding contract would only be drawn up at a later date, covering outstandingpoints such as the precise identity of the vendor and purchaser and the timetablefor the performance of their obligations.
To what extent should we allow estoppel to create property rights throughthe back door when there is a clear public policy, expressed in statute, thatgenerally property rights should be created with a certain degree of formality?To critically assess Lord Scott’s statement, it must be questioned, shouldequity prevail over the statutes despite non-compliance with the formalityrules? Should an estoppel have been awarded to Cobbe? There has been uncertainty within this debate along with theconsiderable uncertainty now as to the approach of the courts when faced with aproprietary estoppel claim in which the agreement falls foul of s.2. This paper will first consider the argument that the doctrine ofproprietary estoppel can be utilized to render an agreement enforceable despitethe lack of formalities, thus deviating away from Lord Scott’s judgement in Cobbe. Firstly, it must be noted that the decision held in Cobbe of thenon-compliance with s2 where no equity was held, has been subject to notablecriticism as suggested by Goumer. The judgement has been regarded as a severecurtailment of the doctrine and was believed to have greatly narrowed the scopeof its operation which lead to some commentators believing it was the ‘death ofproprietary estoppel’ within commercial cases. Those in objection with thecontroversial reasoning in Cobbewould argue that equity should prevail as when one party claims a proprietaryright, an estoppel is considered an antidote for formality defects.
12 To support this argument,we must consider the judges in favour of the doctrine for instance Lord Walkerin Cobbe, denoted that the doctrine was’flexible’ where the courts may use when appropriate to prevent injusticecaused by inconstancy of human nature. Therefore, we must analyse case law whichportray instances where the courts have done so. For instance, in the highcourt case of Whittaker v Kinnear13, where the sale of land was concerned, had survived theenactment of s2 LPMPA despiteLord Scott’s dicta which suggested the contrary in Cobbe. Furthermore, some may argue that equity should intervene to give a purchaser equitable rightswhere no document compliant exists. This is demonstrated Yaxley v Gotts where Lord Walkersuggested “the doctrine of estoppel may operate to modify and even counteract theeffect of s. 2 of the 1989 Act.
The circumstances in which s. 2 has to becomplied with are so various, and the scope of the doctrine of estoppel is soflexible, that any general assertion of s.2 as a ‘no go area’ for estoppelwould be unsustainable …
In this case that principle must of course beapplied consistently with the terms in which s. 2 of the 1989 Act has beenenacted, including the saving at the end of s.2(5)” This suggests the courtshere were willing to find an interest in land within equity. That aconstructive trust can be found as an exception however this may have littlesignificance to commercial cases like Cobbe where such trust was not found. Another reasoning as to whythis doctrine should render an agreement enforceable is due to the perceptionthat proprietary estoppel should be available to cure absence of formality when’it would be unconscionable for the defendant to relay on lack of formality todefeat the claimant’. It is evident that there isproportionality in its doctrine which may be applicable in certaincircumstances relating to statutory provisions. It is important to note thatthis doctrine should be distinguished from the doctrine of constructive trustalthough the two concept requires detriment and work on the basis that it wouldbe unconscionable for the legal owner to deny the existence of the beneficialinterest. The doctrine has been noted as’flexible’ but is this sufficient enough to against formality rules? Despite evidence in favour of the allowance of equity, the ultimate stanceof this paper is in agreement with Lord Scott where ‘equity cannot contradictthe statute’.
Lord Scott, in supporting his view, indicated in his obitercomments that the doctrine cannot be used to circumvent s2 1989 act, suggestinga much stricter application of estoppel in the future cases than in earliercases such as Yaxley, a moreaffirmative approach. In Cobbe it wasunnecessary to decide the point because the agreement, being incomplete, felloutside the section. But Lord Scott nonetheless stated (at para.
29) that “Mypresent view, however, is that proprietary estoppel cannot be prayed in aid inorder to render enforceable an agreement that statute has declared to bevoid.”. If this is correct, that could represent a substantial blow to thedoctrine. In Hutchinson v B & DF Limited14 Peter Smith J expressedhis agreement with the obiter comments of Lord Scott, and said that a 5- yearlease term, having failed to comply with the s.
2(1) formalities, could not bemade enforceable through proprietary estoppel. His comments were themselvesobiter because the case for proprietary estoppel had not been made out in otherrespects. But if we consider this point, it is evident that where a term of alease fails with rules, proprietary estoppel cannot be relied upon. Thisupholding the rules and requirements of the statute. Equity should not conflict with the statute.
A reasoning that must beanalysed is due to the principal of public policy. The question of whetherproprietary estoppel can be used to get round section 2 was first raised in theCourt of Appeal in Yaxley. Herethe claimant had entered into an ‘oral’ contract to purchase building, renderedvoid by s2 LPMPA but held a constructive trust interest due to faith of acontract plus money claimant spent. There it was argued, drawing on Halsbury’sLaws (vol 16, para 962, 4th edn reissue), that: “‘The doctrine of estoppel maynot be invoked to render valid a transaction which the legislature has, ongrounds of general public policy, enacted is to be invalid …”. Robert LJidentified what is known as the public policy principle. The use of estoppelcontradicts policy behind legislation by attaching an element of validity to anarrangement that requires to be in a certain form – which parties have failedto observe.
We can see the importance of statutory controls, so why overridethem? If we do not comply with statute, what purpose does the statute hold? Thissuggests that intended dispositions of interests in land that the law requiresto take a certain form e.g. wiring a deed.
May not be enforced by estoppel forthat would be to undermine the legislative purpose and policy (Classic analysiscan be found (Filler, Consideration and form 1941 Colombia Law review 799. In further support of this argument ofpublic policy, we can refer to the privy council case of Kok Hoong Appellant v Leong Cheong Kwneg Mines Ltf15where it was considered to be against the general principle of socialpublic policy to allow an estoppel to effect Parliaments aims. It is evidentthat there is a necessity for the certainty of contracts whereby the statuteshould be obeyed subject to these policy rules. Nevertheless, to place an in depth analysis of whether proprietaryestoppel can override the statute, we must focus on the context in whichestoppel is being claimed, in relation to commercial or domestic situations. Toquestion does proprietary estoppel have relevance to? The case of Thorner v Majorinvolved a successful proprietaryestoppel claim based upon tacit remarks and conduct, where there was a domesticcontext. In its later decision in Thorner v Major, a proprietary estoppel casebased on the claimant working his father’s cousin’s farm for no pay on theexpectation of receiving it on the owner’s death, the Lords were at pains todistinguish the “classic farm and family” proprietary estoppel case, which hasno “contractual connection” from the more commercial, contractual claims suchas in Cobbe.
Lord Neuberger stated at para 99: “I do not consider that section 2has any impact on … a straightforward estoppel claims without anycontractual connection”.
The emphasis in Thorner was on the fact that this hadbeen a gift rather than a contract, which is why s.2 did not apply. Thornerindicates a sharp demarcation between gifts and contracts and possiblycommercial and non-commercial proprietary estoppel claims. In non-commercial situations,the estoppel claim tends not to be dependent on facts suggesting the sort ofagreement requiring formality, so these types of cases are unlikely to beaffected by the decision in Cobbe, as was the case in the “farm and family”case of Thorner (domestic) Itmay be that s.2 can be overcome in the domestic context but the positionremains largely unresolved. However, we must contrast this within commercial contexts like Cobbe. The status of claims ofproprietary estoppel in commercial situations is still somewhat unsettled.
Itappears that such a claim will only succeed if allied to a claim for aconstructive trust. Whether the courts are as flexible as they have been infinding such trusts in the future remains to be seen. The strictness in Cobbemay be due to the commercial/contractual relationship between the parties. If we refer back to Whitteaker – Bean J – suggested a distinction betweencommercial and domestic cases.
It is the nature of party’s dealings; estoppelsucceed in domestic cases. Lord Walker’s speech isvery much in the same mould. After an extensive review of the authorities,his Lordship’s conclusionwas that in both the commercial and family/domestic cases, the requisiteestoppel was establishedbecause “the claimant believed that the assurance on which he or sherelied was binding andirrevocable”: at 66. In the commercial context, however, the “subject tocontract” rubric providedobvious evidence of a high degree of revocability or negotiability, whichwould also be apparent wherethe terms of the agreement had not been written down at all (or only inpart) leaving the contractvague and incomplete pending further negotiation.
Here, the expectation of”persons experienced in theproperty world” would be the same, namely, that matters were still atlarge with neither partylegally bound either at law or in equity: at 91. This highlights theunderlyingtheme in Lord Walker’sspeech that “conscious reliance on honour alone” will not give rise to aproprietary estoppel. To conclude, it is evident that proprietary estoppel is an equitabledoctrine where claimants may be able to rely on when acquiring a property rightin land.
As to the question of whether this doctrine can render an agreementenforcement where there has been non-compliance with s2 still remains to beunsolved, but with the direction of case law, it is evident that casesregarding a commercial context like Cobbe and McFarlane, proprietary estoppelwill fail, however in cases like Thorner where s2 did not apply, a domesticcontext may allow equity to prevail. 1 Cobbev Yeoman’s Row Management Ltd 2008 UKHL 55, 2008 1 WLR 17522ibid 1, para 29, per Lord Scott of Foscote3 Law of Property (Miscellaneous Provisions) Act1989 s24 ibid 45 Section 2(5) LPMPA 19896 (ibid)Land Law Textbook. Ben McFarlanepage 1667 Crab v Arun District Council 1975 EWCA Civ 78 Lord Scottin Cobbe (at para.
14) of proprietary estoppel as a “sub-species” of promissoryestoppel9 Ramsden v Dyson 1866 LR 1 HL 129 10 LordNeuberger ‘The Stuffing of Minerva’s Owl?’ Taxonomy and taxidermy inequity(2009) 68 CLJ 537 541 12 Elizebeth Cooke (Modern Studies in PropertyLaw, Volume 2)13 Whittakerv Kinnear 2011 EWHC 1479 (QB)14 Hutchinson v B & DF Limited 2008 EWHC 2286 (Ch)15 KokHoong Appellant v Leong Cheong Kwneg Mines Ltf 1964 AC 993.