#7345 - Proprietary And Equitable Estoppel

As it underpins constructive trust, the concept of unconscionability underpins the doctrine of proprietary estoppel; or the ‘doctrine of equity by acquiescence;
- Though they are both based on unconscionability they developed as separate lines of authority but the relationship between them isn’t clearly defined
- Sir Browne_Wilkinson suggested that proprietary estoppel cases can assist in determining whether a constructive trust should be imposed – the two principles have developed without cross-fertilization between them, but they rest on the same foundation and have on all other matters reached the same conclusion

Inward v Baker (1965) 2 QB 29

Facts: Mr Baker was the sole owner of land and his son was thinking of erecting a bungalow but couldn’t afford the land. His father said to build the bungalow on his land and so he did with his own labour and a lot of the expenses (which his father also pitched in, roughly 50/50). When he was finished he lived there and his father visited him from time to time. His father’s will left everything to his executrix (his wife who had 2 children’s that were trustees under the will) who initially didn’t take steps to get him out of the house (in fact visiting him) but later took proceedings to get him out. Her two children continued the proceedings as trustees.

Lord Denning MR:

Cited authorities (incl Dillwyn v Llewelyn) for the proposition that:

“if the owner of land requests/allows another to expend money on the land under an expectation created or encouraged by the landlord that he will be able to remain there, that raises an equity in the licensee such as to entitle him to stay. He has a license coupled with an equity”

It was submitted that this only applied where there was some precise legal term for the stay – but Plimmer v Wellington Corp makes it clear that the interest doesn't fail because the time isn’t expressly indicated – one must look to the circumstances of the case to see whether there is an equity arising from expenditure

All that is necessary is that the licensee should, with request/encouragement of the landlord, spend money on the xpectation of being allowed to stay here; the court won’t allow this expectation to be defeated where it would be inequitable to do so

Here it was clear the father allowed such an expectation that the bungalow was to be his home for life as long as he wished to remain. The father could not in light of this equity then turned the son out
Though it was put forth the possibility of a purchaser – this fails since a purchaser taking with notice would be bound by the equity. The plaintiffs, as successors in title as equally bound by this equity.

Dillwyn v Llewelyn – plaintiff’s father devises a real estate on trust for his widow for life, remainder on trust for plaintiff for life and remainder on certain other trusts. Father later expressed a wish that his son should live nearby and thus offered a farm to build a house on. He signed a memorandum stating he presented the farm to the son to build a house but the legal fee simple was never conveyed. With the father’s knowledge/approval a house built for 14k. On the father’s death the plaintiff brought action seeking a declaration of his rights and conveyance of the fee simple
- Held: If A puts B into possession of land to build a house on it, and on the strength of it with A’s knowledge he expends money to do so; the donee acquires a right from this transaction to call on the donor to perform the contract and complete the imperfect donation.
Olsson v Dyson (acknowledges Dilywn but doesn't apply) – Dyson purported to assign a wife a debt owed to him by a company but didn’t satisfy the legal requirements for its assignment. After death his executors brought action against the company for the debt + interest.
- Argued: The executors argued that the assignment was ineffective at law and equity could intervene to prefect the gift. Wife says she is entitled to it – says she abstained from taking testators’ family maintenance proceedings in reliance on the assignment of the debt being valid and Dilwyn applying
- Held: Dilwyn doesn't apply since there was no evidence the testator adverted to the possibility that the wife would refrain from making a testators’ family maintenance application after his death, or act to her prejudice in reliance on the effectiveness of the gift. He didn’t encourage her to act in a manner prejudicial to her interest
Williams’s v State – defendants earlier held to have an ‘equitable license for life’ in a cottage. Judge applies Inwards v Baker. Cottage later sold to plaintiff who took notice of the interest. Defendants deliberately harassed defendants. Plaintiffs commence proceedings for possession.
- Held at first instance: Conduct was so outrageous that it terminated their equitable right to remain
- Held (Lord Denning): In extreme cases the conduct of the holder of an equity can be sufficient to end the equity but the remedy for bad conduct should usually be an action for an injunction or damages
- Held (Goff, Gumming, Bruce LJJ): If legal owner was attempting to assert his legal rights and it was alleged that equity restrained him from doing so, the conduct of the holder of the alleged equity can be taken into account by the court in deciding whether to exercise the discretion in his favour.
  - But here the equity was already acquired before the bad conduct and hence it cant be revoked but the conduct can give rise to damage for trespass/nuisance etc.

Crabb v Arun District Council (1975) 3 All ER 865

Facts: Defendant council owned a road runnig between the plaintiff and their own land. The plaintiff had access at a point (A) on the road. He decided to divide his land, requiring a second point of access to allow egress from both divisions. A meeting took place between the plaintiff and the defendant’s representative and it was understood that he would have additional access at another point (B). No written agreement was entered into and no payments were made. The defendant erected a fence along the road with a fence at A and B and then sold the acre that enjoyed access at A. He reserved rights in over that lot in favour of the lot he retained believing he already had access at B but the council fenced off B and refused to open it unless he pay 3000 pounds. The plaintiff commenced proceedings for a declaration that he was entitled to access the road at B and for an injunction stopping the defendant interfering with this enjoyment.

Lord Denning MR:

Remarked that he was shaken on the suggestion of estoppel since they don’t generally give rise to a cause of action – some do, that is proprietary estoppel where one’s title to property is held to be limited and new rights are created because of that persons conduct, raising an estoppel protected by courts and giving a cause of action.

The question posed was when could dealings preclude one from insisting their strict legal rights:

For a binding contract that his strict legal rights wouldn’t be enforced – equity would hold him to it
If he makes a promise (or by his words or conduct leads another person to believe) that he will not insist upon his strict legal rights, intending that the person will act on it, and he does act upon it – equity will not allow him to go back on that promise.
The question is then – were the circumstances such as to raise an equity in the plaintiff’s favour?
- The defendants led the plaintiff to believe he would be granted a right of access at B; the defendant’s representative agreeing as much (he dispensed with the agency issue)
- Though there was no ‘definite assurance’ (in that there were ‘further processes’ to be undertaken – the subsequent conduct of the parties was such as to dispense with them. That is by allowing them to put up the gates at considerable expense, they were led to believe that they should have access at point B without further issues
- Furthermore it isn’t required that the defendant know the plaintiff was selling the portion without reserving a right of access for the back – that they knew he intended to sell them separately was enough. They knew of this and did nothing to disabuse but confirmed in by erecting gates
IT would be inequitable that the council insist on their strict legal rule. If he moved at once for an injunction it should have been granted. But equity is flexible in these cases; hence Denning declared that a right of access was to be given at point B without paying of compensation (since his land was rendered sterile for 5-6 years and he was unable to deal with it in the interim).

Silovi v Barbaro – Barbaros granted a 10year lease over part of their land and a license over another to wieners of a plant nursery. The lease was contrary to the Local Government Act which prohibited leases exceeding 5 years unless the land was included in an approved subdivision hence the lease couldn’t be registered. The lessees spent $100k+ on the land. Later Barbaros contracted to sell the land to Silovi who was aware of the lessees arrangement and their expenditure
- Held: In the circumstances it would be unconscionable for Barbaros to deny the plaintiffs the right to use the land or to act in such a way as to enable it to be overridden. This was an equity coupled with an equitable profit which took priority of Silovi’s later equitable interest. Powell J suggested that a constructive trust could also have been established.

#7345 - Proprietary And Equitable Estoppel - Property, Equity and Trusts 1

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