Someone recently bought our

students are currently browsing our notes.

X

Proprietary And Equitable Estoppel Notes

Law Notes > Property, Equity and Trusts 1 Notes

This is an extract of our Proprietary And Equitable Estoppel document, which we sell as part of our Property, Equity and Trusts 1 Notes collection written by the top tier of University Of New South Wales students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Property, Equity and Trusts 1 Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

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; o

Though they are both based on unconscionability they developed as separate lines of authority but the relationship between them isn't clearly defined

o

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 o

*

*

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. o

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

o

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. o

Held at first instance: Conduct was so outrageous that it terminated their equitable right to remain

o

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

o

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?
o

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)

o

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

o

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

o

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.

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Facts: At the end 1993 W was negotiating with M about the lease of their property incl. Demolition of a building. The lease was forwarded to E, M's solicitor who suggested amendments. On 7/11 E told W's solicitor R that it was essential for the lease to be concluded quickly because they would be unable to organize supplies/labour otherwise. E said M didn't want to demolish the newer brick part of the building until it was clear there were no problems with the lease. R said he received instructions from W that the amendments were acceptable and would send the amended lease to them - this was sent on the day with a letter saying he would let E know the next day if any difficulties existed. On 11/11 E forwarded to R the lease executed by M and shortly after M began demolishing the building. On 21/11 W had second thoughts telling them to 'go slow' processing the documents. On 10/12 they were aware the work had begun and on 19/1 E was informed that W didn't intend to go with the lease - but at this stage the building was already 50% complete. Between 11/11 and the signing of the lease by M and sending to R and 19/2, R didn't communicate with E and retained the signed lease.

M brought an action seeking a declaration of an enforceable agreement and an order for SP or damages. They were unsuccessful but appealed to the HCA. The HCA had to consider whether M was induced to believe a contract had come into existence or that they believed it would come into existence - on the latter view the problem was that common law estoppel only applied to representations of fact and not representations of future conduct. Also proprietary estoppel was inapplicable since W had no interest in the property.

Mason CJ and Wilson J: Their honours iterated that since the case wasn't brought up on the basis of common law estoppel by representation; the question as to an assumption concerning future events didn't arise. They then considered the features of promissory estoppel which was brought up in this case which definitely extends to future conduct

*

*

The doctrine was initially confined to precluding departure from a representation by a person in a pre-existing contractual relationship but the same was held to apply to enforce noncontractual rights (High Trees) o

This is consistent with estoppel being a defensive equity; relied upon as a shield not a sword, 'part of a cause of action, but not a cause of action in itself' (Denning in Combe v Combe) - the idea behind this is that it would otherwise outflank the laws of contract and dispense with the doctrine of consideration

o

This can also be argued in logic - in one case the estoppel alters the existing legal relationship but in the other it creates a new one

Their honours considered a harmony between the ideas of promissory estoppel and the

Buy the full version of these notes or essay plans and more in our Property, Equity and Trusts 1 Notes.