#16449 - Estoppel Licences - Property law

ESTOPPEL LICENCES A licensor and his successors in title may, in certain circumstances, be estopped from revoking a licence relating to land, unless the successor is a bona fide purchaser of the legal estate for value without notice. Equity proceeds from the premise that where a licensor induces the licensee into acting in relation to the land by, for example, building on it on the basis that the licence will not be revoked, the licensor is estopped in equity from revoking it in a manner inconsistent with the understanding of the parties. There are two species of estoppel which may be invoked by the licensee: (1) promissory estoppel; (2) proprietary estoppel. The essence of both doctrines is the making of a representation by a person, whether by words or conduct, which causes another party to incur detriment in reliance upon that representation. In these circumstances, the author of the representation will not be permitted to act in a manner inconsistent with that representation. (1) Promissory Estoppel While the decision in Jorden v Money [1854] appeared to limit the doctrine of equitable estoppel to representations of existing fact, the judgment in Hughes v Metropolitan Railway Co. [1877] illustrated that equity would give relief to a person in circumstances where the truth or accuracy of a representation of future intention might be denied in an unconscionable manner. In that case, a landlord sought to forfeit his lease on the basis that his tenant had not carried out repairs as required by the leasehold agreement. The landlord could show that he had served notice on the tenant to conduct the works within six months. He could also establish that the works had not been carried out within this period of time. However, after the service of the notice, the landlord and tenant entered into negotiations for the sale of the property to the tenant, and it was agreed that the repair work could be deferred pending the determination of these negotiations. Subsequently, the negotiations fell through. The question arose as to whether the landlord was entitled to rely upon the strict terms of the leasehold agreement. Lord Cairns observed that where parties who enter into definite contractual terms subsequently "enter upon a course of negotiations which has the effect of leading one of the parties to suppose that strict rights arising under the contract will not be enforced, then the party who would otherwise be entitled to enforce those rights will not be allowed to do so because it would be inequitable having regard to the course of dealings which had taken place between the parties". Thus, Lord Cairns concluded that the landlord was estopped from going back on his promise to extend the time for the completion of the repair work. The decision in Central London Property Trust Ltd v High Trees House Ltd [1947] can be regarded as the seminal moment when the foundations of the doctrine of promissory estoppel were laid. Lord Denning observed that a promise "intended to be binding, intended to be acted on and in fact acted on, is binding so far as the terms properly apply". Accordingly, the plaintiffs were estopped from recovering the arrears in rent during the war years. The reasoning employed by Denning J was relied upon in this jurisdiction in the case of Revenue Commissioners v Moroney [1972]. While the effect of the decision appeared to be farreaching, its scope was circumscribed in the subsequent decision of the English Court of Appeal in Combe v Combe [1951]. Lord Denning stressed that the doctrine of estoppel should not be stretched too far. He pointed out that it does not create new causes of action where none existed before. It solely precludes a party from insisting on his strict legal rights when it would be unjust and inequitable to allow him to do so, having regard to the dealings which have taken place between the parties. As Birkett LJ famously noted, the doctrine of promissory estoppel should be "used as a shield and not a sword". (2) Proprietary Estoppel The basis of the doctrine of proprietary estoppel is to prevent a person from insisting on his strict legal rights where to do so would be inequitable having regard to the dealings which 1