Proprietary Estoppel - Irish Equity

Proprietary Estoppel

• Re Basham (Ch)

  • 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 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.

• CF v JDF (SC)

  • In a dispute relating to the respondent's assets it was claimed that he gained an interest in his father's stud farm through proprietary estoppel.

  • Held that, in order to establish estoppel there must actually be a promise or at least a reasonably clear direct representation or inducement of some kind – it is not sufficient to establish that something was permitted to happen (i.e. in this case the respondent's father had permitted him to make improvements to the farm.)

• Gillett v Holt

  • There must be a sufficient causal link between reliance on the assurance and the detriment suffered.

  • It is to be judged at the moment the person who gave the assurance seeks to go back on it.

  • The gravity of the detriment should be such that would render it unjust or inequitable to allow the assurance be disregarded.

  • The detriment need not be of a quantifiable financial nature as long as it is substantial – though in practical terms, detriment not of this nature may be difficult to prove.

• Bracken v Byrne (HC)

  • A case where the detriment suffered was too insubstantial.

  • Plaintiff contended that she had entered into an arrangement with the defendant, whereby the she would be given a plot of land and allowed to build a house.

  • Plaintiff sought to assert proprietary estoppel after this was refused.

  • Held that, any detriment that had been suffered was insubstantial – all plaintiff had done was make a planning application and hold a meeting with a builder.

• McDonagh v Denton (HC)

  • The plaintiff was looking for a declaration that the defendants were estopped from asserting that they owned a disputed plot of land.

  • The plaintiff's solicitor had made it clear to the defendants that the plaintiff believed himself to the landowner and they had not responded.

  • Held that, any expenditure in this case (consisting of minor repairs) was insufficient to establish detriment.

  • The plaintiff, believing that he owned the land, entered a contract for sale and was later sued for specific performance after the doubts about his title.

  • This was held to be sufficiently detrimental.

Imperfect gifts

• Dillwyn v Llewelyn

  • A son built a house on his father's land with his father's consent and an informal memo was drawn up establishing that the father's intention was to transfer the land to his son.

  • Held that, the father's intention to convey the land should be carried into effect by the court.

  • All the ARD elements were present – the only problem was that the court was perfecting a gift.

  • Explanation: voluntary agreements will not be completed by equity, it was rather the subsequent acts of the donor that grounded the claim.

• Cullen v Cullen (HC)

  • Kenny J stated that a person claiming under a voluntary agreement will not be assisted by a court of equity, but subsequent acts of the donor may give the donee a ground of claim which he did not acquire from the original gift.

• Pascoe v Turner (CA)

  • A variety of gifts may arise from proprietary estoppel – not just a fee simple, but also lesser interests reflecting the plaintiff's expectations and detriment.

  • The parties had lived together for some time in a house owned by the plaintiff.

  • They split up and the plaintiff assured the defendant that she could remain and it would belong to her.

  • She then carried out substantial repairs to the property, but the plaintiff later sued for possession of the property.

  • Court refused to give the plaintiff possession and found the defendant entitled to a fee simple interest in the land.

• Smith v Halpin (HC)

  • The plaintiff had been assured by his father that he could build a house on a site on his father's property.

  • The son, at the father's urging, eventually built an extension on to the father's house instead.

  • The father then left the entire house to his wife for her life and thereafter to his daughter.

  • The son sued for a reversionary interest in the property after his mother's death.

  • Geoghegan J referred to Dillwyn and Pascoe

  • This was an imperfect gift but the father's conduct necessitated the court upholding the claim.

  • The father clearly guaranteed the property to the son and the expenditure made, resulted in it being inequitable to deny the claim.

Common expectation

• Ramsden v Dyson (HL)

  • Lord Kingsdown: Where there is a verbal agreement or an expectation created or encouraged by the landlord of property, that a certain individual shall have an interest in the property, and this individual takes possession of the property and expends money on it, equity will compel the landlord to give effect to such promise or expectation.

  • This will apply even where the agreement or expectation is too uncertain to enforce under the law of contract.

  • Where the tenant improves the land without encouragement or inducement from the landlord, he will not have gained an interest in the land.

• Plimmer v Mayor of Wellington (PC)

  • Ramsden followed – the equity arising from expenditure on land need not fail merely on the ground that the interest to be secured has not been expressly indicated.

  • The court must look to the circumstances of each case to decide in what way the equity may be satisfied.

• Inwards v Baker (CA)

  • In this case, the defendant, having represented to the plaintiff that he could have the house at issue as his home, was estopped from removing him from the property.

• AG of Hong Kong v Humphrey's Estate (PC)

  • The plaintiff company allowed the defendants (government of Hong Kong) to enter and spend money on flats belonging to them, on the basis that they would acquire them in exchange for a Crown lease of some development property.

  • There was no concluded contract but a non-contractual agreement covered the basic terms, while expressly excluding any legal effect.

  • Before the contract could be properly executed, the plaintiffs sought to remove the defendants from the property.

  • Held that, as the evidence plainly showed that the the defendants neither expressly or by implication indicated that they had surrendered their right to withdraw from the agreement, they could not claim that the plaintiffs created or encouraged them to expect to retain possession.

• Haughan v Rutledge (HC)

  • The plaintiff leased the defendants' lands for the purposes of building a racetrack for horse racing.

  • There was an interruption to the performance of the agreement when the County Council demanded planning permission be acquired and subsequent to this the defendants refused to afford the plaintiffs a further lease.

  • Held that, in order for the plaintiffs to establish an equitable interest in the land, they had to show that they had acted to their detriment in the belief that they owned, or in the expectation that they would own, a sufficient interest in the lands to justify such action, which belief was encouraged by the property owner.

  • The plaintiffs had not shown that they had built the track in the belief that they would obtain a lease of the lands and there was no agreement or representation on the particulars of their retaining the land if the work was completed.

Unilateral mistake

• Ramsden v Dyson (HL)

  • If a stranger builds on the land of another, believing it to be his own and the landowner perceives his mistake, leaves him to persevere in his error, equity will not allow the landowner to assert his title to the land.

• O'Callaghan v Ballincollig Holdings (HC)

  • Ramsden v Dyson approved – the plaintiffs had expended money in this case knowing that the defendants were entitled to the reversion.

• Wilmott v Barber (Ch)

  • A man is not deprived of his legal rights unless he has acted in some way that would make it fraudulent for him to rely on those rights.

  • This kind of fraud must meet three criteria:

    • the plaintiff must have made some mistake as to his legal rights

    • the plaintiff must have expended money or done some act on the faith of this mistake belief

    • the defendant must know of the existence of his own right which is inconsistent with the belief of the plaintiff

    • the defendant must know of the plaintiff's mistaken beliefs

    • the defendant must have encouraged the plaintiff directly or by abstaining from asserting his own legal right

A move towards a test of unconscionability

• Taylor's Fashions v Victoria Trustees Co. (Ch)

  • The test Ramsden v Dyson can be more broadly drawn as a principle which seeks to ascertain whether it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, has caused another party to assume to his detriment – knowledge of the circumstances is just one factor to take into account in assessing whether the behaviour was unconscionable.

• Lim Teng Huan v Ang Swee Chuan (PC)

  • The defendant in a counterclaim against the plaintiff claimed that he was sole beneficial owner of land, which was part owned by the plaintiff and on which he had been permitted to build a house.

  • Taylor's Fashions applied.

  • Held that, as the plaintiff had represented to the defendant that, upon payment of certain compensation, that the latter would be entitled to the entire beneficial interest in the land and the defendant had expended money on the...