proprietary estoppel

To establish a case for proprietary estoppel, the claimant must show that the defendant takes advantage of the claimant in a manner that is unconscionable, unjust or inequitable. The application of the doctrine requires the court consideration of all the circumstances of the case to ascertain whether it would be unconscionable for the defendant to deny that intentionally or unintentionally to accept a change of position. Proprietary estoppel acts to negative or take away rights that a party otherwise would have had and thus is a source of legal obligations (and not a mere rule of evidence).

Operation of Proprietary Estoppel

Proprietary estoppel applies in situations where the claimant has (1) made a mistake as to the extent of its legal rights in property, (2) where the claimant has been promised legal rights in property. Broadly speaking, these are concepts of detrimental reliance. The claimant must form the requisite belief or expectation and the defendant, who owned the property, must have either encouraged or induced that belief or acquiesced to it.

The doctrine may operate in appropriate circumstances to enforce:

1. non-contractual promises; or
2. an understanding of a shared expectation as to the outcome of a transaction, or some other basis of the relationship.

In addition, where a defendant leads a claimant to believe that the claimant would have a right over his property as a result of a transaction, the relevant words may be a statement of fact or a promise .

This is a flexible doctrine that focuses on the individual circumstances of the case. The minimum remedy will be awarded to avoid the effect of the detriment suffered by the change of position. The court maintains a wide remedial discretion in granting remedies, which includes prevention of a party asserting their strict legal rights.

Representation

The claimant must show that a representation of present fact or belief as to future entitlement (and silence may suffice) was made that he was presently entitled, or would be entitled to property in the future. As with other forms of estoppel the person looking to make out a case of proprietary estoppel must show that he relied on the representation, and the defendant acquiesced to or encouraged the statement or belief. So, where the claimant has acted in reliance of statement or belief that he has or will be granted rights over property, and the owner of that property acquiesces or induces that belief or expectation, the estoppel will be made out. Passive acquiescence where the representor knew of the mistake on the part of the claimant suffices for the purposes of silence. Mere delay however does not establish acquiescence. A defendant may have encouraged acts in reliance of the belief or solidify the belief in the mind of the claimant.

The parties must have a relationship in existence at the time of the representation and the statement may be of future intention, for instance to convey ownership or grant an interest in property.

Reliance

The claimant must show that it relied upon the representation with a genuine expectation that it would be fulfilled, changed his position and acted differently to from the way in which he otherwise would have done. An act of reliance discharges the requirements provided that the claimant suffers detriment in the event of a withdrawal of the representation on the part of the defendant. This provides the causation required for the court to act on the unconscionable conduct on the part of the defendant.

The acts of the claimant must be in reliance of the representation and not merely connected to it. The statement may be made to be calculated to influence the conduct of the claimant or tend to induce the behaviour. Mere intention is influence is most frequently inadequate as the causative link between representation made and the conduct of the claimant is not sufficiently material. That is to say, if the claimant would have done the acts in the absence of the representation, he has not relied on the representation. Whether or not the causative link exists may be determined by reference to statutory or contractual duties that underpin the relationship between the parties – if it is the case that the claimant was obliged to act in the manner that he did pursuant to obligations under a contract, it cannot be said that he would not have acted as he did.

A contract is not required to give rise the application of the estoppel, however a statement that the relationship is not intended to affect the legal relationship will in all likelihood provide a defence.

Detriment

The detriment suffered by a claimant is the loss incurred as a result of resiling from the representation – the change of position by the defendant. The change of position need not be dramatic in itself. It is the detriment suffered by the claimant that is the legally protectable interest. A mere promise is insufficient upon which to base a claim – more than de minimus detriment or some further detriment must be suffered as a result of the change of position.

The change of position may result from (1) positive acts or omissions to act, where an representation indicated that such would take place (2) a failure to act to protect legal interests, or (3) something of value is lost. Money dos not need to be spent and there is no requirement that the defendant has been unjust enriched.

Remedies

The maximum remedy in proprietary estoppel is that which would have been conveyed if the expectation were realised. Appropriate remedies may be granted with reference to the expectation to reflect the rights that the claimant expected or was led to believe they were entitled. An alternative approach lies in granting such relief so as to avoid the detriment suffered by the change of position to protect against the harm suffered. This is the usual approach of Courts of Equity, namely to grant the minimum equity required to do justice between the parties. This may take the form of a constructive trust over the relevant property, injunctions and equitable damages. Orders may be of transitory effect (such as a reversionary interest in property) or permanent transfer of property.