Where a proprietary estoppel arises, a claimant will obtain personal or property rights. A claimant that has personal rights may be awarded damages or a licence to use land. By contrast, a claimant that has property rights may obtain a freehold or leasehold interest in, or easement over, land.
The lords’ decision in Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55; [2008] 3 EGLR 31; [2008] 35 EG 142; [2008] 36 EG 142 prompted apocalyptic claims that the doctrine of proprietary estoppel had been severely curtailed or even virtually extinguished. None the less, the courts have continued to apply the doctrine in subsequent cases, albeit rather more cautiously than before.
Where a proprietary estoppel arises, a claimant will obtain personal or property rights. A claimant that has personal rights may be awarded damages or a licence to use land. By contrast, a claimant that has property rights may obtain a freehold or leasehold interest in, or easement over, land.
The lords’ decision in Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55; [2008] 3 EGLR 31; [2008] 35 EG 142; [2008] 36 EG 142 prompted apocalyptic claims that the doctrine of proprietary estoppel had been severely curtailed or even virtually extinguished. None the less, the courts have continued to apply the doctrine in subsequent cases, albeit rather more cautiously than before.
The ruling of a differently constituted House of Lords in Thorner v Majors [2009] UKHL 18; [2009] PLSCS 104 examined when the courts should apply the doctrine and proves that proprietary estoppel is alive and well. The decision confirms that the doctrine does not apply to claims that are contractual in nature but that it still applies to claims without any contractual connection.
Lord Neuberger emphasised that, in Cobbe, the claimant sought to use proprietary estoppel to sidestep the requirements of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (which requires contracts relating to land to be made in writing). He stressed the distinction between “the commercial context” and “the domestic or family context” and ruled that claims in the domestic context are different to commercial claims.
Consequently, the lords upheld a claim to a farm based upon oblique assurances (which both parties had none the less understood as promises) that the claimant would inherit on the death of his uncle. The court ruled that it had been reasonable for the claimant to rely upon his uncle’s assurances that he would leave the farm to his nephew and that the latter had relied upon those assurances to his detriment. The claimant had worked long hours on the farm for almost 30 years without pay and it would be unconscionable were his uncle’s promises not to be kept.
The key to understanding the different outcomes in these cases lies in the difference in the parties’ relationships. In Cobbe, the relationship was entirely at arm’s length and commercial and the claimant was a highly experienced businessman. It was reasonable to expect the parties to have entered into a formal contract. However, they consciously chose not to do so. Their agreement did not comply with the statutory formalities, and was incomplete, and each party knew that neither was legally bound. By contrast, in Thorner, the relationship was familial and personal. Both parties lacked commercial experience and they had never contemplated entering into a formal contract as to the future of the farm. Indeed, it would not be reasonable to have expected them to do so.
The decision is an extremely useful exposition of the current law. However, Cobbe and Thorner fall at different ends of the legal spectrum. Other cases, involving inexperienced businessmen who operate outside their areas of expertise (and possibly without the benefit of legal advice), may be more difficult to categorise.
Allyson Colby is a property law consultant
