Proprietary estoppel – Representations – Detrimental reliance – Respondents claiming interest in property on basis of proprietary estoppel relying on parents’ assurances – County court allowing claim – Appellant mother appealing – Whether court wrong in law or interpretation of facts in concluding that respondents established proprietary estoppel – Appeal allowed
The appellant and her late husband had been living elsewhere as a family with their two sons, the first respondent (and his wife) and D before they bought a property known as The Meadows, Grove Lane, Retford, in 1997. The respondents moved into the self-contained “caretaker’s end” of the property, and D had a room in the main part of the house.
Neither of the sons made any contribution to the purchase price of the property but the common understanding was that they could all stay there as long as they wanted. The appellant accepted that, all being well, it would pass to the boys, in equal shares. It followed that the boys had a licence to occupy, which was expected to be long-term.
Following the breakdown of her relationship with the respondents, the appellant applied for possession of the property. The respondents counterclaimed for a declaration of their beneficial ownership of or an interest in the property under the principles of constructive trust or proprietary estoppel.
The recorder held that the respondents had failed to prove any constructive trust but that they had proved an equity under the doctrine of proprietary estoppel, as a result of which they should be deemed to have a 27.5% interest in the equity of the property.
The appellant appealed contending, among other things, that there was no sufficient promise or assurance, no detriment, no reliance and no unconscionability about the appellant terminating the respondents’ licence to occupy so that she could sell and move to a smaller property on her own.
Held: The appeal was allowed.
(1) The first and central requirement of the law of proprietary estoppel, so far as the creation of an equity was concerned, was that of encouragement to believe that a person (C) had or would acquire an interest in land: Megarry & Wade: The Law of Real Property (9th ed) at 15-008.
If there was sufficient encouragement in relation to a right or benefit, C must then have acted to his or her detriment in reliance on the belief that C had or would acquire some right over O’s land. In the absence of detriment, it was unlikely to be unconscionable for O to insist on his or her rights. However, detriment was to be viewed broadly and not as a narrow or purely financial concept. Thus, giving up a career opportunity or simply “positioning one’s whole life on the basis of the assurances given and reasonably believed” might suffice: Suggitt v Suggitt [2012] EWCA Civ 1140 considered.
The final requirement, and a necessary ultimate test of whether an equity was raised against O, was whether it was unconscionable for them to act in such a way as to defeat the expectation that C had been encouraged or induced to believe. Unconscionability was assessed at the time at which O sought to defeat the expectation that C claimed was created by O, but the assessment was objective, not subjective.
(2) In the present case, there was no finding of a promise or assurance at any time that the boys should have an interest in the property. Therefore, this was not a case in which the respondents were told that the property was theirs, in part or in whole.
The first assurance, in 1997, was that it was agreed that they could all live there as long as they wanted. There was nothing said about contingencies. But it was generally understood that things might happen later, that meant that they would no longer be living there. It was implicit that the right to reside would be in the long term, rather than the short term, but how long it would last depended on unknown factors. It was therefore not an absolute assurance of entitlement to remain living in the property until the death of the appellant and her husband.
The other assurance relied on, made around 2006, was when the respondents were considering moving out of the property and buying their own house. It was implicit that the respondents would be entitled to continue to live at the property for the foreseeable future, but there was no assurance made that the position would never change, or that the boys would inherit the property.
(3) The recorder’s finding of sufficient detrimental reliance depended on there being an assurance of inheritance. That could only be a finding on the original assurance because there was no assurance in 2006. There was no evidence of any such detriment from 1997 to 2006. The respondents lived in the property for free and saved £30,000 with which they were in a position to pay a substantial deposit on a house.
There was also no evidence that anything to the respondents’ detriment had been done in reliance on the 1997 assurance. The respondents decided to stay put in the property rather than incur the financial detriment of buying a house on mortgage, and they lived there for a further 15 years before the appellant decided that she needed to downsize.
In any event, the 1997 assurance was qualified: it encompassed the possibility that things would happen which meant that the parents would not be living in the property at the end of their lives. That was what had happened.
(4) The recorder considered that it was unconscionable, not for the appellant to sell the property and downsize, but to do so without compensating the respondents. But his view of unconscionability was based solely on his conclusion that for 25 years the respondents had positioned their lives based on an assurance about eventual inheritance of the property. That conclusion was not available on the limited evidence of detrimental reliance.
If any equity arose in favour of the respondents from the limited assurance that was made, that equity had long since been satisfied when, 15 years after the 2006 assurance, the appellant gave notice to the respondents to terminate their rent-free occupation of the property for good reasons.
The recorder should have found that there was insufficient evidence of detrimental reliance, on the limited assurances proved, to give rise to a proprietary interest, and that it was not unconscionable for the appellant to seek possession on six months’ notice without paying compensation to the respondents.
William Hanbury (instructed by Jones & Co Solicitors) appeared for the appellant; Holly Challenger (instructed by Foys Solicitors) appeared for the respondents.
Eileen O’Grady, barrister
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