Proprietary estoppel cases are on the rise. This article outlines the basic principle of proprietary estoppel and some practical considerations to guard against such claims.
The classic scenario in which a proprietary estoppel claim may arise is where:
- a landowning parent promises their adult child that, if they work on the family farm until the parent’s death for little or no pay, that farm will be left to the child.
- the child relies on this promise and gives up the opportunity of employment elsewhere to work for their parent.
- upon death, the parent goes back on their promise and leaves the farm to a different child or a third party.
Proprietary estoppel can allow the court to step in and stop the parent from going back on their promise if the circumstances are such that it would be unconscionable for the parent to fail to uphold their end of the bargain.
How to bring a successful claim?
In order to bring a successful proprietary estoppel claim, three essential elements must be present:
- Assurance – There must have been a representation or assurance which created an expectation on the part of the claimant that they were or would become entitled to a right or interest in the defendant’s land.
- Reliance – The claimant must be able to demonstrate reliance on that promise.
- Detriment – The claimant must be able to demonstrate that they acted to their detriment.
Once a claimant has satisfied these tests and established that it would be unconscionable for them to be given no remedy at all, the court will consider how to remedy that unconscionability. The court has wide jurisdiction with respect to the remedy. The remedy given will depend on the facts of each case but they can be extremely serious for the legal owner or their estate. Options include: (a) denying the legal owner's right to possession of the land, (b) award of compensation, (c) grant of a lease and (d) monetary compensation.
Practical considerations to guard against claims
Proprietary estoppel remains an active area of law. Thanks to rising land values and a number of recent high profile cases, we have seen an increase in proprietary estoppel cases in the last 18 months, particularly in the context of family farms and businesses.
This will no doubt be of concern to many landowners as proprietary estoppel claims often lead to adversarial, lengthy and very bitter litigation.
- The key to guarding against proprietary estoppel claims is not to make promises or create expectations in circumstances where you do not intend to (or anticipate that you may not) fulfil your side of the bargain. This includes promises to leave property on death as proprietary estoppel represents an inroad into the general principle in England and Wales that a person can leave their estate to whomever they wish.
- Not all proprietary estoppel claims relate to land but a lot of them do. In order to protect an estate from a proprietary estoppel claim, it is important that owners of assets consider their succession planning at an early stage. Where possible, it is best to include all family members with any expectation of benefiting from the estates in that decision making process and to make sure that decisions are taken openly.
- Making a Will which clearly addresses succession and a letter of wishes which explains the thinking behind that succession can also offer protection.