Title to land – Proprietary estoppel – Section 2 of Law of Property (Miscellaneous Provisions) Act 1989 – Claimant transferring interest in jointly-owned property to brother relying on parents’ promise of inheriting property – Claimant seeking to enforce alleged promise – Whether claimant acting in reliance on promise to his detriment – Claim allowed
The claimant and his brother were the two sons of the defendants, farmers who owned and worked a farm in Chudleigh, Devon, comprising 101 acres of land. The farm was later split between the claimant and his brother, with the defendants retaining partial ownership. It was subsequently sold for £830,000.
The claimant sought a declaration that the defendants held the sale proceeds on trust for him absolutely. He contended that they had promised that, if he transferred to his brother his half share in another property that the brothers jointly owned, he would receive the whole of the farm after the first defendant’s death. The claimant had made that transfer to his brother and sought to enforce the promise. The defendants denied making the promise and contended that, even if they had, it had been satisfied by gifts of land and the provision of financial support to the claimant.
The principal issues were whether: (i) the principle of promissory estoppel or proprietary estoppel applied; (ii) the claim was barred by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, due to the absence of formalities required by the Act to validate agreements for the sale of land; (iii) the recognition of a proprietary estoppel would contradict or stultify the operation and purpose of section 2; and (iv) the defendants should be estopped from going back on their promise.
Held: The claim was allowed.
(1) Proprietary estoppel was the appropriate doctrine where a claimant sought to enforce a permanent right over property as the result of a representation. Equity assisted on the basis that it would be unconscionable for a party to go back on a representation on which the representee had relied to his detriment. The detrimental reliance on the representation made it irrevocable. Where the representations were of future benefits, and subject to qualification on account of unforeseen future events, the remedy was the imposition of a remedial constructive trust. Equity was sufficiently flexible to allow a remedy in cases where there was a promise, acted on to the detriment of the representee, even where the promise might be said to be conditional on future events. On the facts of the present case, a constructive trust arose by virtue of the proprietary estoppel: Gillett v Holt [2001] Ch 210 and Thorner v Major [2009] 1 WLR 776 applied.
(2) Section 2(5) of the 1989 Act contained an express saving provision for constructive trusts. Where a remedy was sufficiently distinct from the enforcement of a contractual agreement, then section 2 was not a bar. A promise, which was otherwise unenforceable because of section 2, could be enforceable on the basis of a constructive trust by virtue of the facts which gave rise to a proprietary estoppel. The court had to take a principled approach to remedies in this area; equity could provide a remedy based either on the expectations of the parties, where the mutual understanding was clear, or on some more limited remedy where the expectations were uncertain or extravagant or out of all proportion to the detriment suffered.
(3) The court should look at all the circumstances to decide how to achieve the minimum equity required to do justice, adopting a cautious approach: Yaxley v Gotts [2000] Ch 162, Gillett, Jennings v Rice [2002] EWCA Civ 159 and Thorner applied. There was a wide range of possible relief and it was not necessarily a question of providing compensation for either the detriment or the reliance or the expectation. It might be necessary to exercise a wide judgmental discretion. Proportionality lay at the heart of the doctrine of promissory estoppel. The court had to take into account whether, in all the circumstances, the promise and the benefit were proportionate to the detriment and the remedy had also to be proportionate: Gillett and Henry v Henry [2010] 1 All ER 988 applied.
(4) On the facts of the present case, the claimant had suffered a detriment by giving up half the jointly-owned property in reliance on the promise that he would receive, in the future, a property worth substantially more. It would be inequitable and unjust to allow the defendants to go back on that promise. What the claimant had actually received was insufficient to amount to a satisfaction of the equity which arose. On the evidence, the appropriate relief to achieve the minimum equity to do justice to the claimant was to award him the entire beneficial interest in the property. The defendants would be ordered to execute a declaration of trust of the property in favour of the claimant, subject to the right of the defendants, and in due course the survivor, to live there as long as they wished or required. If the need arose for the property to be sold, the claimant had to agree to it. The claimant’s interest would then be in any alternative accommodation which might be purchased and in the balance of any sale proceeds.
Andrew Willetts (instructed by Gard & Co, of Plymouth) appeared for the claimant; Guy Adams (instructed by WBW Solicitors LLP, of Exeter) appeared for the defendants.
Eileen O’Grady, barrister
