Proprietary estoppel is a legal principle that allows the courts to deal fairly with disputes that arise after someone’s failure to adhere to a promise in respect of land or property. An example is where an individual was promised something in a Will, but when the time comes, they do not receive it. There are certain criteria which must be proved in order for a proprietary estoppel claim to succeed, which are explored below.
Summary
This article covers:
- The Meaning of Proprietary Estoppel
- Key Elements of a Proprietary Estoppel Claim
- The Difference Between Promissory Estoppel and Proprietary Estoppel
- The Difference Between Proprietary Estoppel UK and Constructive Trust
- How Might Proprietary Estoppel Affect You?
- Legal Requirements and Case Law
- Remedies for Proprietary Estoppel
- What is Meant by ‘Reliance’ in a Proprietary Estoppel Claim?
- What is Meant by ‘Detriment’ in a Proprietary Estoppel Claim?
- What is the Time Limit for Proprietary Estoppel Claims?
- Cases in the UK
- Cost of a Proprietary Estoppel Claim
- Contact Our Contentious Probate Solicitors
- FAQ
The Meaning of Proprietary Estoppel
Proprietary estoppel is when someone is prevented from going back on a promise or assurance made in respect of land or property, when the person in receipt of the promise relied on it to their detriment.
Key Elements of a Proprietary Estoppel Claim
For a proprietary estoppel claim to be successful, the claimant needs to establish the following:
- A clear promise or assurance, or the reasonable belief of the claimant that they would receive land or property, where the owner did nothing to change this belief
- Reliance by the claimant on the promise, where the reliance is reasonable
- The claimant suffered a detriment because they relied on the promise, for example, they worked for very little money, believing that a business would one day be theirs
- It would be unconscionable not to grant the claimant’s request
Common Scenarios for Proprietary Estoppel
A common example of proprietary estoppel is where a farmer promises his son that one day the farm will be his. In return, the son does not pursue or train for any other career, but spends his years working on the farm for a low wage, on the understanding that one day he will own it.
If the farmer goes back on his promise in later years, the son would have a clear proprietary estoppel claim. He received a promise, his reliance on the promise was reasonable, and he suffered a detriment as a result, because he worked for a low wage and did not look for a career outside of the farm. It would be unconscionable not to compensate the son for his years of service.
Similarly, if a business owner made a promise to pass it on to a relative, then reneged on this, they could have a valid claim if the relative relied on the promise and put themselves in a less advantageous position.
The Difference Between Promissory Estoppel and Proprietary Estoppel
Proprietary estoppel relates to promises or assurances made in respect of land or property, while promissory estoppel relates to promises made within a contract, where a binding legal relationship exists.
No legal relationship is required for a proprietary estoppel claim to succeed.
An example of promissory estoppel is where someone agrees to accept a lower payment than that specified in a contract. Where the other party relies on this agreement, the person making the offer cannot later renege on it and take legal action to recover the full amount.
The Difference Between Proprietary Estoppel UK and Constructive Trust
Proprietary estoppel relies on one party making a promise or assurance to another party, while a constructive trust is a common intention to share a property or asset.
In a successful proprietary estoppel claim, the courts will consider what a fair remedy might be and may award compensation. In a successful constructive trust case, the courts will look at the parties’ understanding of the way the asset was to be held and make a ruling that states each party’s legal share, but does not award any compensation.
How Might Proprietary Estoppel Affect You?
If you have been assured that you will receive something, such as a share in a business, and you have relied on that assurance to your detriment, you could have a valid proprietary estoppel claim if the individual goes back on that assurance. It does not need to be in a Will situation. Someone may simply tell you that they no longer intend to give you a share that you were previously promised.
Legal Requirements and Case Law
In the case of Gillett v Holt [2000], a farmer with no clear heirs made promises to one of his farm managers, Mr Gillett. Gillett worked for the farmer, Mr Holt, for 38 years for low pay, and allowed Holt to persuade him not to attend agricultural college.
Gillett assisted Holt with acquisitions of the assets in dispute, and Holt had told Gillett on seven separate occasions that ‘all this will be yours’ in the future. Ultimately, Holt tried to remove Gillett and his wife from the property on the farm where they lived, and did not allow Gillett an interest in the land he had promised him.
The Court of Appeal said that Gillett was entitled to a share. It found:
- Holt had given a clear assurance to Gillett that he would inherit
- Gillett had relied on Holt’s assurances to his substantial detriment, as he had dedicated his life to the farm for only low pay
- It was fair and equitable to award Gillett the farmhouse, some land, and £100,000 in compensation
The later case of Thorner v Major [2009] found that an assurance can be implied by conduct, as well as by words. The claimant had worked on his cousin’s farm for nearly 30 years without pay, relying on assurances that he would inherit it. The decades of this conduct supported the assurances, and the proprietary estoppel claim succeeded.
Remedies for Proprietary Estoppel
The court has the discretion to award the remedy it believes to be equitable, looking at all of the circumstances of the case, including the level of detriment the claimant has suffered.
Examples of remedies in proprietary estoppel cases include:
- The transfer of the promised property, land, or business to the claimant
- A lump sum payment, which could either be of a similar value to the interest that was promised, or compensation for the detriment
- A right or interest in the asset, such as a life interest in a property
Challenges and Defences
Proprietary estoppel defences can include:
- There was no clear assurance or promise
- The claimant did not rely on the assurance or promise
- The claimant did not suffer any detriment or loss
- The claim is not proportional to the detriment
- The claimant acted in a way that suggests they felt their claim was satisfied
- The claimant did not come to the case ‘with clean hands’, which is a requirement when seeking an equitable remedy. This means that their conduct was not without fault, for example, they have behaved unfairly
- The claim was substantially delayed
What is Meant by ‘Reliance’ in a Proprietary Estoppel Claim?
To demonstrate the necessary element of reliance in proprietary estoppel, the claimant must show that they held a reasonable belief in the validity of the promise and that they would be given an interest in an asset.
Their actions must be directly linked to this belief, and as a result, it would be unconscionable for the party providing the assurance to go back on their word.
What is Meant by ‘Detriment’ in a Proprietary Estoppel Claim?
Detriment is interpreted widely, and does not just mean a financial loss. It could be an element of hardship, or failing to pursue training or a career, or giving up their time to provide care.
In the case of Winter v Winter [2024], two sons were told they would inherit a family strawberry farm business, and during their time working for the business, they received substantial financial benefits. However, the claimants had made life-changing decisions not to pursue joining the Royal Marines and working in construction, respectively, instead devoting their lives to the business. This was held by the court to be acting to their detriment, and their claim succeeded, even though their alternative careers might not have been as financially rewarding.
The Court of Appeal stated that detriment does not have to be financial, and it could be a life-changing choice or a loss of opportunity. It would be unconscionable to go back on a promise after someone has altered their course in life in reliance on the promise.
What is the Time Limit for Proprietary Estoppel Claims?
While there is no specified time limit in which to bring a proprietary estoppel claim, delays may give the other side a stronger defence.
In particular, where the claim is being made after a death, it is crucial to take immediate action to prevent the estate from being distributed.
Cases in the UK
If you ask us to represent you in a proprietary estoppel UK claim, we will put together a robust case on your behalf and work to find a negotiated settlement. We are often able to resolve matters out of court, which is a faster and more cost-effective option. It can also prevent relationships from deteriorating further.
Where necessary, we can litigate your case, ensuring that the strongest possible evidence is put before the court.
Cost of a Proprietary Estoppel Claim
The costs of proprietary estoppel claims vary widely, depending on how vigorously they are defended and the length of time it takes to reach an agreement or obtain a court order.
If we put together a sound case and we are able to agree on a settlement out of court, the legal fees are likely to be substantially lower than a lengthier case, which needs litigation.
To discuss our fees in more detail, please feel free to call us, and we can talk you through the likely costs.
Contact Our Contentious Probate Solicitors
If you believe you may have a proprietary estoppel claim, contact us now, and we will be happy to help.
For information on our related services, see our equitable claims solicitors page.
To speak to one of our expert contentious probate solicitors, ring us on 0330 173 3980, email us at info@witansolicitors.co.uk or fill in our contact form, and we will talk through your situation with you and discuss how we can assist.
FAQ
Is proprietary estoppel flexible?
Remedies in proprietary estoppel cases are flexible, and the court will look at the following issues when deciding what order to make:
- What the claimant was promised, and whether it is equitable to simply order that this asset be transferred to the claimant
- Would enforcing the promise be proportional to the detriment suffered by the claimant?
- Looking at the whole case, what should the court consider? For example, are there any other potential claimants, and did the claimant receive any benefits from the position, such as accommodation?
How much is a claimant entitled to in a proprietary estoppel claim?
The court will award what it considers to be just and equitable. This could be property, money, or the transfer of assets, such as a business. As well as awarding what was promised, the court may also decide to award a financial sum in compensation for loss, for example, years of working at a low wage.
