‘Talk is cheap’ is a well-known phrase, in certain situations however it can be anything but. Suppose you promised someone that they would receive your house after you were gone. Ordinarily this would no more give them a right to your house than if you had promised them the moon; you can always leave your property to anyone you wish in your Will. However, what if, based upon what you said, the person to whom you had promised your house repaired, maintained and improved it, all at their own expense?
In that situation, they could be entitled to rights in your property through a legal doctrine called proprietary estoppel.
The word ‘estoppel’ sounds like the densest of ‘legalese’ but it actually derives from the French word ‘estouppail’, which is also where the English word ‘stop’ originates. This relates to the idea behind proprietary estoppel: to stop someone who makes a promise of rights in property from going back on that promise in certain circumstances.
In order for proprietary estoppel to arise, it must be established that:
- a promise or assurance was given
- the promise/assurance was relied upon by the person who received it
- some kind of detriment was suffered by that person when relying on the promise/assurance
To see how these might occur in a real life situation, it is helpful to look at the recent case of Davies v Davies
 EWCA Civ 463.
This case involved a farming couple, Mr and Mrs Davies, and one of their three daughters, Eirian. In 1985, when Eirian was 17, it became apparent that she was the only daughter who had an interest in taking over the farm and it was Mr and Mrs Davies’ wish that the farm should stay in the family when they retired.
Although Mr and Mrs Davies did not think they had given any binding promises to Eirian, the Court was satisfied that they had made assurances to Eirian that the farming business would one day be hers. This was on the understanding that she worked on the farm. Eirian received no wages for her work but had free board and lodging and received an allowance for things like clothing and leisure.
By 1989, relations between Mr and Mrs Davies and Eirian had deteriorated. As a result, Eirian left the farm.
The Court found that Eirian was entitled to a payment in respect of this four-year period by virtue of proprietary estoppel. Mr and Mrs Davies had given Eirian assurances that she would receive the farm at a later stage provided she worked there. Eirian had relied upon these assurances by working on the farm when she left school. In doing so, she suffered a detriment as, the Court considered, even with the benefits afforded her, she had not received full payment for the work she had done.
This was just one instance of proprietary estoppel in the case. Eirian returned to and left the farm several times after 1989 but in 2012 she moved away for the last time. The case report gives a clear impression of the tumultuous relationship between Eirian and her parents and this relationship played a big part in giving rise to the numerous proprietary estoppel claims in the case.
However, rather than relate the somewhat complicated facts of the case in full, certain parts can be highlighted to give a better idea of how the doctrine of proprietary estoppel can operate.
One such example in the case, concerns Eirian moving into a farmhouse on part of Mr and Mrs Davies’ land. At the time, in 2007, Eirian owned a property at Ludchurch and she kept this after moving into the farmhouse. The move was prompted by an assurance from Mr and Mrs Davies that the farmhouse would be her home for life. However, when she later left the farmhouse, the Court found that she did not acquire any rights to the farmhouse itself through proprietary estoppel. This is because Eirian had retained her property at Ludchurch and so had not relied upon the assurance to her detriment.
Although a detriment must be suffered for proprietary estoppel to operate, it does not have to be a financial loss. One of the detriments that Eirian suffered, which the Court identified, was that if she had not been working on the farm, she could have been working shorter hours elsewhere and away from the clearly difficult working relationship she had with her parents.
Another interesting aspect of the case to note is that, potentially, showing someone a draft Will where they stand to inherit could constitute an assurance for the purposes of proprietary estoppel. In 2009, Mr and Mrs Davies showed Eirian draft Wills they had made which left the farm to her. Even though the Wills had not been executed and therefore were not valid, the Court noted that they were an indication of Mr and Mrs Davies’ intentions at that time. However, the Court ruled that no proprietary estoppel arose from this, due to a combination of facts. Among these facts were: that Eirian knew they were draft Wills; that she knew Mr and Mrs Davies had other, valid Wills at the time, which did not leave the farm to her; and that Mr and Mrs Davies changed their Wills again later that year and did not leave the farm to Eirian. Essentially, the Court did not consider that Eirian had ever relied upon the assurance of the draft Wills she was shown. Even so, it is not difficult to envisage a situation where the sight of a draft Will could give rise to a proprietary estoppel claim. What if Eirian had not known of the Davies’ currently valid Wills, for example, or had been led to believe that the draft Wills had actually been executed?
It is important to note that the courts will consider the facts and circumstances of a case as a whole to determine whether rights should be granted through proprietary estoppel. How a judge interprets these facts therefore has a crucial bearing on the case at issue.
A high degree of judicial discretion also extends to the methods by which the Court can remedy the situation. The Court might award the property rights which were the subject of the promise, or it might award financial compensation. However, the aim of such remedies is always to avoid a detriment being suffered rather than just making sure that the assurance or promise is enforced.
Additionally, when the detriment is not wholly a financial one, the Court has to determine what an appropriate award would be. In the Davies case, Eirian was awarded £500,000 compensation in respect of the various proprietary estoppel claims but this was actually a reduction of the £1.3 million sum which was awarded previously. It was Mr and Mrs Davies’ appeal to reduce the compensation that gave rise to this most recent case.