A dutiful cousin

The House of Lords have again considered the nature and extent of proprietary estoppel in Thorner v Majors [2009] UKHL 18. Regular readers will recall we discussed their decision in Yeoman’s Row Management Limited (Appellants) and another v Cobbe (Respondent) [2008] UKHL 55 in August last year.

Picture this: a large farm in Somerset owned by Peter Thorner. Peter is a man of few words and very indirect in conversation. He might say to you “What are you doing tomorrow?” but what he would really mean is “Would you come along and help me tomorrow”. 

David Thorner was the claimant. His father was Peter’s cousin. David worked very hard for many years on Peter’s farm and was given to understand that he would inherit the farm on Peter’s death.

As you might expect Peter communicated this understanding in his typically terse and indirect way. For example in 1990 Peter handed David two assurance policies on his life saying “That’s for my death duties”. In context the trial judge found that this was a clear indication that David should inherit the farm.

The trial judge found that Peter had given an assurance that David would inherit the farm; it was reasonable for David to rely on those assurances and he had in fact done so to his detriment. That meant that there was a proprietary estoppel in David’s favour.

The Court of Appeal allowed an appeal on the principal ground that the trial judge had failed to make a finding that Peter intended David to inherit. David appealed and the matter to the House of Lords. The personal representatives of Peter’s estate took two further points: first that Peter’s representations were not sufficiently clear and unequivocal and second that over the many years during which David worked on the farm, some land was sold and other land acquired: there was therefore no identifiable property on which the estoppel could operate.

The House of Lords allowed David’s appeal. The view of Lord Walker (with which Lords Rodger and Neuberger agreed) was that assurance on which a proprietary estoppel is based only needs to be “clear enough”. What is enough will depend hugely on context. Such an assessment was best left to the trial judge and the Court of Appeal should not have tried to second guess his findings.

Lord Walker did not deal with the question of intention directly (although it is clear that in his view Peter’s subjective intention was not relevant). Lord Neuberger addressed the point directly: if the statements made by Peter were reasonably understood by David to be an assurance that he would have the farm and David acted reasonably in relying on them to his detriment, Peter’s subjective intention was “not really germane”. 

Otherwise where would all those reasonablys have come from?

On the question of the identity of the property, Lord Walker made a useful distinction between promissory and proprietary estoppel. Promissory estoppel is based on an existing legal relationship (such as a contract) whereas proprietary estoppel relates to land (either owned by or about to be owned by the person estopped). His Lordship adopted an explanation by Hoffman LJ (as he then was) in Walton v Walton that proprietary estoppel looks backwards from the moment when the promise falls due to be performed. Of course at that moment (Peter’s death) it was quite clear what the extent of the farm was.

The backward looking nature of proprietary estoppel also explains what would happen if Peter had sold the farm in his lifetime (perhaps in order to pay for medical expenses or out of a wish to resile from his promise as happened in Gillett and Holt [2001] 1 Ch 210). If Peter had tried to go back on his assurance, the court could look back from that moment and decide if an equity had arisen and how best to satisfy it.

Lord Hoffman elegantly encapsulated the backward looking nature of proprietary estoppel by quoting Hegel: “The owl of Minerva spreads its wings only with the falling of the dusk”. 

Lord Scott allowed the appeal but took a different path. His view was that proprietary estoppel is merely a species of promissory estoppel. Furthermore proprietary estoppel could only operate in situations (such as Crabb v Arun Distrinct Council) where there was a representation that the promissee would gain an immediate or more or less immediate interest in the property. His reasoning was that Peter’s assurances must have been conditional in the sense that he was able to freely deal with the farm (selling parts off though adding others). What if Peter had needed to sell the farm to fund nursing care at the end of his life? Surely (His Lordship seems to have assumed) Peter would have been free to do so. Thus Peter’s assurance was a conditional one and “it is an odd sort of estoppel that is produced by representations that are, in a sense, conditional”.

Instead Lord Scott felt that this was a case where a remedial constructive trust would be better deployed to do equity (and therefore justice). It would seem that a remedial constructive trust would result in the same outcome as that deduced by the other Lords of Appeal on the basis of proprietary estoppel. As a result Lord Scott also allowed the appeal.

I am quite unconvinced by Lord Scott’s approach. Proprietary estoppel is a very well established principle which allows a court to do justice where someone has reasonably relied to their detriment on assurances that they would have an interest in land. The equity can be satisfied in whatever way the court  looking backwards thinks best.

It seems to me that Lord Scott in classifying proprietary estoppel as a species of promissory estoppel is thereby forced to cut down its flexibility. That in turn forces him to look elsewhere for a means to do justice and he finds in the remedial constructive trust a mechanism for justice. Unfortunately the remedial constructive trust is a much less well understood tool for the English lawyer.

If its effects are much the same as those classically understood for proprietary estoppel, why use it? If not, what are the differences? It seems to me that a trust and an equity are different things and Lord Scott’s approach would be a difference of substance not merely of classification, but I cannot tell for certain.

The case contains some very useful and careful discussion of proprietary estoppel and is well worth reading if one finds oneself acting for Somerset farmers.

Posted in Housing law - All, Trusts and Estoppel and tagged , .

5 Comments

  1. I attended this case as a spectator (the first time I have ever seen a HoL case – prob the last with Supreme Court coming in), so I am really pleased to see it commented on by Nearly Legal. I do believe given the facts, it was a right and just decision.

    Thank you

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  3. You update with ferocious speed, and your commentary on Thorner is both clear and insightful, and I agree that Lord Scott’s approach is highly unorthodox, stemming in part from his view in Yeoman’s Row v Cobbe.

    I would disagree, however, that Lord Neuberger concurred with Lord Walker that the statement relied on only had to be “clear enough”. Indeed Lord Neuberger (who gave the other leading speech) seemed at pains to emphasise that the assurance had to be “clear and unequivocal”, which was a position Lord Walker distanced himself from. On a simple headcount, it appears that Lord Neuberger is in the majority on this issue, although he also expressed agreement with Lord Walker.

    It is interesting to note that only the two leading speeches felt any need to refer to Cobbe, and the precise relationship between these two judgments will no doubt be played out in numerous lower court decisions.

    • Quite right. This illustrates the perils of trying to rapidly summarise two cases late at night having only just read them.

      Lord Neuberger does use the “clear and unequivocal” formulation. He then clarifies the sense in which he uses that phrase in paras. 84-86. He clearly accepts that the clarity of the assurance is highly contextual (and can for example be made in silence) and that a court should not be “unrealistically rigorous” in applying the standard. Furthermore, an ambiguous statement may still be “clear and unequivocal”.

      I suspect that in practice Lord Neuberger’s “clear and unequivocal” (as qualified by him) is probably very close to Lord Walker’s “clear enough”.

      Thank you for that correction.

    • Yes; Lord Neuberger’s three qualifications do appear to significantly undermine his insistence that an ambiguous assurance is nonetheless “clear and unambiguous”.

      Together with the stark differences in approach between Lords Scott, Walker and Neuberger (the latter difference being less pronounced given the “qualifications”), I am beginning to think the courts are rapidly painting themselves into a corner with proprietary estoppel, and it is perhaps regrettable that the House did not use this opportunity to further clarify the precise relationship between promissory and proprietary estoppel, as well as the relationship between estoppel and constructive trusts.

      After Stack v Dowden and Cobbe, this is the third missed opportunity to bring some much-needed certainty to this vexed area of the law.

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