Associate Kirsty Manley explores proprietary estoppel claims, drawing on the recent case of Conway v Conway & Anor to explain what they are and how the court approaches them in practice.
Many of us will remember the iconic line from the Lion King where Mufasa promises Simba that one day “everything” will become his. Proprietary estoppel claims can arise where similar promises are made, but broken.
What is proprietary estoppel?
A claim in proprietary estoppel can arise in situations where Person A has made a promise to Person B in relation to property, Person B relies on that promise to their detriment and it would be unconscionable (i.e. unfair) for Person A to resile from the promise.
Where those requirements are met, the Court has discretion as to what would constitute the appropriate remedy. Broadly speaking, there are two schools of thought in relation to remedies: Person B is compensated for their detriment suffering in relying on the promise, or the promise is enforced.
Conway v Conway & Anor
The case of Conway v Conway & Anor [2024] provides a helpful illustration of the Court’s approach to proprietary estoppel in practice.
Background
The Claimant (Peter Conway) issued proceedings to rely on an oral agreement with the Defendants (Stephen Conway and Amber Meek) in relation to a property known as the Barn. The Claimant alleged that the oral agreement consisted of three terms:
a) The Defendants would purchase the Barn for £150,000 from the Claimant;
b) The £150,000 payment would be deferred owing to the extensive renovations that the Defendants would carry out; and
c) The Claimant had the option to buy-back the Barn from the Defendants.
The Defendants alleged that the agreement was that the Claimant would sell the Barn to them for £150,000 (without the Claimant’s buy-back option).
The Claimant and the Defendants sought to formalise their oral agreement, but were unable to do so in light of disagreement over the existence of any buy-back option.
Proceedings were issued by the Claimant to enforce the three terms of the oral agreement mentioned above. The Defendants filed a defence and counterclaim in proprietary estoppel to seek the transfer of the Barn to them. By that time, the Defendants had spent over £230,000 on renovations to the Barn, investing a significant amount of time and money in their ‘dream home’.
The decision and outcome
Following review of the evidence, the Court’s conclusion was that a buy-back option did not form part of the oral agreement between the Claimant and the Defendants. The Claimant’s claim failed.
The Court turned to consider the Defendants’ proprietary estoppel claim. Judge Mithani KC addresses each of the component parts (of proprietary estoppel) as follows:
- Promise (or assurance): there was a “sufficiently clear and unequivocal” assurance given to the Defendants by the Claimant that he would sell the Barn to them.
- Reliance: There could not be “a more clear-cut instance of “reliance””. The Defendants spent substantial sums of money to carry out works to the Barn. The Judge found that the Defendants would not have spent that money if they thought that the Claimant could reside from the promise to sell the Barn to the Defendants.
- Detriment: This was “obvious” on the facts of the case. The detriment included not only the sums spent by the Defendants, but also the amount of time that they invested in carrying out, supervising and monitoring the works.
- Unconscionability: The Judge found that, if the Claimant could resile from the promise and retain the Barn, the Claimant would walk away “without any repercussions for his conduct” and would do so knowing that the Barn was worth considerably more as a result of renovations funded by the Defendants. The Judge held that if the Court was to allow this type of behaviour by the Claimant that it would be “falling substantially short of the standards it needs to uphold justice”.
In other words, the requirements for the Defendants’ proprietary estoppel claim were met.
The Court turned to consider the appropriate remedy. The Court has to “grant the minimum relief necessary to satisfy the Defendants' rights which have arisen” under proprietary estoppel. The Court made an order to enforce the oral agreement (the terms of which were as found by the Judge). In short, the Barn was to be sold to the Defendants for £150,000.
The Court had considered granting lesser relief or a different order. The Court took into account that the Barn was supposed to be the “dream home” for the Defendants and their family, and any compensatory or other relief would prolong the proceedings as an account would be needed to assess the extent and value of the works carried out by the Defendants.
Pursuing a proprietary estoppel claim
A proprietary estoppel claim is a mechanism to enforce broken promises. Such claims are not uncommon within farming families, where someone can be promised “everything” at the farm will become theirs one day, and they, in return, work for little or no payment and dedicate time and money to the farm.
Proprietary estoppel cases can be difficult to navigate, particularly where strained family relationships or a bereavement compound the disappointment of a broken promise. There is often a need for advice from multiple angles, including regulatory and tax advice.
Kirsty Manley is an associate in the trust and estate disputes team. She advises on a range of contentious matters, including claims pursuant to the Inheritance Act 1975 and challenges to the validity of a testator’s will, as well as estate administration disputes.
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