The way that land is dealt with in law is very strict. The transfer of land in particular is subject to stringent rules pursuant to the Law of Property Act 1925 (“LPA 1925”). Transfers that are not conducted in line within the rules of the LPA 1925 are not considered valid in law. This includes the recognition of interests in land that people believe they have gained by virtue of promise or gift, but which have not been formalised by either a legal conveyance or the establishment of a trust.
Consequently, real problems can arise where, for example, a child has been promised a share in a property by a parent, but the parent later changes their mind and produces a contrary will. In this situation, what, if anything, can the child do? It may be that the child can bring a claim against the parent based upon ‘proprietary estoppel’.
What is Proprietary Estoppel?
Proprietary estoppel is a tool that judges can use to make a decision based on equity, rather than law. If a Claimant can show three elements, the judge may, notwithstanding the legal ownership of the property, order that the Claimant has an interest in the property. Those three elements are:
- That the property owner made a promise or representation that the Claimant would obtain an interest in the property;
- That the Claimant relied upon the promise of the property owner; and
- That in doing so, the Claimant acted to his own detriment.
The judge will also look at whether it would be unconscionable (unjust) to allow the property owner to go back on their promise.
Moore v Moore [2016]
A classic example of a proprietary estoppel claim can be seen in the recent High Court case of Moore v Moore [2016]. This case was brought by a son against his father in relation to the ownership of a farm.
In short, the farm had originally been owned by the father and the Claimant’s uncle. The Claimant began working at the farm at a very young age and was continuously promised by his father and his uncle that he would eventually be given full ownership of the entire farm. When his uncle later left the farming partnership, the Claimant replaced the uncle and started to work on the farm as a partner with his father. As the father aged, he ceased farming and the Claimant took over full responsibility of the operation of the farm.
Unfortunately, the Claimant’s mother later decided that gifting the entire farm to their son on the death of his father would be unfair to their daughter, and she therefore persuaded her husband to change his will and leave the Claimant only a share in the farm. The Claimant, upon finding out about this, brought a proprietary estoppel claim against his father in order to acquire full ownership of the farm.
The High Court ruled in the Claimant’s favour and awarded him the entire farm for the following reasons:
• The father had made repeated promises to his son that he would inherit the farming business;
• The Claimant had relied upon these promises by devoting his entire working life to the farm and the business. In doing so he had acted to his detriment because he had given up any chance of alternative employment, as he truly believed he would inherit the farm from his father; and
• It would be unjust to allow the father to now go back on his promise.
Moore v Moore is a relatively straightforward proprietary estoppel claim, but the remedy is still deployed by the Courts even where the facts of the case are more complicated.
In Davies & Anor v Davies [2016], the Court of Appeal considered a complex case involving a number of quasi-agreements that were periodically broken by both parties due to the acrimonious relationship between parents and their daughter. In that case, the proprietary estoppel claim still succeeded, although the Claimant was awarded monetary compensation to represent her interest rather than an actual interest in the property.
It is clear that proprietary estoppel is a very useful tool for acquiring an interest in land where you have relied upon the promise of another, but they now seek to break that promise. It is important to act quickly to avoid any arguments from potential Defendants that you have consented to their decision to break their promise.
Are you involved in a dispute concerning property? If so, the experienced Property Litigation team at Levi Solicitors LLP can assist you. Please call on 0113 244 9931.
