Proprietary Estoppel PQ Solving (Property Law) Docx

PROPERTY LAW
PROPRIETARY ESTOPPEL
PROBLEM QUESTION
Question-1
In 2013, Leroy, McGee and Tony live in Nos 1, 2 and 3 Navy Street respectively, an
area of registered land. Each house has a large garden, although Leroy has
concreted over his and uses it to store spare parts connected with his carpentry
business. Last year, Leroy asked McGee (who lives in No 2) whether he would
mind if he (Leroy) constructed a small shed to store some more valuable
equipment, even though this meant building some foundations in McGee’s
garden. McGee readily agreed and helped Leroy construct the shed. A little later,
before the shed was complete, Leroy promised that McGee could store some of
his (McGee’s) own goods in the shed. McGee also asked if Leroy would mind if
his wife’s mother, Ziva, parked her mobility scooter in the shed.
Leroy readily agreed, not realising that Ziva drove a very large scooter that would
occupy considerable space. Meanwhile, Tony has been negotiating with McGee
over the purchase of some land owned by McGee at the back of Navy Street.
McGee is unwilling to sell, but permits Tony to occupy the land pending the
negotiation of a long lease. McGee asks Tony to pay him £600 per month as ‘a
down payment’ for the lease, but, when Tony comes to pay, McGee tells him to
keep his money as he (McGee) has decided to sell and will give him a full price
later. Tony subsequently seeks planning permission from the local council to
build a coffee house on his new land and gets Leroy and McGee’s guarantee that
they will not oppose planning permission. However, just as he is about to instruct
a local builder, McGee informs him that he has sold the property to CaffPow plc.
Leroy is distraught at the prospect of a large coffee house behind his house and
manages to sell to Ducky. Ducky has just discovered Ziva’s scooter in the shed
and has removed it, along with McGee’s property. In retaliation, McGee is about
to knock down that part of the shed that stands on his land. Tony wants to know
whether he has any rights that can be enforced against CaffPow plc.
Advise generally.
Ans: This problem essentially revolves around two central issues. First, it is necessary
to determine the nature and extent of any interests created by the actions of the parties
in favour of each other. Second, it is necessary to establish whether any or all of those
interests are rights binding on the subsequent purchasers of the plots.
(a) Leroy and the Shed; McGee and the Storage; Ziva and the Scooter
The facts indicate that none of the arrangements between the parties have been
recorded in writing. This means that unless the activities fall within one of the
recognised exceptions to the formality requirements found in s 2 of the Law of
Property (Miscellaneous Provisions) Act 1989, then any interests they may have will
be void as property rights. The absence of writing means that Leroy, McGee and Ziva
will have to rely on proprietary estoppel if they are to claim property rights which could
be enforceable against Ducky and CaffPow. Failing that, their rights might amount to
contractual licences but they would be incapable of binding any third party (Ashburn
Anstalt v Arnold (1989); Lloyd v Dugdale (2002)).
(i) The Shed

McGee, the owner of the land over which the shed will protrude, has agreed that Leroy
can build that shed in the full knowledge that use of his own land will thereby be
diminished. In such circumstances, Leroy will have a reasonable chance of establishing
that McGee is bound by proprietary estoppel from demolishing the shed. Following
Taylor Fashions v Liverpool Victoria Trustees (1982), McGee made an assurance to
Leroy that the shed could be built, which was relied upon by Leroy to his detriment. The
fact that McGee assisted in the building can only reinforce this presumption. In such
circumstances, following cases such as Crabb v Arun DC (1976) and Ives v High
(1967), it is unlikely that McGee will be able to renege on his promise and destroy the
shed. Equity will intervene by way of an injunction.
What is not clear, however, is what happens when Leroy sells his land to Ducky. There
is authority that the benefit of the estoppel cannot be transferred to a successor in title
(Fryer v Brook (1984)) because it is merely personal to the promisee, although this
appears to have been contradicted by Lord Denning in Ives v High. Indeed, it is difficult
to see why the alleged personal nature of an estoppel (even if this were true) should
stop the benefit passing to another, as contractual benefits may pass under the general
law unless the contract prohibits it.
(ii) The Storage of McGee’s Goods

On one view of the facts, Leroy has simply agreed that McGee can store goods in his
shed. This may have been done as a personal favour – in which case McGee has a
bare licence – or it may have been done as a counterpart to McGee’s promise and
assistance with the shed – in which case it may be a contractual licence. If it is a bare
licence, it is revocable at will by Leroy (Thomas v Sorrell (1673)), although, if it is
contractual, it may be irrevocable by Leroy according to its terms (Wintergarden
Theatres v Millennium Productions Ltd (1948)). However, in either case, the licence as
such cannot be binding on a third party (Ducky) (Ashburn Anstalt v Arnold; Lloyd v
Dugdale).
An alternative view is, however, that there has been some form of estoppel generated in
McGee’s favour by Leroy’s conduct in relation to the storage. It would be necessary to
establish that there was an assurance, reliance and detriment (Taylor Fashions),
although it might well be difficult on the facts as there appears to be little in the way of
detriment suffered by McGee in reliance on the promise (and such detriment is crucial:
Gillett v Holt (2001)). However, if the estoppel is made out, McGee could go on to argue
that it is enforceable against Ducky as an interest in land (s 116 of the LRA 2002):
either because it might be protected by an entry on the register (a notice: s 29 of the
LRA 2002); or as an overriding interest under Sched 3, para 2 to the LRA 2002 on the
basis of discoverable actual occupation – Henry v Henry (2010).
(iii) The Shed and the Storage

We have assumed above that the shed building and the storage were separate events.
It might be possible to argue that they are so interconnected that, at least for Leroy and
McGee, they must be taken together. Hence, by analogy with Ives v High, it could be
argued that, if Leroy wants the benefit of the shed, he must be subject to the burden of
the storage of McGee’s goods. This would, of course, prevent either of the original
parties from reneging on their agreement. But, even then it is doubtful if the ‘burden’ of
Leroy’s obligations could be passed to Ducky. There is no evidence that Ducky
purchased Leroy’s land with express knowledge of McGee’s rights (or in an inequitable
manner), so as to subject him to a personal constructive trust within Ashburn Anstalt v
Arnold, Lloyd v Dugdale and Chaudhary v Yavuz.
(iv) The Mobility Scooter

The issue of Ziva’s motorcycle is very similar to that concerning McGee’s goods and it
may well be just as difficult to establish anything other than a bare or contractual licence
to support the parking/storage. Even if we were to approach this issue on a
benefit/burden analysis, it could be decisive that the ‘benefit’ is given to someone (Ziva)
other than the person who is subject to the burden of the shed (McGee). This makes it
highly unlikely that Ducky would be bound by this obligation when he purchases Leroy’s
land.
(b) Tony, the Plot of Land and CaffPow Plc
Tony and McGee start off by negotiating the terms of a lease following McGee’s initial
refusal to sell the land. When they fail to reach agreement on the terms of the long
lease, Tony is let into occupation by McGee pending successful conclusion of
negotiations and provided that he pays £600. At first sight, this raises the possibility of a
periodic tenancy. If this could be established then Tony would have an overriding
interest against the purchaser CaffPow (Sched 3, para 1 to the LRA 2002), who would
be bound by the terms of the lease. Unfortunately for Tony, however, it appears from
Javad v Aqil (1991) and Erimus Housing v Barclays Wealth Trustees (2014) that
occupation and payment of rent will not give rise to a periodic tenancy if the occupation
can be attributed to negotiations pending the grant of a ‘real’ lease. This is Tony’s
position and he will be a ‘tenant at will’, which, even if it is binding on CaffPow, can be
terminated on reasonable notice. Circumstances then take a different turn. McGee
makes it clear that he will now sell to Tony and Tony, acting in reliance on this, begins
to make plans for his coffee house. McGee even reinforces this by promising not to
oppose a planning application (see the similarity with Yeoman’s Row v Cobbe (2008)).
This may, then, raise a proprietary estoppel in Tony’s favour, provided that he can
establish assurance, reliance and detriment. On the facts, McGee will argue that he
simply made an offer to sell that he has now withdrawn (Ravenocean v Gardner
(2001)), whereas Tony will argue that he has relied on the promise to such an extent as
to make its withdrawal unconscionable, as in Thorner v Major (2009). In fact, it is a
marginal case, as Tony does not suffer the same degree of detriment as the promisees
in other cases such as Re Basham (1986), and Pascoe v Turner (1979) and, although
the cases of Lim Teng Huan v Chuan (1992) and Flowermix v Site Development (2000)
offer some support, it may be that the estoppel cannot be made out because the
promise is legitimately withdrawn (Canty v Broad; Taylor v Dickens (1998); Yeoman’s
Row v Cobbe (2008)).20 However, were it to be accepted that Tony had an estoppel in
his favour, it might be binding against CaffPow in the same way that McGee’s estoppel
might have been enforceable against Ducky: via an entry on the register or as an
overriding interest.

Proprietary Estoppel PQ Solving (Property Law) Docx

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Proprietary Estoppel PQ Solving (Property Law) Docx

Uploaded by

Copyright:

Available Formats

PROPERTY LAW

(i) The Shed

(ii) The Storage of McGee’s Goods

(iii) The Shed and the Storage

(iv) The Mobility Scooter

You might also like