Ipsofactoj.com: International Cases [2002] Part 15 Case 3 [CAEW]


COURT OF APPEAL, ENGLAND & WALES

Coram

Jennings

- vs -

Arthur T. Rice

LORD JUSTICE ALDOUS

LORD JUSTICE MANTELL

LORD JUSTICE ROBERT WALKER

22 FEBRUARY 2002


Judgment

Aldous LJ

  1. This appeal from the judgment of HHJ Weeks QC of 20th March 2001 is concerned with one aspect of the law of proprietary estoppel, namely the extent of the relief where the claimant establishes the estoppel.

  2. The facts are no longer in dispute. I can therefore take them from the judgment. Mrs. Royle, who lived at Lawn House, Shapwick in Somerset, died on 11th August 1997 aged 93. Her estate was sworn for probate at £1.285 million net with the house and furniture being valued at £435,000. She died a widow without children and wholly intestate. Her estate is now being administered by Mr. Arthur Thomas Rice, the respondent himself and on behalf of nineteen other beneficiaries.

  3. Mrs. Royle married her husband in the early 1950s. In 1959 her husband bought Lawn House which was his family home, and he and his wife moved in. In 1965 Mr. Royle gave Lawn House to Mrs. Royle and in 1969 when he died, he left her, then aged 65, a portfolio of investments which were never changed until her death.

  4. The claimant, Mr. Jennings, was born in 1939 and has lived in Shapwick all his life. He was a self-employed bricklayer who married in 1966 and has two children. In about 1970 Mrs. Royle needed a gardener and Mr. Jennings was recommended. He started to work for Mrs. Royle on a part-time basis at 30p per hour. At the beginning he used to work Saturdays and about 3 evenings a week in the summer. As time went by, his job was extended to running errands, taking Mrs. Royle shopping and minor maintenance work about the house. The hours he worked increased and the demands made on him by Mrs. Royle put a strain on his marriage because his wife disliked Mrs. Royle and resented her husband’s loss of free time.

  5. In the late 1980s Mrs. Royle stopped paying Mr. Jennings, but did provide him with £2,000 towards the purchase of his property. In the early 1990s Mrs. Royle, now in her eighties, became increasingly incapacitated with arthritis and leg ulcers. She became more and more dependent on Mr. Jennings, who at that time still worked full-time as a bricklayer.

  6. Mrs. Royle was always frugal and spent as little money as possible. By the late 1990s Mrs. Royle had shut and locked the major part of the house and had taken to sleeping in the servants’ kitchen. In 1993 she had a burglary, which must have been a shocking and upsetting experience for her. She was, however, determined to go on living in her own house, and she sought to persuade Mr. Jennings to stay overnight to provide her with security. Mr. Jennings was reluctant at first, but eventually he did agree to do so and, from some time in 1994 until her death in 1997, he spent nearly every night on a sofa in a sitting room at Lawn House.

  7. After finishing work Mr. Jennings would go to Lawn House to check that Mrs. Royle was alright, then go home for a shower, and often a meal, and then return to sleep at Lawn House. Mr. Jennings ran errands for Mrs. Royle, collected her prescriptions, helped her to dress and go to the toilet, made sure she had food and drink available and did some work in the garden. In the last months of her life, Mrs. Royle needed even more care and Mrs. Jennings, to her credit, volunteered to come in and help. Eventually Mrs. Royle died on 11th August 1997. Mr. Jennings remained living at Lawn House.

  8. It is quite clear that for many years Mr. Jennings spent a considerable amount of his time looking after Mrs. Royle, despite the fact that from the late 1980s she paid him nothing. It seems that he did that out of compassion for her, and also because she assured him that she would see him right.

  9. The judge held that in the late 1980s Mrs. Royle was challenged by Mr. Jennings about her failure to pay him. Her reply according to the judge was always:

    He did not need to worry about that, he would be alright and she would ‘see to it’. At all times she said to him ‘this will all be yours one day’ or words to that effect. Nothing was put in writing and while I accept the general thrust of Mr. Jennings evidence, it is difficult to be precise about the exact words used several years ago.

  10. Later in his judgment the judge said:

    The terms of the offer were too vague and imprecise to amount to a contract. Mrs. Royle was prone to saying different things at different times and, perhaps deliberately, couched her promises to Mr. Jennings in non-specific terms.

  11. The result as recorded by the judge was:

    It is clearly established by the evidence that Mr. Jennings believed he was going to receive all or part of Mrs. Royle’s property on her death.

  12. Mr. Jennings’s claim against the estate was pleaded in three ways. First, a claim under the Inheritance Act 1975, second in contract, and third under the doctrine of proprietary estoppel. The judge rejected the claims under the Inheritance Act and for breach of contract, but found for Mr. Jennings under the doctrine of proprietary estoppel. The judge went on to assess the “equity in the present case” at £200,000 and ordered the estate to pay that to Mr. Jennings.

  13. There is no appeal against the judge’s conclusion that Mr. Jennings’s claim should fail under the Inheritance Act and for breach of contract. Also the estate does not contend that the judge was wrong to conclude that Mr. Jennings was entitled to an award of £200,000 pursuant to the doctrine of proprietary estoppel. This appeal is concerned solely with Mr. Jennings’s contention that he was entitled to the whole estate of Mrs. Royle or alternatively to a sum equal to the value of Lawn House and the furniture.

    THE JUDGMENT

  14. The judge held that Mr. Jennings had clearly established that he believed he was going to receive all or part of Mrs. Royle’s property upon her death. He also held that Mr. Jennings acted to his detriment in giving up his spare time in the evenings and weekends to look after Mrs. Royle and eventually staying overnight in her house, unpaid. It was, according to the judge, clear that one reason for acceding to Mrs. Royle’s demands was Mr. Jennings’s belief that he would benefit on her death. The judge went on to consider the question of conscience. He said:

    I can now move on to consider the matter in the round and see whether it was unconscionable for Mrs. Royle to go back on her assurances. In my judgment, it was. As Mr. Warner said, Mrs. Royle promised Mr. Jennings the moon and left him nothing. Mr. Gardner [the bank manager] made several attempts to get her to make a will but she chose to die intestate and deliberately disappointed Mr. Jennings. That is unconscionable conduct for a person who took the benefit of his services.

  15. The judge then had to decide what was the appropriate relief. He started by referring to Crabb v Arun District Council [1976] Ch 179 at 198. He went on to refer to a number of authorities and concluded that he should be guided by the approach of Robert Walker LJ and the other members of the Court of Appeal in Gillett v Holt [2001] Ch. 210. He concluded that he had a discretion to be exercised judicially in the light of all the relevant circumstances. He took into account, first that Mr. Jennings did not know the extent of Mrs. Royle’s wealth and second, that the value of her actual estate and even the part known to Mr. Jennings was out of all proportion to what Mr. Jennings might reasonably have charged for the services he provided free. He then considered whether it would be equitable for Mr. Jennings to take the house and the furniture which were the minimum he expected, and also what the judge called the problem of proportionality. The judge reminded himself that the house was valued at £420,000 and was not a suitable house for Mr. Jennings to reside in on his own and he took into account that Mrs. Royle had no special obligations to her family. He said that to reward an employee on the scale of £420,000 was excessive. He also compared the cost of full-time nursing care, which he estimated at £200,000, with the value of the house. He reasoned that Mr. Jennings would probably need £150,000 to buy a house. He concluded:

    I do not think that he could complain that he had been unfairly treated if he had been left £200,000 in Mrs. Royle’s will. Most people would say that she would, at least, then have performed her promise to see him all right. The quality of her assurance affects not only questions of belief, encouragement, reliance and detriment, but also unconscionability and the extent of the equity.

    In my judgment the minimum necessary to satisfy the equity in the present case is the sum of £200,000.

    THE APPEAL

  16. Mr. Warner, who appeared for Mr. Jennings, submitted that in a case like the present, where the claimant had established his claim of proprietary estoppel, the basic rule was that the established equity should be satisfied by making good the expectation. He accepted that there were exceptions, for example where there had been misconduct, but this case did not fall within any of them. Mr. Warner went on to submit that Mr. Jennings had expected to be left Mrs. Royle’s whole estate and that is what the judge should have ordered. If the expectation was only the house and furniture, then that was the minimum that the judge should have awarded.

  17. The first submission, that the award should equal the whole estate, cannot succeed having regard to the findings of fact made by the judge. He held that Mrs. Royle had said she would see him all right and “This will all be yours one day.” By the word “this” the judge must have been referring to the house and furniture. He also held that Mr. Jennings had no idea what Mrs. Royle owned, apart from the house and furniture and therefore could not have expected to receive anything more. There was no finding that Mrs. Royle had led Mr. Jennings to believe that he would get more than the house and furniture. That being so, any award upon the basis that the equity should be satisfied by awarding a sum equal to the expectation of Mr. Jennings could not exceed the value of the house and furniture (£435,000), perhaps reduced by the amount of inheritance tax that the property would bear.

  18. Miss Rich, who appeared for the respondents, supported the conclusion and reasoning of the judge. She submitted that to arrive at the correct award, the starting point was the claimant’s expectation as that would indicate the maximum extent of the equity. However the court’s task did not end there. The ultimate aim was to achieve justice. That was achieved by making the award proportionate to the expectation and the detriment suffered.

  19. Before coming to the authorities which establish the approach necessary to arrive at the correct award, it is instructive to consider the basic principles of proprietary estoppel. For that purpose it is sufficient to refer to two cases. First, Crabb v Arun District Council [1976] 1 Ch 179 at page 187 Lord Denning MR said:

    The basis of this proprietary estoppel – as indeed of promissory estoppel – is the interposition of equity. Equity comes in, true to form, to mitigate the rigours of strict law. The early cases did not speak of it as “estoppel”. They spoke of it as “raising an equity”. If I may expand what Lord Cairns L.C. said in Hughes v Metropolitan Railway Co. (1877) 2 App. Cas. 439, 448: "It is the first principle upon which all courts of equity proceed", that it will prevent a person from insisting on his strict legal rights – whether arising under a contract, or on his title deeds, or by statute, when it would be inequitable for him to do so having regard to the dealings which have taken place between the parties.

    What then are the dealings which will preclude him from insisting on his strict legal rights? If he makes a binding contract that he will not insist on the strict legal position, a court of equity will hold him to his contract. Short of a binding contract, if he makes a promise that he will not insist upon his strict legal rights – then, even though that promise may be unenforceable in point of law for want of consideration or want of writing – then, if he makes the promise knowing or intending that the other will act upon it, and he does act upon it, then again a court of equity will not allow him to go back on that promise: see Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 and Charles Rickards Ltd v Oppenhaim [1950] 1 KB 616, 623. Short of an actual promise, if he, by his words or conduct, so behaves as to lead another to believe that he will not insist on his strict legal rights – knowing or intending that the other will act on that belief – and he does so act, that again will raise an equity in favour of the other; and it is for a court of equity to say in what way the equity may be satisfied. The cases show that this equity does not depend on agreement, but on words or conduct. In Ramsden v Dyson (1866) L.R. 1 H.L. 129, 170 Lord Kingsdown spoke of a verbal agreement “or what amounts to the same thing, an expectation, created or encouraged.” In Birmingham and District Land Co. v London and North Western Railway Co. (1888) 40 Ch.D. 268, 277, Cotton LJ said that “.... what passed did not make a new agreement, but .... what took place .... raised an equity against him.” And it was the Privy Council in Plimmer v Wellington Corporation (1884) 9 App. Cas. 699, 713-714 who said that “.... the court must look at the circumstances in each case to decide in what way the equity can be satisfied” giving instances.

  20. The second case is Habib Bank Ltd v Habib Bank AG [1981] 1 WLR 1265. That was a case that followed soon after the law had been examined in Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank [1982] QB 84 and Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133. Oliver LJ, giving the judgment agreed to by the other members of the court, considered the authorities and concluded at page 1285 at B:

    For myself, I believe that the law as it has developed over the past 20 years has now evolved a far broader approach to the problem than that suggested by Mr. Aldous and one which is in no way dependent upon the historical accident of whether any particular right was first recognised by the common law or was invented by the Court of Chancery. It is an approach exemplified in such cases as Inwards v Baker [1965] 2 QB 29 and Crabb v Arun District Council [1976] Ch 179. We have been referred at length to a recent judgment of my own in Taylors Fashions Ltd v Liverpool Victoria Trustees Co. Ltd (Note) [1981] 2 WLR 576 in which I ventured to collect and review the authorities. I there said, at p. 593:

    Furthermore the more recent cases indicate, in my judgment, that the application of the Ramsden v Dyson, L.R. 1 H.L. 129 principle – whether you call it proprietary estoppel by acquiescence or estoppel by encouragement is really immaterial – requires a very much broader approach which is directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour.

    Whilst, having heard the judgment read by counsel, I could wish that it had been more succinct, that statement at least is one to which I adhere.

  21. There can be no doubt that reliance and detriment are two of the requirements of proprietary estoppel and that the basis of the estoppel is, as Lord Denning said in Crabb, the interposition of equity: thus the requirement of unconscionability. If the conscience of the court is involved, it would be odd that the amount of the award should be set rigidly at the sum expected by the claimant.

  22. Against that background I turn to consider the crucial question in this case, namely how to give effect to the estoppel. Mr. Warner took us back to cases decided in the last century. For my part, I believe it is appropriate to start with the Crabb case, decided in 1976. In that case the dispute concerned a right of access that had been promised by the defendants. The court held that the plaintiff had acted upon that promise to his detriment in circumstances where an equity was raised in his favour and that equity was satisfied by the grant free of charge of an easement. The award exceeded the expectation, but it was the proportionate response as appears from the judgment of Scarman LJ. At page 199 he came to consider how effect could be given to the equitable right which had been established. He said:

    .... the courts have acted upon the basis that they have to determine not only the extent of the equity, but also the conditions necessary to satisfy it, and they have done so in a great number and variety of cases. I need refer only to the interesting collection of cases enumerated in Snell’s Principles of Equity, 27th ed. (1973), at pp. 567-568, para 2 (b).

    In the present case the court does have to consider what is necessary now in order to satisfy the plaintiff’s equity. Had matters taken a different turn, I would without hesitation have said that the plaintiff should be put upon terms to be agreed if possible with the defendants, and, if not agreed, settled by the court. But, as already mentioned by Lord Denning MR. and Lawton LJ, there has been a history of delay, and indeed high-handedness, which it is impossible to disregard. In January 1969 the defendants for reasons which no doubt they thought good at the time, without consulting the plaintiff, locked up his land. They removed not only the padlocks which he had put on the gates at point B, but the gates themselves. In their place they put a fence – rendering access impossible save by breaking down the fence. I am not disposed to consider whether or not the defendants are to be blamed in moral terms for what they did. I just do not know. But the effect of their action has been to sterilise the plaintiff’s land; and for reasons which I have endeavoured to give, such action was an infringement of an equitable right possessed by the plaintiff. It has involved him in loss, which has not been measured; but, since it amounted to sterilisation of an industrial estate for a very considerable period of time, it must surpass any sort of sum of money which the plaintiff ought reasonably, before it was done, to have paid the defendants in order to obtain an enforceable legal right. I think therefore that nothing should now be paid by the plaintiff and that he should receive at the hands of the court the belated protection of the equity that he has established. Reasonable terms other than the money payment, should be agreed: or, if not agreed, determined by the court.

  23. Lawton LJ and Lord Denning MR. came to the same conclusion. Thus all three judges concluded that the claimant should be awarded an easement without payment and in doing so made an order that did justice, having regard to all the circumstances. The reasoning of Scarman LJ is not consistent with Mr. Warner’s submission that the court’s task was to ascertain the expectation and to award a sum which would satisfy it. Mr. Warner realised that was the case, but he submitted that the Crabb case was an example of a case where the court had refused to confine the claimant to his expectations due to the misconduct of the defendant. To an extent that is true, but that fails to appreciate the reasoning of the judgments which establish the need to do justice.

  24. In Pascoe v Turner [1979] 1 WLR 431 the defendant went to live in 1963 with the plaintiff as his housekeeper. In 1964 they began living together as husband and wife. In 1973 the plaintiff began an affair with another woman. The defendant relied on a declaration made by the plaintiff that he had given her the house and she spent her money on it. In 1976 the plaintiff gave the defendant 2 months notice to quit. She refused to leave the house and the plaintiff commenced proceedings against her.

  25. Cumming-Bruce LJ gave the judgment of the court. He held that the defendant had established her claim of proprietary estoppel. He went on to decide what was “the minimum equity to do justice having regard to the way in which she changed her position for the worse by reason of the acquiescence and encouragement of the legal owner.” The defendant submitted that the only way the equity could be satisfied was by perfecting the imperfect gift. The plaintiff submitted that equity should be satisfied by a licence to occupy the house for the defendant’s lifetime. The court rejected that submission. It concluded (p. 439 at B):

    Weighing such considerations this court concludes that the equity to which the facts in this case give rise can only be satisfied by compelling the plaintiff to give effect to his promise and her expectations. He has so acted that he must now perfect the gift.

  26. That was a case where the award equalled the expectation, but the court did not come to that conclusion because the award had to equal the expectation. The court looked at all the circumstances (see page 438 F), including the financial position of the parties. This case does not support Mr. Warner’s submission.

  27. In Sledmore v Dalby [1996] 72 P & CR 196, Roch LJ gave the leading judgment which was agreed to by Butler-Sloss LJ. Having cited a passage from the 29th edition of Snell’s Equity, he said at page 204:

    I would respectfully adopt that passage as an accurate statement of the decided cases and the law. In the present case the respondent clearly has assumed that he will be allowed to stay in this house for the rest of his life rent free. In my judgment this is a case where the respondent has to be content with something less than his expectations. The Recorder should have considered the position of the appellant and her needs and balanced those against the present use of the premises made by the respondent and his present need for them.

  28. Hobhouse LJ came to the same conclusion as Roch LJ, but for slightly different reasons. At page 207 he pointed out that in the equitable doctrine of proprietary estoppel, it was necessary to consider the extent of the equity that was created and also “what is, in the circumstances, the equitable way in which to give effect to it.” He went on to consider the elements of other types of estoppel and then said at page 208:

    These general considerations have been discussed (with a review of the leading English authorities) by the High Court of Australia in Commonwealth of Australia v Verwayen which understandably was not cited to us by counsel. The judgment of Mason CJ contains a discussion of the law of estoppel which is of particular value. I will cite three passages which are relevant to what I have said and to the correct approach to the present case.

    In conformity with the fundamental purpose of all estoppels to afford protection against the detriment which would flow from a party’s change of position if the assumption that led to it were deserted, these developments have brought a greater underlying unity to the various categories of estoppel. Indeed, the consistent trend in the modern decisions points inexorably towards the emergence of one overarching doctrine of estoppel rather than a series of independent rules. The element which both attracts the jurisdiction of a Court of Equity and shapes the remedy to be given is unconscionable conduct on the part of the person bound by the equity, and the remedy required to satisfy an equity varies according to the circumstances of the case. As Robert Goff J. said in Amalgamated Property Co. v Texas Bank [1982] QB 84 at 103: ‘Of all doctrines, equitable estoppel is surely one of the most flexible.’ However in moulding its decree, the court, as a court of conscience, goes no further than is necessary to prevent unconscionable conduct.

    .... it should be accepted that there is but one doctrine of estoppel which provides that a court of Common Law or Equity may do what is required, but not more, to prevent a person who has relied upon an assumption as to a present, past or future state of affairs (including a legal state of affairs), which assumption the party estopped has induced him to hold, from suffering detriment in reliance upon that assumption as a result of the denial of its correctness. A central element of that doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid. It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption.

    ....

    The other aspect clearly illustrated by the quotations which I have made from Mason CJ is the need for proportionality. This is to say little more than that the end result must be a just one having regard to the assumption made by the party asserting the estoppel and the detriment which he has experienced. Here it is unreal to suggest that the conclusion of the County Court judge is proportionate to what happened over 15 years earlier. Similarly, it is unreal to say that the Defendant has suffered any injustice. He expended money in 1976 and 1978 upon his then family home and he and his family fully enjoyed the benefits of such expenditure. He also enjoyed within the same framework over a period of 15 years the rent-free occupation of the property. By the same token it cannot be properly said that there was anything unconscionable in Mrs. Sledmore seeking possession of number 15A in 1990.

    In my judgment there is no estoppel operating against the plaintiff. Her claim in this action falsifies no legitimate assumption or expectation. The effect of any equity that may in any earlier time have existed has long since been exhausted and no injustice has been done to the defendant. The plaintiff is entitled to an order for possession and the defendant’s counterclaim must be dismissed. This appeal should be allowed accordingly.

  29. Sledmore is another case where the court did not merely conclude that the award should satisfy the expectation. All the members of the court took account of the material circumstances. The need for proportionality was at the heart of the judgments.

  30. I do not believe it is necessary to examine any of the Australian authorities which appear to lean towards the view that the award should compensate the detriment. In so far as they differ from the law stated by Mason CJ in Verwayen, which was cited by Hobhouse LJ in Sledmore, they do not reflect the law of this country.

  31. In Bawden v Bawden [1997] EWCA Civ 2664 Robert Walker LJ gave the leading judgment, agreed to by Staughton and Phillips LJJ. In that case the plaintiff’s submission was similar to that advanced by Mr. Warner. It was rejected. Robert Walker LJ pointed out that the Court had approved the passage in Snell which made clear that there was “a wide range of relief which it may be appropriate for the court to grant as a matter of discretion once the equity has been established.” He went on:

    I cannot accept the proposition which seems to underline Mr. Fletcher’s submissions, that once the factual basis for some proprietary estoppel is put in place that a right of enjoyment for life is more or less automatically established. On the contrary, that ignores the Court’s insistence on it being the minimum equity that is to be satisfied and on the need for the Court to adopt a flexible approach.

  32. I come to the cases decided in this century. First, Gillett v Holt [2001] Ch. 210. In that case Waller and Beldam LJJ agreed with the judgment of Robert Walker LJ. He held that the claimant had established his claim to equitable relief and therefore the courts had to decide what was the appropriate form that it should take. He said at page 839:

    Since Mr. Gillett has established his claim to equitable relief, this court must decide what is the most appropriate form for the relief to take. The aim is, as Sir Arthur Hobhouse said in Plimmer v Wellington Corporation (1884) 9 App. Cas. 699, 714, to “look at the circumstances in each case to decide in what way the equity can be satisfied.” The court approaches this task in a cautious way, in order to achieve what Scarman LJ in Crabb v Arun District Council [1976] Ch. 179, 198, called “the minimum equity to do justice to the plaintiff.” The wide range of possible relief appears from Snell’s Equity, 30th ed. (2000), pp. 641-643.

  33. Due to the facts of that case, satisfaction of the equity presented unusually difficult problems, but the approach adopted was to ascertain the maximum extent of the equity and then to form a view “as to what is the minimum required to satisfy it [the equity] and do justice between the parties.”

  34. In Campbell v Griffin [2001] EWCA Civ 990; [2001] W & TLR 981, Mr. Campbell moved in to live as a lodger with Mr. and Mrs. Ascough in 1987. They had no children and the relationship developed to the extent that they treated him as their child. They frequently told him that whatever happened he would have a home for life. Despite attempts by Mr. Ascough to provide for Mr. Campbell, the Ascoughs’ house passed on his death to his wife. When she died the property passed under an old will to her nieces.

  35. The court concluded that Mr. Campbell’s claim to an equity, having regard to the principles of proprietary estoppel, had been established. Robert Walker LJ gave the leading judgment with which the President and Thorpe LJ agreed. He came at page 10 to consider the extent of the equity.

    Sledmore v Dalby is a good illustration of the flexible nature of the court’s jurisdiction. But on the facts of this case I do not consider that Mr. Campbell’s rent-free occupation has had the effect of extinguishing his equity. Nevertheless I see considerable objections to Mr. Sisley’s proposal that Mr. Campbell should be granted a life interest in 26 St Boltolph’s Road for so long as he wishes to live there.

    In the first place such an order would be disproportionate: Mr. Campbell has a moral (and, as I see it, a legal) claim on the property, but it is not so compelling as to demand total satisfaction, regardless of the effect on other persons with claims on the Ascoughs’ estate. In the second place it would be administratively inconvenient. It would produce a situation of a trust of land (under the Trusts of Land and Appointments of Trustees Act 1996) which would probably involve disproportionate legal expenses (including trustees’ remuneration) and might well lead to further disputes (especially in relation to Mr. Campbell’s keeping the property in good repair and condition). In exercising its discretion the court can have regard to the need for a “clean break”: Pascoe v Turner [1979] 1 WLR 431, 438-9.

    Taking these and all other relevant circumstances into account, I have come to the conclusion that it would not be right to confer on Mr. Campbell (who began as a lodger with one out of four bedrooms) a right in respect of the whole house which might hold up the administration of the estate for a whole generation and might also have the effect of eliminating the other beneficiaries’ interests because of mounting interest on the County Council charge. That charge (with accrued interest) now amounts to about £64,000. The present value of the house, unencumbered with vacant possession, is about £160,000.

    The court has a very wide discretion in satisfying an equity arising under the doctrine of proprietary estoppel. That discretion includes power to award a fixed sum charged on the property. I would declare Mr. Campbell is entitled to the sum of £35,000 charged on the property, but that he must give up possession of the property to enable it to be sold by Mrs. Ascough’s executors, and that interest on the sum of £35,000 should not start to run until 56 days after Mr. Campbell has given vacant possession in order to enable the house to be sold. The sum payable to Mr. Campbell will not by itself enable him to buy a freehold house in Worthing, but it will assist him with re-housing himself.

  36. Both the result and the reasoning of the judgment in Campbell are inconsistent with Mr. Warner’s submission. There is a clear line of authority from at least Crabb to the present day which establishes that once the elements of proprietary estoppel are established an equity arises. The value of that equity will depend upon all the circumstances including the expectation and the detriment. The task of the court is to do justice. The most essential requirement is that there must be proportionality between the expectation and the detriment.

  37. Mr. Warner warned against the conclusion I have reached. He submitted that it led to uncertainty and that the appropriate course was to satisfy the expectation. I accept that the flexible approach adopted in the past may mean that there is room for what has been referred to as a judicial discretion, but the rigidity of the approach advocated by Mr. Warner can lead to injustice which could not form the basis of an equitable result. One only has to alter the facts of this case to illustrate the unsatisfactory nature of Mr. Warner’s submissions. The expectation was that Mr. Jennings would receive the house and furniture valued at £435,000. If he had been left £5 or £50,000 or £200,000 in Mrs. Royle’s will, or she had died one month, one year or twenty years after making the representation relied on, should the court award the same sum? Yes, said Mr. Warner. The result could then have been that Mr. Jennings would receive £635,000 made up of the expectation and the legacy of £200,000, or perhaps, £435,000 in total, even when the detriment was say £800.

  38. The judge was right to conclude that the award must be proportionate. He took into account the relevant factors as placed before him, namely the expectation, the detriment, the position of Mr. Jennings and the amount available. His conclusion was the result of a judgment to which he was entitled to come. I would not interfere with it and would dismiss the appeal.

  39. I have read the judgment of Robert Walker LJ in draft and agree with it.

    Mantell LJ

  40. For the reasons given by Aldous LJ as well as those contained in the judgment of Robert Walker LJ which I have had the opportunity of reading in draft, I too would dismiss this appeal.

    Robert Walker LJ

  41. I also agree that this appeal should be dismissed for the reasons given by Aldous LJ. Because of the general interest of this appeal I add some observations of my own.

  42. This court was referred to two recent articles which contain a full and illuminating discussion of this area: Estoppel and the Protection of Expectations by Elizabeth Cooke [1997] 17 L.S.258 and The Remedial Discretion in Proprietary Estoppel by Simon Gardner (1999) 115 LQR 438. Those articles could with advantage have been cited in Gillett v Holt [2001] Ch 210. Both are concerned with whether the fundamental aim of this form of estoppel is to fulfil the claimant’s expectations, or to compensate him for his detrimental reliance on the defendant’s non-contractual assurances, or is some intermediate objective; and (following on from the identification of the correct principle) the nature of the discretion which the court exercises in granting a remedy to the claimant. The articles amply demonstrate that the range of English authorities provides some support for both theories and for a variety of intermediate positions; and that recent Australian authority (especially the decision of the High Court in Commonwealth v Verwayen (1990) 170 CLR 394) has moved in favour of the reliance loss theory.

  43. It cannot be doubted that in this as in every other area of the law, the court must take a principled approach, and cannot exercise a completely unfettered discretion according to the individual judge’s notion of what is fair in any particular case. Dr Gardner’s fourth hypothesis (“the approach is for the court to adopt whatever style and measure of relief it thinks fit, for whatever reason it thinks fit”) cannot be right. I do not think that the judgment of Hobhouse LJ in Sledmore v Dalby (1996) 72 P&CR 196 (to which I shall return) can possibly be regarded as adopting or advocating an unfettered judicial discretion.

  44. The need to search for the right principles cannot be avoided. But it is unlikely to be a short or simple search, because (as appears from both the English and the Australian authorities) proprietary estoppel can apply in a wide variety of factual situations, and any summary formula is likely to prove to be an over-simplification. The cases show a wide range of variation in both of the main elements, that is the quality of the assurances which give rise to the claimant’s expectations and the extent of the claimant’s detrimental reliance on the assurances. The doctrine applies only if these elements, in combination, make it unconscionable for the person giving the assurances (whom I will call the benefactor, although that may not always be an appropriate label) to go back on them.

  45. Sometimes the assurances, and the claimant’s reliance on them, have a consensual character falling not far short of an enforceable contract (if the only bar to the formation of a contract is non-compliance with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, the proprietary estoppel may become indistinguishable from a constructive trust: Yaxley v Gotts [2000] Ch 162). In a case of that sort both the claimant’s expectations and the element of detriment to the claimant will have been defined with reasonable clarity. A typical case would be an elderly benefactor who reaches a clear understanding with the claimant (who may be a relative, a friend, or a remunerated companion or carer) that if the claimant resides with and cares for the benefactor, the claimant will inherit the benefactor’s house (or will have a home for life). In a case like that the consensual element of what has happened suggests that the claimant and the benefactor probably regarded the expected benefit and the accepted detriment as being (in a general, imprecise way) equivalent, or at any rate not obviously disproportionate. Cases of that sort, if free from other complications, fit fairly comfortably into Dr Gardner’s first or second hypothesis (both of which aim to vindicate the claimant’s expectations as far as possible, and if possible by providing the claimant with the specific property which the benefactor has promised).

  46. However the claimant’s expectations may not be focused on any specific property. In Re Basham [1986] 1 WLR 1489 the deputy judge (Mr. Edward Nugee QC) rejected the submission that there must be some clearly identified piece of property, and that decision has been approved more than once in this court. Moreover (as the judge’s findings in this case vividly illustrate) the claimant’s expectations may have been formed on the basis of vague and inconsistent assurances. The judge said of Mrs. Royle that she

    .... was prone to saying different things at different times and, perhaps deliberately, couched her promises in non-specific terms.

    He made that observation in relation to the failure of the contract claim, but it is relevant to the estoppel claim also.

  47. If the claimant’s expectations are uncertain (as will be the case with many honest claimants) then their specific vindication cannot be the appropriate test. A similar problem arises if the court, although satisfied that the claimant has a genuine claim, is not satisfied that the high level of the claimant’s expectations is fairly derived from his deceased patron’s assurances, which may have justified only a lower level of expectation. In such cases the court may still take the claimant’s expectations (or the upper end of any range of expectations) as a starting point, but unless constrained by authority I would regard it as no more than a starting point.

  48. I do not see that approach as being inconsistent with authority. On the contrary, I think it is supported by a substantial body of English authority. Scarman LJ’s well-known reference to “the minimum equity to do justice to the plaintiff” (Crabb v Arun District Council [1976] Ch 179, 198) must no doubt be read in the context of the rather unusual facts of that case, but it does not stand alone. As Scarman LJ recognised, the line of authority goes back to nineteenth-century cases such as Duke of Beaufort v Patrick (1853) 17 Beav.60 and Plimmer v Wellington Corporation (1884) 9 App Cas 699. A passage in the opinion of the Privy Council (delivered by Sir Arthur Hobhouse) in Plimmer’s case at pp.713-4 is particularly instructive. The conclusion of the passage is that

    In fact the court must look at the circumstances in each case to decide in what way the equity can be satisfied.

    Scarman LJ’s reference to the minimum does not require the court to be constitutionally parsimonious, but it does implicitly recognise that the court must also do justice to the defendant.

  49. It is no coincidence that these statements of principle refer to satisfying the equity (rather than satisfying, or vindicating, the claimant’s expectations). The equity arises not from the claimant’s expectations alone, but from the combination of expectations, detrimental reliance, and the unconscionableness of allowing the benefactor (or the deceased benefactor’s estate) to go back on the assurances. There is a faint parallel with the old equitable doctrine of part performance, of which Lord Selborne said in Maddison v Alderson (1883) 8 App Cas 467, 475,

    In a suit founded on such part performance, the defendant is really ‘charged’ upon the equities resulting from the acts done in execution of the contract, and not (within the meaning of the statute) upon the contract itself.

    So with proprietary estoppel the defendant is charged with satisfying the equity which has arisen from the whole sequence of events. But the parallel is only faint since in the case of estoppel there is no contract and the nexus between the benefactor’s assurances and the resulting equity is less direct; the assurances are only half the story. In Dillwyn v Llewelyn (1862) 4 De G F & J 517, 522 Lord Westbury expressed the point in terms which anticipated Lord Selborne:

    The equity of the donee and the estate to be claimed by virtue of it depend on the transaction, that is, on the acts done, and not on the language of the memorandum [which amounted to an imperfect gift].

  50. To recapitulate: there is a category of case in which the benefactor and the claimant have reached a mutual understanding which is in reasonably clear terms but does not amount to a contract. I have already referred to the typical case of a carer who has the expectation of coming into the benefactor’s house, either outright or for life. In such a case the court’s natural response is to fulfil the claimant’s expectations. But if the claimant’s expectations are uncertain, or extravagant, or out of all proportion to the detriment which the claimant has suffered, the court can and should recognise that the claimant’s equity should be satisfied in another (and generally more limited) way.

  51. But that does not mean that the court should in such a case abandon expectations completely, and look to the detriment suffered by the claimant as defining the appropriate measure of relief. Indeed in many cases the detriment may be even more difficult to quantify, in financial terms, than the claimant’s expectations. Detriment can be quantified with reasonable precision if it consists solely of expenditure on improvements to another person’s house, and in some cases of that sort an equitable charge for the expenditure may be sufficient to satisfy the equity (see Snell’s Equity 30th ed para 39-21 and the authorities mentioned in that paragraph). But the detriment of an ever-increasing burden of care for an elderly person, and of having to be subservient to his or her moods and wishes, is very difficult to quantify in money terms. Moreover the claimant may not be motivated solely by reliance on the benefactor’s assurances, and may receive some countervailing benefits (such as free bed and board). In such circumstances the court has to exercise a wide judgmental discretion.

  52. It would be unwise to attempt any comprehensive enumeration of the factors relevant to the exercise of the court’s discretion, or to suggest any hierarchy of factors. In my view they include, but are not limited to, the factors mentioned in Dr Gardner’s third hypothesis (misconduct of the claimant as in J Willis & Sons v Willis [1979] Ch 261 or particularly oppressive conduct on the part of the defendant, as in Crabb v Arun District Council or Pascoe v Turner [1979] 1 WLR 431). To these can safely be added the court’s recognition that it cannot compel people who have fallen out to live peaceably together, so that there may be a need for a clean break; alterations in the benefactor’s assets and circumstances, especially where the benefactor’s assurances have been given, and the claimant’s detriment has been suffered, over a long period of years; the likely effect of taxation; and (to a limited degree) the other claims (legal or moral) on the benefactor or his or her estate. No doubt there are many other factors which it may be right for the court to take into account in particular factual situations.

  53. The judge did in this case consider, although not in detail, what Mr. Jennings might reasonably have earned in the way of arm’s length remuneration for his services. He also considered what professional nursing care might have cost during the last eight years of Mrs. Royle’s life. A detailed computational approach was adopted (but with a different outcome, limited to compensation of reliance loss) by the Supreme Court of Tasmania in Public Trustee v Wadley [1997] 7 Tas. LR 35 in which the court discussed the appropriate hourly rate and the total number of hours of housework undertaken by a daughter who (as it was put in the dissenting judgment of Wright J)

    had subordinated her own life to that of her father and [whose] attentive and affectionate service, often no doubt at considerable inconvenience to herself, put her assistance on a higher plane than that of a domestic servant.

  54. That illustrates the Australian preference for compensating the reliance loss only. Under English law that approach may sometimes be appropriate (see paragraph 51 above) but only where, on the facts, a higher measure would amount to overcompensation. In my view it would rarely if ever be appropriate to go into detailed inquiries as to hours and hourly rates where the claim was based on proprietary estoppel (rather than a restitutionary claim for services which were not gratuitous). But the going rate for live-in carers can provide a useful cross-check in the exercise of the court’s discretion.

  55. I have made some references to the general trend of Australian jurisprudence in this area. It is unnecessary to attempt any detailed study of the different views expressed by the High Court in the Verwayen case (which was concerned with estoppel in the very different context of litigation arising out of personal injuries suffered in a collision between two warships) or of Australian cases since then.

  56. However I respectfully agree with the view expressed by Hobhouse LJ in Sledmore v Dalby (1996) 72 P&CR 196, that the principle of proportionality (between remedy and detriment), emphasised by Mason CJ in Verwayen, is relevant in England also. As Hobhouse LJ observed at p.209, to recognise the need for proportionality

    .... is to say little more than that the end result must be a just one having regard to the assumption made by the party asserting the estoppel and the detriment which he has experienced.

    The essence of the doctrine of proprietary estoppel is to do what is necessary to avoid an unconscionable result, and a disproportionate remedy cannot be the right way of going about that. Cases on interim injunctive relief have recognised the importance of proportionality in the granting of equitable remedies: see for instance Lock International v Beswick [1989] 1 WLR 1268, 1281. Where the court is granting final relief after investigating all the facts proportionality is even more important.

  57. I do not consider that the judge made any error of law in his approach to the exercise of his discretion, or that it was otherwise flawed. He did make an error in his reference to the quantum of the relief granted in Gillett v Holt (the claimant was awarded a farmhouse and 42 hectares of land as well as £100,000). But every case depends on its own facts and that slip cannot in my view have played a significant part in the judge’s disposal of the case.

  58. I would therefore dismiss this appeal.


Cases

Crabb v Arun District Council [1976] Ch 179; Gillett v Holt [2001] Ch. 210; Habib Bank Ltd v Habib Bank AG [1981] 1 WLR 1265; Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank [1982] QB 84; Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133; Pascoe v Turner [1979] 1 WLR 431; Sledmore v Dalby [1996] 72 P & CR 196; Bawden v Bawden [1997] EWCA Civ 2664; Campbell v Griffin [2001] EWCA Civ 990; [2001] W & TLR 981; Commonwealth v Verwayen (1990) 170 CLR 394; Yaxley v Gotts [2000] Ch 162; Re Basham [1986] 1 WLR 1489; Duke of Beaufort v Patrick (1853) 17 Beav.60; Plimmer v Wellington Corporation (1884) 9 App Cas 699; Maddison v Alderson (1883) 8 App Cas 467; Dillwyn v Llewelyn (1862) 4 De G F & J 517; J Willis & Sons v Willis [1979] Ch 261; Public Trustee v Wadley [1997] 7 Tas. LR 35; Lock International v Beswick [1989] 1 WLR 1268

Authors and other references

Snell’s Principles of Equity, 27th ed.

Snell’s Principles of Equity, 29th ed.

Snell’s Principles of Equity, 30th ed.

Elizabeth Cooke, "Estoppel and the Protection of Expectations" [1997] 17 L.S.258

Simon Gardner, "The Remedial Discretion in Proprietary Estoppel" (1999) 115 LQR 438

Representations

Mr. M. Warner (instructed by Pardoes) for the Appellant
Miss B. Rich (instructed by Gould & Swayne) for the 1st Respondent
The 2nd – 6th Respondents not present nor represented


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