Proprietary Estoppel explained

Hasan SadikAlternative Dispute Resolution (ADR), Mediation, Proprietary estoppel

Farm land

Proprietary estoppel is a complicated legal term that can be stripped back and explained fairly simply. The verbal promise of a property is commonly superseded by a legal document. However, if that promise can be established and proven, then a claim for proprietary interest may be established. A common example of this is an owner bequeathing property or land to a claimant before death, but their request being overturned by a legal will post death. In this scenario, the claimant has no legal documentation but has a proprietary interest in the property, also known as proprietary estoppel.

Three Key Factors of Proprietary Estoppel

Claims of proprietary estoppel may be in relation to money or property. The legal basis for these claims is complex, but in essence there are three factors which need to be established in order for a claim to be proven:

  1. Assurances or promised being made.
  2. Belief and reliance on the aforementioned promise.
  3. The claimants reliance on the promise causing them to suffer detriment.

Assurances

The very foundation of a proprietary estoppel claim is the original assurance or promise of land or money being made. The owner’s assurances that the land or property would be passed to the claimant may be expressed or implied, but generally must be clear and unambiguous.

Proclamations like “one day, all this will be yours” is an example of evidence that may be used in proprietary estoppel cases. This kind of evidence will form the basis for a claim, along with how the promise came about and the context in which it was made.

Evidence from a third party in support of the claimant’s position may be critical to proving the validity of the assurance, particularly where the third party has nothing to gain from the claim.

Reliance

The claimants reliance on the promise or assurance should be evident in the way they have conducted their lives, and proven by their consideration of it in their life or career choices. Evidencing that the promise was part of their decision making process, will show that they had genuine belief that the land or property would become theirs.

Detriment

The failure for the assurance to be realised must be proven to be to the detriment of the claimant. They must be in a worse position than they would have been than if the assurance had been fulfilled. For example, the claimant invested money improving a piece of land promised to them and are therefore negatively affected financially, when it failed to become theirs.

Common Cases of Estoppel

Commonly associated with the agricultural sector, the majority of cases of proprietary estoppel in recent years have been in a farming context. This may perhaps be due to the absence or non-committal manner of succession planning in the farming sector. A classic example of this is an individual working on a piece of land for many years for free, on the promise that the land will become theirs when the landowner dies. When the owner dies, it is discovered their will has made no provision for the individual. And so the individual has grounds to claim proprietary estoppel.

Many contested wills feature valuable estates. For those emotionally attached to the owner, the devastation of their loss may be further exacerbated by the deceased’s will stating that promised land or property is actually bequeathed to someone else. A disappointed beneficiary will often have grounds for an estoppel claim and bring claim accordingly.  

Proprietary estoppel is an interesting area of law as a lot of evidence presented in these cases are verbal agreements. This perhaps makes it well matched with mediation as a means of resolution, due to both parties have the opportunity to present their case fully and with the help of a mediator, possibly reconcile a relationship as well as reaching an agreement about the claim.

Mediation + Proprietary Estoppel

Proprietary estoppel claims can be hostile and court costs can be significant, with the losing party often being required to settle the associated costs of winning party. Mediation is a viable alternative to this, with many mediators specialising in proprietary estoppel claims, agriculture claims and family law.