Estoppel is a doctrine whereby the court can prevent a party asserting or denying a fact (or a right in the case of proprietary estoppel), based on something that party has said or done in the past.
There are 3 main categories of estoppel.
- Equitable estoppels
- Common law estoppels
- Estoppel by record (Issue estoppel and Cause of action estoppel)
Central to all forms of estoppel is the aim of preventing unconscionable conduct and the principle that ‘the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations’ (Grundt v Great Boulder Proprietary Gold Mines Ltd (1938) 59 CLR 641 at 674).
Promissory estoppel, which is often confusingly referred to as equitable estoppel, prevents someone who makes a promise without contractual consideration from going back on the promise where it would inequitable to do so.
The test for promissory estoppel is that:
- A makes a clear or unequivocal promise or representation to B
- B relies on the promise or representation
- B alters his position, as a result of the reliance, in such a way that it would be inequitable for A to go back on the promise.
NB | It is sometimes said that a fourth requirement of detriment is required. Whilst detriment may be helpful in establishing the third test, it is not a formal requirement, and is probably a confusion with estoppel by representation.
The effect of promissory estoppel is to suspend rather than extinguish the promisor’s rights and it cannot create new rights. It is a defence and cannot be used as a cause of action. This is often described as the estoppel being a shield and not a sword.
Proprietary estoppel is solely concerned with property and can be used as the basis of a claim rather than just a defence, as is the case in promissory estoppel. In summary the test is:
- An owner of property makes or allows the claimant to believe that he has or will receive some right in property;
- The claimant relies on this belief and, with the knowledge of the owner, acts on the belief to his detriment; and
- The owner acts in a way that is incompatible with the belief, and it would be unconscionable for the owner to assert or deny the right by acting in such a way.
Whilst the court has a very broad discretion on the appropriate remedy, it will do the bare minimum to preserve equity. Proprietary estoppel can thus be distinguished from a claim for a constructive trust as once the court has found a constructive trust is has no discretion as to the remedy.
The simplest way of understanding proprietary estoppel is to consider the farmers’ cases, where a farmer (A) promises B, who is usually a relative, that the farm will belong to B one day. Acting on that promise, B works on the farm for many years for little or no remuneration. In such a situation it would be unconscionable for A not to keep to the promise.
Proprietary estoppel has become increasingly important since the Law of Property Act (Miscellaneous Provisions) 1989 (“the Act”) was enacted. With very few exceptions, the Act requires all dispositions of land to be in writing and to contain all the terms. Proprietary estoppel allows the court to provide some relief where these formalities have not been fulfilled.
Until upheld by a court, a propriety estoppel is a mere equity as it is within the court’s discretion. However, section 185 of the Land Registration Act 2002 makes it clear that an equity arising by estoppel in relation to registered land can be protected by a notice on the register.
Estoppel by representation
Common law estoppel by representation arises where party A makes a statement of fact, which may include law, knowing that it will be acted upon or was false, and party B, relying on the representation, alters their position to their detriment. Party A can be precluded from denying the fact as he stated it to be. The representation does not need to be the only cause of the change of position.
It can be distinguished from promissory and proprietary estoppel as it relates to a representation about a present fact as opposed to what will happen in the future.
Estoppel by convention
Estoppel by convention arises where both parties to a transaction act on assumed states of fact or law, the assumption being either shared by both or made by one and acquiesced in by the other. The parties are then precluded from denying that assumption if it would be unjust or unconscionable.
Estoppel by deed
Estoppel by deed prevents a party to a deed from denying the truth of the deed or something contained in it.
Estoppel in pais
Estoppel in pais arises where a public act establishes a legal relationship, other than by deed. For instance where a tenant pays a landlord rent and the landlord accepts it, the tenant is precluded from denying the landlord’s title and the landlord from denying the tenancy.
Issue estoppel prevents a party from attempting to re-litigate an issue which has already been decided by a court. Attempting to re-litigate an issue is an abuse of process and can lead to the strike out of statements of case or parts of statements of case (Rule 3.4(2)(b) of the Civil Procedure Rules 1998 (“CPR”)).
Cause of action estoppel
Cause of action estoppel is distinguished from issue estoppel in that the whole cause of action, as opposed to a particular issue, has already been decided by a court. As with issue estoppel it can lead to the strike out of statements of case (CPR 3.4(2)(b)).