Proprietary estoppel: sounds complicated, but a relatively simple idea
Estoppel is a legal device whereby a court may prevent or stop a person from going back on their word. And proprietary estoppel involves property.
If someone has promised or assured you land or property, but then reneges on the agreement after you have relied on that promise, you can contest this using proprietary estoppel. The reliance must have caused a detriment in your life.
It is used at times, to contest a will, although increasingly it is being used during the promisor’s lifetime.
When is it used?
We tend to see proprietary estoppel most frequently during the passing down of a farm or family business to children.
The cliché shows the parent standing with arms aloft saying: “one day, all this will be yours”. A son or daughter, therefore might work on the farm or business to build it up, sometimes on poor wages, assuming that the eventual reward will be worth it.
However, family fall-outs, or a desire to share the farm across many children may make the older generation renege on that promise when they make their will.
“All this will be yours” might turn into a very much smaller portion of land and property than expected.
What are the 3 key elements of proprietary estoppel?
- A promise or assurance, in documents, words and conduct, or witness testimony
- Reliance: a claimant must prove that the claimant relied on the promise and made life decisions based upon it
- Detriment: the claimant must have ‘lost out’ in some way, giving up other opportunities or working for lower wages.
The concept of unconscionability is also at play here. Was the decision made by the promisor, unconscionable? In the case of Guest vs Guest in 2020, it was deemed that an unconscionable decision can be identified by an objective bystander. Is it right? Is it reasonable?
Proprietary estoppel claims in practice
Proprietary estoppel claims are difficult to prove. The promisor has probably passed away or denies all knowledge. If it was a verbal promise or an assumption based on family traditions, evidence may be very limited or non-existent. And this might be set against the backdrop of quarrelling siblings, arguing over their inheritance.
As each case is very different, courts deal with proprietary estoppel on a case-by-case basis. They can struggle to evaluate how much compensation might be given to a claimant, and compensation might be in the form of land, property, money, or a combination of all three.
How do you avoid proprietary estoppel?
Think ahead. Ensure any property agreements or farming partnerships are in writing. Don’t make promises, unless you fully intend to honour them. Think about your succession plan. Write your will. And should you face a proprietary estoppel claim, seek legal advice as soon as possible.
If you need further information, please contact Jenny Barron on 01756 692866 or email jenny.barron@awbclaw.co.uk.
Solicitor and Director, Society of Trust and Estate Practitioners.
Further reading:
Mental capacity and writing, or updating a will. What to consider.
Inheritance Tax Planning – 7 key strategies to mitigate tax
