Proprietary estoppel

Introduction

Where a person promises something to another, but then fails to follow through on that promise, there can be circumstances where the Court will intervene to make good that promise. This is referred to as proprietary estoppel.

What is Proprietary Estoppel?

As mentioned above proprietary estoppel allows the Court to intervene where it would be unconscionable and unfair not to enforce a promise which was made.

In order for the Court to do this, three elements must be proven in addition to the overarching unconscionability:

• an assurance or promise made by the promisor;
• the person to whom the promise was made (known as the ‘promisee’) relied upon that promise; and
• in reliance on that promise, the promisee has acted to their detriment.

Assurance

In order to show assurances or a promise, the promisor must have made their intentions clear and it must have been sufficiently certain that a promise was being made and what it related to.

Where there are numerous express promises to the promisee that they will inherit property, a claim will be much stronger.  However cases have succeeded where the promises are implied or there are assurances by conduct.

Reliance

It is important that the promisee actually believes that the person making the promise really intended to follow through on it, and they then acted in a way which was consistent with that belief.

Detriment

The Court will not enforce the promise unless the promisee has suffered some sort of detriment in relying on the assurances made.

The detriment does not have to be actual expenditure of money or any other quantifiable financial impact, but it must be a substantial detriment.  Examples of detriment include working or caring for a person for little or no pay, on the understanding that they would be compensated for this by the promisor, usually after their death via their Will.

What will the Court do?

The Court has a discretion whether to provide relief if the three elements are made out, and it will order whatever it thinks fair in the circumstances.  The Court will be guided by the overarching principle of unconscionability.

The relief granted by the Court will generally be proportionate to the detriment and therefore the Court will not necessarily enforce the promise in its entirety, but will provide recompense for the detriment suffered.

For example, where a person has given up work to care for someone for a short time, without pay, it is unlikely the Court will enforce a promise to give that person the entirety of the promisor’s estate.  Instead the Court is more likely to work out what would be fair compensation for that, for example by awarding them a sum to represent what the care would have cost had the promisor paid for it.

Conclusion

In summary, where promises have been made during a person’s lifetime which are not met, the Court may enforce them if the circumstances would make it unconscionable and inequitable not to. 

If you believe the issues raised in this briefing note may be relevant to you, please contact us for further advice.