The law on estoppel

Introduction

The law on estoppel can be quite intimidating to students. The biggest problem they have with it is the language – what are we talking about when we talk about estoppel? Lord Denning MR’s judgment in McIlkenny v Chief Constable of the West Midlands (1980) (quoted by John Cartwright in his excellent article on estoppel, ‘Protecting legitimate expectations and estoppel in English law’ 10.3 Electronic Journal of Comparative Law (December 2006)) provides some useful guidance:

‘The word “estoppel” only means stopped… It was brought over by the Normans. They used the old French “estoupail.” That meant a bung or cork by which you stopped something from coming out. It was in common use in our courts when they carried on all their proceedings in Norman-French. Littleton writes in the law-French of his day (15th century) using the words “pur ceo que le baron est estoppe a dire,” meaning simply that the husband is stopped from saying something.’

So the law on estoppel is essentially concerned with situations where the law will stop or prevent someone from doing something that they would otherwise be entitled to do. The law on estoppel has many different branches, as Lord Denning went on to explain:

‘…there has been built up over the centuries in our law a big house with many rooms. It is the house called Estoppel. In Coke’s time it was a small house with only three rooms, namely, estoppel by matter of record, by matter in writing, and by matter in pais. But by our time we have so many rooms that we are apt to get confused between them. Estoppel per rem judicatam, issue estoppel, estoppel by deed, estoppel by representation, estoppel by conduct, estoppel by acquiescence, estoppel by election or waiver, estoppel by negligence, promissory estoppel, proprietary estoppel, and goodness knows what else. These several rooms have this much in common: They are all under one roof. Someone is stopped from saying something or other, or doing something or other, or contesting something or other. But each room is used differently from the others. If you go into one room, you will find a notice saying, “Estoppel is only a rule of evidence.” If you go into another room you will find a different notice, “Estoppel can give rise to a cause of action.” Each room has its own separate notices. It is a mistake to suppose that what you find in one room, you will also find in the others.’

In this note, I want to explore three of the rooms that make up the Estoppel house.

Estoppel by representation

This branch of the law on estoppel really provided the springboard for all future developments in this area of the law. The law on estoppel by representation basically says this: If A and B are litigating a case in court, and A wants to deny that x is true, A will be prevented (or estopped) from doing so if (1) A had previously represented to B that x was true, (2) A intended that B should rely on that representation, and (3) B did rely on that representation. The rule is a rule of evidence – it is a rule about what A can and cannot say in court. Under this rule, A is prevented from playing fast and loose with the truth. He cannot outside court say one thing to B, with the intended effect that B relied on what A said, and then go into court and deny that what he said to B was true.

As a mere rule of evidence, the law on estoppel by representation does not give B a ground for suing A, but as Brandon LJ observed in Amalgamated Investment and Property Co Ltd (1982), B ‘may, as a result of being able to rely on an estoppel, succeed on a cause of action on which, without being able to rely on that estoppel, he would necessarily have failed.’ Here are two examples of how relying on an estoppel by representation could allow B to win a case against A that would otherwise fail.

A owns a large area of land. A tells B that a cottage located on A’s land now belongs to B. B relies on that representation in various ways. In fact, A has done nothing to transfer title to the cottage into B’s hands. A and B later fall out, and while B is away on holiday, A has the locks changed on the cottage and B’s belongings thrown out of the cottage. B wants to sue A for trespass to land. A wants to deny trespass: he wants to argue he was justified in acting as he did as the cottage belongs to him. But he is not allowed to plead this in court, as it would involve going back on a representation that he made to B (‘this cottage now belongs to you’) which B relied on, as A intended he should. So an estoppel by representation arises which prevents A justifying his behaviour, and as a result B is able to sue A for trespass to land.

B takes a dress to be cleaned in A’s dry cleaners. A has B sign a form, setting out the terms on which A is prepared to dry clean B’s dress. B queries one of the terms under which B undertakes not to sue A if the dress is returned to her in a damaged condition. A tells B, ‘Don’t worry about that – that only applies if we are cleaning dresses that have lots of beads and sequins on them: we can’t guarantee our cleaning process won’t damage that sort of thing. But your little black dress will be no problem.’ When B picks up the dress, it is stained. B sues A for breach of contract. A will want to defend the claim by arguing that under the standard terms on which B and A were dealing, B agreed not to sue if her dress was damaged. But A will be estopped from raising such a defence: A told B that the term in question did not apply to the job of cleaning B’s dress, and B relied on that representation by agreeing to allow B to clean the dress. A cannot now go back on that representation and argue that the term did after all apply in B’s case. As a result, B will be able to sue A for breach of contract (assuming that the damage to the dress was the result of a lack of skill and care in the way A cleaned the dress, which presumably it was).

So the law on estoppel by representation can help a claimant sue a defendant by providing the claimant with one of the building blocks that she needs to make her case. But all the other building blocks need to be in place if the claimant is going to winher case. For example, suppose that by making various cryptic remarks and suggestions, A leads B to believe that A is promising to leave B all his property in his will. B relies on that belief – as A intended that she should – by looking after A in his old age. After A dies, it turns out that A has left B nothing in his will. B now wants to claim all of A’s property. The law on estoppel will kick in to prevent A’s representatives from denying that A promised to leave B all his property in his will. But that won’t get B over the winning line. B still has to show that A’s promise to give her all his property is legally binding, or has some legal effect, and the law on estoppel by representation has nothing to say about that. But as we’ll see, other areas of the law on estoppel do have something to say about that.

Promissory estoppel

At some point, the idea underlying the law on estoppel by representation – that you could stop someone going back on a representation if they had intentionally induced someone to rely on that representation – gave rise to the idea that the law on estoppel could also be used to prevent someone from going back on a promise if they had intentionally induced someone to rely on that promise. Thus was born the law on promissory estoppel.

In England, the law on promissory estoppel only applies to prevent someone from going back on a promise that they have made not to enforce some legal right that they have against someone else. So just as the law on estoppel by representation is based on the idea that you can’t play fast and loose with the truth, the law on promissory estoppel – in England at any rate – is based on the idea that you can’t play fast and loose with your rights. If you have a right against someone, you can’t tell them that you won’t enforce it, with the effect that they rely in some way on your promise, and then turn round and say that you’ve changed your mind and that you will be standing on your strict legal rights after all. This principle was first articulated by Lord Cairns LC in Hughes v Metropolitan Railway (1877):

‘[if the parties to a contract] enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings between those parties.’

In that case, the defendants leased some properties from the claimants. The claimants served a notice of repair on the defendants, which basically gave the defendants six months to carry out certain repairs to the let properties, or face forfeiting their lease. The defendants weren’t enthusiastic about carrying out the repairs and suggested that the claimants buy out their lease instead. The claimants asked the defendants how much they wanted to give up their lease, and the defendants replied ‘£3,000.’ The claimants said, ‘That’s too much – come back to us with a more reasonable offer.’ The defendants never replied. The six months that the defendants had been given to repair the premises expired without the repairs having been carried out, and the claimants sued to eject the defendants from the premises, claiming that they had forfeited the lease by not carrying out the repairs. The House of Lords held that the claimants could not do this. They had impliedly promised that they wouldn’t enforce the defendants’ obligation to repair the premises while negotiations for the defendants to surrender the premises were still going on, and those negotiations had never been definitively broken off.

For one reason or another, the law on promissory estoppel – as it was set out in Hughes – slumbered for about 70 years until it was revived by a first instance judge called Alfred Denning in the case of Central London Property Trust Ltd v High Trees House Ltd (1946) (popularly known as the ‘High Trees case’). That was another case about a lease. High Trees leased a block of flats in London from Central London Property Trust (‘CLPT’) in 1937, on a nine year lease, at a rent of £2,500 a year. High Trees then let out the individual flats to tenants. When World War II broke out, and London came under heavy bombing, High Trees found it harder and harder to find tenants who were willing to rent their flats. Accordingly, CLPT agreed in 1940 to halve the rent payable by High Trees, to £1,250 a year. And that is what High Trees paid for the rest of the war. By the time the war ended in June 1945, CLPT was in receivership (which meant its affairs were being administered by a receiver, appointed by the company’s creditors to get as much of their money back) and the receiver went to court to find out: (1) whether High Trees were now liable to pay rent at £2,500 a year; and (2) whether High Trees had been liable during the course of the war to pay rent at £2,500 a year and were therefore liable for about £8,000, which was the difference between the rent that High Trees should have paid if they had been liable to pay £2,500 a year during the course of the war, and what High Trees did pay as they only thought that they had to pay £1,250 a year.

Denning J ruled that CLPT could now put the rent back up to £2,500 a year, but that it would not be allowed to go back on its promise that it would not sue High Trees for the full amount of the rent during the course of the war. He argued that a promise not to sue for the full amount of a debt that was owed to the promisor would be binding if ‘it was intended to be binding, intended to be acted on, and in fact acted on… The courts have not gone so far as to give a cause of action in damages for breach of such a promise, but they have refused to allow the party making it to act inconsistently with it. It is in that sense, and that sense only, that such a promise gives rise to an estoppel… The logical consequence, no doubt, is that a promise to accept a smaller sum in discharge of a larger sum, if acted upon, is binding notwithstanding the absence of consideration…’. Denning J’s judgment in High Trees has given rise to three issues.

(1) Reliance

Denning J made it clear that CLPT’s promise to accept half the rent owing to it under the rental agreement was binding on it because their promise had been relied on by High Trees. But how? What did High Trees do differently that they would not otherwise have done had CLPT not promised to halve their rent?

It was suggested by Arden LJ in Collier v Wright (2008) that in a case where B owes A £1,000 and A tells B that if B pays him £500, he will forget the rest, B’s act of paying A £500 can count as reliance on A’s promise that he will not pursue B for the full amount of the debt. This is difficult to accept. In order for B to argue that when she paid A £500, she was relying on A’s promise not to sue her for the full amount, she would essentially have to argue that, ‘Had A not promised not to sue me for the full amount, I wouldn’t have paid him anything. So A’s promise induced me to do something – pay him half the amount I owed him – that I would not otherwise have done.’ It is not clear that a court would, or should, allow B to say something like that.

In suggesting that part payment of a debt could count as reliance on a promise not to sue for the full amount, Arden LJ was simply following the judgment of Lord Denning MR in the case of D & C Builders v Rees (1965) (builders who were owed £480 for work they had done on the defendants’ property were told that the defendants could only afford to give them £300 in full satisfaction of the defendants’ debt; they accepted the £300 on that basis and then tried to sue for the balance). In that case, Lord Denning said that ‘Where there has been a true accord, under which the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts upon that accord by paying the lesser sum and the creditor accepts it, then it is inequitable for the creditor afterwards to insist on the balance. But he is not so bound unless there has truly been an accord between them’ (emphasis in original). (In D & C Builders itself, there was no such ‘true accord’ as the promise not to sue for the full amount had been extorted under pressure.)

There seems no doubt – on the basis of this dictum – that Lord Denning thought that High Trees had relied on CLPT’s promise not to sue for the full amount of the rent by paying half the rent that they owed. But the problem remains: someone who pays half of what they owe can only be said to be relying on a promise that the balance will not be sued for if, in the absence of that promise, they would have paid less than half, or even nothing at all. It is difficult to see how High Trees could have argued that in the High Trees case.

(2) Suspensory, not extinctive

The fact that in High Trees, CLPT was held to be entitled to go back to charging High Trees the full rent of £2,500 a year once the war was over has given rise to the impression that promissory estoppel only operates to suspend, and not extinguish someone’s strict legal rights. There are two reasons why it is misleading to read High Trees as saying that promissory estoppel has a ‘suspensory, not extinctive’ effect on people’s rights.

First, CLPT’s rights to the full amount of the rent that was payable during the war were definitively extinguished under the law on promissory estoppel. They simply could not get that rent back, ever.

Secondly, Denning J’s judgment in High Trees makes it abundantly clear that the reason why CLPT could go back to charging High Trees rent of 2,500 a year once the war was over had nothing to do with any feature of the law on promissory estoppel, but was simply because CLPT’s agreement to accept £1,250 a year in rent from High Trees was only meant to apply while High Trees found it difficult to find tenants for their flats. As Denning J observed: ‘I am satisfied that [CLPT’s] promise was understood by all parties only to apply under the conditions prevailing at the time when it was made, namely, when the flats were only partially let, and that it did not extend any further than that. When the flats became fully let, early in 1945, the reduction ceased to apply.’

However, there is one sense in which the law on promissory estoppel can apply simply to suspend someone’s rights, rather than extinguish them. This sense was identified by the Privy Council in Ajayi v R T Briscoe (1964), in which case the Privy Council ruled that if A promises not to enforce his strict contractual rights against B, with the result that B relies on that promise, ‘[A] can resile from his promise on giving reasonable notice, which need not be a formal notice, giving [B] a reasonable opportunity of resuming his position’. So if B can, with sufficient notice, undo his act of reliance on A’s promise that he would not enforce his strict legal rights against B, then A will only be prevented from enforcing his strict legal rights for as long as is needed to give B a chance to undo whatever it is she did in reliance on A’s promise. It is only in the case where B cannot ‘resume’ her original ‘position’ that A’s promise not to enforce his strict legal rights against her will become ‘final and irrevocable’.

These dicta from Ajayi make the position adopted by Arden LJ in Collier v Wright (and, before her, Lord Denning MR in D & C Builders v Rees) that part payment of a debt can count as a sufficient act of reliance on a promise not to sue for the full amount even more difficult to sustain. If undoing the promisee’s act of reliance allows the promisor once again to enforce his strict legal rights against the promisor, then if the only thing B has done to rely on A’s promise that he would not sue her for the full £1,000 that she owes him is to pay A half of that amount, then it seems that A could escape being estopped from suing B for the money that she owes him by the simple expedient of paying B back her £500. If he does that, they are back where they started and A can then sue B for the £1,000 that she owed him in the first place. But instead of making A repay B the £500 she paid him, and then allowing him to sue her for the full £1,000 that she owed him in the first place, it would seem simpler to allow A to keep the £500 and hold that the law on promissory estoppel does not prevent him suing B for the remaining £500. This was the position taken by Viscount Simonds in Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd (1955) where he observed that: ‘the gist of the equity [that arises in promissory estoppel cases] lies in the fact that one party has by his conduct led the other to alter his position. I lay stress on this because I would not have it supposed, particularly in commercial transactions, that mere acts of indulgence are apt to create rights.’

(3) A shield, not a sword

As I have already said, the law on promissory estoppel in England only works to prevent a promisor going back on a promise that they would not enforce their strict legal rights against the promisee. As such, the law on promissory estoppel in England operates as a ‘shield’, protecting defendants from being sued by claimants who have previously promised not to sue the defendant, and does not operate as a ‘sword’, allowing claimants to sue defendants for breaking a promise that the defendant made to them. Denning J acknowledged as much in High Trees when he said of a promise that was ‘intended to be binding, intended to be acted on, and in fact was acted on’ that ‘The courts have not gone so far as to give a cause of action in damages for breach of such a promise, but they have refused to allow the party making it to act inconsistently with it.’ However, the end of his judgment could have been read as leaving the door open to claimants to sue for breach of such a promise: ‘a promise intended to be binding, intended to be acted on and in fact acted on, is binding so far as it terms properly apply.’

However, Denning slammed that door shut in the subsequent case of Combe v Combe (1951). In that case, a husband and wife were divorcing, and the husband promised to pay the wife £100 a year in maintenance. The promise was not made with the object of persuading the wife not to seek an official order for maintenance from the Divorce Court, so when the wife failed to seek such an order, her failure did not provide consideration for the husband’s promise. When the now ex-husband failed to come through with the promised maintenance payments, his ex-wife took him to court. As she could not argue that his promise to pay her £100 a year was contractually binding on him, she was forced to argue that the law on promissory estoppel prevented him going back on his promise. By this time Alfred Denning had been promoted to the Court of Appeal, and Denning LJ ruled that the wife’s claim must fail:

‘Much as I am inclined to favour the principle stated in the High Trees case, it is important that it should not be stretched too far, lest it should be endangered. That principle does not create new causes of action where none existed before. It only prevents a party from insisting upon his strict legal rights, when it would be unjust to allow him to enforce them, having regard to the dealings which have taken place between the parties.’

Since Combe v Combe was decided, the line that promissory estoppel only works to stop someone going back on a promise not to enforce his strict legal rights against the promisee, and not to stop someone going back on any other type of promise, has been pretty solidly adhered to by the English courts. The only slight weakening came in Williams v Roffey Bros & Nicholls (1991), when Russell LJ said that he would have ‘welcomed’ the opportunity to consider whether a contractor was estopped from going back on a promise to pay a sub-contractor more for getting work done on time. But otherwise it seems to be accepted (as it was by the Court of Appeal in Baird Textiles v Marks & Spencer plc (2002)) that only the UK Supreme Court can change the law so that promissory estoppel can operate as a sword, and not just a shield.

The position is, of course, different in the United States (under s 90 of the Restatement 2d of Contracts)and Australia (thanks to the decision of the High Court of Australia in Waltons Stores (Interstate) Ltd v Maher (1988)). In those countries, if A makes a promise to B with the foreseeable effect that B relies on that promise in some way, B may be entitled to seek some remedy against A if A attempts to resile from his promise. As it is the fact that B has relied on A’s promise that impels the American and Australian courts to grant B a remedy, one would expect that remedy to be tailored towards ensuring that B is left no worse off as a result of relying on A’s promise. The easiest way of doing that is to order A to perform his promise, or put B in the financial position she would have been in had that promise been performed – on the basis that B will not regret relying on A’s promise if the promise is actually kept, or is as good as kept – and that tends to be the remedy (a remedy protecting B’s ‘expectation interest’) that the American and Australian courts have adopted in promissory estoppel cases even though a lesser remedy targeted at just giving back to B what she has given up as a result of relying on A’s promise (a remedy protecting B’s ‘reliance interest’) would sometimes be just as effective in protecting B’s position, and less burdensome to A.

Proprietary estoppel

We now enter the third of the rooms in the house of Estoppel that this essay wants to look at. This room contains the law on proprietary estoppel, which applies when B has relied on a belief that she has, or will have, an interest in land that belongs to A.

If we go back to the section of this essay dealing with the law on estoppel by representation, we saw there that if B relies on A’s representation that B has an interest in land that currently belongs to A, B can take advantage of the fact that A is estopped from going back on that representation to bring a claim against A for trespass to land. It was not so much of a leap for the law to say that in such a case B could also bring a claim asking the court to recognise that she actually did have the interest in A’s land that A told her that she had. Obviously, this could not be done through the law on estoppel by representation because, as we have seen, that area of the law is simply concerned with rules of evidence on what someone can and cannot say in court. So the law on proprietary estoppel was born, under which area of law claimants could go to court to ask for the court to recognise that they had an interest in land when they had been led to believe by the landowner that they had such an interest and had relied on that belief.

The law on proprietary estoppel, unlike the law on promissory estoppel, could therefore work as a sword, not just as a shield – people could bring claims to be granted interests in land under the law on proprietary estoppel, and not just defend themselves from having claims brought against them. But the roots of proprietary estoppel in the law on estoppel by representation meant that for a long time, it was thought that the law on proprietary estoppel would only apply to protect claimants who had relied on a belief that they had an interest in land that belonged to the defendants. In Ramsden v Dyson (1866), Lord Kingsdown suggested that the law on proprietary estoppel might apply to protect a claimant who had relied on a belief that he would be given an interest in land belonging to the defendant:

‘If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation’ (emphasis added).

However, this was rejected by the majority. Lord Cranworth LC held that:

‘If a stranger begins to build on my land supposing it to be his own, and I, perceiving his mistake, abstain from setting him right, and leave him to persevere in his error, a Court of equity will not allow me afterwards to assert my title to the land on which he had expended money on the supposition that the land was his own… [But] if a stranger builds on my land knowing it to be mine, there is no principle of equity which would prevent my claiming the land with the benefit of all the expenditure made on it. There would be nothing in my conduct, active or passive, making it inequitable in me to assert my legal rights.’

It was not until the decision of the Court of Appeal in Crabb v Arun DC (1976) that it was held that the law on proprietary estoppel could be used to compel A to keep a promise that A would give B an interest in A’s land when B had relied on that promise. In that case, the claimant owned land next to the defendant council’s land. A fence separated the two pieces of land and a road ran along the council’s side of the fence. When the fence was being constructed, the council gave the claimant a point of access through the fence onto the road, so that he could access and exit his land through that point of access. But the claimant – who was thinking of selling the top half of his land that contained the point of access onto the road – asked the defendant council to grant him another point of access to the bottom half of his land. The council agreed that they would do this, and the fence when it was finally constructed contained two gaps, corresponding to the point of access to the top half of the claimant’s land that the council granted the claimant, and the point of access to the bottom half of the claimant’s land that the council had said they would give him. The claimant then sold the top half of his land. The council subsequently fell out with the claimant and blocked up the gap in the fence through which he was planning to access and exit the remaining bottom half of his land that he retained. The claimant sued, arguing that under the law on proprietary estoppel, the council could not go back on its promise to give him a point of access to the bottom half of his land. The Court of Appeal agreed. It held that the claimant should be given a right of way from his land onto the road running along the defendant council’s land. It also ordered that the claimant should be given the right of way free of charge, as the council had behaved so disgracefully in preventing the claimant gaining access to the bottom half of his land for the six or so years that it had taken to take the case to court.

After Crabb, there was nothing to stop the law on proprietary estoppel being used to grant people interests in land where they had relied on a promise that they would be given such an interest in the land. But Crabb emphasised as well that where such a promise was made, what remedy the promisee would be entitled to under the law on proprietary estoppel was discretionary. As Scarman LJ observed in Crabb, the remedy granted to the claimant in such a case would depend on what was the ‘minimum’ required to ‘satisfy the equity’ raised in favour of the claimant as a result of his relying on the defendant’s promise. Sometimes that would involve giving the claimant the interest he was promised. But sometimes that would involve giving the claimant less, or more, than he might have expected to get from the promises that were made to him.

Crabb was a ‘more’ case, where the unpleasantness of the defendant’s conduct led the court to give the claimant more than he might originally have expected to get. Pascoe v Turner (1979) was a ‘what the claimant expected’ case. The claimant was granted title to the house which she used to live in with her ex-lover, the defendant, and which the defendant had told her he would give her when he walked out on her. However, the Court of Appeal would have given the claimant less than that given her minimal reliance on the defendant’s promises (putting some curtains up) had the defendant not been subsequently so unpleasantly vindictive in trying to throw the claimant out of the house. Gillett v Holt (2001) was a ‘less’ case. The claimant was promised that he would get the defendant’s farming business when the defendant died, and on that basis had worked for the defendant for 40 years. The defendant then went off the claimant, dismissed him as an employee, and changed his will so that the claimant would no longer get anything from him when he died. The claimant sued, and the defendant was ordered to hand over to the claimant the farmhouse and 105 acres of land on which the claimant had been living with his wife before being dismissed, as well as £100,000 – but the claimant did not get the entire farming business.

In allowing: (1) a claimant to sue on a promise that he would receive an interest in land; and (2) leaving it up to the courts’ discretion to determine what remedy to give the claimant, the law on proprietary estoppel has lost touch with the idea that estoppel is about stopping someone doing something. Proprietary estoppel is about green lights, not red lights. It gives the green light to disappointed promisees to sue, so long as the promise in question was a promise to give them an interest in land, and it gives the green light to the courts to decide for themselves what is the ‘minimum equity’ required to ‘do justice’ to those promisees.

Perhaps disturbed by the thought that the law on proprietary estoppel had lost its way, Lord Scott attempted to bring this area of law under some kind of control in Cobbe v Yeoman’s Row (2008). The claimant and defendant had reached an agreement ‘in principle’ that the defendant would sell the land to the claimant if he obtained planning permission to develop the land. But a lot of the details of the deal still needed to be settled, and the defendant – unhappy with those details – pulled out of the deal after the claimant had done a lot of work trying to obtain planning permission. In an attempt to obtain some sort of remedy for his client, counsel for the claimant made five different types of claim against the defendant. One of the claims was that the claimant was entitled to a remedy under the law on proprietary estoppel.

The House of Lords held that the law on proprietary estoppel did not apply in this case. Lord Scott gave the leading judgment. He argued (at [14]) that ‘An “estoppel”  bars the object of it from asserting some fact or facts…that stands in the way of some right claimed by the person entitled to the benefit of the estoppel. The estoppel becomes a “proprietary estoppel”…if the right claimed is a proprietary right…’. As the claimant was not arguing that he had a proprietary right in the defendant’s land, and was not seeking to stop the defendant’s raising an argument that would deny that he had such a right, then the law on proprietary estoppel was irrelevant here. Moreover, Lord Scott held (at [18]) that for the law on proprietary estoppel to apply, a claimant would have to received assurances that he had a ‘certain interest’ in the defendant’s land, and there was no certainty in this case that the claimant would have any kind of interest in the defendant’s land as whether or not he would obtain such an interest would depend on whether his negotiations with the defendant were successful. Furthermore, Lord Scott expressed the view (at [29]) that the law on proprietary estoppel could not be used to sue on an agreement which a statute had rendered invalid and unenforceable.

The limitations that Lord Scott attempted to place on the operation of the law on proprietary estoppel in Cobbe v Yeoman’s Row led two academics, Ben McFarlane and Andrew Robertson, to announce ‘The death of proprietary estoppel’ in [2008] Lloyd’s Maritime and Commercial Law Quarterly 449. However, normal service in the law on proprietary estoppel was resumed just a year later when the House of Lords decided Thorner v Major (2009). In that case, David Thorner worked for 30 years unpaid for his father’s cousin, Peter Thorner, on Peter’s farm. At various times, Peter said things that made David believe that he would inherit the farm on Peter’s death. However, Peter died without having made a valid will; the one will he did make, which did leave the farm to David, he had destroyed when he fell out with one of the legatees. David claimed that he was entitled to the farm under the law on proprietary estoppel given that he had done substantial work for Peter because he had been led to believe that he would inherit the farm on Peter’s death.

Consistently with his judgment in Cobbe v Yeoman’s Row, Lord Scott was unhappy about allowing Peter to take advantage of the law on proprietary estoppel to obtain an interest in the farm: ‘I would prefer…to confine proprietary estoppel to cases where the representation, whether express or implied, on which the claimant has acted is unconditional…’ (at [20]). Cases involving ‘representations…of future benefits, and subject to qualification on account of unforeseen future events’ should be dealt with by other areas of the law, such as the law on when a claimant can claim a constructive trust over property belonging to another.

However, this time Lord Scott was in the minority. The leading judgment was given by Lord Walker, who saw no problem in the fact that Peter’s promises (such as they were) that David would inherit the farm on his death must have been conditional on nothing else happening that would require him to dispose of the farm (for example, to fund his being cared for in his old age). He quoted (at [57]) Hoffmann LJ in Walton v Walton (1994): ‘equitable estoppel…does not look forward into the future and guess what might happen. It looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept.’ As Peter had now died, his promises that David would inherit had fallen due to be performed, and in the circumstances it would have been unconscionable if David did not obtain the farm.

The House of Lords’ decision in Thorner seems to make clear that Lord Scott’s attempted retrenchment of the law on proprietary estoppel has failed, and this area of the law has been restored to the position it occupied before Cobbe v Yeoman’s Row was decided (though Lord Walker’s strictures in Cobbe v Yeoman’s Row (at [46]) that the law on proprietary estoppel is not ‘a sort of joker or wild card to be used whenever the court disapproves of the conduct of a litigant who seems to have the law on his side’ will survive).

Knocking down the walls

We have now looked at each of the three different rooms in the house of Estoppel that this essay has been focussing on. I hope that why we have these rooms, and why they have developed in the way they have, has been made relatively clear. But looking at each of these rooms in isolation creates a tendency to think of each room in isolation and to simply concentrate on what aspects of each room could do with improvement or tidying up, given what that room is trying to do. But comparing the rooms with each other raises a number of very difficult issues which are going to have to be addressed at some stage, either by the courts or by Parliament.

First, should the law on estoppel have ever gotten into the business of stopping people going back on their promises? Did cases like Hughes v Metropolitan Railway and the High Trees case in fact impede the rational development of the law of contract by relieving the law of contract from the necessity of determining whether cases like Foakes v Beer (1884) were rightly decided in denying contractual effect to promises not to sue for the balance if a debt was paid in part? And given that Foakes v Beer decided not to recognise that such promises were contractually binding, was it legitimate for a first instance judge like Denning J to rule that such promises were binding anyway under a different area of the law?

Secondly, could the law on promissory estoppel learn something from the law on proprietary estoppel and not be so one-dimensional in terms of its response to the fact that A’s promise to B that he will not enforce his strict legal rights against B has been relied upon by B? Instead of preventing (estopping) A from enforcing his strict legal rights, could the law allow A to enforce his strict legal rights but as a condition of doing so, require A to indemnify B against the consequences of having relied on A’s promise? The decision of the Privy Council in Ajayi v R T Briscoe (1964) provides the courts with the justification they would need for taking such a step: there is nothing wrong with A’s enforcing his strict legal rights, so long as B’s reliance on A’s promise can be unwound. But would adopting such a ‘tailored’ response to the fact of B’s having relied on A’s promise render the law unacceptably uncertain?

Thirdly, can it be justified that the claimants who have relied on a promise to give them an interest in land can sue on those promises, while claimants who have relied on a promise to give them money cannot? It is hard to see why promises in relation to land are privileged – in terms of the sanctions against breach that they attract – over other kinds of promises. Either the law on proprietary estoppel needs to be scaled back, along the lines suggested in Cobbe v Yeoman’s Row, or the law on promissory estoppel needs to be expanded, as has already happened in the United States and Australia. But the current position seems unsustainable.