Introduction
Estoppel is a legal doctrine that prevents a party from asserting a claim or right that contradicts what they previously said or did, especially when another party has relied on those statements or actions. This principle operates to prevent unfairness or injustice that could arise from a party’s inconsistent behavior. It is a complex area of law with various applications, extending across contract law, property law, and public law. Several distinct types of estoppel exist, each with its own specific requirements and applications, but all are rooted in the idea of preventing inconsistency and promoting fairness. Key requirements generally involve a representation or promise, reliance by another party, and resulting detriment or inequity if the inconsistent position is allowed. This technical principle ensures that parties are held accountable for their communications and conduct.
Promissory Estoppel
Promissory estoppel, a significant equitable doctrine, prevents a party from going back on a promise, even if that promise is not supported by formal consideration. This form of estoppel arises when a clear promise is made which a reasonable person would rely upon, and the promisee does, in fact, believe and act upon that promise in good faith. A central requirement is that the promisor later retracts the promise, which has caused financial or other tangible harm to the promisee. In Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130, a landlord agreed to reduce rent during wartime; the court held that the landlord was estopped from claiming the full rent for that period once conditions returned to normal. This case established the precedent for promissory estoppel by preventing the claimant from asserting the strict legal rights that existed in the original contract. The doctrine tempers the strictness of the common law's requirement for consideration.
A promisee is required to demonstrate that they have altered their position in reliance of a promise and this is to demonstrate that it would be inequitable for the promisor to go back on the terms of the agreement. This is also described as a detrimental reliance by the promisee in acting upon the representations of the promisor. It is not a necessary requirement of promissory estoppel that the claimant suffered detriment as part of reliance, however it will certainly help a claim if this is present (see Greasley v Cooke [1980] 3 All ER 710).
In D & C Builders v Rees [1966] 2 QB 617, promissory estoppel did not apply due to the fact that the promisee (Rees) acted inequitably, holding the builders at ransom, by applying economic duress to reduce the debt owed. The court held that in these circumstances it was not inequitable for the builders to enforce their legal rights. The judgement also established that under promissory estoppel, the original contractual obligation may become extinguished rather than merely suspended when it relates to a one-off payment (see also Collier v Wright [2007] EWCA Civ 1329, [2008] 1 WLR 643). Where payments are periodic such as in Tool metal Manufacturing v Tungsten Electric Co Ltd [1955] 2 All ER 657, the operation of promissory estoppel is suspensory; meaning that the original obligation can be reinstated after notice.
Promissory estoppel has been deemed to be a defensive tool used by claimants to defend themselves against actions brought by promisors. Therefore a cause of action itself cannot be founded on promissory estoppel, as demonstrated in Combe v Combe [1951] 2 KB 215.
Proprietary Estoppel
Proprietary estoppel is an equitable doctrine that arises where a landowner has created an expectation that another person will gain a proprietary interest in land, and the other person relies on that expectation to their detriment. Unlike promissory estoppel which prevents a party from enforcing legal rights, proprietary estoppel can be a cause of action and can be used to create rights, especially regarding land ownership. Key elements include a representation or assurance, reliance upon that assurance, and detriment suffered as a result of reliance. These requirements are often intertwined and can often not be assessed individually (see Gillet v Holt [2000] 2 All ER 289). The representation may be express or implied via conduct (see Crabb v Arun DC [1976] Ch 179). The doctrine is most commonly applied in the context of familial relationships though it may also apply in commercial situations where there is a sufficient degree of certainty surrounding a property interest (see Dowding v Matchmove [2016] EWCA Civ 1233).
Detriment in this context is not a narrow concept and it need not consist of expenditure or financial detriment, so long as it is substantial ( Gillet v Holt [2000] 2 All ER 289). Detriment must also be assessed in light of any benefits the claimant has received (see Henry v Henry [2010] 1 All ER 988).
Once a claimant demonstrates a proprietary estoppel has arisen, the court has the discretion to provide an appropriate remedy (see Crabb v Arun DC [1976] Ch 179). Generally the courts will seek to ensure the remedy is proportionate to the detriment suffered (see Habberfield v Habberfield [2019] EWCA Civ 890), though historically, as in Suggitt v Suggitt [2012] WTLR 1607, awards were made even if this meant that the claimant’s expectations were satisfied fully. An equitable remedy may take any form of payment or a formal proprietary right such as an easement or ownership of a freehold or leasehold (see Pascoe v Turner [1979] 1 WLR 431) and may act in a suspensory or extinctive manor (see Williams v Staite [1979] Ch 291).
In Thorner v Major [2009] UKHL 18, the House of Lords held that, in the context of a close familial relationship, conduct over a long period was sufficiently clear to indicate to a reasonable person that they would inherit the family farm, even though no such promises had been expressly made. This decision highlights that proprietary estoppel can be established even in the absence of clear and unequivocal promises, provided that assurances and reliance are evident when viewed within their particular context.
However, proprietary estoppel will not arise in commercial negotiations where the parties are fully aware of their rights and intend to be bound only when a formal contract has been made (see Yeoman’s Row Management Limited v Cobbe [2008] UKHL 55, and Generator Developments v Lidl UK GmbH [2018] EWCA Civ 396). The policy concern for clarity in commercial negotiations was a key factor in limiting the operation of proprietary estoppel in those decisions. This position contrasts with the decision in Dowding v Matchmove [2016] EWCA Civ 1233 where a common intention constructive trust was found to be present in a commercial context. This means that there will be instances where a trust may arise even though a proprietary estoppel claim might fail.
Contractual Estoppel
Contractual estoppel, is a form of estoppel that arises directly from a contract that parties enter into. Unlike other types of estoppel, it doesn’t depend on demonstrating reliance but instead focuses on the explicit terms of an agreement. It operates to prevent parties from denying the existence of a factual state of affairs that they have agreed to, even if such facts are untrue (see Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd [2006] EWCA Civ 386). The key element here is that the parties explicitly agree in a written contract that certain facts are correct. The parties will then be contractually bound to those facts regardless of their actual truth.
A common example of this is a non-reliance clause in a contract, where a party will explicitly state that they are not relying on any statements or representations that were made prior to their agreement (see Springwell v JP Morgan Chase [2010] EWCA Civ 1221). The non-reliance clause effectively creates a contractual estoppel which works as a cause of action against a claim of misrepresentation. Such non-reliance clauses must be compliant with section 3 of the Misrepresentation Act 1967, which stipulates that such terms must be reasonable as per section 11 of the Unfair Contract Terms Act 1977 (see First Tower Trustees Ltd v CDS Ltd [2018] EWCA Civ 1396). The test for reasonableness can be a difficult one to overcome and requires the courts to evaluate the terms of the contract in light of all facts and circumstances.
Estoppel by Convention
Estoppel by convention occurs when parties to a transaction act upon a common assumption or understanding, even if that understanding is not expressly stated in a formal agreement. This type of estoppel prevents a party from denying the shared assumption that has formed a basis of their dealings (see Amalgamated Investments v Texas Commerce Bank [1982] QB 84). It is necessary for the assumption to be shared or agreed upon by both parties. Estoppel by convention was held to arise, in the above mentioned case, when two parties mistakenly assumed that a contractual agreement existed between them where there was no written contract that proved as such.
Estoppel by convention was explained by Lord Denning MR as when the parties are ‘under a common mistake as to the meaning or effect of a contract, it replaces the original terms of the contract by a conventional basis’. Importantly, such a shared assumption does not need to be legally valid to act as an estoppel. Estoppel by convention may be used as both a shield or a sword and therefore be the cause of action itself. In Amalgamated Investments v Texas Commerce Bank [1982] QB 84, Lord Brandon said: ‘While no one can found a cause of action on an estoppel, he can succeed on a cause of action in which without the estoppel he will fail’.
The intention of the parties has to be to affect their legal relations (see Baird Textile Holdings Ltd v Marks & Spencer [2001] EWCA Civ 274) and this differentiates it from proprietary estoppel which does not necessarily need this requirement. Estoppel by convention can arise from mistake or misrepresentation on behalf of either party.
Estoppel and Public Law
Estoppel principles are not limited to private law and can also have applications in public law. One example is in the use of legitimate expectations, which are akin to promissory estoppel when used in judicial review cases. The term ‘legitimate expectation’ is a means through which the court holds public bodies to account in accordance with their promises. Legitimate expectations can be both procedural and substantive and may be express, implied or arise from existing policy. Such expectations may arise from promises from public bodies, or from an established practice. For a legitimate expectation to exist, the promise must be clear, unambiguous and devoid of relevant qualification (see R v Foreign Secretary, ex parte Bancoult (No 2) [2008] UKHL 61). There also must have been an undertaking made from a public body. It is not necessary that the claimant relied on that promise to their detriment (see Secretary of State for the Home Department v The Queen (Rashid) [2005] EWCA Civ 744). In certain circumstances a public body will be prevented from acting in a way that frustrates a legitimate expectation. The justification for such frustration must be in the public interest. The courts are also able to offer a range of remedies including procedural protections, full substantive review, or compelling the public authority to treat the legitimate expectation as a relevant consideration (see R v Devon CC, ex p. Baker [1995] 1 All ER 73).
In cases where a Directive of the European Union has not been properly implemented, a member state may be estopped from denying the direct effect of such a directive (see Case 148/78 Ratti [1979] ECR 1629). The unexpired directive could not be relied upon by the individual. Furthermore, public authorities will be prevented from taking advantage of their own failures to comply with EU law and can therefore be held accountable to EU directives directly in a public law context (see Case 152/84 Marshall [1986] ECR 723).
Conclusion
The doctrine of estoppel encompasses a range of principles designed to prevent injustice by enforcing consistency in legal interactions. From promissory estoppel, which addresses promises unsupported by consideration, to proprietary estoppel, which creates rights based on reasonable expectations and detrimental reliance, estoppel ensures fairness and promotes equitable conduct. Contractual estoppel provides for parties to be bound by the explicit terms of an agreement, highlighting the autonomy of the parties when agreeing facts within contracts. Estoppel by convention operates to support what was otherwise a misinformed position where both parties had agreed to act under a common assumption or understanding. The applications in public law further demonstrate the flexibility of these concepts. The complexities of estoppel underscore its importance as a tool for balancing formal legal requirements with the demands of justice and equity. These principles continue to evolve, adapting to address novel circumstances whilst maintaining the central goal of preventing inconsistent positions where reliance and detriment exist.
