B e f o r e :
LORD JUSTICE BUTLER-SLOSS
LORD JUSTICE ROCH
LORD JUSTICE HOBHOUSE
____________________
| |
PATRICIA SLEDMORE |
|
| |
Plaintiff/Appellant |
|
| |
-v- |
|
| |
ALEC JAMES DALBY |
|
| |
Defendant/Respondent |
|
____________________
Computer Aided Transcript of the Palantype notes of John Larking
Verbatim Reporters, Chancery House, Chancery Lane, London WC2
Telephone No: 071 404 7464
Official Shorthand Writers to the Court
____________________
MR. LIONEL SCOTT (Instructed by Messrs Pinsent Curtis, 41 Park Square, Leeds, LS1 2NS) appeared on behalf of the Appellant.
MR. GORDON LAKIN (Instructed by Messrs Langleys, Queens House, Micklegate, York, YO1 1JH) appeared on behalf of the Respondent.
____________________
HTML VERSION OF JUDGMENT
____________________
Crown Copyright ©
ROCH LJ:
This action concerns a dwelling house, 15A, The Green, Acomb, York. The freehold was bought on the 5 March 1962 by the appellant and her late husband, Joseph Harrison Sledmore. The property was part of a larger holding which comprised in addition to this house, three further dwelling houses, a large workshop, showroom and land. In the workshop and showroom the businesses of panel beating and the sale of second hand cars were carried on by a company, Danebury Panel Works Ltd, the shares in which were owned by Mr & Mrs Sledmore and of which they were directors.
15A was occupied by Mr Sledmore's brother until 1965, when Mr Sledmore's brother moved elsewhere.
At that time the respondent married Jacqueline Sledmore the daughter and eldest child of Mr & Mrs Sledmore. The respondent was a fitter/welder who was in employment at that time. He was not employed by Danebury Panel Works Ltd. Following their marriage, the respondent and Jacqueline Dalby as she then became lived at 15A. 15A was a two bedroomed terraced cottage. Jacqueline Dalby worked as a mobile hairdresser, although such work was irregular and provided her with an income which could properly be described, colloquially, as pin money. They paid rent for No 15A, the rent being paid by Jacqueline Dalby to her mother, the appellant. Initially that rent was £2 per week and rose to the figure of £6 per week in 1976 when it ceased to be paid. The Recorder in his judgment found that that rent was somewhat below the rent that would have been obtainable for the property on the open market.
In 1973 Mr Sledmore discussed selling the house to the respondent and Jacqueline Dalby for the sum of £6,000 on condition that he could buy back the house. The respondent's evidence was that he and his wife were not interested in that proposal.
In early 1976 Mr Sledmore, who had guaranteed a debt for the company of some £2,000 wished to raise £2,000. On the 22 September that year he visited his bank manager who recorded the conversation between them. That record was to the effect that he, Mr Sledmore, wished to transfer 15A to his daughter and son-in-law for value and Mr Sledmore was inquiring whether his daughter and son-in-law would be able to borrow £2,000 from the bank with the house as security, so as to be able to pay the sum of £2,000 to him. The evidence before the Recorder indicated that Mr Sledmore offered the house to his daughter and son-in-law at the sum of £6,000 suggesting that they raise £2,000 of that figure by way of mortgage. The respondent's evidence was that he and his wife had already been told by Mr Sledmore on more than one occasion that ultimately the house would be theirs; that Mr Sledmore as a term of transferring the house to them at that time wanted a provision which would enable him to buy back the house if he wished to do so. The offer was unattractive according to the respondent because if he and his wife bought the house from his father-in-law the only person to whom they could sell the house would be his father-in-law who might not be in a position to buy it which might result in them missing another property which they might wish to buy. The respondent also asserted that for the sum of £6,000 he and his wife would have been able to buy an attractive semi-detached house, the implication being that No 15A in 1976 was not worth £6,000.
A further event in 1976 which is of considerable importance in this case was the discovery that Jacqueline Dalby was suffering from breast cancer. She underwent an operation for removal of a breast. At about the same time the respondent became unemployed. As a consequence of those two events, the appellant ceased to accept rent from Jacqueline Dalby and thereafter the Dalby's lived rent free at No 15A until her death in 1983. Since 1983 the respondent has lived there rent free, initially with both his daughters, but since the marriage of his elder daughter with the younger daughter who is now 27 years of age. The respondent has a female partner who lives in York. The use the respondent makes of No 15A is that he spends every Thursday night there and most Tuesday nights. Apart from those nights he lives with his female partner in York. The respondent is in employment. The respondent's younger daughter also has employment as a mobile hairdresser.
The Judge found that between 1976 and 1979 the appellant and her husband formed the intention of giving No 15A to their daughter and son-in-law, and that Mr Sledmore told the respondent and Jacqueline Dalby of that intention. The appellant during her evidence had said that that was well known within the family. That was an intention she and her husband had formed when Jacqueline became ill. The judge found that the appellant although she might not have been present when her husband told the respondent and Jacqueline of their intent certainly knew all about it. The judge further found that between 1976 and 1979 major improvements to the house were carried out by the respondent. Those were the construction of a bathroom on the ground floor and a further bedroom out of the old bathroom on the first floor, renovation of the kitchen with the installation of new kitchen units and a secondhand split level cooker, and the installation of central heating. Some of the cost of this work was defrayed by Mr Sledmore, for example he paid for the bathroom units and for the necessary plastering work. The remainder was done by the respondent who also purchased the necessary equipment and materials to complete the work. In his judgment the Recorder made no specific finding as to the sums expended by the respondent nor as to the number of hours work carried out by him. The evidence contained in the respondent's witness statement and in the transcript of his evidence to the Recorder indicate that although the sums in total were probably less than £1,000, they were substantial in relation to the then value of the property. There was no evidence as to the extent to which the value of the property was enhanced by this work.
In 1979 the appellant and her husband contacted their solicitors because they wished to ensure that their daughter inherited No 15A to the exclusion of the respondent. Correspondence passing between the Sledmores and their solicitor and the wills which resulted from their instructions to their solicitor are in the appeal bundle. Counsel accepted that the Recorder in his judgment accurately summarised the effect of the previous wills made by the appellant and her husband in 1972 and of the new wills made in 1979. Briefly Mr Sledmore's 1972 will provided that the income from his residuary estate was to go to the appellant for her life and after her death the residuary estate was to be held in equal shares for his children who attained the age of 18 with a survivorship clause in the case that any one of them predeceased him leaving children. The appellant made a will in virtually the same form which the Recorder regarded as a mutual will. In 1979, on the advice of their solicitors, new wills were executed. Prior to the execution of those wills, Mr Sledmore conveyed his share in No 15A to the appellant making her the sole owner of the fee simple in that property. His 1979 will provided that if the appellant predeceased him then his estate was to go to such of his children as survived him and if more than one in equal shares absolutely provided that if they had died in his life time leaving issue such issue were to receive that child's share by way of substitution. If the appellant did survive him he left the whole of his estate on trust for sale to hold it in two equal parts one part for the appellant and the other part for his two sons. In the event of the appellant surviving him Mr Sledmore left nothing to his daughter Jacqueline.
The will of the appellant made in 1979 in its first substantive gift devised to Jacqueline Dalby "absolutely free of any tax which may be payable thereon or attributable thereto by reason of the appellant's death her freehold property known as 15A, The Green, Acomb". There was no gift over in the event of Jacqueline Dalby predeceasing her mother. Subsequently in the will the remainder of her estate, after specific bequests relating to her jewellery and personal belongings, was divided equally among her three children or their issue if one of them died within her lifetime. The result was that if, as in fact happened, Jacqueline Dalby died in her mother's lifetime, the house 15A would go into the residue and be divided along with the rest of her estate apart from her personal effects among her three children or their issue if her children predeceased her leaving issue.
Mr Sledmore died in 1980. Jacqueline Dalby died in 1983. In 1985 the company went into liquidation. A property and development company was incorporated, which redeveloped part of the property as 16 flats forming sheltered accommodation for elderly persons. In 1987 most of the garden of 15A was taken for the purposes of that development with the acquiesence of the respondent. In that year the appellant's sons, according to the respondent's statement made it clear to him that they wanted him out of No 15A so they could develop these flats. Having taken most of the garden for that development the appellant's sons started asking the respondent for rent which according to his statement he replied that if they wished to charge rent they should serve him with a Notice. At about the same time No 15A was reroofed by the Sledmores. The insurance on the property has always been paid by the Sledmores as was the telephone bill in respect of No 15A until 1987. The respondent has paid the rates or their equivalent and the other outgoings on the house.
The appellant gave evidence to the Recorder that she lives at No 15 which is a house which is now too large for her. Further it is a house that requires repairs. There is a mortgage of £40,000 on that house the interest on which is being paid by the Department of Health and Social Security. There are arrears on that Mortgage of £6,000. The house had been used to guarantee the over draft to the bank of Danebury Panel Works Ltd. The appellant in her witness statement said that she was 68 years of age, the date of that statement being 22 November 1993. She was entirely dependant upon Supplementary Benefit and her Widows Pension,. The respondent in his witness statement expressed doubts as to the financial position of the appellant but as Mr Scott has pointed out during argument there was no evidence to contradict the appellant's account of her means and the incontrovertible facts are that she is on Supplementary Benefit and the Department is paying the interest on the Mortgage.
The Recorder came to these conclusions:
First that the tenancy of Jacqueline Dalby and the Respondent came to an end in 1976 when it was replaced by the equity under which the respondent was then occupying the property. The Recorder dismissed the appellant's claim for possession and, on the respondent's counterclaim, made a declaration that the respondent was personally entitled to live at 15A during his life, so long as he wishes. The respondent did not have any transmissible interest in the property; he did not have a right to assign his licence; he had "a non-assignable, non-transmissible personal licence to occupy so long as he wishes and once he ceases to live there the licence comes to an end". The Recorder went on to add that the respondent's daughter was entitled to live in the house so long as the respondent lived there. The Recorder held that the licence included the obligation for the respondent to maintain the property.
The Recorder decided that the wills of 1979 and subsequent deaths of Mr Sledmore and Jacqueline Dalby did not alter what had happened between 1976 and 1979. Prior to the making of the 1979 wills representations had been made and work had been carried out and money spent by the respondent. No work or expenditure of any consequence had been made by the respondent after the 1979 wills. On the 12 September 1979 when the undivided share of Mr Sledmore was conveyed to the appellant, the appellant was not a purchaser for value nor was she a purchaser without notice of the respondent's equity. Consequently the conveyance of the 12 September 1979 had no effect on the respondent's equity and the freehold acquired by the appellant was subject to it. The judge found that the appellant was aware of and approved of what was being said in 1976 by her husband. The Judge then directed himself as to the law and during that part of his judgment he cited this extract from the judgment of Lord Denning in Inwards -v- Baker [1965] 2QB 29 at page 37 C:
"So in this case, even though there is no binding contract to grant any particular interest to the licensee, nevertheless the court can look at the circumstances and see whether there is an equity arising out of the expenditure of money. All that is necessary is that the licensee should, at the request or with the encouragement of the landlord, have spent the money in the expectation of being allowed to stay there. If so, the court will not allow that expectation to be defeated where it would be inequitable so to do."
The Recorder's essential finding comes at page 27 E of his judgement:
"There was plainly knowledge and, to say the least, acquiesence, if not outright encouragement by Mr and Mrs Sledmore that they (referring to the Dalby's) should improve that house. As far as Mr Dalby was concerned, having been told in 1976, at the time of his wife's breast illness that the house would be theirs, he set about to improve it and of course motives were to improve it for the benefit of his family. ..... At all events I am satisfied that the circumstances which give rise to the equity are all met in this case. Mr Dalby did act to his detriment, he did incur expenditure in the way I have said. He did so in the expectation that he would obtain an interest. I do not find that he ever thought at the relevant time that he actually had already acquired an interest. I find that his expectation was and ought to have been that he would acquire an interest sufficient to justify the expenditure. I find that this was encouraged by Mr Sledmore particularly with the participation of Mrs Sledmore and the knowledge of this belief was there at the time when the expenditure was incurred. He (referring to Mr Sledmore) must have known that the property was his and that his property was being improved and he was entitled to interfere .... It was all done by Mr Dalby with the object of assisting his family, of course, but in the knowledge fostered by Mr & Mrs Sledmore that it would be theirs in due course."
The Recorder then went on to consider how to give effect to the equity and reminded himself that cases such as Crabb -v- Arun District Counsel [11976] Ch 179 and Pascoe -v- Turner [1979] 1 WLR 431 had laid down that a court must search for "the minimum equity to do justice" to the person "who is entitled to the equity, and shaping it to the facts of the case". The Recorder then went on to ask what it was that Mr Dalby was entitled to expect. The Recorder found that he was bound to look at the parties circumstances at the present time. At page 30 B of his judgment he said:
"But, as I say, one has to look at the parties and try to find what is a legitimate and minimum equity that can give effect to the equity that has arisen. I have concluded that the way in which this equity can be properly, and should be properly, put into effect in this case is not by giving Mr Dalby a beneficial interest in the property in the sense of acquiring any of the equity, either the whole estate or any smaller part thereof. .....; I take the view that in the first place, and the simplest thing I can do, is simply to dismiss the claim for possession."
The Recorder then went on to make the declaration that the respondent was entitled to a non-assignable personal licence as I have already set out.
A cross-notice of appeal was served on behalf of the respondent in this case claiming that the respondent should have had the property transferred to him absolutely as owner in fee simple. Mr Lakin did not pursue that claim before us.
Mr Scott on behalf of the appellant distilled the grounds of appeal in the notice of appeal and in his skeleton argument down to three points which were helpfully set out in his "Skeleton of the Skeleton" handed to the court at the outset of the hearing of this appeal. The first point urged by Mr Scott was that at its highest the evidence in this case disclosed no more than statements by Mr Sledmore of his testamentary intention, and that such statements should not be permitted to form the basis of an equity arising by way of proprietary estoppel because that would place a fetter on testamentary freedom. Nothing that was said by Mr Sledmore could have raised in Mr Dalby an expectation or belief that Mr Dalby alone was to have any interest in the property. It was clear at all times that Mr & Mrs Sledmore intended the respondent to have an interest in the property only as long as he was the husband of their daughter and living with her at the property. By 1979 Mr & Mrs Sledmore clearly intended to exclude the respondent from having any proprietary interest in the property. Mr Scott relied particularly on an intervention by the Recorder during the evidence of the respondent at page 34 D of the Transcript of Evidence which was not disputed then or at any later time by Mr Lakin namely:
"I do not think that has ever been suggested, Mr Scott, from my understanding of the evidence. I do not think it has ever been suggested that father-in-law expressed a desire to benefit this witness as opposed to his wife. Far from it. The suggestions seems to me that he expressed a wish more than a suggestion, the evidence seems to be that he expressed a wish to benefit them as a couple."
Consequently, submitted Mr Scott, the death of Jacqueline Dalby in 1983 changed the position substantially and the Recorder should have held that whatever equity the respondent had in the property would have terminated a reasonable time after his wife's death. Ancillary to this submission is Mr Scott's criticism of the Recorder's judgment at page 6 D where the Recorder deduced from the entry in the bank records for the 22 September 1976 that Mr Sledmore was telling the bank manager that he intended to give one of his cottages to his daughter and his son-in-law and that the £2,000 mentioned in that note was not an integral part of the proposed gift. Mr Scott argued that that entry in the bank records by the bank manager simply could not be read in the way in which the Recorder had chosen to read it.
The second ground relied on by Mr Scott is that if the events between 1976 and 1979 did create an equity, that equity was satisfied by the appellant's will made in 1979. If the respondent had not received the benefit he expected or believed he would receive, that was due to the forces of destiny in the shape of his wife's death and not to any attempt by the appellant to enforce her strict legal rights.
The third ground is put in two ways. First that the judge was wrong in his conclusion as to the extent of the equity. Alternatively the judge should have found that it was no longer inequitable to allow the respondent's expectation to be defeated.
Mr Lakin at the outset of his argument stated that he relied on this being a case of proprietary estoppel and not merely promissory estoppel. Mr Lakin made that point because of the difference between the effect of promissory estoppel which may be only temporary whereas the effect of proprietary estoppel is permanent in that it will last as long as the interest created by the proprietary estoppel endures. For that reason, the court's function in determining the extent of the equity created by a proprietary estoppel is especially important, and it is in relation to this area that I regard the Recorder's decision as being deficient. Because of the view that I have formed concerning the third broad ground advanced by Mr Scott on behalf of the appellant, I do not consider it necessary to examine in detail either of the first two broad grounds.
In relation to those two grounds I will simply content myself with saying that the representation made by Mr Sledmore with the appellant's knowledge and consent in 1976 that one day this house would become the property of Jacqueline Dalby and the respondent and the encouragement given by Mr Sledmore to the respondent to carry out the works of improvement to the property between 1976 and 1979 contained by necessary implication a representation that Mr & Mrs Dalby and their children should be allowed to remain in the house, if that was their desire, until such time that the house was willed to them. The appellant's will in 1979 was not, in my view, a satisfaction of that expectation.
The respondent's expectation, in my opinion, would have been that he would remain in the house certainly as long as his wife was alive and he was living with her and, probably, whilst his daughters were still living with their parents or, following his wife's death with him, if only because the prime reason for the improvement in the house was that the elder daughter had by 1977 reached the age where she needed a bedroom of her own.
The task for a court in determining the extent of an equity created by proprietary estoppel is set out in the 29th Edition of Snell's Equity at page 576.
"The extent of the equity is to have made good, so far as may fairly be done between the parties, the expectations of A which O has encouraged. A's expectation or belief is the maximum extent of the equity, so that if, for example, A's expectation is that he could stay in a house for the rest of his life, this will not be given effect to in such a way as to confer on him the rights of a tenant for life under the Settled Land Act 1925, for that, with its concomitant right of sale, would give him a greater interest than he was entitled to expect. Accordingly A may have to be content with something less than his expectations, eg some form of lease at a rent. In other cases a full life interest operating under the Settled Land Act 1925 may be given. Further, the position of O has to be considered. Thus the courts are reluctant to compel two persons to live together when they have fallen out, and even after O has died, the due administration of his estate and the rights of those taking under it are factors to be considered."
I would respectfully adopt that passage as an accurate statement of the decided cases and the law. In the present case the respondent clearly has assumed that he will be allowed to stay in this house for the rest of his life rent free. In my judgment this is a case where the respondent has to be content with something less than his expectations. The Recorder should have considered the position of the appellant and her needs and balanced those against the present use of the premises made by the respondent and his present need for them.
Although the Recorder acknowledged the existence of the principles stated in the passage from Snell which I have cited, for example at page 29G where he said:
"I am bound to look at their circumstances today as things have turned out since then."
and again at page 30 B:
"One has to look at the parties and try to find what is a legitimate and minimum equity that can give effect to the equity that has arisen,"
nowhere does the Recorder make any assessment of the respondent's present use of and need for the house on the one hand or of the appellant's situation and need for the house on the other. Nor does the Recorder at any point ask himself the question whether it was still inequitable to allow the respondent's expectation to be defeated by permitting the appellant to enforce her legal rights, as owner of the property.
It is necessary to consider at this stage whether it is appropriate for this court to send the matter back to the Recorder for him to resolve these issues or whether in the light of the material before this court these issues can be resolved at this hearing?
We have the advantage of an appeal bundle which contains the witness statements of all those called to give evidence, who numbered some ten persons, together with a full transcript of their evidence. In addition in the appeal bundle is to be found the relevant correspondence, the notes made by Mr Sledmore's bank manager in 1976 and the wills made by Mr & Mrs Sledmore in 1972 and in 1979 together with the conveyance by Mr Sledmore of his share in the property to Mrs Sledmore dated 12 September 1979. We have also had the advantage of argument from Mr Scott and Mr Lakin on this aspect of the case.
In those circumstances in my judgment, these issues can be resolved by this court.
The conclusion that I have reached is that it is no longer inequitable to allow the expectation created in the respondent's mind by Mr Sledmore's oral statements and by his encouragement of the respondent to carry out the improvements to the house which were carried out between 1976 and 1979 to be defeated. The respondent has lived rent free in this accommodation for over 18 years. During that time the insurance of the property has been paid for by the Sledmore family and the property has been reroofed at their expense. The use made by the respondent of the house at the time of the trial was minimal and it is clear that there was accommodation for him elsewhere. He is a man in employment and therefore capable of paying for his accommodation. Whilst the respondent has lived in this house his elder daughter has married and left home and his younger daughter has reached the age of 27 and is able to maintain herself.
On the other hand, the evidence indicates that the appellant is vulnerable in that she is liable to lose her present accommodation and that she has a pressing need for this house which is her property. The respondent at the outset of the hearing before the Recorder conceded that he was not a tenant because it was recognised that he had no prospect of resisting the appellant's claim for possession based on Case 9 of Schedule 15 to The Rent Act 1977, that is to say the possession of the house was reasonably required by the appellant for occupation as her own residence.
I would allow this appeal and make an order for possession in the appellant's favour on the basis that the minimum equity to do justice to the respondent on the facts of this case was an equity which has now expired.
HOBHOUSE LJ: I agree that this appeal should be allowed as proposed in the Judgment of Roch LJ and I agree with his reasons for so doing.
However, I would go further than Roch LJ; I consider that the judgment appealed from is open to more fundamental criticism. The decision of the County Court Judge in the present case was said to be an application of the principles of equitable estoppel, yet his conclusion produces a clear injustice. The doctrine of estoppel exists for the purpose of enabling courts to do justice, modifying what otherwise might be the strict legal rights of the parties. If the supposed application of such a doctrine produces injustice not justice, then something has gone wrong.
I need not rehearse the facts which have been fully set out by Roch LJ. The essentials can be briefly set out. In 1962 the freehold title of number 15A was purchased jointly by Mr and Mrs Sledmore. In 1965 their daughter Jacqueline married Richard Dalby and they moved into the occupation of number 15A as joint tenants of Mr and Mrs Sledmore. There was no formal lease but Mr and Mrs Dalby paid a weekly rent, the Judge found at a favourable rate. In 1966 and 1969 the two children of the Dalby marriage were born. In 1973 the Dalbys were offered an opportunity to purchase number 15A for £6,000 but declined the offer. In 1976, Mr Sledmore discussed with his bank manager the idea that the title to number 15A might be transferred to the Dalbys for a payment of £2,000 but it was not followed up.
In 1976, at about the time that Mrs Dalby first fell ill, the Dalbys were allowed to stop paying rent on the basis that they pay the outgoings - the council and water rates and maintain the property. At about the same time Mr Sled more, to the knowledge of Mrs Sled more, was in the habit of making observations to the Dalbys along the lines that number 15A "is going to be yours some day" - "will be yours one day". The Judge apparently con sidered that what was said at this time amounted to a termination of the Dalby's tenancy of number 15A. There was no basis for this finding. The payment of rent was waived but there is no basis for saying that the right to exclusive occupation was surrendered by the Dalbys nor that they were losing their right to statutory protection should it be relevant. What was said did not relate to rights of occupation but to the intention of the Sledmores that the Dalbys should have number 15A "some day". There were subsequent affirmations of the existence of the ten ancy.
Between 1976 and 1978, with the encouragement of Mr Sledmore, various improvements were made to number 15A. A bathroom was converted to a bedroom. A store was converted into a bath room. Central heating was installed. The kitchen was modern ised. The making of these improvements was, on the evidence, something of a co-operative family exercise in which Mr Sledmore certainly played a part and bore some of the expense. But the Judge found that a substantial part of the expense and labour was contributed by Mr Dalby. The Judge did not make specific find ings of how much he spent; the evidence was not precise. Mr Dalby's circumstances would not have permitted a large outlay. It must have been between about £700 and double that sum.
The improvements were undoubtedly carried out to improve number 15A as a family home, and in the expectation that the Dalbys would be bringing up their young family there. They were already the tenants of the property and were no doubt entitled to statutory protection should such protection have proved necessary. However, it is said by the Defendant, Mr Dalby, and was accepted by the Judge, that he contributed the money and labour on the faith of the statements of Mr Sledmore that the house would be "yours one day".
The evidence of Mr Dalby at the trial was that his expectations resulting from what Mr Sledmore had said would be ful filled by the house being left to Jacqueline Dalby. In my judg ment if, which does not appear to have been his evidence, he had interpreted what Mr Sledmore had said as amounting to more than a statement of an intention that the house would be left to Jacqueline by will, his expectation would not have been justified and would not have been reasonable. Mr Dalby apparently did not know at the time who actually owned the freehold so that did not enter into his calculations. In 1979, when Mr and Mrs Sledmore were re-making their wills, Mr Sledmore was advised to transfer his interest in number 15A to Mrs Sledmore and she made a will in which she left number 15A to her daughter Jacqueline. Number 15A had not previously been the subject of a specific devise by either Mr or Mrs Sledmore.
The position in 1979 was therefore that the Dalbys had a tenancy. They had incurred expenditure improving the house. They had done so with the encouragement of the Sledmores and in the belief and expectation, derived from the Sledmores, that the freehold title would, if not transferred to them earlier, be left to Jacqueline Dalby by will. The expectation was not falsified. Mrs Sledmore had left the freehold title in the property to Jacqueline Dalby in her will.
In 1980 Mr Sledmore died and in 1983 Jacqueline Dalby died. Between that time and the date of the issue of the County Court Summons, there were mutual acknowledgements from time to time of Mr Dalby's status as tenant but requests to Mr Dalby that he should pay rent were refused by him. The Sledmores had throughout been paying the insurance on number 15A and in 1989 and 1990 they also at their own expense carried out substantial repairs to it. In 1990 Mr Dalby was given notice to quit and the proceedings for possession were instituted. He defended the claim to possession on two bases. He said that by reason of what had occurred between 1975 and 1979, he had acquired an equitable right to have transferred to him the freehold title to the property or at the least the interest of a life tenant. Alternative ly, he said that he was a protected tenant and the statutory grounds for his eviction had not been made out.
It was Mrs Sled more's case that she would be caused hardship if she was not allowed to move into number 15A and that number 15 where she was living was too large and no longer suitable for her. Also, she was in financial difficulties if she was not able to dispose of number 15. She could not keep up the mortgage payments; she was on income support. At the commencement of the trial the Defendant, Mr Dalby, abandoned the defence that he was a protected tenant who could resist Mrs Sledmores application. He asserted that he was a bare licensee but with an equity based upon a proprietary estoppel. He did not allege any promissory estoppel. At the time of the trial, number 15A was being occupied by one of his daughters as his sub-licensee with the Defendant only spending one or at the most two nights a week there. The daughter is in her mid-twenties; she is employed and able to provide for herself
The Judge decided that there was an equitable proprietary estoppel and that Mrs Sledmore was not entitled to the possession of number 15A and that the Defendant should have the right to occupy it for the remainder of his life, apparently free of any payment.
The disproportion of this result is obvious as, in my judgment, is its injustice. The Defendant by virtue of carrying out very limited improvements to number 15A between 1976 and 1978 and incurring an expenditure which was likewise limited, has been held to have acquired a right to occupy number 15A for the remainder of his natural life rent free to the exclusion of Mrs Sledmore, although his tenancy has been lawfully terminated and he has no right to an extension of that tenancy. Further, he has, since 1976, had the benefit of the occupation of number 15A, together with such members of the family as were living there from time to time, without paying any rent for such occupation. The primary case which he has been presenting to the courts, right up to the time that he abandoned it before this Court, was that his expenditure in 1976 to 1978 entitled him without more to have transferred to him the freehold title.
The doctrine of proprietary estoppel can be traced back further than other types of equitable and common law estoppel in pais. It has many similar features to promissory estoppel and to estoppel by representation and by conduct. Because of its historical origins there has been a tendency to analyse proprietary estoppel differently and, indeed, to characterise it in a different way. (See Snell's Equity, 29th edition, pp.573 and following.) But in proprietary estoppel there has to be some conduct on the part of the party affected, either encouraging or acquiescing in the other party's acting to his detriment. The party asserting the estoppel must be able to show that his own conduct was attributable to an expectation or a mistake contributed to by the conduct (including inaction) of the affected party. There are therefore elements of assumption on the part of the party asserting the estoppel which the party affected is not permitted, in equity, to disregard. In the equitable doc trine of proprietary estoppel, it is also necessary to consider the extent of the equity so created and what is, in the circumstances, the equitable way in which to give effect to it.
In other types of estoppel the same elements can be identified: conduct/representation/promise; reliance; detriment; just outcome. However, the emphasis and consequences may vary. In estoppel by representation or promise, a representation or prom ise must be clear and unequivocal; provided that there is reli ance, the detriment element may be limited. In proprietary estoppel the emphasis is the other way round: the detriment must be distinct and substantial; the conduct of the affected party may be no more than acquiescence. It is said that the effect of proprietary estoppel is permanent, whereas estoppel by representation is merely temporary. However, in so far as such terms are valid as a source of distinction, the differences probably reflect no more than the difference of subject matter. The same applies to the oft-quoted but misleading statement (see per Brandon LJ in Amalgamated Investment v Texas Bank [1982] 1 QB at 131) that common law estoppel may only be used as a shield where as equitable proprietary estoppel may be used to found a cause of action. One element which is often present in proprietary estoppel in contrast to common law estoppel is restitution. In many of its applications the equitable doctrine of proprietary estoppel bears a close relationship to restitutionary principles where one party has acquiesced in or encouraged another in con duct whereby that other at his own expense would have, if no remedy were granted, unjustly enriched the former. (Ramsden v Dyson LR 8 HL 129)
These general considerations have been discussed (with a review of the leading English authorities) by the High Court of Australia in Commonwealth of Australia v Verwayen (1990) 95 ALR 321, which understandably was not cited to us by counsel. The judgment of Mason CJ contains a discussion of the law of estoppel which is of particular value. I will cite three passages which are relevant to what I have said and to the correct approach to the present case.
"In conformity with the fundamental purpose of all estop pels to afford protection against the detriment which would flow from a party's change of position if the assumption that led to it were deserted, these developments have brought a greater underlying unity to the various categories of estoppel. Indeed, the consistent trend in the modern decisions points inexorably towards the emergence of one over arching doctrine of estoppel rather than a series of inde pendent rules." (p.331)
"The element which both attracts the jurisdiction of a Court of Equity and shapes the remedy to be given is unconscion able conduct on the part of the person bound by the equity, and the remedy required to satisfy an equity varies according to the circumstances of the case. As Robert Goff J said in Amalgamated Property Co v Texas Bank [1982] QB 84 at 103: 'Of all doctrines, equitable estoppel is surely one of the most flexible' ... However, in moulding its decree, the court, as a court of con science, goes no fur ther than is necessary to prevent unconscionable conduct." (At p.332, quoting Brennan J at 152 CLR 419.)
"... it should be accepted that there is but one doctrine of estoppel, which provides that a court of Common Law or Equity may do what is required, but not more, to prevent a person who has relied upon an assumption as to a present, past or future state of affairs (including a legal state of affairs), which assumption the party estopped has induced him to hold, from suffering detriment in reliance upon the assumption as a result of the denial of its correctness. A central element of that doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid. It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption." (p.333.)
There are similarly illuminating passages in the judgment of Deane J (pp.346 et seq).
It is thus always necessary to ask what is the assumption made by the party asserting the estoppel for which the party affected is to be treated as responsible. In the present case it was no more than the assumption that the mother, Mrs Sledmore, would leave number 15A to her daughter Jacqueline Dalby. That was the assumption which the Defendant recognised was capable of encompassing and fulfilling his legitimate expectation. That assumption was never falsified. The disappointment of the Defendant was that his wife sadly died and did so before his mother-in-law; further, 20 years later, his mother-in-law is still alive. Therefore there is no assumption in the relevant sense which was ever falsified. The assumption upon which the Defendant was entitled to say that he incurred the expenditure was in fact fulfilled.
The other aspect clearly illustrated by the quotations which I have made from Mason CJ is the need for proportionality. This is to say little more than that the end result must be a just one having regard to the assumptions made by the party asserting the estoppel and the detriment which he has experienced. Here it is unreal to suggest that the conclusion of the County Court Judge is proportionate to what happened over 15 years earlier. Similarly, it is unreal to say that the Defendant has suffered any injustice. He expended money in 1976 to 1978 upon his then family home and he and his family fully enjoyed the benefits of such expenditure. He has also enjoyed within the same framework over a period of over 15 years the rent-free occupation of the property. By the same token it cannot be properly said that there was anything unconscionable in Mrs Sledmore seeking the possession of number 15A in 1990.
In my judgment there is no estoppel operating against the Plaintiff. Her claim in this action falsifies no legitimate assumption or expectation. The effect of any equity that may at any earlier time have existed has long since been exhausted and no injustice has been done to the Defendant. The Plaintiff is entitled to an order for possession and the Defendant's counterclaim must be dismissed. This appeal should be allowed accordingly.
BUTLER-SLOSS LJ:
I agree with the Judgment of Lord Justice Roch and that the appeal is allowed.
ORDER: appeal allowed with costs here and below, not to be enforced without the leave of the County Court; defendant's counterclaim dismissed; order for possession in 2 months; legal aid taxation for both parties.
© Crown Copyright
