There are many cases in which the owner of land allows another person to expend money on that land or otherwise act to his detriment under a promise or expectation that he will acquire an interest in the land. Where the owner fails to follow through with his promise, he may be prevented from claiming his legal right to the land based on the doctrine of proprietary estoppel.
Proprietary estoppel is a legal principle which prevents a person from claiming his legal rights when it would be unjust for him to do so in light of his conduct and dealings. This principle would be applicable where, for example, a landowner makes a promise to transfer his interest in land to another and then encourages that person to build a house on the land. The landowner then fails to fulfill his promise of transferring his interest in the land. In these circumstances, the court can bar the landowner from claiming his right to the land and order him to transfer his interest in the land to the promisee. The doctrine, therefore, provides for the informal creation of interests in land.
There are three essential elements which must be proved before one can successfully make a claim based on the doctrine of proprietary estoppel. Firstly, there must be an encouragement or assurance or conduct on the part of the landowner which causes the person expending the money to reasonably believe that he has or will have a title or some interest in the land. The person relying on the claim must show that either by language, silence or inaction he was led to believe that he would acquire an interest in the land.
Secondly, the person making the claim must have relied on the assurance given by the landowner. In other words, he must prove that he was induced to act in a particular manner as a result of the assurance given to him that he would acquire an interest in the land. Thirdly, the person making the claim must show that he has suffered some detriment in relying on the landowner’s assurance. The most common example of detriment is expenditure of money in building on the land or making improvements to an existing building on the land. However, the detriment does not have to take the form of expenditure of money or other quantifiable financial loss, provided it is substantial and was incurred as a result of the assurance by the landowner. To sum it up, the determining factor is whether it would be unjust for the landowner to be permitted to deny that which he knowingly or unknowingly has allowed or encouraged another to do to his detriment.
Where a successful claim has been made out in proprietary estoppel, there are a number of remedies which may be awarded by the court. For instance, the court can order the property in question to be transferred to the successful party. The court can also grant a charge or lien over the land to cover the expenditure or the value of the improvements effected on the land by the successful party. Where the landowner is in the process of transferring the property to a third party, the court can grant an injunction preventing the transfer of the property to the third party. The court has the discretion to take into account all the circumstances of the case in determining the nature and extent of the remedy most appropriate to balance the rights and interests of the parties.
It must be noted that proprietary estoppel may not be the easiest claim to prove as the courts are often reluctant to deny a landowner the legal right to his property. It is, however, a principle that is founded in the rules of equity and fairness and can be invoked by a person who has been treated unjustly.
