Reservation of interest for a third party to a conveyance when honouring the intentions of the vendor was at one point impossible, however in this matter the court broke with tradition for the sake of modernity and allowed the claim to stand.
In 1972, litigation commenced when a somewhat unconventional conveyance was initiated by parties not entirely privy to its completion. This began when the part owners of conjoined plots decided to sell their property along with the adjoining vacant plot, despite having title only to their home, while the second plot was itself used by a local church adjacent to the site for parking purposes under express permission by the landowner.
At the point of sale, the vendor approached the landowner and explained that a joint sale was under offer, and that with her permission, the two parties would stand to profit at the price suggested. Having considered the opportunity, the owner requested that an easement be inserted into the deeds for the second plot, after which the sale went through as hoped.
Unfortunately for one reason or another, the purchaser and now respondent was unaware that the easement existed, and so now sought quiet title to the plot, whereupon the district court upheld the claim on grounds that under common law, a grantor cannot reserve interest to a stranger to a title, and therefore the easement was unlawful and void, as was also expressed in ‘The Law of Real Property’ (1939) and ‘Reservations in Favor of Strangers’ (1953) both of which stated how while a reservation allowed a grantor’s whole interest to pass to a grantee, it reverted a newly created interest in the grantor, but not to a theoretical third party to the disposition.
Presented in the Supreme Court of California, the appellant church argued that under art.5 s.1085(a) of the California Civil Code, interest to a disposition of property was assignable to persons not named in the deed, however the Court held that as the appellants were a corporation and not individual entities, the statute could not reasonably apply.
Instead, the Court referred to both Townsend v. Cable and Garza v. Grayson, within which the supreme courts of Kentucky and Oregon had abandoned the existing common law rule in favour of following the wishes of the grantor, a position subsequently adopted by the Court as a show of indifference to the now outdated and restrictive approach to property conveyance.
It was then argued by the respondents that the easement was invalid as the property insurers had not relied upon it when drafting their policies, however there was no evidence to support such a claim and so the Court held that a balance must be struck between the want of policy and the equitable nature of the claim, which on this occasion fell in favour of the needs of the grantor, despite the limitations of the statute presented. It was thus for this reason that the Court upheld the appeal and reversed the previous judgment.
Specific performance and cessation of contract on grounds of mistake, are both viable arguments for either continuation of contractual obligations, or the cessation of a transaction for reasons non-detrimental to both contractees. However, both approaches rely upon the honesty and accountability of at least one party should the courts take a view to upholding either of them.
In this instance, a Gujarati widower entered into an agreement to convey a determinate plot of land for an agreed sum, yet immediately after signing the disposition, she tore up the document and refused to continue with the transaction on grounds that she had been misled as to (i) the size of the plot, and (ii) the identity of the individual to whom the purchaser was planning to sell it to.
During initial litigation in the Supreme Court of Kenya, her argument for the fraudulent misrepresentation was based upon her limited grasp of the English language, and so she had elected a representative to be present with her at the time of signing. However, it was also argued that no mention had been given of the size of the plot, which in the first instance was alleged to be half an acre, and not the two acres contained within the conveyance, a fact discovered only after the signing.
When cross-examined, the respondent was proven to have falsified the statement, and thus her witness was accused of perjury, whereas contrastingly, the appellant contested that during preliminary talks, the proposed plot was described as two acres, and not the half-acre suggested.
The contract itself was signed in the presence of a third party, however the respondent also relied upon the contention that at no point during an earlier meeting did anybody translate the contents of the contract, despite the appellant claiming that not only did he explain it, but that the respondent’s cousin had also clarified its contents to her.
It was likewise argued by the appellant that the respondent tore up the contract, not because of the plot variation, but upon the knowledge that the land was to be resold to an individual she disliked, however this was also proven to be untrue after lengthy cross-examination and questioning of oral evidence.
Upon summation, the trial judge awarded in favour of the appellant, despite reservations around the integrity of both parties, and so when presented to the Court of Appeal of East Africa, the Court took issue with the reliability of the appellant’s statements and proceeded to reexamine the facts, before reaching the same conclusion as the lower court.
Take finally to the House of Lords, it was noted that vol. 2 of ‘Williams on Vendor and Purchaser’ clearly illustrated that:
“[A]s a rule, either party to a contract to sell land is entitled to sue in equity for specific performance of the agreement. This right is, in general, founded on a breach of the contract, but not in the same manner as the right to sue at law. The court has no jurisdiction to award damages at law except in case of a breach of the contract; while the equitable jurisdiction to order an agreement to be specifically performed is not limited to the cases in which at law damages could be recoverable.”
Which translated that when contracting parties hold a good account of themselves throughout their dealings, equity would provide sufficient weight as to instigate specific performance; yet on this occasion, neither party had been anywhere near as truthful as a court would rightfully expect, and so on this principle it was impossible to uphold the appeal, nor enforce the equitable rights of the appellant, or those forwarded by the respondent, thus the appeal was dismissed while the House held that:
“In equity all that is required is to show circumstances which will justify the intervention by a court of equity.”
‘Estoppel’ or by virtue of its purpose ‘interruption’, is a legal source of remedy often used in connection to land or property related matters, but is readily used in numerous fields of dispute. The concept behind this intervening doctrine is one that prevents a miscarriage of justice where through discourse and action, a party is found to suffer at the expense of another’s profit. Because this approach often falls outside of common law rules, it frequently requires equity to redress the balance in favour of a fair and reasoned settlement where proven as fact.
To date, there are distinct and overlapping forms of estoppel, and so the list below while no means definitive, aims to cover the more familiar (and unfamiliar) versions used within domestic and international law.
Promissory Estoppel (or Equitable Estoppel)
Founded within contract law, this form of estoppel relies upon the promise of one party to another that is later revoked and proven detrimental to the promisee. Naturally circumspect of the rules of contract, the essence remains equitably valid, and was best witnessed in Central London Properties v High Trees Ltd, where Denning J remarked:
“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.”
As founded and used most in property law, there are three main elements to qualifying action in proprietary estoppel, namely (i) that the landowner leads the claimant to believe he will accumulate some proprietary right, (ii) the claimant acts to his own detriment in reliance of the aforementioned right, and (iii) those actions are demonstrably in reliance of the expected right, where otherwise different choices might have been made. This was explained by Lord Scott of Foscote in Cobbe v Yeoman’s Row Management Ltd , who said:
“An estoppel bars the object of it from asserting some fact or facts, or, sometimes, something that is a mixture of fact and law, that stands in the way of some right by the person entitled to the benefit of the estoppel. The estoppel becomes a proprietary estoppel – a sub-species of a promissory estoppel – if the right claimed is a proprietary right, usually a right to or over land but, in principle, equally available in relation to chattels or choses in action.”
Estoppel within Public Law
This is often used where a member of a public body has issued assurances that (i) an action can be undertaken by member of the public, or (ii) that the specific body will exercise its power to the benefit of the person enquiring. Where either fact has been proven correct, the designated department or authority is held liable to follow through on that action where reasonable, and in line with public interest, as was discussed in Southend-on-Sea Corporation v Hodgson (Wickford ) Ltd, although the applicable claim was never upheld after it was stressed by Lord Parker CJ that:
“[I]t seems to me quite idle to say that a local authority has in fact been able to exercise its discretion and issue an enforcement notice if by reason of estoppel it is prevented from proving and showing that it is a valid enforcement notice in that amongst other things planning permission was required.”
Estoppel by (unjust) Conduct
This phrase is largely self-explanatory, but can be best surmised as visibly manipulative or unreasonable behaviour by one party toward another, for example when securing an annulment, as was explored in Miles v Chilton, where the groom falsely induced his fiancée into a marriage that was by all accounts, illegal, as the bride-to-be was in fact still married to her previous husband, despite his misleading her that the annulment had succeeded. The destructiveness of this self-created dilemma was explained by Dr. Lushington, who despite awarding in favour of the claimant, warned that:
“[H]ere the averment of marriage is made by the party having an opposite interest, and we well know that every one is bound by his admission of a fact that operates against him.”
Estoppel by Per rem Judicatam (or issue estoppel)
This is another family law approach, which translates that a judicial decision to grant nullity cannot be overturned after the fact, except in circumstances where the annulment is proven invalid, after which any party aside from the divorcing couple, can challenge the direction of the court. This form of estoppel can however, be found in criminal law cases, as was seen in Hunter v Chief Constable of the West Midlands Police and Others, where Lord Diplock commented that:
“The abuse of process which the instant case exemplifies is the initiation of proceedings in a court of justice for the purpose of mounting a collateral attack upon a final decision against the intending plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the intending plaintiff had a full opportunity of contesting the decision in the court by which it was made.”
Estoppel through Acquiescence (or Laches or Silence)
As used in a number of fields, there are requisites that the party claiming estoppel has had their hand forced into complying with matters that they had in fact not been properly consulted upon, as was argued in Spiro v Lintern, where a husband was held to agree to the sale of his co-owned property, despite not having consented to his wife’s putting it up for sale, and the purchaser proving able to enforce the contract in his name through her individual representation. It is also applied in cases where a secondary party to a contract or notice, fails to challenge it within a reasonable period, after which estoppel of acquiescence can be used to deter any claim to the contrary, as was used in Kammins v Zenith Investments, where Lord Diplock again explained:
“[T]he party estopped by acquiescence must, at the time of his active or passive encouragement, know of the existence of his legal right and of the other party’s mistaken belief in his own inconsistent legal right. It is not enough that he should know of the facts which give rise to his legal right. He must know that he is entitled to the legal right to which those facts give rise.”
And in the U.S case Georgia v South Carolina, where it was held that:
“South Carolina has established sovereignty over the islands by prescription and acquiescence, as evidenced by its grant of the islands in 1813, and its taxation, policing and patrolling of the property. Georgia cannot avoid this evidence’s effect by contending that it had no reasonable notice of South Carolina’s actions. Inaction alone may constitute acquiescence when it continues for a sufficiently long period.”
Estoppel through Encouragement
Similar to acquiescence, this form of estoppel was discussed in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd, where Oliver J defined it in the following passage:
“The fact is that acquiescence or encouragement may take a variety of forms. It may take the form of standing by in silence whilst one party unwittingly infringes another’s legal rights. It may take the form of passive or active encouragement of expenditure or alteration of legal position upon the footing of some unilateral or shared legal or factual supposition. Or it may, for example, take the form of stimulating, or not objecting to, some change of legal position on the faith of a unilateral or a shared assumption as to the future conduct of one or other party.”
Estoppel by Convention
Often used in contract law, this principle comes into effect when two parties have relied upon an assumed true statement of fact, only to learn otherwise after the actions undertaken have been shown as unreasonable or unlawful. Any wrongful decision to then undo the damage is by definition, estopped on those grounds, as was discussed in Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd, where Denning LJ eloquently concluded that:
“When the parties to a contract are both under a common mistake as to the meaning or effect of it – and thereafter embark on a course of dealing on the footing of that mistake – thereby replacing the original terms of the contract by a conventional basis on which they both conduct their affairs, then the original contract is replaced by the conventional basis.”
Estoppel by Representation (or Pais)
Again found in many contractual matters, this doctrine is bought into effect when a party that has agreed to a change in the terms of the relationship (often supported by a promise of trusted representation of their own) later chooses to renege on that statement, despite the other party altering their position to accommodate that express arrangement. This was found in Royal Bank of Scotland v Luwum, where Lord Justice Rimer outlined that:
“[T]he clear sense of the arrangement was that Mr Le Page was making a representation or promise to Mr Luwum that the Bank would hold its hand on enforcing its rights for three months, and Mr Luwum changed his position in reliance upon that by borrowing £260 from friends and family in order to make a payment to the credit of the account, which was the very purpose of the arrangement that was made. In my judgment those circumstances had the consequence of estopping the Bank from reneging on its promise and starting the proceedings it did before the expiry of the three-month period.”
Estoppel by Deed (or Agreement)
This doctrine is applied when two parties agree to contract with each other for whatever intended gain or purpose, in the knowledge that the terms of the contract (or in these instances deeds) are based upon fraudulent fact, and nothing more. It is suggested that the motivation for such covenants is one of singular gain on the pretence that should the truth out, those facts will remain unchallenged. It is this kind of clandestine deception that was explored in Prime Sight Ltd v Lavarello, where Lord Toulson JSC mused:
“If a written agreement contains an acknowledgement of a fact which both parties at the time of the agreement know to be untrue, does the law enable on of them to rely on that acknowledgement so as to estop the other from controverting the agreed statement in an action brought on the agreement?”
Estoppel by Contract
Again, the terms of the contract can themselves prevent enforcement between disputing parties, as was discussed in Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd, where it was said:
“Where parties express an agreement…in a contractual document neither can subsequently deny the existence of the facts and matters upon which they have agreed, at least so far as concerns those aspects of their relationship to which the agreement was directed. The contract itself gives rise to an estoppel…”
In closing, it must be iterated that the doctrine of estoppel exists as a rule of evidence and not a cause of action, therefore any idea that this principle can, and should, be wielded as a defence or prosecution, falls outside the intended design and usurps its undiluted use.
When two first-time homebuyers rely upon a financial donation from family members, the equality of shared ownership can become displaced, despite individual perceptions of common intention and the partnership of marriage.
When two young newlyweds entered into a mortgage of their family home, it was not without a significant cash contribution from the groom’s parents. This gift was bestowed upon the couple after the bride’s parents had covered the costs of the wedding, and therefore implied equal investment into their committed relationship. At the time of conveyance, the deeds fell under sole title in favour of the groom, and no assumptions were otherwise made than it was their home, and that both parties were joint occupants and thus entitled to equal benefits.
A few years after the purchase, the nature of the mortgage altered, and was now liable under the terms of an acquiring bank, at which point the wife was asked to sign away any beneficial interest she held in favour of the new mortgagee. Her agreement to this request was given (albeit under visible duress) so that the husband could continue to run his business, while the family (now with three children) could remain in secure occupation.
After re-mortgaging the property a number of years later, the wife took the opportunity to have her name included within the title, and thus became a legal tenant-in-common. When the business began to fail and the mortgage fell into unrecoverable default, the bank sought to repossess, at which point the wife challenged the order on grounds that any relinquishing of interest had not been of her volition, rather that her now estranged husband’s undue influence led her to act against her will and under marital obligation.
In the first hearing, the judge found in favour of the wife on the grounds described, before going further to explain that while her collective time and monies invested into the home during the course of their marriage could not translate into an equal half-share of the property, it did result in a six percent stake hold, arising from her half-share entitlement of the cash gifted by the groom’s parents at the point of purchase; and therefore under those circumstances, any repossession order could not stand.
When challenged by the bank and the wife in the Court of Appeal, the principle of shared equity was given greater consideration, along with the equitable maxim ‘equality is equity‘, which on this occasion was not relied upon. Instead, it was agreed that the wife’s actions first dismissed as non-contributory, were embraced as wholly acceptable, despite no verbal agreements between the couple as to whether or not the home was equally divisible to begin with.
As can be traced back through the historic case law surrounding easements, there has been much dispute as to exactly what constitutes such a privilege; and so in Re Ellenborough Park, a generosity of scope was favourably agreed upon and the principle further refined.
When the considerate nature of the original owner of Ellenborough Park (itself no more than an expansive parcel of land) bestowed conditional rights upon the future freeholders of property encircling it, those privileges allowed exclusive enjoyment of the space and fresh air afforded them, yet the vendor had no idea how many years later, that same kindness of spirit would be challenged by those succeeding him.
For almost 100 years, the owners of the chosen properties had enjoyed uninterrupted peaceful use, until the second world war brought with it, the temporary military occupation of both the park and the homes built around it. After returning the houses back to their current owners (along with suitable compensation for their use), it was decided by the trustees of Ellenborough Park, that continued access to the gardens would no longer be accepted, and that under the terms of the original conveyance, no such easements had ever been put into effect.
Under the general terms prescribed by common law, there are a number of criteria that need to be met for an easement to exist. These critical elements include the principles that those assigned the granting of an easement must take it on the understanding that use of such a covenant relies upon utility and benefit from the right, and that benefit of the easement must derive from the granting of such a right. Because Ellenborough Park was cosmetically different from most commonly prescribed easements, it was argued that the mere capacity to wander around freely upon a large plot of land (albeit subject to expressly detailed maintenance contributions) amounted to no more than a ‘jus spatiandi’, which is a phrase typically assigned to public parks and recreational areas requiring little more than careful observation of the rules associated with their use.
In the first hearing, the judge found in favour of the defendants, and so when further considered under appeal, an in-depth examination of the founding conveyance revealed very succinct terminology as to support and endorse the intentions of the estate owner, in that he had not only established by definition the presence of easements to the freeholders, but that such consideration had been expressly granted by way of the deed’s construction. This decision has since proven instrumental to the variances in the physical representation of easements, and the reinterpretation of covenants provided for by way of grant.