Proprietary Estoppel Law

A constructive trust can be defined as an implied trust and equitable remedy that is created in a court of law for the benefit of justice. It would be unjust enrichment if it were allowed to be used by the holder of property for fraudulent actions the case of Keech v Standford where the defendant held the trust on a minor’s behalf and he made a request to have a renewal of this lease. It was held that any profits that the profits of the lease were held to favour the beneficiaries and trustee could not do the same but instead acts in the best interest of the beneficiary (McFarlane, 2002).

Contructive trusts come in two types which are described in the case of Westdeutsche Landesbank Girozentrale v Islington BC [1996] as:

  1. Institutional trusts which are as a declaration by the court from the actual date of misconduct and are dependent on the rule of law.
  2. Remedial constructive trust is such that it prevents unjust enrichment and is aimed at the recovery of property from the trustee who is acting ultra vires or in breach of his duties leading to an enforceable obligation.

The trustee should never put themselves in a position that conflicts with their duties as was seen in the case of Regal ltd v Guliver [1942] where the plaintiff got an offer from one of the subsidiaries to sell shares, the funds were not sufficient but the directors later sold them at a profit. Held: the transactions were bona fide and the directors were accountable to the company. A trust gives proprietary right to the claimant and not to the trustees and the latter’s declaration of insolvency means that the property is untouchable to them this was held in the case of Lister v Stubbs (Bray, 2010). There is a relationship of trusts and proprietary estoppel which will be seen later on.

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Proprietary Estoppel Law Analysis

It can be defined as the legal claim arising in property laws. Proprietary Re Basham is one case that gives the elements of proprietary estoppel as that which has assurance, reliance and detriment all of which do not really have to arise from a contractual relationship, it confers the right of action and arises from the remedies of equity and can bind third parties constituting the equitable proprietary rights.

This may arise if the land has been transferred as first an “imperfect gift” in the good case of Dillwyn v Llewellyn (1862) a father had given his house to his son after having spent a lot of money renovating it, the father later dies and the son claimed equitable ownership. The court held that the land should be transferred to him. This may also be orally as was seen in the case of Pascoe v Turner in which the defendant had told the plaintiff that all that was in the house was hers even after the D had moved in with another person. P made a suit on the irrevocable license to occupy that had been made the courts held that all property was to be transferred to the plaintiff. The second if done in common expectation based on the notion of reliance after a relation that makes one of the parties rely on shared property in the assumption that they would raise property from it. The case of Ramsden v Dyson in which there was an oral agreement with a landlord to have certain interest in land and by expectation which also was encouraged by the landlord, then the courts of equity will ensure that the landlord effects to such a promise. The last is the “unilateral mistake” is where an error has been made on the rights of a party allowing detriment which is from the improvements on the physical stature of the land on the mistake. The good case of Ramsden v Dyson where a stranger had began building o land knowing it to be his own (mistakenly), and that he is wrong and as the owner of the land does nothing about it but aiming at self-profit, then the courts will not allow the owner to assert to his land where the former has invested.

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For the promissory estoppel to apply, there ought to be a fulfillment of some elements which is seen in the case of Willmott v Barber’s five probanda that:

  • Mistake to the legal rights
  • Expectations of money or an act was committed on the mistake leading to reliance.
  • Owner of land must have known his own rights which are different from the claimants.
  • Owner knew of the claimant’s mistake.
  • The owner encouraged the claimant on his mistake by not taking any action.

Relation of Proprietary estoppel and constructive trust

A trustee who uses the trust money and some of his to get a life insurance after which he committed suicide the insurance paid out to his family while the beneficiaries who were defrauded claimed that it was a constructive trust held for them they had to choose between equitable lien where the money would be repaid to them and it being a constructive trust. In this sense, we find the similarity with the proprietary estoppel in that they share the principle in Gissing v Gissing that the courts applying the equitable principles that prohibit the institution of strict legal rights then inequitable interests develop where the dealing proceed. The concept of “equity of expectation” is encouraged by past dealings and creates a form of constructive trust which may be granted by court on land interests.

The distinction between the doctrine of proprietary estoppel and constructive trust is that while the former has more emphasis on the inducement and frustrated “expectations” meaning that a claim on any legal interests could succeed. Constructive deals with undertakings and based on the frustrated bargain. The issue of contributions which are relevant in terms of detriment in the liberal concept of constructive trust. Equitable principles of a wider range and which allow for relief where constructive trust have no remedy but in areas where the constructive trust claim is made the estoppel as a rule that was given in the case of Te Rama Engineering Ltd v Shortlands Properties Ltd as it gives significance to more of the intangible contributions and commitment.

Burden of proof is a concept of clarity on the entitlement need not be proved in estoppel while in constructive trust, it is necessary to prove. It is easier done in estoppel and its assurance is done by the actual owner adopting a sort of conduct is adopted which is does not prejudice or is detriment then an assumption is made that the reliance on the assurance was a course of action. The range of remedies in equity in both is less effective that the other which isn’t the case as was seen in Bristol & West Building Society v Henning [1985] in which he constructive trust involved the litigants sharing equitable ownership of property. Proprietary estoppel seem to provide a lower sense of remedies as was previously understood, it exceeds the relief in the constructive trust.

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Equity arises in litigation and in the determination of the remedy; the claimant has a right to the property which has been breached. Immediately a property owner realizes the fraud or unjust conduct then an inchoate right arises as his conscience has been disturbed and seeks to defeat the hope which by his conduct which encouraged the plaintiff but this isn’t a warranty to be awarded with interest. It however opens jurisdictions which are considered against any landowners. If one by any chance citing the rules of promissory estoppel decides to be unjustly wealthy, then their actions can be justified by regaining the property back from the fraudsters as was in Chase Manhattan Bank NA v Israel-British Bank Ltd where there was an accidental payment of money by one bank and the recipient bank did not do anything. Held: the money was held in constructive trust for the other bank. Dealing in a way that it impedes the rights of other persons over the property leads to a court order instructing for the use of constructive trust showing intention by a joint contribution Llyod Banks plc v Rosset. The equitable interest to transfer personal property also applies and the last is the creation of several parties that have an interest in the exploration of land seen in Pallant v Morgan.

Failure to complete transactions by one party as in Re Rose it is held in trust and is created in the pre-payments fund to an insolvent company. The keeping of money in foreign accounts by the insolvent companies is meant to protect it but instead causes problems to the creditors it is however found that it is with reference to the pari passu principle that no creditors should be given advantage over the others (Pawlowski, 2000). Constructive trusts are concerned with the understanding of ownership of property before it is acquired this is with regard to the beneficiaries of a trust which is more rigid and changing its clauses requires the courts intervention. The estoppel is the thought that acquiring rights of property that is already owned by the promisor and whose transactions are fully completed these terms are more flexible.

Proprietary estoppel can be in word as well as written while constructive trusts can only be in writing. Estoppel deals with the past and analyses whether there the promise has been finalized and if it is per the circumstance as was seen in the case of Walton v Walton [1994]. Trust on the other hand is that which describes the promise of a future as the trust property deals with the beneficiaries (Cartwright, 2009). Persons who seek estoppel are meant to establish the owner or the agent and he receives an interest in the property while as for the constructive trust the trustees are stipulated by the testator in his will and they have no interest in the property other than as handling it for the beneficiaries benefit.

An expenditure arising from the proprietary estoppel which caused a detriment by himself and to his detriment as in the case of Greasley v. Cooke [1980] but the case of constructive trust any misconduct for self benefit by the trustee is seen to be held in trust and so the beneficiaries are entitled to any profit that it acquired.

In conclusion, there are instances where the two would seem similar but the law has done its best by precedence to solve the matter. Trusts and proprietary estoppel can both be seen to be remedies of equity which help in solving the injustices of law.

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