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Kara Swift
Kara Swift
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Proprietary estoppel – does the recent Court of Appeal case of Southwell v Blackburn change anything for cohabitees?

Date:5 JAN 2015
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Charlotte Sanders, Assistant Solicitor, Vardags
Beatrice Carro, Trainee, Vardags

The recent court of appeal case of Southwell v Blackburn [2014] EWCA Civ 1347 has been heralded by the media as a landmark ruling, whose result ‘could open the floodgates'. In fact, it is more apt to say that the case merely adopted the less original Victorian doctrine of proprietary estoppel. Indeed, the old doctrine of proprietary estoppel is still used to deal with a modern issue: cohabitation. This is a particularly hot topic as Parliament looks to pass the Cohabitation Rights Bill to protect cohabitees, who have long been relying on this grey area of the law and now seek a more reliable and certain alternative.

Proprietary Estoppel

In short, proprietary estoppel arises most commonly when the owner of a property causes another to act to his/her detriment in the belief that he/she will obtain an interest in the property. Three main factors must be established, as clarified in the case of Thorner v Major [2008] UKHL 55:

1. There must have been an assurance, representation or expectation that the claimant has or will have rights in the landowner’s land.

The representation can be active or may amount to passive acquiescence to an assumption held by the claimant, as long as the landowner intends the claimant to rely on it. The representation does not need to be made in the precise terms of a specific proprietary right, but there must be sufficient certainty as to some sort of entitlement on the part of the claimant.

2. The claimant must suffer detriment.

Financial expenditure or a quantifiable financial loss may count as suffering detriment. For example, carrying out improvements to a landowner’s property.

3. The detriment must be suffered in reliance on the assurance.

If the claimant would have suffered the detriment anyway, there can be no estoppel. The case of Wayling v Jones (1993) 69 P&CR 170 affirms that there must be a sufficient link between the assurance relied on and the conduct that causes the detriment.

In addition to the above three factors, a feature that permeates throughout, and it must be noted that these factors are intertwined and not disparate in any event, is unconscionability. One cannot take advantage of the other and deny him/her of the right they expected to have.

If these factors are established, the burden of proof shifts to the defendant to demonstrate that the claimant did not rely on the assurances (Coombes v Smith [1987] 1 FLR 352).

Southwell v Blackburn [2014] EWCA Civ 1347 – Facts

The case involved an unmarried couple; Miss Blackburn was 40 and had two daughters aged 11 and 12, and Mr Southwell who was 41. They decided to move in together in 2002. Miss Blackburn helped select the property, but Mr Southwell bought the house in his sole name, with a mortgage of approximately £100,000 and equity of approximately £140,000 from his previous home. When the relationship broke down in 2012, Mr Southwell changed the locks at the property. Miss Blackburn applied to the court for an equal share of the property.

Miss Blackburn asserted that the couple intended to purchase the house together and that she would be an equal owner. Miss Blackburn’s understanding was that the property would later be transferred into joint names. Mr Southwell denied this; he argued he had simply agreed to provide Miss Blackburn with a home for as long as their relationship would last.

First Instance Decision

The first instance judge, HH Judge Pearce-Higgins QC, rejected Miss Blackburn’s claim to be a beneficiary of a constructive trust, as there was no evidence of a clear promise that she would become an equal owner of the property. The judge did, however, uphold her alternative claim of proprietary estoppel, because Mr Southwell had assured Miss Blackburn that she would have a secure home and she had given up her own accommodation in reliance on that promise.

The judge valued her claim at £28,500 (calculated by looking at what Miss Blackburn had lost financially and adding inflation) and ordered Mr Southwell to pay her this sum to put her back in the position she was in before she gave up her house to live with him. Mr Southwell appealed.

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Court of Appeal Decision

The Court dismissed the appeal. The Court supported the first instance judge’s findings that there was in fact an assurance, as Mr Blackburn had assured Miss Southwell that she would have a home with him: 'she would always have a home and be secure in this one'. The judge stated that 'the discussions they had were not specific as to ownership of the home they were moving into. They were specific as to the nature and extent of his commitment to her and the provision of secure accommodation for her.'

The parties had discussed the move and its consequences. Mr Southwell made promises that persuaded Miss Blackburn to move and give up her independence and security, with the intention she would rely on those assurances.

Miss Blackburn acted to her detriment as she left her secure home: 'without such promise and assurance [Miss Southwell] would not have given up her house and moved in with him'. In short, the judge considered that the Miss Blackburn was taking a big risk, moving from a secure rented home on which she had spent considerable sums, leaving her job and moving her children. Without Mr Blackburn’s assurances, she would not have moved and given up her secure home.

The judge also stated that it would be unconscionable for Mr Blackburn to retract from his promise and not return Miss Blackburn to the position she was in before she gave up her house.

Impact on the law

It can be seen from the reasoning in this case that no new principles were expounded, and that it is neither a landmark case nor will it open any floodgates. Rather, the court merely applied the old equitable principles to a modern relationship. In the case of Southwell v Blackburn it was less the legal principles of proprietary estoppel that were in dispute, but rather the facts of the case and the quality of the evidence.

That said, with the rise in couples cohabitating instead of marrying, and the ever present myth of a ‘common law marriage’, it is an important reminder of the legal position for cohabitees.

The case highlights the potential liability that may arise if a relationship with a cohabitee turns sour. In Southwell v Blackburn, the court sent a clear message that it will protect those in Miss Blackburn's position. It demonstrates the risk of losing assets and equity to former cohabitees following a relationship breakdown as they may be awarded a share in the property having not contributed financially towards it at all and it being in their partner's sole name.

It is clearly right that someone should have a legal claim if they suffer a detriment as a result of relying on an assurance regarding a property, and it would be unconscionable not to renege on that assurance. However, as is the case with equitable principles, it is relatively opaque and not obvious to ‘the man on the Clapham omnibus’ what their rights or liabilities may be from cohabiting. Furthermore, as with all equitable remedies, the court has a wide discretion on how to give effect to that equity, making this area of the law less certain. For example, in Southwell v Blackburn detriment was interpreted widely, and does not necessarily mean financial detriment (here Miss Blackburn uprooted her daughters and moved away from family and friends).

In accordance with principles of the rule of law, it is clear that legislation is required in this area of the law to provide a long-term solution to the breakdown of a cohabiting relationship. Cohabiting couples need more certain and specific remedies, and Lord Lester’s Cohabitation Bill (based on the 2007 Law Commission Report) may be just what is needed to modernise this area of the law. The Bill was originally proposed in 2008, and on 12 December 2014 it had its second reading in the House of Lords. It is unclear whether or when this Bill will be made laws, but at least steps are being made in the right direction.

In the meantime, while we at the mercy of equitable doctrines, a possible solution for cohabitating couples to protect themselves would be to set up an explicit cohabitation agreement, or a declaration of trust.