Proprietary estoppel

Proprietary Estoppel under Gillett v Holt applied to support carer interests in property: Campbell v Griffin, Laverick, Bennett and West Sussex County Council – Court of Appeal Wednesday 27th June 2001. Reported by Smith Bernal Casetrack (full transcript) and LTL June 28 2001.

Introduction

Local authorities seeking to make a financial assessment on persons entering long-term care can only raise assessments upon capital that belongs to the person assessed. They have to take note of property that in fact, if not in terms of strict legal title, belongs in whole or in part to a third party. That is the point in drawing this particular issue to the reader’s attention. There are ‘behind the title’ interests to be considered in some cases before a final assessment can be completed.

The principles of proprietary estoppel were clarified by the case of Gillett v Holt [2000] 2 All ER 289. It will be recalled that Mr Gillett was given promises that he would receive the estate of Mr Holt. This led to his prejudicing his personal and family financial interests. When Mr Holt attempted to go back upon those promises Mr Gillett was given substantial property and cash on account of his proprietary interest in the property that was built up by his work for Mr Holt over many years.

In ‘Protecting the Assets of Older People’ (Ark Group November 2000) the author noted: ‘It does not take a giant leap of the imagination to suggest that Gillett v Holt may be very much applicable to care cases. It would enable people who have contributed to the property of an older person in cash and kind, as well as carers, especially resident carers, to take suitable protective action. That action would be to ensure that property they have either been promised or have otherwise assumed they would receive is received. The possibility of a ‘state of affairs’ approach (to proprietary estoppel) in particular is much more broad brush than the traditional approach. It may therefore more easily represent the modern reality of complex social and economic relationships than the previously accepted more inflexible legal formula.’ (Page 178)

Robert Walker LJ gave judgement for the Court of Appeal in both Gillett v Holt and Campbell v Griffin & others. It is therefore not surprising that the two cases are so consistent. Nor is it surprising that the logical extensions of the revived and re-invigorated principles of proprietary estoppel in Gillett v Holt have borne fruit for an aggrieved carer. It seems that a number of possibilities exist under Gillett v Holt to facilitate a claim in proprietary estoppel.

The purpose of proprietary estoppel is ‘to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting.’ Grundt v The Great Boulder Pty Gold Mines (1938) 59 CLR 641. (Quoted with approval in Gillett v Holt)

The author has previously stated his view that: ‘The essence of Gillett v Holt may be represented as saying that where one party has, acted to, what transpired to be, his detriment in a substantial way (as to quality but not necessarily as to amount): because of the particular encouragements given to him or; because the particular ‘state of affairs’ between the parties generated an assumption on his part the other party cannot be allowed to exercise his legal rights freely so as to crystallise the effect of that detriment to the extent that it would be unconscionable for him to do so.’ (‘Protecting the Assets of Older People’ page 177)

The case of Campbell v Griffin and Others appears to bear this out. This means that in practice advisers must be alert to the possibilities for their clients. It is to be hoped that litigation will not always be required and sensible arrangements can be agreed between the parties. That will avoid unnecessary expense. The author would suggest that the likelihood of further litigation on this subject is reduced by the clarity of the judgement given. The scope for negotiation is proportionately increased.

The facts of Campbell v Griffin & others

1. The value of 26 St Botolphs Road, Worthing, was worth fighting over. In this large semi-detached house, the owners as beneficial joint tenants, Thomas Ascough, a large man, a former senior civil servant who died in October 1995, and his wife Constance, who died in December 1997, lived with one Mr Campbell. He was their lodger since 1978. The Ascoughs had two nieces with children as their next of kin.

2. Messrs Griffin and Laverick were Mr Ascoughs executors and Mr Griffin and Mr Bennett were those of Mrs Ascough. All were solicitors in Worthing. West Sussex County Council joined the action as they had placed a charge upon the property on account of unpaid home fees.

3. Mr Campbell was area Manager for Wimpey in Worthing and then, upon redundancy, had numerous jobs such as shift work at Gatwick Airport. His initial rent was £10 per week. However this was only required erratically as years progressed. Mr Ascough apparently became less willing to accept it although it was still offered. The rent was never increased. When the Ascoughs finally entered full-time care Mr Campbell was told by the care home staff not to give them the money as the Ascoughs lost it.

4. For the first five years Mr Campbell was ‘just’ a lodger who got along very well with his aged landlords. They were already in their late 70’s. He was just 30. After that time he took on more of the role of carer.

5. The Ascoughs became more frail and came to depend upon Mr Campbell who remained single. He began by cleaning and maintaining the house and garden. There were receipts for significant expenditure upon the garden given in evidence. Mr Campbell’s care role then extended to waking the Ascoughs in the morning, shopping (which he generally paid for although was sometimes reimbursed) and preparing drinks and meals. Although never a full time carer, through work pressures he was the only carer ever present to deal with nighttime issues. Further, he was the person who was able to help Mr Ascough when he had blackouts that led to falls. Later still, Mr Campbell took on incontinence care. When the Ascoughs both entered care Mr Campbell kept on visiting regularly and continued to shop for them, deal with issues connected with the semi and took no reimbursement.

6. Mr Campbell was apparently treated as a son. Mr Campbell having lived in a children’s home found this was a mutually agreeable situation. Mr Campbell was apparently told several times (commencing sometime between 1983 and 1987) that he had a home for life. Sometimes comments suggesting this were made in the presence of others. Mr Ascough also discussed with the family solicitors the possibility of a reduced price sale of the semi to Mr Campbell. This was described by Mr Griffin, the solicitor, as ‘not practical as the house is in the joint names and Mrs Ascough is subject to an Order of the Court of Protection.’ He was also understandably cautious about the issue of residential security such a transfer would create for Mr Ascough.

7. In 1985 the Ascoughs made Wills which were broadly in favour of the two nieces and charities. Mr Campbell was not included. In December 1993 Mr Ascough, who was in better mental and physical health than his wife, made a codicil giving a life interest in the semi in favour of Mr Campbell. This was taken by Robert Walker LJ as ‘quite a strong confirmation of Mr Campbell’s evidence of Mr Ascough’s repeated assurances that he would have a home for life. So is Mr Griffin’s letter to the Benefits Agency.’ There was no severance of the joint tenancy. Mr Ascough was made aware that this left some uncertainty about his wishes being fulfilled. In January 1994 both of the Ascoughs went into full time residential care. The Council was persuaded by Mr Griffin, the solicitor, not to seek a sale of the semi but to place a charge upon it. That itself was in the light of the assistance of Mr Campbell as ‘a son.’ It was also because the complexities of a Court of Protection application would have been required.

8. Mr Ascough died first. The house passed to Mrs Ascough by survivorship. Mr Ascough’s Will was thus neutralised in respect of the semi. Then Mrs Ascough died. The executors, acting for the beneficiaries, and the Council seeking recovery of fees, then sought their relative interests in the property. Mr Campbell raised the existence of his estoppel interest.

The case goes to Court

1. First instance – Mr Campbell claimed an interest in the property by way of proprietary estoppel. The Judge at first instance suggested that as Mr Campbell had acted out of friendship and as a result of a very close relationship with the Ascoughs. He suggested there was ‘no causal connection between the acts of detriment… and the assurances … given by Mr and Mrs Ascough…’ The Judge also gave weight to the ‘cheap and good accommodation’ received by Mr Campbell and the ‘minimal cost’ of the proven expenditure. He concluded that the facts did not ‘amount to detriment and do not amount to detriment that was undertaken by Mr Campbell because he was relying upon the assurances which he claims to have been made by Mr and Mrs Ascough.’ He found that ‘in the circumstances of the relationship between him and Mr and Mrs Ascough he would have so acted in any event.’

2. The Court of Appeal on ‘detriment’ – Robert Walker LJ disagreed on the issue of detriment. This is not surprising as in Gillett v Holt he had already stated that ‘The detriment need not consist of expenditure of money or other quantifiable financial detriment, so long as it is something substantial. The requirement must be approached as part of a broad enquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances.’ Thus care, time and money and other detrimental effects upon a carer are a perfectly sufficient form of detriment under Gillett v Holt. They are quite capable of building up an estoppel interest in a property. This was re-iterated with practical effect in the case of Campbell v Griffin and Others. Robert Walker LJ noted that even a lodger on a low or zero rent does not normally do what Mr Campbell did. Indeed he added that ‘The Court can take judicial notice that a live-in carer looking after a couple as frail as Mr and Mrs Ascough would expect to be paid a very substantial wage in addition to free board and lodging, and would expect to be fully reimbursed for all out-of-pocket expenditure.’ Thus there was a detriment to Mr Campbell.

3. The Court of Appeal on ‘reliance’ – Robert Walker LJ then turned to the issue of reliance upon the promises given to him. He noted, quoting Wayling v Jones (1993) 69 P&CR 170, 173, that ‘Once it has been established that promises were made, and that there has been conduct by the plaintiff of such a nature that inducement may be inferred then the burden of proof shifts to the defendants to establish that he did not rely on the promises.’ Mr Campbell agreed in cross-examination that he would not have stopped helping Mr and Mrs Ascough if he had received no promise such as he claimed. This was still sufficient under the circumstances to show reliance. First, the presumption was on Mr Campbell’s side and second the matter had a long history. Mr Campbell was increasingly ‘doing much more for the Ascoughs than could be ascribed to even the most friendly lodger.’ ‘He had become part of the family, and there was a strong presumption that the assurances given to him (to treat him, in effect, as a member of the family with moral claims on the Ascoughs) were influencing his conduct.’ Questions of the ‘what if there had been no promise?’ variety were not important. If they were important then it might tempt less scrupulous parties to be economical with the truth. The promises given do not need to be the sole inducement for conduct. ‘It is sufficient if they are an inducement.’ (Robert Walker LJ quoting Wayling v Jones at page 173). This was accepted to have occurred in the instant case. The author suggests that a ‘state of affairs’ approach to proprietary estoppel is strongly suggested by the judicial interpretation of these facts. There is rather limited emphasis upon the nature and content of the alleged promises. There is much more emphasis upon the detriment. The author would also note in this context that Slade LJ in Jones v Watkins [1987] CAT 1200 stated that proprietary estoppel may even arise in cases of equivocal representation.

4. The Result –The Court of Appeal then moved on to the issue of quantification of the estoppel interest:

The local authority charge – One important preliminary issue, from the point of view of the adviser, is that Robert Walker LJ effectively brushed aside the local authority charge. Mr Campbell had priority. His claim was based on actual occupation and his equity arose prior to the Ascough’s need for residential care. Robert Walker LJ noted that he followed Re Sharpe [1980] 1 WLR 219. Further the author would note this follows the traditional interpretation of interests arising under proprietary estoppel, that they arise before a Court Order is made. The Court Order merely crystallises them. See Sen V Headley [1991] Ch 425. The issue of the priority, or rather lack of priority, of the charge did not in fact have to be dealt with in practice. The net equity was sufficient to cover the award to Mr Campbell and the local authority entitlement.
Quantum – Turning to quantum Mr Campbell had not paid rent since 1992 and had occupied the semi alone since January 1994. His equity was not however, already satisfied by that 10 year period. The Court did not agree that a full life interest was required to satisfy the equity. The life interest was stated to be ‘administratively inconvenient.’ The author is a little puzzled by this as a life interest in a property is not hard or expensive to administer in most cases. The trustees have little to do and the tax office is not likely to be interested as the asset would not be generating an income. However, there would be the possibility of disputes over up-keep. Further, interest would accrue on the local authority charge to reduce the net equity on the property to the disadvantage of the residuary claimants. The charge was worth some £64,000 out of £160,000 at the time of judgement. A ‘clean-break’ under Pascoe v Turner [1979] 1 WLR 431, 438-9 and Gillett v Holt was favoured. The result was that Mr Campbell received £35,000 charged upon the property with interest upon it commencing after 56 days of vacant possession. He would also have to give vacant possession to the executors to facilitate sale. The figure would not buy Mr Campbell a new house in the area but would help with his re-housing needs. The executors were ordered to pay the costs of Mr Campbell’s appeal.

The conclusion must be that in the context of protecting the interests of carers in property, proprietary estoppel is their friend. There would seem to the author to be no rational distinction between ‘family’ and ‘non-family’ carers. That is especially given the emphasis on ‘family’ in Campbell v Griffin and Others. Fully remunerated carers would be another issue. Further, in the light of the apparent use of a ‘state of affairs’ approach this principle may be one of great value to the adviser seeking to put the wishes of the older person into practice whatever the apparent powers of the local authority charging regime may be. This is a modern and realistic approach to complex social and economic relations.

It should also be noted that where there is a proprietary interest there is an effective co-ownership situation. This might reduce the value of the former residence that might be assessed as belonging to the care home resident but that is another story in itself…

David Coldrick is partner in charge of Wrigleys Solicitors Sheffield office 0114 2675588 david.coldrick@wrigleys.co.uk