Articles

Proprietary estoppel and laches

9th March 2018

This article considers whether a claim based on the doctrine on proprietary estoppel might be defeated by a limitation defence.

It is helpful to start by identifying some of the core principles.

Core principles

In a claim based on proprietary estoppel, the claimant must prove three elements (see Davis v Davies [2016] EWCA Civ 463 per Lewison LJ at 38ii):

  1. an assurance of sufficient clarity;
  2. [reasonable] reliance on that assurance; and
  3. detriment in consequence of the reasonable reliance.

The jurisdiction exercised by the court is equitable. In principle, therefore, the equitable doctrine of laches will apply to the claim (see Megarry & Wade, The Modern Law of Real Property, eighth edition, §16-027).

Laches is the principle that the claimant who seeks an equitable remedy must come to the court quickly once he knows his rights are being infringed (see McGee, Limitation Periods, sixth edition, §3.015). The following considerations apply (see McGee):

  1. it is not just the length of the delay which is relevant but the nature of the acts done during the interval which might affect either party and cause a balance of justice or injustice in taking one course or the other so far as relates to the remedy (see Lindsay Petroleum Co. v Hurd (1874) LR 5 PC 221 per Lord Selbourne LC at 239 and 240);
  2. the question for the court in each case is simply whether, having regard to the delay, its extent, the reasons for it and its consequences, it would be inequitable to grant the claimant the relief he seeks;
  3. some sort of detrimental reliance is usually an essential ingredient;
  4. the court engages in a broad approach to investigate whether it was unconscionable for the party concerned to be permitted to assert his beneficial rights;
  5. it is impossible to set any fixed time-limit for the operation of the principle – everything must depend on the damage caused in the particular case; and
  6. a lapse of time amounting to much less than the statutory limitation periods [for example, 6 and 12 years being those which most frequently concern claims concerning proprietary rights] can cause relevant prejudice to the defendant so as to make the granting of the remedy inappropriate.

Pausing there, it is clear from the principles outlined above that in a dispute which requires the resolution of both the claimant’s claim arising from the doctrine of proprietary estoppel and the defendant’s defence arising from the doctrine of laches, as part of its efforts to achieve a balance of justice, the court will be called on to examine each party’s allegation that the other has acted unconscionably. It is extremely difficult to see how these allegations might meaningfully be separated. As such, the overall justice of the case will probably involve the court considering the claimant’s and defendant’s respective allegations as interconnected and part of an overall process of assessing prejudice and unconscionability to achieve fair result in the round.

Case law

Case law on the relationship between proprietary estoppel and laches is few and far between.

In Reimers v Druce (1857) 23 Beav. 145 (CA), Sir John Romilly MR said this in respect of a delay in taking proceedings to enforce a foreign judgment and its effect on a defence to that action (at 62, emphasis added): “[It] has barred the possibility of its being adduced. The Defendants may have been seriously prejudiced by this delay, and it appears to me that the Plaintiff who seeks to enforce, in this country, a foreign judgment recovered by him, ought to be diligent in his proceedings for this purpose… I am of the opinion that where the delay is unreasonable he ought not to obtain the assistance of this Court to enforce his demand. In this case the Plaintiffs have waited upward of twelve years, and have offered no excuse for this delay. I think the delay is unreasonable.”

In Bourne v Swan & Edgar Ltd [1903] 1 Ch 211, Farwell J said this (emphasis added): “Delay, no doubt, may in some cases be sufficient to prevent the applicant from obtaining relief, but, so far as I can see, the only case in which the delay ought to have that effect would be when the respondent has been put to real disadvantage by the loss of his evidence, or the like… The lapse of time here… has not in any way prejudiced the respondent on the evidence which he has been able to put before the Court“.

In Williams v Greatrex [1957] 1 WLR 31, Denning LJ said this in respect of a claim for specific performance by a purchaser who had gone into possession of the land but delayed in bringing proceedings: “The second point is on delay or laches… All that needs to be done is for the legal title to be perfected. In such a case, laches or delay is not a bar.”

In Voyce v Voyce (1991) 62 P & CR 290, Dillon LJ said this: “I note that in Snell’s Equity, in considering delay by a plaintiff in a claim for specific performance under a contract it is said: Where, however, the plaintiff has been let into possession under the contract and has obtained the equitable interest, so that all he requires is a mere conveyance of the legal estate, even many years’ delay in enforcing his claim will not prejudice him. I find it difficult to see why the defendant should be prejudiced in the present case by [the plaintiff’s] delay in taking steps to perfect his title when his possession of [the property] was not being challenged”.

In Taylor v Crotty [2006] EWCA Civ 1364, Mummery LJ said this in answer to a ground of appeal by which it was alleged that a tenant had delayed in seeking the remedy of specific performance and the landlord would suffer detriment as a result of that delay: “I agree with [the trial judge] that it does not lie in the mouth of the landlord to complain of delay in relation to the right to complete a contract, which the landlord refuted because the landlord disputed the validity of the exercise of the option. The landlord’s position could have been protected by the service of a notice making time of the essence, but this understandably was not done because the landlord was disputing the very existence of a valid contract”.

In Fisher v Brooker [2009] 1 WLR 1764, Lord Neuberger said this: “[l]aches and estoppel are well established equitable doctrines. However, at least in a case such as this, I am not convinced that acquiescence adds anything to estoppel and laches… laches, failing to raise or enforce an equitable right for a long period, can be characterised as acquiescence… in so far as the respondents’ arguments is put on the basis of estoppel… one would expect the respondents to succeed in estoppel only if they could show that they reasonably relied on his having no such claim, that they acted on that reliance, and that it would be unfairly to their detriment if he was not permitted to raise or enforce such a claim… Although I would not suggest that it is an immutable requirement, some sort of detrimental reliance is usually an essential ingredient of laches, in my opinion.”

So, if an overarching principle is capable of being derived from these cases, and, in particular and most recently in Fisher, it is that the defendant to a claim based on proprietary estoppel must demonstrate that he has relied to his detriment on the claimant’s delay in bringing the claim.

Application of principles and case law

To attempt to put some flesh on this bone, might a defence of laches arise if a claimant has, for example, delayed in circumstances where a key witness has died (see Bourne, above)? Assume that the testimony of the witness would go to the very heart of one of the elements the claimant would have to prove, such as the representations or assurances on which the claimant relies. Suppose the claimant has, without reasonable excuse, delayed for several years in bringing proceedings, during which time the witness has died. Would the court merely treat this as part of its overall evaluation of the strength of the claimant’s case or would it apply laches in a principled way, if raised as a defence? Does the defence add anything to the court’s deliberations?

It is difficult to see how the defendant might demonstrate that the claimant’s failure to progress his case was, in any meaningful way, relied on. But, does laches requires detrimental reliance? In the passage cited above, Lord Neuberger referred to a defendant raising estoppel as a defence to a claim. In the example of a claimant who has inexcusably sat back, a key witness has died, and then proceedings are brought, why, as a matter of principle, ought the defendant be required to show detrimental reliance in order for a limitation defence to succeed?

In these circumstances, the earlier cases are consistent with the court asking itself, not whether there has been detrimental reliance, but only whether the defendant has been put to real disadvantage by the delay. If that test is applied, failing to bring proceedings where the quality of the evidence before the court has been undermined to a material extent, would, it is suggested, give rise to a defence of laches over and above the court’s more general assessment of the quality of the evidence.

The advantage to the defendant in running laches as a defence is that the court will not merely be concerned with the weight of the witness testimony but will examine in close detail the claimant’s failure to act with proper alacrity. That will, surely, place the defence in a far stronger position when resisting the claim. It is, therefore, a defence worth taking the trouble to plead.

Pleading the allegation

This leaves the question of what precisely the defendant must plead. The answer is the alleged prejudice with all the available specificity. There is to be no cutting of corners. The defence must allege that the doctrine of laches is being relied on and then particularise each fact which gives rise to the prejudice. In a case in which the alleged prejudice is the death of a material witness, this would give rise to the need for close attention to detail so that the causal link between the loss of the evidence and the detriment to the defendant is firmly made out. If it is not, a claimant will no doubt consider applying to strike out the relevant paragraph or raise a demanding request for further information.

If the pleading is to be consistent with Fisher, it must go further. It must develop the defendant’s detrimental reliance. It must particularise the basis on which the defendant says he has acted (or not acted) in response to the claimant’s delay. Pleading that allegation will take considerable skill and attention to the facts. In the light of Fisher, claimants will need to be astute to the difficulties inherent in laches being pleaded as a defence to a claim based on proprietary estoppel and to consider carefully making an interim challenge to careless drafting.

 

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