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CHAPTER 12: EQUITABLE ESTOPPEL
to the land. However, no proprietary estoppel claim is available if the plaintiff and defendant have a
legally enforceable contract relating to the property: Giumelli v Giumelli (1999) 196 CLR 101 at 121;
161 ALR 473 at 482; Riches v Hogben [1985] 2 Qd R 292 at 301. As Young CJ in Eq observed in Barnes
v Alderton [2008] NSWSC 107 at [55], ‘contract and proprietary estoppel are mutually exclusive’.
12.18 Due to the two methods by which the assumption of an interest could arise, proprietary
estoppel was recognised as comprising two streams. The first is estoppel by encouragement, which
was described by Handley JA in Delaforce v Simpson-Cook (2010) 78 NSWLR 483 at 488, as follows:
Such an estoppel comes into existence when an owner of property has encouraged another to alter
his or her position in the expectation of obtaining a proprietary interest and that other, in reliance
on the expectation created or encouraged by the property owner, has changed his or her position
to their detriment. If these matters are established equity may compel the owner to give effect to
that expectation in whole or in part.
12.19 Dillwyn v Llewelyn [1862] All ER 384 is the classic example of estoppel by encouragement.
In that case a father put his son into possession of land which he purported to voluntarily convey
to his son. The conveyance was ineffective. With his father’s assent and approval, the son built and
occupied a house on the land. After the father’s death, the son sought a declaration that he was the
owner of the land in equity and that the trustees of the land be ordered to convey the land to him
absolutely. The House of Lords made these orders.
12.20 The other stream of proprietary estoppel is estoppel by acquiescence, which was succinctly
explained by Cranworth LJ in Ramsden v Dyson (1866) LR 1 HL 129 at 140–1, as follows:
If a stranger begins to build on my land supposing it to be his own, and I, perceiving his mistake,
abstain from setting him right, and leave him to persevere in his error, a Court of equity will
not allow me afterwards to assert my title to the land on which he had expended money on the
supposition that the land was his own. It considers that, when I saw the mistake into which he
had fallen, it was my duty to be active and to state my adverse title; and that it would be dishonest
in me to remain wilfully passive on such an occasion, in order afterwards to profit by the mistake
which I might have prevented.
But it will be observed that to raise such an equity two things are required, first, that the person
expending the money supposes himself to be building on his own land; and, secondly, that the
real owner at the time of the expenditure knows that the land belongs to him and not to the
person expending the money in the belief that he is the owner. For if a stranger builds on my land
knowing it to be mine, there is no principle of equity which would prevent my claiming the land
with the benefit of all the expenditure made on it. There would be nothing in my conduct, active
or passive, making it inequitable in me to assert my legal rights.
12.21 For a proprietary estoppel claim to be successful, the plaintiff must have suffered some
detriment. In Barnes v Alderton at [42], Young CJ in Eq put it as follows:
No equity arises to raise a proprietary estoppel unless the person in whose favour it is being raised,
has acted to their prejudice or detriment in some way whether in terms of direct expenditure
or on some other basis. However, the detriment may not necessarily be expenditure of money,
commonly a claimant leaves her job, moves in with the promisor and does his housekeeping for
many years … However, … minor expenditure such as day to day living expenses or minor repairs
will not qualify.
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Spi-Radan & Stewart - Principles of Australian Equity and Trusts 2nd ed. Ch.12.indd 271 10/10/2012 05:22:31
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