Proprietary Estoppel: Case Review
Proprietary estoppel is a legal principle that allows a person who has been given an assurance to seek enforcement of that assurance through positive relief. To establish proprietary estoppel, the court requires five key elements as outlined in Laird v Vallance [2023] VSCA 138:
The promisor makes a representation that they will grant the promisee an interest in the property.
The promisee acts in reliance on this representation.
The promisee’s reliance on the assurance or promise is reasonable.
The promisor knew or intended that the promisee would rely on the assurance.
The promisee suffers a detriment as a result of the promisor’s failure to fulfill the assurance.
When these elements are satisfied, the court may impose an enforceable obligation on the promisor to prevent the promisee from suffering further detriment due to their reliance on the promise.
Facts
In the recent case of Slade v Brose [2024] NSWCA 197, the doctrine of proprietary estoppel was applied. The appellants, the Slades, owned several parcels of farming land in Quandialla. The respondents, Kellie and Garreth Brose (the Brose), relocated from Townsville to Quandialla in 2014 based on the Slade’s assurance that if they moved and worked for the family business, they would receive an interest in certain parcels of the farming land.
However, in late 2021 and early 2022, a dispute arose between the Slade and the Broses, leading the Slades to deny any such arrangement existed. The Slades began selling off their rural properties and partnership assets. In response, the Broses lodged caveats on the titles of the properties, claiming that the Slades held the properties in a constructive trust for them (Disputed Properties), based on their detrimental reliance on the Slade’s representations.
Judgement
On 8 August 2024, the court held that the Disputed Properties were indeed held in a constructive trust, applying the principles of proprietary estoppel by encouragement. It was determined that the Broses were entitled to the farming properties in Quandialla because they had reasonably relied on the Slades’ repeated assurances, particularly in the family context, that they would inherit most of the land and the partnership business. The Broses’ decision to relocate and forgo other opportunities was deemed sufficient to constitute detrimental reliance.
Consequently, the judge ordered the Slades to transfer the Disputed Properties to the Broses and for the Broses to pay the Slades $500,000.00 to reflect the accelerated acquisition of their interest in the properties.
Key Takeaways
The case highlights the principle that when a person reasonably relies on assurances – such as promise of property ownership – and acts to their detriment, the court may enforce those assurances through equitable remedies like a constructive trust. This ruling emphasises that the Broses’ decision to relocate and commit to the family business was a clear example of detrimental reliance, justifying the enforcement of the Slade’s promises. Additionally, the court’s decision to include a monetary adjustment in favour of the Slades illustrates the judicial effort to achieve a balanced and fair outcome, ensuring that the accelerated acquisition of the property interest was addressed.
For assistance with formalising agreements involving promises of property or business interests, please feel free to contact our people:
Ron Zucker 0410 590 111
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