Lloyd & Ors v Dugdale & Anor

A shareholder cannot ordinarily found a proprietary estoppel upon detriment suffered by his company. The claimant must show substantial personal detriment caused by reliance on the landowner’s assurance, save perhaps where the parties pursued a joint enterprise.

Actual occupation under Land Registration Act 1925 section 70(1)(g) requires occupation by the person asserting the interest. A company’s occupation is not attributed to its controlling shareholder merely because he attends the premises as its director.

Notice of an unregistered interest does not itself bind a purchaser of registered land. A constructive trust arises only in special circumstances where the purchaser undertakes a new obligation to give effect to the interest. A purchase expressed to be subject to possible claims ordinarily provides disclosure and protection between vendor and purchaser without creating new rights for third parties.

The respondent had obtained assurances that he personally would receive a long lease of commercial premises for £20,000. His company occupied the premises and spent more than £15,000 improving them. The proposed lease was never executed, but the respondent personally lost the opportunity to acquire alternative premises in reliance on the assurances.

The appellants later acquired and registered the freehold with notice of pending possession proceedings and the respondent’s asserted rights. His company, rather than the respondent personally, then occupied the premises.

His Honour Judge Howarth held that proprietary estoppel bound both the former owner and the appellants. He found that the respondent was in actual occupation and that the appellants were also constructive trustees. He dismissed their possession claims and ordered them to grant the proposed lease.

The appeal concerned personal detriment, actual occupation under section 70(1)(g) of the Land Registration Act 1925, the effect of corporate personality, and whether the acquisition created a constructive trust.

1. Appeal allowed unanimously. Sir Christopher Slade, with whom Mummery and Kennedy LJJ agreed, held that the respondent had acquired an equity by proprietary estoppel against the former owner’s estate. The assurances were made to him personally. His loss of the opportunity to acquire other premises and obtain the contemplated security constituted substantial personal detriment, making withdrawal of the assurances unconscionable.

2. The judge’s wider theory of collective or derivative estoppel was rejected. A person ordinarily cannot rely on expenditure or other detriment suffered by his company. Personal detriment remains necessary, save perhaps where the claimant and the person suffering the detriment pursued a joint enterprise. A controlling shareholder and his company remain separate legal persons.

3. The respondent’s equity did not constitute an overriding interest under section 70(1)(g) of the Land Registration Act 1925. Actual occupation requires physical occupation of sufficient permanence and continuity, although occupation may be shared. A licensor is not in actual occupation merely because his licensee occupies on its own behalf. Here the company conducted its business at the premises, and the respondent attended only as its managing director and agent. The company’s occupation could not be treated as his occupation.

4. Registration therefore gave the appellants the legal estate free of the respondent’s prior equity under section 20(1), unless the circumstances independently imposed a constructive trust. Express notice of an unregistered interest does not by itself make reliance on the register unconscionable. A contrary general rule would defeat the statutory registration system.

5. A purchaser taking land expressly subject to possible interests becomes a constructive trustee only where special circumstances show that the purchaser undertook a new obligation to give effect to them. The transaction documents contemplated continued possession proceedings and protected the appellants against the asserted claims; they did not confer fresh rights on the respondent. No price reduction was proved, and a trust could not safely be inferred from slender materials.

6. The respondent’s counterclaim was dismissed. He was ordered to deliver possession and pay damages for trespass from the date of the company’s liquidation until possession was delivered.

• Court of Appeal (Civil Division): Allowed the appeal unanimously, set aside the order below, dismissed the respondent’s counterclaim and ordered delivery of possession and an assessment of trespass damages.
• High Court, Chancery Division at Manchester: His Honour Judge Howarth held that proprietary estoppel, actual occupation and constructive-trust principles bound the appellants. He dismissed their possession claims and ordered them to grant the respondent the proposed long lease. Judgment was given on 15 August 2000; no citation is stated.