Keelwalk Properties Ltd v Waller & Anor

A landlord’s longstanding practice of renewing leases at a ground rent does not, by itself, create an expectation that renewal will continue indefinitely. Proprietary estoppel requires conduct to a claimant’s detriment in reliance on a belief or assurance known to, or encouraged by, the other party. There must also be a sufficient link between the assurance and the detriment, and the circumstances must make it unconscionable to assert strict legal rights. Reasonable expenditure based only on the likelihood that an established practice will continue is insufficient. Human rights provisions do not confer a right to lease renewal where domestic law provides none.

Keelwalk, the freehold owner of two plots at the Marine Valley Estate, appealed against the Kingston upon Hull County Court’s dismissal of its possession and mesne profits claims. The respondents’ fixed-term leases had expired. They relied principally on a historic practice by Keelwalk’s predecessor of granting replacement leases at ground rent, and alternatively on human rights arguments.

The county court held that an equity entitled the respondents to new leases at ground rent. It also held that the bungalows formed part of the realty, but Keelwalk conceded on appeal that the respondents could remove them under the lease terms. The central issue was whether the historic practice created a proprietary estoppel or other entitlement to renewal.

1. Appeal allowed. The county court’s order was set aside. Possession orders were made against both respondents, together with an inquiry as to mesne profits. The orders were suspended for three months to allow the parties to reconsider their positions and seek an amicable solution.
2. Proprietary estoppel requires a person to act to their detriment in reliance on a belief concerning rights over another’s property, where that belief was known to or encouraged by the other party. There must be a sufficient link between the assurance relied upon and the conduct constituting detriment. The court must assess unconscionability in the round, as explained in In re Basham [1986] 1 WLR 1498, Wayling v Jones (1993) 69 P & CR 170 and Gillett v Holt [2001] Ch 210.
3. A longstanding practice by a landlord of renewing leases at a ground rent cannot, without more, justify an expectation that the practice will continue in perpetuity. The fact that capital expenditure may have been reasonable on the assumption that the practice would probably continue does not convert the practice into a representation or assurance sufficient to found an estoppel.
4. The court expressed no view on cases where a tenant had paid a capital sum specifically to purchase the bungalow, or on whether a resident occupying a bungalow might obtain protection under the Rent Acts. Neither respondent fell within those categories.
5. Articles 8 and 1 of the First Protocol of the European Convention on Human Rights did not support a right to renewal where no such right existed under domestic law. The human rights argument was in any event linked originally to the abandoned ownership issue.

• Court of Appeal (Civil Division): allowed Keelwalk’s appeal from the Kingston upon Hull County Court, set aside the order granting equitable relief, and made possession orders with an inquiry as to mesne profits. The possession orders were suspended for three months.
• Kingston upon Hull County Court: dismissed the possession and mesne profits claims and held that the respondents were entitled in equity to new leases at ground rent.