Powell & Anor v Benney

In proprietary estoppel, a clear assurance about land does not by itself entitle the claimant to the promised property. The court must identify the equity created by detrimental reliance and select relief that satisfies it. Where the assurance and reliance have a consensual character close to contract, expectation-based relief may be appropriate. Where no bargain exists, the court has a wider judgmental discretion. It may make a monetary award where the expectation is out of proportion to the detriment, taking account of countervailing benefits. A common-intention constructive trust remains distinct from proprietary estoppel, which is a mere equity that may be satisfied without transferring the property.

Ronald Hobday repeatedly told Martin and Janet Powell that they would receive his two properties after his death and allowed them to use the properties. They assisted him, used the properties for teaching and church activities, and incurred expenditure. Hobday died intestate, and Betty Benney, his personal representative, refused to transfer the properties.

The Powells claimed a constructive trust and proprietary estoppel. The Central London County Court rejected the constructive trust claim, upheld proprietary estoppel only to the extent of a £20,000 award, and ordered possession to Mrs Benney. The appeal challenged the classification of the case and the refusal to award the properties themselves. The central issue was whether the assurances and reliance formed a bargain-category case attracting expectation-based relief.

1. Appeal dismissed. Sir Peter Gibson gave the leading judgment, with which Richards LJ and Lloyd LJ agreed. The judge below had rejected the constructive trust claim and upheld proprietary estoppel only to the extent of a £20,000 monetary award.
2. The case fell within the non-bargain category of proprietary estoppel. The bargain category requires a clear mutual understanding, clearly defined expectation and detriment, and a consensual arrangement close to an enforceable contract. Hobday had promised to leave the properties and offered their use, but he had not required the Powells to perform the acts relied upon. Their actions were their own choice, so there was no bargain or equivalent consensual arrangement. Non-compliance with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 did not alter that conclusion.
3. In a non-bargain case, expectation-based relief is not mandatory. Where the expected benefit is out of proportion to the detriment, the court may exercise a wider judgmental discretion and satisfy the equity by a limited monetary award. The expectation of properties worth about £280,000 was out of proportion to the detriment found, and £20,000 was a permissible award. The court was entitled to take account of benefits received in connection with the alleged detriment, including use of the properties and savings on improving the shop. This approach accords with Jennings v Rice [2003] 1 P&CR 100.
4. Proprietary estoppel and a common-intention constructive trust are distinct. Proprietary estoppel is a mere equity satisfied by the minimum award necessary to do justice, potentially by money; a common-intention constructive trust identifies the true beneficial ownership and the size of the beneficial interests. The present case concerned satisfaction of an equity, not identification of beneficial ownership, applying the distinction stated in Stack v Dowden [2007] 2 WLR 831.
5. The judge was entitled to reject unpleaded or unsupported heads of detriment, including alleged loss of passing trade and unhappy incidents at the shop, and to make the relevant factual findings. The appellate challenge was in substance an impermissible challenge to findings of fact.
6. The costs challenge was not properly arguable without a transcript or agreed note showing what was put to the judge and what the judge said when exercising the costs discretion.

• Court of Appeal (Civil Division): On 5 December 2007, the appeal was dismissed. Permission had initially been refused on the papers by Lloyd LJ but was granted on renewed oral application by Rix LJ.
• Central London County Court: On 9 August 2006, HHJ Levy QC awarded the Powells £20,000 from the sale proceeds, ordered them to give possession of the properties to Mrs Benney, and ordered them to pay her costs from 26 July 2006.