Preedy & Anor v Dunne & Ors

Proprietary estoppel requires an assurance, reliance and detriment, followed by unconscionability in denying the expected benefit. A promise by one of several trustees does not bind a co-trustee without authority, participation or acquiescence. Trustees’ wide administrative powers under the Trusts of Land and Appointment of Trustees Act 1996 do not permit them, without beneficiary concurrence, to create a proprietary estoppel altering beneficiaries’ interests. A contractual licence granted for consideration may stand on a different footing and potentially bind the trust estate. On the facts, the alleged promises were not proved, the relevant trustee lacked authority to bind his co-trustee, and the beneficiaries had neither promised nor acquiesced in the asserted right of occupation.

The claimants, trustees of a will trust owning a public house, sought possession from the first defendant and companies associated with him. The defence relied on a proprietary estoppel equity and, more broadly, an alleged contractual licence to occupy the premises until refurbishment monies were repaid.

The defendant had funded substantial refurbishment works and operated the pub business. The issues included whether the alleged assurances were made, whether one trustee could bind another, whether trustees could bind the beneficiaries by proprietary estoppel, and whether the facts supported a contractual licence.

1. Proprietary estoppel. The court accepted the orthodox elements: an assurance or representation, reliance and detriment, with the ultimate question whether it would be unconscionable to deny the expected benefit. The defendant’s payments were loans to the business, not to the trustees or the trust freehold.
2. Trustee unanimity and authority. Where one of several trustees makes a promise without the authority, participation or acquiescence of the others, the promise does not bind an innocent co-trustee. The principle applies through ordinary agency rules. The evidence did not establish actual, implied or ostensible authority in Mr Shilson to bind Mr Preedy concerning the trust land.
3. Trustees and beneficiaries. Trustees holding land have broad administrative powers under the Trusts of Land and Appointment of Trustees Act 1996, but those powers are subject to the rights of beneficiaries and cannot be used to give trust property away. Section 6 powers concern formally and substantively complete administrative transactions. An informal bargain concerning an interest in land, ineffective for want of formality, does not bind beneficiaries without their concurrence or ratification. Sections 12 and 13 do not authorise a proprietary estoppel which alters beneficial interests.
4. Contractual licence. A licence granted for consideration and coupled with an agreement not to revoke it until a specified event may potentially bind the trust estate. Such a right may substantially derogate from co-beneficiaries’ interests. No such contractual agreement was proved here.
5. The alleged promises by Mr Shilson were not proved. Nor were promises or acquiescence by Mr Preedy, Sarah or Peter. Reliance therefore did not arise for decision. The defence, whether pleaded or advanced informally, failed. Judgment was entered for the claimants.