Proprietary estoppel claim against trustees - Boodle Hatfield

Your lawyers since 1722

01 Jan 2017

Proprietary estoppel claim against trustees

In Fielden -v- Christie-Miller and others [2015] EWHC 87 (Ch), trustees sought to have a claim brought against them based on proprietary estoppel struck out on the grounds that the statement of case disclosed no reasonable cause for bringing the claim pursuant to CPR 3.4 (2)(a) and, secondly, summary judgment because the claimant (in fact back part 20 claimant) had no real prospect of succeeding in the claim and there was no other compelling reason why the case should be disposed of at trial pursuant to CPR 24.2.

The trustees advanced two distinct arguments, each based upon a proposition of law.

First, the trustees said that under trust law, unless provided to the contrary in the trust instrument (and there was no contrary provision in this case), the trustees must act unanimously. They referred to this as the “unanimity” principle. Therefore, they said, if a representation by them is to found an estoppel, it must have been made by or on behalf of all of them. They contended that the statement of case, even when read together with the part 20 claimant’s reply to their defence, did not allege that any representation or assurance was made by or on behalf of all of them. Accordingly, they said it was contrary to the “unanimity” principle and should be struck out and summary judgment entered in their favour.

Secondly, they said that, as is trite law, trustees cannot fetter their discretion. Specifically, trustees cannot fetter the exercise at a future date of a discretion possessed by them as trustees so that any covenants, undertakings, policies, or premature or irrevocable views entered into or expressed by them concerning the future exercise by them of their fiduciary powers are void and unenforceable as a fetter on their discretion. They referred to this as the “non-fettering” principle and said that no estoppel based on representation or promise concerning their intention as to the future exercise of their dispositive powers could arise.


The dispute concerned the succession to the Swyncombe Estate in Oxfordshire.

The estate had been owned by Charles Wakefield Christie-Miller, who during his lifetime became concerned about the future of estate and how the potential taxation payable on his death would affect it. Accordingly, during his lifetime, Charles split the estate in two, to be held in different ownerships. One part, then known as the Swyncombe Downs Estate, was transferred to his son, John, in 1958. Then, in 1967, Charles settled the other part in trust, giving rise to what became known as the 1967 Settlement.

Notwithstanding the split ownership, the two parts of the Estate continued to be run as one. Charles died in 1976 and after his death, although no more than discretionary objects under the trusts of the 1967 Settlement, John, and after his death in 1999, Kathleen, his wife, were in receipt of the income of the Settlement, effectively as if appointments for life in their favour had been executed.

As to the part of the Estate that had been transferred to John in 1958, upon his death in 1999 that part became held on the trusts established by his Will. Under the terms of John’s Will, he conferred a life interest in the part of the Estate he owned (“the Will Fund”) upon his widow Kathleen, who died on 20 December 2004. From the expiry of three months from Kathleen’s death, Stephen Christie-Miller (see below) became entitled to an interest in possession of the Will fund, subject to any appointment by the trustees.

By the time of Kathleen’s death in 2004, consideration was being given as to what was to happen to the Estate, both by the Settlement trustees as to that part which was owned by the 1967 Settlement (“the Settlement Fund”) and by the Will trustees to the Will Fund. Under both trusts, their respective trustees had extensive powers of appointment and the principal contenders for succession were Samuel Fielden (“Sam”) and Stephen Christie-Miller (“Stephen”), who is mentioned above. Sam is a grandson of Charles, his mother being one of Charles’ four daughters. He is therefore a nephew of John. Stephen is a more distant relation. He is a great-nephew of Charles, his grandfather Geoffrey Christie-Miller being one of Charles’ brothers.

On 5 January 2005, the Settlement trustees resolved to grant Sam a life interest in the Settlement Fund and, subject to this, to hold the fund primarily for his issue. Deeds of appointment to this effect were executed in 2007 and 2008. Excluded from these deeds was a property owned by the Settlement trustees known as Home Farmhouse. Stephen and his family had been living in Home Farmhouse since Easter 1996 and the Settlement trustees resolved to grant Stephen an assured tenancy of it on a full repairing basis at a market rent, that rent being reduced to take into account Stephen’s contribution to certain renovation costs relating to Home Farmhouse.

In March 2007, the Will trustees purported to exercise a power of appointment whereby, subject to certain trusts declared by the Will in favour of Stephen, the Will Fund and its income should thenceforth be held for Sam absolutely. Disputes arose over the meaning and effect of that deed of appointment (“the 20 March deed of appointment”) and on 9 August 2013, Sam issued proceedings against Stephen and the former and current trustees of the Will trusts seeking declaratory relief concerning the true construction of the deed, alternatively rectification of it. Sam claimed that the deed provides, or should be rectified to provide, that the income of the Will fund is held for Stephen for life and that subject thereto capital and income are held for him (Sam) absolutely. Stephen contends that the 20 March deed of appointment does not cut down the absolute interest which, in the events that had happened, had been given to him by another provision of the Will.

By his defence and counterclaim, Stephen sought declarations that he became and remains entitled to an absolute interest in the Will fund and that it was not open to the then Will trustees or their successors to reduce or cut down that interest. Stephen further claimed (and this is the issue with which this article is concerned) that he is entitled to a freehold interest in Home Farmhouse, or alternatively the right to live there rent free until the death of the survivor of himself and his wife. The basis for this is a claim in proprietary estoppel which is founded on events which occurred between late October 1994 and subsequently (but mainly during the period up to John’s death in 1999), such that the then Settlement trustees and their successors are, Stephen, claims estopped from exercising any power of appointment conferred on them by the 1967 Settlement so as to reduce or cut down his claimed entitlement to Home Farmhouse. Stephen further claims the repayment of rent he says he mistakenly paid for living in Home Farmhouse between the death of Kathleen in December 2004 and October 2011.

The particulars of the Settlement trustees were as follows: Michael Jodrell had been a trustee since 1985; John Morcom had been a trustee since 1992; David Christie-Miller (Stephen’s father) had been a trustee in 1994, was replaced as a trustee by Robin Peppiatt in February 1995 and later died; and Caroline Cannon-Brookes was appointed in 2002.

The pleaded facts relied upon by Stephen in claiming proprietary estoppel

Set out below are the crucial representations upon which the application turned. For the purpose of the application, it had to be assumed that the representations were made and that the other necessary ingredients of estoppel, save only for those in issue on the application, were established.

Stephen pleaded:

“2.6 In late October 1994 the First Defendant [i.e. Stephen] was informed by the Deceased [i.e. John] and Kathleen, and separately by Michael Jodrell (“Mr. Jodrell”), the then senior trustee of the Swyncombe Settlement (in the sense of the trustee who commonly took responsibility for ensuring that estate matters were addressed and taken forward in a timely manner) that he and his family would be the beneficiaries of the two estates after the Deceased and Kathleen had died…”

“2.8 In reliance upon the representations of the Deceased and Kathleen and of Michael Jodrell in or about Easter 1996 the First Defendant moved from Highclere Park to Home Farmhouse (which is on Swyncombe rather than on Swyncombe Downs) with his wife and young family to live on the Swyncombe Estate after that property had been refurbished by the Swyncombe Trustees to make it a suitable family home. Further additions were required over and above those budgeted for by the Swyncombe Trustees and it was suggested to the First Defendant by Mr Jodrell and the Third Defendant [i.e. John Morcom] (in the presence and the knowledge of each other) shortly before the trustees meeting in October 1995 that he should pay for them himself (as in fact he did) on the basis that he would be the next beneficiary of the Estate in any event.”

In his reply, in relation to Mr. Jodrell’s representations in late October 1994, Stephen pleaded that he discussed them with David (his father) “to whom they came as no surprise and who did not dissent from them”.

Proprietary estoppel

There was no dispute over the essential ingredients of proprietary estoppel. In his judgment, Sir William Blackburne quoted Lord Walker in Thorner -v- Major [2009] UKHL 18, at 29 where Lord Walker cited an academic authority to the effect that there was no definition of proprietary estoppel that was both comprehensive and uncontroversial but then went on to state that:

“Nevertheless most scholars agree that the doctrine is based on three main elements, although they express them in slightly different terms: a representation or assurance made to the claimant; reliance on it by the claimant; and detriment to a claimant in consequence of his [reasonable] reliance.”

Sir William Blackburne also quoted what Oliver J stated in Taylor Fashions Ltd -v- Liverpool Victoria Trustees Co Ltd (Note) (1979) [1981] 1 All ER 897 to the effect that the doctrine required:

“a very much broader approach which is directed rather at ascertaining whether, in particular circumstances, it would be unconscionable for a party to be permitted to deny that which knowingly, or unknowingly, he has allowed or encouraged another to assume to his detriment than to enquiring whether the circumstances can be fitted within the confines of some pre-conceived formula serving as a universal yardstick for every form of unconscionable behaviour.”

The unanimity principle

The unanimity principle was also not in dispute. Sir William Blackburne referred to it being conveniently set out in Lewin on Trusts, 19th edition, at 29-069 (with the reasons for it summarised at 29-068) and in Underhill and Hayton, Law Relating to Trusts and Trustees, 18th edition, at 52.1, especially at 52.4. Underhill and Hayton provide, for example:

“It is not unusual to find one of several trustees spoken of as the “acting trustee”, meaning the trustee who actively interests himself in the trust affairs, and whose decisions are merely indorsed by his co-trustees. The court, however, does not recognise any such distinction; for the settlor has trusted all his trustees, and it behoves each and every one of them to exercise his individual judgment and discretion on every matter, and not blindly to leave any questions to his co-trustees or co-trustee.”

Counsel for Stephen said (as Stephen had pleaded in his reply) that Mr. Jodrell appeared to be speaking for and making representations on behalf of the Settlement trustees and that it was, therefore, reasonable for Stephen to rely upon those representations. He said that the touchstone was whether the person making the representation had a sufficient appearance of authority to act to bind the legal owner and that, in the case of trustees, representations or assurances made by one trustee will bind the others if it was reasonable in the circumstances for the person to whom they were made to rely upon them in the belief that they were made by or on behalf of all of the trustees. The trustees disagreed and said that appearance was not enough and that the pleading failed to set out how the trustees became bound by what Mr. Jodrell was supposed to have represented.

Sir William Blackburne said that the question before him was whether it was sufficiently pleaded that Mr. Jodrell was the agent at all of his co-trustees, in the sense either that they authorised him to make the representations in question on their behalf (specifying how that authority arose), or they stood by knowing that he had made the representations but acquiesced in them (specifying the circumstances in which they stood by and acquiesced), or by their actions (specifying what those actions were) they put Mr. Jodrell in a position in which he appeared to be authorised to make the representations on their joint behalves.

Sir William Blackburne did not agree with Stephen’s counsel’s “fundamental proposition” that where estoppel is in issue it is sufficient merely that the claimant asserting the estoppel believes that the person with whom he is dealing has the authority needed and it is sufficient that the agent has the appearance of authority with nothing to suggest to the claimant that he does not. As Sir William Blackburne held “Elementary fairness requires that before a person can be bound by the acts of another purporting to act on his behalf, that other must-have his authority to bind him in the manner. Whether he has will depend on the usual principles of agency. This applies, in my judgment, as much in the field of estoppel as it does in other contexts.”

Accordingly, Sir William Blackburne held that so far as Stephen’s pleading was concerned, in respect of each trustee at the time of the representation which is said to bound the estoppel, the facts, and matters that were relied upon (whether at the time the representation was made or subsequently) for saying that that trustee was bound by the representation in question had to be set out. Such matters were not set out in the case of Mr. Morcom in respect of the 1994 representation. Such matters were set out, but only just, in the case of David Christie-Miller in respect of the 1994 representation and then only in Stephen’s reply. Such matters were not set out at all in the case of Mr. Peppiatt, whether in respect of the representation alleged to have been made before the trustee meeting in October 1995 or otherwise.

Accordingly, the pleaded case did not set out how Mr. Jodrell had the authority of his co-trustees to make the representations alleged of him (which, for the purpose of the application, it was assumed he made), and accordingly Sir William Blackburne found that the claim failed unless an appropriate amendment to the pleaded case was made.

The challenge based upon the non-fettering principle

Again, the principle was not disputed. A convenient statement of it is to be found in Lewin on Trusts, 19th edition, at 29-227:

“When the power is fiduciary, the donee must exercise his judgment according to the circumstances as they exist at the time: he cannot anticipate the arrival of the proper time by affecting to release it or to exercise it or by pledging himself beforehand as to the mode in which the power shall be exercised in the future. Any form of undertaking as to the way in which the power will be exercised in the future is ineffective.”

It was established that Stephen’s pleading, at paragraphs 2.6 and 2.8 (as quoted above) were to the effect that Mr Jodrell was, and then Mr. Jodrell and Mr. Morcom were, representing (on the assumption, for the purposes of the application, that they made the representations) that the trustees would at some future date exercise in Stephen’s favour their power of appointment under the Settlement. Sir William Blackburne said:

“The question, therefore, is whether the non-fettering principle operates as a complete defence to a plea of estoppel founded on a representation by trustees that they would exercise their discretion in a particular way at some future date. At the heart of the challenge is that if, as authority shows, a contract entered into by trustees with a potential beneficiary as to the future exercise by them of their discretion under their trust is void and unenforceable, the position cannot be any different, and the beneficiary in question cannot be in any better position if instead of seeking to enforce the contract he raises a claim to estoppel. Counsel did not refer me to any point which directly decided the point.”

The trustees asserted that to give effect to the pleaded estoppel would require the trustees to exercise their discretion in a particular way when they come in due course to exercise it and that was the very thing that trustees cannot do and which the courts will not compel them to do. Estoppel, the trustees said, cannot authorise what is unauthorisable. They submitted that the non-fettering principle prevents an estoppel from arising by preventing any assurance that may be made from being even capable of having a binding effect. (The trustees also submitted that the principle prevents any estoppel from arising by making it unreasonable for the person to whom the representation was made to rely on it but that was concerned with reasonable reliance which was an issue which Mr. Justice Blackburne was not concerned with on the application.)

Sir William Blackburne was not persuaded by the trustees’ argument. He held:

“The difficulty I feel about the submission is that it leaves without apparent remedy a person who in all good faith has conducted his affairs, for example by making personal or financial sacrifices, on the faith of a representation that he would one day inherit or acquire some interest in an estate or area of land, simply because the persons with whom he has dealt are trustees of that land, holding the land for the benefit of others, and are not themselves the outright beneficial owners. In the latter case (assuming the other estoppel requirements are present) he would be able to establish the estoppel and, let it be assumed, establish his right to an interest in the land equivalent to what he was given to understand would be given to him, whereas in the former case, if the trustees are correct, he would not. This strikes me as unfair, not least when the claimant might have no idea, and no means of knowing, that the persons he has dealt with are trustees holding the benefit of others and are not themselves the beneficial owners.”

Accordingly, Sir William Blackburne declined to strike out Stephen’s claim, or give the trustees summary judgment in respect of it, on the challenge founded upon the non-fettering principle. In doing so, he pointed out that the effect of a court granting relief to a person claiming an estoppel is not (or does not need to be) to compel the trustees to exercise their power in some given way in the future. Rather, it merely disables the trustees from exercising their power in respect of the asset in question and then only to the extent that the court has declared that the asset is to be applied in satisfaction of the equity which the claimant has established. Thus, in Stephen’s case, if the court were to hold that he established a right to live rent-free in Home Farmhouse until the death of the survivor of himself and his wife (which is one of the alternative declarations Stephen seeks), the trustees would not be prevented from exercising their power of appointment over that asset. Instead, the appointment would be without prejudice to the rent-free right of occupation so declared.

As Mr. Justice Blackburne stated in his judgment, this is an area of jurisprudence where the relevant principles are still very much in the course of development and the outcome of the trial of the action (at which the trustees will be able to submit that the non-fettering principle prevents any estoppel from arising by making it unreasonable for the person to whom the representation was made to rely on it) will no doubt assist the development of the law in this area.

One view is instinctively to feel that the unfettering principle ought to be upheld and to query how it can be reasonable for a person to rely upon a representor’s representation concerning land to his detriment without ascertaining the status of the representor (i.e. beneficial owner or otherwise) in relation to the land. Sir William Blackburne talks of the representee having “no means of knowing” that the representors were not the beneficial owners, but in normal circumstances one would surely consider it reasonable to expect a representee, before acting to his detriment, to satisfy himself that the representor was the beneficial owner of the land in question and able to give effect to the representation he was making.

This article originally appeared in Trusts & Estates Law & Tax Journal.