CG65430 | Constructive trusts: relationship with proprietary estoppel

TCGA92/S225

The doctrine of proprietary estoppel is very similar to that of constructive trusts. It applies if the legal owner of the property has encouraged another to believe that they will acquire an interest in the property and that other person has acted to their detriment in reliance on that believe. The Courts will act to prevent unconscionable conduct by the legal owner.

Although the doctrines are very similar there are significant differences as far as relief under TCGA92/S225 is concerned. First, a constructive trust is created by the actions of the parties. It does not require intervention by the Courts. By contrast proprietary estoppel requires a Court Order. Second, a constructive trust identifies the true beneficial owner of the property and the size and nature of their interest. Under proprietary estoppel the Courts will make the minimum award necessary to do justice. This gives the Courts greater discretion to make the remedy fit the facts of the case. The remedy may range from a share in the beneficial ownership of the property to a monetary award. A claim under TCGA92/S225 can be established under proprietary estoppel only if the Courts had awarded a life interest in the property. It would take effect from the date of the award.

A leading commentator has suggested that when considering a right other than a share in the sale proceeds proprietary estoppel may be a more appropriate remedy especially if the common intention can be implied only from conduct. See Lewin on Trusts 18th edition paragraph 9-75. CAR-CGT Technical Group can provide a copy of the text if it is needed.