Hoyl Group Ltd v Cromer Town Council

This is an appeal from the judgment of HHJ Moloney QC sitting in the Norwich County Court, and his subsequent order dated 30 September 2014. The issue in the appeal is whether the claimant and respondent Hoyl Group Limited (“Hoyl”) is entitled to a right of way over land owned by the appellant, Cromer Town Council (“Cromer”). The judge held that Hoyl was entitled to one such right of way, relying oh the equitable doctrine of proprietary estoppel, but rejected its case concerning another. Permission has been given to both sides to appeal by orders of Lewison LJ on 30 December 2014 and 25 February 2015.

North Lodge is a substantial 19^th century house in the middle of a public park on the seafront in Cromer, Norfolk. North Lodge was acquired by Cromer in 2006 from North Norfolk District Council (“NNDC”) which still owns the surrounding park. The ground floor was used by Cromer for public purposes, such as council meetings and the registration of births, marriages and deaths. The upper floors were let as offices and the basement was used for various non-residential purposes.

At the time of Cromer's purchase of North Lodge in 2006, Hoyl agreed to take a 21 year lease of an upper floor (not the ground floor) as an office. Shortly afterwards the parties also agreed that Cromer would grant Hoyl a 99 year lease of the basement which Hoyl would then convert into a residential apartment. Hoyl intended to use the apartment as accommodation for visiting directors who did not live in Norfolk, but there was to be no restriction on a subsequent sale to an unconnected party.

I must next explain the layout of North Lodge and its surroundings. The seafront in Cromer faces north. North Lodge was built to face south, with its main public entrance, car park, and drive all on that side. On the north-facing or seaward side is a small walled garden, mostly laid to grass, which is open to the public, and which the public can access through a gate in the wall near the north east comer of the garden. There is a large flag pole in the middle of the garden, supported by guy ropes or stays.

At the date of the lease the basement rooms could be accessed by an internal door reached via an internal staircase from the hall of North Lodge. Its use would entail going in through the main public entrance on the ground floor. I will refer to this as “the internal access”.

There were two other potential ways out of the basement The first was a fire exit at the eastern end of the north wall. This exit led to a small light well from which one could climb up into the walled garden and from there across the garden and out through the gate. I will refer to this, and access to and from the garden generally, as “garden access”.

The second additional potential access route was through a shed at the eastern end of the front of the building. If “knocked through” the shed would be capable of providing a lobby and access via stairs or a ladder to the south-eastern part of the basement. I will refer to this as “car park access”. One can reach the car park from Overstrand Road, up the drive which is at right angles to the front of the building.

Hoyl obtained planning permission from NNDC for the residential conversion of the basement flat in January 2007. In accordance with the terms of the proposed agreement with Cromer, Hoyl would also need to obtain a licence from Cromer as freeholder to carry out the proposed works. In early 2007 Hoyl’s architects prepared a plan (“Plan A”) with, for present purposes, the following important features:

Plan A was discussed at a meeting of Cromer and Hoyl and by a letter of 16 March 2007 the town clerk, Ms Chance, informed Hoyl that the plans were agreed. It followed that the access routes which the parties were envisaging at that stage were those I have set out above: car park access was to be main entry, garden access was to be fire escape and the internal door was to be blocked off.

On 23 July 2007 the parties signed an agreement for a lease (‘the agreement”). There are a few points to note about the agreement. Firstly, the agreement attached drafts of the lease and the licence for alterations, as well as Plan A (at this stage to show the extent of the demise). Secondly, the agreement referred to “Tenant’s Plans”. The licence for alterations to be granted to Hoyl was to incorporate the Tenant’s Plans. By clause 8 of the agreement Hoyl was to provide the Tenant’s Plans to Cromer within two weeks for approval. Thirdly, clause 4 of the scheduled licence obliged Hoyl to carry out the works, and to do so with “all due diligence and speed”. In this sense the licence was more than purely permissive: it was to constitute an agreement for the work to be done in accordance with the Tenant’s Plans when these were identified.

It was apparently envisaged that the lease and the licence for alterations would be executed together, but this did not occur. Instead the lease was granted on 24 August 2007. The only right of way granted by the lease is that provided by schedule 2 paragraph 1 of the lease, that is to say to the front, up the drive to the car park.

By October 2007 Hoyl had reconsidered its plans for conversion of the basement and decided to pursue a simpler and less expensive approach. The revised plan (“Plan B”) reversed the internal arrangements. The open plan kitchen/living area was now along the northern side, and the two bedrooms were moved to the south. The entry arrangements were also reversed so that now:

The parties discussed the changes introduced by Plan B at a meeting on 2 October 2007. Mrs Wreford on behalf of Hoyl explained the changes. Cromer had by this stage expressed some concern that the garden access would damage the lawn area in the communal garden. There was also concern about the need to move one of the stays for the flag pole, although the precise reasons for this are not clear. The minutes of the meeting record the following:

“Explained we would like to have access to the terraced area from a new gate situated in the low wall, which would maintain the grass to the communal area, a concern raised by the Town Council.”

All those present at the 2 October meeting appreciated, at least at that stage that the proposed main entrance was now to be via the garden access. The reference to “a new gate situated in the low wall” was to deal with Cromer’s concern about damage to the grass. This proposal would mean that someone leaving the flat from the patio area would go up a flight of steps and carry straight on over a short strip of scrub and out into the footpath to the east, and thus not cross the lawn at all. The impact on the garden would be trivial. Counsel for Cromer estimated the width of this strip as about two feet, but at all events it is a tiny piece of land. Although it needed to be approved at a formal council meeting, representatives of Cromer at the meeting indicated that the arrangement was likely to be acceptable. The minutes recorded that the revised plans would need to be shown to the Town Council Planning Committee,

So far as the internal access was concerned, it was agreed that as a temporary arrangement Hoyl could install a fire door instead of blocking it off permanently, so that staff staying in the flat could continue to access the offices conveniently, provided that the access was blocked off when the flat was sold. Again this was agreed in principle at the meeting, but needed approval at a council meeting.

After the meeting Mr Ramage, Hoyl’s principal director, wrote an internal memo to Mrs Wreford commenting on the minutes of the October 2 meeting. He said that he did not believe Hoyl should pay for the new gate. As agreement for use of the internal access had been achieved, staff should enter and exit the flat through that access. It went on to say that for the majority of the time the internal access would be used by himself and his fellow director and that any damage to the lawn would be minimal. If this use of the garden bothered the council they could pay for the new gate. He advised letting the matter rest until Cromer brought it up again.

Hoyl’s position was, however, relayed to Cromer in a letter from Mrs Wreford to Ms Chance in a letter of 5 October 2007:

“However [the directors] have said that it will no longer be necessary for you to approach the Town Council about a new gate in the low wall outside your office that would lead to the terraced area. This is because access to the apartment will be minimal over the lawn as any staff needing to access the apartment will use the fire door that is to be installed, linking the apartment to the rest of the building.”

This letter from Mrs Wreford crossed with a long letter from Ms Chance to Mrs Wreford also dated 5 October 2007. The letter confirmed that the fire door might be installed to provide "an alternative access to the basement”. As to the garden area, it also confirmed that she was “certain that agreement can be reached concerning the additional access”; this was subject to the plan being shown to the council’s planning committee and NNDC’s planning department agreeing to the gate in the wall.

Quite what happened between this exchange of letters on 5 October 2007 and 17 October is not entirely clear, but Ms Chance wrote to Mrs Wreford on 17 October 2007 saying:

“I understand from discussion with your director Mick Ramage that you now do not want to proceed with the access to the patio area from the front garden, thereby overcoming the repositioning of the stay,”

There are a number of puzzles about this letter. Firstly, the terms of the letter seem to suggest that Ms Chance had spoken to Mr Ramage in the interim, and that this letter was not simply a reply to Mrs Wreford’s letter of 5 October. Secondly, Mrs Wreford had not said, as Ms Chance’s letter does, that Hoyl did not require access to the patio area from the garden. She had said that there would be minimal access required because of the temporary permission for internal access via the fire door. Thirdly, given that Plan B was now firmly in front of the council, and had been explained to them, anyone who had given a moment’s thought to the matter would have concluded that Hoyl could not be abandoning a right of access via the garden. The only alternative access, via the internal staircase, was temporary.

At the subsequent council meeting on 29 October 2007 the Project Officer Mr Margarson, who had attended the 2 October meeting with Hoyl and had had the revised plans explained to him, reported on the progress of the project. The main concern of the councillors was over the time the works were taking. There was no express resolution about means of access. The councillors however did not want the internal access to be used for longer than was necessary. A letter was sent to Hoyl on 5 November 2007 urging Hoyl to complete “the works” as soon as possible. In its letter of response dated 21 November 2007 Mr Ramage of Hoyl reminded Cromer that it had decided not to go ahead with the original plan involving the car park access.

The position as it must have appeared to Cromer at the beginning of December 2007 was therefore that there was a temporary agreement to use the internal fire door which they wished to remain open for no longer than necessary. Plan B had been explained to them and they had been expressly reminded that this involved no car park access. The only permanent means of access would be the garden access, given the agreement to block up the internal door if the apartment was sold.

The works continued through 2007 and 2008, first with Cromer undertaking tanking and damp-proofing works and then with Hoyl’s contractors building the fiat according to Plan B. As constructed, the fire exit from bedroom 2 was improved by inserting a door (instead of a window escape) and stairs up to the lobby, but the internal arrangement of bedrooms remained the same. The formal licence was not granted until November 2008, by which time the works were nearly complete. As executed, the licence for alterations contained the obligation to carry out the works in accordance with Plan B. The annexed copy of Plan B still showed only an escape window from the small bedroom, and the shed arranged as a fire escape with internally activated push bars. The garden access was still shown as a “replacement front door” onto the patio.

Between 2009 and 2012 the internal access was used for Hoyl’s staff to come and go between the flat and the offices upstairs, and occasional use was made of the garden access without objection from Cromer. Ms Chance occasionally enquired when Hoyl were to block off the internal door, and these inquiries became more frequent when Hoyl began to try to sell the flat.

In August 2012 Hoyl surrendered its lease of the upper floor. In September 2012 it blocked up the internal access. In late 2012 Hoyl placed the flat on the market and found a purchaser. The purchaser was, however, concerned to discover that no formal right of way had been granted by the lease via the garden access. There were attempts by Hoyl to agree a formal deed of variation with Cromer. These attempts were unsuccessful.

The present proceedings were commenced on 29 October 2013 seeking a declaration as to the existence of a right of way via the garden access or in the alternative to reopen the internal access.

On the issue of proprietary estoppel, the judge directed himself by reference to principles set out in Megarry & Wade (8^th Edn 2012) at paragraph 16-001, in the following terms:

“(a)

the landowner induced, encouraged or allowed the other party to believe that he has or will enjoy the easement;

(b)

in reliance on that belief, the other party had acted to his detriment to the owner's knowledge;

(c)

the landowner acts unconscionably in denying the other party the easement.”

The judge’s conclusions on these issues were as follows. Firstly, he found that Hoyl believed that it had or would have a right to use the garden access. The construction of the flat to Plan B (internal door blocked, car park access as fire exit and garden access as front door) followed by the closure of the internal door amounted to very clear evidence of that belief. The judge dealt with the correspondence to which I have referred by saying that it was all in the context of the temporary use of the internal door.

The judge next held that Cromer encouraged or allowed (albeit that it had not induced) Hoyl to hold that belief. From 2 October 2007 Cromer knew about Plan B, knew that it involved garden access (hence the wear to the lawn) yet positively encouraged Hoyl to get on with it. It was never suggested that Hoyl or its successors would be prevented from using the garden access as the front door.

Hoyl had also acted on its belief to its detriment, Hoyl constructed the flat in accordance with Plan B. The layout of the bedrooms on the one hand and the kitchen/living area on the other hand was only consistent with a belief that there was a right to use the garden access. It had also, at Cromer’s request, blocked up the internal door, which it would not have done if it knew or feared that there was no garden access. Cromer had actual knowledge that Hoyl was taking each of these steps, and “at least constructive knowledge” that Hoyl was taking each of these steps in reliance on its belief that there was a right to use the garden access as the main entrance,

Finally the judge held that Cromer was acting unconscionably in denying the right of way claimed. Cromer had received full notice of the change of plan and its implications for the garden. It had had full access to legal advice. It could have objected by refusing to licence the alterations. Instead it encouraged Hoyl to carry out the works. Against this background it was unconscionable to refuse to confirm the easement in 2012, when it was obvious that this would expose Hoyl to financial loss, Cromer had “put forward no moral or public justification for its position”.

The judge accordingly held that a proprietary estoppel had arisen. He went on to decide the appropriate way in which the equity should be satisfied. Rather than a right of way to the existing entrance, he preferred a right of way to a new private gate in the wall. The details of the precise way in which the equity is to be given effect to are not in issue in this appeal.

Cromer is dissatisfied with the decision of the judge on the issue of proprietary estoppel. Hence its appeal to this court.

Cromer challenges each of the judge’s findings on proprietary estoppel. Its grounds are:

In Willmott v Barber (1880) 15 Ch D 96 Fry J identified the essential elements of what has become known as estoppel by acquiescence in the following way:

“In the first place the plaintiff must have made a mistake as to his legal rights. Secondly, the plaintiff must have expended some money or must have done some act (not necessarily upon the defendant's land) on the faith of his mistaken belief. Thirdly, the defendant, the possessor of the legal right, must know of the existence of his own right which is inconsistent with the right claimed by the plaintiff. If he does not know of it he is in the same position as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge of your legal rights. Fourthly, the defendant, the possessor of the legal right, must know of the plaintiffs mistaken belief of his rights. If he does not, there is nothing which calls upon him to assert his own rights. Lastly, the defendant, the possessor of the legal right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right. Where all these elements exist, there is fraud of such a nature as will entitle the Court to restrain the possessor of the legal right from exercising it, but, in my judgment, nothing short of this will do.”

Much water has flowed under this particular bridge since that time. It is true that in Kammins v Zenith Investments [1971] AC 850 at 884, Lord Diplock lent his support to the notion that the Willmott v Barber “probanda” were all essential elements of an estoppel by acquiescence. It was in that context that he said:

“ ... the party estopped by acquiescence must, at the time of his active or passive encouragement, know of the existence of his legal right and of the other party’s mistaken belief in his own inconsistent legal right. It is not enough that he should know of the facts which give rise to his legal right. He must know that he is entitled to the legal right to which those facts give rise.”

Mr Kokelaar, who appeared for Cromer on this appeal, places much reliance on this observation for the proposition that constructive knowledge by the party estopped of the state of belief of the opposite party will not be enough. However, as we shall see, subsequent decisions, including subsequent decisions of the House of Lords, have favoured a more holistic approach to proprietary estoppel, as opposed to the application of rigid rules. Quite apart from that, the focus in Kammins v Zenith was on the knowledge of the party estopped of his own rights. No question arose as to what it might be necessary to show about that party’s knowledge, actual or constructive, of the state of mind of the other party. Mr Kokelaar accepts, for example, that Nelsonian blindness would be sufficient for this purpose,

The principles of proprietary estoppel, as they have developed since Willmott v Barber, were reviewed by Oliver J in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133. A critical issue in Taylors Fashions was what needed to be shown about the state of knowledge of the party estopped. There were two aspects to this question. The first was whether the party estopped needed to know what his strict rights were. The second was whether the party estopped needed to know that the other party was acting in the belief that those strict rights would not be enforced against him. It was argued on behalf of the party resisting the existence of the estoppel that there was a clear distinction between cases of proprietary estoppel or estoppel by acquiescence on the one hand and promissory estoppel or estoppel by representation on the other hand. In the latter case, so it was argued, the state of mind of the promisor or representor was largely irrelevant (except to the extent of knowing, actually or inferentially that his representation was likely to be acted upon). In the former case, however, it was necessary that the party alleged to have acquiesced in or encouraged the other’s belief knew that other believed that the right of the party resisting the estoppel would not be enforced against him.

To determine what needed to be shown about the state of knowledge of the party estopped, Oliver J started with the judgment of Fry J in Willmott v Barber. Of this case he said:

“It has to be borne in mind, however, in reading the judgment, that this was a pure acquiescence case where what was relied on was a waiver of the landlord’s rights by standing by without protest It was a case of mere silence where what had to be established by the plaintiff was some duty in the landlord to speak.”

It was argued in Taylors Fashions that Fry J’s fourth probandum was not met, i.e. (i) knowledge by the possessor of the legal right of the other party's belief and (ii) knowledge that that belief is mistaken. As to the alternative approach of estoppel by representation, no representation was ever made, or if it was it was a representation of law. Oliver J said of that argument:

“Now, convenient and attractive as I find Mr. Millett's submissions as a matter of argument, I am not at all sure that so orderly and tidy a theory is really deducible from the authorities - certainly from the more recent authorities, which seem to me to support a much wider equitable jurisdiction to interfere in cases where the assertion of strict legal rights is found by the court to be unconscionable. It may well be (although I think that this must now be considered open to doubt) that the strict Willmott v. Barber ... probanda are applicable as necessary requirements in those cases where all that has happened is that the party alleged to be estopped has stood by without protest while his rights have been infringed.”

Oliver J went on to explain why this should be. In a pure acquiescence case, where all that is alleged is a standing by in silence:

“.,. it is readily understandable that there must be shown a duty to speak, protest or interfere, which cannot readily be shown in the absence of knowledge or at least a suspicion of the true position.”

On the other hand it was submitted for the party seeking to create the estoppel that the authorities did not support the absolute necessity for compliance with all five probanda (and in particular the requirement of knowledge on the part of the party estopped that the other party's belief is a mistaken belief) in cases where the conduct relied on has gone beyond mere silence and amounts to active encouragement. Thus it could be that the fostering of an expectation in the minds of both parties at the time but from which, once it has been acted upon, it would be unconscionable to permit the landlord to depart, could give rise to the estoppel. Oliver J said:

“The fact is that acquiescence or encouragement may take a variety of forms. It may take the form of standing by in silence whilst one party unwittingly infringes another's legal rights. It may take the form of passive or active encouragement of expenditure or alteration of legal position upon the footing of some unilateral or shared legal or factual supposition. Or it may, for example, take the form of stimulating, or not objecting to, some change of legal position on the faith of a unilateral or a shared assumption as to the future conduct of one or other party. I am not at all convinced that it is desirable or possible to lay down hard and fast rules which seek to dictate, in every combination of circumstances, the considerations which will persuade the court that a departure by the acquiescing party from the previously supposed state of law or fact is so unconscionable that a court of equity will interfere.”

This led Oliver J to conclude:

“Furthermore the more recent cases indicate, in my judgment, that the application of the Ramsden v. Dyson... principle - whether you call it proprietary estoppel, estoppel by acquiescence or estoppel by encouragement is really immaterial - requires a very much broader approach which is directed rather at ascertaining whether, in particular individual 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 inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour. So regarded, knowledge of the true position by the party alleged to be estopped becomes merely one of the relevant factors (it may even be a determining factor in certain cases) in the overall inquiry. ” (emphasis supplied)

I have laboured the case of Taylors Fashions at some length to demonstrate that Oliver J’s reference to “that which, knowingly, or unknowingly, he has allowed another to assume to his detriment” is deliberate. Whilst Oliver J was certainly not saying that questions of knowledge by the party estopped are not relevant — he says the opposite - they fall to be considered in the overall assessment of whether it is unconscionable to allow him to deny the interest which he has allowed or encouraged to believe in or to assume.

This final passage in Oliver J’s judgment was approved in general terms by Lord Walker in Cobbe v Yeoman‘s Row Management Ltd [2008] 1 WLR 1752 at 1779G- 1780B. In the course of his own judgment in that case Lord Walker made some other important observations. Firstly, at paragraph 54, he describes Plimmer v Wellington Corporation (1884) 9 App Cas 699 as a “common expectation case”. Mr Plimmer, a businessman of some substance, dealt with the provincial government, under arrangements attended by a high degree of informality. Lord Walker described the nub of the Privy Council’s decision in this way:

Secondly, Lord Walker notes at paragraph 56 that Willmott v Barber:

“calls for mention because Fry J's five probanda have over the years proved something of a stumbling-block in the development of equitable estoppel, until the position was clarified by Oliver J in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd (1979) [1982] QB 133. Gray and Gray comment (para 10.204, footnote 1) that courts often tried to force factual situations into the probanda even when they were "ludicrously irrelevant or inapplicable" to the case.”

Thirdly he pointed out with approval at paragraph 58 that Oliver J had explained:

“the five probanda (including the defendant's knowledge of his own title, and of the claimant’s mistake as to title) are relevant only to cases of unilateral mistake, where the defendant's only encouragement to the claimant has been passive nonintervention”,

Fourthly Lord Walker, at paragraph 65, dealt with the difference between a party believing that he has a right and a party hoping, or even confidently expecting that he would be granted one. He noted however that the point that hopes were not enough came out most clearly in the commercial context, and surfaced less often in cases with a domestic or family flavour.

The following year in Thorner v Major [2009] UKHL 18, Lord Walker commenced his judgment with the following, expressly approving the passage in an earlier edition of Megarry & Wade, Law of Real Property, to that which the judge in our case relied:

“... 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 the claimant in consequence of his (reasonable) reliance (see Megarry &

Wade, Law of Real Property, 7th edition (2008) para 16-001;

Gray & Gray, Elements of Land Law, 5th edition (2009) para 9.2.8; Snell’s Equity, 31st edition (2005) paras 10-16 to 10-19;

Gardner, An Introduction to Land Law (2007) para 7.1.1).”

It might have been thought that cases of pure acquiescence did not fit into that general formulation. However, Lord Walker explained at paragraph 55 that:

So far as the clarity of the assurance is concerned Lord Walker declined to lay down a hard and fast rule. He said at paragraph 56 that:

“I would prefer to say (while conscious that it is a thoroughly question-begging formulation) that to establish a proprietary estoppel the relevant assurance must be clear enough. What amounts to sufficient clarity, in a case of this sort, is hugely dependent on context.”

In support of his argument based on the fourth probandum in Willmott v Barber Mr Kokelaar relies on Brinnand v Ewens [1987] 19 HLR 415. In that case the landlord, Mrs Brinnand, knew that the tenants of a flat in her house, Mr and Mrs Ewens, had moved into the whole house and expended money on repairs. The trial judge had held that Mrs Brirmand’s knowledge of the occupation and repairs did not mean that she knew that the work was done in expectation of a tenancy of the whole house. Nourse LJ, in deciding that this finding meant that Mrs Brinnand had not encouraged the Ewens' belief that they would have an interest in the whole property, said:

“You cannot encourage a belief of which you do not have any knowledge.”

I think it would be wrong to read too much into this dictum, particularly in the light of Oliver J’s recognition that it may be sufficient in some cases for someone “unknowingly” to cause someone to assume something. Brinnand v Ewens was a case in which it was not at all obvious that what the tenants were doing would require any right or interest in the landlord’s property. The landlord not only did not know that the tenant was acting on a belief that he would be granted a tenancy of the whole house, she had no means of knowing that either. In order to encourage a belief in those circumstances it may be correct to say that one must have at least constructive notice of it. But there will be other cases where it is self-evident that the acts which the tenant is doing, and of which the landlord is fully aware, necessarily require some right to be granted. If, therefore, I encourage a tenant to do acts which are only consistent with him having some right or interest on or over my property, so that he in fact believes that he has such a right, I can see no reason why it is not correct to say that I have encouraged him to believe or assume that he has the right. Of course whether a proprietary estoppel arises in such circumstances will depend on all the particular facts of the case.

Similarly, although some formulations of the rule speak of the party estopped having knowledge of the acts of detrimental reliance, this is not a requirement that is rigidly insisted on in cases of encouragement. Thus for example in Joyce v Epsom & Ewell Borough Council [2012] EWCA Civ 1398, a case referred to in a passage from The Law of Proprietary Estoppel by Professor Ben McFarlane to which Mr Kokelaar referred us, Epsom & Ewell had encouraged Mr Joyce’s predecessor to believe that he would be able to gain access over a road. The trial judge refused to recognise a proprietary estoppel because it was not clear that the council was aware of the particular detriment on which the claimant relied, the moving of a garage and the construction of a drive. Davis LJ with whom Lord Dyson MR and Treacy LJ agreed, said this:

“ ...I do not think that the alleged lack of knowledge on the part of the Council of the precise works actually undertaken by Mr Holborn can have the crucial significance the judge seems to have ascribed to it. As the judge had himself found, this was a case of encouragement, on which there was in fact detrimental reliance. It was known what Mr Holborn intended to do. It is not an invariable requirement in a case of this particular kind - indeed it is contrary to the flexible approach which the more recent authorities establish - that the person encouraging necessarily must know just what the person encouraged may have actually done in reliance on the encouragement: see, for example, Crabb v Arun District Council [1976] 1 Ch. 179 at p. 189 D-E (per Lord Denning MR) and at pp. 197H-198E (per Scarman LJ); and Taylor[s] Fashions at p.151 (per Oliver J). Mr Green himself very fairly accepted in argument that this could be so: he acknowledged that cases of encouragement are capable, depending on the circumstances, of standing in this respect on a different footing from cases based on acquiescence. But ultimately, of course, all depends on the particular facts of the individual case.”

It is therefore necessary to approach the grounds of appeal, structured as they are as individual attacks on particular elements of what is said to be necessary in order to create a proprietary estoppel, with some care. I have to say that, listening as I did to Mr Kokelaar’s well-constructed arguments, that what he was doing had all the attributes of what Oliver J described as “forcing these incumbrances into a Procrustean bed constructed from some unalterable criteria”. There was also a tendency to revert to the “orderly and tidy” theory which places a rigid dividing line between cases of proprietary and promissory estoppel. What the judge ultimately had to decide was whether, in the events which had happened, and taking into account all the relevant history (including what, if anything, Cromer had encouraged Hoyl to assume) it would be unconscionable in 2012 for Cromer to deny, as it then did, the existence of a right of way from the garden access.

Cromer submits that the judge’s finding that Hoyl believed that it had or would have a right to the garden access was an inference that was not justified. It did not follow from the fact that Plan B appeared to show a need for a particular right that Hoyl believed that it had that right. Hoyl might merely have hoped it would be granted such a right or might not have thought through the implications of the amended design, and that is not enough.

Cromer also submits that the finding of the judge as to Hoyl’s knowledge is inconsistent with other evidence:

Cromer thus submits that the judge should have inferred instead that Hoyl was unsure about whether a right would be granted. This was not sufficient.

Finally Cromer submits that the way in which the judge expressed his finding makes it unclear whether Hoyl believed it had an existing right or whether it believed it would be granted one in the future. An acquiescence-based proprietary estoppel claim required a belief in one’s existing legal rights. Whilst a belief in future rights can form the basis of an estoppel, this was only where there was an express or implied promise that such a right would be granted, and there was none here.

I accept that it is necessary for Hoyl to show that they believed that they had or would have a right of way via the garden access. This is a question of fact, however, and I do not think that I would be justified in interfering with the judge’s finding that Hoyl did have such a belief. The judge, after all, had the benefit of hearing Hoyl’s witnesses give oral evidence. We have not been provided with a transcript of their evidence or even a note of it, and even if we had, experience shows such things to be a poor substitute for the live event.

The documentary material does not go as far as showing that Hoyl did not believe they had or would have a right. Mr Ramage’s preference to defer the issue of who would pay for the new gate was not inconsistent with his belief in a right of way. The rest of the correspondence has to be viewed, as the judge said, in the context of the fact that there was to be temporary access via the internal door. This meant that the use to which the right of way would be put was likely to be minimal whilst the internal door was available. It did not mean that the right was not needed, to some extent both then and in the future. On the other hand the agreement to block off the internal door, the fact that the internal door was blocked off in fact without protest and the fact that in those circumstances the flat would be left with an exit only via the small bedroom if there was no right of way through the garden all supported the existence of the belief that the judge found. The judge was plainly entitled to conclude as he did.

That leaves Cromer’s point about the judge’s formulation of his finding about Hoyl’s belief, namely that it “had or would have” a right of access. Mr Kokelaar suggests that this is not enough for a finding of proprietary estoppel by acquiescence and cited Ramsden v Dyson, (1866) LR 1 HL 129, as an example of a case where the absence of a belief in an existing right was fatal to the claim. I think there are two answers to this. Firstly I do not think that the judge was expressing any uncertainty as to Hoyl’s belief in an existing right Secondly, Mr Kokelaar’s submission does not hold good outside pure acquiescence cases, and this is not such a case.

I would therefore reject this first ground of appeal.

Cromer submits that failure by it to object to Plan B or suggest that Hoyl might not be able to use the garden access can only form the basis of a proprietary estoppel if the five probanda in Willmott v Barber are satisfied, one of which is that the defendant knows of the claimant’s mistaken belief as to his rights, The judge had stopped short of making a finding of knowledge of this kind, finding only constructive knowledge. Cromer submits that this is not adequate, as it is not possible to encourage a belief of which you are not aware.

Alternatively Cromer submits that the evidence before the judge did not justify a finding even of constructive knowledge. That evidence showed that Hoyl sought to play down the need for it to use the garden access at all.

As to active encouragement, there was nothing which amounted to a sufficiently clear and unequivocal representation that the flat benefited from an existing right of way over the garden or an express or implied promise that such a right would be granted.

The finding of encouragement of Hoyl’s belief was impossible to reconcile with the letter from Ms Chance dated 17 October 2007 which recorded Cromer’s understanding that Hoyl did not wish to proceed with the garden access. The judge had been wrong to place reliance on either the licence to carry out the alterations or Cromer’s encouragement to Hoyl to press on with the alterations. As to the former, the works were nearly completed at the date of the licence and the licence in any event did not imply anything about the grant of rights over the landlord’s retained land. As to the latter, Cromer’s desire for Hoyl to get on with the works was motivated by the desire to end the disruption to Cromer’s work at North Lodge. It did not imply anything about access to the basement flat.

Hoyl supports the judge’s conclusion about allowing or encouraging Hoyl’s belief. Cromer’s approval of Plan B, coupled with its urging of Hoyl to press on in the knowledge that the works had altered to change the layout of the interior, amounted to allowing or encouraging the belief.

Mr Blohm QC, who appeared for Hoyl, accepted that the judge had not made an express finding as to Cromer’s state of actual knowledge of Hoyl’s belief He submits however that such a finding is not always necessary. To adopt a rigid rule of this kind, derived from the Willmot v Barber probanda, is to ignore the developments in the law which have taken place over the last 150 years, including the fact that this is a case of encouragement, which Willmott v Barber was not. In any event Cromer knew enough to come under a duty to speak up about its rights.

It is important to focus on what this ground of appeal asserts. It is that the judge was wrong to hold that Cromer had allowed or encouraged Hoyl to believe that it had or would have a right of way over the garden. The focus is on how Hoyl came to believe what, on the judge’s finding, it did believe. Was it through encouragement by Cromer? Or was it something they independently hoped for without encouragement from Cromer? This, again, was essentially a factual question for the judge.

Despite Mr Kokelaar’s submissions, I do not think it is right to analyse Cromer’s inactivity and failure to act separately from its acts of encouragement. A proprietary estoppel does not have to fit neatly into the pure acquiescence-based pigeon hole or the assurance one. Not only was that an argument which was rejected in Taylors Fashions, but if silence and inactivity can themselves be the necessary assurance as Lord Walker explained in Thorner, they are surely not to be ignored altogether in a case which has elements of encouragement as well.

Mr Kokelaar’s reliance on Nourse LJ’s dictum in Brinnand v Ewens (that you cannot encourage a belief of which you are unaware) is, in my judgment, misplaced in this context. As I have explained above, it is possible by words and conduct to encourage another to believe or assume that he has a right or interest over property when what is encouraged is only consistent with him having some such right, I do not think it was necessary, at this stage at least, for the judge to make a finding of actual knowledge by Cromer of Hoyl’s belief.

The judge’s finding that Hoyl believed it had or would have a right of way across the garden because it was encouraged so to believe by Cromer was, I believe, justified:

I have no doubt that these overt acts by Cromer coupled with its silence on the issue of what was to happen when the internal door was closed, amounted to encouragement to Hoyl to hold the belief which it did. The judge was entitled so to hold. I would therefore reject this second ground of appeal.

Cromer points out that the judge relied on two matters as constituting detrimental reliance: the construction of the flat in accordance with Plan B and the blocking up of the internal door. Cromer submits that in order for the judge to find detrimental reliance in the construction of the flat in accordance with Plan B there would have to be a causal link between Hoyl’s belief that it had the right to the garden access and building the flat to the Plan B design. The judge did not make such a finding, merely that the construction in accordance with Plan B was only consistent with such a belief It had not been part of Hoyl’s case that it would not have built the flat in accordance with Plan B if it had not believed it had the right to the garden access. Its pleaded case on detriment related solely to the blocking up of the internal door.

Further, Cromer submitted that the judge ignored the fact that the building was not constructed in accordance with Plan B, but was constructed in accordance with a modified Plan B which had a “viable and practicable” entrance through the car park.

As to blocking up the internal door, it had been envisaged from the outset that the internal door would be blocked up. Hoyl had merely been permitted to postpone the blocking up until the flat was sold. Further, Hoyl did not give up an existing right of way by blocking up the internal door: the judge had found that the use of the internal door was a purely permissive arrangement. Finally the licence for alterations when completed imposed a contractual obligation on Hoyl to block up the door. An action taken pursuant to an existing contractual obligation cannot amount to detrimental reliance.

Hoyl submits that there is ample to support the judge’s finding that it relied on the mistaken belief. In finding that the construction of the flat was consistent only with a belief in a right of way across the garden, the judge was also finding that Hoyl would not have carried on regardless of any decision not to permit the alterations. The blocking of the internal door was also an act of reliance, in the sense that Hoyl could have argued that it should not block off the internal access until such time as an alternative, effective and convenient access was provided.

The judge asked himself whether Hoyl acted on its belief (in a garden right of way) to its detriment, to Cromer’s knowledge. He approached the matter in this way because he had directed himself by reference to the three elements of proprietary estoppel which he derived from Megarry & Wade, one of which is:

“in reliance upon this belief, C acts to his detriment to the owner’s knowledge.”

The acts of detriment relied upon by Hoyl were the construction of the flat according to Plan B and the blocking up of the internal door. Would Hoyl have done these acts if it had not believed it had a right of way through the garden? I find it impossible to suppose that it would. I have not forgotten Mr Kokelaar’s submission that only the second of these items of detriment was pleaded. But is it seriously to be supposed that Hoyl would have undertaken the substantial reconstruction of the internal layout represented by the difference between the original layout and Plan B if there was no right of way over the garden? To do so would have been folly. A conclusion that there was a causal connection between the construction of the flat and the belief that it would have the access as shown in Plan B is no more than a recognition of the inevitable.

The blocking up of the internal door was also an act of reliance. The judge accepted Hoyl’s case that it would not have blocked up the internal door if it had supposed that by doing so it would be forced to enter the flat via the car park access and the small bedroom. He was plainly entitled to do so. I was not impressed by Mr Kokelaar’s arguments that the door was going to be blocked up anyway, or that Hoyl had no existing right of way. The fact is that (subject to re-arranging the flat to allow access through the car park) they were boxing themselves in if the internal access was closed, which would only make sense if the garden access was preserved.

These were not activities which Hoyl was undertaking without Cromer’s knowledge. They were activities which Cromer knew about and encouraged, as the judge found. What remained was whether Cromer knew that these acts were undertaken by Hoyl in reliance on its belief in a right of way through the garden. It is here that the judge made his finding that Hoyl had “at least constructive knowledge”, by which I understand him to mean that Cromer, at least, ought to have appreciated that Hoyl was acting on the basis of that belief.

I think in the circumstances of this case what was critical was not so much Cromer’s knowledge of Hoyl’s reliance, but the fact that Cromer must have appreciated that Plan B was critically dependent on a right of way being granted across the garden. That is what was discussed at the meeting on October 2 2007, and that is what they approved and encouraged thereafter. The entire project went forward on the common assumption that there would be a right of way over the garden.

It follows that I do not think there is any error in the judge’s conclusions on detrimental reliance, and I would reject this ground of appeal.

Cromer submitted that the judge had approached the question of unconscionable conduct in a way which was wrong in law. It was not for Cromer to justify its reliance on its own legal rights, but rather for Hoyl to show that insistence on them was unconscionable. The judge had been wrong to make a finding of unconscionable conduct in a commercial context on the basis of imperfect discussions between the parties. Instead the judge should have concluded that Hoyl had acted at its own risk when it carried out the works without first ensuring that there was a clear agreement in place as to future access arrangements and that any loss should lie where it falls.

Finally Cromer submitted that the judge had failed to take account of two important matters: the fact that there was a viable and practicable alternative entrance and Hoyl’s own conduct in its decision to abandon the creation of a new gate in the boundary wall because it was unwilling to meet the costs of putting it in.

Hoyl supported the judge’s overall evaluation that for Cromer to refuse to recognise a right of way was unconscionable.

I am not persuaded that the judge’s evaluation of this issue was wrong. The judge was entitled to rely on his earlier findings. These were that Cromer had encouraged Hoyl to believe that it would have a right of way via the garden and that Hoyl did believe that. On the basis of that belief Hoyl had expended money on constructing the flat in accordance with Plan B and in blocking up the internal access, all to Cromer’s knowledge. To deny the existence of a right of way via the garden access would render the existing configuration of the flat at worst highly inconvenient, given that the only means of access would be through a small bedroom. It would inflict significant financial loss on Hoyl.

I do not think Mr Kokelaar’s criticisms of the judge’s evaluation were of any weight. It is true that the judge referred to the absence of any justification put forward by Cromer. However, coming where it does in the judge’s reasoning, I do not think it is fair to say that he placed the burden on Cromer to show why their conduct was not unconscionable,

It is true that the context of this case is a commercial one, rather than a domestic or family one and that it is fair to describe some of the communications between the parties as imperfect. Against that, I would add that the circumstances of this case were unusual, given that Cromer’s offices were immediately above the flat, and they were alive to the use being made of the access through the garden, and the need for that to continue. There can never have been any doubt that the Plan B arrangement required a right of way, and the uncertainties were all in the context of the temporary arrangements while the internal door was open.

It is also true that judge did not expressly mention that the car park access, as built, provided a viable (although highly inconvenient) means of access in 2012, but he plainly had it in mind. As he put it, the refusal of the right of way would:

“expose [Hoyl] to the risk of substantial financial losses in respect of the sale value of the flat and/or the costs of remedial works to revise the entrance and layout of the flat.”

This is a recognition that the access from the car park through the bedroom, whilst now viable in the sense of benefiting from a right of way, was inconsistent with Plan B and would require Hoyl, in essence, to revert to Plan A. The judge was not ignoring the potential use of the car park access,

Finally I do not think that the judge should have taken Hoyl’s conduct into account. Hoyl did not “abandon” the garden access via the gate: it merely sought to defer a decision on who would pay for it whilst the temporary access was in place. I think the judge was right to say this did not prevent the equity arising, although he was correct to require Hoyl to pay for it when dealing with how the equity was to be satisfied.

Standing back, and taking the holistic view which the modem authorities require, it was unconscionable for Cromer to approve and encourage the construction according to Plan B, which both parties recognised was only consistent with a right of way through the garden, and then to refuse to recognise it when Hoyl called upon them to do so.

I would therefore dismiss this appeal. In these circumstances the cross appeal by Hoyl, which is expressly contingent on the main appeal being allowed, does not arise.

I agree.

I agree also.