Case No: B5/2008/0688
Neutral Citation Number: [2008] EWCA Civ 1541
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CARDIFF COUNTY COURT
(HIS HONOUR JUDGE JARMAN QC)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Thursday, 17th July 2008

Before:

LORD JUSTICE LAWS
LORD JUSTICE LONGMORE
and
LORD JUSTICE RICHARDS
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Between:

	NEWPORT CITY COUNCIL	Respondent/Claimant
	
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CHARLES	
Appellant/
Defendant

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Mr M Barnes QC and Mr J Beckley (instructed by Hodson, Parson, James & Vaux) appeared on behalf of the Appellant.
Mr A Arden QC and Mr I Wightwick (instructed by Newport City Council) appeared on behalf of the Respondent.
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Judgment
Lord Justice Laws:

1.	This is a second appeal, with permission granted by Pill LJ on 23 May 2008, against orders made by HHJ Jarman QC in the Cardiff County Court on 22 February 2008 in possession proceedings brought by the respondent housing authority against the appellant.

2.	The appellant’s mother was the secure tenant of premises at 1B Marlborough Road, Newport.  She died on 6 January 2003, on which date the appellant succeeded to the tenancy by virtue of section 89 of the Housing Act 1980.  In June 2007 the respondent commenced proceedings to recover possession of the property.  Having regard to the terms of section 82 to 84 of the 1980 Act and on the facts, they were only entitled to obtain such an order if the case fell within ground 16 of Schedule 2 to the Act which specifies these circumstances: 

“The accommodation afforded by the dwelling house is more extensive than is reasonably required by the tenant and -- 

(a) the tenancy vested in the tenant by virtue of section 89 (succession to periodic tenancy), the tenant being qualified to succeed by virtue of section 87(b) (members of family other than spouse), and 

(b) notice of the proceedings for possession were served under section 83 [(or, where no such notice was served, the proceedings for possession were begun)] more than six months but less than twelve months after the date of the previous tenant’s death.”

3.	By Section 83 the court is not to entertain proceedings for possession of a dwelling house let under a secure tenancy

“(a). unless the landlord has served on the tenant a notice [of particulars of the ground relied on] or 
(b). the court considers it just and equitable to dispense with the requirement of such a notice.”

4.	In this case paragraph (a) of ground 16 was satisfied but no section 83 notice was given, nor were the possession proceedings commenced within 12 months of the death.  There was accordingly a plain question, whether the court possessed any jurisdiction to make an order for possession.  Section 84 provides in terms that:

“The court shall not make an order for possession of a dwelling-house let under a secure tenancy except on one or more of the grounds set out in Schedule 2.”

And in this case ground 16 was the only ground having any potential application.  Yet on 4 October 2007 District Judge Fraser made the possession order sought and on 22 February 2008 HHJ Jarman dismissed the appellant’s appeal in substance, though he set aside the possession order and remitted the claim to a district judge for further determination.  That was only because there remained a live issue as to whether suitable alternative accommodation would be available for the appellant, and that was something that had to be shown if a possession order was to be made.  The critical point is that both district judge and the circuit judge accepted there was jurisdiction substantively to hear the claim and to make an order for possession if it were right on the facts to do so; and that was so albeit that the 12-month time limit stipulated by ground 16(b) was not met.  

5.	The housing authority’s case was and is that in the events which happened a proprietary estoppel operates to prevent the appellant from denying that the time for service of a Section 83 notice or the commencement of proceedings was not within 12 months after his mother’s death but within 12 months from the date the authority learned of the death.  Whether such an estoppel can operate in the context of possession proceedings for the recovery of premises let under a secure tenancy is a question of some importance, well justifying the grant of permission to bring a second appeal.

6.	The core facts on which the housing authority relies as supporting the estoppel amount to a deliberate and fraudulent concealment by the appellant of the fact, and therefore of course the date, of his mother’s death.  The factual position clearly emerges from the oral evidence of the appellant given before the district judge. When his mother was on her deathbed the appellant telephoned what he called “a couple of housing officers” (not the respondent’s housing department) anonymously.  He did so in order to ask about what his position would be on his mother’s death. He was told it was likely that the respondent would not allow him to remain in the house.  Accordingly, when she died he did not register her death or inform any public authority.  He was in fact obliged on pain of criminal sanctions to register the death with the Registrar of Births and Deaths within five days of the event: see Births and Deaths Act Registration Act 1953, section 16.  Had that been done the Registrar in turn would have been obliged to notify the billing authority for council tax purposes: see the Council Tax (Administration and Enforcement Regulations) 1992, Regulation 5.  And the billing authority is in fact the housing authority: that is, the respondent.  Far from registering the death the appellant remained living at the property, paying rent in his mother’s name as if she were still alive, “to save any problem”.  He said he did not inform “the council tax” that he was living at the property nor seek to have it transferred into his own name because he thought that would lead to the respondent housing department being involved.  

7.	The district judge recorded a particular aspect of the appellant’s fraud, though taking place at a later date -- this was in 2006 and it seems to have led to the respondent’s discovery of his mother’s death.  I should say before citing the finding that the lady called Mrs Protheroe was a housing manager employed by the respondent.  This is what the district judge said, paragraphs 6 to 7: 

“Mrs Protheroe told the Defendant that if his mother was the next of kin they could only deal with her regarding his brother’s flat.  The Defendant informed the Council that his mother was currently unwell and that she had asked him to act on her behalf.  Mrs Protheroe told him that if that was the case the Council would require a letter, that was on 3rd April.

7. A week later, on 10th April, the Defendant brought in the letter, which he stated was from his mother.  That is an exhibit to this matter and we all know, at this hearing, that that was not correct and was a fraudulent letter.  Following the receipt of the letter of 10th April, enquiries were made on 11th April and it was apparent that Mrs Charles had been buried.”  

That act, deceitful though it certainly was, of course took place in any event well after the expiry of the statutory 12-month time limit”.

8.	On the appellant’s appeal from the district judge to HHJ Jarman the judge held (paragraph 12) that the facts disclosed: 

“…a representation by conduct on the part of the appellant that the tenancy continued after 6 January 2003 to be in the name of his mother on the basis that his mother was still alive.”

9.	There is no doubt but that the respondent acted to its detriment in reliance on that conduct.  They withheld service of a Section 83 notice or the commencement of proceedings until after what was on the face of it the last date for those acts to be done if possession proceedings were to be properly constituted under the Act of 1980.  However, it was submitted to the judge for the appellant that no estoppel could avail the respondent because in essence there was no escape from the strict requirements of the statute.  An estoppel could not extend the 12-month time limit prescribed in ground 16.  But the judge rejected that argument. He held, paragraph 19, that by virtue of his own conduct the appellant could not be allowed to deny that the 12-month time limit under ground 16 ran from March 2006, when the respondent discovered the truth, rather than January 2003, the actual date of the mother’s death.  The appellant had owed a duty, so held the judge (paragraph 11), to notify the housing authority of the death.  Accordingly HHJ Jarman rejected the substance of the appellant’s appeal from the district judge, although as I have said he remitted the case for consideration of the issue of suitable alternative accommodation.  

10.	The appellant seeks to raise six grounds of appeal.  The last two have been lately formulated by Mr Barnes QC.  He has been instructed in place of Mr Luba QC, who was unavailable for the hearing.  Mr Barnes has appeared before us this morning; we are greatly obliged by his submissions.  He sought leave to add the last two grounds and we indicated that it would be granted.  Mr Barnes formulated his argument under three heads, but it is convenient to set out the six grounds as they are articulated in the skeleton argument:  1) The county court judge was wrong to hold that there is an obligation on a successor to a secure tenancy to disclose to the landlord the fact of the death of the former tenant.  2) The county court judge was wrong to hold that in the absence of service of a Section 83 notice or at the commencement of proceedings within the stipulated time limit the court had jurisdiction to make a possession order.  3) The county court judge was wrong to hold that by virtue of estoppel or any other equitable principles the court could obtain such jurisdiction by reference to the acts or omissions of the successor tenant before the time limit expired.  4) In the alternative the judge was wrong to hold that the district judge had made sufficient findings of fact to give rise to an estoppel.  Then the two fresh grounds:  5) The principles of proprietary estoppel have no application to the facts of the case.  6) The alleged estoppel cannot be used as a sword rather than a shield; that is it cannot be deployed as the means of founding a cause of action.

11.	Of these grounds the first was effectively not pursued, and it seems to me that Mr Arden QC for the respondent was right to submit as he did in writing that whether or not the appellant owed a legal duty to notify the housing authority of the death is really neither here nor there.  The judge below found that the appellant made positive representations to the effect that his mother remained a tenant, representations which were capable of giving rise to an estoppel.  That finding was good or bad irrespective of the existence of any duty as such of disclosure upon the shoulders of the appellant.  

12.	The second ground is correct as stated if it is taken in isolation.  It is entirely right that in the absence of a Section 83 notice or the commencement of proceedings within the time limit there is no jurisdiction to make a possession order unless of course the position can -- I use the word with no intended gloss at this stage -- be cured by the operation of an estoppel.  But that engages grounds 3, 5 and 6.  Mr Barnes’ first substantive submission this morning in effect reflected ground 4.  The judge was wrong to hold that the district judge had made sufficient findings of fact to give rise to an estoppel.  Indeed he submitted in terms that there were no such sufficient facts and I think he would say there was not the evidence upon which such facts could rightly be found.  He correctly reminded us that the district judge made no express reference to estoppel; that is indeed so.  However, he made the findings of fact relating to the appellant’s conduct which I have already summarised and at paragraph 13 of his judgment HHJ Jarman said this: 

“Mr Beckley [representing the appellant] does not dissent from the argument on behalf of the local authority that, on the basis of that representation, the local authority relied upon it in assuming that his late mother was still alive and in not serving the notice, in other words they acted to their detriment.”

13.	Mr Barnes’ submission that the matters in question did not amount to a representation capable of giving rise to an estoppel was put forward with great economy and elegance, but for my part I would reject it.  The appellant continued, as I have said, to live in the property, paying rent in his mother’s name for all the world as if she were still alive.  That would inevitably lead any person or party having to do with the matter to assume that the pretended position was in fact the truth.  I am driven to say that in my view the district judge’s findings based on the express evidence of the appellant himself disclose a pattern of deliberate dishonesty persisted in to the detriment of the local authority over a considerable period, a pattern of behaviour which amply justifies as a matter of fact the circuit judge’s conclusion that an estoppel arose.  

14.	Hence the real questions in this case are whether in this statutory context estoppel as a matter of law can have any part to play and even if it can, whether a proprietary estoppel distinctly arose, such as might found a cause of action relating to the recovery of land.  Those questions are of course between them the subject matter of grounds 3 and 5.  As regards ground 6 -- a shield not a sword -- it is not necessary to take any time.  It was accepted by Mr Arden that the only species of estoppel which may found a cause of action rather than operate merely defensively was a proprietary estoppel.  One is thrown back in the end then on two questions: can an estoppel in any event run in this statutory context?  If it can, did the facts here disclose what may properly be described as a proprietary estoppel?  I turn then to the first of these issues.

15.	The appellant has by Mr Barnes assembled an impressive array of authority to support the proposition that no estoppel can be relied on to avoid the effects of the 12-month time limit.  Thus in J & F Stone Lighting and Radio Ltd v Levitt [1947] AC 209 at 216, Lord Thankerton said:

“…it is idle to suggest that either estoppel or res judicata can give the court a jurisdiction under the Rent Restriction Acts, which the statute says it is not to have”.

16.	Then in Welch v Nagy [1951] QB 455 at 464, Asquith LJ said: 

“To treat the tenant here as estopped from denying that the tenancy is unfurnished when it is in fact unfurnished is to confer on the courts by the act of one of the parties a jurisdiction (namely, an untrammelled power to make orders for possession of premises in fact unfurnished) which Parliament has said that the court should not have…Just as in general parties are not competent to contract out of the protection of the Acts… where the true facts attract that protection, so here the tenant cannot, in my view, be estopped from proving the true facts, where those facts attract that protection.”

17.	Then after referring to Solle v Butcher [1950] 1 KB 671 per Bucknill LJ at 688, Mr Barnes proceeds to cite Keen v Holland [1984] 1 WLR 251, where Oliver LJ, as he then was said this at 261D: 

“Once there is in fact an actual tenancy to which the Act applies, the protection of the Act follows and we do not see how, consistently with Johnson v Moreton 1980 A.C. 37, the parties can effectively oust the protective provisions of the Act by agreeing that they shall be treated as inapplicable.  If an express agreement to this effect would be avoided, as it plainly would, then it seems to us to follow that the statutory inability to contract out cannot be avoided by appealing to an estoppel.  The terms of section 2(1) are mandatory once the factual situation therein described exists, as it does here, and it cannot, as we think, be overridden by an estoppel even assuming that otherwise the conditions for an estoppel exist: see, for instance, the somewhat similar though not wholly analogous position under the Rent Acts: Welch v. Nagy [1951] KB 455.  We agree with the judge that having regard to the purpose of the Act of 1948, it cannot be said to be unconscionable for the tenant who is protected by it to rely upon the protection the statute specifically confers upon him.  Once the protection attaches, the jurisdiction to grant possession is exercisable only subject to the statutory provisions and it is a little difficult to see how the parties can, by estoppel, confer on the court a jurisdiction which they could not confer by express agreement.”

Mr Barnes also referred to Islington London Borough Council v Uckac [2006] EWCA Civ 340, but with respect I need not cite the passage from Dyson LJ to which he refers. 

18.	Mr Arden’s riposte to this array of learning is to assert that its effect is no more than this:  that estoppel may not be used to defeat or frustrate the purpose or effect of a statute on its proper construction.  A contract may not do so; neither can an estoppel.  However, he submits the use in this case of an estoppel, as found by the judge below, far from undermining the Housing Act actually vindicates its relevant aims and policies. 

19.	I turn then to consider briefly the effect of Mr Barnes’ authorities.  In Keen v Holland and Welch v Nagy the parties had sought by agreement to oust the provisions of the relevant statutes.  Plainly that was something they could not do and the court held that it could no more readily be achieved by seeking to rely on estoppel.  There is therefore strong reason to suppose that the underlying thread of reasoning in this learning very much turns on the purpose and policy of the statute in question.  Mr Arden for his part also placed before us the authority of Yaxley v Gotts [2000] Ch 162 per Robert Walker LJ as he then was at 174, 175: 

“I have no hesitation in agreeing…that the doctrine of estoppel may operate to modify (and sometimes perhaps even counteract) the effect of section 2 of the Act of 1989; that is the Law of Property Miscellaneous Provisions Act 1989.  The circumstances in which section 2 has to be complied with are so various, and the scope of the doctrine of estoppel is so flexible, that any general assertion of section 2 as a “no-go area” for estoppel would be unsustainable.  
…
If an estoppel would have the effect of enforcing a void contract and subverting Parliament’s purpose it may have to yield to the statutory law which confronts it...
…
In enquiring whether the parliamentary purposes is frustrated, is necessary to note the live range of relief which may be granted where a claim to proprietary estoppel is established.”

Mr Arden cites Clarke LJ as he then was to like effect at 181 to 182.  

20.	What then is the purpose and policy of ground 16 in Schedule 2 of the Housing Act 1980?  In my judgment it is plain: it is that the Housing Authority should be enabled to recover a family-sized property from a succeeding relative who does not need so large a home.  The time provisions are there to ensure that the relative is not disturbed too early after the death: hence the six months; nor so much later that he is settled into the property as his own long-term home after the death of the previous tenant: hence the 12 months.  

21.	The appellant’s actions in my judgment, if they prevent the local authority from seeking an order for possession, would wholly frustrate this policy.  Their effect is that the appellant can never be evicted from the property which is larger than he needs and might be occupied by a family who indeed need it, never at least unless another ground under Schedule 2 were adventitiously to arise.  The notion that the time limits set an overriding policy aim which on the facts of this case the local authority’s claim for possession would frustrate is entirely unreal, yet that must be the burden of Mr Barnes’ submission.  The statutory policy is in fact as I see it frustrated and flagrantly so if Mr Barnes is right, and, because of the appellant’s dishonesty, the respondent cannot rely on ground 16.  Mr Barnes submitted that Parliament has chosen to give effect to the policy in part by means of the compulsory time limit and that must not be frustrated; but this is, with respect, to treat what is ancillary as if it were central.  I do not accept Mr Barnes’ submission, elegantly presented as it was, that to allow an estoppel to run in these circumstances would open a Pandora’s box of uncertainties.  It is clear that parties may not contract out of a statute whose application is compulsory, but if a party by his unilateral act would frustrate the operation of the statute, I do not see why the court should not vindicate the statute by holding, if the facts justify it, that the relevant act is negated by the operation of an estoppel.  I do not consider that would give rise to any unacceptable want of clarity.  In those circumstances I would uphold the judge on the application of the estoppel found by him unless we are prevented from doing so by the nature of the estoppel in question.  

22.	Is it a proprietary estoppel such as might found a cause of action in relation to land?  This is the third heading in Mr Barnes’ argument and the fifth of this ground of appeal.  Again Mr Barnes cites a number of authorities.  First and foremost, perhaps, he refers to what was said by Oliver J as he then was in Taylors Fashions Ltd v Liverpool Victoria Trustee Company Ltd [1982] QB 123 at 144A to B: 

“If A under an expectation created or encouraged by B that A shall have a certain interest in land, thereafter, on the faith of such expectation and with the knowledge of B without objection by him, acts to his detriment in connection with such land, a Court of Equity will compel B to give effect to such expectation.”

23.	As Mr Barnes submits (paragraph 47 of his skeleton) the 2005 edition of Snell’s Equity describes this dictum as the most important and authoritative modern statement of the doctrine of proprietary estoppel and it is clear that the expectation of A in Oliver J’s formulation may be satisfied by a range of remedies including an order vesting a freehold in A.  Thus, unlike other estoppels proprietary estoppel may indeed be used as a sword not only a shield.  See also Baird Textiles v Marks and Spencer [2001] EWCA Civ 274 paragraph 34: 

“…accepting that proprietary or equitable estoppel may create a cause of action it is limited to places involving proprietary rights, whether or not confined to land, Western Fish Products v Penwith District Council [1981] 2 AER 204, 217.”

24.	Western Fish is an important case.  Megaw LJ reviewed a great deal of earlier learning, not least Crabb v Arun District Council [1976] 1 Ch 179.  He stated, 217G, that the principle there established was this: 

“…when A to the knowledge of B acts to his detriment in relation to his own land in the expectation, encouraged by B, of acquiring a right over B’s land, such expectation arising from what B has said or done, the court will order B to grant A that right on such terms as may be just.”

Megaw LJ stated also (218 J) that there was no good reason to extend the principle further.  Mr Barnes correctly submitted this morning that a proprietary estoppel may actually create an interest in the property, and the burden of his submission is that its scope or application is in fact limited to the creation of property rights along the lines described in particular by Oliver J and also by Megaw LJ. 

25.	But Mr Arden for his part made these submissions, encapsulated in a helpful note.  First of all, he observes that in the seventh edition of Megarry and Wade the description given of proprietary estoppel referred not only to the creation of a right but also to the enjoyment of some benefit over property, and this he says tends to show that the doctrine runs a little wider than might be thought from a strict reading of Oliver J’s description.  He added that this passage from Megarry and Wade has been approved by the Court of Appeal in Lloyd v Dugdale [2001] EWCA Civ 1754 at paragraph 26.  He noted that it is important not to confuse proprietary estoppel with constructive trust, and thus a proprietary estoppel may give rise, so he submitted, to a revocable licence.  He went so far as to submit that such an estoppel can arise out of any dealings which make it inequitable for a person to insist on his strict legal rights, but though this seemed an ambitious submission on the face of it, it is supported by what was said by Lord Denning MR in Crabb v Arun District Council at page 187.  In my judgment, however, as a bare proposition, it is, with great respect, too wide.

26.	Mr Arden also relied on the decision of Hart J in JS Bloor (Measham) Ltd v Calcott, an agricultural holdings case: [2002] 1 EGLR 1.  There is some disagreement at the Bar as to whether the passage relied on by Mr Arden at paragraphs 32 and 33 in truth represents the law.  It is not, I think, necessary to go into the correctness of the particular dictum.  At paragraph 25 of his note Mr Arden submits, without opposition, so far as this goes, from Mr Barnes that a proprietary estoppel may require a tenant to surrender his interests just as an owner may be obliged to create an interest or to grant an interest.  In general terms Mr Arden’s argument is that the subject matter of a proprietary estoppel may run wider than the strict creation of legal estates or interests in land.  He says there is at least one instance in this court where it has been applied to intellectual property rights and he submits that it is but a small step to accept that it may apply to facilitate the making of an order for possession at the behest of the local authority in circumstances such as obtain here.

27.	I have found this a troubling question.  I have concluded, however, for my part, that the doctrine of proprietary estoppel cannot be said to apply in this case.  The housing authority is not claiming an interest in land.  Its interest as landlord and as freeholder is not in question.  That interest is not facilitated by any estoppel.  What the housing authority seeks to do is no more nor less than to raise a strictly statutory claim to possession in a strictly statutory context.  That ambition as it seems to me cannot be fulfilled as the fruit of a proprietary estoppel.  The appellant has not created any expectation that the appellant will enjoy any kind of interest in land.  Accepting that a proprietary estoppel may as Mr Arden submits require a tenant to surrender his interest, the present situation cannot be catalogued in such a manner.  In truth the appellant’s acts in this case all bear the marks of an estoppel by representation; and that is what it was.  However, as I have sought to indicate, it is settled law that such an estoppel is a shield only and cannot found a cause of action.  If that is right the respondent cannot in my view maintain the possession claim because it is outwith the time limit, which is a constituent element of ground 16, and there is no legal mechanism by way of estoppel such as might avoid its operation.

28.	I should say that I reach this conclusion with very considerable regret.  I think it is unjust in the circumstances.  It frustrates the statutory purpose of ground 16.  It means that this family house cannot at any rate for the present be released for use by a family who need it.  I share the unease expressed by Sir Peter Gibson as to the limitations the law places on estoppels as shields only and not as swords: see Riverside Housing Association v White [2006] HLR 50 at page 70, an unease shared by the other members of the court.  If I may say so I hope that, if my Lords agree with this conclusion, I hope that the legislature may find an early opportunity to alleviate the difficulty if not by altering the law of estoppel then perhaps by amending the Housing Act.

29.	For the reasons I have given I would allow the appeal.

Lord Justice Longmore:  

30.	I agree that this appeal must be allowed and I expressly agree that my Lord’s acceptance of what he has called Mr Barnes’ third head of submission.  To accede to Mr Arden’s argument would mean rewriting the classic definition of proprietary estoppel contained in Taylors Fashions Limited v Liverpool Victoria Trustee Company Ltd [1982] QB 133 at 143 by inserting after the words “interest in land” some such words as “or rights in some way affecting real property”.  That would be a substantial extension to the law of proprietary estoppel and I do not consider that the 7th edition of Megarry and Wade’s Law of Real Property p698 to 9 intended to do that merely by the use of the words “some benefit over property”.  I have to say I am rather less certain about my Lord’s acceptance of Mr Arden’s argument in relation to Mr Barnes’ second submission that a party can be estopped from relying on the statute in cases where such reliance would serve to frustrate the policy of the Act rather than promote it.  I was impressed by Mr Barnes’ argument, speaking for myself, that if a party cannot contract out of the statute, he can no more be estopped from relying on any rights arising out of the statute as held in the authorities cited by Mr Barnes, including Keen v Holland [1984] 1 WLR 251.  The argument that this principle only applies where the reliance on the estoppel promotes the policy of a statute such as the Housing Act rather than frustrates it is I fear an argument that may be too uncertain a statement of law to be useful in future cases.  I express that opinion hesitantly.  If this appeal turned on this submission I would have wished to take time to consider my judgment.  As it is the appeal did not so turn on this part of Mr Arden’s argument.  I would also say that I would wish to associate myself with the concluding paragraph of my Lord’s judgment.

Lord Justice Richards:  

31.	I agree that this appeal should be allowed for the reasons given by Laws LJ.  As to the matter on which Longmore LJ has expressed a degree of reservation, I have to say that I find Laws LJ’s analysis persuasive.  To allow an estoppel to operate on the limited basis indicated and in circumstances of the kind that have arisen in this case so as to prevent the policy of the statute being frustrated by a tenant’s dishonest conduct would not in my view give rise to the uncertainty or adverse consequences suggested by Mr Barnes.  The point is not, however, necessary to our decision given that we are all agreed on the outcome in relation to the issue of proprietary estoppel, which is decisive in the appellant’s favour.

Order: Appeal allowed