Felix Smyth (plaintiff) v John Joseph Halpin and Regina Stokes (defendants).

Equity - Proprietary estoppel - Whether expenditure on foot of an expectation created in the mind of one by another can give rise to an equity - Extent of the equity - How such equity is best protected.

The High Court (before Mr Justice Geoghegan); judgment delivered 20 December 1996.

WHERE a clear expectation is created in the mind of a person through the actions or utterances of another that he will one day inherit property and on foot of which expectation he expends money, that person has an equity which the Court must protect by directing a conveyance to him of the interest which the Court feels is appropriate in all the circumstances.

The High Court so held in acceding to the plaintiff's application based on proprietary estoppel to have the reversionary interest in his parents' family home transferred to him notwithstanding the contents of his fathers will and thereby completing an imperfect gift.

Gavin Ralston BL for the plaintiff Joseph Finnegan SC and Edmund Honohan SC for the defendants.

MR JUSTICE GEOGHEGAN said that the plaintiff had lived with his parents at the family house and farm in Co Meath. In 1983 his father had asked him if he wanted the place and he had said he did. When, in 1987, he decided to marry, he asked his father to provide him with a site for a house. His father replied saying that the family home would be his (the plaintiff's) on the death of his mother and there was no point in he having two places.

His father suggested that the plaintiff build an extension to the family home and the site for the extension was subsequently transferred to the plaintiff for the purposes of securing a loan. Mr Justice Geoghegan accepted that it was clear from the design of the extension that there was a presumption the entire house would eventually belong to the plaintiff on the deaths of his parents. It was unlikely the plaintiff would have adopted the suggestion if he had not thought he would eventually become full owner of the entire house.

The plaintiff's father made a number of wills before he died. His will dated 13 February 1976 bequeathed the house and lands to the plaintiff absolutely on the death or remarriage of his mother subject to the rights of the testator's other children to reside there until their marriages or their reaching the age of 25. A further will dated 21 October 1986 was in similar terms in relation to the plaintiff inheriting the house and lands in fee simple. A will dated 25 June 1991 bequeathed the lands alone to the plaintiff and the house absolutely to his sister the second defendant. The first defendant was appointed an executor under a further and final will of 23 July 1992 under which the plaintiff was to inherit the lands and the second defendant the house on the death of their mother. A right of way used by the plaintiff for the benefit of his property over lands surrounding the dwelling house was also bequeathed to the plaintiff absolutely.

Mr Justice Geoghegan said that the plaintiff was seeking a declaration that he was entitled to the reversionary interest in the house on the death of his mother and a direction that this interest in the dwelling house be transferred to him. In the alternative, he was seeking to recover the monies he had expended on the house. The precise right of way he had received also needed to be clarified.

Mr Justice Geoghegan said that the plaintiff's claim was not based on contract. He was not saying that he had an agreement with his father to look after his parents in their old age and as a result he would inherit the house and lands in due course. He was not attempting to establish his claim on the grounds of part performance. Rather, his claim was an equitable one based on the principle of proprietary estoppel.

Mr Justice Geoghegan considered the authorities on the kind of proprietary estoppel invoked by the plaintiff including Dillwyn v Llewelyn (1862)4 De G F & J 517 and Inwards v Baker [1965] 1 All ER 446.

Mr Justice Geoghegan said that the principles which emerged from these cases were that it is for the Court to determine the extent of the interest which the plaintiff has in the estate in light of all the circumstances - and not having recourse to what is contained in any document. The equity arises as a result of the expenditure incurred by the person in actual occupation of the property who is led to believe that he will be allowed to remain there. It is ultimately for the Court to say in what way the equity can be satisfied.

Mr Justice Geoghegan concluded that the facts of the case gave rise to a proper recourse to the principle of proprietary estoppel and the expenditure incurred by the plaintiff gave him an equity which the Court had a duty to protect. Mr Justice Geoghegan, referring to Pascoe v Turner [1972] 2 All ER 945, said that it was a matter for the Court to say what interest the plaintiff was entitled to. In this case the plaintiff had expected that he would own the house absolutely one day and therefore he was entitled to a conveyance of the remainder interest in fee simple.

On the question of the right of way, Mr Justice Geoghegan agreed with the plaintiff that the right of way intended by the testator was the one the plaintiff used, which was close to the house, and not the one the second defendant suggested, which was for the benefit of the farm.

Mr Justice Geoghegan directed that the remainder interest in the house be vested in the plaintiff and declared his entitlement to the right of way.

Solicitors:M. A. Regan & McEntee (Trim) for the plaintiff; Steen O'Reilly (Navan) for the defendants.