‘The relationship between constructive trust and proprietary estoppel remains

difficult to discern with any great degree of confidence.’

Hayton in his article ‘Equitable Rights of Cohabitees’ suggested that the difference between
common purpose constructive trusts and proprietary estoppel is illusive and goes on further to
suggest that since the general way of the development of the jurisprudence has been to
encompass the rule of forestalling and rectifying conscienceless behavior regardless of whether
the claim brought before them was originally brought under the construct of a constructive trust
or proprietary estoppel the differentiation between the two legal tools should be wholly
abolished. Lord Browne Wilkinson put it ‘the two rules have been developed individually without
cross fertilization between them: but they rest on the same foundation and have on all the affairs
reached the same conclusions”

Firstly, Common purpose constructive trusts have been defined as trusts created by courts
regardless of the purpose in order to profit a party that has been wrongfully deprived of his
rights. The authority for this is (Paragon Finance) if it can be unreasonable for the owner of a
property to declare his beneficial interest, constructive trust will arise by law. Constructive trusts
do not need to be in writing as they are exempted from the operation of Law Property Act 1925
s 53(1) (b), by s 53(2). Mere denial of an informal arrangement or understanding is generally
insufficient, since equity will not assist a volunteer. Either the owner must be unjustly enriched
or the claimant must have acted to their detriment. Following the rules of (Lloyds Bank v Rosset)
in order for a common purpose constructive trust to be established the first important question
is whether from the conduct of the parties in the course of sharing the house as their home and
managing their joint affairs, there has at any time prior to acquisition, or exceptionally at some
later date, been any agreement, arrangement or understanding reached between them that the
property is to be shared [Link] Etherton has summarized that the courts have the
ability to both affirm the pre-existence of constructive trusts and to enforce constructive trusts
as a redress where they see fit. Constructive trusts in theory can be a redress under a proprietary
estoppel claim, although courts have not been inclined to allow these in such a manner.

Proprietary estoppels can be used as a defense rather than a remedy as it is another method
whereby a person may receive the equitable interest that they deserve without the appropriate
formalities. Firstly, the owner of the land assures the claimant that he will have some rights over
the property, secondly, the claimant must have had belief that he would receive interest in the
property and lastly the claimant acted to his detriment and where it would be unconscionable
for the court not to grant the right. This detriment has to be substantial, authority from Gillet v
Holt. The extent and the nature of the loss suffered by the claimant appears to be more flexible
than that of constructive trust. In Inwards v Baker such loss amounted to improvement of the
defendant’s land whilst in Gillett v Holt it was manifested in both financial and personal loss.
Both doctrines rely upon a promise which has been relied upon and a detriment due to the
reliance of the promise. Authority from Grant v Edwards which proved that both depend upon
shared characteristics, assurance, reliance and detriment. Also in this case, Lord
Browne-Wilkinson suggested that proprietary estoppels might provide an alternative route for
claiming an interest in the home, to that of the constructive trust. The assurance must be made
by the person against whom the estoppels are claimed that will usually be the owner of the
freehold or leasehold estate in the land (Lloyds Bank Plc v Carrick). Detriment will usually be
financial that is contributions to the acquisition or improvement of the land but it may also be
personal, involving, for instance, working without payment or giving up an independent life style
it may involve the payment of money (like consideration in a contract) or it
may involve something personal to the claimant like moving their children to a new school in
reliance on a promise that they would consequently have a new home (Grant v Edwards).
Reliance, being the link between the assurance and the detriment can be difficult to pin down,
particularly where the detriment is personal. The claimant must have acted to their detriment
because of the owner's assurances and not for any other reason. For instance, that reason may
be personal attachment. In Greasley v Cooke suggestions were made, although not proved, that
Mrs Cooke acted to her detriment because of the personal relationships she had within the
family. Alternatively, the reason may arise because of the existence of some other legal right. In
Lloyds Bank Plc v Carrick, Carrick's claim to an interest by estoppels was rejected because as a
buyer under an enforceable contract she held under a bare trust and had acted to her detriment
in that capacity.

There are similarities between the two equitable doctrines which have just been
examined. On occasions the courts have not made it clear upon which doctrine they have relied
in reaching their decision. For instance, in Gissing v Gissing when
considering implied trusts Lord Diplock thought it was unnecessary to distinguish
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between the doctrines although now there are signs that the courts are more aware of the
importance of the distinctions between the two doctrines.
To an extent, both doctrines are similar, however the significant differences between them will
now be looked at. Intention and remedy are the two sections which cause differences to arise
between proprietary estoppels and constructive trusts
A constructive trust is founded upon a common intention that can either be expressed or
inferred but cannot be based upon an intention that the parties never in fact had. Estoppels may
be claimed where there has been either a representation or acquiescence that an interest in
property is to arise. Certainly a representation could equally be interpreted as leading to an
express common intention. In a constructive trust, once a common intention has been found
between the parties, they will now be entitled to the intended property. A comparison can be
seen with proprietary estoppels whereby it is for the court to resolve and to decide which
remedy is the most appropriate for the case, taking into account the minimum equity to do
justice, which was an important statement made in Crabb v Arun.
For the remedy, the clearest distinctions lie in what result will flow from each of the doctrines.
Gillet v Holt was a case which clearly showed the distinction between the two doctrines and its
importance when a defendant has already discarded the property. When there is a claim
regarding proprietary estoppels, the court will look back and will take everything into
consideration when deciding what interest to give. Only then can an interest in the property be
definite. Nevertheless, constructive trust arises by the operation of law, which can be recognized
by the court. Proprietary estoppels usually can be seen as more beneficial to a claimant when a
testator disposed of his personal assets example home during his lifetime.
Despite the similarities which exist between common intention constructive trusts and
proprietary estoppels, in practice the differences are significant. In Lydia Barnet case it was
questionable whether she can claim by using proprietary estoppels or constructive trust,
however the court will decide which one would be more appropriate for her
After taking everything into consideration, I agree with Hayton’s statement. A lot of
differences do not exist between the two doctrines. Both can be used to gain an
interest in equity. The elements of each doctrine have a close relationship, and even though
their particular methods of functioning stay dissimilar, they may lead to
comparable outcomes.