Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd Forty Years On: The Relationship between Unconscionability and Estoppel in the Law of Equity

by Jennifer O’Toole

Jennifer O’Toole is a recent BCL graduate of UCD. In this article, she assesses the impact of the English High Court’s seminal decision Taylors Fashions and subsequent jurisprudence on ‘unconscionability’ in estoppel.

In Taylors Fashions Ltd,[1] Oliver J set out that the correct approach in cases of estoppel was to look at all the circumstances of the case in a broad fashion and determine whether it would be unconscionable for a party to avoid carrying out an action which they had assured the other party of.[2] Oliver J’s approach sought to bring greater flexibility to judgments, and allow the courts to do better justice between the parties. Since this decision, the concept of ‘unconscionability’ as an overarching principle of estoppel has become a fundamental aspect of equity, not only in the UK and Ireland but as far away as Australia and New Zealand. While Oliver J’s judgment has been called a ‘watershed’ moment in the development of estoppel[3], it has also been criticised for creating too much uncertainty, distracting from the other key elements of proprietary estoppel such as assurance, detriment and reliance, and creating a cloak to mask judicial discretion.[4] This article will set out how Oliver J’s test has been adopted since Taylor Fashions Ltd, explore both the advantages and disadvantages to the unconscionability approach, and argue that the greater flexibility which the approach gives to judges increases the possibility of justice being done, therefore outweighing any disadvantages or criticisms of the test.

Oliver J set out the unconscionability test in Taylor Fashions Ltd as he felt ‘hard and fast rules’ were not desirable in estoppel cases, as they required a much broader look at all the circumstances involved in order to justify intervention by a court of equity.[5] The first approval of this concept can be seen in Amalgamated Investment and Property Company[6] by Denning MR, who used the language of ‘unjust’ and ‘unfair’ in determining whether the dealings required equity to interfere.[7] Oliver J’s test was wholeheartedly embraced by the Court of Appeal in Gillett v Holt,[8] where Walker LJ held that the prevention of ‘unconscionable conduct permeates all the elements of the doctrine’, and that in cases involving estoppel claims the court must ‘look at the matter in the round’.[9] Later in Jennings v Rice,[10] Aldous LJ noted that the basis of estoppel was unconscionability.[11] Walker LJ further elaborated on Oliver J’s test, noting that the doctrine of estoppel was only applicable if all the elements of assurance, reliance and detriment in combination made the conduct of a party unconscionable.[12] This suggests that unconscionability is not a ‘fourth wheel of the carriage’ as some academics have said[13], but is instead a lens for analysing all the elements of estoppel and determining when the conduct of the parties will cross the line and require equity to intervene. In Ireland, Biehler notes that despite little judicial analysis, the concept of unconscionability also plays a role here.[14] In McMahon v Kerry County Council,[15] Finlay P took ‘many factors and considerations’ into account when deciding whether it would be unconscionable to allow the plaintiffs to recover possession of the land.[16] Similarly, in Coyle v Finnegan[17] and Finnegan v Hand,[18] the significance of unconscionability was also recognised     .

Greater consideration of the role of unconscionability has been given      in the Australian High Court. In Waltons Stores (Interstate) Ltd v Maher,[19]Mason CJ and Wilson J both recognised that equity comes to the relief on the basis of unconscionable conduct, while Brennan J also noted that unconscionable conduct shapes the remedy which the court will grant.[20] In the later case of The Commonwealth v Verwayen,[21] Mason CJ noted that the case law was following a trend towards an overarching doctrine of estoppel based on unconscionability rather than a series of independent rules.[22] This was also supported by Deane J in his judgment.[23] In the neighbouring jurisdiction of New Zealand, Randerson J suggested that unconscionability was a key consideration for the court in cases of estoppel.[24]

It would appear from the case law described above that Oliver J’s test has become entrenched in the doctrine of estoppel across the common law world. However, it has not been without challenges. The first challenge came in Taylor v Dickens, where Judge Weeks argued that to apply a test of unconscionability in every case would result in the return of ‘the days of justice varying with the size of the Lord Chancellor’s foot’ and that judges might as well have a ‘portable palm tree.’[25] While this colourful criticism was later subject to much criticism of its own,[26] it is by no means alone in challenging the suitability of the unconscionability test. In Yeoman’s Row v Cobbe,[27] the House of Lords seemed to take a step back from Oliver J’s test. Scott LJ noted that unconscionability on its own could not warrant an intervention of equity unless all other ingredients for proprietary estoppel were also present.[28] Walker LJ went further, saying that unconscionability could not be used as a ‘joker or wild card’ whenever the Court disapproves of the conduct of a litigant.[29] Dixon and Handley have both noted that the previous absence of a structured framework for the use of unconscionability led to fears it was being used as a ‘cloak for judicial discretion.[30] Similarly, Breen suggests that a broad interpretation of ‘unconscionability’ could make it ‘an unruly subject’.[31] It is in this sense that Biehler has noted that greater flexibility can be both a weakness and a virtue.[32]

It is suggested that Yeoman’s Row v Cobbe did not set back the unconscionability test as much as some academics have suggested. Rather than saying that unconscionability is not a factor, it would appear that Walker LJ was arguing for it to be applied in a more principled manner.[33] He notes that even if all elements of estoppel were present, the result would still need to ‘shock the conscience of the court’ before estoppel would be applied.[34] This echoes an earlier judgment of Walker LJ in Jennings, where he emphasised the importance of tying unconscionability to the elements of estoppel.[35] If this interpretation of Yeoman’s Row is correct, and is in fact applied in later cases, then the fears that unconscionability will be used to fill the gaps where the essential elements are not present are unwarranted.[36] Gavin argues that by anchoring the concept of unconscionability in the analysis of the elements of estoppel, the court maintains an important flexibility which enables the judgment to reflect the reality of the circumstances of the case, and allows for a more nuanced analysis.[37] She argues that rather than obscuring the analysis, the use of the unconscionability test can in fact make the analysis more transparent, by allowing the nuances of the elements be taken into account, and can highlight the interdependence of all the elements of estoppel.[38]

It is argued on this basis that the unconscionability test adds  great flexibility to the analysis of the three elements of estoppel, which in turn can lead to a greater ability of the courts of equity to do justice between the parties, and therefore outweighs concerns about uncertainty and abuse of the doctrine to hide judicial discretion. McFarlane and Sales argue that the refinement of broad ideas of justice, such as unconscionability, allows for more explicit recognition and articulation of the varying factors considered by the courts, thereby maintaining flexibility but in a more transparent way.[39] By attempting to make the application of unconscionability clearer and more principled, and explicitly anchoring it in the elements of estoppel, Yeoman’s Row v Cobbe has in fact strengthened the arguments in favour of the continuance of the test.

Piska argues that proprietary estoppel has become ‘one of equity’s sharpest instruments’.[40] It is argued here that the flexibility added to proprietary estoppel by Oliver J’s unconscionability test has greatly contributed to this success, and has played a vital role in sharpening the doctrine. While there have been concerns that the principle proposed by Oliver J was too broad, or was being used inappropriately, recent case law such as Yeoman’s Row v Cobbe has clarified the concept of unconscionability, and thus weakened these criticisms. By using unconscionability to analyse the elements of estoppel, Oliver J’s test has maintained its flexibility and ability to consider the nuances of the case while doing so in a transparent manner and should no longer be a cloak for judicial discretion. It is suggested on this basis that Oliver J’s test remains a useful and important part of the doctrine of estoppel, even forty years after Taylor’s Fashions Ltd v Liverpool Victoria Trustees.

[1] Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133.

[2] ibid, (Chancery Division) 151 (Oliver J).

[3] Gillett v Holt [2001] Ch 210 (COA) 19 (Walker LJ).

[4] Martin Dixon, ‘Confining and Defining Proprietary Estoppel: The Role of Unconscionability’ (2010) 30(3) Legal Studies 408, 413.

[5] Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133 (Chancery Division) 148 (Oliver J).

[6] Amalgamated Investment and Property Company Ltd v Texas Commerce International Bank Ltd [1982] QB 84.

[7] ibid, (COA) 11 (Denning MR).

[8] Gillett v Holt [2001] Ch 210.

[9] ibid, (COA) 19 (Walker LJ).

[10] Jennings v Rice [2002] EWCA Civ 159.

[11] ibid, [21] (Aldous LJ).

[12] ibid, [44] (Walker LJ).

[13] Martin Dixon, ‘Confining and Defining Proprietary Estoppel: The Role of Unconscionability’ (2010) 30(3) Legal Studies 408.

[14] Hilary Biehler, Equity and the Law of Trusts in Ireland (7th edn, Round Hall 2020) 954.

[15] McMahon v Kerry County Council [1981] ILRM 419.

[16] ibid, (HC) 15 (Finlay P).

[17] Coyle v Finnegan [2013] IEHC 463 [35] (Laffoy J).

[18] Finnegan v Hand [2016] IEHC 255 [37] (White J).

[19] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7.

[20] ibid, [30] (Mason CJ and Wilson J) and [19] (Brennan J).

[21] The Commonwealth v Verwayen [1990] 170 CLR 394.

[22] ibid, [32] (Mason CJ).

[23] ibid, [15] (Deane J).

[24] Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407 [116] (Randerson J).

[25]Taylor v Dickens [1998] 1 FLR 806.

[26] Hilary Biehler, Equity and the Law of Trusts in Ireland (7th edn, Round Hall 2020) 947.

[27] Yeoman’s Row Management Ltd and another v Cobbe [2008] 4 All ER 713.

[28] ibid, [16] (Scott LJ).

[29] ibid, [46] (Walker LJ).

[30] Martin Dixon, ‘Confining and Defining Proprietary Estoppel: The Role of Unconscionability’ (2010) 30(3) Legal Studies 408, 413; Ken Handley, ‘Unconscionability in Estoppel by Conduct: Triable Issue or Underlying Principle?’ (2008) 5 Conveyancer and Property Lawyer 382, 395.

[31] Oonagh Breen, ‘Proprietary Estoppel – Frustrated Expectations and the Doctrine of Unconscionability’ (1999) 4(1) Conveyancing and Property Law Journal 9.

[32] Hilary Biehler, ‘Remedies in Cases of Proprietary Estoppel: Towards a More Principled Approach?’ (2015) 54(2) The Irish Jurist 79.

[33] Yeoman’s Row Management Ltd and another v Cobbe [2008] 4 All ER 713 [46] (Walker LJ).

[34] ibid, [92].

[35] Jennings v Rice [2002] EWCA Civ 159 [44] (Walker LJ).

[36] Elizabeth Gavin, ‘Unconscionability and Proprietary Estoppel: Striking a Balance between Formulaic and Subjective Approaches’ (2012) 30 Irish Law Times 88.

[37] ibid.

[38] ibid.

[39] Ben McFarlane and Philip Sales, ‘Promises, Detriment, and Liability: Lessons from Proprietary Estoppel’ (2015) 131(Oct) Law Quarterly Review 610, 632.

[40] Nick Piska, ‘Hopes, Expectation and Revocable Promises in Proprietary Estoppel’ (2009) 72(6) Modern Law Review 998, 999.

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