Proprietary estoppel is a legal doctrine designed to prevent someone from reneging on a promise (relating to land and property) on which another person relied to their detriment. The application of this remedy is often seen in farming families where a child has been promised that they will inherit the family farm and, as a result, forgoes other opportunities in order to devote their lives to working on the farm.
As a general rule, proprietary estoppel claims normally arise after the parents die and the subsequent discovery by the child that, against expectations, they do not stand to inherit the farm as promised. The case of Guest v Guest is however, an example of a proprietary estoppel claim being brought by the son against his parents while they were still alive. On the ground, we are dealing with an increasing number of lifetime cases as the case law becomes increasingly well established.
Guest v Guest: background to the case
Andrew Guest had worked on the farm, at minimum wage, for his entire life after leaving school aged 16. His parents had promised him and his brother that they would inherit the farm, a promise supported by his parents’ original wills and partnership agreement. However, in 2014 he and his parents fell out; he was disinherited and barred from living in the farm cottage he occupied with his family. In response he brought a claim for proprietary estoppel which was upheld in the first instance. The judge upheld the claim of proprietary estoppel but noted that a ‘clean break’ was necessary to enable all parties to move on, acknowledging that any award in favour of Andrew amounted to him receiving his inheritance early. As such he ruled that Andrew’s parents had to sell the farm of which he was awarded 50% of the dairy business and 40% of the land and buildings (both net of tax). His parents were given a life interest in the farmhouse.
At appeal, his parents argued that such a ‘clean break’ award was unfair and contrary to Andrew’s expectation: he expected to inherit the farm rather than it being sold to fund the lump sum awarded. Instead, the Court should have restricted its approach to quantifying the detriment as well as compensating for the fact that Andrew was never able to save for a house. The Court of Appeal concurred with the first trial judge and leave to appeal to the Supreme Court was given.
The Supreme Court judgment: split decision
The question before the Supreme Court was whether Andrew should receive the full value of what he had been promised or whether he should have received a compensation payment reflecting his detriment i.e. what he might have earned had he not relied on his parents’ promise that he would inherit the farm. In the event, the Court’s decision was based on a 3/2 split.
The majority, led by Lord Briggs, broadly upheld the Court of Appeal ruling that the primary remedy should be to satisfy Andrew’s expectations. However, they determined that his parents should choose between putting the farm in trust for Andrew (with a life interest in the meantime) or for him to receive an early award but discounted to reflect the fact of receiving an ‘accelerated’ inheritance. The minority opinion, led by Lord Leggatt, held that the primary remedy should be compensatory in nature to reflect the detriment suffered. Both Lords Briggs and Leggatt, despite adopting different rationales, arrived at a similar compensatory figure, approximately half of the sum specified by the judge at first instance.
Guest v Guest: summary
Although all five judges agreed that the focus of a proprietary estoppel claim is the unconscionability of the act of reneging on a promise, they differed on the interpretation, with the majority view holding that ‘the simplest way to remedy the unconscionability constituted by the repudiation is to hold the promisor to the promise’. By contrast, the minority opinion held that ‘what the law regards as unconscionable is not A’s failure to keep a non-binding promise. It is A’s failure to accept responsibility for the consequences of B’s reasonable reliance on the promise and for ensuring that B does not suffer detriment as a result of such reliance.’
Nonetheless, all agreed that it would have been unreasonable not to discount the amount Andrew should receive due to the ‘acceleration of the promise’. Guest v Guest is a useful reminder that every proprietary estoppel claim is fact specific, and it is the case that this split opinion over the correct basis for assessing the remedy for a proprietary estoppel claim continues to be revisited in cases appearing before the courts.
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