Can I be compensated for broken promises over family property?
27 February 2023
The answer is “yes”, provided you meet certain criteria. In particular, the principles of ‘proprietary estoppel’ and ‘unjust enrichment’ are frequently called upon to assist in these situations.
Useful light is shed on these principles by the case of Mate v Mate , decided earlier this month in the High Court.
The case concerned farmland in West Yorkshire, which had been sold for a greatly uplifted value to a residential housing developer, Persimmon Homes Limited.
The dispute was between Julie Mate (the claimant) and her mother, Shirley Mate (the first defendant), as well as her brothers, Andrew and Robert Mate (the second and third defendants).
When part of the family farmland was sold to Persimmon, Julie was not strictly entitled to share in the purchase monies. This was because she was not a legal or beneficial owner of the land. However, Julie argued that she should get a slice of the money anyway, pursuant to either proprietary estoppel or unjust enrichment.
These are two forms of ‘equitable remedies’ which, broadly speaking, empower the courts to intervene where the assertion of strict legal rights would be unconscionable.
The facts of the case
Julie was one of five children of Shirley and her late husband Donald Mate. Donald and Shirley were partners in a milk bottling business. Robert and Andrew became partners in the business shortly before Donald’s death in 1992.
Donald worked hard throughout his working life and built up the farm so that, by the time of his death, he owned land (most of it jointly with Shirley) totalling around 140 acres.
By his Will, Donald left his share of the farm business to Shirley, Andrew and Robert in equal shares; and his share of the land that he and Shirley owned together to Andrew and Robert in equal shares, resulting in Shirley owning 50% of that land and Andrew and Robert each owning 25%.
While the farm did well in the 1990s, it started to struggle financially in the late 2000s/early 2010s. Julie argued that around this time she was encouraged by Shirley to start looking into the potential development of some 40 acres of a part of the farm known as Netherton Moor. She identified a suitable planning consultant, Duncan Hartley, and arranged to bring him to a meeting with Shirley, Robert and Andrew at the farm in 2008. Following that meeting, Shirley, Robert and Andrew agreed that Julie should engage the services of Mr Hartley to assist in achieving the removal of the Netherton Moor land from the Green Belt, with a view to the land being allocated for housing on the Council’s Local Plan.
Julie argued that she worked on this project with Mr Hartley at various times between 2008 and late 2015 in reliance on promises made to her by Shirley that, if she succeeded in removing Netherton Moor from the Green Belt and securing its allocation for housing, the proceeds of sale of that land would be shared equally between Shirley and her five children.
In late 2015, the Council published its draft Local Plan, which showed that part of the Netherton Moor land had been released from the Green Belt. Shortly after that, Julie discovered that, without her knowledge, Shirley, Robert and Andrew had entered into an agreement with Persimmon about a year earlier, which gave Persimmon the option to purchase part of Netherton Moor for £9 million.
In April 2021, the Council gave Persimmon permission to develop 250 houses on Netherton Moor. Persimmon then exercised its option, resulting in the sale by Shirley, Robert and Andrew for £9 million. Julie did not receive any of this money.
Julie’s primary claim was that Shirley, Robert and Andrew were estopped (prevented) from going back on Shirley’s promise that, if the farmland was sold, the proceeds of sale would be shared equally between Shirley and her five children.
We set out the fundamental requirements of a successful proprietary estoppel claim in our previous articles: “One day my son, all this will be yours”; “Broken promises and the law”; “Were you promised a share in a property which is now being reneged upon?”; and “You broke your promise! Estoppel in the commercial property context”.
By way of brief summary, to succeed in a claim for proprietary estoppel, a claimant must prove that (1) a promise was made to them (2) which they relied upon (3) to their detriment.
Julie’s claim in proprietary estoppel was not successful. The law requires the promise to have been made in a sufficiently clear way. The Judge did not consider that the promises made by Shirley were clear enough to entitle Julie to believe that she would receive an equal share of the proceeds of sale. While the Judge accepted that it was entirely possible that Shirley may have made general comments over the years that she expected her daughter to benefit if farmland ever came to be sold, the Judge found that she did not specify what share of the proceeds her daughters could expect to receive, nor did she make any promise which was intended to bind Andrew and Robert. In the circumstances, whatever was said by Shirley to Julie was too vague and unspecific for it to have been reasonable for Julie to rely on it. Nor was there any evidence that Andrew and Robert were aware of what Shirley may have said to Julie, so they could not be taken to have agreed to whatever vague assurances Shirley may have given to Julie.
In the alternative, Julie claimed that Shirley, Robert and Andrew knew that she would not have been prepared to spend time and money on the work that she did in removing the Green Belt restriction from Netherton Moor and securing its allocation for residential housing development without recompense and that, unless she was rewarded for her work, they would have been unjustly enriched. Julie accordingly claimed as compensation a share in the proceeds of sale of the Netherton Moor land.
The test for unjust enrichment is fourfold: (1) Has the defendant been enriched? (2) Was the enrichment at the claimant’s expense? (3) Was the enrichment unjust? (4) Are there any defences available to the defendant?
The defendants in this case did not plead any particular defence to the claim, so the unjust enrichment claim turned on issues (1) to (3).
Julie argued that:
- she took steps to remove the Green Belt restriction on the Netherton Moor land and gain its allocation for residential development;
- Shirley, Andrew and Robert encouraged her to take those steps when they knew or should have known she was not acting gratuitously;
- those steps caused the Green Belt restriction to be removed and the land to be allocated for housing;
- Shirley, Andrew and Robert had therefore been unjustly enriched; and
- Julie was entitled to restitutionary damages equal to a share in the proceeds of sale or such other compensation as the court thought just.
The Judge found that there could be no doubt that Shirley, Andrew and Robert had been enriched as a result of the work undertaken by Julie, with Mr Hartley’s assistance, to remove the Green Belt restrictions on the Netherton Moor land and to gain its allocation for residential development. The Judge accepted that Julie had spent between 500 and 600 hours in total working on the project between 2008 and 2018, and that this work had been carried out for the benefit of Shirley, Andrew and Robert at Julie’s expense.
Shirley, Andrew and Robert were aware of the services being performed by Julie and knew that Julie expected a reward for her work, and they could have rejected the benefit (but did not). They were enriched by Julie’s services in circumstances, which were unjust because they knew she was not providing those services gratuitously and they made no attempt to reward her for them.
The court accordingly found that it was appropriate for Julie to be paid for her services, calculated in the same way that a land promoter’s fee would be calculated, in other words on a commission basis by reference to an objective valuation of the services she and Mr Hartley in fact performed. That is the price that a reasonable person in Shirley, Andrew and Robert’s position would have paid for those services, as a percentage of the sale proceeds received by them.
The court did, however, take into account that, while Julie was performing a role akin to that of a land promoter, she was not in fact a professional land promoter, and she did not play any role in the later stages of the planning process, which resulted in the grant of planning permission.
The Judge therefore arrived at a fee of 7.5%, which represented the market value of the services performed by Julie by taking the figure at the lower end of the range, namely 15%, and halving that figure, to reflect the fact that (1) Julie did not have a formal arrangement and (2) the court felt that Julie had performed about 50% of the work. Accordingly, it was held that Julie should be awarded a sum equal to 7.5% of £8.7 million (being the amount of the uplift in the market value of the land from £300,000 to £9 million). On that basis, she was entitled to be paid £652,500 by the defendants.
The Birketts View
Here are our main takeaway points:
- Mate v Mate provides helpful guidance on the application of relatively niche but important equitable principles, and serves to remind us that these cases are technical in their nature and best handled by property litigators specialising in equitable remedies.
- Informal arrangements, agreements and promises can be a recipe for disaster. Any such arrangements should be clear and unambiguous, involve all of the relevant parties, and, ideally, be documented in writing in a formal way by a legal professional.
- Informal promises or assurances, even those made orally and not written down, can form the basis of a claim in proprietary estoppel.
- However, such promises or assurances will need to be sufficiently clear and precise if they are to form the basis of a successful proprietary estoppel claim.
- Claims in proprietary estoppel are frequently brought with alternative claims in unjust enrichment, given the necessary ingredients for both claims are likely to rely on the same factual matrix.
- Equitable claims of this nature can be ruinously expensive to litigate – the trial in Mate v Mate lasted seven days and involved hearing evidence from 11 witnesses of fact and two expert witnesses.
- The risk of litigating these cases to court is high, given the very fact specific nature of these claims and the fact that witness testimony is fallible.
At Birketts, our Property Litigation Team is ranked in the top tier by legal commentators and we can help you to bring or defend claims involving proprietary estoppel or unjust enrichment, as in Mate v Mate.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at February 2023.