“One day my son, all this will be yours”
29 November 2022
This is a proprietary estoppel case law update for Guest & Anor v Guest  UKSC 27
How do you deal with a situation where promises are made by one person, and relied upon by another at their detriment, but are subsequently broken? This is the common dilemma considered by the Courts in a claim for proprietary estoppel.
As is clear from previous articles authored by Birketts on this topic (such as “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”), such informal promises, where broken, can commonly erupt into hotly contested court litigation.
There have historically been two conflicting approaches on how the issue of “relief” should be decided in proprietary estoppel cases. The first school of thought was to uphold the promise, i.e. to give the promisee what they were promised. The second school of thought was to compensate the promisee for the detriment and loss suffered in reliance of the promise, with the latter approach usually being far less generous to the claimant promisee.
The Supreme Court has now clarified the law in this area and given much needed guidance on which approach should be adopted. Its widely anticipated judgment can be found here, and related to an appeal in the case of Guest v Guest. The decision of the Supreme Court will have a lasting effect on future legal claims concerning proprietary estoppel and represents an important landmark case.
The facts of the case in Guest
“One day my son, all this will be yours”. These were the words spoken by a farmer (David Guest) to his eldest son (Andrew Guest) and repeated for many years thereafter.
In 1981, David Guest and his wife (Josephine) prepared their Wills, stating that their two sons would inherit the farm in equal shares, in expectation that the two sons would work on the farm upon leaving school. Relying on this expectation that the farm would one day be his, Andrew spent substantial part of his working life on the farm in return for a low wage.
Some years later, the relationship between Andrew and his parents broke down irretrievably, such that they could no longer work together or even live in close proximity.
In 2014, David and his wife prepared new Wills, removing Andrew as a beneficiary. The farming partnership was dissolved and Andrew moved out to find alternative work and rented accommodation for himself and his family elsewhere. Andrew issued proceedings in the High Court on the basis of proprietary estoppel, seeking a share in the family farm or its monetary equivalent. By the time Andrew made his application to court, he had dedicated over 30 years of his life working at the family farm.
In the High Court proceedings, Andrew succeeded with his claim, with the Judge finding that an assurance was indeed given by the parents through a series of conversations over several years. It was further held Andrew’s reliance on this assurance caused a detriment to Andrew, as he had worked hard to improve the efficiency of the farming practices, which he had thought he would one day inherit.
Consequently, the Court found that the claim for proprietary estoppel was established and ordered that Andrew be entitled to 50% of the dairy business and 40% of the land. This effectively reflected the parents’ previous Wills, which had been revoked in 2014. The award to Andrew was to be achieved by either an immediate sale of the farm, or else the parents could elect to pay Andrew the monetary equivalent. The parents felt that the remedy was too generous to Andrew and they appealed to Court of Appeal.
In the Court of Appeal, Andrew’s parents argued that the trial Judge was wrong to give Andrew a remedy which was based on his expectations. Rather, his parents posited that the relief should have been based on Andrew’s contribution to the value of the farm or the detriment that he had suffered. The relief went beyond what was necessary to avoid an unconscionable result, it was argued.
In its judgement, the Court of Appeal disagreed with the parents and dismissed the appeal, holding that it was appropriate for the trial Judge to order a remedy based on Andrew’s expectation, and that a clean break solution had been found to be necessary in a number of farming cases. Still unhappy with the decision, the case was then appealed to the Supreme Court by the parents in December 2021, with Judgment being handed down on 19 October 2022.
Consequently, it was this issue of relief that came before the Supreme Court, when it was asked to decide:
- whether the appropriate starting point was to enforce the expectation and give effect to the promise, as opposed to quantifying the detriment suffered;
- where a lump sum had been awarded, whether that went beyond what was necessary in the circumstances;
- whether the relief should have been granted whilst the parents were alive, or whether any payment to Andrew should only be triggered upon the death of the second parent. This was on grounds that Andrew’s expectation was only ever to inherit upon the death of both parents.
The decision of the Supreme Court
All five justices allowed the appeal in favour of the parents. However, the Supreme Court largely followed the Court of Appeal’s decision to provide Andrew with an immediate interest in the farm under a clean break settlement. The Supreme Court considered that the parents should be entitled to choose between two alternative forms of relief:
- if Josephine and David’s preference was for a clean break with Andrew then they could sell the farm to make a lump sum payment to Andrew with a discount for accelerated receipt; or alternatively
- the farm could be placed in trust, such that Andrew would have the benefit of it after Josephine and David’s death, but such that David and Josephine had the benefit of it during their lifetimes, with a sale thereafter.
The Court determined that the parents should choose which remedy they wanted to adopt.
The Supreme Court confirmed that the starting point for remedy is to fulfil the expectation, which is simply, to enforce the promise. Albeit, there could be factors that would lead a court to depart from strict enforcement of the promise. The Court provided some examples of such factors, which included:
- The property may have been sold.
- It may be unfair on others who may have claims over the estate.
- It may be unfair on the promisor, who may need to fund care costs.
- It may be entirely disproportionate and unjust on the promisor.
In the event that a case requires a clean break, which involves the promisee receiving something early, that is permitted subject to there being a significant discount for the early receipt. The Judgment finally settles an ongoing controversy over conflicting approaches to relief. This will now be the key and leading authority courts will look to when addressing the question of relief in future
At Birketts, our Property Litigation Team is ranked in the top tier by legal commentators and can help you to bring or defend claims involving the principles of proprietary estoppel, as in Guest.
For further assistance or advice regarding proprietary estoppel or property disputes more generally, please contact Sunday Aladetoyinbo on 01473 406206.
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 November 2022.