Proprietary estoppel – Remedy – Respondent son claiming interest in family farm following breakdown in relationship with appellant parents – Judge concluding respondent establishing equity based on proprietary estoppel – Judge ordering clean break and awarding lump sum payment – Appellants appealing – Whether judge adopting correct approach to remedy for equity established on facts – Appeal dismissed
The respondent had worked on his family farm known as Tump Farm, Sedbury, Tutshill, Chepstow, Monmouthshire since leaving school in 1982 for at least 60 hours per week for a low wage. The freehold of the farm and buildings was owned by his parents (the appellants) who lived in the farmhouse. In 1981, the appellants made wills under which the respondent and his brother would inherit the farm property and business in equal shares.
In 1989, the respondent moved into a cottage on the farm. In 2007, the business took over the tenancy of a neighbouring farm and the two farming operations were integrated. In 2012, the business was split into two new partnerships: the LF partnership between the respondent and the appellants, running Tump Farm; and the DF partnership between the respondent’s brother and the appellants, running Dayhouse Farm. Each son was to be the principal farmer of “his” farm.
In 2014, the relationship between the respondent and his parents broke down and the LF partnership was dissolved. The appellants made new wills, excluding the respondent beyond his right to occupy the cottage. In 2017, they gave the respondent notice to quit the cottage. He left the farm and obtained alternative employment. In 2018, the first appellant made a new will which removed the respondent entirely from its terms and his right to occupy the cottage was removed.
The respondent brought proceedings, based on proprietary estoppel, seeking declarations of entitlement to occupy the cottage and to the entire beneficial interest in Tump Farm and its business. Alternatively, he sought a capital payment by way of a clean break. The respondents denied making any representations about the claimant inheriting the farm after the surviving parent had died.
The High Court allowed the claim in part. The judge concluded that it was appropriate to make a clean break by awarding a lump sum payment: [2019] EWHC 869 (Ch); [2019] PLSCS 78. The appellants appealed.
Held: The appeal was dismissed.
(1) The objective of the remedy was to avoid a result which was unconscionable. An unconscionable result would normally appear to be so to an objective bystander, at least if he or she was a reasonable one. To that extent, the courts had sometimes used a normative legal fiction in order to determine what was and was not unconscionable. The objective bystander would, however, take into account all the circumstances, including the expectations of and detriment to the claimant. He did not look at the matter solely through the eyes of the owner: Uglow v Uglow [2004] EWCA Civ 987 considered.
The judge found that a sufficiently clear assurance had been given to the respondent that he would inherit a sufficient interest in Tump Farm to enable him to farm there. That assurance had been intended to be, and was, acted upon. As a result, the respondent had given up the possibility of being able to pursue a successful career elsewhere. The assurances had been relied upon for over 30 years, with little financial return. Finally, by repudiating that assurance and effectively disinheriting the respondent, the appellants had acted unconscionably.
(2) The alternative remedies proposed by the appellants were not adequate to avoid an unconscionable result. In the present case, although the assurances were given in broad, descriptive terms, there was no uncertainty of a kind which would assist the appellants. The judge had not fallen into any error in fashioning a remedy giving important weight to the respondent’s expectation. The judge was able to reach a finding that a clear enough assurance had been made, and that it had been relied upon by the respondent to his detriment. When he came to remedy, the judge directed himself by reference to the authorities. Whilst it was not a case where the parties had made a quasi-contractual arrangement at the outset, looking back from the moment when the assurance was repudiated, the overall outcome came close to the expected reciprocal performance of the acts requested in return for the assurance. The judge was therefore entitled to take the respondent’s expectation as a strong factor in deciding how to satisfy the equity. He was not bound to abandon expectation in favour of some more limited form of remedy: Thorner v Major [2009] UKLHL 18; [2009] 2 EGLR 111 and Jennings v Rice [2002] EWCA Civ 159; [2003] 1 P&CR 100 considered.
(3) In order to succeed, the appellants had to show that the judge exceeded the wide bounds of his discretion by adopting the course of settling the respondent’s entitlement now. The judge had to balance a number of factors in deciding what course to take. There was no prospect of the parties continuing to work and live together in close proximity. Deferral would perpetuate the situation in which the respondent was required to take up salaried employment away from the farm, for an indefinite period. The respondent had expected to take over running the farm on his father’s retirement, yet did not expect to inherit anything until his parents’ deaths. An immediate sale would prejudice the appellants in some ways, although it would release capital to fund their retirements. That was the background against which the judge decided to accelerate the respondent’s entitlement, while at the same time making allowance for a life interest in the farmhouse for the parents and mitigating the tax impact of paying the respondent’s entitlement. In those circumstances the judge had not exceeded the bounds of his discretion.
The judge did not go wrong in principle by devising a clean break solution. He was well aware that the need for a sale was a sad consequence of the breakdown in relations, and was part of what was, in all the circumstances, necessary to avoid an unconscionable result.
Guy Adams (instructed by Twomlows, of Chepstow) appeared for the appellants; Philip Jenkins (instructed by Clarke Willmott LLP) appeared for the respondent.
Eileen O’Grady, barrister
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