Landlord and tenant – Possession – Proprietary estoppel – Identified property – Claimant landlords issuing claim for possession of farm for permitted development – Defendant tenants defending claim pursuant to doctrine of proprietary estoppel in reliance on promises made by claimants – Whether promises proprietary in character as relating to identified property – Whether acts of detriment relied upon sufficient to establish proprietary estoppel – Claim allowed
The claimants were the landlords of Maesllech Farm (the farm) Radyr, Cardiff. The first defendant held tenancies of the farm dated 1965 and 1968 which were protected under the Agricultural Holdings Act 1986. The second defendant (his son) worked on the farm. When the first defendant died in September 2021, the second defendant was substituted as a defendant, as his father’s personal representative, as well as in his own right.
The claimants obtained planning permission for a substantial housing development on the farm to be carried out in phases over twenty years. In January 2018, they served notices to quit under case B of schedule 3 in Part 1 of the 1986 Act on the basis that the land was required for development.
The notices were challenged by the defendants. An arbitrator appointed under the 1986 Act upheld the validity of the notices, accepting the evidence that all the land was required at the date of the expiry of the notices or shortly thereafter. An appeal against that decision was dismissed.
Thereafter, the claimants issued a claim for possession of the farm. A defence and Part 20 claim were served alleging that the claimants had promised that: the farm would not be taken back until required to be built on; the second defendant would succeed to the tenancy and enjoy security under the 1986 Act; and they would be offered further land on the estate, if available, to continue their farming business or be compensated for relocation.
The defendants pleaded that, relying on those promises, they had acted to their detriment by taking on extra responsibilities, not objecting to the claimants’ applications for planning permissions, giving up some land for development and by the second defendant committing to remain at the farm rather than seeking to secure his livelihood elsewhere.
Held: The claim was allowed.
(1) There was no substantial dispute of fact. The issue was whether the evidence of promises, taken at its highest, was sufficient to found a case of proprietary estoppel. To establish proprietary estoppel the relevant assurance had to be clear enough. What amounted to sufficient clarity was dependent on context. The promise had to be unambiguous and appear to have been intended to be taken seriously. Taken in its context, it must have been a promise which one might reasonably expect to be relied upon by the person to whom it was made: Crabb v Arun District Council [1976] Ch 179, Taylor Fashions Ltd v Victoria Trustee Co Ltd [1982] QB 133; [1979] 2 EGLR 54 and Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55; [2008] 3 EGLR 31 applied.
It was a necessary element of proprietary estoppel that the assurances given by the claimant should relate to identified property. That was one of the main distinguishing features between promissory estoppel and proprietary estoppel. The former had to be based on an existing legal relationship (usually a contract, but not necessarily relating to land). The latter need not be based on an existing legal relationship, but it had to relate to identified property (usually land) by the defendant. It was the relation to identified land that enabled proprietary estoppel to develop as a sword, not merely a shield: Thorner v Major [2009] UKHL 18; [2009] 2 EGLR 111 applied.
(2) Here, the promises were made in the context of an existing landlord and tenant relationship, had proprietary elements such as the promise of alternative land if available and the promises in relation to the farmhouse, which went beyond the statutory rights to compensation under the 1986 Act. Although relocation to land on the claimants’ estate was mentioned as part of the promises, no such land had been identified as available. Moreover, the defendants knew they might have to leave the farm because of the development and hoped that they would farm elsewhere, again on unidentified land. That, together with the arbitrator’s finding that all of the farm was needed for the development, explained why the second defendant properly acknowledged that the appropriate remedy was monetary rather than proprietary in nature. Accordingly, the necessary element of promises relating to identified land owned or to be owned by the claimants was absent.
The context in which the promises were made was a contractual one between the parties where each had a land agent acting. There was uncertainty as to what was to happen in terms of property, interest, contractual rights or money. In terms of the latter, no boundaries or formula were set for the quantification of fair compensation. The promises were not to agree any sum demanded by the defendant or even to pay any sum determined by a court. They were to negotiate with a view to agreeing a sum. The claimants had made a clear offer in 2016, in the context that the claimants would make one offer only. Accordingly, the promises were not sufficiently clear to establish a proprietary estoppel.
(3) In any event, such acts of detriment as were shown on the evidence of the second defendant, were not sufficiently substantial to amount to detrimental reliance for the purpose of proprietary estoppel, given that the defendants continued to farm the farm for many years which was what they wanted in the knowledge of, and latterly despite, the progress of the development plans. Despite the challenges of farming on the urban fringe, there was no suggestion that that was anything other than a commercially successful business over a period of some 50 years.
There was also the overarching point, that the claimants’ 2016 offer was 10 times the statutory compensation before any significant costs were incurred in litigation or arbitration, and the claimants indicated that they remained open to further discussion to see if an agreement could be reached. It was not clear what happened to that suggestion but, with hindsight, it was a pity that the parties could not reach such an agreement but instead embarked upon five years of expensive arbitration and litigation. Accordingly, the claim of proprietary estoppel failed and the claimants were entitled to possession.
Penelope Reed QC and Christopher McNall (instructed by Burges Salmon LLP, of Bristol) appeared for the claimants; Rebecca Cattermole (instructed by Ebery Williams, of Somerset) appeared for the defendants.
Eileen O’Grady, barrister
