Louise Clark analyses a farm dispute that offers a useful refresher course on the doctrine.
Key points
- To establish a proprietary estoppel, the promise must relate to tangible property
- To be enforceable, a promise must be certain in terms of property, interest, contractual rights and money
- Promises to negotiate fair compensation are not sufficient
In Earl of Plymouth and others v Rees (deceased) (by his representative) and another [2021] EWHC 3180 (Ch); [2021] PLSCS 204, the court has reviewed the authorities on proprietary estoppel when considering a defence to a claim to possession of a farm.
The law
Proprietary estoppel concerns the following question: is it unjust or unconscionable for a landowner to insist on its strict legal rights in relation to property where (a) the landowner has raised an expectation of an interest in that property, (b) by an unambiguous promise – by words or conduct – to a third party, and (c) the third party has relied on that promise to its detriment?
The promise must appear to have been intended to be taken seriously and it must relate to identified property (see Thorner v Major [2009] UKHL 18; [2009] 2 EGLR 111).
The background
The claimants were the owners of Maesllech Farm, Radyr, Cardiff, of which the first defendant was tenant under tenancies dated 1965 and 1968 protected by the Agricultural Holdings Act 1986. The first defendant died shortly before trial and was succeeded by his son, the second defendant, who also acted as his father’s personal representative. In 2016 and 2017 the claimants obtained planning permission for a substantial housing development on the farm and other land which is to be carried out over a period of 20 years. By the date of the hearing the development had commenced.
The claimants served notices to quit under the 1986 Act in respect of each tenancy, including the farmhouse, in 2018. The notices were challenged by the first defendant and, in 2020, an arbitrator appointed under the 1986 Act upheld the validity of the notices and accepted the claimants’ evidence that all of the land was required for the purposes of the development at or shortly after expiry of the notices. The claimants then sought possession of the farm.
The promises
The possession claim was defended and the first defendant issued a Part 20 claim, arguing that the following promises had been made to him by one of the directors of the claimants’ agent:
- that no part of the farm would be taken back by the claimants until required to be built on;
- that it would not be necessary to give up possession of the farmhouse;
- that the defendants would be offered further land on the estate, if available, to continue the farming business; or
- they would be compensated for the costs of relocating their farming business.
In reliance on those promises, the defendants pleaded that they had acted to their detriment by taking on extra responsibilities, by not objecting to the claimants’ applications for planning permissions, by giving up some land for development, and by the second defendant committing to remaining at the farm in his 40s and 50s rather than seeking his livelihood elsewhere.
In his evidence, the first defendant acknowledged that, as the development of the farm had been discussed over many years, the defendants knew there may come a time when they would have to leave, but that they would carry on until the development made that impossible. If they could not relocate on the claimants’ estate it would be a matter of fair compensation and everything would be a matter for negotiation.
Negotiations
By the date of the trial there was no substantial dispute of fact between the parties. The question was whether the evidence of the promises made was sufficient to found a case of proprietary estoppel.
The amount of compensation payable under the 1986 Act was only £45,000, which was insufficient to enable the defendants to move and farm elsewhere. In 2016, after the reference to arbitration, the claimants had offered to pay the sum of £500,000 if agreement could be reached in a timely way, but the defendants had held out for £1m.
The decision
The court decided that the promises were not proprietary in nature because they did not relate to tangible, identifiable property – one of the essential components of proprietary estoppel. Even if there was a sufficient proprietary element to the premises, the court decided that the promises were not sufficiently certain in terms of property, interest, contractual rights or money. In effect they amounted to promises to negotiate fair compensation, which is not enough to found a proprietary estoppel (see Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55; [2008] 3 EGLR 31).
While that was sufficient to determine the issue, the court went on to consider the acts of detriment relied on. It concluded that they were not sufficiently substantial to amount to detrimental reliance for the purposes of proprietary estoppel since the defendants continued to farm the farm for many years, which is what they wanted to do. They were obliged to farm in a good manner under the tenancies and were compensated for additional works carried out. There was no evidence in relation to the surrender of land but there was evidence to show that the defendants had in fact objected to the claimants’ planning applications. The second defendant acknowledged that he had grown up with farming and knew nothing else.
The claimants’ offer to pay £500,000 to the defendants in 2016, before significant costs were incurred in arbitration or litigation, meant that it was not unconscionable for the claimants to now insist on their strict legal rights to possession of the farm.
Louise Clark is a property law consultant and mediator
