Proprietary estoppel arises when a person gives a promise or assurance to another person that they have or will be given an interest in property and that other person reasonably relies on the promise or assurance to their detriment. The Supreme Court has confirmed in Guest and another v Guest [2022] UKSC 27; [2022] PLSCS 169 that the proper basis for a remedy for proprietary estoppel is the promisee’s expectation and not the detriment they have suffered.
The case concerned a dispute between members of a farming family over the future of the family farm near Chepstow. After leaving school in 1982, Andrew lived and worked on the farm with his parents for 32 years, with increasing responsibilities. He was paid for his work but at relatively low rates. He had been promised by his parents, David and Josephine, that he would inherit a substantial but unspecified share of the farm, sufficient to enable him to continue a viable farming business after David’s death. David and Josephine had made wills in 1981 providing for him and their other son, Ross, to inherit the farm in equal shares subject to financial provision for their daughter, Jan.
From around 2008, the relationship between Andrew and his parents began to deteriorate. In May 2014, David and Josephine made new wills removing Andrew’s inheritance. In April 2015, they dissolved their farming partnership with Andrew and gave him notice to quit the property on the farm in which he lived with his family.
Andrew issued proceedings claiming a share in the farm or its monetary equivalent on the grounds of proprietary estoppel. The trial judge decided that he had continued to work on the farm for little financial reward because he reasonably relied, to his detriment, on assurances made by his parents as to his future inheritance of the farm. The parents were ordered to make Andrew an immediate payment of around £1.3m – 50% of the value of the farming business and 40% of the value of the land and farm buildings – to satisfy his expectation as to what he would have inherited.
The parents’ appeal to the Court of Appeal – that the judge should have fashioned the remedy not on Andrew’s expected inheritance but on his contribution to the value of the farm or his loss of opportunity to work elsewhere – failed. Their appeal to the Supreme Court succeeded in part.
The aim of proprietary estoppel is to prevent or compensate for the unconscionability of a person going back on a promise which another has relied upon to their detriment: it has not been – and should not be – about valuing the detriment. The trial judge was right to adopt an approach based on Andrew’s expected inheritance but did not adequately discount the sum awarded to reflect the fact that he would receive compensation earlier than he had expected to inherit an interest in the farm. The parents could choose between alternative remedies of either putting the farm in trust in favour of their children subject to a life interest or paying compensation to Andrew now but with a reduction to reflect his earlier-than-anticipated receipt.
Louise Clark is a property law consultant and mediator
