Proprietary estoppel – Remedy – Respondent son claiming interest in family farm following breakdown in relationship with appellant parents – Judge concluding respondent established equity based on proprietary estoppel – Judge ordering clean break and awarding lump sum payment – Court of Appeal dismissing appeal – Appellants appealing – Whether judge adopting correct approach to equitable remedy established on facts – Appeal allowed in part
The respondent had worked on Tump Farm, Sedbury, Tutshill, Chepstow, Monmouthshire since leaving school in 1982 for at least 60 hours per week for a low wage. The freehold 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 in equal shares.
In 1989, the respondent moved into a cottage on the farm. In 2014, the relationship between the respondent and his parents broke down. The appellants offered the respondent terms for a farming business tenancy which he rejected.
The appellants made new wills, excluding the respondent beyond his right to occupy the cottage. In 2017, they gave him notice to quit the cottage. He left the farm and obtained alternative employment. In 2018, the first appellant made a new will removing the respondent from its terms and his right to occupy the cottage.
The respondent brought proceedings, based on proprietary estoppel, seeking declarations of entitlement to occupy the cottage and to the entire beneficial interest in the farm and its business. Alternatively, he sought a capital payment by way of a clean break.
The High Court ruled in the respondent’s favour and concluded that it was appropriate to award him a lump sum payment to satisfy his expectation as to what he would have inherited: [2019] EWHC 869 (Ch); [2019] PLSCS 78.
The Court of Appeal dismissed the appellant’s appeal holding that it was appropriate to order a remedy by reference to the respondent’s expectation and the trial judge was entitled to make the order he did: [2020] EWCA Civ 387; [2020] EGLR 19. The appellants appealed.
Held: The appeal was allowed in part.
(1) (Per Lord Briggs (Lady Arden and Lady Rose agreeing)) The purpose of proprietary estoppel was to prevent the unconscionable repudiation of promises or assurances about property (usually land) upon which the promisee had relied to his detriment. The normal and natural remedy was to hold the promisor to his promise, as the simplest way to prevent the unconscionability inherent in repudiating it, but it was always discretionary, and liable to be tempered by circumstances which might make strict enforcement of the promise unjust, either between the parties or because of its effect on third parties. While reliant detriment was a necessary condition for the equity to arise, the court’s focus on holding the promisor to his promise was not aimed at “protecting” the promisee from the detriment, still less compensating for it. It was aimed at preventing or remedying the unconscionability of the actual or threatened conduct of the promisor, with the effect, but not the aim, that it tended to satisfy the expectations of the promise. However, where strict enforcement would be unjust, the court could substitute a payment based upon (but sometimes less than) the value that the promisee expected to receive: Crabb v Arun District Council [1976] Ch 179, Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752; [2008] PLSCS 227 and Thorner v Major [2009] 2 EGLR 111 considered.
(2) The theory that the aim of the remedy for proprietary estoppel was detriment-based did not form any part of the law of England. The common law (and perhaps even equity) could have based itself on such a theory, and the concept that the remedy compensated for detriment was one which would appeal to some minds. But the cases showed that equity did not take that course, and there was no good reason for doing so now. However, the remedy should not, without some good reason, be out of all proportion to the detriment, if that could readily be identified. It was no more nor less than a useful cross-check for potential injustice: Jennings v Rice [2003] 1 P&CR 8, Cobbe v Yeoman’s Row Management Ltd [2006] 1 WLR 2964, Hopper v Hopper [2008] EWHC 228 Ch; [2008] PLSCS 41 and Davies v Davies [2016] 2 P & CR 10 considered.
(3) The first stage was to determine whether, in the circumstances, going back on the promise was unconscionable at all. If so, the court should proceed on the assumption that the simplest way to remedy that unconscionability was to enforce the promise to transfer the property in question, but it might have to consider alternatives such as providing a monetary equivalent, for example if the property had been sold or if its transfer would cause injustice to others. If the enforcement of the promise, or monetary equivalent, would be out of all proportion to the detriment to the promisee, the court might need to limit the remedy. But that did not mean that it should seek precisely to compensate for the detriment to the promise. If the remedy involved acceleration of a future promised benefit, it would generally require a discount for accelerated receipt. In the end, the court should consider in the round whether a particular remedy would do justice in the circumstances, by considering whether the promisor would be acting unconscionably if they were to confer the proposed benefit on the promise.
(4) Applying those principles, the trial judge was not wrong to adopt an approach based on the respondent’s expected inheritance. However, the judge did not adequately discount the sum awarded to reflect the fact that the respondent would receive compensation earlier than he had expected to inherit an interest in the farm.
It followed that in that respect the judge exceeded the ambit of his discretion, and the Supreme Court should exercise it afresh. The appellants should be entitled to choose between putting the farm into trust for the children subject to a life interest in the parents’ favour; or making an immediate payment of compensation on the lines the judge ordered but with sufficient discount to reflect the early receipt.
(5) (Per Lord Leggatt (Lord Stephens agreeing)) The core principle underpinning the grant of relief for proprietary estoppel was to prevent a party going back on a promise without ensuring that the party who relied on that promise would not suffer a detriment as a result of that reliance.
Thomas Dumont KC and William Moffett (instructed by Thrings LLP, of Bristol) appeared for the appellants; Penelope Reed KC and Philip Jenkins (instructed by Clarke Wilmott LLP, of Taunton) appeared for the respondent.
Eileen O’Grady, barrister
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