Sale of land – Proprietary estoppel – Unjust enrichment – Claimant seeking share of proceeds of sale of farm land for development – Claimant contending work carried out to remove green belt restriction and obtain planning permission without proper reward – Whether claimant entitled to equal share of sale proceeds by proprietary estoppel – Whether defendants unjustly enriched at claimant’s expense – Claim allowed in part
The claimant was one of five children of the first defendant and her late husband. The second and third defendants were her brothers. A dispute arose concerning the family dairy farm in Netherton, West Yorkshire. The first defendant and her husband were partners in a milk bottling and milk retail business. The second and third defendants became partners in the business shortly before their father died.
The claimant argued that, from the late 1990s onwards, the first defendant had promised her that, if farmland was sold, the proceeds of sale would be shared equally between the first defendant and her five children. The claimant said that she had relied on those promises by working to remove the green belt restriction from 40 acres of land (the Netherton Moor land) and secure its allocation for residential housing development. Further, the second and third defendants had been aware of those promises.
Therefore, the claimant argued that the defendants were estopped from denying that on the sale of the farmland she would receive an equal share of the proceeds of sale by proprietary estoppel.
Alternatively, the defendants had known that she would not have been prepared to spend time and money on the work in removing the green belt restriction from the land and its allocation for residential housing development without recompense; and the defendants would be unjustly enriched as a result of benefiting from her services without paying for them.
Held: The claim was allowed in part.
(1) The approach to analysing a claim based on proprietary estoppel, and how any equity should be satisfied, was a retrospective exercise looking backwards from the moment when the promise fell due to be performed and asking whether it would be unconscionable for a promise not to be kept either wholly or in part. The ingredients necessary to raise an equity were: an assurance of sufficient clarity; reliance by the claimant on that assurance; and detriment to the claimant in consequence of his reasonable reliance: Thorner v Major [2009] 2 EGLR 111, Davies v Davies [2016] 2 P & CR 10; [2016] PLSCS 148 and Guest v Guest [2020] EGLR 19 considered.
However, no claim based on proprietary estoppel could be divided into watertight compartments. The quality of the relevant assurances might influence the issue of reliance; and whether there was a distinct need for a “mutual understanding” might depend on how the other elements were formulated and understood. Detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it was something substantial. The requirement had to be approached as part of a broad inquiry as to whether repudiation of an assurance was or was not unconscionable in all the circumstances: Gillett v Holt [2020] EGLR 19 and Henry v Henry [2010] UKPC 3; [2010] 1 All ER 988 considered.
There had to be a sufficient causal link between the assurance relied on and the detriment asserted, judged when the person who had given the assurance sought to go back on it. The essence of proprietary estoppel was to do what was necessary to avoid an unconscionable result.
(2) In deciding how to satisfy any equity, the court had to weigh the detriment suffered by the claimant in reliance on the defendant’s assurances against any countervailing benefits he enjoyed in consequence of that reliance. There had to be a proportionality between the remedy and the detriment which was its purpose to avoid. In deciding how to satisfy the equity the court had to exercise a broad judgmental discretion. However, the discretion was not unfettered. It had to be exercised on a principled basis: Taylor v Dickens [1998] 1 FLR 806 and Jennings v Rice [2002] EWCA Civ 159; [2003] 1 P & CR 8 considered.
On the facts, the claimant had failed to establish that a sufficiently clear promise or assurance was made to her by the first defendant. It followed that she could not have relied on any such promise or assurance and the issues of reliance and detriment did not fall to be considered.
(3) The test for unjust enrichment was fourfold: whether the defendant been enriched; whether the enrichment was at the claimant’s expense; whether the enrichment was unjust; and whether there were any defences available to the defendant: Benedetti v Sawiris [2014] AC 938 considered.
As with proprietary estoppel, care should be taken to avoid treating that test as a straightjacket, since the questions were not themselves legal tests, but signposts towards areas of inquiry involving a number of distinct legal requirements. In particular, the words “at the expense of” did not express a legal test; and a test could not be derived by exegesis of those words, as if they were the words of a statute. There need not be a loss in the same sense as in the law of damages: restitution was not a compensatory remedy: Investment Trust Companies v Revenue and Customs Commissioners [2018] AC 275 considered.
(4) There was no doubt that the second and third defendants had been unjustly enriched as a result of the work undertaken by the claimant to remove the green belt restrictions on the land and to gain its allocation for residential development; or that the claimant had not done that work gratuitously. Moreover, the enrichment had been at the claimant’s expense.
The position of the first defendant was less clear because, since December 2016, she had not held any beneficial interest in the land following the declaration of trust she had signed in favour of the second and third defendants. However, the second and third defendants had freely accepted the claimant’s services, and their enrichment was unjust: Yeoman’s Row Management Ltd v Cobbe [2008] UKHL 55; [2008] 1 WLR 1752; [2008] PLSCS 227 considered.
(5) In all the circumstances, the objective market value of the benefit of the services provided by the claimant to the second and third defendants was to be assessed by reference to a commission fee of 7.5% of £8.7 million (being the amount of the uplift in the market value of the land from £300,000 to £9 million). On that basis, she was entitled to be paid £652,500.
Wilson Horne and Timothy Sherwin (instructed by Charles Russell Speechly LLP) appeared for the claimant; Caroline Shea KC and Michael Ranson (instructed by Chadwick Lawrence LLP) appeared for the second and third defendants.
Eileen O’Grady, barrister
