Seward v Seward and another
Chancery Division, Bristol District Registry
Simon Monty QC (Sitting as a Deputy Judge of the Chancery Division)
20 June 2014
APPROVED JUDGMENT
I DIRECT THAT PURSUANT TO CPR PD 39A PARA 6.1 NO OFFICIAL SHORTHAND NOTE SHALL BE TAKEN OF THIS JUDGMENT AND THAT COPIES OF THIS VERSION AS HANDED DOWN MAY BE TREATED AS AUTHENTIC.
MR S MONTY QC:
Introduction
1. The Claimant and his late brother (“Paul” and “Jonathan”) are the two sons of the Defendants (respectively, “Mr Seward” and “Mrs Seward”, and together “Mr & Mrs Seward”). Paul claims a declaration that the sale proceeds of Northwood Farm, Chudleigh, Devon (“Northwood Farm”) are held by Mr & Mrs Seward on trust for him absolutely. Paul claims that in circumstances which I shall set out further below Mr & Mrs Seward promised in 1989 that if Paul transferred to Jonathan his half share in another property, Bullaton Farm, Bovey Tracey, Devon (“Bullaton Farm”), which he owned jointly with his brother, he would receive the whole of Northwood Farm after Mr Seward’s death; he made that transfer, and it is that promise which Paul seeks to enforce by this action. Mr & Mrs Seward deny that they made such a promise, but even if they did, they say that the promise has been satisfied by gifts of land and the provision of financial support.
2. Mr Seward was too unwell to attend the trial. At the start of the trial, I made an order, on an application by Mr Adams (acting for Mr & Mrs Seward), appointing Mrs Seward as her husband’s litigation friend and confirming that all steps that have already been taken in the proceedings on his behalf should for the avoidance of doubt take effect as if duly taken on his behalf at the time.
3. I should say at the outset that for the reasons I will set out in more detail below, it is clear to me on the evidence that such a promise was made to Paul in 1989, and that he acted upon that promise in the belief that he would in due course inherit Northwood Farm. The principal issues, therefore, seem to me to be whether Paul acted to his detriment, and if so, what is the appropriate order which should be made.
The law
4. The claim is said by Mr Willetts (acting for Paul) to be one of promissory estoppel. This doctrine operates where a promise is made, which was intended to create legal relations, and which to the knowledge of the person making the promise was going to be acted upon.
5. However, consideration of the authorities shows that the courts have approached cases such as the present one under the doctrine of proprietary estoppel. Promissory estoppel is commonly although not exclusively used as a defence, rather than as a cause of action, and is usually said to have a temporary effect: see Snell’s Equity, 32nd edition, 12-014. Proprietary estoppel is in my view the appropriate doctrine where a claimant seeks to enforce a permanent right over property as the result of a representation: see Snell’s Equity, op. cit., 12-016. Equity assists on the basis that it would be unconscionable for a party to go back on a representation which the representee had relied on to his detriment; it is the detrimental reliance on the representation which makes it irrevocable: see for example Gillett v Holt [2001] Ch 210, at 227-9 per Robert Walker LJ, and Thorner v Major [2009] 1WLR 776, at [2] and [5] per Lord Hoffmann (although in the latter case, Lord Scott said he would have dealt with such cases via the principles of remedial constructive trusts).
6. In any event, it is clear from those authorities that proprietary estoppel is a flexible doctrine; that there needs to be a representation which the representor intended the representee to rely on; the representee must have relied on it to his detriment; and that looked at overall, it must be unconscionable for the representor to go back on the representation.
7. The promise in this case, as I have indicated, is said to have been that if Paul gave up his half interest in Bullaton Farm, he would in due course inherit Northwood Farm. Just like in Gillett v Holt, there was a contingent element about this promise. As Lord Scott said in Thorner v Major, a problem inherent in this sort of promise is that
“the expected fruits of the representation lie in the future, on the death of the representor, and, in the meantime, the circumstances of the representor or of his or her relationship with the representee, or both, may change and bring about a change of intentions on the part of the representee.”
Lord Scott said it would be questionable whether an equity which arose in favour of the representee could bar the sale of the property which was the subject matter of the promise if a sale was required to fund the changed needs of the representor, and described it as
“an odd sort of estoppel that is produced by representations that are, in a sense, conditional.”
For that reason, Lord Scott said that the remedy was by the imposition of a remedial constructive trust in cases
“where the representations are of future benefits, and subject to qualification on account of unforeseen future events.”
8. In my view, as the authorities demonstrate, equity is sufficiently flexible to allow a remedy in cases where there was a promise, acted on to the detriment of the representee so as to make the promise irrevocable, even where the promise might be said to be conditional on future events. In my view, the correct characterisation (if supported by the facts) is of a constructive trust arising by virtue of the proprietary estoppel.
9. A further issue which arises is whether the claim is barred by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (“the 1989 Act”). That section provides that agreements for the sale of land require certain formalities, which were absent in the present case, to be satisfied. Section 2(5) of the 1989 Act contains an express saving provision for constructive trusts. As the learned authors of Snell’s Equity (op. cit.) state at paragraph 12-023, on one view this should include proprietary estoppel, but the essential question is whether the recognition of a proprietary estoppel would contradict or stultify the operation and purpose of section 2 of the 1989 Act. For my part, I would respectfully agree with what is said later in the same paragraph. In my judgment where the remedy is sufficiently distinct from the enforcement of a contractual agreement, then section 2 of the 1989 Act is not a bar: see also Lord Neuberger’s comment to similar effect in Thorner v Major at [99], and the approach of the Court of Appeal in Yaxley v Gotts [2000] Ch 162 in which the promise, which was otherwise unenforceable because of section 2 of the 1989 Act, was held to be enforceable on the basis of a constructive trust by virtue of the facts which gave rise to a proprietary estoppel.
10. The authorities suggest that the remedy is to look for the minimum equity to do justice: see Gillett v Holt and Jennings v Rice [2002] EWCA Civ 159 at [32-35]. In the latter case, the Court of Appeal held that the court must take a principled approach to remedies in this area; equity can provide a remedy either based on the expectations of the parties where the mutual understanding is clear, or some more limited remedy where the expectations were uncertain or extravagant or out of all proportion to the detriment which the claimant has suffered: [50]. However, it is clear that there is a wide range of potential remedies available: see Snell’s Equity, op. cit., 12-024 to 12-030.
11. I was taken by Mr Adams to some of the authorities dealing with reasonable financial provision under the Inheritance (Provision for Family and Dependents) Act 1975, on the basis that Paul’s claim was, in reality, a claim to enforce a promise of a future inheritance. I do not think these authorities, none of which had been referred to in Mr Adams’ skeleton argument, provide any assistance in deciding whether equity should assist in the present case.
12. Mr Adams also referred me to authorities relating to the court’s power to postpone a sale of a family home held on a trust for sale under section 30 of the Law of Property Act 1925. Again, these had not been referred to in Mr Adams’ skeleton argument, but were said to be relevant to whether Paul would have been able to get an order for sale of Bullaton Farm when he fell out with Jonathan (in circumstances which I shall describe in more detail below). I am prepared to accept that since Jonathan and his family were living in Bullaton Farm at that time, it would not have been straightforward to obtain an order for sale let alone an immediate order, but I do not think I need refer in this judgment to any of the authorities cited to me on this point.
The evidence
13. I have read the witness statements of, and heard oral evidence from, Paul Seward, David Wotton, Robert May, Mrs Seward and Caroline Seward.
14. In my view, all of the witnesses came to court to give truthful evidence.
15. Paul Seward struck me as a sound and honest witness. I accept his evidence that a promise was made. I also accept his evidence generally.
16. Mrs Seward was not party to the discussions between her husband and Paul in which the promise was made, but she gave clear oral evidence that she later discovered that the promise had been made and (as I shall elaborate below) in my view she knew at the time that the promise had been made. She also gave oral evidence as to why she and her husband had a change of mind and decided to exclude Paul from their wills. It is unfortunate that much of this evidence was only hinted at, and was not made explicit, in her witness statement.
17. Mrs Caroline Seward was a truthful witness, but as she accepted, she was not party to any discussions which led to the promise having been made. Save where I will indicate below, I accept her evidence.
18. Both Mr Wootton and Mr May gave evidence which provided some (limited) support to Paul’s case.
19. I have read the Expert Valuation evidence from Mr Paul Griffin of Sawyde & Harris, to which I shall refer in due course. This was adduced by Mr & Mrs Seward and was not the subject of challenge by Paul.
20. I now turn to set out my findings of fact, based on the evidence I have heard and read.
The facts
21. Mr & Mrs Seward married on 11 March 1961. They had two sons. Jonathan was born on 6 June 1964, and died suddenly on 31 October 2009. Paul was born on 1 January 1968. Mr Seward is 80 years old, and is in poor health. Mrs Seward is 76 years old. Mr & Mrs Seward care for their granddaughter Rebecca, who is Paul’s daughter from his first marriage.
22. Mr & Mrs Seward were farmers, until their retirement in about 2000, and they owned and worked at Northwood Farm which at that time comprised 101 acres of land. They also owned some other farmland at Trusham, which was known as Bramble Farm, and a 4-acre field known as Pylon Field. In her witness statement, Mrs Seward says this:
“Paul finally decided to surrender his interest in Bullaton Farm and after that we decided to split up Northwood Farm, giving Paul 33 acres of meadow land at Trusham (Bramble Farm) which had outline planning permission for a dwelling and a barn. In 1993 we gifted Paul a further 25 acres of Northwood Farm and also arranged for a 4 acre field (Pylon Field) to be transferred to him for the nominal sum of 100.00.”
In my view it is clear, and I so find, that Bramble Farm and Pylon Field were part of Northwood Farm.
23. Mr Seward had bought Northwood Farm in 1960 from his father, taking out a mortgage to do so, and it was in his sole name until the legal title was transferred in 2005 into the joint names of Mr & Mrs Seward. I accept Mrs Seward’s evidence that she always had an interest in Northwood Farm, although she was not a legal owner until 2005, but I also accept Paul’s evidence that he was not aware of this; he knew that the title was in his father’s sole name and in his mind he drew a distinction between the property itself (which he believed was his father’s alone) and the farm business (which he believed was jointly owned by his parents).
24. Mr & Mrs Seward also owned Bullaton Farm by virtue of their having inherited it in 1978 from Mr Seward’s uncle. Bullaton Farm is a medieval farm comprising a 14th Century farmhouse with a 19th Century annexe, situated on moorland within the Dartmoor National Park. It comprises some 150 acres. When Mr & Mrs Seward inherited it, it was in a poor condition. Mr & Mrs Seward decided to gift Bullaton Farm to their sons, and this they did by a Deed of Gift dated 18 August 1982. Paul Seward was then about 14 years old, and Jonathan Seward was about 18 years old. Paul Seward’s share was thus held in trust by Mr & Mrs Seward until he reached 18 years old.
25. At that time, Northwood Farm and Bullaton Farm were farmed together as a family enterprise.
26. At some stage, Paul entered into a partnership agreement with his brother under which they ran Bullaton Farm jointly. This agreement was informal, but Paul says and I accept that this was later formalised by a written agreement, a copy of which has not survived. Under the agreement, they shared profits and losses equally. Paul did some work at Bullaton Farm, and purchased some livestock. Many of the animals at Bullaton Farm belonged to Mr & Mrs Seward; no-one paid too much attention to the question of whose animals were on which farm, which is not surprising as the two farms were part of the family business, although as I have said Bullaton Farm was owned as a business by the brothers and Northwood Farm by the parents.
27. After their marriage in 1985, Jonathan and Caroline Seward intended to move into Bullaton Farm. By that time, no-one had lived there for at least 8 years and it needed a lot of work. I accept Caroline Seward’s evidence that with some financial and physical assistance from Mr & Mrs Seward works were done to Bullaton Farm to make the farmhouse habitable and to enable the property to be farmed. I also accept her evidence that Jonathan and Mr Seward carried out most of those works, and that Paul, who was still living and working at Northwood Farm with his parents, also gave some help.
28. The relationship between the brothers was not a happy one. It broke down in about 1989, principally because both Jonathan and Caroline were unhappy at the fact that Paul was taking half the profits but was not contributing equally to the farming work, perhaps because Paul wanted to establish himself as a farm contractor. Caroline Seward says that she had an argument with Mr Seward, and that shortly thereafter Paul said that he wanted Bullaton Farm to be sold, or that he wanted 154,000 for his share. Caroline and Jonathan were concerned that Paul might be able to get possession of the farm, but they were advised by a solicitor friend that they should stay put. I accept Paul’s evidence that he suggested at one stage that he could come and live at Bullaton Farm but that this was rejected by Caroline and Jonathan. In my view, Caroline was not correct when she told me that no such suggestion had been made.
29. Paul says that Mr Seward then brokered an arrangement whereby Paul would transfer his half share in Bullaton Farm to Jonathan, and Mr Seward promised that if he did that, Northwood Farm would be left to Paul alone in Mr Seward’s will. That is the promise on which Paul relies in this claim. He says that this was intended to equalise matters between him and his brother, because each would thereby end up owning, in their respective sole names, a farm and farmhouse of roughly equal size and value.
30. A Deed of Gift was drawn up and executed on 2 October 1989 by which Paul Seward assigned his interest in Northwood Farm to his brother. On the same day, at the same meeting, Mr Seward executed a new will.
31. Mrs Seward says that no such promise was made. She tells me, and I accept, that Mr Seward, by reason of his ill health, has no recollection of events in 1989, but has told her more recently that he did not make such a promise. However, Mrs Seward’s oral evidence in relation to her own knowledge was clear about the promise.
32. Mrs Seward said that she understood that by his new will, Mr Seward was leaving Northwood Farm to Paul (her words were that “He left the property to Paul; I remember that.”) She said that the will was a straightforward one, leaving everything to Paul, and that she wasn’t happy about it; she also said that the will made no provision for her at all, and she was unhappy about that too.
33. When asked about the promise, said that her husband told her, “Paul would be able to have the farm” and that her husband had agreed to leave Northwood Farm to Paul after his death, that she knew about it and didn’t disagree with it at the time.
34. In response to a direct question as to whether she agreed that Paul had given up his share in Bullaton Farm in exchange for a promise that he would inherit Northwood Farm, Mrs Seward answered, “Yes, it was the agreement at that time.”
35. In re-examination, Mrs Seward agreed that both her and her husband had promised Paul that he would have Northwood Farm: “We did [make that promise] in 1989, I suppose; we did say he would hopefully have the farm but everything changed over the years.” In my view, the use of the word “hopefully” did not mean that the promise had not been made, but rather reflected Mrs Seward’s evidence that subsequent events meant that she and her husband were entitled to change their minds.
36. Mrs Seward also accepted that both her and her husband had been part of the discussions: “We went up to see what we could do to put it right.”
37. Caroline Seward confirmed that both Mr & Mrs Seward were the driving force behind the discussions, although she herself was not party to them, because she had (for other reasons) fallen out with Mr Seward. I have to say that I found it surprising that Caroline could not say either way that it was or was not agreed that Paul had given up his share in Bullaton Farm in exchange for Northwood Farm. In my view, she must have known that this was the agreement; Jonathan must have told her.
38. Mrs Seward also accepted that Paul was right that there was a meeting at which a discussion took place, the outcome of which was that Paul gave up his half share in Bullaton Farm.
39. It is right to note that in answers to cross-examination, Mrs Seward said at times that Paul was not promised Northwood Farm but then that Paul was told by Mr Seward that he would inherit Northwood Farm and that she had been told by Mr Seward that he had promised Paul Northwood Farm. In my view, having heard the evidence, the truth is that it was more than a mere hope or understanding; it was indeed a promise made to Paul.
40. I am entirely satisfied on the evidence that not only was Paul promised that he would inherit Northwood Farm in due course, but also that such promise was made to him by both Mr and Mrs Seward. As Mr Willetts observed, Mrs Seward was a party to the Deed of Gift having also been party to the preceding discussions. In my view it is far more likely than not that she was fully aware of what had been promised to Paul, and I am unable to accept those parts of her evidence in which she asserted that she was not so aware.
41. Mr & Mrs Seward, together with Paul and Jonathan, attended the offices of solicitors, Harold Michelmore & Co, who drew up the Deed of Gift, in order to sign the necessary documents.
42. One interesting point is that the Deed of Gift was executed on 2 October 1989. The 1989 Act had come into force on 27 September 1989. No-one gave evidence as to the precise date when the promise was made, and the agreement was reached. It seems to me likely that this was all some time before the date on which the 1989 Act came into force, because once the agreement had been made, solicitors had to be instructed to draw up the Deed of Gift and Mr Seward’s will, and an appointment had to be made for these to be signed. If that is right the potential difficulty in relation to section 2 of the 1989 Act disappears, because under the earlier provision contained in section 40 of the Law of Property Act 1925, part performance of the agreement to transfer an interest in land would be sufficient, and in my view the Deed of Gift would amount to part performance. However for the reasons set out in paragraph 9 above, I do not regard section 2 of the 1989 Act as presenting a problem in this case.
43. I accept Paul’s evidence that he was shown a copy of the will by his father, and that the will left “all my property” to Paul absolutely; Jonathan was not a beneficiary. I also accept Paul’s evidence that he believed that the reference to “all my property” included Northwood Farm, and that the will therefore reflected the promise which had been made to give him Northwood Farm on his father’s death. This accords with Mrs Seward’s evidence. I also accept on balance that Paul’s evidence that the will gave a life interest in Mr Seward’s estate to Mrs Seward is likely to be correct, and I so find; in my view Mrs Seward’s recollection to the contrary is not correct. Mr Adams criticised this part of Paul’s evidence as a late invention; as I have said, having heard Paul’s evidence, I do not agree.
44. Mr Adams also pointed out that Paul had asserted, in his evidence in support of his injunction application (see paragraph 59 below) he had said that two persons had witnessed assurances given by Mr Seward to Paul in relation to the promise, but neither were called; instead, Paul had called evidence from Mr Wootton and Mr May, who were said in Paul’s evidence to have witnessed similar assurances, but in fact their evidence was not that they had heard assurances being given.
45. I was not taken to any of Paul’s evidence in support of the injunction, none of which was in the trial bundle, and it seems to me that the criticism levelled at Paul by Mr Adams for not calling certain witnesses is of limited probative value. Similarly, whilst I accept that the evidence of Mr Wootton and Mr May did not go quite as far as Paul in his own statement said it did, in my view their evidence was supportive, to a limited extent, of Paul’s case: see paragraph 62.7 below.
46. On 2 October 1989, the same day as the Deed of Gift, Mr & Mrs Seward gave 33 acres of land at Bramble Farm to Paul. Bramble Farm also had outline planning permission for an agricultural dwelling. It was, as I have indicated above, part of Northwood Farm. Mr & Mrs Seward took out a mortgage, secured on Northwood Farm and guaranteed by Paul, which was used to enable Paul to build a house and barn at Bramble Farm, and for three years paid the mortgage until it was taken over by Paul. I do not accept Paul’s evidence that he paid the mortgage from the outset but in my view nothing turns on that.
47. On 16 February 1993, Mr & Mrs Seward transferred 25 acres of the farmland at Northwood Farm to Paul. At about the same time Paul purchased Pylon Field from Mr & Mrs Seward for the nominal sum of 100, which he then sold for 8,000. Pylon Field was also part of Northwood Farm.
48. Mr & Mrs Seward also made Paul an interest free loan of 24,000 in the 1990s. They raised this money by selling part of Northwood Farm’s land. For three years they made annual gifts to Paul of 6,000 per annum, thereby reducing the loan by 18,000. There was a minor dispute over how much of the loan remains outstanding. I do not need to resolve that issue and indeed I was not shown any bank statements or the like which might have enabled me to do so, although I rather think that Paul is right, and only 4,000 is due.
49. From 1989, Mr & Mrs Seward gave no further financial assistance to Jonathan and Caroline.
50. In 1991 Mr & Mrs Seward put Northwood Farm up for sale for 320,000. By this time, Mr Seward was quite unwell and a decision had been made to give up farming. The livestock was sold. However, Northwood Farm did not sell, and Paul took over the running of the farm with his own livestock. Paul did not object to Northwood Farm being put up for sale, and it was said against him that had he really believed that he was entitled to Northwood Farm he would have done so. However, I accept his evidence that he believed that his parents would have paid off the loan and given him a lump sum; he was not in a financial position to take over Northwood Farm at that point. Mr & Mrs Seward did not seek, nor did Paul pay, any rent or fee for using Northwood Farm, and furthermore Paul received various farming subsidies in respect of Northwood Farm.
51. Paul had married in April 1990, and he moved out of Northwood Farm to live with his in-laws whilst a bungalow was being built for him and his wife at Bramble Farm. They had one daughter, Rebecca, who was born in 1992. However, Paul’s marriage ended in divorce in 2004. He remarried in 2009. Paul became estranged from his parents, and sadly also from his daughter Rebecca, who came to live with Mr & Mrs Seward. At some stage in 2009 there was an argument between Paul and his parents, and Mrs Seward says, and I accept, that Paul said he wanted nothing more to do with them or the farm. This marked the sad end of any contact between Paul and his parents. I am told by Paul, and accept, that Mr Seward has told him he has left nothing to Paul in his will; Mrs Seward told me that this was correct, and that her will is in similar terms. It is clear to me, from Mrs Seward’s evidence, that this all came about because of a combination of factors.
52. First, Jonathan seems to have put some pressure on his parents on the basis that he did not think it right that Paul should have all of Northwood Farm.
53. Secondly, Mr & Mrs Seward came to realise over the years that they might well need the money (represented by Northwood Farm) for themselves in their latter years.
54. Thirdly, Mr & Mrs Seward were less than impressed by Paul’s falling out with his daughter and the fact that he had “gone off on his own” when he remarried.
55. Fourthly, Mr & Mrs Seward came to feel that Paul had had something for nothing by virtue of the promise which had been made back in 1989.
56. Fifthly, Mr & Mrs Seward did not get on with Paul’s new wife.
57. It was because of these factors that Mr & Mrs Seward decided to do two things. First, they transferred Northwood Farm into their joint names. This may also have been prompted by tax advice they had received. Secondly, they made new wills which did not name Paul as a beneficiary. It is in my view notable that in cross-examination Mrs Seward did not deny that they were going back on the promise, but rather emphasised on a number of occasions that “it was only done in a will, and wills can be changed”. Mrs Seward therefore felt that they were entitled to do this, and that although they were going back on the promise which had been made, that was 24 years earlier, and so much had changed in the meantime (which was a reference to the five factors I have outlined above). Paul was not told about the new wills until sometime in 2010; it was this which marked the end of his relationship with his parents.
58. In the meantime, Jonathan sadly died suddenly in October 2009. Shortly thereafter, Paul made what is the present claim to an absolute entitlement to Northwood Farm.
59. On 16 August 2013, Northwood Farm was sold for 830,000, and Mr & Mrs Seward purchased a smaller property in Bovey Tracey for 289,000. Paul tried, unsuccessfully, to injunct his parents to prevent the sale. The balance of the proceeds is held in a building society account in the names of Mr & Mrs Seward.
Was a promise made?
60. There is a straightforward dispute of fact over whether a promise was made by Mr Seward, or Mr & Mrs Seward, to Paul that if he gave up his half share in Bullaton Farm to his brother, he would in due course inherit Northwood Farm in its entirety.
61. The only persons from whom I have heard direct evidence on this are Paul and Mrs Seward.
62. I have concluded, on the evidence I have heard, that such a promise was made. My principal findings in relation to the evidence are at paragraphs 29 to 40 above.
62.1. Not only was Paul’s evidence that the promise was made, and in my judgment he was telling the truth, Mrs Seward’s evidence was also that the promise was made.
62.2. Both Mr & Mrs Seward made the promise. It therefore affected the interests that both had in Northwood Farm, and not merely Mr Seward’s interest alone.
62.3. I accept that there is no document recording the promise, and it is not mentioned in the Deed of Gift of Paul’s share in Northwood Farm to his brother. It was said by Mrs Seward that had such a promise been made, it would have been documented, and the solicitors who drew up the Deed of Gift would have been made aware of it. However, it is clear to me that Mr Seward’s will was intended to give effect to the promise, for the reasons I have already outlined.
62.4. I accept that Mr & Mrs Seward intended as best they could to provide equally for their sons. In my view, they sought to achieve this by Jonathan having Bullaton Farm, and by Paul having Northwood Farm in due course in its entirety, and in the meantime he would be gifted various parts of it. I will deal with the valuations below. In my view, Mr & Mrs Seward did not particularly have in mind the value of the various parcels of land owned by their sons, or the value of the land they gave and financial assistance they provided to Paul, but took the view that they were indeed attempting to provide equally for their two sons by the promise.
62.5. Mrs Seward’s evidence was that whilst there may have been a general expectation on the part of Paul that he might, in due course, inherit from his father’s estate in due course, that was dependent upon a number of factors, principally whether and for how long Mr & Mrs Seward would want or be able to go on farming at Northwood Farm, and whether they would need to sell it in order to buy a smaller property for their retirement and old age. In these circumstances which were in my view known to Paul at all times it is said that the promise which Paul contends for is inherently unlikely to have been given. However, as a matter of fact it was given, as both Paul and Mrs Seward accept, and it seems to me that Mrs Seward’s evidence in this regard goes towards the assessment of any detriment and the appropriate relief, as I shall go on to deal with in due course.
62.6. Mr Adams asked me to note that Paul’s evidence about the alleged promise has varied from time to time. In the Particulars of Claim, it is asserted that the promise was made by both Mr & Mrs Seward; paragraph 8.3 alleges that “the Defendants made assurances that the Claimant would receive Northwood Farm absolutely on his death.” This is clearly a typographical error for a reference to the death of Mr Seward, not the death of Paul Seward, and I accept that this was a simple error in drafting. However, in his witness statement, Paul Seward said that he relied “upon assurances given to me by my Father” and that “my Father assured me that he would leave Northwood Farm solely to me in his Will”; he does not assert that any assurances were given to him by Mrs Seward. When first advancing his claim to Northwood Farm, Paul’s solicitors did not refer to a promise; it was alleged in a letter dated 4 November 1989 that
“by contractual agreement between both Paul and Jonathan Seward and Mr and Mrs W R Seward, it was agreed that [Paul] would transfer his equity in Bullaton Farm to Jonathan Seward and that in return for so doing [Paul] would be entitled to the transfer of Northwood Farm … such transfer to be effected following Mr and Mrs W R Seward’s passing.”
It was further alleged that it was Paul’s “contractual right” to a transfer and that the “contractual arrangement” was not disclosed on the title deeds. What was therefore alleged in that letter, on instructions from Paul, was a wholly different arrangement from that which is currently asserted – a contractual agreement (the letter expressly referred to a claim “founded on contract”) between Mr & Mrs Seward, Paul Seward and Jonathan Seward, as opposed to a promise by Mr Seward alone. However, for the reasons which I have already set out, in my view both Mr & Mrs Seward made the promise, and although I suspect that Mr Seward may well have been the main driving force, I am satisfied that both Mr & Mrs Seward were fully involved.
62.7. Mr Wootton’s evidence was (as he says in his witness statement) that he had “the impression … that Paul would have Northwood Farm by his parents gifting it or he inheriting it.” He told me that Jonathan had said words to this effect to him. Mr May referred to it having been local common knowledge that this agreement had been made. Of course, neither Mr Wootton nor Mr May could give direct evidence in relation to the alleged promise, but I accept that they were doing their best to assist the court, and whilst I do not derive much assistance from their evidence in resolving the question, it seems to me that their evidence is supportive of the promise having been made.
63. For these reasons, I accept Paul’s evidence that the promise was made by Mr & Mrs Seward, to leave Northwood Farm to him if he gave up his half share in Bullaton Farm.
Did Paul Seward rely to his detriment on the promise?
64. Mr Adams accepts that if the promise was made (as indeed I have found it was) then the Deed of Gift amounted to reliance on it, but he denies that there was any detriment suffered by Paul.
65. Detriment is an essential ingredient of proprietary estoppel: see the judgment of Robert Walker LJ as he then was in Gillett v Holt at page 232, from which I derive the following propositions:
65.1. Detriment is not a narrow or technical concept.
“The requirement must be approached as part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances.”
65.2. “The issue of detriment must be judged at the moment when the person who has given the assurance seeks to go back on it.”
65.3. The detriment must be something substantial.
“Whether the detriment is sufficiently substantial is to be tested by whether it would be unjust or inequitable to allow the assurance to be disregarded – that is again, the essential test of unconscionability.”
66. Mr Adams asks me to compare what Paul had given up with what he subsequently acquired. I accept the retrospective valuations of the various plots of land prepared by Mr Griffin. As at the date of the Deed of Gift, Bullaton Farm was worth 240,000. Therefore Paul’s share was worth 120,000 at the time of the Deed of Gift. Bramble Farm was worth 66,000 at October 1989 when it was given to Paul Seward, but with the existing planning permission it was worth 85,800. Pylon Field was worth 6,000 when given to Paul Seward in 1993 (and he sold it for 8,000). The value of the 25 acres at Northwood Farm given to Paul Seward in 1993 was 41,000. Thus Mr Adams says that whilst Paul gave up an interest worth 120,000, he subsequently acquired property worth some 133,000. In addition, he had financial assistance from his parents, to which I have already referred. Finally, Mr Adams says that Paul would not have realised his half share in the sum of 120,000 because he would not have been able (easily or at all) to obtain an order for dissolution of the partnership and sale of the property, as Jonathan and his family were living there; this serves to reduce the value of what Paul gave up still further. Mr Adams therefore says that there was no detriment.
67. In my judgment however, this would be a restrictive approach which is not supported or encouraged by the authorities. The enquiry as to detriment is much wider than simply comparing Paul’s position before and after he acted in reliance on the promise; one must look at the position at the time Mr & Mrs Seward reneged on the promise, and also take into account what Paul was promised but has not got.
68. Mr Willetts says I should take into account the following valuation comparisons. Using the 1989 valuations, Paul gave up his half share in Bullaton Farm, worth 120,000. In return, he was promised at some date in the future (under his father’s will) Northwood Farm, worth 280,000, Bramble Farm and Pylon Field (parts of Northwood Farm) worth 86,000 and 6,000 respectively using round figures, and the value of additional land at Northwood Farm which was sold to raise the 24,000 loan, a total of 396,000. Using 2012 valuations, Paul had Bramble Farm, valued at 235,000, 25 acres of Northwood Farm, valued at 102,000, Pylon Field, valued at 18,000 (he had in fact sold that some time earlier), and the loan, worth some 20,000. This totals 365,000. Mr Willetts then said that Paul had, by contrast, lost Northwood Farm, which sold for 830,000. However, as I pointed out and as Mr Willetts I think agreed, this may not be the right comparison. Bullaton Farm in 2012 was worth 1,195,000. Half of that would be approximately 600,000, and that should be compared with what Paul had in fact received (365,000).
69. In my view, the approach suggested by Mr Willetts is right, and in my judgment it is clear that Paul did suffer a detriment by giving up half of Bullaton Farm. In so doing, he relied on the promise, and expected to receive in the future a property worth substantially more. It would, in my judgment, be inequitable and unjust to allow Mr & Mrs Seward to go back on the promise. I therefore have concluded that Paul did indeed act to his detriment in reliance on the promise, and that the detriment was substantial.
70. It is that detrimental reliance which made the promise irrevocable: see paragraph 5 above. I accept that Mrs Seward felt that there was nothing which prevented her or her husband changing their minds and making new wills, but in my view they were wrong about that; the promise had been made irrevocable because Paul had acted on it to his detriment.
Satisfaction of the equity
71. Mr Adams contended that if an equity had arisen in Paul’s favour it was satisfied by the gifts of property which Mr & Mrs Seward made, and by the financial assistance they had provided.
72. In my judgment, that is not correct. At one end of the spectrum, the maximum extent of relief possible, is to have made good, so far as may fairly be done between the parties, the expectations which the representor has promised or encouraged. At the other end is the need to do the minimum equity necessary. In between is a wide variety of potential orders, and in my view it makes sense that the equitable doctrine should be as flexible as the circumstances allow in order to give effect to the equity; see also paragraph 10 above.
73. I am guided by the approach taken in Jennings v Rice, Gillett v Holt, and Henry v Henry [2010] 1 All ER 988. In no particular order, it seems to me that the main principles are as follows:
73.1. The aim is to look at all the circumstances to decide in what way the equity can be satisfied.
73.2. The approach is a cautious one, in order to achieve the minimum equity required to do justice.
73.3. There is a wide range of possible relief.
73.4. It is necessary to look at both expectation and detriment. It is not necessarily a question of providing compensation for either the detriment or the reliance or the expectation. It may be necessary to exercise a wide judgmental discretion.
73.5. Proportionality lies at the heart of the doctrine of promissory estoppel; the court must take into account whether in all the circumstances the promise and the benefit is proportionate to the detriment and the remedy must also be proportionate.
74. I have earlier in this judgment dealt with the question of detriment: see paragraphs 65 to 69 above. In my view, looking at the position after Mr & Mrs Seward had changed their minds and their wills, the detriment suffered by Paul was his having given up his half share in Bullaton Farm, by then worth almost 600,000, in return for which he obtained a benefit worth some 365,000; and he ought to have been entitled to inherit Northwood Farm in due course, which was sold for 830,000.
75. I agree with Mr Willetts that when one analyses what Paul actually received, it was insufficient to amount to a satisfaction of the equity which arose. As Mr Willetts says in his skeleton argument (and I summarise his points rather than set them out in full):
75.1. Bramble Farm, Pylon Field and the 25 acres of Northwood Farm were in fact all part of Northwood Farm; the transfer of these properties to Paul thus amounted in effect to an advanced receipt of part of what he had been promised.
75.2. The mortgage raised to pay for building a home on Bramble Farm was obtained by using Northwood Farm as security.
75.3. Paul in fact worked on Northwood Farm over the years; it is misleading to characterise this as “using” Northwood Farm rent free as if this was a benefit to him.
75.4. The interest free loan of 24,000 was raised by a sale of part of Northwood Farm’s land, which as I have found was part of what Paul had been promised.
I therefore agree with Mr Willetts that the equity has plainly not been satisfied.
76. Mr Willetts accepts that however the court satisfies Paul’s equity it must be subject to the lifetime interests of his parents to live in their new property and to use the balance of the proceeds of sale as they see fit during their lifetime.
Disposal
77. In my judgment in all the circumstances of this case, and on the evidence I have heard, the appropriate relief in this case, which in my view is the relief required in order to achieve the minimum equity required to do justice to Paul, is to award him the entire beneficial interest in Mr & Mrs Seward’s property at 25 Coombe Close, Bovey Tracey, Devon TQ13 9ER. It seems to me that this fairly reflects not only the expectation loss in circumstances where the promise was clear and unequivocal, but also the actual loss which Paul has suffered by his parents having gone back on the promise, taking into account what he gave up and the benefits he actually received. No later than 30 June 2014 Mr & Mrs Seward are to execute a declaration of trust of the property in favour of Paul, but Paul’s interest is to be subject to the right to Mr & Mrs Seward, and in due course the survivor, to live there as long as they wish or require. If the need arises for the property to be sold (for example, if either or both of Mr & Mrs Seward decide to go into sheltered accommodation or the like), that sale shall not be obstructed or objected to by Paul, who must agree to it; his interest will then be in any alternative accommodation which may be purchased and of course in the balance of any sale proceeds, and the declaration of trust must reflect that also. The costs of preparing and executing the deed of trust are to be paid by Mr & Mrs Seward.
78. The date of 30 June 2014 should give sufficient time for the parties to take any necessary tax advice on the effect of this judgment. If a more tax efficient way of giving effect to my decision is agreed, then the parties should notify me, and that can be reflected in the order. If the parties cannot reach an agreement, then the matter can be relisted for a hearing at which the appropriate form of order can be determined.
79. I invite counsel to prepare and agree a form of order which reflects my judgment.
Costs
80. My provisional view is that costs must follow the event, and that Mr & Mrs Seward must pay Paul’s costs of the claim, to be assessed on the standard basis if not otherwise agreed. If the parties need me to resolve the question of costs in the event that such an order is not agreed, I will do so on the basis of written submissions.
