Proprietary estoppel – Representations – Detrimental reliance – Appellant and respondent brothers carrying on market garden business in partnership with parents – Father leaving partnership shares to appellant – Respondents’ proprietary estoppel claim successful because of detrimental reliance on assurances that assets to be divided equally – Appellant appealing – Whether judge applying right test and reaching conclusions properly open to him – Appeal dismissed
The appellant and the respondents were brothers who had carried on a market garden business from Bower Farm in Bridgwater, Somerset, in partnership with their parents. The land was owned by the parents and subject to a declaration of trust in favour of the partnership.
When their mother died in 2001, her share of the partnership vested in the brothers in equal shares. In 2004, the business was transferred to a company in which the partners held equal shares.
The sons were paid relatively little for their work, with profits being retained by the business. They paid low rent on their respective partnership properties, and all tax and national insurance liabilities were paid by the business. In 2014, the business ran into financial difficulties and the appellant and his father disagreed with the respondents about the way forward.
By his will made in 2015, the father left his shares in the partnership and company to the appellant. Following their father’s death in 2017, a dispute arose between the appellant and the respondents. The court ruled in favour of the respondents on their proprietary estoppel claim in relation to the property in the father’s estate.
The court found that both respondents had relied to their detriment on their parents’ assurances that they intended to treat the sons equally and that the farming business and assets would be divided equally between the brothers: [2023] EWHC 2393 (Ch). The appellant appealed.
Held: The appeal was dismissed.
(1) The three main elements of proprietary estoppel were a representation or assurance made to the claimant, reliance on it by the claimant and detriment to the claimant in consequence of his (reasonable) reliance. The court had to look at the matter in the round: see Thorner v Major [2009] 2 EGLR 111.
The fundamental principle that equity was concerned to prevent unconscionable conduct permeated all elements of the doctrine and might bear on the level of detriment needed to succeed in a proprietary estoppel claim. Whether the detriment was sufficiently substantial was tested by whether it would be unjust or inequitable to allow the assurance to be disregarded. The overwhelming weight of authority showed that detriment was required. However, detriment was not a narrow or technical concept and need not consist of the expenditure of money or other quantifiable detriment: Gillett v Holt [2001] Ch 210, Jennings v Rice [2002] EWCA Civ 159, [2003] 1 P&CR 8, Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55; [2008] 3 EGLR 31 and Hudson v Hathway [2022] EWCA Civ 1648; [2022] EGLR 10 considered.
(2) Where a claimant’s reliance on an assurance had resulted in both disadvantages and benefits, the court had to have regard to both. The judge had to balance the two regardless of whether it was possible to put a figure on the disadvantage. Comparing something that could be expressed in money with something that could not might not be easy but the exercise was nonetheless required. In particular, a claimant who had derived a financial benefit from reliance on an assurance could not necessarily satisfy the requirement for detriment by showing that he had suffered an unquantifiable non-financial disadvantage. Notwithstanding the difficulty, the court had to weigh the one against the other: Davies v Davies [2014] EWCA Civ 568; [2014] PLSCS 143, Habberfield v Habberfield [2019] EWCA Civ 890; [2019] PLSCS 95 and Guest v Guest [2022] UKSC 27; [2023] EGLR 2 considered.
(3) There were only limited circumstances in which the appeal court could interfere with a finding of detriment. Whether there was detrimental reliance in any given case was an evaluative judgment on the facts, which normally lay within the exclusive province of the trial judge. An appellate court would interfere only if it considered the decision under appeal to have been unreasonable or wrong as a result of some identifiable flaw in reasoning, such as a gap in logic, a lack of consistency, or a failure to take account of some material factor, which undermined the cogency of the conclusion. The detriment which a claimant alleged had to be pleaded and proved: Suggitt v Suggitt [2011] EWHC 903 (Ch); [2011] 2 FLR 875, [2012] EWCA Civ 1140; [2012] WTLR 1607 considered.
(4) To succeed in a proprietary estoppel claim, a claimant needed to show sufficiently substantial net detriment of whatever kind. Where, however, a claimant had made a life-changing choice and over many years undertaken work in reliance on an assurance, the court would probably be prepared to treat loss of opportunity to lead a different life as itself detrimental.
The fact that claimants deprived themselves of the opportunity of trying to better themselves in other ways would itself be taken to amount to detriment. Detrimental reliance was likely to be found to exist where a parent promised a child a farm if they worked on the farm until the parent died, and the child did what they were asked to do, giving up the possibility of other options, and basing their working life on the assurances. However, if it could be seen that the claimant had derived considerable financial benefits from working on the farm, those had to be weighed against loss of the possibility of other options: Habberfield and Spencer v Spencer [2023] EWHC 2050 (Ch) considered.
(5) It was not unreasonable for the judge to conclude that there was the requisite detriment on the facts of the present case. The respondents were found to have made life-changing choices on the strength of their father’s assurances. On the judge’s findings, they had devoted their working lives, from before they left school until their father’s death, to working in the family business. Despite their interests in the partnership and company, their parents took the important decisions while their mother was alive, and their father exercised effective control over the company’s affairs until about 2014.
The respondents would have had other options open to them including taking their existing partnership shares and developing them in some other way. In all the circumstances, the judge arrived at a conclusion which was open to him. Whether or not a different judge could have taken a different view was irrelevant.
Alex Troup KC (instructed by Ashfords LLP) appeared for the appellant; Hugh Sims KC and Michael Selway (instructed by Berensens Solicitors) appeared for the respondents.
Eileen O’Grady, barrister
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