Guest v Guest [2022] UKSC 27.
1. Introduction
The doctrine of proprietary estoppel seems to be receiving more and more attention. The 2017 decision by the Supreme Court of Canada, Cowper-Smith v Morgan,[1] is now the leading case in Canada. But questions remain about the nature and correct foundation of the doctrine. The United Kingdom Supreme Court engaged in a detailed consideration of its nature and foundation in Guest v Guest. The judgments in the case will undoubtedly be of great interest in Canada too. So it is important to consider the case in some detail. It contains two sets of reasons: a majority judgment by Lord Briggs, with which Lady Arden and Lady Rose agreed, and a minority judgment by Lord Leggatt, with which Lord Stephens agreed. While both Lord Briggs and Lord Leggatt allowed the appeal, they reached different conclusions on the remedy. The reasons are very long.
They run to 282 paragraphs, plus an appendix to Lord Leggat’s reasons on quantification of loss.
2. Facts
Many cases in which proprietary estoppel is argued involve farm properties and that is also the case in Guest. David and Josephine Guest operated a dairy farm for many years. They had three children, Andrew, Jan, and Ross. Andrew, the eldest, was born in 1966. He left school in 1982 at age 16 to work full time on the farm. He lived with his parents but after he married, he and his wife lived in a cottage on the farm. Early on, David told Andrew, ‘One day my son, all this will be yours’, and he repeated that for many years. Andrew understood that his parents would leave the farm to him, and he relied on their promise. Thus, he worked on the farm for minimum wages for 33 years. He earned diplomas in agricultural management and took over more and more responsibilities at the farm. The parents made wills in 1981 which provided that Andrew and Ross (who was 11 years younger than Andrew) would inherit the farm, subject to payment of a legacy to Jan. David and Josephine operated the farm for many years in partnership with Andrew. Eventually, relations between Andrew and David broke down. In 2014 the parents made new wills in which they disinherited Andrew, except for his right to continue to live in the cottage. Negotiations to resolve their differences were unsuccessful and in 2017 the parents dissolved their partnership with Andrew, gave him notice to quit the cottage, and made new wills in which they excluded Andrew entirely.
Andrew then found employment as a senior herdsman at another farm and, having learnt that his parents had disinherited him, brought proceedings against his parents in 2017. In those proceedings he relied on the doctrine of proprietary estoppel. Meanwhile, the parents sold the dairy herd but still farm the land and want to continue to do so.
3. Trial Judgment[2]
The trial judge, HHJ Russen QC, made detailed findings of fact in his judgment.[3] He concluded that until Andrew and his parents had a falling out, David consistently led Andrew to believe that he would succeed to the farming business and inherit a major share in the farm. That changed somewhat when Ross also became part of team and was expected to receive an inheritance as well, and Andrew understood and accepted that. The trial judge also found that Andrew had relied on his father’s assurance and would not have worked on the farm for minimum wages if his father had not promised him an inheritance.
The remedy the trial judge awarded required David and Josephine to pay Andrew an immediate lump sum, composed of:
(a) 50% after tax of either the market value of the dairy farming business (professional determined) or the value realized by sale of the business in consequence of the judgment; and
(b) 40% after tax of either the market value of the freehold land and buildings at the farm (professionally determined) or the proceeds of sale in consequence of the judgment, but in either case so that the parents received a life interest in the farmhouse, subject to their being responsible for the upkeep while in possession.
4. Court of Appeal
The parents were granted leave to appeal only on the question of the remedy, not on the finding that a proprietary estoppel had been established.
The Court of Appeal dismissed the appeal.[4] It held that the trial judge was entitled to take account of Andrew’s expectation as ‘a strong factor in deciding how to satisfy the equity’. The court rejected a remedy based on any increase in the value of the land because it would not reflect the nature of the assurances given. It also rejected an approach based on valuing Andrew’s loss of opportunity to work elsewhere.
5. The Supreme Court
5.1 Lord Briggs
His Lordship began his reasons by affirming that the remedy for Andrew is the equitable remedy of proprietary estoppel. It is of interest that he says the remedy ‘is all about promises to confer an interest in property, usually land’ (para 4). He makes the same point elsewhere.[5] Indeed, Lord Leggatt also makes the point in para 151 where he quotes the following passage from the dictum of Lord Scott of Foscote in Cobbe v Yeoman’s Row Management Ltd:[6]
The estoppel becomes a ‘proprietary’ estoppel … if the right claimed is a proprietary right to or over land but, in principle, equally available in relation to chattels or choses in action.
The point is important because it has occasionally been argued that the doctrine of proprietary estoppel can only be raised with respect to real property. These references make it clear that that view is incorrect.
Although the doctrine often confers on the person who relied on the assurance an interest in property, there are many cases in which that is not appropriate. Then the court must fashion a different remedy, such as awarding equitable compensation, perhaps discounted if the date for performance of the property lies in the future (para 6).
Lord Briggs then noted that during the last 25 years there has been a fundamental divergence on the question of the correct foundation of proprietary estoppel. Some favour satisfying the promisee’s expectation, whereas others claim that compensating for the detriment is what underlies the remedy (para 7). His Lordship first considered the problem from the perspective of first principles (paras 8ff). He noted that the remedy imposed seeks to ‘eliminate, or at least mitigate, the affront to conscience’ occasioned when the promisor resiles from the promise. Although detrimental reliance is not foundational to the remedy, it is a relevant aspect of it, for without it there is no equity. However the harm done by resiling from the promise differs from the detriment, which lies in the past and can no longer be undone. He concluded that the idea that all problems in framing a remedy can be solved by ‘identifying either compensation for detriment or fulfilment of expectation … as the true purpose of the remedy, is misconceived. In his view, the true purpose is ‘dealing with the unconscionability constituted by the promisor repudiating his promise’ (para 13).
His Lordship then engaged in an exhaustive examination of the authorities from the nascency of the remedy in the 1860s (when it was not yet known by its modern term) to the present. He noted that early proprietary estoppel cases suggest that ‘expectation is the main driver of the remedy’ (para 22). That was confirmed by the followings statement by Oliver J in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Limited:[7]
… if under an expectation created or encouraged by G that A shall have a certain interest in land, thereafter, on the faith of such expectation and with the knowledge of B and without objection by him, [A] acts to his detriment in connection with such land, a Court of Equity will compel B to give effect to such expectation.
Of course giving the promisee an interest in the property is not always the best remedy. Sometimes it is, but in other situations the promisor may be required to compensate the promisee for the expense he has incurred. And the court can then also make payment of compensation a charge on the property if that is appropriate. The point is that the choice of remedy is flexible (para 34).
Some courts were misled by a dictum of Scarman LJ in Crabb v Arun District Council.[8] The court sought to fulfill the plaintiff’s expectations in that case in the fairest way, while at the same time ensuring that his expectations were not exceeded. It did not seek to compensate the plaintiff for the detriment he suffered. In that context Scarman LJ said, ‘I would analyse the minimum equity to do justice to the plaintiff as a right either to an easement or a licence upon terms to be agreed’.[9] On this point Robert Walker LJ said in Jennings v Rice[10] ‘Scarman LJ’s reference to the minimum does not require the court to be constitutionally parsimonious, but it does implicitly recognize that the court must also do justice to the defendant’. Moreover, as Lord Briggs notes (in para 13), the dictum was not ‘minimum equity’, but ‘minimum equity to do justice’.
Other cases introduced the notion of proportionality, which they derived from dicta in Australian cases. On that point Robert Walker LJ said. ‘The essence of the doctrine of proprietary estoppel is to do what is necessary to avoid an unconscionable result, and a disproportionate remedy cannot be the right way of going about that’.[11]
Lord Briggs expressed the following view on the matter (para 44):
No one would disagree with the notion that a remedy must be proportionate to the harm. But in the present context that begs the question whether the harm is the detriment or rather (as I think) the loss flowing from the repudiation of the expectation. Nonetheless by that means the seed of proportionality has become firmly embedded in the English law of proprietary estoppel.
Then he examined a number of modern cases in which the concept of proportionality was accepted, including Henry v Henry,[12] which contains the following dictum, ‘Proportionality lies at the heart of the doctrine of proprietary estoppel and permeates its every application’.
Lord Briggs then returned to the controversy between the essential purpose of the exercise of the court’s discretion in proprietary estoppel cases. First he notes that a long line of English authority has ‘generally followed the expectation-based approach’ and that no authority that favours that approach takes the view that therefore it must compensate for the detriment suffered. While the cases do show that there must be ‘some proportionality between the remedy and the detriment, they rejected the idea that the aim of the remedy was compensation for the detriment. Second, he states his opinion that the ‘supposed logic of the detriment-based approach is … both faulty in origin and wrong in its inevitable result’. While reliant detriment is necessary for awarding equitable relief, ‘it is the repudiation of the promised expectation which constitutes the unconscionable wrong’ (paras 52-53).
His Lordship then considers Australian authorities and concludes that, despite some influential dicta in minority judgments, the courts ultimately held that proprietary estoppel is not founded on compensation for detriment but on the promisee’s expectation (para 58).
By way of summary Lord Briggs then states (para 61):
Drawing together this lengthy review of the authorities and looking at the matter historically, I suggest that what has happened may be summarised in this way. For over a century, starting in the 1860s, the courts of equity developed an equitable estoppel-based remedy, the aim of which 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, because that was 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 promisee.
His Lordship went on to speak about the practical problems that may arise when the court seeks to fashion an appropriate remedy in many different fact situations, for example, when it desirable to come up with a ‘clean break’ so that the parties no longer have to live together, or when, as in this case, the promisor has broken his promise well before its intended performance.
Lord Briggs expressed the view that ‘the court should firmly reject the theory that the aim of the remedy for proprietary estoppel is detriment-based’ (para 71). He acknowledges that the concept of proportionality has been adopted by the cases, ‘as part of the assessment of whether a proposed remedy to deal with the proven unconscionability based on satisfying the claimant’s expectations works substantial justice between the parties’. But he notes that while it is a good servant, it is a bad master and defines it as ‘no more than a useful cross-check for potential injustice’. He believes that ‘the best summary of the proportionality test is that the remedy should not, without some good reason, be out of all proportion to the detriment’ (para 72). Moreover, the court must not carry out the question of proportionality on the basis of pure financial comparison (para 73).
In his opinion, the court should normally approach the matter in two stages. The first stage is to determine whether the promisor’s repudiation of his promise is indeed unconscionable, having regard to the promisee’s detrimental reliance on it (para 74). The second stage is where the court considers the remedy. The court should normally begin with the assumption that the simplest way to remedy the unconscionability arising from the repudiation is to hold the promisor to his promise. However, the court may have to take into account reasons given by the promisor showing that something less than full performance will negate the unconscionability but will still satisfy the equity (para 75). Finally, if it is shown that ‘specific enforcement of the promise, or its monetary equivalent, would be out of all proportion to the cost of the detriment to the promisee’, the court may have to limit the extent of the remedy (para 76).
Lord Briggs then applied these principles to the facts. He took into account the uncertainty in identifying the exact interest in the farm David promised to Andrew in light of the need to make provision also for Ross and Jan. He also considered the fact that David was over 70 and Andrew almost 50, and that the matter arose some time before the promise was to be fulfilled. That gave rise to questions of futurity and cohabitation, or acceleration and a clean break. On the other hand there was no real uncertainty about Andrew’s detrimental reliance and its extent.
His Lordship was particularly concerned about the acceleration issue. He concluded that the trial judge exceeded his discretion because he failed to provide for a general discount since Andrew would be receiving the remedy early, with the result that Andrew in effect received more than he was promised (para 100). Moreover, all the parties may have preferred a complete break (para 103). Consequently, His Lordship fashioned a remedy that would give the parents the ability to choose between two alternative forms of relief:[13]
- if they preferred a clean break with Andrew, they could sell the farm to enable them to make a lump sum payment to him that would be discounted because of the early receipt; or
- the farm could be placed in trust so that Andrew would receive it when his parents died but they could continue to enjoy the property while they lived.
His Lordship expressed the hope that the parties can agree on the calculation of the amount under the first option, thereby avoiding professional costs, but if that is not possible the matter can be remitted to the Chancery Division.
Thus, his Lordship allowed the parents’ appeal to this extent (para 106).
It seems to me that this is a brilliant solution to a particularly difficult fact situation and fashions a remedy that is appropriate in the circumstances.
5.2 Lord Leggatt
Although this judgment is longer, my discussion of it will be significantly shorter than for Lord Brigg’s judgment since Lord Leggatt’s is a minority judgment and covers much the same ground.
Lord Leggatt also begins with a consideration of the nature of the ‘equity’, and after describing the facts, he discusses the development of the proprietary estoppel remedy. He also provides an exhaustive examination of the case law, including the issues raised especially during the last quarter century.
His Lordship then engages in a lengthy search for principles that should govern the court in determining whether the facts raise proprietary estoppel and how to fashion a remedy. These include such things as detrimental reliance, reliance on a non-binding promise, avoidance of detriment, ‘minimum equity’, difficulty in quantifying reliance loss, monetary compensation, proportionality, and other factors. In the process, he discusses many of the cases that have addressed these matters. He summarizes the principles as follows (para 255):
… the core principle underpinning the grant of relief is that equity will not allow A [the promisor] to go back on the promise made without ensuring that B [the promisee] does not suffer detriment as a result of B’s reliance on it. The aim of the remedy is thus to prevent detriment to B in the circumstances which have arisen.
Thus, Lord Leggatt seems to take a slightly different view of the fundamental basis of proprietary estoppel than Lord Briggs.
His Lordship notes that there are two methods of achieving this aim. The first will compel the promisor to perform the promise, or to award the promisee a sum of money that will place him in as good a position as if the promise had been performed. The second awards the promisee a sum of money that compensates the promisee’s reliance loss. However, there are also two kinds of cases. The first is one in which the date to perform the promise has occurred. The second kind is one in which the promise is not yet due to be performed, but the promisor refuses to perform it. The two kinds of cases are likely to result in different remedies.
Lord Leggatt noted that the trial judge failed to give adequate reasons for the remedy he awarded. Nor did he consider whether the remedy was proportionate to the detriment Andrew suffered. And further, he made only a minor. allowance for the acceleration in the receipt of the property. More important, the trial judge failed to analyse the detriment.
Accordingly, his Lordship re-exercised the judge’s discretion. Both parties had asked the Supreme Court to fix the amount of the award if the Court should decide that compensation should be assessed on a reliance basis, as this would avoid another trip to the High Court and the costs associated with it. His Lordship therefore concluded his reasons by stating that he would allow the appeal and require David and Josephine to pay Andrew £610,000 as equitable compensation. He added an Appendix to his reasons in which he explains how he decided on that figure.
—
[1] 2017 SCC 61, [2017] 2 SCR 754.
[2]I have derived the facts at trial and at the Court of Appeal, recorded below, principally from the judgment of Lord Leggat at paragraphs 126-135.
[3] [2019] EWHC 869 (Ch).
[4] [2020] EWCA Civ 387.
[5] In paras 12 and 61.
[6] [2008] UKHL 55 para 14.
[7] [1982] QB 133 at 144, emphasis supplied by Lord Briggs as para 31.
[8] [1976] Ch 179 (CA).
[9] Ibid., pp 198-99, emphasis supplied.
[10] [2002] EWCA Civ 159, para 44.
[11] Ibid., para 56.
[12] [2010] 1 All ER 988 para 65, a case on appeal from St Lucia. In passing, I note that in Cowper-Smith v Morgan, footnote 2, supra, para 47, the Supreme Court of Canada also endorsed the proportionality principle, saying:
Since the equity aims to address the unfair or unjust detriment the claimant would suffer if the owner were permitted to resile from her inducement, encouragement, or acquiescence, ‘there must be a proportionality between the remedy and the detriment which is its purpose to avoid’.
Lord Briggs does not refer to Cowper-Smith v Morgan, but Lord Leggatt quotes this passage in his judgment as para 230.
[13]For a convenient summary of the two choices, which I have made grateful use of, see the excellent blog by Alison Parry for Today’s Wills & Probate, https://todayswillsandprobate.co.uk/guest-v-guest-one-day-my-son-all-this-will-be-yours-or-will-it/.
Menu
Written by: Albert Oosterhoff
Posted on: December 30, 2022
Categories: Commentary, WEL Newsletter
Guest v Guest [2022] UKSC 27.
1. Introduction
The doctrine of proprietary estoppel seems to be receiving more and more attention. The 2017 decision by the Supreme Court of Canada, Cowper-Smith v Morgan,[1] is now the leading case in Canada. But questions remain about the nature and correct foundation of the doctrine. The United Kingdom Supreme Court engaged in a detailed consideration of its nature and foundation in Guest v Guest. The judgments in the case will undoubtedly be of great interest in Canada too. So it is important to consider the case in some detail. It contains two sets of reasons: a majority judgment by Lord Briggs, with which Lady Arden and Lady Rose agreed, and a minority judgment by Lord Leggatt, with which Lord Stephens agreed. While both Lord Briggs and Lord Leggatt allowed the appeal, they reached different conclusions on the remedy. The reasons are very long.
They run to 282 paragraphs, plus an appendix to Lord Leggat’s reasons on quantification of loss.
2. Facts
Many cases in which proprietary estoppel is argued involve farm properties and that is also the case in Guest. David and Josephine Guest operated a dairy farm for many years. They had three children, Andrew, Jan, and Ross. Andrew, the eldest, was born in 1966. He left school in 1982 at age 16 to work full time on the farm. He lived with his parents but after he married, he and his wife lived in a cottage on the farm. Early on, David told Andrew, ‘One day my son, all this will be yours’, and he repeated that for many years. Andrew understood that his parents would leave the farm to him, and he relied on their promise. Thus, he worked on the farm for minimum wages for 33 years. He earned diplomas in agricultural management and took over more and more responsibilities at the farm. The parents made wills in 1981 which provided that Andrew and Ross (who was 11 years younger than Andrew) would inherit the farm, subject to payment of a legacy to Jan. David and Josephine operated the farm for many years in partnership with Andrew. Eventually, relations between Andrew and David broke down. In 2014 the parents made new wills in which they disinherited Andrew, except for his right to continue to live in the cottage. Negotiations to resolve their differences were unsuccessful and in 2017 the parents dissolved their partnership with Andrew, gave him notice to quit the cottage, and made new wills in which they excluded Andrew entirely.
Andrew then found employment as a senior herdsman at another farm and, having learnt that his parents had disinherited him, brought proceedings against his parents in 2017. In those proceedings he relied on the doctrine of proprietary estoppel. Meanwhile, the parents sold the dairy herd but still farm the land and want to continue to do so.
3. Trial Judgment[2]
The trial judge, HHJ Russen QC, made detailed findings of fact in his judgment.[3] He concluded that until Andrew and his parents had a falling out, David consistently led Andrew to believe that he would succeed to the farming business and inherit a major share in the farm. That changed somewhat when Ross also became part of team and was expected to receive an inheritance as well, and Andrew understood and accepted that. The trial judge also found that Andrew had relied on his father’s assurance and would not have worked on the farm for minimum wages if his father had not promised him an inheritance.
The remedy the trial judge awarded required David and Josephine to pay Andrew an immediate lump sum, composed of:
(a) 50% after tax of either the market value of the dairy farming business (professional determined) or the value realized by sale of the business in consequence of the judgment; and
(b) 40% after tax of either the market value of the freehold land and buildings at the farm (professionally determined) or the proceeds of sale in consequence of the judgment, but in either case so that the parents received a life interest in the farmhouse, subject to their being responsible for the upkeep while in possession.
4. Court of Appeal
The parents were granted leave to appeal only on the question of the remedy, not on the finding that a proprietary estoppel had been established.
The Court of Appeal dismissed the appeal.[4] It held that the trial judge was entitled to take account of Andrew’s expectation as ‘a strong factor in deciding how to satisfy the equity’. The court rejected a remedy based on any increase in the value of the land because it would not reflect the nature of the assurances given. It also rejected an approach based on valuing Andrew’s loss of opportunity to work elsewhere.
5. The Supreme Court
5.1 Lord Briggs
His Lordship began his reasons by affirming that the remedy for Andrew is the equitable remedy of proprietary estoppel. It is of interest that he says the remedy ‘is all about promises to confer an interest in property, usually land’ (para 4). He makes the same point elsewhere.[5] Indeed, Lord Leggatt also makes the point in para 151 where he quotes the following passage from the dictum of Lord Scott of Foscote in Cobbe v Yeoman’s Row Management Ltd:[6]
The estoppel becomes a ‘proprietary’ estoppel … if the right claimed is a proprietary right to or over land but, in principle, equally available in relation to chattels or choses in action.
The point is important because it has occasionally been argued that the doctrine of proprietary estoppel can only be raised with respect to real property. These references make it clear that that view is incorrect.
Although the doctrine often confers on the person who relied on the assurance an interest in property, there are many cases in which that is not appropriate. Then the court must fashion a different remedy, such as awarding equitable compensation, perhaps discounted if the date for performance of the property lies in the future (para 6).
Lord Briggs then noted that during the last 25 years there has been a fundamental divergence on the question of the correct foundation of proprietary estoppel. Some favour satisfying the promisee’s expectation, whereas others claim that compensating for the detriment is what underlies the remedy (para 7). His Lordship first considered the problem from the perspective of first principles (paras 8ff). He noted that the remedy imposed seeks to ‘eliminate, or at least mitigate, the affront to conscience’ occasioned when the promisor resiles from the promise. Although detrimental reliance is not foundational to the remedy, it is a relevant aspect of it, for without it there is no equity. However the harm done by resiling from the promise differs from the detriment, which lies in the past and can no longer be undone. He concluded that the idea that all problems in framing a remedy can be solved by ‘identifying either compensation for detriment or fulfilment of expectation … as the true purpose of the remedy, is misconceived. In his view, the true purpose is ‘dealing with the unconscionability constituted by the promisor repudiating his promise’ (para 13).
His Lordship then engaged in an exhaustive examination of the authorities from the nascency of the remedy in the 1860s (when it was not yet known by its modern term) to the present. He noted that early proprietary estoppel cases suggest that ‘expectation is the main driver of the remedy’ (para 22). That was confirmed by the followings statement by Oliver J in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Limited:[7]
… if under an expectation created or encouraged by G that A shall have a certain interest in land, thereafter, on the faith of such expectation and with the knowledge of B and without objection by him, [A] acts to his detriment in connection with such land, a Court of Equity will compel B to give effect to such expectation.
Of course giving the promisee an interest in the property is not always the best remedy. Sometimes it is, but in other situations the promisor may be required to compensate the promisee for the expense he has incurred. And the court can then also make payment of compensation a charge on the property if that is appropriate. The point is that the choice of remedy is flexible (para 34).
Some courts were misled by a dictum of Scarman LJ in Crabb v Arun District Council.[8] The court sought to fulfill the plaintiff’s expectations in that case in the fairest way, while at the same time ensuring that his expectations were not exceeded. It did not seek to compensate the plaintiff for the detriment he suffered. In that context Scarman LJ said, ‘I would analyse the minimum equity to do justice to the plaintiff as a right either to an easement or a licence upon terms to be agreed’.[9] On this point Robert Walker LJ said in Jennings v Rice[10] ‘Scarman LJ’s reference to the minimum does not require the court to be constitutionally parsimonious, but it does implicitly recognize that the court must also do justice to the defendant’. Moreover, as Lord Briggs notes (in para 13), the dictum was not ‘minimum equity’, but ‘minimum equity to do justice’.
Other cases introduced the notion of proportionality, which they derived from dicta in Australian cases. On that point Robert Walker LJ said. ‘The essence of the doctrine of proprietary estoppel is to do what is necessary to avoid an unconscionable result, and a disproportionate remedy cannot be the right way of going about that’.[11]
Lord Briggs expressed the following view on the matter (para 44):
No one would disagree with the notion that a remedy must be proportionate to the harm. But in the present context that begs the question whether the harm is the detriment or rather (as I think) the loss flowing from the repudiation of the expectation. Nonetheless by that means the seed of proportionality has become firmly embedded in the English law of proprietary estoppel.
Then he examined a number of modern cases in which the concept of proportionality was accepted, including Henry v Henry,[12] which contains the following dictum, ‘Proportionality lies at the heart of the doctrine of proprietary estoppel and permeates its every application’.
Lord Briggs then returned to the controversy between the essential purpose of the exercise of the court’s discretion in proprietary estoppel cases. First he notes that a long line of English authority has ‘generally followed the expectation-based approach’ and that no authority that favours that approach takes the view that therefore it must compensate for the detriment suffered. While the cases do show that there must be ‘some proportionality between the remedy and the detriment, they rejected the idea that the aim of the remedy was compensation for the detriment. Second, he states his opinion that the ‘supposed logic of the detriment-based approach is … both faulty in origin and wrong in its inevitable result’. While reliant detriment is necessary for awarding equitable relief, ‘it is the repudiation of the promised expectation which constitutes the unconscionable wrong’ (paras 52-53).
His Lordship then considers Australian authorities and concludes that, despite some influential dicta in minority judgments, the courts ultimately held that proprietary estoppel is not founded on compensation for detriment but on the promisee’s expectation (para 58).
By way of summary Lord Briggs then states (para 61):
Drawing together this lengthy review of the authorities and looking at the matter historically, I suggest that what has happened may be summarised in this way. For over a century, starting in the 1860s, the courts of equity developed an equitable estoppel-based remedy, the aim of which 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, because that was 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 promisee.
His Lordship went on to speak about the practical problems that may arise when the court seeks to fashion an appropriate remedy in many different fact situations, for example, when it desirable to come up with a ‘clean break’ so that the parties no longer have to live together, or when, as in this case, the promisor has broken his promise well before its intended performance.
Lord Briggs expressed the view that ‘the court should firmly reject the theory that the aim of the remedy for proprietary estoppel is detriment-based’ (para 71). He acknowledges that the concept of proportionality has been adopted by the cases, ‘as part of the assessment of whether a proposed remedy to deal with the proven unconscionability based on satisfying the claimant’s expectations works substantial justice between the parties’. But he notes that while it is a good servant, it is a bad master and defines it as ‘no more than a useful cross-check for potential injustice’. He believes that ‘the best summary of the proportionality test is that the remedy should not, without some good reason, be out of all proportion to the detriment’ (para 72). Moreover, the court must not carry out the question of proportionality on the basis of pure financial comparison (para 73).
In his opinion, the court should normally approach the matter in two stages. The first stage is to determine whether the promisor’s repudiation of his promise is indeed unconscionable, having regard to the promisee’s detrimental reliance on it (para 74). The second stage is where the court considers the remedy. The court should normally begin with the assumption that the simplest way to remedy the unconscionability arising from the repudiation is to hold the promisor to his promise. However, the court may have to take into account reasons given by the promisor showing that something less than full performance will negate the unconscionability but will still satisfy the equity (para 75). Finally, if it is shown that ‘specific enforcement of the promise, or its monetary equivalent, would be out of all proportion to the cost of the detriment to the promisee’, the court may have to limit the extent of the remedy (para 76).
Lord Briggs then applied these principles to the facts. He took into account the uncertainty in identifying the exact interest in the farm David promised to Andrew in light of the need to make provision also for Ross and Jan. He also considered the fact that David was over 70 and Andrew almost 50, and that the matter arose some time before the promise was to be fulfilled. That gave rise to questions of futurity and cohabitation, or acceleration and a clean break. On the other hand there was no real uncertainty about Andrew’s detrimental reliance and its extent.
His Lordship was particularly concerned about the acceleration issue. He concluded that the trial judge exceeded his discretion because he failed to provide for a general discount since Andrew would be receiving the remedy early, with the result that Andrew in effect received more than he was promised (para 100). Moreover, all the parties may have preferred a complete break (para 103). Consequently, His Lordship fashioned a remedy that would give the parents the ability to choose between two alternative forms of relief:[13]
His Lordship expressed the hope that the parties can agree on the calculation of the amount under the first option, thereby avoiding professional costs, but if that is not possible the matter can be remitted to the Chancery Division.
Thus, his Lordship allowed the parents’ appeal to this extent (para 106).
It seems to me that this is a brilliant solution to a particularly difficult fact situation and fashions a remedy that is appropriate in the circumstances.
5.2 Lord Leggatt
Although this judgment is longer, my discussion of it will be significantly shorter than for Lord Brigg’s judgment since Lord Leggatt’s is a minority judgment and covers much the same ground.
Lord Leggatt also begins with a consideration of the nature of the ‘equity’, and after describing the facts, he discusses the development of the proprietary estoppel remedy. He also provides an exhaustive examination of the case law, including the issues raised especially during the last quarter century.
His Lordship then engages in a lengthy search for principles that should govern the court in determining whether the facts raise proprietary estoppel and how to fashion a remedy. These include such things as detrimental reliance, reliance on a non-binding promise, avoidance of detriment, ‘minimum equity’, difficulty in quantifying reliance loss, monetary compensation, proportionality, and other factors. In the process, he discusses many of the cases that have addressed these matters. He summarizes the principles as follows (para 255):
… the core principle underpinning the grant of relief is that equity will not allow A [the promisor] to go back on the promise made without ensuring that B [the promisee] does not suffer detriment as a result of B’s reliance on it. The aim of the remedy is thus to prevent detriment to B in the circumstances which have arisen.
Thus, Lord Leggatt seems to take a slightly different view of the fundamental basis of proprietary estoppel than Lord Briggs.
His Lordship notes that there are two methods of achieving this aim. The first will compel the promisor to perform the promise, or to award the promisee a sum of money that will place him in as good a position as if the promise had been performed. The second awards the promisee a sum of money that compensates the promisee’s reliance loss. However, there are also two kinds of cases. The first is one in which the date to perform the promise has occurred. The second kind is one in which the promise is not yet due to be performed, but the promisor refuses to perform it. The two kinds of cases are likely to result in different remedies.
Lord Leggatt noted that the trial judge failed to give adequate reasons for the remedy he awarded. Nor did he consider whether the remedy was proportionate to the detriment Andrew suffered. And further, he made only a minor. allowance for the acceleration in the receipt of the property. More important, the trial judge failed to analyse the detriment.
Accordingly, his Lordship re-exercised the judge’s discretion. Both parties had asked the Supreme Court to fix the amount of the award if the Court should decide that compensation should be assessed on a reliance basis, as this would avoid another trip to the High Court and the costs associated with it. His Lordship therefore concluded his reasons by stating that he would allow the appeal and require David and Josephine to pay Andrew £610,000 as equitable compensation. He added an Appendix to his reasons in which he explains how he decided on that figure.
—
[1] 2017 SCC 61, [2017] 2 SCR 754.
[2]I have derived the facts at trial and at the Court of Appeal, recorded below, principally from the judgment of Lord Leggat at paragraphs 126-135.
[3] [2019] EWHC 869 (Ch).
[4] [2020] EWCA Civ 387.
[5] In paras 12 and 61.
[6] [2008] UKHL 55 para 14.
[7] [1982] QB 133 at 144, emphasis supplied by Lord Briggs as para 31.
[8] [1976] Ch 179 (CA).
[9] Ibid., pp 198-99, emphasis supplied.
[10] [2002] EWCA Civ 159, para 44.
[11] Ibid., para 56.
[12] [2010] 1 All ER 988 para 65, a case on appeal from St Lucia. In passing, I note that in Cowper-Smith v Morgan, footnote 2, supra, para 47, the Supreme Court of Canada also endorsed the proportionality principle, saying:
Since the equity aims to address the unfair or unjust detriment the claimant would suffer if the owner were permitted to resile from her inducement, encouragement, or acquiescence, ‘there must be a proportionality between the remedy and the detriment which is its purpose to avoid’.
Lord Briggs does not refer to Cowper-Smith v Morgan, but Lord Leggatt quotes this passage in his judgment as para 230.
[13]For a convenient summary of the two choices, which I have made grateful use of, see the excellent blog by Alison Parry for Today’s Wills & Probate, https://todayswillsandprobate.co.uk/guest-v-guest-one-day-my-son-all-this-will-be-yours-or-will-it/.
Author
View all posts