Guest v Guest
On 19 October 2022, the Supreme Court handed down judgment in Guest v Guest  UKSC 27. Penelope Reed KC and Philip Jenkins of Ten Old Square (instructed by Clarke Wilmott LLP) acted for the Respondent. The case is the first time that the highest appellate court has considered the appropriate remedy for proprietary estoppel claims and the first time that the Supreme Court has considered a proprietary estoppel case. Tomos Rees observed the Supreme Court hearing as a pupil and summarises the case below.
The Appellants had for a number of decades owned a farm and managed a farm business. The Respondent was their son, who had worked full-time at the farm for 32 years from the age of 16. He had been provided with accommodation as well as a basic wage which at times was below the minimum rate set by the Agricultural Wages Board. The Respondent’s brother had also worked full-time on the farm since 2002. The Respondent had been consistently led to believe by his father (with the tacit support of his mother) that he would inherit a share of the farming business and the farm.
Following disagreements over the running of the farming business, the Appellants made new wills which disinherited the Respondent. The Respondent and his wife and children were also served notice to quit their accommodation on the farm. The Respondent subsequently brought a proprietary estoppel claim against the Appellants.
The trial judge found that the extent of the assurance to the Respondent had been that he would have a sufficient stake in the farm so as to enable him to carry on farming independently after his parents’ deaths, and that the Respondent had detrimentally relied on the assurance by working on the farm for many years for little financial reward. In terms of remedy, the judge held that he had a broad discretion to avoid an unconscionable result or to identify the minimum equity to do justice.
The judge found that the case was not one of a quasi-contractual nature as the extent of the Respondent’s inheritance was too uncertain. In addition, any interest in the farm had been intended to be given to the Respondent on the death of his parents. The judge decided that the appropriate remedy was to give the Respondent an immediate lump sum of 50% of the value of the farming business and 40% of the value of the farmland (taking into account the value of a life interest for his parents).
The Court of Appeal dismissed an appeal on remedy by the Appellants, holding that the judge had been entitled to take the Respondent’s expectation into account as a strong factor and that the trial judge had not wrongly accelerated the Respondent’s expectation as the judge had been entitled to devise a clean break solution within the wide bounds of his discretion.
On appeal to the Supreme Court, the Appellants submitted that the remedy awarded should not have the effect of accelerating the Respondent’s expectation of an interest in the farm before his parents’ death, and the court should provide a clear statement of principle by holding that the remedy in cases of proprietary estoppel was intended to compensate for the claimant’s detriment in relying on an assurance, rather than giving effect to the claimant’s expectation.
The Respondent submitted that the starting point in cases of proprietary estoppel was to satisfy the claimant’s expectation, although that might not necessarily be the end of the matter if the expectation were out of all proportion to the detriment suffered.
The Supreme Court by a majority of 3 to 2 allowed the appeal in part on the basis that the primary approach was to assess the appropriate remedy according to the Respondent’s expectation of an interest in the farm, but that a present monetary award reflecting that interest should be discounted in order to reflect the fact that the Respondent’s interest had been accelerated.
The starting point for the majority (Lord Briggs, with whom Lady Arden and Lady Rose agreed) was that equitable remedies are flexible and discretionary, and that in proprietary estoppel claims equity is at its most flexible. Relying on case law from the last 150 years or so, the majority held that English (and Australian) law had generally followed an expectation-based approach, subject to the need for some proportionality between the remedy awarded and the detriment suffered by the claimant. For the majority, that conclusion was sound in principle as it was the repudiation of the promised expectation which constituted the unconscionable wrong in cases of proprietary estoppel, rather than the detrimental reliance itself.
On that approach, the starting point in terms of remedy was that the promisor should be held to the promise made. That starting point could be departed from in cases of disproportionality between expectation and detriment. In addition, there was a spectrum of cases ranging from the quasi-contractual (in which full enforcement of the promise was more likely, regardless of disproportionality) to cases in which the expectation and detriment were ill-defined (in which case there might be greater scope for departure from full enforcement of the claimant’s expectation).
Further, cases involving an acceleration of the claimant’s expectation interest were likely to cause the most difficulty. In such cases, the court retained a discretion as to the appropriate remedy. The remedy might, for example, involve a discount for early receipt or an allowance for the promisor to provide for nursing care from the property.
In the present case, the judge had exceeded his discretion by making an award with no discount to reflect acceleration. The Respondent’s award was therefore substituted for an award which gave the Respondent a reversionary interest in 40% of the value of the farm with a life interest for his parents, with the Appellants being entitled instead to elect to pay a discounted monetary award before their deaths. The amount of the discount would be determined in the course of a valuation of the farm as a whole before the Appellants were put to their election.
The minority (Lord Leggatt, with whom Lord Stephens agreed) started from the position that English law should provide a principled basis for determining the appropriate remedy in claims of proprietary estoppel, rather than relying on a broad discretion to satisfy the equity in a given case. In the minority’s view, compensating for the claimant’s reliance loss was the most appropriate approach as detrimental reliance was the element of the cause of action for proprietary estoppel which justified awarding a remedy, although that approach could be departed from in favour of an expectation-based approach if the detrimental reliance were difficult to quantify. In the present case, the minority held that the appropriate course was to estimate the Respondent’s reliance loss on the basis of his lost earnings over the years he had worked on the farm, plus interest.
The majority judgment provides much-needed guidance on the approach to be taken to the appropriate remedy in cases of proprietary estoppel, particularly those involving acceleration of a claimant’s interest. The judgment also highlights the need for courts to continue to adopt a flexible and pragmatic approach in fashioning a remedy, which will ultimately turn on the facts and the nature of the case. The 3:2 divide between the Justices of the Supreme Court might, however, be an indication that the “lively controversy” surrounding the appropriate remedy for proprietary estoppel will persist.
A copy of the decision of the Supreme Court can be accessed by clicking here.