Enforcing Promises – Proprietary Estoppel (Latest Caselaw)
Claims for proprietary estoppel can arise when a party is given a promise or assurance of an interest in a property or land, they rely on that promise or assurance and subsequently suffer detriment as a result of the promisor reneging on the promise or assurance.
Proprietary estoppel has long been an area of conflicting opinions for lawyers. On 19 October 2022, the Supreme Court delivered Judgment on the proprietary estoppel claim in Guest v Guest, the most significant since Jennings v Rice some 21 years earlier. The focus of the Court was whether relief should be the completion of the claimant’s expectation or remedy of the claimant’s detriment.
Guest v Guest – Background of the Proprietary Estoppel Claims Case
Guest v Guest, as with many proprietary estoppel claims, revolves around a family farm. The claimant, Andrew Guest, worked and lived on the family farm owned by his parents for over 30 years. Mr Guest received low wages for the work he undertook and in return he was promised that upon his parents’ death, he would inherit a portion of the farm.
The parties fell out, causing Mr Guest to leave the farm and subsequently, he brought a claim of proprietary estoppel seeking a share in the farm. Mr Guest centred his argument on his reliance on the promise his parents made that he would inherit a share of the farm, his detriment being his devotion over the years to his work on the farm and the lost opportunity of what he could have otherwise have earned.
Decision in the Guest v Guest Case (Proprietary Estoppel)
Mr Guest was successful in the High Court, the Judge finding that clear assurances had been made, reliance and detriment were present. Mr Guest was awarded a payment equalling 50% of the market value of the farming business and 40% of the market value of the farm. This would require Mr Guest’s parents to sell the farm in order to meet the award.
The High Court decision was appealed to the Court of Appeal, who dismissed the appeal. Mr Guest’s parents subsequently appealed to the Supreme Court.
The Supreme Court focused on whether Mr Guest’s expectation was the correct starting point when coming to the remedy, and whether the remedy granted in the High Court went beyond what was necessary. Mr Guest’s parents, the appellant, argued that the remedy should rectify the detriment Mr Guest had suffered, being the lost opportunity and compensation for the years he spent working on the farm. The Court rejected this argument and confirmed that the focus is on the claimant’s expectation, noting that it is unlikely that expectation and detriment will be of the same value and therefore proportional.
This case is unique in that Mr Guest’s parents had not died at the time of his claim and the award would require the farm to be sold. The Court noted that the High Court award would have been appropriate if Mr Guest’s parents had died.
The Court gave the option to Mr Guest’s parents to either; provide Mr Guest a reversionary interest of the farm under trust and subject to a life interest in their favour, or to make a lump sum payment to Mr Guest at a discounted amount due to Mr Guest receiving the payment at an earlier date.
Guest confirms an expectation rather than detriment-based approach to quantum and provides guidance for those seeking remedies under proprietary estoppel. It also demonstrates the wide discretion available to the Court and acts as a reminder that each claim will turn on its facts. Potential claimants should seek advice on arrangements and promises made. Anthony Gold is experienced in Proprietary Estoppel claims and are able to advise further or help with any questions or queries.
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