Promise-based remedies in proprietary estoppel claims

A farmer telling their child: “one day, all this will be yours” followed by years of toil, long hours and little pay, in reliance on that promise, is a familiar scenario in farming communities. Succession rarely plays out as planned. Families fall out. Promises are broken. What then? 

If a claimant is able to prove that: (1) the defendant gave an assurance that they had or would have an interest in land, (2) they reasonably relied on that assurance, and (3) they would suffer detriment were the defendant to resile from their promise, what should the remedy be? Should the remedy (a) reflect the defendant’s promise, or (b) an order compensating the claimant for the detriment suffered, or (c) something in between? 

For many years up until the decision in Guest, the momentum had been in favour of the compensation-based remedy, rather than upholding the promise itself. The eagerly anticipated Supreme Court decision in Guest was meant to put the issue to bed once and for all. Did it? Yes – insofar as it could.  The decision was split 3:2, coming down in favour of a promise-based remedy, albeit with caveats. 

The case 

David Guest promised one of his sons, Andrew, a sufficient (but undefined) part of the farm to enable him to operate a viable farming business on it after the death of his parents. Andrew relied on that promise and worked for low wages on the farm for many years. The parties later fell out. Andrew was cut out of his parents’ wills and had to move, with his wife and children, away from the family farm. He brought a claim under the doctrine of proprietary estoppel.

In the initial court proceedings, the court determined that Andrew had a valid proprietary estoppel claim, and ordered that Andrew should receive, net of tax, 50 per cent of the farming business and 40 per cent of the proceeds of sale (or valuation) of the farm after tax, reduced by crediting his parents a life interest in the farm. The amount payable to Andrew was around £1.3m. 

On appeal the parents argued that the correct remedy should have been to compensate Andrew for his detrimental reliance, which would have translated to a remedy of c.£610,000.

On the one side, Lord Briggs, Lady Arden and Lady Rose preferred a ‘promised-based’ remedy. On the other, Lord Leggatt and Lord Stephens preferred a ‘reliance-based’ remedy. 

In the promise camp, Lord Briggs stated that the remedy analysis should “normally start with the assumption (not presumption) that the simplest way to remedy the unconscionability constituted by the repudiation is to hold the promisor to his promise” (at [75]). That is unless enforcing the promise “would be out of all proportion to the cost of the detriment to the promise, then the court may be constrained to limit the extent of the remedy” (at [76]).  

Lord Briggs accepted (at [79]) that this meant that there was a “wide range of options with little in the way of rules as a guide” but “the court will just have to do the best that it can”. He went on (at [80]): “The yardstick for that justice assessment will always be whether, if the promisor was to confer that proposed remedy upon the promise, he would be acting unconscionably.”

Lord Leggatt lambasted the promise-based camp’s analysis and conclusion. At [164] he said “[t]o give judges no clearer mandate than to do what that think just or necessary to avoid unconscionability is a recipe for inconsistent and arbitrary decision making. This is itself a source of injustice.” His view was that the purpose of the doctrine was “to avoid the detriment to [the promisee] which will result from [their] reasonable reliance on the promise if [they are] not given this right” (at [189] - [190]). The court should therefore consider what would need to be ordered to perfect the promise and what would be needed to compensate the detriment and (at [256]) the court should adopt whichever method results in the minimum award necessary to achieve that. 

Conclusion 

Following the Supreme Court decision in Guest, if a claimant in a proprietary estoppel claim establishes a promise, reasonable reliance and detriment the court’s mind will assess the remedy by reference to the following questions: 

• What was promised? 
• Should a discount apply for accelerated relief? 
• What was the value of the claimant’s detrimental reliance? 
• Would a promise-based remedy be out of all proportion to the value of the detrimental reliance? 
• If it would be out of all proportion what should be ordered instead? The court need not go to the value of the detriment but must instead do the best that it can. 

Lord Leggatt is right that the courts are now left with a wide scope as to what remedy to apply, which leaves scope for inconsistency. But surely that has to be better than applying a one size fits all legal straitjacket to situations which are all so very different to each other? 

Barny Croft is partner in the disputed wills and trusts team at Ashfords LLP: ashfords.co.uk