A’s owned a farm. In 1981, their wills provided for their two sons to inherit the farm equally, subject to their daughter receiving 20% of their estate.
R, their eldest son worked on their farm from 1982 for 32 years, for a low wage.
The relationship soured between A’s and R, and in 2014 A’s removed R as a beneficiary under their wills and gave him notice to quit the farm.
A issued, claiming he was entitled to a share of the farm or its monetary equivalent based on equitable estoppel.
The first instance judge held:-
- A had worked for little financial reward because he relied on the assurances from A’s as to his inheritance and
- awarded R £1.3m, equivalent to 50% of the value of the dairy farming business and 40% of the value of the freehold of the farming land & buildings.
The Court of Appeal agreed with the trial judge.
The Supreme Court held in favour of R, three to two but by varying the original order.
- The three allowed the appeal in part & substituted alternative remedies,
- Either put the farm into trust in favour of their children OR
- pay R compensation with a reduction for accelerated payment at the choice of A’s.
- The two dissenting would have allowed the appeal on different grounds, with a different remedy.
Opinions of the three.
- Purpose of PE is to prevent or compensate for the unconscionability of a person going back on a promise upon which another person had relied to their detriment.
- Simplest remedy is to enforce the promise, but look at other remedies eg compensation taking into account injustice to others.
- Remedy must not be out of proportion to detriment suffered.
- Discount required for accelerated compensation payment.
- Consider justice in all the circumstances.
- The trial judge did not adequately discount compensation for accelerated payment.
- The parents should be entitled to choose - either put the farm in trust for 3 children with a life interest to themselves OR
- pay compensation, which if not agreed is to be determined by a Chancery Judge.
Opinions of the two.
- Expressed in terms of unconscionability, what the law regards as unconscionable is not A’s failure to keep a non-binding promise. It is A’s failure to accept responsibility for the consequences of B’s reasonable reliance on the promise and for ensuring that B does not suffer detriment as a result of such reliance.
- Court may either compel performance of the promise or order equivalent payment on the basis that the promise had been performed OR award compensation putting R into as good a position as if they had not relied upon the promise the court adopting whichever provides the minimum necessary to meet the aim.
- The sum would be £610k, calculated in an appendix to the opinion.
Moral of the story, be careful what you promise !
