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Guest (A’s) v Guest (R) [2022] UKSC 27. Proprietary estoppel (PE). Bullet point law made simple!

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 !