This seminal case marks a pivotal development in the case law; the first time that the highest appellate court has considered the appropriate remedy for proprietary estoppel claims.
The appeal concerned a dispute between family members who lived and worked on a farm (Tump Farm). David Guest and Josephine Guest had three children: Andrew, Ross and Jan.
Andrew (The Claimant) was the eldest son, who had worked full time on the farm for 32 years, since the age of 16. He lived in one of the cottages rent free and was provided with a basic wage which often fell below the minimum rate set by the Agricultural Wages Board. He was motivated by the incentive that one day he would inherit a significant share of the farm after his parents’ deaths, with Ross and Jan inheriting the remainder.
After considerable acrimony, the familial relationship deteriorated, and his parents (the Defendants) made new wills which disinherited the claimant. The claimant then brought a claim on the basis of proprietary estoppel.
At first instance, Andrew was successful in his claim. There was clear evidence that assurances had been given by his parents over a significant period of time (around 30 years). Accordingly, the claimant had detrimentally relied on the assurance by working on the farm for many years, with little financial reward. He had also worked hard to develop the efficiency of farming practices with the view that one day, the farm would be his.
The judge in the first instance (the high court) ruled in the claimant’s favour and decided upon a ‘clean break’ remedy. The claimant was awarded a lump sum based on 50% of the net market value of the dairy farm business, and 40% of the net market value of the farm (including land and buildings). This award encompassed the detriment that Andrew had suffered, David and Josephine’s continued interest in the farm itself, and others who may have claims to it. The trial judge decided that this was the minimum award to avoid an unconscionable outcome. David and Josephine appealed.
Before the Court of Appeal, it was argued that the High Court had failed to adequately consider the defendants’ interests. The defendants asserted that the award surpassed the necessary standard of justice. Instead, the judge should have awarded a remedy based on the claimant’s contribution to the value of the farm or the detriment that he had suffered. The Court of Appeal dismissed the appeal, arguing that it was appropriate to order a remedy by reference to the claimant’s expectations. Again, this was appealed and a hearing was listed before the Supreme Court.
The Supreme Court
In the Supreme Court, by a majority of 3 to 2, the appeal was allowed in part. The following factors were integral to the decision-making:
The Supreme Court sought to parallel the Court of Appeal’s decision to provide Andrew with an immediate interest in the farm, via a clean break remedy. Yet, the court noted that this would provide Andrew with an acceleration of his inheritance because his parents were still alive.
The Supreme Court decided upon two options: Andrew would be granted the lump sum (at a reduced value due to accelerated receipt) or the defendants would create a trust where Andrew’s interest would be protected, but the farm would not need to be sold. This is where the case has been left, if any terms of the trust are disputed, it will be transferred to the High Court.
The outcome of Guest v Guest aims to strike a balance between Andrew’s expectations and ensuring equity for his parents. The premise of all claims should be proportionality and meeting the interests of all parties. Andrew expected to claim inheritance on the death of his parents. The lump sum previously awarded would have forced the sale of the farm during his parents’ lifetime which would have been disproportional. Unequivocally, financial remedies should only be sufficient to satisfy justice.
Effects of Guest v Guest
Indeed, this case captures the complexities of proprietary estoppel, especially when the defendants are still alive. While this case appears to bring clarity to this area of law, the principle of testamentary freedom becomes somewhat clouded. In England and Wales, unlike other jurisdictions, each individual has freedom of who they would like to include as beneficiaries in their will. However, Guest v Guest flies in the face of this principle.
Essentially, Lord Briggs removes David and Josephine’s unfettered discretion and places Andrew back into the position of beneficiary (as if their wills had not been revoked). This is a clear example of how all areas of law are interlinked. Here, the judges favoured proprietary estoppel and parties must be aware that the courts have ultimate discretion when disputes arise.
Moral of the story… Be careful what you promise!
If you wish to discuss a proprietary estoppel claim, please contact the Commercial Litigation team or call us on 01823 625826
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