Proprietary Estoppel and the Law

The classic scenario in which a proprietary estoppel claim may arise is where:

  • a farm owner father promises their adult child that, if he/she works on the family farm until his death for little or no pay, that farm will be left to him/her; and 
  • the child relies on this promise and gives up the opportunity of employment elsewhere to work for the father; then 
  • upon the fathers death it is established that a will has been made by the father which actually leaves everything to his surviving wife; then 
  • the surviving wife goes back on her late husbands  promise and makes a will leaving the farm to all of the children equally, or gives it all to a different child or to a third party.

Proprietary estoppel can allow the court to step in and stop the surviving parent from going back on the promise which the late spouse made if the circumstances are such that it would be unconscionable for the parent to fail to uphold the agreement.

How to bring a successful claim?

In order to bring a successful proprietary estoppel claim, three essential elements must be present:

  1. Assurance – There must have been a representation or assurance which created an expectation on the part of the claimant that they were or would become entitled to a right or interest in the defendant’s land.
  2. Reliance – The claimant must be able to demonstrate reliance on that promise.
  3. Detriment – The claimant must be able to demonstrate that they acted to their detriment.

Once a claimant has satisfied these tests and established that it would be unconscionable for them to be given no remedy at all, the court will consider how to remedy that unconscionability.

The court has wide jurisdiction with respect to the remedy. The remedy given will depend on the facts of each case but they can be extremely serious for the legal owner or their estate.

Options include: (a) denying the legal owner’s right to possession of the land, (b) award of compensation, (c) grant of a lease, and (d) monetary compensation.

Practical considerations to guard against claims

Proprietary estoppel remains an active area of law. Thanks to rising land values and a number of recent high profile cases, we have seen an increase in proprietary estoppel cases in the last 18 months, particularly in the context of family farms and businesses.

This will no doubt be of concern to many landowners as proprietary estoppel claims often lead to adversarial, lengthy and very bitter litigation which can split families asunder.

  • The key to guarding against proprietary estoppel claims is not to make promises or create expectations in circumstances where you do not intend to (or anticipate that you may not) fulfil your side of the bargain. This includes promises to leave property on death, as proprietary estoppel represents an inroad into the general principle in England and Wales that a person can leave their estate to whomever they wish.
  • Not all proprietary estoppel claims relate to land but a lot of them do. In order to protect an estate from a proprietary estoppel claim, it is important that owners of assets consider their succession planning at an early stage. Where possible, it is best to include all family members with any expectation of benefiting from the estates in that decision making process and to make sure that decisions are taken openly.
  • Making a Will and destroying any draft wills which may show different considerations. The Will must clearly addresses succession and if it also has a letter of wishes which explains the thinking behind that succession that may offer protection.

    So, what reminders and lessons should we take from the recent cases?

    Representations: what will suffice?

    Nearly a decade after Thorner v Major [2009], the recent case of Habberfield v Habberfield [2018] confirmed that, to establish a proprietary estoppel, the relevant assurance must simply be “clear enough” in the context.

    In this case, the claimant, Lucy Habberfield, had worked on the family farm in Somerset from the 1980s until her father’s death in 2014.  He left his entire estate to her mother. Lucy brought a claim on the basis that her parents had assured her on numerous occasions that she would take over the farm within their lifetime. Although the various representations were in themselves ambiguous, the judge found that, taken together and in context, they were sufficiently clear to convey the idea that there would be a transfer of freehold property.

    The claimant, Raymond Allen James, in another recent case (James v James [2018]) was less fortunate. He had worked on his father’s farm in Dorset for all of his adult life and was a partner in the business, until a falling out saw the partnership dissolved and the claimant disinherited.

    Despite what he had understood, he was unable to present sufficiently clear and reliable evidence of an assurance that he would inherit the farm, as the judge differentiated between a “statement of current intentions as to future conduct” and “a promise of that conduct” (emphasising that “saying that it is your intention to do a thing is not at all the same as promising to do it”). This is a subtle but important distinction, which may prove to be a stumbling block in many cases, particularly those which centre around representations as to the deceased’s testamentary intentions.

    A similar approach was adopted in Shaw v Shaw [2018], a claim brought by Clive Shaw, the son of a dairy farmer, where it was held that statements by Clive’s parents about the provision made in their wills were insufficient to give rise to an estoppel.

    Although Thorner v Major [2009] was regarded by many as relaxing the criteria for representations (requiring only that they be “clear enough”), it is nevertheless important to  think carefully about whether a representation has actually been made and identify the difference between a statement of current intention and a promise, where relevant.

    Context is not only relevant – it could be critical

    Proprietary estoppel claims aim to achieve fairness in all of the circumstances, and so the court has great discretion. As such, the outcome of a proprietary estoppel claim will be heavily shaped by the context.

    James v James [2018] is a good reminder of this, as the judge considered the personalities of those involved when finding that statements made by the father (that his son Sam would be “farming [the father’s land] one day”) did not amount to assurances, noting that the father was generally reluctant to make any commitments, and that Sam was overly keen to inherit his father’s property.  Consideration will always need to be given to all of the facts of the case, including the characters involved and the dynamics between them.

    You must satisfy all of the elements

    Claimants must satisfy the court in relation to all elements for a claim to have any prospect of success. For example, Smyth-Tyrrell v Bowden [2018] (where tenants tried to establish an interest in land in Cornwall which they had rented for many years on the mistaken belief that they could eventually acquire the freehold) failed as there was simply no promise or assurance that they would be entitled to the land. Similarly, in Dobson v Griffey [2018] (where the claimant, Jacqueline Dobson, asserted an interest in her former partner’s farm, after leaving her job to work there full-time and carrying out significant renovation work), the judge found that there was no estoppel in circumstances where the “expectation did not spring from any assurance or other conduct of the defendant”, even where the defendant, Matthew Griffey, was aware of Jacqueline’s expectation. In that case, the judge also found that there had been no true reliance as Jacqueline had not undertaken work for the purpose of receiving financial gain but instead to make a home with Matthew.

    In Shaw v Shaw [2018], it was found that Clive had not acted solely on his parents’ assurances or suffered any real detriment. As discussed above, James v James [2018] failed because he could not establish an assurance, but also because he had received good remuneration for his work and could not be said to have suffered any detriment.

    A pragmatic view must be taken in relation to each claim; solicitors must give clear advice as to the likely weakness of any action, and potential claimants should not seek to proceed with a claim in circumstances where their expectations have simply not been fulfilled.

    Evidence is key

    The success of a proprietary estoppel claim will regularly turn on the witness evidence and whose version of events is preferred by the judge. This, as well as the fact that a key witness will often have died, leaves much scope for uncertainty, particularly as those on the stand are asked to relay reliably their recollection of a story which will have unfolded over many years.

    Against this background, any documentary evidence which is available may prove determinative. This was the case for at least two of the successful claimants in 2018. In Thompson v Thompson [2018] (where the claimant, Gilbert Thompson, left school aged fifteen to work full time on his father’s farm, and continued to do so until he fell out with his mother following his father’s death) the judge was able to rely on the documentary evidence obtained from the files of professionals who had advised the family over many years.

    Likewise, in Habberfield v Habberfield [2018] there was independent documentary evidence of an intention that Lucy would one day assume ownership of the relevant property.

    Conversely, in James v James [2018], documentary evidence that the deceased had taken advice as to potential inheritance issues proved extremely unhelpful (particularly in the absence of any documentary evidence to support Sam’s position). 

    When no documentary evidence exists, a measured approach is often preferred when witnesses take the stand (as was the case in Thompson v Thompson [2018] where the judge was highly critical of Mrs Thompson’s “attempted character assassination” of her son).

    The appropriate remedy: “An equitable doctrine, and therefore tempered by conscience”

    Where a claim is successful, the court has broad discretion as to how to compensate the claimant. However, judgments continue to be divided upon the question of whether the court should aim to give effect to the claimant’s expectation, or to compensate the detriment suffered.

    Unfortunately, the Court of Appeal passed up the opportunity to provide clarity in the farming case of Moore v Moore [2018], where the unsuccessful defendant’s (Roger Moore) appeal was rejected, and the question of the appropriate award was returned to the court of first instance. However, some relevant guidance was given, as it was held that the trial judge had wrongly attempted to give effect to the son’s (Stephen Moore) expectation of future entitlement, by replicating what would have happened had no dispute arisen.  The court felt that the judge should have instead focused on the minimum provision required to achieve a fair outcome. Speaking more generally, the Court of Appeal appeared to accept that it was not necessary to be limited by Stephen’s expectation, with one of the three judges acknowledging that it was “logically attractive” to compensate Stephen for the detriment suffered. The court also noted that it was possible to order a solution which accelerated a claimant’s entitlement (which could be particularly desirable where relations between the parties have broken down irreparably, and a clean break is appropriate).However, in this case, an order was also made to reflect the need for proper provision for the defendants during the remainder of their lifetime.

    The judge in James v James [2018] also commented on this issue,  favouring the approach of giving effect to the claimant’s expectation (instead of compensating the detriment, as one of the judges seemed to favour in Moore v Moore [2018]).  However, he did acknowledge that there may be exceptional cases where such a remedy is disproportionate.

    Whilst there is some benefit to the continuing ambiguity, in that a good argument can be made for either approach, the uncertainty also makes it more difficult for potential claimants to decide whether to pursue a claim. Accordingly, it seems likely that the Court of Appeal will have to grapple with the question and give further guidance at some stage. In the meantime, it is expected that judges will continue to take a cautious approach, aiming to make the minimum award needed to do justice.

    Conclusion

    The recent cases demonstrate that proprietary estoppel is as relevant today as it has ever been. Whilst there is certainly room for further development and clarification, particularly in relation to the appropriate award following a successful claim, the three main principles of proprietary estoppel are sufficiently clear and form a good base from which to identify the initial strengths and weakness of a potential claim. However, building a true picture of the merits will require a much deeper analysis, as the likely outcome of any matter will be heavily dependent on context.

    As well as providing a potential solution to some, these proprietary estoppel cases should also act as cautionary tales, discouraging empty promises and encouraging thoughtful wealth planning and good communication with loved ones. A failure to take a considered and consistent approach may result in costly litigation and the breakup of family assets and/or family relationships.

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