Proprietary Estoppel – Does Hard Work & Expenditure Equate To Detriment?

In the case of Hughes v Pritchard and others [2023] EWHC 1382 (Ch), the High Court dismissed a claim in proprietary estoppel by the estate of a son against the estate of the father on the ground that the son did not suffer a detriment in relying on the father’s promise that he would inherit the family farmland.

This case is the first proprietary estoppel case argued before the High Court since the landmark decision of the Supreme Court in Guest v Guest [2023] UKSC 27. The Court’s judgment demonstrates that the doctrine of proprietary estoppel continues to be a highly fact-sensitive inquiry.

Hughes v Pritchard and others

Background of the case

Evan Richard Hughes passed away in 2017. He had three children: Elfed; Gareth; and Carys, but only two survived Evan, as Elfed committed suicide in 2015.

Evan made a Will in 2005, leaving all of his agricultural holdings, including the farmland, to Elfed or Elfed’s family (2005 Will). After Elfed’s death, Evan changed his Will in 2016, bequeathing the farmland to Gareth instead (2016 Will).

Upon Gareth’s application for a grant of probate in respect of the 2016 Will, Elfed’s widow and son resisted and claimed that the 2005 Will was the valid one. They initially challenged the validity of the 2005 Will but failed on appeal; the Court of Appeal held that the 2016 Will is valid.

Their alternative claim was in proprietary estoppel. They argued that, if the 2016 Will was to be found valid, Elfed’s estate would have been entitled to the farmland on this basis. The Court, whilst it was satisfied that Evan had made representations and Elfed had relied on those representations, was of the opinion that the issue of whether Elfed had suffered detriment in doing so required further consideration.

Proprietary Estoppel – the Law

A claimant seeking a remedy on the grounds of proprietary estoppel is required to establish that:

The heart of the inquiry of each of the above elements is the prevention of unconscionable conduct (i.e. a person reneging on his promise at the expense of the other’s reliance).

Detriment does not have to be expenditure of money or labour but it has to be something substantial enough to make going back on the promise unconscionable. The Court will look at all of the circumstances holistically to determine if there was any detriment suffered and, if so, whether it was substantial enough.

Detriment also informs the remedy that the Court may award to an aggrieved party. In Guest v Guest, the Supreme Court ruled that the remedy should serve to put right the unconscionability suffered, but no further than that. The remedy should not give the aggrieved party more than what he would have received had the promise been honoured. As in Guest v Guest, the claimant was not to receive his promised inheritance years later and a claim for outright transfer of the inheritance would be more than what was promised. Conversely, there may be circumstances in that simple enforcement of the reneged promise is not feasible, for instance, if the subject matter that was promised no longer exists or is no longer in the hands of the promisor.

Considering detriment

Evan’s children all assisted on the family farm from an early age but Elfed was the one who took on farming as a passion and a career. Elfed went to study agriculture and worked for his father’s farming business. Elfed eventually began his own farming business, using Evan’s farmland rent-free. Elfed’s own farmland and that of Evan’s were farmed as a single unit and father and son took out tenancies for more farmland for the mutual benefit of their businesses. Throughout the years, whilst there was no formal partnership, their businesses and farmlands were mostly run as a single operation.

The Court looked at Evan’s and Elfed’s businesses closely, including time spent on the business by each and the nature and extent of effort they put in. The Court found that Elfed was a very passionate farmer who was proud of his farming business. Whilst there was no doubt that he had put in significant work and hours into the farm to the extent that he suffered illness and work took away time with his family, the Court did not consider his contribution a detriment that was suffered as a result of Evan’s promise. It was also a manifestation of Elfed’s devotion to his career and passion. The Court acknowledged Elfed’s contribution to the financial value and revenue of their essentially symbiotic businesses but also took note of the fact that Elfed’s success was due in large measure to the association with his father’s farm.

The Court considered Elfed’s financial expenditure on the farmland, including the cost of purchasing adjoining farmlands to expand the farming business and for improvements to the farmland. Whilst the Court was satisfied that Elfed had spent significantly more money on the symbiotic business than Evan, it balanced the expenditure with the benefits he received from Evan, which included large sections of farmland which allowed Elfed to start his own business. Elfed’s rent-free use of Evan’s farmlands and the revenue and capital gains he enjoyed from the business was also taken into account.

The Court, therefore, concluded that Elfed had not suffered sufficient detriment to make it unconscionable for Evan to not leave the farmland in question to him and thus his family. Elfed’s widow and son’s claim was dismissed.

Comment

The Court made a comprehensive analysis of the evidence in reaching its conclusion of lack of detriment. A clear distinction was drawn between expenditure and detriment. Expenditure, however significant and it affects the life of the person receiving the promise, does not necessarily equate to detriment. Equally, the benefit to the person giving the promise through the other’s hard work does not translate to the other’s detriment.

A distinct aspect of Hughes v Pritchard and others is that the person who made the promise died before the promise was reneged upon. Whilst this did not bar the estate from making a claim based on the promise and the reliance of and detriment suffered by the deceased, it appears to weigh in some form in the Court’s decision.

The Court noted that, since Elfed died before Evan changed his will to leave the farmland to Gareth, Elfed did not technically suffer “soul-destroying, gut-wrenching realisation of being deprived” of which Lord Briggs spoke of in Guest v Guest. Moreover, the Court appeared to have taken into account that Elfed’s widow, not being a farmer herself, would not have had many benefits from the farmland apart from increasing the value of the family asset.

This decision shows that unconscionability is indeed at the heart of the inquiry of proprietary estoppel. Evidence of significant expenditure and sacrifice may not suffice. Detriment as a result of the promise being made needs to be proved. Proprietary estoppel is a powerful doctrine in that it is capable of enforcing in full a failed promise. However, establishing a successful claim is still a nuanced exercise.

As the Court did not find that proprietary estoppel has been established, it remains to be seen how Courts will rule on the issue of remedy after the judgment of the Supreme Court in Guest v Guest.