Calculating Remedies In Proprietary Estoppel Claims

Proprietary estoppel is an equitable claim available to those seeking to enforce a promise. These claims are commonly brought when an applicant has been promised an inheritance and acts on that promise to their detriment, but on the death of the testator learns they have been excluded from their Will or their expected inheritance turns out to be much less.

Proprietary estoppel is not only reserved for claims against an estate and can be brought during the lifetime of the defendant in order to remedy any immediate loss, as demonstrated in the recent case of Guest and another v Guest heard in the Supreme Court.

There are three requirements a claimant will need to satisfy in order to pursue a claim of proprietary estoppel. These are as follows:

The promise(s) made to the claimant will often be verbal, and will not be contained set out in writing, and therefore whether the promise was made or not would depend on witness evidence. However, even if the claimant manages to establish the existence of a clear promise of something, this is not enough on its own. The claimant must show they acted on that promise to their own detriment. In Guest and another v Guest, the claimant was promised that he would inherit the defendant’s farm and therefore continued to work there on a low wage for many years and in doing so, abandoned the chance of pursuing a better-paid career.

The claimant however must then also show that in the specific circumstances it would be “unconscionable” for the promisor to go back on their word.

Guest and another v Guest

Case background

In Guest and another v Guest, the applicant met all three requirements. The claimant had worked on the defendant’s farm from a young age all the while earning a low wage on the basis of his father’s promise that the farm would be his to inherit, and that he would have the right to live on the farm. The claimant then fell out with his father, who promptly changed his Will to exclude him altogether. The claimant had spent his entire working life on the farm and done so on the understanding that he would inherit it, and very much acted to his detriment.

The larger dispute arose in relation to the award available to the claimant. The first instance Judge awarded the claimant a sum of £1,300,000 on the basis that this represented his expected share of the farm and the value of the freehold on his parents’ death. This calculation was appealed by the defendant twice and ended up in the Supreme Court.

The Supreme Court’s decision

The Supreme Court Judges noted that proprietary estoppel was an “equitable and discretionary remedy”. The Court looked at previous case law and reduced the remedy – there was some discount applied given that the award took place before the defendant’s death.

On this approach, it is likely that in future decisions we will see a claimant being awarded a sum representing the loss suffered as a result of a claimant’s reliance on a promise, rather than the entire value of someone’s estate. The Judge in this case considered the date on which the promise was made, the value of the claimant’s lost earnings, the interest on those sums, and then whether there were other circumstances to be considered. Taking those factors into account the sum awarded was reduced to £610,000 which was viewed to be sufficient to remedy the claimant’s loss.

Comment

This decision perhaps demonstrates that the Court will be pragmatic in proprietary estoppel claims rather than simply enforce a promise without question. The type of remedy should reflect the extent of the loss suffered by a claimant as a result of his/her reliance on an unfulfilled promise which essentially means that the Court will order a proportionate remedy.