The Proper Basis For Awarding Remedies For Proprietary Estoppel Is No Longer "Guest Work"

• Published date: 04 November 2022
• Subject Matter: Litigation, Mediation & Arbitration, Family and Matrimonial, Trials & Appeals & Compensation, Wills/ Intestacy/ Estate Planning
• Law Firm: Herbert Smith Freehills
• Author: Mr Richard Norridge and Hussein Mithani

Proprietary estoppel arises in the context of property and creates a proprietary interest in that property in circumstances where: (i) a promise in respect of the property is made to by one person to another who relies upon the promise to their detriment; and (ii) there is a failure to keep that promise that causes an unconscionable outcome. Where a Court finds proprietary estoppel to have arisen, a frequent question which arises is: what is the appropriate remedy?

The Supreme Court has clarified in Guest and another v Guest [2022] UKSC 27 the proper basis for awarding remedies in cases of proprietary estoppel. In such circumstances, the Supreme Court's decision reflects a flexible approach to remedying detriment where proprietary estoppel arises. The general principle is that Courts should consider, in the round, whether a particular remedy would do justice between the parties and would cause injustice to third parties in the circumstances.

It is worth noting that the traditional remedy for proprietary estoppel is to transfer ownership of the property, however the Supreme Court's decision shows that the Courts may consider alternatives such as providing a monetary equivalent where the property has been sold or if its transfer would cause injustice to others. The Supreme Court also noted that this approach does not mean that Courts should seek precisely to compensate the detriment, allowing for a more flexible approach.

Hussein Mithani, an associate in our disputes and private wealth team, considers the decision in more detail below.

Background

The dispute concerns a family who own a farm (the "Farm"). The Claimant is a farmer and is the eldest child of the Defendants who are the current owners of the Farm. The Defendants have two other children, one of whom is a farmer and another who is not. The Claimant lived and worked on the farm with the Defendants for some 32 years, with increasing responsibilities but relatively low pay.

The Claimant had been promised by the Defendants that he would inherit a substantial but unspecified share of the farm and had reflected this promise in wills executed in 1981 providing for the Claimant and his farmer sibling to inherit the farm in equal shares (subject to financial provision of 20 percent of the estate for the non-farmer sibling).

The relationship between the Claimant and the Defendants deteriorated in or around 2008, with the Defendants writing the Claimant out of their will in or around May 2014 and giving the...