Introduction
An earlier blog post outlined the facts and the judgment of the majority of the UK Supreme Court in Guest v Guest ([2022] UKSC 27).
One of the distinctive features of proprietary estoppel, in comparison with the common intention constructive trust for example, is the judicial discretion as to the relief to be awarded. This discretion gives judges some flexibility and an ability to seek solutions that are fair to all concerned in the circumstances of a particular case.
It is desirable, however, that there should be a conceptual framework to guide the exercise of judicial discretion. Judges can then draw on this framework as they exercise their discretion and can use it to give reasons for their decision.
Judges will then be helped to focus on, and properly assess, the facts of the case that are of most importance in the light of the guiding principles. Clarity of exposition as to the relative importance of these facts and the part they played in designing the relief will help appeal courts to assess whether a first instance award was soundly based.
This clarity must also be helpful to the parties and their advisers when negotiating a potential settlement, surely a good thing.
This blog post outlines the approach taken by the majority in Guest v Guest which proposed an expectations-based model for relief. This approach gave rise to the outcome described in the earlier blog post. A minority of the Supreme Court advocated a different approach placing a heavier emphasis on detriment.
Guest v Guest concerned the promise of a future right
Lord Briggs made the point that Guest v Guest concerned the promise of a future interest, rather than an assurance of a supposed existing right. The same doctrine applies, he thought, but he implies that the relevant considerations might differ ([8]).
Expectation v detriment
A description of the detriment-based approach of the minority in the Supreme Court in Guest v Guest can help us to understand why the difference in approach can have very significant practical consequences.
The majority took the plaintiff’s expectation (of sufficient land to run a viable farming business) as the starting point, modified so that accelerated receipt of the award did not mean that the plaintiff got more than his expectation.
The minority took the plaintiff’s detriment as the guiding principle. It thought that the detriment was easy to identify and quantify. The plaintiff worked for many years at low wages on his father’s farm because of the assurance. The detriment was the difference between market-level wages for the work he did and the wages he actually received ([278]).
This could be identified with certainty (GBP 267,748). The plaintiff was also entitled to interest on the sum at 2% above base rate (GBP 342,162). Rounded up, he total relief that the minority would have awarded was, thus, GBP 610,000.
The value of the majority’s award is not specified in the judgment but it is presumably much more valuable than the sum arrived at by the minority’s detriment-based approach.
Proprietary estoppel seeks to undo unconscionability
While the main focus of the judgments is on the principles governing equitable relief in proprietary estoppel, some attention is paid to the broader question of the aim of proprietary estoppel.
Giving the majority judgment, Lord Briggs said:
‘neither expectation fulfilment nor detriment compensation is the aim of the remedy. The aim remains what it has always been, namely the prevention or undoing of unconscionable conduct’ ([94]).
Fulfilling expectations while avoiding an award that is out of all proportion to the detriment
Lord Briggs’ review of the authorities led him to the conclusion that expectation fulfillment has always been the starting point for equitable relief ([5]).
But specific enforcement of the promise might sometimes be disproportionate to the detriment and so be much more than is required to undo the unconscionability ([6] and [10]).
So ‘the concept of a proportionality test does appear to have taken root in England, as part of the assessment of whether a proposed remedy to deal with the proven unconscionability based on satisfying the claimant’s expectation works substantial justice between the parties’ ([72]).
And ‘the best summary of the proportionality test is that the remedy should not, without some good reason, be out of all proportion to the detriment, if that can readily be identified. If it cannot, then the proportionality test is unlikely to be of much use’ ([72]).
Lord Briggs close his discussion of proportionality by observing that, ‘the question of proportionality is not to be carried out on the basis of a purely financial comparison’ ([73]).
Other factors that might mean that it is not appropriate to fulfil the plaintiff’s expectation
Proportionality is a relevant factor, then. Other factors too may mean that specific performance of the promise would be unjust:
‘The promise may be incapable of specific enforcement, for example where the underlying property is no longer in the hands of the promisor or his estate. The promised date for performance may lie so far in the future, or the date may be so unpredictable, that an order for performance on the promised date would be too insubstantial as a remedy. Or the early enforcement in full of a promise which, although repudiated, is years away from the due date for performance may give the promisee too much, or something radically different from that which was promised. The promisor may have other powerful equitable or moral claims on his bounty, so that the appropriation of the whole of the promised property to meet the claim of the promisee may be unjust to those other claimants, and be more the cause of unconscionable conduct than a remedy for it. Finally the magnitude of specific enforcement in full may be so disproportionate to the detriment undertaken by the promisee that something much less than full specific enforcement is needed to clear the conscience of the promisor ([6]).
In some cases, as in Guest v Guest itself, the need for a ‘clean break’ between the parties might also be an important factor ([64]) so that solutions that would require the parties to live or work together might be unworkable.
The majority’s principles for the design of equitable relief
Lord Briggs argued that the court should approach equitable relief in the following stages:
- Decide whether repudiation of the promise is unconscionable in the circumstances ([74]);
- Start with the assumption that the appropriate relief is full performance of the promise performance (or a monetary equivalent) but be aware that there may be factors which would render this disproportionate ([75];
- The burden of proof is on the party arguing that full performance is disproportionate ([76]);
- Full performance is likely to be appropriate in cases that fall just short of a contract ([77];
- Just because full specific performance is inappropriate does not mean that detriment should be taken as the yardstick ([79];
- ‘In the end the court will have to consider its provisional remedy in the round, against all the relevant circumstances, and ask itself whether it would cause injustice to third parties’ ([80]).
Appropriate to focus on detriment where it is specific and short-lived
Despite the insistence on performance of the promise as the starting point, Lord Briggs acknowledged that it might be appropriate to focus on detriment (and undoing it) ‘where the detriment is specific and short-lived, and in particular shorter than the parties are likely to have contemplated’ ([72]).
But, ‘wherever the relevant detriment has (as here) had lifelong consequences, a detrimental valuation analysis will fall upon stony ground’ ([72]).
Fulfilling expectations where the promise has had life-changing consequences: harm v detriment
Throughout his judgment, Lord Briggs distinguishes between ‘detriment’ and ‘harm’. Detriment is an essential element of a proprietary estoppel claim and, as we have seen, the court should consider whether the proposed award is proportionate given the detriment; this presupposes that detriment can always be measured in some way.
‘Harm’ seems to be a broader concept, less susceptible to being reduced to a specific sum of money. The idea seems to be that repudiation of a promise may give rise to harm that is incalculable or difficult to calculate. In such cases, it seems that the court should be more ready to give full effect to the promise.
Lord Briggs explained the harm in Guest:
‘In a case like the present, the harm consists of the soul-destroying, gut-wrenching realisation of being deprived, and then actually being deprived over the rest of a lifetime, of an expected inheritance of land upon which the promisee has spent the whole of his life and work to date and which, in due course, he expected to be able to pass on to one or more of his own children, making the same promise to them as his father made to him … this cannot necessarily be valued with any reliability ([11]).
Specific performance recognises the inability to assign a monetary value to expectations concerning land ([12]). It also seems appropriate where the promise has induced ‘life-changing choices’ ([51]).
A detriment-based approach, ‘mistakenly treats the detriment rather than the loss of expectation as the relevant harm’ ([53]).
In Guest, the fact that the father’s promise induced the son to make decisions ‘with incalculable whole-life consequences’ ([95]) meant that it would be inadequate for relief to be based on the detriment (reduced wages over the course of a career).
Thus, it would be, ‘simply impossible to identify some monetarised value of his detriment in a way which would render a fulfilment of his expectation disproportionate’ ([95]).
Michael Lower