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). A second blog post described the majority judgment in more detail.
This third blog post in the series looks at the minority judgment of Lord Leggatt (with whom Lord Stephens agreed). The majority judgment emphasized enforcement of the promise as the starting point in proprietary estoppel cases involving a promise of the future acquisition of property rights.
The minority judgment, by contrast, argues very strongly that preventing detriment is the central aim of proprietary estoppel and also provides the yardstick for the design of relief in successful cases.
This difference in approach can lead to very different outcomes, as a comparison of the majority and minority judgments illustrates.
This blog post will explain how the minority judgment read the major cases in the development of proprietary estoppel and the statement of principles that this reading generated. This statement will be compared and contrasted with the statement of principles in the majority judgment.
It is tempting to focus exclusively on the majority judgment. This temptation should be resisted since the minority judgment contains ideas that may prove influential in the future development of this area of the law.
Comparing and contrasting the statements of principles to emerge from the minority judgment sheds light on the choices made by the majority.
Differences in outcome
The relief awarded by the majority, applying an expectations-based approach is valued at GBP 1.3 million (less the value of the parents’ life interest) ([131]). The minority, taking a detriment-based approach would have awarded GBP 610,000 (more than half of which was interest on the detriment as determined by the minority).
These very different outcomes illustrate the practical significance of adopting one approach to equitable relief over another.
Different model of proprietary estoppel
Lord Leggatt’s reading of the development of proprietary estoppel led him to see the Court of Appeal decision in Crabbe v Arun District Council as a watershed moment.
Until then, proprietary estoppel operated defensively as a species of estoppel:
‘the equitable doctrine operated as an estoppel properly so called. The doctrine was not treated as an independent basis for acquiring legal rights, let alone one which might justify compelling A to transfer an interest in land to B. It operated negatively and defensively to prevent A (or A’s successors in title) from exercising a pre-existing property right against B. Where the relevant conditions were satisfied, A was estopped from asserting this right against B.’ ([146])
The distinctive feature of Crabbe was that a promise to confer a proprietary right (an easement in this case) created a new right. Proprietary estoppel became a positive cause of action ([147] – [148]) ‘valid against other persons generally’ ([154]).
The House of Lords decision in Thorner v Major ‘established beyond question’ the status of proprietary estoppel ‘as an independent cause of action and basis for acquiring new property rights’ ([151]). Thorner also established the essential features of this cause of action.
Lord Leggatt was of the view that this new type of proprietary estoppel is so different in its operation and effects that it should have a name which properly reflects its nature. He suggests that this type of claim should be called a ‘property expectation claim’ ([155]).
The purpose of proprietary estoppel
Clearly, proprietary estoppel is a response to a certain type of unconscionable behaviour, so that it is uncontroversial to say, as the majority judgment does, that the purpose of proprietary estoppel is to undo unconscionability.
The minority judgment is more specific as to what this means: ‘The equity is to be protected from detriment that B will suffer if the promise is not kept’ ([190]).
The focus on detriment is clear.
What this means for the approach to equitable relief
Lord Leggatt points out that there are two ways of undoing detriment: either enforce the promise (or order payment of the financial equivalent) or provide a remedy which compensates for reliance loss ([193]).
If the focus is on protecting from detriment, then the question arises as to why compensation for reliance loss should not always be the preferred approach. Why should enforcement of the promise be considered at all?
First, difficulty in quantifying the detriment may be a reason to prefer enforcement of the promise (or its monetary equivalent) ([200]). Even then, care should be taken to ensure that the remedy is not out of proportion to the detriment ([204]).
Second, there are cases where the promise is given in an exchange that is ‘something like a contract’. For example, A may promise B that B will inherit some property of A in return for providing caring services for the rest of A’s life.
Here, the parties have agreed that the expectation (that the promise will be kept / enforced) and the detriment are well-aligned ([220]). Cases involving family members are unlikely to fall into this category ([221])
Enforcing conditional promises and promises subject to unspoken qualifications
Lord Leggatt pointed to two situations which pose significant difficulties where the court proposes to take an expectations-based approach to equitable relief. The first is that there are cases where the promise is that B will inherit A’s property on A’s death and A is still alive. A successful claim in these circumstances interferes with A’s testamentary freedom.
Enforcing the promise also raises the issue of ‘acceleration’ that was, logically enough, a major feature of the majority Supreme Court judgment in Guest ([238]). A backward-looking detriment-based approach is free of this problem since the detriment has already been incurred at the time of the claim.
Promises of a future inheritance are often ‘subject to unspoken and ill-defined qualifications’ (Walton v Walton [19], Hoffman LJ). It may be implicitly understood, for example, that the relevant property might be wholly or partly used up to pay for medical or care expenses.
Lord Leggatt points out that this consideration also gives rise to issues where the court proposes to enforce a promise before the due date for performance:
‘Any such assessment must in principle seek to take account of such “unspoken and ill-defined qualifications” as were implicit in the promise made and how they bear on what might happen in the future (or on what might have happened in the future in a counterfactual world in which the promise had not been revoked when it was). That may be a difficult and speculative exercise to attempt to undertake, potentially more so than quantifying the claimant’s reliance loss’ ([244]).
Remedial offers
One of the interesting features of the minority judgment is its brief exploration of the role of remedial offers.
Lord Leggatt explains:
‘Where A, for whatever reason, decides to revoke a promise on which B has relied that A will transfer property to B on A’s death (or some other event) before the event has occurred, A may satisfy such equity as has arisen by making a gift or offer of compensation to B sufficient to prevent B’s change of position from operating as a detriment’ ([249]).
The significance of such an offer is explained:
‘provided the prospective benefactor has endeavoured to treat the promisee fairly and has made a genuine and reasonable alternative arrangement or offer of amends, a court should be slow to find fault with it and to order more extensive relief’ ([252])
Lord Leggatt suggests that B’s rejection of a fair remedial offer might provide A with some protection against an adverse order for costs ([252]).
Summary of principles
Just as Lord Briggs and the majority had done, Lord Leggatt crystallises his approach to the design of equitable relief into a summary of principles:
- The prevention of detriment is the core aim of equitable relief in proprietary estoppel (or ‘property expectation claims’ as Lord Leggatt would have it) ([255]);
- This could be achieved either by enforcing the promise or by compensating for reliance loss ([256]);
- If both are practicable ‘the court should adopt whichever method results in the minimum award necessary to achieve that aim’ ([256]);
- Enforcement of the promise is often appropriate where the date for performance of the promise has passed AND where (a) reliance loss is difficult to quantify; and (b) enforcement of the promise is not clearly disproportionate to the reliance loss ([258]);
- Where the performance date has not passed and a fair offer for compensation has been made (a ‘remedial offer’) then relief should rarely exceed the offer ([259]);
- Otherwise, the relief should be calculated by reference: (a) to the prospective future gift (a discount may be necessary to deal with acceleration, unspoken qualifications and so on); or (b) to the reliance loss ([260]);
- The guiding principle is always that ‘the aim is to award a remedy which does all that is necessary, but no more than is necessary, to prevent B from suffering detriment as a result of having relied on a promise of a gift of property which A no longer intends to make’ ([261]).
Applying the principles to the facts of this case
The promise made to the son, Andrew, in this case was that he would inherit enough of his parents’ farm to allow him to carry on a farming business. This was no longer possible since the family break-up, and the fact that Andrew’s brother had an equal claim to the farm, meant that Andrew could no longer go back to the farm itself.
The financial award envisaged at first instance might well not be enough to set up elsewhere, even if Andrew should want to do so at his stage in life. So it was, in any event, impossible to give effect to the promise made to Andrew ([272]).
More important, from the minority perspective, is the fact that there was no evidence to indicate that the first instance award was even roughly proportionate to the reliance loss ([273]).
The only possible approach, then, was ‘to make an award of compensation calculated to put Andrew, so far as money can do it, in as good a position as if he had not built his career on those promises’ ([276]).
Unlike the majority, Lord Leggatt thought that it was possible to quantify the reliance loss and he does so in an Appendix to his judgment. This approach has the benefit that there is no need to deal with issues such as acceleration or to take into account the unspoken conditions to which the parents’ promise was subject ([277]).
Lord Leggatt thought that it was fair to assume that, but for the promise, Andrew would have pursued an alternative career in the dairy business ([278]).
The detriment-based relief in this case was the difference between the wages that Andrew would have worked if he had been employed elsewhere and the wages he earned working on his parents’ farm. This, including a sum for the interest that Andrew would have earned on the excess wages, came to GBP 610,000 (Appendix [30]).
Comparison of the majority and minority approaches
Both Lord Briggs (for the majority) and Lord Leggatt (for the minority) articulated a statement of principles concerning the award of equitable relief. The minority statement is set out in this blog post. That of the majority is described in my previous blog post on this case. It is instructive to compare and contrast these two statements.
- The aim of proprietary estoppel
Lord Briggs said that the aim of proprietary estoppel is to undo unconscionability ([94]). No-one would dispute this. Lord Leggatt, however, thought that this was not clear enough. He said that ‘The equity is to be protected from detriment that B will suffer if the promise is not kept’ ([190])
2. When enforcement of the promise is appropriate
Lord Briggs thought that enforcement of the promise (or its monetary equivalent) is the starting point when considering the appropriate relief ([5]).
This is subject to the caveats that this must not be disproportionate to detriment ([72]) and that other factors such as changed personal circumstances of the promisor or the acceleration of a promise due to be performed in the future need to be taken into account ([6]).
Lord Leggatt did not see enforcement as a starting point but as something that may be appropriate where: (a) the date for performance of the promise has passed; (b) reliance loss is difficult to quantify; and (c) enforcement is not clearly disproportionate to the reliance loss ([258]).
It may be appropriate where the date for performance is in the future, the court will need to decide whether to enforce the promise or to compensate for reliance loss ([260]). Enforcement of the promise is a possibility, not a starting point.
Even if enforcement seems appropriate there may need to be adjustments to take account of unspoken qualifications and acceleration ([260]).
3. Should the award be proportionate to the detriment?
This is an area of agreement between the majority and the minority (at least on the face of it); each accepts that enforcement is only appropriate where it is not disproportionate to detriment ([76] and [258]).
4. When are the consequences of reliance ‘incalculable’?
This may be one of the most significant areas of divergence between the majority and minority approaches.
Lord Briggs, as we saw in the previous blog post, thought that a central aspect of the harm suffered by Andrew was the ‘gut-wrenching’ realisation that the promise he had relied on was to be repudiated. This could not be calculated with any reliability ([11]). This pointed to the need to enforce the promise ([12] and [51]).
Lord Leggatt accepted that it might be appropriate to compensate Andrew for the emotional harm ‘from having built his life on an expectation of inheriting Trump Farm which has been disappointed’? (Appendix [34])
He thought, however, that it would be possible to assign a monetary value to this harm. In this case, he decided against doing so, partly because ‘it is inherently difficult to separate feelings of dislocation and distress at having to rebuild his life from other harm for which no compensation can be recovered – for example, the anger and sense of betrayal’ ([37]).
We see in the minority approach a much greater willingness to assume that harm, even psychological harm and emotional distress, can be compensated for financially.
Applying the minority principles, this makes compensating for the reliance loss a much more feasible option.
Michael Lower