Introduction
Is there detriment if a parent promises their child that they will inherit the family business if the child works in the business for the rest of the parent’s life and the child does so?
Is there only detriment if the child is able to demonstrate some specifiable alternative opportunities or reasonably likely ‘alternative future’ that they could have pursued had they not organized their lives in response to their parent’s assurance?
Does it make any difference if the child derives considerable wealth from working in the business before the time for the performance of the parent’s promise has arrived?
These were the questions that the English Court of Appeal had to answer in Winter v Winter ([2024] EWCA Civ 699).
Facts
Albert and Brenda Winter (‘the parents’) owned a farm on which they carried on a market garden business. They had three sons (Richard, Philip and Adrian).
The parents promised their sons that they would leave the farm and business to the sons equally.
Relying on this promise, the sons worked in the business for low wages.
The sons were, however, given 20% shares in the business and were millionaires as a result.
When Brenda died, she left her 20% share in the business to be divided equally between the sons. Thus, the sons came to each have a 26.66% share in the business.
Philip paid greater attention to his father after his mother’s death; Richard and Adrian concentrated on looking after the business.
Albert’s relationship with Philip grew closer while that with Richard and Adrian deteriorated.
When Albert died, he left most of his estate to Philip.
Richard and Adrian brought a proprietary estoppel claim, arguing that Albert had acted inconsistently with their parents’ promise that they would inherit equal shares.
Proprietary estoppel
The essential elements of a proprietary estoppel claim are well known: ‘a representation or assurance made to the claimant; reliance on it by the claimant; and detriment to the claimant in consequence of his (reasonable) reliance’ (Thorner v Major [2009] UKHL 18 at [29], Lord Walker).
Detriment
The central concern in Winter was whether Richard and Adrian had incurred detriment.
The concept of detriment was explained by Robert Walker LJ in Gillett v Holt ([2001] Ch. 210): ‘‘The detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances.’
It is also relevant to note that there is a balancing exercise to be carried out where, as in Winter, the recipient of the assurance has received advantages as well as incurring detriment.
The overall impact of these countervailing benefits has to be borne in mind when considering whether, overall, there has been detriment so that it would be unconscionable for the promisor to go back on the promise given (Winter [29] and [40], Newey LJ).
Life-changing consequences of reliance as detriment: unquantifiable non-financial disadvantage
One of the arguments in a case like Winter, where children devote their working lives to the family business is that reliance on the promise given them has had life-changing consequences.
This is a type of detriment that is not merely financial and that is, in a sense, incalculable because it is impossible to say what other opportunities might have been pursued had the parents’ promise not been relied upon.
In Winter, Newey LJ made it clear that the existence of unquantifiable life-changing consequences is not a ‘trump card’ and that it is still necessary to consider whether there is detriment and to balance this type of detriment against any financial benefit (Winter [30] and [40]).
That said, the first instance judge had been entitled to find that by committing their working lives to the family business, ‘Richard and Adrian had suffered detriment outweighing the financial benefits which they had derived from working in the family business’ ([43], Newey LJ).
There was no need to specify the alternative career paths that Richard and Adrian might have pursued: ‘[t]he authorities seem to show that, where a claimant has devoted his working life to a particular course in reliance on an assurance, it may be proper for the court to find detriment even if the claimant has not shown that he would otherwise have been likely to take a specific alternative course which would probably have been beneficial’ (Winter, [45], Newey LJ).
Are life-changing consequences especially likely to be considered detrimental?
Whether life-changing consequences are detriment must be considered on the facts of each case.
That said, where reliance on an assurance has had life-changing consequences over many years, then the loss of opportunity will probably be considered detrimental ([52], Newey LJ).
There is still the need to weigh up the impact of countervailing benefits but detrimental reliance is likely to be found where a parent promises that a child will inherit a farm (or any other business presumably) if they work on the farm during the parent’s life and the child does so ([52], Newey LJ).
Conclusion
Richard and Adrian’s proprietary estoppel claim succeeded.
Devoting their professional lives to the business, with its life-changing consequences, in reliance on the parents’ promise was detriment.
This was true even though they became wealthy in the process and even though it was not possible to describe alternative futures which would have worked out better for them.
Albert’s executors held his shares on trust for the three sons equally.
Michael Lower
**Disclaimer**: The information provided on the Hong Kong Land Law blog is for educational purposes only. It is intended to offer a general understanding of the cases or issues discussed, not to provide specific legal advice. Readers should not act upon this information without seeking professional legal advice. The views expressed are my own and do not necessarily reflect the official policy or position of any court or legal authority.