2018 Estate Disputes round up: Part 1 Proprietary Estoppel

It’s been a bumper year for proprietary estoppel cases. Here is a round up of some of decisions that caught my attention.

James v James [2018] EWHC 43 (Ch)

The claimant, Sam, in James v James was the son of the deceased, Charles James. The subject matter of the proprietary estoppel claim was the deceased’s farm in Dorset. The case was decided by HHJ Paul Matthews sitting in the High Court. Sam’s case was unsuccessful, in HHJ Matthews’ judgment, on each of the essential ingredients of the doctrine of proprietary estoppel.

Promises or assurances

There had been occasions where Charles had told Sam what his testamentary intentions were. But a statement of current intentions as to future conduct is not a promise of that conduct, let alone a promise intended to be acted upon. Making a will in favour of someone is not the same as promising to leave property to that person. It is ambulatory, merely a statement of current intention, and can be changed at any time.

The high point of Sam’s case in relation to an assurance was his evidence that, before buying further land the deceased had asked Sam whether he should buy it, because (as Sam put it) “I would be farming it one day”. HHJ Matthews accepted that the deceased had said words to this effect to Sam, at least twice.

However, these comments needed to be considered in the context of the personalities of the individual in question. Sam’s evidence had been that Charles wanted to keep all the assets in his own name as long as possible, and, although he liked to make decisions, he would not make them until he was good and ready. He had stated in evidence that he did not accept that Charles would give away any of his land during his life. Charles did not easily make promises to transfer property, let alone actually transfer any of it. To Charles, “money was God.”

Against that background, the comments made by Charles James did not amount to a promise or assurance to leave the property to Sam. Really, these comments reflected nothing more than him acknowledging that one day he would die and would have to pass the land to the next generation and, at the time that he made these remarks, Sam was the obvious person to leave it to. Statements of intention of this sort are not promises intended to be acted on. 

HHJ Matthews remarks [38]:

“there is sufficient place in our legal system for a landowner to be able to express a present intention to leave property by will to another person but without making any promise to do so, such that he or she is not then bound so to leave the property even if that other, misunderstanding what the landowner has done, purports to rely to his or her detriment on a supposed promise.”

Detriment and reliance

Sam’s case further lacked the necessary reliance and detriment to found a proprietary estoppel.

Sam could not demonstrate sufficient detriment. This was not the classic proprietary estoppel scenario where a claimant works for nothing, or very little, on the strength of assurances that they would inherit the farm. Sam had been properly paid the going rate for farm work, had been bought cars (which had been shown in the business accounts as ‘bonuses’), had occupied a property rent-free, had been made a partner in the family business and in time had received some land, cash and a haulage business.

There was further no evidence of reliance. Sam had not ever thought seriously about going away to make his fortune in some other industry or occupation.

Relief

Given all of the above, the question of how to approach the relief to be awarded was not a live issue in James v James. Nonetheless, HHJ Matthews did express his view on the relevance of proportionality, comparing views expressed by the Court of Appeal in Davies v Davies [2016] EWCA Civ 463 with those expressed in Suggitt v Suggitt [2012] WTLR 1607:

In Davies, Lewison LJ appeared to endorse a suggestion put forward by counsel in that case that there should be a sliding scale approach, whereby greater weight would be given to expectation in cases where there is a clearer expectation, greater detriment and a longer passage of time during which the expectation was held.

In Suggitt (which was cited in Davies), at [43] Arden LJ referred to the judgment of Robert Walker LJ in Jennings v Rice [2002] EWCA Civ 159, where he had said that, rather than to simply fulfil the claimant’s expectations: “if the claimant’s expectations are uncertain, or extravagant, or out of all proportion to the detriment which the claimant has suffered, the court can and should recognise that the claimant’s equity should be satisfied in another (and generally more limited) way.” Commenting on this statement, at [44], Arden LJ said that this: “does not mean that there has to be a relationship of proportionality between the level of detriment and the relief awarded“.

HHJ Matthews, for his part, comes down on the expectation fulfilment side of the debate stating as follows:

“51. For what it may be worth, I agree with what Arden LJ said. Proprietary estoppel is a doctrine which, like the law of contract, focuses on expectations created rather than losses suffered. So if A promises B some property right, intending B to rely on this, and B does rely on it to B’s detriment, the natural impulse is (as with contract law) to require A to make good the expectation. Making the remedy proportionate to the detriment suffered would be to focus more on what B has lost, rather than on what B expected to obtain.

52. But of course proprietary estoppel is not as strict as contract law. It is also an equitable doctrine, and therefore tempered by conscience. So there may be exceptional cases where (as Robert Walker LJ said) it is just not right to require A to go the whole length of satisfying the expectation created. In those cases, there may be another way to satisfy the equity raised, without however necessarily requiring the remedy to be proportionate to the detriment. For myself I respectfully doubt how far a “sliding scale” approach would be useful. Just as a contract is either made and broken or not, either the promisor has created an expectation, on which the promisee has relied to his or her detriment, or not.”

 

Habberfield v Habberfield [2018] EWHC 317 (Ch)

The dispute concerned a family farm in Somerset. The Claimant, Lucy, was one of the four children of the deceased, Frank Habberfield. The farming business had been operated as a partnership between Frank and his wife, Jane. The main business had been dairy farming, however that had ceased when Lucy had departed from the farm following a disagreement with other family members.

The case was decided by Birss J.

Promises or assurances

Birss J found that the following representations had been made to Lucy:

  • From time to time, Frank told Lucy that she would take the farm over when he could not do farming any more.
  • Shortly after the re-establishment of the dairy herd, Frank told her that “they are your cows, and if you want them you should milk them”.
  • When Lucy and Frank were discussing the need to replace the milking parlour in due course, Frank said that he did not know how much it would cost but that the responsibility for replacing it would be Lucy’s.
  • From time to time, Lucy would raise the issue of her extensive work and limited remuneration and/or need for time off. Frank and Jane would assure Lucy that she could not have the benefit of her hard work both now and in the future. Frank in the presence of Jane assured Lucy that she would receive the farm and the farming business in the future because they could not run the farm forever.
  • When Lucy asked for any time off she was told that if she did take time off ‘the cows would not be there when she got back’.
  • When she asked for a weekend off to spend at South West Young Farmers Club, she was told that if she wanted the farm then she had to stay to ensure the work was done.
  • Frank would require Lucy to deal with staff employed to help on the farm, in relation to the milking, telling her that the employee would in time be working for her.

Whilst some of these statements related to the operation of the business, rather than ownership of the farm property, Birss J concluded that, taken as a whole, they did amount to assurances that the farm business and land would be Lucy’s one day. Birss J concluded that the statements in this case, in contrast to those in James, were in the form of assurances that, in return for what Lucy was being asked to do now, she would receive something in the future.

Detriment and reliance

Birss J heard expert evidence on the question of the remuneration that Lucy could have expected to receive for her work. His conclusions on detriment were summarised as follows [207]:

“The detriment overall can be summarised as pay lower than she could have reasonably expected for her work, long hours, few holidays and the continued commitment to Woodrow. This applied for all the time she was at the farm. By 2013 Lucy had acted in this way for just under 30 years. A notable feature of this detriment is that it does not only consist in the level of pay and conditions, it also involves her commitment to farming at Woodrow rather than elsewhere. She became and is a highly skilled dairy farmer. It is hard to imagine what would have happened if Lucy had not been assured she was working to build and maintain a successful dairy farm which she would inherit, because that is a long way from what happened. The assurances had been given from more or less the start of her working life in the early 1980s and continued until 2008. If they had not been given things would have been very different. Most likely Lucy would still have learned dairy farming from her father but then she would have gone elsewhere, probably sometime in the 1990s. She probably would have sought a farming tenancy elsewhere long ago. To borrow an expression from other cases, in this case the claimant has positioned her working life based on her parents’ assurances.”

Birss J estimated the quantifiable part of Lucy’s detrimental reliance. He took account of the expert evidence concerning typical agricultural wages in order to estimate what Lucy could reasonably have earned over the period of her labour on the farm, and offset that against what she did in fact earn, to reach the conclusion that the upper limit of her quantifiable reliance losses stood at c. £220,000.

Relief

Birss J also considered the debate concerning the approach to be taken to remedying the estoppel which has been found to have arisen and the decisions of the Court of Appeal in Davies and Jenning v Rice to which HHJ Matthews referred in James.

Birss J posed himself the following questions:

  • Could it be said that Lucy’s detriment could be fairly quantified such the foundation of the claim would be removed if she received that sum by way of compensation? The answer to this question, in Birss J’s view, was ‘no’. Part of her detriment could be quantified but her commitment to the farm over three decades and her lost opportunity to go somewhere else and build a different life could not be readily quantified.
  • How certain were Lucy’s expectations? In Birss J’s view, she expected to receive a viable dairy farm and that was a specific expectation that was capable of being vindicated. The question of whether or not that would be the right thing to do, was a separate consideration.
  • Were Lucy’s expectations fairly derived from the assurances? In Birss J’s judgment, they were and following Jennings v Rice, this was not a case for saying that the expectation was no more than a starting point.

Birss J developed his analysis further by reference to sliding scale approach mooted by Lewison LJ in Davies. Whereas HHJ Matthews was not attracted to this approach, Birss J considered it to be useful, subject to one refinement – it is not only the length of time that the claimant has held the expectation and the extent of their detriment that is relevant in considering whether or not to give effect to it, how far the claimant has gone in performing what was expected of them is also relevant. In a quasi bargain case, where a claimant has been working to fulfil the promise made to them, they should be entitled to receive their expectation where they have substantially fulfilled their side of the bargain.

Birss J concluded that Lucy had done what had asked of her over the years and thus that this was a case in which she should receive compensation based on her expectation, rather than her reliance loses. What she was promised was a viable dairy farm.

However, Birss J considered that the following factors needed to be taken into account in determining what relief to award Lucy:

  • It had always been intended that some land would go to Lucy’s siblings and it would be fair to deduct some of the land to reflect this.
  • The farmhouse was Jane’s home and should also be deducted.
  • Lucy had rejected an offer made by her parents to resolve disagreements concerning the future of the farm in 2008 and had departed from the farm in 2013. The offer had been a genuine attempt to resolve the succession issue. Had Lucy accepted the offer and remained at the farm, there would still have been a viable dairy unit.
  • The relative size of the quantifiable reliance loss, as compared to the value of the expectation did not in his view necessitate a further reduction in addition to the reduction he considered appropriate for the rejection of the 2008 offer.
  • An in specie transfer would not be appropriate given that it would not, in his view, be fair to make an order that would inevitably force Jane to leave her home or to separate the land from the farmhouse (although he recognised that it might not be possible to avoid a sale).

An award ward would be made assessed by reference to the land and buildings where the dairy enterprise had been carried out, excluding the farmhouse and other and, necessitating a cash payment of c. £1,170,000.

I understand that this decision is under appeal to the Court of Appeal.

 

Thompson v Thompson [2018] EWHC 1338 (Ch)

The deceased, Norman Thompson, and his wife, Doreen, had five children – four daughters and one son, the claimant, Gilbert, who was the youngest. The defendant was Gilbert’s mother, Mrs Thompson. Gilbert’s sisters had all moved away, however Gilbert stayed and worked on the land for most of his life. His case was that he had done so in reliance upon representations, promises and assurances that he would receive the farm upon the death of his parents.

This was a decision of HHJ Davis-White QC sitting in the High Court.

Promises or assurances

Gilbert alleged, and the judge accepted, that he had been told by his mother that she and Norman had continued having children as they were determined to have a son to take over the family farm. A partnership had been set up between Norman, Doreen and Gilbert under the trading name “Thompson & Son”.

Although this was not a case where it was possible to pinpoint a specific occasion on which promises or assurances were given, the judge was satisfied that the farm, including the family home had been promised to Gilbert and that this was a very long standing promise or assurance, repeated within the family and to Gilbert, (and others) on many occasions from when he was fairly young and starting to work full time on the Farm.

Detriment and reliance

Gilbert had dedicated his whole life to the farm which had effected his lifestyle in terms of working hours, financial independence and ability to buy or live in his own house.  He had been the recipient of very low wages. The submission that Gilbert would have acted the same way anyway and that he lacked initiative and therefore there was no reliance at all, was rejected.

Relief

HHJ Davis-White QC stated in conclusion:

“161. I consider that this case falls squarely within the principle referred to by Lewison LJ in the Davies case at paragraph 40 of his judgment:

“[40] In Jennings v Rice at [45] Robert Walker LJ referred to a class of case in which the assurances and reliance had a consensual character not far short of a contract. In such a case “both the claimant’s expectations and the element of detriment will have been defined with reasonable clarity”. In that kind of case the court is likely to vindicate the claimant’s expectations.  Although Robert Walker LJ does not say so in terms, it is implicit that in such a case the claimant will have performed his part of the quasi-bargain….”.

162. I am satisfied that it would be unconscionable were Gilbert now to be denied the Farm on Mrs Thompson’s death and that the equity that arises must be satisfied by giving him the Farm after her death.”

 

Gee v Gee & Anor [2018] EWHC 1393 (Ch)

This case concerned a family farm in Oxfordshire, valued at c. £8 million. The claimant, John M Gee (“JM” in the judgment), was the son of the first defendant John R Gee (“JR” in the judgment). The second defendant was JR’s second son, Robert Gee (“RG”). 


JM worked on the family farm from the 1970s through to 2016 when he was dismissed, ostensibly for gross misconduct. Following a family fall out, JR transferred all of his property and holdings to RG. JM alleged that an estoppel had arisen in his favour.


Birss J decided the case.

Promises or assurances

JM relied upon 6 specific representations:

  • In 1988 when JM was about 30, JM told his father than he wanted to farm on his own account and take on JR’s role and ownership of the farm and JR assured him that he would one day.
  • In about 1993 in the course of a discussion between various farmers about the inheritance of their farms, JR agreed, within JM’s hearing, that such farms should pass to the son who stayed on the farm and worked and farmed there. 
  • In about 1995 JM and JR conducted the farm’s bank manager on a tour.  JM commented to the bank manager that he hoped to pass the farm on to his own children.  JR did not object or contradict this. 
  • In about 1998 JR told JM that the certain land was his and that in due course he could use it as collateral to buy out his siblings shares in the farm land. JR also told JM that JM could farm that land on his own account. 
  • In about 2008 JM objected to JR’s plan to build a new dwelling on gardens of a farm cottage.  JR replied that JM could build a dwelling there using company collateral “when it’s yours”. 
  • In August 2009 JR told JM that he had a discretion as to how to spend the company’s income which JM understood to mean that JM now controlled the business.

Birss J found that over a twenty year period from the late 1980s until about 2009/10 his father JR made it clear to JM that he would succeed his father as the farmer and owner albeit that some provision would be made for JM’s other siblings.   The early representations in particular were made by JR to encourage JM to remain on the farm and farm the land.  The representations were serious and were understood as such by JM.

Detriment and reliance

JM was paid minimum wage, although his qualifications and experience would have entitled him to earn more elsewhere. He worked unpaid overtime, which had also impacted upon his family life. His quantifiable detriment was valued at c. £180,000.

He positioned his life on the strength of the representations made to him and had lost the opportunity to set up his own farming enterprise.

Unconsionability

It was unconscionable for JR to resile from his representations.  The background to JM’s dismissal did not afford any justification to JR resiling from his representations to JM.  His dismissal happened in the context of this hotly disputed claim and after JR had already made the transfer to RG.

Relief

Awarding JM the quantifiable aspect of his detriment would not satisfy the equity. In part this was because of the non-quantifiable aspects but also because JM had done what his father’s representations were designed to have him do over a very long period of time. JM could not go back to being 30 years old and run his whole life again.

The appropriate approach was to base the remedy on the expectation, not the financial value of the measurable parts of the detriment.  A fair outcome was for JM to receive a controlling shareholding of 52% of the shares in the business and 46% of the land. What he had expected was the “lion’s share” of the land. Further submissions were to be heard on how that should be given effect to and as to whether or not the transfers to RG could be reversed.

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