Proprietary estoppel: Two cases – two different outcomes

Proprietary estoppel: Two cases – two different outcomes

Since Davies v Davies, which started in 2014, we have seen a steady stream of proprietary estoppel decisions from the courts. We now have 2 new decisions; two farming families, promises alleged, but very different outcomes.

Guest v Guest

In our Summer Edition 2019 of Agricultural Lore we reported on the High Court decision in Guest v Guest [2019]. The judge ordered a clean break for the parties, due to the bad blood in the family, which meant that Andrew’s (the son’s) interest in the farm was accelerated and that inevitably the farm would have to be sold by his parents to satisfy the order.

The parents appealed the decision, however, the Court of Appeal dismissed the appeal.

Avoid an unconscionable result

The appeal was brought on the basis that the judge had gone too far in his approach to compensation for Andrew. In proprietary estoppel cases there is broad discretion for the judge to do what is necessary to avoid an unconscionable result.  The Court of Appeal agreed that the objective of the remedy in this case was to avoid a result which was unconscionable and that the High Court was correct in its approach.

Andrew’s parents had provided their son with assurances for over 30 years that he would inherit a sufficient interest in the farm, which Andrew had relied upon for little financial return. By repudiating that assurance and effectively disinheriting Andrew, they had acted unconscionably. The judge in the previous decision found that a clear enough assurance had been made and it had been relied upon by Andrew to his detriment.

The judge at the appeal also looked at the alternative remedies proposed by the parents, to avoid an unconscionable result, but held that these would not satisfy this.

Accelaration of share

It was also argued that the judge shouldn’t have accelerated the interest to Andrew, as his original expectation was that he would inherit on the death of his parents. This was not accepted. The judge has wide discretion to balance a number of factors, which, in this case, included the fact that the parties could not continue to work and live together in close proximity.

It was considered that although an immediate sale would prejudice the parents in some ways, it would also release capital to fund their retirements. Clean break solutions are a foreseeable outcome to proprietary estoppel cases, where a breakdown in relations has occurred and the judge cited previous case law (including Moore v Moore [2018]) to demonstrate this.

Horsford v Horsford (Reviewed by Rajvinder Kaur)

On 12 March 2020 the High Court handed down a judgement in the case of Horsford v Horsford [2020]. This decision highlighted the importance of regularly updating written records of agreements between family members, concerning the intended future ownership of family assets.

The claimant, Marian Horsford, was in partnership with her son Peter.  A written partnership agreement had been entered into in 2012.  The partnership agreement included a clause which said that a partner could retire by notice, and that the remaining partners had the option to purchase the share of the outgoing partner.  On Marion’s retirement, Peter elected to exercise the option.

Estoppel v written agreement

There were various issues that the Court was asked to determine.  In particular, Peter asserted that he owed his mother nothing following her retirement, as he had the benefit of a proprietary estoppel claim.  He argued that assurances had been made to him from a young age that he would receive the family farm on his parents’ death.  He claimed to have relied on those assurances to his detriment.  He claimed that he had not waived his proprietary estoppel rights by signing the partnership agreement, as he was not aware of his proprietary estoppel rights until after Marion had retired from the partnership.

The judge did not accept that a proprietary estoppel had arisen in Peter’s favour.  He did not accept that the alleged assurances had been made to Peter, as well as finding that Peter had been well remunerated as a result of his decision to farm with his parents, so had suffered no detriment.

Estoppel rights extinguished

Interestingly though, the Court held that even if the requirements for a proprietary estoppel claim had been made out, those rights had been extinguished by the partnership agreement.  The ‘contractual estoppel’ therefore would have trumped the ‘proprietary estoppel.’  The Court reiterated that where a person has rights in respect of property, and then enters into a contract, which is inconsistent with those rights, that person is estopped from asserting those earlier rights.