A note on Guest v Guest [2020] and its significance to proprietary estoppel

June 4, 2020

By Andrew Williams

A week before lockdown gripped the nation, the Court of Appeal handed down judgment in an increasingly long line of proprietary estoppel claims arising out of unpaid or inadequately remunerated farming work. This one, Guest v Guest [2020] EWCA Civ 387 concerned a farmer who had worked on his father’s farm for over 30 years for modest pay, believing his parents’ assurances that one day he would inherit a proportion of the farm.

Given that there had been a breakdown in family relations, at first instance the judge had held that in order to achieve a clean break, the farm should be sold and a lump sum paid to the son. The lump sum was calculated by reference to 50 per cent after tax of the market value of the farming business and 40 per cent after tax of the market value of the farm itself.

In such cases, assuming that the constituent parts of a claim in proprietary estoppel can be made out, a key issue is how to satisfy the equity that arises.  Or to put it another way, what should the court award?

Floyd LJ cited the key passages from Jennings v Rice [2002] EWCA 159 in which Aldous LJ held that the task of the court is to do justice, the most essential requirement being that there must be proportionality between the expectation – by which he meant the remedy – and the detriment. Robert Walker LJ developed this point in the same case, acknowledging that there are some cases in which the representor and the represented have reached a mutual understanding that is in reasonably clear terms but does not amount to an enforceable contract.  The court’s natural response will be to satisfy the expectations, “but 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.”

In Guest v Guest the judge at first instance rejected the suggestion that this was a quasi-contract case (in which a court is likely to award what had been promised). After all, the father’s promises as to what his son would receive were too imprecise. Based on Robert Walker LJ’s guidance, then, one might expect that the eventual remedy would be based less on the son’s expectation and would take more account of proportionality. It was, in essence, for that reason that the father appealed, contending that the award should not have so closely reflected what had been promised.

The Court of Appeal rejected a submission that the son should have been awarded a sum that reflected merely the increase in value of the farm attributable to his work. Rather, Floyd LJ held that the assurance had been sufficiently clear that he would inherit a sufficient interest in the farm to enable him to farm there long term. That assurance was intended to be, and was, acted upon. Therefore it would be unconscionable to repudiate the promise and for an award to be limited by reference to any increase in value.

The father’s legal team had submitted that the extent of the remedy should be limited to what an objective bystander would have said was the arrangement that the owner must be taken to have intended in order to avoid an unconscionable result. Floyd LJ rejected this while holding that the objective of the remedy is to avoid a result which is unconscionable.

Accordingly Floyd LJ considered that the trial judge had not erred when making an award that attached  important weight to the son’s expectation.  Further the need for a clean break militated in favour of his solution.