UK Supreme Court clarifies proprietary estoppel
In the recent decision of Guest v Guest  UKSC 27, the UK Supreme Court clarified the applicable principles in identifying the appropriate relief in proprietary estoppel claims. Historically, the usual remedy was to enforce the promise and when the circumstances make strict enforcement unjust the court could substitute a payment based upon the value that the promisee expected to receive. In a 3:2 majority, the Supreme Court held that the remedy should not be out of all proportion to the detriment suffered without good reason and alternative remedies could also be available. English cases are persuasive in the offshore jurisdictions.
The Claimant (Andrew) was the eldest child of the Defendants who owned a farm. The parents had promised Andrew a substantial share of the farm, which was reflected in their wills in 1981. The wills were revoked in 2014 when the relationship between the parties deteriorated. By then, Andrew had worked in the farm for 32 years on low wages. In 2015, the farming partnership was dissolved, and Andrew was asked to leave his family home on the farm. Andrew claimed a share in the farm or its monetary equivalent on the grounds of proprietary estoppel.
At first instance, the court ordered the parents to make an immediate payment of £1.3m to satisfy Andrew’s expectation of future inheritance. The decision was upheld at the Court of Appeal and the case was appealed to the Supreme Court.
In the Supreme Court, Lord Briggs, giving the lead judgment, held that the purpose of proprietary estoppel is to prevent or compensate for the unconscionability of a person going back on a promise being relied upon by another person. The court should first determine whether going back on the promise, considering the promisee’s detrimental reliance upon it, is unconscionable. If it is, the court will proceed with the assumption that the simplest way to remedy the unconscionability is to enforce the promise, or award monetary equivalent or a combination of both.
However, the remedy should not be out of all proportion to the detriment suffered without good reason. The court should consider in the round whether a particular remedy would do justice to the parties, and essentially whether the promisor would be acting unconscionably by conferring the proposed benefit upon the promisee.
Applying these principles, the Supreme Court granted alternate remedies of either putting the farm into trust in favour of Andrew and his siblings or paying compensation to him now but with a reduction properly to reflect his early receipt of the expected inheritance.
In the minority, Lord Leggatt disagreed and describes the purpose of proprietary estoppel as being to prevent a party going back on a promise without ensuring the person relying on the promise will not suffer a detriment as a result of that reliance. In his view, the court could either compel the performance of the promise or award monetary compensation to put the promisee into as good a position as if they had not relied upon the promise. He would have awarded Andrew £610,000 which reflects the estimated additional amount he would have earned by working elsewhere.
This decision demonstrates the difficulty in valuing the detriment suffered in proprietary estoppel. It gives the promisor the option to choose how they can make good their promise. It provides flexibility in applying the principles of equitable relief. The remedies will be different depending on the circumstances of each case.