Baker v Baker

In proprietary estoppel, monetary relief is not automatically repayment of the representee’s contribution. The court must identify the extent of the equity created by the promise, then select relief that satisfies it fairly and does not exceed the induced expectation. Where promised lifelong accommodation cannot be restored, valuation ordinarily begins with the value of the promised occupation at termination, adjusted for material circumstances, conduct and the parties’ ability to pay. By majority, alternative rent-free public accommodation should not reduce that valuation, although it may be relevant when choosing the final relief. An insufficient evidential basis requires an inquiry rather than a speculative award.

The plaintiff contributed his savings towards the defendants’ purchase of a family home in return for a promise of lifelong rent-free occupation of a room and shared household amenities. After an unfounded accusation, he left the property and obtained local-authority accommodation. The High Court found proprietary estoppel and ordered repayment of the full £33,950 contribution, with interest and a charge over the property. The appeal concerned the proper measure of equitable relief, the relevance of alternative accommodation and housing benefit, and whether the Court of Appeal could assess the sum without further inquiry.

1. Appeal allowed. The High Court award was set aside. The matter was remitted for an inquiry before Judge Hywel Moseley Q.C. to determine compensation for the termination of the plaintiff’s rights of occupation on 13 June 1988. The appeal costs order was not to be enforced without leave; costs below stood, subject to legal aid taxation.
2. All three Lord Justices agreed that an equity had been established and that monetary relief was the only practical remedy. The judge had erred in treating the whole £33,950 gift as the plaintiff’s loss. The contribution had two purposes: providing a family home for the defendants and children, and securing the plaintiff’s promised occupation. The equity therefore extended only to the latter interest.
3. The court must first determine the extent of the equity and then choose relief appropriate to the circumstances. Relief is flexible but cautious and should provide no more than the induced expectation, while doing the minimum necessary to achieve justice. The starting point was the value, at termination, of the room and associated benefits, including shared amenities and family life, capitalised over the plaintiff’s expected lifetime. The parties’ conduct, the defendants’ ability to pay, and the risk of an oppressive order were relevant.
4. By majority, Beldam and Roch LJJ held that alternative accommodation and housing benefit should not be deducted when valuing the frustrated equitable interest. Beldam LJ relied on public-policy considerations reflected in the Social Security Act 1989, the Social Security Act 1990 and the Social Security Act 1986, and by analogy on Liffen v Watson [1940] 1 K.B. 556. Roch LJ considered alternative accommodation potentially relevant at the later stage of selecting the form and manner of relief. Dillon LJ dissented on the deduction issue and would have reduced the award to reflect secure rent-free accommodation, subject to possible loss of housing benefit.
5. The evidence did not permit an informed valuation. The Court of Appeal therefore declined to guess at the figure and directed a further inquiry, including consideration of temporary accommodation, the quality of the present accommodation, and other material circumstances.

• Court of Appeal (Civil Division): Allowed the appeal, set aside the award and remitted the case for an inquiry into the compensation due.
• High Court of Justice, Chancery Division, Bristol District Registry: Following the trial on 8 July 1992, found proprietary estoppel and ordered payment of £33,950 with interest, secured by a charge over the defendants’ property.