Thompson v Thompson

Proprietary estoppel requires an assurance of sufficient clarity, reasonable reliance and detriment caused by that reliance. These matters should be assessed holistically rather than in watertight compartments. The central question is whether, looking back from the time when the assurance falls to be performed, it would be unconscionable to permit its repudiation.

In satisfying the equity, the court must balance the claimant’s expectation, reliance and detriment against any countervailing benefits. Proportionality governs the remedy. Where the assurance and reliance have a consensual character approaching a contract, the court may vindicate the claimant’s expectation. On the facts, the promised inheritance of a farm and bungalow was established and was enforced by granting the claimant the relevant interests after the defendant’s death.

The claimant, the defendant’s son, worked throughout his life on the family farm for relatively low remuneration. He claimed that both parents had repeatedly assured him that the farm, including a bungalow, would eventually be his. The defendant denied making such assurances and contended that the claimant had no interest beyond his one-third partnership share.

The trial concerned whether a proprietary estoppel had arisen and, if so, what interest should satisfy it. The court also noted unresolved issues concerning dissolution and winding up of the farming partnership, which were reserved for further directions.

1. Proprietary estoppel. The court found that both parents had repeatedly made clear and definite assurances that the farm, including the bungalow, would pass to the claimant after the death of the surviving parent. The assurances were part of an overall understanding that he would devote his working life to the farm.
2. Reliance and detriment. The claimant reasonably relied on the assurances. He worked long hours for very low remuneration, sacrificed financial independence and did not pursue alternative employment or housing opportunities. These matters constituted substantial detriment. The one-third partnership interest was an advance towards fulfilment of the promise and did not replace or defeat it.
3. Unconscionability. The relevant questions were interrelated and required a holistic assessment. The equity had crystallised by 2014. Later events, including the claimant’s exclusion from the farm, did not undo the established reliance or detriment. It would be unconscionable to deny him the promised inheritance.
4. Remedy. The court applied the principle that relief must be proportionate to the detriment and must take account of countervailing benefits. Because the assurances and reliance had a consensual character approaching a contract, the appropriate result was to vindicate the claimant’s expectation. The defendant’s effective two-thirds interest in the partnership and farm was to be held for her life and then pass to the claimant. The bungalow was to be treated similarly, subject to the defendant’s lifetime right of residence and any necessary arrangements on sale.
5. The court declared that the claimant had established proprietary estoppel in relation to both the farm and the bungalow. The precise form of relief, partnership issues, costs and other consequential matters were reserved for a further hearing.