Guest & Anor v Guest

In a proprietary estoppel claim, the court must fashion the remedy needed to avoid an unconscionable result. It should begin with the claimant’s expectation arising from the assurance, then test that expectation against proportionality, detriment, countervailing benefits and the interests of the defendants and others. A remedy is not confined to reimbursement of financial detriment or enrichment where the claimant has relied on a promise of a substantial interest in land and has largely performed the requested acts. The court may give substantial weight to the expectation, may adopt a clean-break solution, and may accelerate an inheritance-based entitlement where the circumstances make deferral unjust. The remedy remains a broad but principled judgment, not an enquiry confined to what the owner subjectively intended.

The respondent had worked on his parents’ dairy farm for about 33 years and had lived in accommodation on the farm. The High Court found that his parents had assured him that he would inherit a substantial share sufficient to enable him to continue farming, and that he had relied on the assurance to his detriment.

The High Court ordered a lump-sum payment calculated by reference to 50% of the farming business and 40% of the farm land and buildings, subject to tax adjustments and a life interest in the farmhouse. The order was likely to require a sale of the farm. Permission to appeal was refused on the existence of the equity, leaving the Court of Appeal to determine only whether the remedy was wrongly fashioned. The central issue was whether relief should be limited to detriment-based compensation, deferred until the parents’ deaths, or instead give substantial effect to the respondent’s expectation.

1. Appeal dismissed. The issue was remedy only. The judge had not erred in principle by approaching the matter in two stages: first, whether an equity arose; and secondly, how it should be satisfied. The distinction between a two-stage and three-stage analysis did not materially alter the broad, principled discretion required in either approach, as illustrated by Crabb v Arun District Council [1976] 1 Ch 179.
2. The proposed objective-bystander test was rejected. The court must assess unconscionability in all the circumstances, including the claimant’s expectations and detriment. It must not ask only what arrangement the owner would have intended to avoid an unconscionable result.
3. Where a sufficiently clear assurance has been relied on for many years, the claimant has suffered substantial detriment and has largely performed the acts requested, expectation may be a strong factor in fashioning relief. The remedy is not confined to the increase in the property’s value, wage loss or the defendant’s gain. Such approaches would disregard the nature of the assurance and the loss of the promised opportunity. The approach in Jennings v Rice [2002] EWCA Civ 159 and Habberfield v Habberfield [2019] EWCA Civ 890 supported this analysis.
4. Proportionality remains central. The court must weigh the expectation against detriment, countervailing benefits, the defendants’ continuing interests, the interests of others, taxation and the need for a clean break. The expectation may be scaled down where the assurance is uncertain, extravagant or disproportionate, but it need not be abandoned.
5. It was open to the judge to accelerate an inheritance-based entitlement. Given the breakdown of the family relationship and the impossibility of continued co-operation, deferral or a declaration would not necessarily avoid an unconscionable result. A clean-break order and likely sale of the farm were within the discretion, especially with a life interest for the parents and allowance for tax consequences. A discounted farming business tenancy would not satisfy the equity because it did not reflect the assurance of a substantial inheritable interest and provided no guaranteed renewal. The appeal was dismissed.

• Court of Appeal (Civil Division): The appeal against the remedy ordered by the High Court was dismissed: [2020] EWCA Civ 387.
• High Court of Justice, Business and Property Courts, Property Trusts and Probate List (Ch): HHJ Russen QC found a proprietary estoppel equity and ordered a lump-sum payment calculated by reference to the farming business and farm land and buildings, subject to tax adjustments and a life interest in the farmhouse: [2019] EWHC 869 (Ch).