Horsford v Horsford

Proprietary estoppel requires an assurance sufficiently clear to amount to a promise, reasonable reliance, and substantial detriment causally linked to that assurance. The central question is whether it would be unconscionable, in the circumstances existing when the assurance is repudiated, to allow it to be disregarded. Benefits causally connected with the reliance must be taken into account.

A later comprehensive written agreement may supersede and contractually estop reliance on earlier inconsistent rights. Where a partnership agreement provides for valuation of partnership land on a partner’s retirement, the land is valued as a whole where that reflects its open-market value, including relevant marriage value. An implied obligation to share an expert valuer’s fees may arise where necessary to give the agreement business efficacy.

The claimant, an elderly mother, retired from a farming partnership governed by a written partnership agreement. The defendant, her son, exercised the contractual option to purchase her partnership share. He resisted payment, claiming a proprietary estoppel equity based on alleged parental assurances that he would inherit the farm and business.

The court determined whether any equity had arisen, whether it had been superseded by the partnership agreement, and what sums were payable under the agreement. The court also considered the valuation of partnership land, apportionment of wind-farm value, and liability for the expert valuer’s fees.

1. Proprietary estoppel. The defendant failed to establish a proprietary estoppel equity. The alleged assurances were statements of intention, not sufficiently clear promises. The parents’ continuing concern to achieve fairness between their children, and the possibility that the defendant would have to compensate his sisters, made the alleged assurance uncertain and inconsistent with the parties’ conduct.
2. The defendant also failed to establish significant net detriment. His work and sacrifices had to be assessed together with the substantial benefits he received, including property, capital contributions, use of partnership assets and the advantages of farming with his parents. Detriment and countervailing benefits had to be causally assessed in the context of the alleged assurance.
3. Effect of the 2012 partnership agreement. The agreement was a comprehensive deed which superseded earlier written or oral arrangements. Its provisions gave the defendant a contractual right to purchase the claimant’s interest at a price calculated under clause 19. Even if an earlier equity had existed, the agreement and declarations of trust replaced or satisfied any inconsistent right. The defendant was contractually estopped from asserting a more favourable discretionary entitlement.
4. Valuation. Clause 19.7 required partnership freehold and leasehold property to be valued, rather than merely the outgoing partner’s beneficial interest. The land was therefore to be valued as a whole where that produced the relevant open-market value, including marriage value. The resulting profit or loss was then to be allocated to the appropriate capital or Land Capital Account.
5. The defendant was bound by the agreed statement of facts under which the wind-farm apportionment was submitted to the expert valuer. The expert’s determination was a matter of valuation, not contractual construction, and there was no legal basis to invalidate it.
6. An implied term required the purchasing and outgoing partners to share the expert valuer’s fees equally. Cooperation and shared payment were necessary to give clause 19.7 business efficacy. Judgment was given for the claimant, the counterclaim was dismissed, and the parties were directed to submit draft orders and submissions on consequential matters including costs.