Guest and another v Guest

The purpose of a proprietary estoppel remedy is to prevent or undo the unconscionability of repudiating a property promise after detrimental reliance. The remedy is not aimed at compensating detriment, although detriment is essential to the equity and provides a proportionality cross-check.

The court normally starts with the assumption that the promisor should fulfil the promise. It may grant different or reduced relief where required by practicality, justice between the parties or fairness to third parties. Full performance need not equal the detriment's value, but should not be out of all proportion to it without good reason.

Relief cannot exceed the promised expectation. Where a future benefit is accelerated to achieve a clean break, an appropriate discount for early receipt is ordinarily required.

The respondent worked on his parents’ farm for more than three decades, mostly for low wages. He reasonably relied on assurances that he would inherit enough of the farm to operate a viable farming business after his parents’ deaths. Following a family breakdown, the parents dissolved their farming partnership with him, required him to leave and excluded him from their wills.

The High Court upheld his proprietary estoppel claim and ordered an immediate payment representing 50% of the farming business and 40% of the farm, subject to tax and a deduction for the parents’ life interest in the farmhouse: [2019] EWHC 869 (Ch). The Court of Appeal dismissed the parents’ appeal: [2020] EWCA Civ 387; [2020] 1 WLR 3480.

The principal questions were whether proprietary estoppel relief should protect expectation or compensate detriment, and how a remedy should address a promised inheritance which was repudiated before it fell due.

1. Appeal allowed and remedial order varied. Lord Briggs, with whom Lady Arden and Lady Rose agreed, held that the trial judge had exceeded the proper ambit of his discretion by accelerating the respondent’s expected inheritance without an adequate discount. Lord Leggatt and Lord Stephens agreed that the original order could not stand, but dissented as to the substituted relief.

2. The purpose of proprietary estoppel relief is neither fulfilment of expectation nor compensation for detriment as an end in itself. Its purpose is to prevent or undo the unconscionability involved in repudiating a property promise after the promisee has relied on it to their detriment. The detriment-based theory of relief was rejected. The historical authorities instead established that holding the promisor to the promise is the normal and natural means of satisfying the equity.

3. The remedial inquiry ordinarily has two stages. The court first asks whether repudiation is unconscionable in light of the detrimental reliance. If it is, the court begins with an assumption, not a presumption, that the promise should be fulfilled. It may grant reduced or different relief because of practical obstacles, justice between the parties, third-party interests or other relevant circumstances. The remedy must finally be assessed in the round.

4. Proportionality is a cross-check against injustice, not a measure of compensation. Applying Jennings v Rice, the relevant question is whether the proposed relief is out of all proportion to the detriment. The promisor bears the burden of establishing that disproportion. Financial comparison alone is inappropriate where reliance has lifelong and non-financial consequences.

5. There is no equity to award more than the promised expectation. A court may accelerate a future benefit where necessary, including to achieve a clean break, but must ordinarily discount the award for early receipt. The trial judge’s order was “expectation plus” because it effectively required the parents to realise the farm during their lifetimes without allowing for their continuing interest in the whole property.

6. The parents were permitted to choose between two forms of relief: a reversionary provision securing the respondent’s promised share after their deaths while preserving their lifetime interest; or an immediate financial settlement based on the trial judge’s framework but discounted to reflect their notional life interest in the whole farm. Any unresolved valuation or implementation question was to be remitted to the Chancery Division.

7. Lord Leggatt, with whom Lord Stephens agreed, considered that the doctrine’s core aim was to prevent detriment caused by reasonable reliance. On that analysis the court should choose the less burdensome of expectation relief and compensation for reliance loss. He would have ordered immediate equitable compensation of £610,000.

1. United Kingdom Supreme Court: The appeal was allowed. By a majority of three to two as to the substituted relief, the parents were given a choice between reversionary relief and an appropriately discounted immediate payment: [2022] UKSC 27 .
2. Court of Appeal: The parents’ appeal concerning the remedy was dismissed. The immediate expectation-based award was upheld: [2020] EWCA Civ 387 ; [2020] 1 WLR 3480 .
3. High Court, Chancery Division: The proprietary estoppel claim succeeded. The court ordered an immediate payment based on 50% of the farming business and 40% of the farm, subject to tax and the parents’ life interest in the farmhouse: [2019] EWHC 869 (Ch) .