There are circumstances where a person can be held to a promise, even if that promise was given only verbally or even intimated by a person’s actions alone. B P Collins’ contentious probate team explores estoppel in more detail and when a claim can be made.
What is estoppel?
The principle of estoppel recognises that where a promise has been made by someone (Party A) to someone else (Party B) and Party B relies on that promise to their detriment, Party A should not be entitled to renege on their promise.
There are different types of estoppel claims, but perhaps the most common are proprietary estoppel claims. Proprietary estoppel claims are claims to enforce a promise relating to property.
What are the requirements of a proprietary estoppel claim?
The requirements of a proprietary estoppel claim are:
- Assurance – there must be a representation or assurance relating to the ownership of land;
- Reliance – Party B must have relied on Party A’s promise;
- Detriment – Party B’s reliance on Party A’s promise must have caused some detriment to Party B; and
- Unconscionability – it would be unconscionable to allow Party A to renege on their promise.
What is an assurance?
An assurance or representation does not need to be a written or even oral promise. An assurance may be implied by conduct. However, the assurance does need to be sufficiently clear and relate to particular property, and it may be difficult to prove that an assurance was clearly made where there have been no oral or written representations.
Proprietary estoppel claims can especially occur in farming families, and the phrase often used is something along the lines of “one day, all of this will be yours”. In any claim, the onus will be on Party B to show that Party A’s assurance was more than a mere statement of their intention at the time. For example, in James v James [2018], a father had told his son on more than one occasion that he intended to leave land to him in his will. The court held that this was insufficient to amount to an assurance and was only a statement of his testamentary intention at that point in time.
On the other hand, in Habberfield v Habberfield [2019], the claimant was able to establish that the statements made to her were sufficiently clear that they did amount to an assurance rather than a statement of intention. In that case it was relevant that the assurance would be that the farm would pass to the claimant as a reward for her hard work. The promise was not entirely specific because there was no discussion about which part(s) of the farm would pass, but an assurance that the claimant would receive enough of the farm to allow her to carry on the business as and when her parents were no longer able to run it, did amount of an assurance for the purposes of an estoppel claim.
What is reliance?
Reliance will generally require Party B to show that they changed their behaviour because of the promise which was made to them. If Party A promised Party B land or property, but Party B did not change their life in any way in reliance on that promise, Party A will generally not be held to that promise.
What is detriment?
Reliance and detriment are closely linked. In relying on the assurance, Party B must have suffered some sort of detriment. Often this is financial such as investing money into improving a property which Party B would not have done if he did not believe he would one day come to own it.
Detriment may also come in the form of missed opportunities. In Habberfield the successful claimant worked on the family farm, working very long hours and for very low pay. In Davies v Davies [2016] the successful claimant showed that she had not pursued other potential career opportunities in reliance on the promise, and the court accepted that this was sufficient detriment.
The detriment must also not be outweighed by countervailing benefits. In Horsford v Horsford [2020], the claimant’s claim for proprietary estoppel failed on the basis that he did not suffer any significant net detriment as a result of his reliance on an assurance. Although the claimant had entered into the family farming business, he had done very well from it, becoming wealthy in his own right and had therefore benefitted substantially from the choice.
What does it mean that it would be “unconscionable” to allow Party A to renege?
Whether it is unconscionable to allow Party A to renege on their promise is inherently linked with the detriment Party B has suffered. In essence, the question asks what would be fair. This often depends on the behaviour of both parties. In Horsford for example, the court decided that even if they had found that the claimant had suffered a detriment, his own conduct would have meant that it would not have been unconscionable for the defendant to have changed their mind.
In most cases where the first three elements of a claim are made out, it will naturally follow that it would be unconscionable to allow Party A to renege and that a remedy should be offered to Party B.
What is the remedy in an estoppel claim?
Where a claim for estoppel is proven, the court will usually prevent the promisor (Party A) from reneging on their promise. However, the court has a wide discretion as to the exact remedy. In some cases, the court will enforce the promise by giving Party B exactly what Party A promised them.
In other cases, the court may ‘satisfy the detriment’ in other ways.
Guest v Guest
In Guest v Guest [2022] the claimant was the son of the two defendants. The defendants owned a farm, and the claimant worked there for 33 years for low wages, in the expectation that when his parents died, he would inherit part of the farm which would allow him to carry on the farming business. Although the exact inheritance was unspecified, the claimant was led to believe that he would receive a ‘substantial’ share of the farm. Following a falling out between the parties, the claimant left his home on the farm and was forced to work elsewhere. The claimant subsequently discovered that his parents had changed their wills to exclude him entirely.
The claimant brought a claim against his parents (whilst they were still alive) to enforce their promise. The judge found in the claimant’s favour, but there was a dispute over what the remedy should be. The claimant argued that the promise should be enforced as promised i.e. he should inherit a substantial part of the farm. His parents argued that, given he had left the farm, he should be given the minimum compensation possible to compensate him for the detriment suffered to make up for the low wages and lost opportunities of the previous 33 years. This has since been referred to as an issue of expectation vs detriment.
The court concluded that the promise should be enforced. However, as the claimant was receiving his inheritance during his parents’ lifetime rather than on their deaths, the parents were offered a choice. They could either:
a. Accept that the claimant’s promised share should be held on trust for him until their deaths; or
b. They could sell the farm and pay the claimant his share, with a discount to reflect the fact that he had received his inheritance early.
Whilst the Guest case did answer many questions on the “expectation vs detriment” arguments, it was an unusual choice to allow the defendants to choose their remedy. Choice of remedy would normally only be offered to a successful claimant in proceedings. However, this does demonstrate the flexibility the courts will have to assessing the appropriate remedies in estoppel claims.
When can a claim be brought?
Although estoppel is an equitable remedy, generally thought to be used as a shield rather than a sword – essentially a defence to a claim rather than a claim in itself – it is increasingly common that estoppel will form a claim in its own right. These claims can be brought at any point where it becomes apparent that Party A has or is going to renege on their promise.
Many of these claims only arise once Party A has died. This is because they often relate to a future promise, and often to a promise of inheritance. It therefore won’t become clear that Party A has reneged until they have died, and the terms of their will (or the intestacy rules) come into effect.
However, as has been shown in Guest, this is not always the case and claims can be brought against living people and even where Party A has not technically reneged (in the Guest case it is possible that the defendants might have changed their wills again before their deaths to give effect to their promise).
If you have been promised something which has not been delivered, it may be possible to being a claim for proprietary estoppel. You may also have a claim if you were promised that you would receive a property under the terms of a will and that promise has not been fulfilled.
Whether you are a potential “Party B” or are representing the interests of “Party A”, our expert contentious trusts and probate team can advise you in relation to claims for estoppel and the remedies which may be available to you.
If you require advice in relation to an estoppel claim, please contact our private wealth dispute lawyers at enquiries@bpcollins.co.uk or on 01753 889995.
