Remedial discretion is one of the defining characteristics of proprietary estoppel. Once the essential elements of proprietary estoppel have been established, the court decides on the relief needed to undo the unconscionability.
This flexibility is one of the strengths of proprietary estoppel, enabling the courts to consider a wide range of factors and do justice as between all the parties involved.
The courts have tried to articulate the principles that guide them in the exercise of this discretion and there is an abundance of judicial pronouncements and academic literature reflecting on this issue.
One of the themes dominating these reflections is whether the courts should focus on satisfying the expectation generated by the relevant promise or assurance or whether, instead, the aim should be to compensate the promisee for any loss or detriment occasioned by reliance on the promise.
In Guest v Guest, the UK Supreme Court had the opportunity to address these issues. There are majority and minority judgments, each articulating a statement of principles concerning equitable relief in proprietary estoppel.
This blog post seeks to identify the central themes to emerge from the judgments in Guest. The treatment is brief; I expect that the judgments will be the subject of extensive discussion as the courts and commentators engage with them.
Essential features of the claims to which Guest applies: ‘property expectation claims’
In Guest v Guest parents promised their son that he would inherit, on their death, enough of their farm to allow him to set up his own viable farming business. It concerned, therefore, ‘a non-contractual promise or assurance about property upon which the recipient has relied to their detriment’ ().
The majority judgment distinguishes this form of proprietary estoppel from cases concerning informal assurances of a supposed existing right but regards both forms as being part of the same doctrine.
The minority judgment, by contrast, argues that cases about promises concerning future rights in land are a category of their own. For the minority, the Court of Appeal decision in Crabb v Arun District Council as playing a decisive role in the application of proprietary estoppel to cases like this ( – ). The House of Lords decision in Thorner v Major is seen as articulating the essential features of this kind of proprietary estoppel claim ( – ).
Lord Leggatt argued that where the promise of a future right in land is treated as ‘an independent basis for acquiring property rights’ then it should be described as a ‘property expectation claim’. This does not necessarily mean that it rests on different legal principles than other forms of claim currently described as ‘proprietary estoppel’ (155)).
It remains to be seen whether the idea of a new category of ‘property expectation claim’ gains any traction. This concept is suggested in a minority judgment but this does not mean that it could not be taken up in some form in the future.
When enforcement of the promise is the right approach
Lord Briggs’ review of the authorities led him to the conclusion that expectation fulfillment has always been the starting point for equitable relief (). The majority judgment takes enforcement of the promise as the starting point ().
The majority accept, however, that there may be reasons to modify full enforcement of the promise; the award must not be disproportionate to detriment, the legitimate claims of the promisor and third parties and the award may over-compensate the promisee if it accelerates receipt of property which had been promised at some future time (, ).
Enforcement of the promise is appropriate in those cases that 'fall just short of a contract' (). Here, the parties have agreed that the expectation (that the promise will be kept) and the detriment are well-aligned.
The minority approach
The minority judgment sees prevention of detriment as the aim of proprietary estoppel () and this naturally has consequences in terms of the approach to relief. The minority accepts that enforcement of the promise may be appropriate where detriment cannot be quantified () but implies that it often will be possible to quantify detriment.
The difference in approach can have significant consequences. The relief awarded by the majority, applying an expectations-based approach was valued at GBP 1.3 million (less the value of a life interest awarded to the parents) (). The minority, taking a detriment-based approach would have awarded GBP 610,000.
The need for proportionality
While the majority see enforcement of the promise as the starting point, they acknowledge that a proportionality test has taken root in England; the award should not be out of all proportion to the detriment, provided that the detriment can readily be identified (). The party asserting that enforcement of the promise is disproportionate to detriment has the burden of proof ().
This suggests that the approach is to take enforcement of the promise as a starting point and then make deductions or modifications to take account of issues such as acceleration of receipt or legitimate claims that the promisor or others may have.
The role that detriment plays is left unclear. Lord Briggs acknowledged that it will be appropriate for relief to focus on undoing detriment ‘where the detriment is specific and short-lived, and in particular shorter than the parties are likely to have contemplated’ ().
But what about other cases in which enforcement of the promise is disproportionate to detriment? Lord Briggs says that the fact that full specific performance is inappropriate does not mean that detriment should be taken as the yardstick ().
Lord Briggs does not explain what the court should do in cases where enforcement would be disproportionate. Is there any alternative to taking a detriment-focused approach? There is no guidance as to how the courts should react when it is shown that there is a disproportion between detriment and enforcement of the promise.
Detriment and harm
Lord Briggs says that, ‘wherever the relevant detriment has (as here) had lifelong consequences, a detrimental valuation analysis will fall upon stony ground’ ().
That is, enforcement of the promise is especially likely to be appropriate where the promisee has organized their life in fundamental ways in reliance on the promise.
Lord Briggs distinguishes between ‘harm’ and ‘detriment’. ‘Detriment’ is an essential requirement for a successful proprietary estoppel claim but the ‘harm’ occasioned by resiling from a promise made and relied on might go beyond the detriment.
Lord Briggs explained the ‘harm’ in Guest:
‘In a case like the present, the harm consists of the soul-destroying, gut-wrenching realisation of being deprived, and then actually being deprived over the rest of a lifetime, of an expected inheritance of land upon which the promisee has spent the whole of his life and work to date and which, in due course, he expected to be able to pass on to one or more of his own children, making the same promise to them as his father made to him … this cannot necessarily be valued with any reliability ().
Since the ‘harm’ is significant, and since it defies precise calculation, the inference is that enforcement of the promise (perhaps with adjustments to take account of special factors) is the only possible course.
There is an emotional or psychological element which is significant, needs to be reflected in the award of relief and defies calculation.
It may also be being suggested that the consequences of reliance on the promise, the range of opportunities foregone, are so wide-ranging that they cannot be calculated.
The minority approach to 'harm'
The minority took a very different view. They thought that the award should seek to undo the detriment incurred by the son because of his reliance on the promise. Thus, they sought ‘to make an award of compensation calculated to put Andrew, so far as money can do it, in as good a position as if he had not built his career on those promises’ ().
They thought that it was possible to calculate the detriment by working out the difference between what the son was paid by his parents for the work on the farm and the amount he would have been paid had he taken a similar job elsewhere ().
Lord Leggatt accepted that it might be appropriate to compensate Andrew for the emotional harm ‘from having built his life on an expectation of inheriting Trump Farm which has been disappointed’ (Appendix ). He thought, however, that it would be possible to assign a monetary value to this harm.
The minority's confidence about the court's ability to put a monetary value on harms would make it easier to contemplate a detriment-based approach to relief.
The majority approach in Guest takes enforcement of the promise as the starting point for relief in proprietary estoppel cases where the promise is of a future interest in land.
This can be departed from where enforcement is shown to be out of proportion to the detriment incurred.
Guest does not offer guidance as to how the courts should react in these cases, except to say that compensating for detriment is not the default option.
Detriment will rarely be relevant when reliance has had ‘life-long consequences’. This is, presumably, because the detriment (or ‘harm’) is incalculable. The minority judgment suggests that the courts should not be too quick to abandon the task of calculating even psychological harm.