A look at proprietary estoppel for those of us outside of the swamp

Elise Roberts, Solicitor in our London Private Wealth Disputes team, takes a look at the implications of the case Winter v Winter on proprietary estoppel claims.

Father: “One day lad, all this will be yours…”

Son: “…what, the curtains?”

Father: “… no, not the curtains lad! All that you can see, stretched out over the hills and valleys of this land, that will be your kingdom lad!”

Some of you may not be a fan of Monty Python, but this scene of a father looking out to the horizon showing his son the swamp lands which are promised to be his in the future, highlights (albeit in Python fashion) the types of promises which occur behind closed doors about the future ownership of property.

Our clients often want to pass their family farm, business or home to their next generation (being their own castles in the swamp). There are a variety of issues which need to be considered if you have a similar intention, as a failure to give effect to promises such as these could give rise to a proprietary estoppel claim being brought against your estate in the future.

What is proprietary estoppel?

Estoppel is an equitable principle which prevents a person from saying or doing something which is contrary to what they have previously promised by their comments or actions.

Proprietary estoppel is equitable claim relating to a promise made to someone that they will receive property and for which the proposed recipient reasonably relied on that promise to their detriment. In England and Wales, the four elements required for such a claim are:

1. a promise which has made by one person (‘the promisor’) to another (‘the promisee’);
2. which has been reasonably relied upon by the promisee;
3. to the promisee’s detriment; and
4. the promise has not been fulfilled by the promisor.

This type of claim, then, requires more than simply saying “one day lad, all this will be yours” like our Monty Python example above (the son in this scene doesn’t wish to inherit the swamp domain and so likely would not have reasonably relied on the promise made).

Proprietary estoppel can be difficult to prove as most of the time, there are no independent witnesses to the discussion behind closed doors, and so evidence can be difficult to obtain.

The other difficulty with these claims is proving the nature of detriment suffered.

What is detriment?

Detriment is difficult to describe as it can present itself in a number of ways. As an example:

• a father has promised his son that he will inherit the family farm if he works hard helping his father tend the crops and animals
• the son, works on the farm after leaving school and shortly moves onto the land to help tend the animals
• the son spends his own funds updating the fences and stable block for his horses he keeps on the farm
• the father passes away and his will leaves his farm to a distant relative. His son receives only a small cash legacy of £20,000.

There are several detrimental instances suffered. The son has discontinued his education early; he has not purchased his own home to live in – opting instead to live on the land; and he has invested in the farm using his own funds; all due to his reasonable reliance on the promise made to him by his father.

Detriment can be expressed as a financial figure (i.e. the expense of the fencing) or is often unquantifiable (ending his education early and dedicating his life to working on the farm). Claims of detriment can be made regardless of whether the detriment can easily be quantified, so long as there is sufficient evidence to show the detriment incurred.

It is ultimately for the court to decide whether detriment exists and if it would be unconscionable not to deliver on the promise made.

The law relating to proprietary estoppel can be less clear cut than other civil claims, but the recent case of Winter v Winter [2023] EWHC 2393 (Ch) has helped to clarify the position of the courts on these disputes.

Winter v Winter

This case dealt with a proprietary estoppel claim in relation to a family business.

There were three brothers, Richard, Adrian and Philip who all worked on the family farm and market garden business. The family farm, their own farms (where the sons lived) and the market business garden were held within a partnership which was used to operate the family business. Each of these three sons were promised by their father (Albert) and mother that they would inherit the father’s share of the partnership equally. The partnership share was the largest asset of their father’s estate.

The three sons all helped on the farm, even before they had left school, and were paid relatively little early on. However, healthy profits were made by the business and historically reinvested into the partnership, of which the children also held shares.

When their father Albert passed, he left the residue of his estate (including the farm and his share in the partnership) to Philip, seemingly because he had grown closer to him than his other sons after the death of his wife (the sons’ mother). References were also raised in the case to some unrest relating to the running of the partnership, which was later solely managed by Richard.

After their father’s death, Richard and Adrian brought a claim on the grounds of proprietary estoppel, a will validity claim based on mutual wills and a constructive trust. The claims regarding mutual wills and constructive trusts were not accepted by the judge, however.

The judge at first instance decided that the sons had relied on the promise made to them by their father. He also found that Adrian and Richard had suffered detriment which “would be unconscionable for Albert’s estate to renege on” by allowing the father’s estate to pass entirely to Philip. The judge accordingly held that the estate and the partnership were held on 1/3 share for each of the sons.

Philip appealed against the decision. While he agreed that an assurance had been made to the sons, he disagreed with the judge’s finding that Richard and Adrian had suffered a detriment and so the claim for proprietary estoppel should fail. His argument was that they were now millionaires from the wealth accumulated over their lifetime from working in the partnership and so this cancelled out any detriment they incurred.

The court of appeal did not agree with Philip’s argument. The judge explored the meaning of detriment and its evolution in his judgment and concluded that a lifelong commitment to the family business was a detriment, regardless of receiving a monetary benefit for having done so. The judge found that Adrian and Richard would not have accumulated as much wealth if they had pursued their dream careers, but this did not change the fact that they had relied on the promise made by their father and given up pursuing their aspirations and so sustained a loss of opportunity for living another life. They had suffered detriment, and it would be unconscionable for the promise to now be broken.

What does this case mean for our clients?

This case could be significant for clients, especially where there is a disagreement over a family farm or other family run business, as it appears that the court is now minded to agree that a lifetime dedication and loss of opportunity to pursue another career is a net detriment.

We would strongly recommend you speak to a professional to obtain estate and tax planning advice before discussing intentions for your own assets to pass to family members. On the other hand, if you find yourself wanting for an asset you believe was promised to you, then speak to a specialist dispute lawyer. Our specialist Private Wealth Disputes team deal with estoppel claims regularly and can advise you on your options to protect your interests if you are facing such a dispute.