Inheritance by Proprietary Estoppel

 In Probate

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inheritance of farms

The impact of the decision of the House of Lords in Thorner v Major and others [2009] UKHL 18, [2009] 1 WLR 776

  • Key issue: will a nod and a wink suffice?
  • Answer: Yes, in the right context

The facts

David Thorner is a Somerset farmer. For nearly 30 years he did substantial work without pay on the farm of his father’s cousin Peter Thorner. During the 1980s David came to hope that he might inherit Peter’s farm. That hope became an expectation when in 1990 Peter, a man of few words, gave David the bonus notice on two life assurance policies and said: “that’s for my death duties”. The judge found that by so doing Peter intended to indicate to David that he would be Peter’s successor to the farm and that David’s understanding to that effect was correct.

Over the following years Peter made other remarks based on the unspoken mutual understanding which encouraged the expectation which David had formed. The 1990 hint and the subsequent remarks encouraged David to continue his very considerable unpaid help to Peter at the farm rather than move to other opportunities. Further, the judge found that Peter’s remarks were reasonably understood and relied on by David in that way.

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In 1997 Peter made a will leaving pecuniary legacies to others and his residuary estate to David. A year later, because of a disagreement with one of the pecuniary legatees, Peter destroyed the will and so in 2005 he died intestate.

The judge found a case of proprietary estoppel proved and ordered that David should receive the land, buildings and other assets of Peter’s farming business subject to David indemnifying Peter’s personal representatives in respect of inheritance tax payable.

Court of Appeal – about turn

The Court of Appeal reversed the judge on the ground that there was no sufficiently clear and unequivocal assurance made by Peter that was intended to be relied on by David that he would leave the farm to David – as opposed to a mere statement of a present intention to leave the farm to David. The Court of Appeal accepted that a person must be taken to intend what a reasonable person would have understood him to intend, but said the judge had not found that Peter knew of alternative opportunities that David might have pursued and so did not have material on which to find that he intended David to rely on what he said to his detriment.

House of Lords – “clear enough”

The House of Lords (Lord Walker with whom Lord Rodger and Lord Neuberger expressly agreed and from whom Lord Hoffmann expressed no dissent) reviewed the extent to which there must be a clear and unequivocal assurance. Lord Walker’s answer was that the relevant assurance must be “clear enough” and pointed out that what amounts to sufficient clarity in cases of this sort is “hugely dependant on context” (paragraph 56). He approved of the way Hoffmann LJ had put it in Walton v Walton(14/4/94) in a case where a mother said repeatedly to her son who had worked on her farm from the age of 15 for low wages: “You can’t have more money and a farm one day”. Hoffmann LJ had said:

“The promise must be unambiguous and must appear to have been intended to be taken seriously. Taken in its context, it must be a promise which one might reasonably expect to be relied upon by the person to whom it was made.”

Lord Walker also approved Hoffmann LJ’s further insight into the crucial difference between contract and proprietary estoppel later in his judgment in the Walton case. Whereas promises in contracts must be precise because they must be performed in future uncertain circumstances, equitable estoppel does not have to look forward and anticipate the future. Rather it looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have happened, it would be unconscionable for the promise not to be kept.

The House concluded that the judge had made the critical finding that Peter’s assurances, objectively assessed, were intended to be taken seriously and to be relied on, and that the judge was entitled so to find although the assurance was implicit not express and there was no proof that Peter knew of the alternatives available to David.

How far must the property be identified?

A secondary issue arose in the case as to whether the assurances given to the Claimant must relate to identified property owned or about to be owned by the Defendant and if so how far the property must be identified. The House concluded that for proprietary estoppel to be established the assurances must relate to identified property for it is the relation to identified property that has enabled proprietary estoppel to be developed as a sword not merely a shield. In Thorner the matter only arose for decision because the identity of the farm had changed somewhat over the 15 years that the assurances had been given and relied on. Peter had sold a field for development, he had used part, but only part, of the proceeds to buy more land. But the common understanding was that the assurance related to whatever the farm consisted of at the time of Peter’s death – as it would under a will. As Lord Walker said at paragraph 62: “this fits in with the retrospective aspect of proprietary estoppel”.

Proprietary estoppel or constructive trust?

What was left open by Lord Walker and not addressed by the other Law Lords in Thorner was whether the doctrine of proprietary estoppel extends to an award of the whole of the deceased’s residuary estate, as happened in Re Basham [1986] 1 WLR 1498. It had been argued in Thorner that in Re Basham the doctrine had wrongly been extended to apply to residue but should have been confined to “specified property”. At paragraph 63 Lord Walker preferred to express no decided view about that issue. An answer may be provided in such cases by Lord Scott’s analysis that cases where the relevant representation relates to inheritance prospects are more appropriately treated as cases of constructive trust than of proprietary estoppel (paragraph 20). Unlike the judge in Re Basham Lord Scott thought the two doctrines should be kept separate, but he appears to have approved of the outcome in Re Basham on the basis of a remedial constructive trust created by the common intention or understanding of the parties acted on by the Claimant to his detriment.

Practice Point:

In cases where clearly identified property is involved proprietary estoppel may be relied on in accordance with the majority judgments in Thorner. In cases where the promise relates to property that is not clearly identified such as a claim based on a promise to leave residue it will be wise for advisors to base the claim on constructive trust in the alternative.

Long-live proprietary estoppel

Finally, and importantly, their Lordships (especially Lord Neuberger at paragraphs 90 to 100) were at pains to point out that their decision in Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 should be confined to its facts and not taken (as it had been in some articles in the legal press) to have destroyed or emasculated the doctrine of proprietary estoppel.


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