Is 2018 the year of proprietary estoppel?

 In Probate

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In the leading modern decision of Thorner v Major [2009] UKHL 18, Lord Walker commented that claims to an interest in land based on proprietary estoppel were “fairly rare”. However, the first half of 2018 has already seen no fewer than seven such claims go all the way to trial in the High Court, and there is currently the possibility of some of them going to the Court of Appeal. Is 2018 the year of proprietary estoppel?

This article will briefly survey the five High Court decisions which involved proprietary estoppel claims in an inheritance context[1] and will then consider what, if anything, can be gleaned from this recent flurry of activity.

James v James [2018] EWHC 43 (Ch)

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The Royal Courts of Justice, London High Court

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Charles (known as Allen) James had married Sandra James and had three children: a son, Sam, and two daughters, Karen and Serena. Sam had worked with his father for all of his adult life – around 35 years – on a farm and haulage business which Allen had gradually built up over the years. For most of the relevant period, all of the land had been registered in Allen’s sole name. In the early 1990s Sam had become a partner in partnership with his parents. In 2007 Allen gave some land to Karen. This created family tension and eventually led to the dissolution of the partnership between Sam and his parents in 2009. Allen then transferred assets into his and Sandra’s joint names and in 2010 made a will giving his estate to Sandra, Karen and Serena, cutting out Sam. He died in 2012.

Sam brought a proprietary estoppel claim in respect of the farm against his mother and two sisters, and also a claim challenging the validity of Allen’s will.

HHJ Paul Matthews dismissed Sam’s proprietary estoppel claim. He held that nothing had been said to Sam with a sufficient degree of clarity to amount to a promise or assurance by Allen that he would leave the farm to Sam. He also drew a distinction between “a statement of current intentions as to future conduct” and “a promise of that conduct” and held that the case only involved the former, which did not give rise to a proprietary estoppel claim. The judge also held that in any event Sam had suffered no detriment. He had been paid properly for his work, had been made a partner and there was no evidence that he had “ever thought seriously about going away to make his fortune in some other industry or occupation”. Sam’s will challenge was also dismissed.

Habberfield v Habberfield [2018] EWHC 317 (Ch)

Frank Habberfield initially farmed a farm in Somerset with his two brothers. In 1975, the farm was transferred to Frank and his wife Jane as joint beneficial tenants. The couple had four children: Emily (known as Emma), Andrew, Sarah and Lucy.

Lucy began working on the farm full time when she left school in the early 1980s. She continued to work on the farm until 2013, when she and her husband left following a fight in the milking parlour with her sister Sarah.

Frank died in 2014. By his will he left his entire estate to Jane, who in any event on Frank’s death became the sole owner of the farm automatically by survivorship.

Lucy brought a claim against her mother arguing that she was entitled to the farm as a result of proprietary estoppel. She said both her parents, but in particular her father, had assured her that she would eventually take over the farm and that as a result she devoted her working life to the farm, working hard for low wages and taking almost no holidays. In the alternative, Lucy also brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975. Jane denied that any representation had ever been made to Lucy.

Birss J held that Lucy had made out her proprietary estoppel claim. He found representations had been made to her by both her parents to the effect that she would inherit a viable dairy farm, and that she had suffered detriment by working long hours for low wages and taking very few holidays for nearly 30 years. Although the judge held that Lucy loved dairy farming and that it had never occurred to her to leave and go elsewhere, that was in large part the result of the assurances she had been given.

The judge decided that the appropriate relief was to order Jane to pay Lucy a cash lump sum equivalent to the value at the date of judgment of the farmland and farm buildings excluding the farmhouse and a particular part of the land known as Mudford. That value had been £1.17m as at February 2017. In light of his decision on the proprietary estoppel claim, the judge found it unnecessary to decide Lucy’s 1975 Act claim.

Culliford v Thorpe [2018] EWHC 426 (Ch)

Mr Culliford worked as a flight attendant for British Airways. In 2010 he met Mr Thorpe online and started a relationship with him. Mr Thorpe was unemployed and moved into a property which was solely owned by Mr Culliford, 9 Clover Road, where the two cohabited for the following 6 years until Mr Culliford’s death. Mr Culliford funded most of the couple’s living expenses.

In 2012 Mr Thorpe’s father died intestate. The family believed – wrongly, as it turned out – that as a result Mr Thorpe had inherited a 1/6 share in his parents’ home. This triggered a discussion between Mr Culliford and Mr Thorpe about finances, during which Mr Culliford told Mr Thorpe “this is it, it is time we joined forced properly” and the couple agreed to share their finances and that “what’s mine is yours, and what’s yours is mine”.

Some months later, Mr Thorpe carried out some substantial renovation works at 9 Clover Road. He bought the necessary materials using his own money and contributed a significant amount of labour to the works.

In 2016 Mr Culliford died intestate of a drug overdose. His personal representatives sought possession of 9 Clover Road from Mr Thorpe, who claimed a beneficial interest in the property under a common intention constructive trust or as a result of proprietary estoppel.

HHJ Paul Matthews held that Mr Thorpe was entitled to a 50% beneficial interest in the property under a common intention constructive trust. Although as a result he did not need to decide Mr Thorpe’s proprietary estoppel claim, the judge held that Mr Thorpe would in the alternative also have been entitled to the same interest in the property as a result of proprietary estoppel. The judge held that Mr Culliford had promised to Mr Thorpe to share 9 Culver Road equally, that Mr Thorpe had relied on that promise to his detriment by carrying out the renovation works, and that the appropriate remedy would have been to give Mr Thorpe a 50% beneficial interest in the property.

Thompson v Thompson [2018] EWHC 1338 (Ch)

The deceased, Norman Thompson, came from a farming family. He and his wife Doreen had five children: four daughters and then, 5 years after the birth of the youngest daughter, a son, Gilbert. The judge accepted that Gilbert had been told by his mother that the reason she and Norman had had so many children was that they were determined to have a son to be a farmer and take over the family farm they anticipated acquiring.

In 1979 Gilbert left school aged 15 to work full time with his father on a farm which his father rented. He was initially paid £20 per week. Over the years this increased to £70 per week, but never exceeded that.

Norman subsequently bought a farm and Gilbert continued to live at and work on the farm for the following 35 years. Meanwhile his four sisters left home and moved elsewhere, although two of them helped out at the farm for various periods over the years.

Norman initially ran the farming business as a sole trader. In 1992 a partnership deed was executed to regulate a farming partnership between Norman, Doreen and Gilbert called ‘Thompson & Son’. The judge found that this was a partial implementation of a promise that Gilbert would in due course inherit the farm. Around the same time, the bungalow in which Gilbert and his parents lived was transferred out of the partnership and into Doreen’s sole name to insulate it from farming debts.

Norman died in 2012. In 2014 a family dispute erupted, primarily between Gilbert on the one hand and Doreen on the other, which resulted in Gilbert bringing a proprietary estoppel claim against his mother. Of the four sisters, two gave evidence in support of Gilbert’s claim, one in support of Doreen’s defence and the fourth did not give evidence.

Relying primarily on the contemporaneous documentary evidence from the files of the accountants and solicitors who had advised the family over the years, HHJ Davis-White QC concluded that Gilbert’s proprietary estoppel claim succeeded. He preferred the evidence of Gilbert and his witnesses to that adduced by Doreen, who he decided had attempted to re-write history as a result of the recent family feud. He was also highly critical of the “attempted character assassination” of Gilbert made by Doreen and some of her witnesses. Although the question of how Gilbert’s equity should be satisfied was left open for further argument, the judge indicated that he was minded to achieve a result by which Doreen would continue to have an interest in the farming business and the bungalow for the rest of her life, and that both would then pass to Gilbert on her death.

Gee v Gee [2018] EWHC 1393 (Ch)

John Richard Gee (referred to in the judgment as “JR”) married Pamela and had four children with her, three of whom were alive at the time of trial: John Michael (referred to in the judgment as “JM”), Robert and Jeanne, known as ‘Tussel’. The farm at the centre of the dispute had been in the Gee family for several generations.

JR had started working on the farm in the mid-1950s and had worked on it all of his adult life. JR’s son JM started working on the farm in the mid-1970s and did so until 2016 when the parties fell out. JR’s other son, Robert, went to agricultural college but then became a builder and property developer. JR’s daughter, Tussel, had her own farm with her husband around 8 miles from the family farm.

The farming business was undertaken by a company called John P Gee & Sons Ltd, which had been incorporated in 1957 and was the tenant of the relevant land. By the summer of 2014, JR owned all but one of the 24,000 shares in the company, the remaining share being owned by his wife Pamela. The freehold was owned as to 7/18ths by JR, 7/18ths by Pamela and the remaining 4/18ths by the company.

In the summer of 2014, JR and JM fell out. Pamela’s evidence was that JR’s anger with JM “started to grow and he developed an absolute hatred of JM”.

In November 2014 JR transferred all of his property to Robert, including his shareholding in the company and his interest in the freehold reversion. At the same time Pamela transferred her one share in the company and her interest in the freehold reversion to JM.

JM brought a proprietary estoppel claim against his father JR and his brother Robert, arguing that he had always been promised that he would inherit the lion’s share of the farming business and of the farm. JR and Robert defended the claim. Pamela and Tussel gave evidence in support of JM’s claim.

Birss J held that JM’s proprietary estoppel claim was made out. He held that over a period of 20 years JR had “made it clear to JM that he would succeed his father as the famer and owner albeit that some provision would be made for Robert and Tussel”. JM had relied on those representations by working on the farm for long hours without adequate compensation and by giving up the chance to better himself and work elsewhere. In order to satisfy JM’s equity, the judge indicated that he was minded, subject to hearing further argument and “if it was feasible as a matter of law”, to direct a series of transfers as a result of which JM would end up with 52% of the shareholding in the company and 46% of the freehold reversion.

Comment

The flurry of activity we have seen in the past 6 months suggests that proprietary estoppel continues to be a fertile ground for litigation. Although it is impossible to confidently draw up a comprehensive list of the reasons for this, some features can be identified which are likely to be fuelling these sorts of disputes.

If, as is often the case, the dispute arises in a succession context, then several factors are likely to be present which can contribute to a family feud. By definition, there will have been a recent family bereavement, which carries with it its own emotional baggage. Family members will often have strongly held, and opposing, views about what is ‘fair’ or ‘just’. This is particularly the case where one of the family members has worked on the family farm for several decades while others have not. The older generation may wish to allow one child to carry on the farm whilst at the same time ensuring that the other children are also treated ‘fairly’, but this may be difficult to achieve in practice if the farm represents the bulk of the family wealth.[2] Moreover, conflicting views about gender (in)equality may also have a role to play, particularly in those farming communities which hold more ‘old-fashioned’ views on the subject.

Once the dispute has crystallised, often in a heated family row after which both sides instruct solicitors, it can quickly escalate into a fight about a ‘matter of principle’. Although it is not always clear what that phrase actually means, it often seems to be used by aggrieved family members as a reason to disapply the ordinary cost/benefit analysis which is usually adopted by parties to litigation. All of this can make these sorts of disputes particularly acrimonious.

In addition, two features in particular tend to make proprietary estoppel claims unpredictable, which in turn makes it difficult for lawyers to provide firm advice on prospects of success and thus on compromise.

First, there will often be little, if any, direct contemporaneous documentary evidence, and most of the evidence will instead consist of the parties’ recollection of events, which will often be diametrically opposed. Evidence of this nature is generally less reliable, particularly where it concerns events which are said to have happened several decades earlier: see e.g. the illuminating discussion by Leggatt J (as he then was) in Gestmin SGPS SA v Credit Suisse (UK) [2013] EWHC 3560 (Comm) at [15]-[22]. Furthermore, in most cases the alleged promisor will have died, and so a great deal is likely to turn on how the claimant’s oral evidence comes across at trial, which is almost invariably hugely unpredictable.

Secondly, even if the claimant is able to successfully establish the three ‘ingredients’ of a proprietary estoppel claim (viz. representation, reliance and detriment), it is far from clear what remedy he is likely to receive as a result. Recent cases show that the court can do almost anything it wants in order to satisfy the claimant’s equity. Moreover, there currently appears to be uncertainty as to whether the court should tailor the remedy so as to give effect to the claimant’s expectation, or instead so as to compensate the claimant for the detriment he has suffered.[3] The risk is that lawyers will feel forced to advise clients that, despite HHJ Weeks QC’s prescient concern in Taylor v Dickens [1998] 1 FLR 806, judges have now effectively been issued with a ‘portable palm tree’ and therefore the remedy will, in effect, depend on the judge. This makes it particularly difficult to advise with confidence on the likely outcome of the claim at trial, and thus on how the claim might be compromised without a trial.

If, as seems likely, one or more of the recent proprietary estoppel claims does make its way to the Court of Appeal, it is to be hoped that that court will provide some helpful, practical guidance on how trial judges should approach the issue of remedy.

[1] The other two decisions involved proprietary estoppel claims brought in a different context: in Smyth-Tyrrell v Bowden [2018] EWHC 106 (Ch) the claim was brought in response to the purported termination of a tenancy agreement, whereas in Dobson v Griffey [2018] EWHC 1117 (Ch) the context was the breakdown of a relationship between a cohabiting unmarried couple.

[2] See for example James, Habberfield and Thompson.

[3] See e.g. Davies v Davies [2016] EWCA Civ 463 at [39]: “There is a lively controversy about the essential aim of the exercise of this broad judgmental discretion. One line of authority takes the view that the essential aim of the discretion is to give effect to the claimant’s expectation unless it would be disproportionate to do so. The other takes the view that essential aim of the discretion is to ensure that the claimant’s reliance interest is protected, so that she is compensated for such detriment as she has suffered. The two approaches, in their starkest form, are fundamentally different”.

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