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Guest v Guest & Guest [2019] EWHC 869 (Ch)

A claim based on proprietary estoppel for a share in a family business where a son worked for 30 years at a reduced wage.

This judgment deals with a son's claim, based on proprietary estoppel for a share in a farming business (land, ancillary cottages and linked farming partnerships). The claimant, Andrew, relied on working for 30 years on the farm at a reduced wage compared to the industry average for the skills he developed. He claimed that he did this in reliance on assurances that his father (David) had made and on which he said his father should not be able to renege. Much of the judgment (72 pages) involves a recital and analysis of the evidence called during the hearing. Practitioners who are preparing for a contested estoppel claim may benefit from reading the judge's analysis of the evidence. However, of more general interest to practitioners, the judge:

(a) reflects on the late disclosure and use of covert recordings made by the defendants and the difficulties and consequences that this can cause [¶111-122], [¶286];

(b) reviews the case law [including Thorner v Major [2009] UKHL 18; [2009] 1 WLR 776 Davies v Davies [2016] 2 P&CR 10] concerning proprietary estoppel [¶123-165], - and the practical problems presented, in particular:

(i)  the relationship between such an estoppel and potential claims under the Inheritance (Provision for Family and Dependants) Act 1975 [¶124-127]

(ii) the requirements necessary to establish the equity (representation, reliance and detriment suffered as a result of the reliance) [¶128-133]

(iii) the need to consider "the alleged assurance in the context of the relationship and dealings between the parties" [¶138] and the impact this has on the forensic process [¶139-141];

(iv) the relevance of the representor's passivity ("standing by") in cases where the claimant is alleging that he was to acquire something in the future as opposed to having already acquired an interest [¶140-141];

(v) the problem of changing expectations over time [¶142-143];

(vi) the practical necessity for pleadings for relief sought to be in the alternative [¶149];

(vii) how to calculate the relief to be granted to the claimant – the limits of relying on the value of the detriment, the impact of lost tax planning opportunities and other legal and moral obligations (such as here other siblings) [¶144-164];

and he then summarises the approach he is to adopt [¶165];

(c)  comments as to one of the consequences of this legal analysis on the trial process:

"The fact-sensitive nature of a proprietary estoppel claim, particularly where the making of a clear assurance of a proprietary nature is contested, means that a sound assessment of the testimony is critical to its outcome" [¶166];

(d) draws attention to the fact it does not follow that it will be unconscionable to allow a defendant to resile from an assurance on which there has been detrimental reliance. The defendant relied on the fact that the parties had become involved in a farming partnership and this had been dissolved. [¶276] The judge nevertheless found that this claimant remained entitled to an equity in the farm and the farming business [¶281] as the partnership had come late in the chronology of events;

(e) explains how he has approached the issue of compensation when all parties remain alive and the subject matter is not just land but a business: [¶282-289]. He imposed a "clean-break" (the fact of the recordings showed the judge that the level of distrust meant a continuation of farming together was not possible). He calculated lump sums based on valuations of the business: 50% (after taxes) of the business and 40% (after taxes) of the value of the land to be valued as if subject to a "life-interest" in the farmhouse for the parents. The consequence was likely to be that the farm and business would probably have to be sold without the chance of tax planning.

As the judgment was handed down, the judge gave directions [¶291], for applications for permission to appeal and adjourned the date from which time for filing an application with the Court of Appeal would run in accordance with McDonald v Rose [2019] EWCA Civ 4, [21]

Summary by Nicholas O'Brien, barrister, Coram Chambers
Coram Chambers

You can read the full judgment of Guest v Guest & Guest [2019] EWHC 869 (Ch) on BAILII