Judges are given broad discretion when ruling on equitable claims. But what are the limits of this? The Court of Appeal has, in a recent decision, provided some welcome guidance on the appropriate remedy in proprietary estoppel cases.
Several High Court decisions have highlighted the inconsistent approaches to satisfying equity in proprietary estoppel cases. Examples of high-profile decisions include Gee v Gee and Habberfield v Habberfield.
The controversy stems from whether, once the test for estoppel is met, the appropriate approach is the “expectation” approach or the “reliance loss” approach.
Proprietary Estoppel Claims -the two approaches
There is a three-part test for finding proprietary estoppel:
- whether a sufficiently clear assurance was made;
- whether the claimant relied on this assurance; and
- whether the claimant suffered a detriment in consequence of his or her reasonable reliance.
Once these three conditions are met, the Court will determine what the appropriate remedy is based on one of two separate approaches which have arisen in previous case law.
These two approaches were defined in the landmark case of Davies v Davies  EWCA Civ 463 as being as follows:
“One line of authority takes the view that the essential aim of the [Court’s] discretion [to determine the appropriate remedy] is to give effect to the claimant’s expectation unless it would be disproportionate to do so. The other takes the view that [the] 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.”
The Court of Appeal in Davies felt it was not necessary to determine which of the two approaches was the correct one. Unfortunately, this lack of guidance has caused some problems in the subsequent proprietary estoppel decisions. Difficulties frequently encountered include challenges in measuring the claimant’s expectations and struggles to quantify the scope of the claimant’s loss suffered as a result of their reliance.
The Court of Appeal’s decision
This brings us to the Court of Appeal decision in Moore v Moore  EWCA Civ 2669. Although the Court cautioned that it did not intend to resolve the debate once and for all, the decision does provide useful guidance on the scope of the Court’s discretion.
This was a proprietary estoppel claim involving a family farm. The claimant, Stephen Moore, alleged that his father Roger, had promised him on more than a dozen occasions that he would inherit his father’s share of the farm. By the time of the hearing Roger had lost mental capacity and was no longer able to manage the farm. Key evidence of the relationship between Stephen and Roger came from family members, including the claimant’s uncle, who testified that he sold his share of the farm to Stephen at a steep discount because he had always understood it was Roger’s intention that Stephen should take over the farm.
In first instance, the Judge found that the claimant had met the three-part test for proprietary estoppel over his father’s entire interest in the farm. The Judge ordered that Roger’s interest be transferred to Stephen, but that Stephen should then allow his parents to live at the main farmhouse, pay them a weekly allowance, and pay the outgoings on their property plus all of their reasonable care expenses. This was intended to mirror “as closely as possible the arrangements which would have obtained had the dispute not arisen”.
The Court of Appeal expressed several concerns about the practicalities of this approach. It felt the Judge should have directed a further hearing, with detailed submissions on the remedy issue, before deciding. It stated:
“[The Judge’s] solution was based on the false premise that the position at the date of trial could somehow be equated with the position on the future death of the survivor of Roger and Pamela [Roger’s wife], despite the fundamentally changed circumstances brought about by the dissolution of the partnership, Roger’s lack of capacity, and the breakdown of relations within the family. [The solution] forced the parties to remain financially dependent on each other, when a clean break was clearly called for, and it paid insufficient regard to Pamela’s claims on her husband’s estate as a partner to a long and happy marriage which fortunately still subsists.”
The Court of Appeal ultimately remitted the case to the High Court for a further hearing, but in doing so suggested that the correct decision should give effect to the claimant’s expectation, with some adjustments being made for practical reasons:
- Roger’s share of the farm and partnership assets should be transferred to Stephen;
- Stephen should quickly pay Pamela a lump sum of cash to enable her to rehouse herself comfortably, benefit from a reasonable income and provide for Roger and the rest of the family; and
- Stephen should pay Roger’s reasonable care costs promptly, when requested to do so.
It remains to be seen how Moore will be treated in future cases. For the time being, the decision provides a useful reminder that proprietary estoppel claims are often made against a background of complicated family relationships. If this context is ignored, a decision or settlement agreement may prove to be impracticable.
That said, and whilst the Court is keen to say that cases should be dealt with on a case-by-case basis, without any clear guidance on the subject this debate is likely to continue. I expect this will lead to more appeals on the grounds that the Judge erred in determining the appropriate remedy.
If you have any questions about proprietary estoppel, or if you need help defending against a proprietary estoppel claim, please contact Nicholas Choiniere at 0113 336 3349 or by email at Nicholas.Choiniere@clarionsolicitors.com.
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