A family affair

The recent decision of the House of Lords in Thorner v Majors & Others [2009] UKHL 18 (Thorner) provides an opportunity for the doctrine of proprietary estoppel to be reviewed, once again, at the highest level. This decision should provide some comfort to those who had determined that the House of Lords' decision in Cobbe v Yeoman's Row Management Ltd [2008] UKHL 55, [2008] 4 All ER 713, [2008] 1 WLR 1752 signified the near death of proprietary estoppel, a view which Lord Walker in Thorner referred to as being “rather apocalyptic”.

Facts of the case

David Thorner undertook substantial work without pay on Steart Farm in Somerset for nearly 30 years. The farm belonged to David's father's cousin, Peter Thorner. Peter died intestate in 2005 leaving neither wife nor children. While David had, in the early years, harboured a hope that he might inherit Steart Farm, that hope turned into an expectation in 1990, an expectation which endured until Peter's death. The expectation was initially founded upon a remark made by Peter at that time, together with further oblique remarks and conduct which encouraged David in his expectation. In reliance upon this expectation David continued to work on the farm for no pay rather than move away to take advantage of other opportunities which were available to him. After Peter's death David claimed the farm under the doctrine of proprietary estoppel.

At first instance

The deputy judge, Mr John Randall QC, gave what Lord Walker, in the House of Lords, described as “a long and carefully organised reserved judgment”. The trial judge found, as a matter of fact, that Peter did intend to indicate to David that the latter would inherit the farm. His judgment was also “sensitive to the complexities of human nature as they appeared from the evidence”. This is an allusion to Peter's character, who, it emerged in evidence, was a private man of few words and not given to direct talking, thus providing the factual context in which the legal test was to be applied. The deputy judge held that David had established the requisites of a claim in proprietary estoppel; namely assurance, reliance and detriment. Consequently, his claim should succeed. He ordered that David should receive the land, buildings, livestock and other assets of Peter's farming business, including any money standing in the farm's current account.

The Court of Appeal

Reversing the decision of the judge at first instance, Lord Justice Lloyd, with whom Lord Justice Ward and Lord Justice Rimer agreed, accepted the findings of fact made by the judge but concluded that the assurance by Peter which gave rise to David's expectation that he would inherit the farm was not intended to be relied upon. Thus, the Court of Appeal introduced what appears to be a hitherto unrecognised subjective element to the criteria for succeeding in a claim based on proprietary estoppel.

In the House of Lords

There were two issues in the appeal before their lordships. First, the necessary quality or character of the representation or assurance which is capable of founding a proprietary estoppel claim. Second, the need to be able to adequately identify the subject matter of the claim.

Lord Walker gave the main speech, with whose reasoning Lord Rodger and Lord Neuberger agreed, although Lord Neuberger went on to express his views at some length in his own words. Lord Hoffmann and Lord Scott agreed with the views expressed by both Lord Walker and Lord Neuberger but Lord Scott wished to add some further views of his own (which will be specifically commented upon later in this article).

The first issue

Lord Walker addressed the question of what constitutes an adequate assurance for the purposes of such a claim as this. It was submitted on behalf of David (the appellant) that there was no requirement for any assurance or representation to meet a “clear and unequivocal” test in a claim of proprietary estoppel. It was further contended that even if such a test did apply, it was met in this case, relying upon a decision of the Court of Appeal in Walton v Walton (14 April 1994, unreported). Lord Walker considered this and other authorities such as Jones v Watkins (26 November 1987, unreported) that appeared to support the proposition that a “clear and unequivocal” test does not apply.

Despite the respondents' attempt to persuade their lordships that the correct construction of the words used by Peter, and upon which David had relied, was a matter of law and not fact, Lord Walker simply concluded that “the relevant assurance must be clear enough” and “what amounts to sufficient clarity is hugely dependent on context”.

The relevance of context is something that Lord Neuberger also referred to as being of real importance.

In reversing the decision of the lower court the Court of Appeal had expressed some concern that upholding the decision of the trial judge would have diluted the ingredients of proprietary estoppel to such an extent as to create a dangerous precedent. Lord Walker disagreed, reflecting on the fact that cases such as this are fairly rare and trial judges recognise the need to subject the evidence to careful scrutiny, citing Jones v Watkins as a good example of an exaggerated claim being rightly dismissed.

The second issue

Turning to the second issue, the need to adequately identify the subject matter of the claim, Lord Walker stated, “it is a necessary element of proprietary estoppel that the assurances given to the claimant should relate to identified property owned by the defendant”. The respondents argued that between 1990, the date of the first representation upon which David relied as giving rise to a claim in proprietary estoppel, and Peter's death in 2005, Steart Farm had changed. Land had been sold for development and other land had been acquired. It was contended, therefore, that the land to which the 1990 assurance related was inadequately identified or had undergone change which would cause the claim to fail. The respondents relied upon Cobbe as having reaffirmed the need for certainty of interest which, it was maintained, had been the law since Ramsden v Dyson (1866) LR 1 HL 129.

Lord Walker recognised that Peter and David would have known and accepted that the extent of the farm was liable to fluctuate and he concluded that there was no reason to doubt that Peter's assurance related to whatever the farm consisted of at Peter's death. He went on to note that all sorts of events might have occurred between 1990 and 2005 which might have resulted in the sale of more of the farm, thereby diminishing the property to which David could have a claim. However, Lord Walker considered that such speculation was unprofitable given the retrospective nature of the assessment which the doctrine of proprietary estoppel requires.

Lord Scott's further observations

Lord Scott added some further views of his own. He said that one of the features of this type of case is the extent to which proprietary estoppel and constructive trust have been treated as providing overlapping and alternative remedies and that he was more comfortable regarding David's equity as being established under a remedial constructive trust. His lordship stated that “the possibility of a remedial constructive trust over property, created by the common intention or understanding of the parties regarding the property on the basis of which the claimant has acted to his detriment, has been recognised at least since Gissing v Gissing [1971] AC 886, [1970] 2 All ER 780”. The accuracy of this statement is open to question. The English jurisdiction has always resisted the remedial constructive trust, in contrast to the institutional constructive trust. In Re Polly Peck (No 2) [1998] 3 All ER 812 Nourse LJ held that only an Act of Parliament could introduce the remedial constructive trust into English law, referring to Lord Browne-Wilkinson's contemplation of the possibility of the introduction of remedial constructive trusts into English Law in Westdeutsche Landesbank Girozentrale v Islington Borough Council [1996] AC 669, [1996] 2 All ER 961, as “obiter and tentative”.

Cobbe distinguished

Notwithstanding the obvious confusion which could arise from Lord Scott's reference to the remedial constructive trust, this decision should offer some comfort to those who considered that Cobbe had curtailed the doctrine of proprietary estoppel to such an extent that it would, in the future, provide little assistance in circumstances such as these. Lord Neuberger identified two fundamental differences between Cobbe and Thorner.

Physical property

First, while in Cobbe, as in Thorner, there was no real difficulty identifying the physical property (the tangible property as Lord Walker referred to it) with which the claim was concerned, in Cobbe the difficulty was establishing with any certainty the nature of the benefit to which Mr Cobbe should be entitled (property interest, contractual right, or money).

Context

Second, the context in which the dispute arose in Cobbe was completely different. There the parties were in an arm's length, commercial relationship and Mr Cobbe was an experienced businessman. There is no comparison between the circumstances of that case and the facts in Thorner. Lord Neuberger concluded by saying “in these circumstances, I see nothing in the reasoning of Lord Scott in Cobbe which assists the respondents in this case. It would represent a substantial emasculation of the beneficial principle of proprietary estoppel if it were artificially fettered so as to require the precise extent of the property the subject of the alleged estoppel to be strictly defined in every case”.

A welcome clarification

This decision provides welcome clarification of the approach which will be adopted by the courts in relation to claims based on proprietary estoppel, especially those which arise in a familial context, as so many of them do. The relationship between the parties, the characteristics of the individuals concerned and the retrospective nature of a proprietary estoppel claim will all be taken into account when determining whether the necessary ingredients of such a claim are present.

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