In the below Adam Boyle provides a 60 second summary of the long-awaited proprietary estoppel Supreme Court judgment in Guest v Guest which will be of interest to all property, estates and private client practitioners.
The following appear to be the main takeaways regarding the correct approach to valuing the equity which arises in proprietary estoppel cases:
- ‘Valuing the Detriment’ is wrong in principle and represents a modern misstep, flying in the face of some 150 years of English law (see para 71 of the judgment).
- The misstep arguably began in earnest with Jennings v Rice (see para 42) and crystalised with Davies v Davies (see para 50). [NB: Full disclosure, as junior counsel for the unsuccessful Respondent in the Davies case it was bittersweet to read the Supreme Court describe the ‘supposed logic of the detriment-based approach’, preferred by the COA in that matter, as – ‘faulty in origin and wrong in its inevitable result’! (See para 53).]
- ‘Reliant detriment’ is more a ‘necessary condition’ for the equity to arise, than a yardstick by which to measure the remedy (see para 61).
- The aim of the doctrine is ‘to remedy unconscionability mainly by satisfying expectation’ (see para 68). The ‘fulfilment of the promise’ is therefore ‘likely to be the starting point’ in many cases, ‘although considerations of practicality, justice between parties and fairness to third parties may call for a reduced or different award’ (see para 94).
- There does not need to be proportionality between the detriment and the remedy. However, in some cases where the expectation is ‘out of all proportion’ to the detriment (think X promises Y a house if Y proceeds to carry out a lifetime of house-cleaning for X, and X dies 2 months later) then granting the expectation interest may not be appropriate (see para 76).
- ‘Minimum equity to do justice’ should be put in the bin[!] insofar as it is popularly misunderstood to suggest that awards should somehow be as small as possible (throughout, but see para 80). While equitable remedies should be just, in essence eradicating all relevant unconscionability, the said phrase means nothing more than that.
- Where the benefit promised is accelerated by an award, a discount must be made (see para 98).
- Remedying the relevant equity is still likely to be complicated for practical reasons in a variety of cases, such as Guest itself, where the promisors are still alive and reliant on the subject-matter of the promise (i.e. the farm). Further, in certain circumstances, as in Guest, promisors may be permitted to make a choice between alternative remedies (see para 104).
No doubt far more can be said about a 108 page judgment, but perhaps not within a 60 second summary! It will now be interesting for us all to see how, or indeed whether, Guest changes much for practitioners. For what it’s worth Adam’s view is that it should!
Adam is an experienced specialist in chancery and real estate. He is a go-to barrister for difficult property cases and has been repeatedly recognised in Chambers UK as a specialist in proprietary estoppel. Read more here.