Guest v Guest [2020]

Fri 21st Oct 2022

The long awaited and much anticipated Judgment of the Supreme Court in the case of Guest v Guest has been handed down on 19 October 2022. This can be found at: Guest and another (Appellants) v Guest (Respondent) – The Supreme Court

The Case

The case related to a family of dairy farmers, the Guest family, and their farm, Tump Farm. The family found themselves embroiled in arguments in the Supreme Court over a promise that the son, who helped his parents on the farm for more than three decades for basic wage and having left school at 16 to do so, would receive Tump Farm.

Thereafter, relations between Andrew and his parents, David and Josephine Guest, deteriorated culminating in Andrew leaving the farm in 2014/15 and his parents changing their wills excluding him from any entitlement to occupy a farm cottage and terms to carry on a farm business tenancy.

Andrew commenced his claim under the doctrine of proprietary estoppel claiming an entitlement to receive a share of the farm due to the assurances he had received that he would inherit a significant proportion of it one day. His parents were still alive.

The High Court at first instance decided that his parents, on the basis of an unequivocal promise, should pay Andrew 50% of the value of Tump Farm and 40% of the value of the farm buildings (totalling approximately £1.3m). The Court’s objective was to achieve a clean break rather than enforcement of the original promise.

David and Josephine appealed that decision on the basis that the award should be based on the amount of work Andrew had done on the farm, not his subjective expectation of what he had been promised. In addition, the High Court’s award would require them to sell Tump Farm to pay him. They also argued that the award went beyond the minimum required to do justice for Andrew, especially given that Andrew had never expected to receive anything until they died and so any award should be discounted to take them being alive into account. Their appeal was dismissed and the Court of Appeal agreed with the decision made by the High Court.

The Supreme Court Decision

The legal debate centred on whether Andrew should be compensated for his disadvantage or whether the award should be designed to meet his expectation.

Although all five judges did consider that Andrew was due some compensation, they could not agree on the fair remedy given that the usual remedy in such cases would be enforcement of the promise. However, the Court felt that forcing David and Josephine to sell the farm would be unjust.

The Court ruling has meant that there is now the option of the remedy of putting the farm into trust or paying compensation to Andrew prior to their deaths with a reduction to properly reflect his earlier than expected receipt (given they had not yet died). That clean break lump sum should be discounted (to be agreed or taken back to the High Court) so that it would reflect Andrew’s receipt of his ‘inheritance’ prior to their death.

As such, David and Josephine’s appeal was accepted. They can now either decide to sell the farm to pay Andrew a discounted sum in order to achieve a clean break, or place Tump Farm in trust until after their death.

What does this mean for future claims and awards?

In order to have a successful proprietary estoppel claim, there must be an unambiguous promise by words or conduct, reliance on that promise to the claimant’s detriment and they must show that it would be unjust or inequitable to allow the other party to go back on the promise. Without those, a proprietary estoppel claim is unlikely to succeed.

However, if those elements can be proven, this case shows that, while it is still notoriously difficult for parties or the Court to value the detriment suffered in this type of claim, those who have to pay the price of reneging on an unequivocal promise will sometimes have the choice as to how they make good on those promises, and that discount for early receipt can be made.

Fri 21st Oct 2022

Hayley Gaffney

Associate

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