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Proprietary Estoppel update: Thompson v Thompson [2018] EWHC 1338 (Ch)

Fri 5th Oct 2018

Proprietary Estoppel update: Thompson v Thompson [2018] EWHC 1338 (Ch)

  1. This case involved the family farm and more specifically the question of whether proprietary estoppel operated to give the claimant an interest in a family farm and, if so, what the extent of his interests was.

 

Background Facts

2. The facts of the case are set out in significant detail within paragraphs 17 – 90 of the Judgment. However, in summary, the claimant, Mr Gilbert Thompson (“Gilbert”), was the son of the respondent, Mrs Doreen Thompson (“Doreen”) and Mr Norman Thompson (“Norman”), who had died in August 2012.

3. The claim concerned the inheritance of the family farm, Woody Close Farm, Iveston near Consett, County Durham (“the Farm”) and a bungalow that had been transferred into Doreen’s name, valued in the region of £1.2 – £1.4 million.

Gilbert’s position

4. Gilbert’s case was that throughout his working life on the Farm a number of representations, promises, and assurances were made by his parents to the effect that upon their death he would inherit the Farm and the bungalow.

5. Having relied upon those assurances, Gilbert worked from the age of 15 on the Farm at a very low wage giving up the chance of buying his own property, his independence, and life outside the Farm.

6.Therefore it would “…be unconscionable…” for Doreen to dispose of her interest in the Farm and bungalow otherwise than to him.

Doreen’s position

7.Doreen denied that any representations or assurances were ever made to Gilbert regarding inheritance and strongly asserted that Gilbert was so incompetent and recklessly negligent as a farmer that he was unfit to run the Farm..

8.Doreen also argued that it was inequitable and unfair for Gilbert to be entitled to more than the 1/3 share Gilbert had acquired under the Partnership.

Oral Evidence

9.The court heard evidence from the parties, three of Gilbert’s four sisters, as well as Mr Sedman of Straughans and Mr Bibby and Mr William Brown, Solicitors at Swinburne, Snowball, and Jackson.

10. HHJ Davis-White QC found overwhelmingly in favor of Gilbert’s evidence[1], finding Gilbert “…to be an honest and reliable witness [and]…entirely consistent with the contemporaneous documents and the evidence of others whose evidence I also found to be reliable…”; whereas HHJ Davis-White QC “…was not impressed with the evidence of each of the witnesses called on behalf of Mrs Thompson…” taking the view that Doreen had “…become so convinced of Gilbert’s wrongdoing in recent years that it has clouded her judgment and memory…“;

11. No doubt he was aided in making his findings by Doreen’s oral evidence where her position changed dramatically from Gilbert just riding round doing odd jobs with there being no “…discussion between her and her husband about Gilbert eventually inheriting the farm…to eventuallythat she and Mr Thompson wanted Gilbert to take over the farm, and that that had always been the expectation”.

The Law

12. HHJ Davis-white QC stressed that proprietary estoppel cases require the court to take a holistic approach[2] before moving on to summarize the law[3]:”

I)Deciding whether an equity has been raised and, if so, how to satisfy it is a retrospective exercise looking backwards from the moment when the promise falls due to be performed and asking whether, in the circumstances which have actually happened, it would be unconscionable for a promise not to be kept either wholly or in part: Thorner v Major [2009] UKHL 18, [2009] 1 WLR 776 at [57] and [101].

ii) The ingredients necessary to raise an equity are (a) an assurance of sufficient clarity (b) reliance by the claimant on that assurance and (c) detriment to the claimant in consequence of his reasonable reliance: Thorner v Major at [29].

iii) However, no claim based on proprietary estoppel can be divided into watertight compartments. The quality of the relevant assurances may influence the issue of reliance; reliance and detriment are often intertwined, and whether there is a distinct need for a “mutual understanding” may depend on how the other elements are formulated and understood: Gillett v Holt [2001] Ch 210 at 225; Henry v Henry [2010] UKPC 3; [2010] 1 All ER 988 at [37].

iv) Detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances: Gillett v Holt at 232; Henry v Henry at [38].

v) There must be a sufficient causal link between the assurance relied on and the detriment asserted. The issue of detriment must be judged at the moment when the person who has given the assurance seeks to go back on it. The question is whether (and if so to what extent) it would be unjust or inequitable to allow the person who has given the assurance to go back on it. The essential test is that of unconscionability: Gillett v Holt at 232.

vi) Thus the essence of the doctrine of proprietary estoppel is to do what is necessary to avoid an unconscionable result: Jennings v Rice [2002] EWCA Civ 159; [2003] 1 P & CR 8 at [56].

vii) In deciding how to satisfy any equity the court must weigh the detriment suffered by the claimant in reliance on the defendant’s assurances against any countervailing benefits he enjoyed in consequence of that reliance: Henry v Henry at [51] and [53].

viii) Proportionality lies at the heart of the doctrine of proprietary estoppel and permeates its every application: Henry v Henry at [65]. In particular there must be a proportionality between the remedy and the detriment which is its purpose to avoid: Jennings v Rice at [28] (citing from earlier cases) and [56]. This does not mean that the court should abandon expectations and seek only to compensate detrimental reliance, but if the expectation is disproportionate to the detriment, the court should satisfy the equity in a more limited way: Jennings v Rice at [50] and [51]. I

x) In deciding how to satisfy the equity the court has to exercise a broad judgmental discretion: Jennings v Rice at [51]. However, the discretion is not unfettered. It must be exercised on a principled basis, and does not entail what HH Judge Weekes QC memorably called a “portable palm tree”: Taylor v Dickens [1998] 1 FLR 806 (a decision criticised for other reasons in Gillett v Holt).

Judgment

13.Having made findings consistent with Gilbert’s case, HHJ Davies-White QC decided that “…Gilbert had made out his case of proprietary estoppel…[and therefore]…On the death of Mrs Thompson, he will enjoy the benefit of those properties as well as Mrs Thompson’s interest in the Farming Partnership…”.

14.However, in relation to “…the specific form of relief to give effect to the equity…” and the more specific elements of the partnership matters HHJ Davis-White QC was to hear further submissions and, where required, evidence but hoped “…the parties will now be able to engage in sensible discussions to resolve all outstanding matters between them…”.

Commentary

15.This case serves as a timely reminder that the court will not take a black and white approach to cases of proprietary estoppel but will adopt a “holistic” approach to the case.

16.With this in mind, the case is a useful demonstration of the court’s willingness to award the entirety of a farm to a farmer’s child where said child has dedicated himself to the farm.

17.This should be viewed in light of the court’s unsettled approach to remedy, which has seen the court in some cases tailoring the remedy so as to give effect to the claimant’s expectation and in others, so as to compensate the claimant for the detriment he has suffered [4]. It is therefore difficult to advice on outcome with any precision.

18 .Finally, the criticism levelled at Doreen emphasises the real need for clients to come across as genuine and honest in addition to the necessity in case preparation for early identification of the issues and of the areas of evidence required in respect of them, including where appropriate an early conference with counsel.

 

[1] Paragraphs 146 – 162 of the Judgment.

[2] As per paragraph 147 of the Judgment, where the following cases were highlighted Gillet v Holt [2001] Ch 210; Jennings v Rice [2003] 1 P&CR 8; Uglow v Uglow [2004] EWCA Civ 987; Thorner v Major [2009] 1 WLR 776; Henry v Henry [2010] UKPC 3, [2010] 1 All ER 988; Suggitt v Suggitt [2012] EWCA Civ 1140; Davies v Davies [2014] EWCA Civ 568; Davies v Davies [2016] 2 P&CR 10; Moore v Moore [2016] EWHC 2202 (Ch)

[3] By referencing Lewison LJ in Davies v Davies [2016] P. & C.R. 10 at paragraph 38

[4] Davies v Davies [2016] EWCA Civ 463, at paragraph 39

 

-Jake Ellis

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