Proprietary estoppel: Moore developments

The Court of Appeal has recently handed down its judgement in the appeal of Moore v Moore [2018] – the latest in a series of cases concerning proprietary estoppel. The Moore case was unusual in that the party making the representations was still alive at the time of Trial. This was similar to the situation in the recent case of Davies v Davies [2016] – another Court of Appeal proprietary estoppel case in which Michelmores represented one of the parties. Most estoppel cases arise after the death of the party making the promises. This, of course, is a central consideration of the Court when deciding how the equity is to be satisfied.

The case

The Moore family have farmed Manor Farm, a 650 acre arable holding near Salisbury, for 4 generations. Stephen Moore grew up living and breathing farming on Manor Farm, where he lived with his Father, Roger, Mother, Pamela and sister, Julie.

When Stephen began working on Manor Farm, Roger farmed in partnership with his brother, Geoffrey. Stephen later joined this partnership. When Geoffrey retired from the Partnership, although he had two sons of his own, he decided that (subject to a payment, representing much less than the value of his interest), he would pass his share of the Partnership, including the farm, to Stephen, anticipating that Stephen would also inherit his Father’s share, securing the next generation of the Moore family to farm at Manor Farm. In the event, the property transfers were not completed before a dispute arose between Roger and Pamela on one side and Stephen on the other.

Some four years after Geoffrey’s retirement, Roger gave notice to Stephen to dissolve the Partnership.  There was no written Partnership Agreement.

As a consequence, there was a dispute as to whether the Partnership could
be dissolved. Stephen brought a counterclaim in estoppel on the basis that Roger had promised Stephen that the farm would one day be his to enable him to carry on the Moore family farming legacy.

By this stage Roger was suffering from Alzheimer’s. During the litigation the Court decided that he did not have sufficient capacity to take part, so his wife, Pamela, was appointed as his litigation friend, effectively becoming the party in opposition to Stephen.

High Court decision

In the High Court the Judge decided that the partnership between Roger and Stephen, following on from Geoffrey’s retirement, was one for the joint lives of the parties. The Judge was highly critical of Pamela and accepted the evidence of Stephen and his witnesses, including Geoffrey, finding that the estoppel was established. No witness statement for Roger was produced in the proceedings.

The High Court Judge decided that the equity should be satisfied by accelerating Stephen’s inheritance of the farm and the farming partnership assets to enable him to continue the farming operation, which, the Judge found, was always Roger’s intention, At the same time Stephen was required to provide accommodation for Roger and Pamela for the rest of their lives; to cover all of the costs of running their home including utility bills and maintenance, payment of care fees and an ongoing income for life. This was to mirror, as close as possible, what would have happened but for the dispute.

Court of Appeal

In the Court of Appeal Pamela challenged every aspect of the High Court Judge’s decision: 13 grounds of appeal in all, including whether there was an estoppel at all.

The Court of Appeal confirmed the requisite elements required to establish a proprietary estoppel claim; there needs to be representations which were relied upon by a party to their detriment, to the extent that the Court considers that it is unconscionable for the promises to be withdrawn. Where this arises, the Court then needs to undertake an exercise in deciding how to satisfy the “equity” created by the estoppel.

Lord Justice Henderson considered the guidance of Lord Justice Lewison in the Davies case. When considering the broad judgmental discretion to be applied Lord Justice Lewison explained the two approaches:

“One line of authority takes the view that the essential aim of the discretion 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……… Much scholarly opinion favours the second approach… Others argue that the outcome will reflect both the expectation and the reliance interest and that it will normally be somewhere between the two… Logically, there is much to be said for the second approach. Since the essence of proprietary estoppel is the combination of expectation and detriment, if either is absent the claim must fail. If, therefore, the detriment can be fairly quantified and a claimant receives full compensation for that detriment, that compensation, ought, in principle, to remove the foundation of the claim… Fortunately, I do not think that we are required to resolve this controversy on this appeal.”

The Court of Appeal in Moore, not for the first time, was content not to decide which test was the correct one and instead echoed the sentiment of previous courts as to the fact specific nature of the case.

Court of Appeal decision

The Court upheld the finding of an estoppel in favour of Stephen. Pamela succeeded on only one of the 13 grounds of appeal – that was how the equity should be satisfied.

Lord Justice Henderson decided that the better approach to satisfy the equity was to have “a clean break solution”. He said that Pamela should “be provided with a lump sum which will enable her to rehouse herself comfortably in appropriate accommodation of her choice, to enjoy a reasonable income, and have sufficient capital…to enjoy holidays and occasional luxuries, to provide for Roger (over and above the basic costs of his care), to make gifts to her daughter and grandchildren, and to have a cushion for contingencies”. The Judge said that this lump sum must be raised by Stephen.

The Court did not consider that it had the material to deal with the question of how to satisfy the equity itself.  Instead he decided that a determination as to the lump should be remitted to the High Court, the Judge adding that his “strong inclination … is to direct that the matter be remitted to the same Judge…”.

There are clear parallels between the Moore decision and the Davies case. The Courts are increasingly using the mechanism of a lump sum payment to achieve a clean break between parties, where the party who made the promises is still alive, whether that is paying the party who has relied on the representations or the party who made the representations.

In Moore, Lord Justice Henderson quoted Robert Walker LJ in Jennings v Rice [2002] when considering the clean break option:

“…the court “cannot compel people who have fallen out to live peaceably together”. Although no doubt primarily directed to cases where the warring parties are living under the same roof, the practical wisdom of this recognition applies with the same or scarcely less force in situations where they are living in close proximity to each other and in a relationship of continued financial dependence.”