Giving effect to promises – still a knotty problem for the Courts: The Supreme Court decision in Guest v Guest

24th October, 2022 by Jennifer Laskey

The recently decided case of Guest v Guest shows the complexity of claims based on promises and how hard it can be for the Court to balance the interests of parties when giving effect to a claim for proprietary estoppel.

Back in 2019 the High Court ordered that Andrew Guest be given the sum of £1.3 million by his parents, David and Josephine Guest. In a judgment intended to ensure a clean break between the parties, the Court found that Andrew Guest had been promised by his parents that he would inherit a substantial share of the family farm.

Andrew Guest had worked on the farm since the age of 16 and spent the following 30+ years working for low wages. He lived in a cottage on the farm rent-free. In 2015, after working full-time on the farm for the previous 33 years, there was a disagreement between Andrew and his parents. As a result they forced him to leave the cottage and changed their Will, disinheriting him and breaking the promises they had made.

Often such claims arise following the death of a parent when the terms of the Will come to light but in this case both of Andrew’s parents are still alive and the family dispute played out in the Courts.

The Court found that the promise had been made and in an effort to do justice between the parties awarded Andrew £1.3 million. This figure roughly reflected half the value of the business and 40% of the value of the land. The usual remedy in a proprietary estoppel claim is to enforce the promise and only where such enforcement would be unjust will the Court substitute an alternative remedy. Here the lump sum solution was felt better than trying to enforce the original promise given that relations between the parties were so poor.

Unfortunately, the likely outcome of the award was that a sale of the farm would be necessary to raise the lump sum needed to pay Andrew. That in turn created real hardship for Andrew’s parents as well as tax consequences for David and Josephine Guest and for Andrew himself.

David and Josephine Guest appealed. They argued that the value of the award should have been calculated on the strength of the work Andrew had done on the farm not his expectation of what he had been promised. They also argued that the award of £1.3 million went beyond what was needed to do justice in the case – Andrew would not have received anything until they died and so any remedy should be limited to a declaration of his interest, not an award that required a sale.

Andrew’s parents lost the appeal and took the issue to the UK Supreme Court. Such is the nature of proprietary estoppel claims that the issues raised are of general interest and the outcome of the hearing has been watched with interest by many. The hearing took place on 2 December 2021 and the parties had to wait until 19 October 2022 for judgment to be handed down.

The Court had to consider the principle, when arriving at a remedy other than strict enforcement of the original promise, that a remedy should not be out of all proportion to the detriment the promisee (Andrew). If is it likely to be out of proportion the Court will have to consider adjusting the award to limit the remedy.

Three of the Supreme Court Judges determined that the farm should either be put into Trust for their children, guaranteeing Andrew’s interest in the farm, or a sum should be paid to Andrew Guest now subject to a reduction to reflect the fact that he was not having to wait until his parents died to receive his interest in the farm. David and Josephine Guest can be "spared, if they so choose, the injustice of having to sell up and leave early" and elect which option to choose although the parties will be back in Court if the terms of payment or the Trust cannot be agreed.

The two Judges in the minority proposed to award Andrew £610,000 to reflect what they calculated his loss of earnings in the period had been as a result of working for low pay on the farm rather than elsewhere.

“Proprietary estoppel claims arise so frequently in farming families” says Jennifer Laskey, Director at Howes Percival and a specialist in contentious trusts and probate litigation. “Usually such claims arise after a death but as this case shows, a broken promise can be enforced during a lifetime too. What this case does show is the complexities of how you go about enforcing the promise and giving effect to what was intended. The Supreme Court’s split judgment shows that there are a range of approaches that will be considered.”

Our experienced team at Howes Percival can assist on all aspects of Contentious Trust and Probate. For more information click here.

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