The Court of Appeal in Winter & Anor v Winter & Anor [2024] EWCA Civ 699 recently considered an appeal focused on the finding of the judge at first instance that there was detriment for the purposes of a proprietary estoppel claim. The case provides a useful recap of the relevant principles to be applied when detriment falls to be considered.
Relevant facts
In very simple terms:
- There were three siblings – Richard, Philip and Adrian. The parents of the siblings were Albert and Brenda. Albert and Brenda bought a farm in Somerset ("the Farm") and carried on a market garden business from there.
- Whilst Richard and Adrian did not work on the farm for certain periods, all three siblings worked in the business on a full-time basis.
- In 1988, the farm was transferred into the joint names of Albert and Brenda and a partnership was set up to run the market garden business ("the Partnership"). Albert, Brenda and the three siblings had equal shares in the Partnership.
- In 2000, Albert and Brenda declared that they held the farm on trust for the Partnership.
- In 2001, Brenda died leaving a will pursuant to which her interest in the Partnership passed to her sons. The siblings thus came to have 26.66% of the shares each and their father retained a 20% share.
- Albert wished each of his sons to have a farm of his own and so two further farms were purchased.
- In 2004, the market garden business was transferred from the Partnership to a company in which Albert and his sons each held 25%.
- Until 2009, the siblings received relatively little in payment for their work.
- In about 2013-2014, relations between Richard and Adrian, on the one hand, and Albert and Philip, on the other, began to deteriorate. Albert had previously exercised effective control of the company but, on the advice of the accountant to the business, Richard assumed effective control. At that stage much larger salaries and dividends began to be approved.
- Albert died in July 2017. His will left a gift of £20,000 to his then partner and the residue of his estate, including his interests in the Partnership and the Company, to Philip.
- Richard and Adrian, the other siblings, issued a proprietary estoppel claim contending that assurances were made by their parents and they reasonably understood them to mean that if they committed to working on the family business then the business and its asserts would be divided equally among the siblings.
The judge at first instance made several relevant findings:
- The parents did make assurances to the siblings and such assurances were reasonably understood to mean that if the siblings committed to the family business then the business and its assets would ultimately be divided amongst them.
- Richard and Adrian relied on the assurances and devoted their working lives from school until Albert's death in 2017 to working in the family business.
- Richard and Adrian had suffered detriment and it would be unconscionable for Albert's estate to renege on the assurances made to them.
- The judge did, however, note that as a consequence of the retention of profits within the business over more than two decades and the increase in the capital value of the farms themselves, Richard and Adrian had benefited very substantially from their involvement in the family business. In round terms, the value of final distributions from the Partnership and the Company to each of Richard and Adrian was c£2million.
- He ordered Albert's executors to hold his share of the Partnership and his shares in the Company on trust for Richard, Philip and Adrian in three equal shares separately from the remainder of Albert's estate.
The appeal
The focus of the appeal was on the judge's conclusion that there was detriment.
Counsel for the Appellant argued that it was incumbent on a claimant to plead and prove that he forewent an opportunity which, overall, would have put him in a better position (financially or otherwise). Counsel argued that the judge failed to properly weigh up the financial advantages obtained by Richard and Adrian against the non-financial disadvantages.
Newey LJ gave the judgment in the Court of Appeal with which Falk LJ and Moylan LJ agreed.
Newey LJ considered the various authorities in respect of detriment and noted that:
- Some detriment may be difficult or impossible to quantify, for example, the detriment of an ever-increasing burden of care for an elderly person and having to be subservient to his or her moods and wishes.
- Where a claimant's reliance on an assurance has resulted in both disadvantages and benefits, the Court must have regard to both.
- The fact that a disadvantage may not be susceptible to quantification does not make it a trump card. In a case where reliance has produced both a disadvantage and a financial benefit, the judge must balance the two regardless of whether it is possible to put a figure on the disadvantage.
- There are only limited circumstances in which the Court of Appeal can interfere with a finding of detriment. In Davies v Davies [2014] EWCA Civ 568, Floyd LJ said in paragraph 33:
"Whether there is detrimental reliance in any given case is an evaluative judgment on the facts, which normally lies within the exclusive province of the trial judge. This court can only interfere with the judge's assessment of that issue if it is perverse or clearly wrong: Suggitt v Suggitt [2012] EWCA Civ 1140 per Arden LJ at [37]."
Newey LJ stated that the question for the Court of Appeal was whether the judge at first instance had weighed any non-financial disadvantage against any financial benefit where the disadvantage was not susceptible to quantification.
Newey LJ concluded that the judge could be said to have carried out the necessary evaluative exercise (paragraph 42) and that it was not unreasonable for the judge to conclude that there was the requisite detriment on the facts of the present case [53]. Paragraph 53 of the judgment concludes with the statement, "Whether or not a different judge could have taken a different view is neither here nor there."
However, of potentially most interest to practitioners is Newey LJ's dictum at paragraph 52 of the judgment:
"My own view, as I have indicated earlier in this judgment, is that, to succeed in a proprietary estoppel claim, a claimant needs to show sufficiently substantial net detriment of whatever kind. Where, however, a claimant has made a life-changing choice and over many years undertaken work in reliance on an assurance, the Court will probably be prepared to treat loss of opportunity to lead a different life as itself detrimental without requiring the claimant to prove, or itself trying to determine, quite what the claimant would have done and with what consequences. The fact that the claimant "deprived [himself] of the opportunity of trying to better [himself] in other ways" (to adapt words of Lord Walker in Gillett v Holt) will itself be taken to amount to detriment; the Court will not be inclined to attempt the (probably unrealistic) exercise of "recreat[ing] an alternative life ... without the assurances" (to adapt words of Lewison LJ in Habberfield v Habberfield). In practice, therefore, as Rajah J said in Spencer v Spencer, detrimental reliance is likely to be found to exist where "a parent promises a child a farm if they work on the farm until the parent dies, and the child does what they were asked to do, giving up the possibility of other options, and positioning their working life based on the assurances". That will not automatically be the case, however. If, say, it can be seen that the claimant has derived considerable financial benefits from working on the farm, those must be weighed against the loss of the "possibility of other options"" [emphasis added].
Summary
The case therefore reiterates that, in order to demonstrate detriment for the purposes of a proprietary estoppel claim, a claimant needs to show sufficiently substantial net detriment of whatever kind. The Court will probably be prepared to treat a loss of opportunity to live a different life/pursue other options as detrimental but such detriment must still be weighed against any financial or other benefits derived from relying on the assurance. The case also acts as a reminder that the trial is not a dress rehearsal but the main event as a judge's finding that there was detriment is likely to be difficult to overcome on appeal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.