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Judgments - Thorner (Appellant) v Majors and others (Respondents)

HOUSE OF LORDS

SESSION 2008-09

[2009] UKHL 18

on appeal from:[2008]EWCA Civ 732

OPINIONS

OF THE LORDS OF APPEAL

FOR JUDGMENT IN THE CAUSE

Thorner (Appellant) v Majors and others (Respondents)

Appellate Committee

Lord Hoffmann

Lord Scott of Foscote

Lord Rodger of Earlsferry

Lord Walker of Gestingthorpe

Lord Neuberger of Abbotsbury

Counsel

Appellants:

John McDonnell QC

Michael Jefferis

(Instructed by Stephen Gisby & Co)

Respondents:

Andrew Simmonds QC

Penelope Reed

(Instructed by Gould & Swayne)

Hearing date:

21 JANUARY 2009

ON

WEDNESDAY 25 MARCH 2009

HOUSE OF LORDS

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT

IN THE CAUSE

Thorner (Appellant) v Majors and others (Respondents)

[2009] UKHL 18

LORD HOFFMANN

My Lords,

1.  The appellant David Thorner is a Somerset farmer who, for nearly 30 years, did substantial work without pay on the farm of his father’s cousin Peter Thorner. The judge found that from 1990 until his death in 2005 Peter encouraged David to believe that he would inherit the farm and that David acted in reliance upon this assurance. In the event, however, Peter left no will. In these proceedings, David claims that by reason of the assurance and reliance, Peter’s estate is estopped from denying that he has acquired the beneficial interest in the farm. The judge found the case proved but the Court of Appeal reversed him.

2.  Such a claim, under the principle known as proprietary estoppel, requires the claimant to prove a promise or assurance that he will acquire a proprietary interest in specified property. A distinctive feature of this case, as Lloyd LJ remarked in the Court of Appeal (at paragraph 65), was that the representation was never made expressly but was “a matter of implication and inference from indirect statements and conduct.” It consisted of such matters as handing over to David in 1990 an insurance policy bonus notice with the words “that’s for my death duties” and other oblique remarks on subsequent occasions which indicated that Peter intended David to inherit the farm. As Lloyd LJ observed (at paragraph 67), such conduct and language might have been consistent with a current intention rather than a definite assurance. But the judge found as a fact that these words and acts were reasonably understood by David as an assurance that he would inherit the farm and that Peter intended them to be so understood.

3.  The Court of Appeal said, correctly, that the fact that Peter had actually intended David to inherit the farm was irrelevant. The question was whether his words and acts would reasonably have conveyed to David an assurance that he would do so. But Lloyd LJ accepted (at paragraph 66) that the finding as to what Peter would reasonably have been understood to mean by his words and acts was a finding of fact which was not open to challenge. That must be right. The fact that he spoke in oblique and allusive terms does not matter if it was reasonable for David, given his knowledge of Peter and the background circumstances, to have understood him to mean not merely that his present intention was to leave David the farm but that he definitely would do so.

4.  However, the Court of Appeal allowed the appeal on the ground that the judge had not found that the assurance was intended to be relied upon and that there was no material upon which he could have made such a finding. The judge had found that David had relied upon the assurance by not pursuing other opportunities but not, said Lloyd LJ, that Peter had known about these opportunities or intended to discourage David from pursuing them.

5.  At that point, it seems to me, the Court of Appeal departed from their previously objective examination of the meaning which Peter’s words and acts would reasonably have conveyed and required proof of his subjective understanding of the effect which those words would have upon David. In my opinion it did not matter whether Peter knew of any specific alternatives which David might be contemplating. It was enough that the meaning he conveyed would reasonably have been understood as intended to be taken seriously as an assurance which could be relied upon. If David did then rely upon it to his detriment, the necessary element of the estoppel is in my opinion established. It is not necessary that Peter should have known or foreseen the particular act of reliance.

6.  The judge found (at paragraph 98) not only that it was reasonable for David to have understood Peter’s words and acts to mean that “he would be Peter’s successor to [the farm]” but that it was reasonable for him to rely upon them. These findings of fact were in my opinion sufficient to support the judge’s decision.

7.  The judge held that the equity in David’s favour created by the proprietary estoppel required a declaration that Peter’s personal representatives held the farm with its chattels, live and dead stock and cash at bank on trust for David absolutely. The personal representatives object on two grounds. First, they say although the judge placed reliance on the incident of the handing over of the insurance policy in 1990, the assurance was not unequivocal until affirmed by later words and conduct, after which the detriment suffered by David was a good deal less than if one took the whole period from 1990 until Peter’s death and therefore did not justify an award of the whole farm.

8.  I do not think that the judge was trying to pin point the date at which the assurance became unequivocal and I think it would be unrealistic in a case like this to try to do so. There was a close and ongoing daily relationship between the parties. Past events provide context and background for the interpretation of subsequent events and subsequent events throw retrospective light upon the meaning of past events. The owl of Minerva spreads its wings only with the falling of the dusk. The finding was that David reasonably relied upon the assurance from 1990, even if it required later events to confirm that it was reasonable for him to have done so.

9.  The second ground of objection is that the farm when Peter died in 2005 was not the same as it was in 1990. In between, he had sold some land and bought other land. I agree with my noble and learned friends Lord Walker of Gestingthorpe and Lord Neuberger of Abbotsbury that changes in the character or extent of the property in question are relevant to the relief which equity will provide but do not exclude such a remedy when there is still an identifiable property. In the present case, I see no reason to question the judge’s decision that David was entitled to the beneficial interest in the farm and the farming business as they were at Peter’s death.

10.  I would therefore allow the appeal and restore the decision of the judge.

LORD SCOTT OF FOSCOTE

My Lords,

11.  I have had the advantage of reading in draft the opinions on this appeal of my noble and learned friends Lord Walker of Gestingthorpe and Lord Neuberger of Abbotsbury and am in broad agreement with their reasons for allowing this appeal. I want, however, to add some thoughts of my own and will, for that purpose, gratefully adopt the description and analysis of the facts of the case provided by Lord Walker.

12.  In Crabb v Arun District Council [1976] Ch.179 Scarman LJ (as he then was) said, at p 192, that if the plaintiff, Mr Crabb, had any such right as he had claimed, in the event successfully, “it is an equity arising out of the conduct and relationship of the parties". In the present case the relationship of the parties was a familial one - Mr Peter Thorner, the owner of Steart Farm, had no wife or children and was a first cousin of the father of Mr David Thorner, who claimed upon his cousin’s death to have a right to inherit the farm - and the significance and implications of the conduct of David and Peter respectively in the years leading up to Peter’s death have to be assessed in the context of that familial relationship. David’s many years of unpaid work on the farm and assistance with the management of Peter’s farming business took place in the context of that relationship. Peter’s remarks to David, and to others, regarding David’s eventual inheritance of the farm were, in the context of that relationship, unsurprising. Similarly, David’s expectation of that inheritance, fed by his years of unpaid work and his understanding of his cousin’s remarks and intentions, was unsurprising. The issue that has arisen is whether, Peter having in the event died intestate, David has a right in equity, arising out of his and Peter’s conduct and relationship to claim the farm.

13.  The case for David, as pleaded, relied primarily on proprietary estoppel and extended not simply to Steart Farm but to the whole of Peter’s net estate (see para 19 of the Amended Particulars of Claim). However the judge, Mr John Randall QC sitting as a Deputy Judge of the High Court, confined David’s equity, quite rightly in my opinion, to Steart Farm, its live and dead stock and associated chattels and the working capital standing to the credit of the farm account with the Bank. The judge founded his judgment on the proprietary estoppel that had been pleaded. The Court of Appeal, too, concentrated on proprietary estoppel and the submissions that have been addressed to your Lordships have likewise concentrated on proprietary estoppel. It should be noted, however, that paragraph 20 of the Amended Particulars of Claim had claimed, in the alternative, an equity “which should be satisfied in such manner as the Court thinks just".

14.  One of the features of the type of cases of which the present case is an example is the extent to which proprietary estoppel and constructive trust have been treated as providing alternative and overlapping remedies and, while in no way disagreeing with my noble and learned friends’ conclusion that David can establish his equity in Steart Farm via proprietary estoppel, I find it easier and more comfortable to regard David’s equity as established via a remedial constructive trust. I will return to this later.

15.  Lord Walker, in paragraph 29 of his opinion, identified the three main elements requisite for a claim based on proprietary estoppel as, first, a representation made or assurance given to the claimant; second, reliance by the claimant on the representation or assurance; and, third, some detriment incurred by the claimant as a consequence of that reliance. These elements would, I think, always be necessary but might, in a particular case, not be sufficient. Thus, for example, the representation or assurance would need to have been sufficiently clear and unequivocal; the reliance by the claimant would need to have been reasonable in all the circumstances; and the detriment would need to have been sufficiently substantial to justify the intervention of equity. On the factual findings made by the judge each of the three elements had been present in the period 1990 until Peter’s death in 2005. Having referred to the various remarks made by Peter to David in 1990 and thereafter the judge expressed his conclusions in paragraphs 94, 98 and, finally, 111(d) of his judgment:

“… I am satisfied that … Peter was intending to indicate to David that he would be Peter’s successor to Steart Farm, upon his death, and that David’s understanding to that effect was correct. I find that this remark and conduct on Peter’s part strongly encouraged David, or was a powerful factor in causing David, to decide to stay at Barton House and continue his very considerable unpaid help to Peter at Steart Farm, rather than to move away to pursue one of the other opportunities which were then available to him, and which he had been mulling over …” (para 94)

“I find this and other such remarks encouraged the expectation which David had formed … that he would be Peter’s successor to Steart Farm, upon his death, and encouraged David to continue with his very considerable unpaid help to Peter there. I am also satisfied that it was reasonable for David to understand them and rely on them in that way …” (para 98)

and

“I am also … satisfied that all these remarks further encouraged the expectation which David had formed that he would be Peter’s successor to Steart Farm, upon his death, and encouraged David to continue with his very considerable unpaid help to Peter there, and … that it was reasonable for David to understand them and rely on them in that way …” (para 111(d))

16.  Lloyd LJ, with whose judgment in the Court of Appeal Ward LJ and Rimer LJ agreed, accepted not only the judge’s findings of primary fact but accepted also the inferences drawn by the judge from those findings. They were, said Lloyd LJ, “in effect immune from challenge” (para 66). But the Lord Justice was not satisfied that the judge’s factual findings constituted a sufficient basis for a successful proprietary estoppel claim (see para 67). His doubt appears to have been based on the absence of an explicit finding that Peter had intended David to rely on his (Peter’s) remarks (see para 72)

“… the judge did not in terms consider whether the implicit statement which he found to have been made in 1990, to the effect that Peter intended David to succeed to the farm on his death, was intended to be relied on.”

The Lord Justice went on, in paragraphs 73 and 74, to say this -

“73. It may be that the judge was too much influenced by the fact that Peter did intend that David should inherit the farm, remained of that view, put it into effect by his 1997 will, and did not change his intention despite the revocation of that will …

74. In my judgment … David’s claim in the present case does not satisfy the tests for [a proprietary estoppel] claim, because the statement made implicitly in 1990, as recorded by the judge, did not amount to a clear and unequivocal representation, intended to be relied on by David, or which it was reasonable for him to take as intended to be relied on by him …”

17.  My Lords there seems to me, if I may respectfully say so, to be an inconsistency between, on the one hand, the Lord Justice’s acceptance of the judge’s finding that it was reasonable for David to have relied on Peter’s representations that he (David) would inherit Steart Farm and, on the other hand, the Lord Justice’s conclusion that no representation had been made by Peter that it had been reasonable for David to have taken as intended to be relied on. Whether the representations made by Peter to David about the ownership of Steart Farm after his (Peter’s) death were intended by Peter to have been relied on by David must surely depend upon an objective assessment of Peter’s intentions in making the representations. If it is reasonable for a representee to whom representations have been made to take the representations at their face value and rely on them, it would not in general be open to the representor to say that he or she had not intended the representee to rely on them. This must, in my opinion, particularly be so if, as here, the representations are repeated or confirmed by conduct and remarks over a considerable period. There may be circumstances in which representations cannot reasonably be taken to have been made with any intention that they should be acted on, or with any intention that, if acted on, rights against the representor would ensue, but a finding that it was reasonable for the representee to have relied on the representations, and to have acted to his or her detriment in that reliance, would, in my opinion, be inconsistent with the existence of any such circumstances. It could not be thought reasonable for a representee to rely on a representation that, objectively viewed, was not intended by the representor to be relied on. To put the point in context, the judge’s factual finding that it was reasonable for David to have relied on Peter’s representation that he (David) would inherit Steart Farm, a finding accepted by Lloyd LJ, carries with it, in my opinion, an implicit finding that it was reasonable for David to take the representation as intended by Peter to be relied on.

18.  As to the requirement that a representation, if it is to found a claim based on proprietary estoppel, must be clear and unequivocal, a requirement that I certainly accept, there seem to me to be two respects in which Peter’s representation to David that on Peter’s death David would inherit Steart Farm might be thought to be lacking in the requisite certainty. First, there is the question as to the identity of Steart Farm. A contract for the sale of Steart Farm, if in writing, signed by the parties and stating the price, would not lack contractual certainty provided that evidence were available to identify as at the date of the contract the agricultural unit that constituted Steart Farm. A representation by Peter that David would, on Peter’s death, inherit Steart Farm cannot, at the time the representation was made, be accorded a comparable certainty. Farm boundaries are not immutable. They change, with purchases of additional fields and/or sales of fields that were part of the farm. Steart Farm, excluding land of which Peter was merely the tenant, ranged from 350 acres in 1976 to 460 acres in 2005 when Peter died. It could not be supposed that in, say, 1990 when perhaps the most important of the representations that David would inherit Steart Farm was made by Peter, Peter was representing also that he would not alienate any part of Steart Farm. And, indeed, in the period between 1990 and his death in 2005 Peter both sold land (for development), which thereupon ceased to be part of Steart Farm, and acquired land which was incorporated into and became part of Steart Farm. Peter’s representation that David would inherit Steart Farm speaks, at least where Peter remained the owner of an agricultural entity known as Steart Farm, as from his death and if, at that time, evidence were available to identify Steart Farm with certainty, David’s claim to be entitled in equity to Steart Farm cannot, in my opinion, be rejected for want of certainty of subject matter. What the position would have been, and what right could have been claimed by David, if, in say 2004, Peter had decided to give up farming and to sell the whole of Steart Farm does not arise and need not be decided. It may well be, however, that in that event, David would succeed in establishing a proprietary claim in equity and to consequential relief (c/f Gillett v Holt [2001] Ch.210).

19.  The second “certainty” problem about a representation that David would inherit Steart Farm, a problem inherent in every case in which a representation about inheritance prospects is the basis of a proprietary estoppel claim, is that the expected fruits of the representation lie in the future, on the death of the representor, and, in the meantime, the circumstances of the representor or of his or her relationship with the representee, or both, may change and bring about a change of intentions on the part of the representor. Gillett v Holt was such a case. If, for example, Peter had become, before his death, in need of full time nursing care, so that he could not continue to live at Steart Farm or continue as a farmer and needed to sell Steart Farm or some part of it in order to fund the costs of necessary medical treatment and care, it seems to me questionable whether David’s equity in Steart Farm, bred from the representations and conduct in evidence in this case, would have been held by a court to bar the realisation of Steart Farm, or some sufficient part of it, for those purposes. I do not, of course, imagine for a moment that, in the circumstances I am postulating, David would have raised any objection. However, the conceptual possibility of a dispute arising in the circumstances postulated has to be borne in mind. Would it really be the case that the representations made by Peter, relied on and acted on by David as they were, would have barred the use of Steart Farm as a source of funding for the needs of Peter in a decrepit old age? For my part, I doubt it. But it is an odd sort of estoppel that is produced by representations that are, in a sense, conditional.

20.  These reflections invite some thought about the relationship between proprietary estoppel and constructive trust and their respective roles in providing remedies where representations about future property interests have been made and relied on. There are many cases in which the representations relied on relate to the acquisition by the representee of an immediate, or more or less immediate, interest in the property in question. In these cases a proprietary estoppel is the obvious remedy. The representor is estopped from denying that the representee has the proprietary interest that was promised by the representation in question. Crabb v Arun District Council (supra) seems to me a clear example of such a case. The Council had represented that Mr Crabb would be entitled to have access to the private road at gateway B and had confirmed that representation by erecting gateposts and a gate across the gateway. Once Mr Crabb, in reliance on that representation, had acted to his detriment in selling off a portion of his land so that his only means of access to and egress from his retained land was via gateway B, it was too late for the Council to change its mind. The Council was estopped from denying that Mr Crabb had the necessary access rights. Ramsden v Dyson (1866) LR 1HL 129 is another case, straightforward if viewed through the spectacles of the jurisprudence that has emerged since, of proprietary estoppel. In cases where the owner of land stands by and allows a neighbour to build over the mutual boundary, representing either expressly or impliedly that the building owner is entitled to do so, the owner may be estopped from subsequently asserting his title to the encroached upon land. This, too, seems to me straightforward proprietary estoppel. There are many other examples of decided cases where representations acted on by the representee have led to the representor being estopped from denying that the representee had the proprietary interest in the representor’s land that the representation had suggested. Constructive trust, in my opinion, has nothing to offer to cases of this sort. But cases where the relevant representation has related to inheritance prospects seem to me difficult, for the reasons I have given, to square with the principles of proprietary estoppel established by the Ramsden v Dyson and Crabb v Arun District Council line of cases and, for my part, I find them made easier to understand as constructive trust cases. The possibility of a remedial constructive trust over property, created by the common intention or understanding of the parties regarding the property on the basis of which the claimant has acted to his detriment, has been recognised at least since Gissing v Gissing [1971] AC 886 (see particularly Lord Diplock, at p 905). The “inheritance” cases, of which Gillett v Holt [2001] Ch.210, In re Basham [1986] 1 WLR 1498 and Walton v Walton (1994 C.A. unreported) and, of course, the present case are good examples, are, to my mind, more comfortably viewed as constructive trust cases. Indeed I think Mr Edward Nugee QC, sitting as a High Court judge in In re Basham, was of the same opinion. After stating the proprietary estoppel principle (at p 1503) he went on (at p 1504)

“But in my judgment, at all events where the belief is that A is going to be given a right in the future, it is properly to be regarded as giving rise to a species of constructive trust, which is the concept employed by a court of equity to prevent a person from relying on his legal rights where it would be unconscionable for him to do so.”

And at p 1505E he referred to the detriment “that the plaintiff must prove in order to raise a constructive trust in a case of proprietary estoppel". For my part I would prefer to keep proprietary estoppel and constructive trust as distinct and separate remedies, to confine proprietary estoppel to cases where the representation, whether express or implied, on which the claimant has acted is unconditional and to address the cases where the representations are of future benefits, and subject to qualification on account of unforeseen future events, via the principles of remedial constructive trusts.

21.  I am satisfied, however, that this case would, on the factual findings made by the judge and accepted by the Court of Appeal have justified a remedial constructive trust under which David would have obtained the relief awarded him by the judge. I would allow the appeal.

LORD RODGER OF EARLSFERRY

My Lords,

 
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