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

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52.  In this House Mr McDonnell QC based David’s appeal primarily on the deputy judge’s findings as to the adequacy of the assurances given to David. He submitted that the Court of Appeal erred (in the passage set out in the last paragraph) because the “clear and unequivocal” test did not apply in proprietary estoppel; and that in any case the test was, if necessary, satisfied. He relied on the decision of the Court of Appeal in Walton v Walton (14 April 1994, unreported) as a more helpful practical statement of the test in a case of this sort.

53.  Mr Simmonds QC submitted (on the main point) that the correct construction of the words used by Peter was a question of law, not fact. While recognising that little is gained by comparing the facts of one case with another, he observed that the facts of the present case are very different from those in Walton v Walton or Gillett v Holt [2001] 1 Ch 210. Mr Simmonds emphasised that David (whom he described as a thoroughly decent man) had never pressed Peter for any explicit promise as to his (David’s) expectation. It was not reasonable he said, for David to understand Peter’s comments as he did, or to rely on his understanding of them. Mr Simmonds had other submissions, as to the identity of the promised subject-matter, that I will come to later.

54.  There is some authority for the view that the “clear and unequivocal” test does not apply to proprietary estoppel. That view was expressed by Slade LJ in Jones v Watkins (26 November 1987, unreported). The same view has been expressed in at least the past three editions of Treitel, Law of Contract. The current (12th) edition (2007) by Mr Edwin Peel, in a passage comparing promissory and proprietary estoppel, states (para 3-144):

“Promissory estoppel arises only out of a representation or promise that is ‘clear’ or ‘precise and unambiguous’. Proprietary estoppel, on the other hand, can arise where there is no actual promise: eg where one party makes improvements to another’s land under a mistake and the other either knows of the mistake or seeks to take unconscionable advantage of it.”

55.  The present appeal is not of course a case of acquiescence (or standing-by). David does not assert that he can rely on money which he has spent on the farm, or improvements which he has made to it. His case is based on Peter’s assurances to him. But if all proprietary estoppel cases (including cases of acquiescence or standing-by) are to be analysed in terms of assurance, reliance and detriment, then the landowner’s conduct in standing by in silence serves as the element of assurance. As Lord Eldon LC said over 200 years ago in Dann v Spurrier (1802) 7 Ves 231, 235-236:

“this Court will not permit a man knowingly, though but passively, to encourage another to lay out money under an erroneous opinion of title; and the circumstance of looking on is in many cases as strong as using terms of encouragement.”

56.  I would prefer to say (while conscious that it is a thoroughly question-begging formulation) that to establish a proprietary estoppel the relevant assurance must be clear enough. What amounts to sufficient clarity, in a case of this sort, is hugely dependent on context. I respectfully concur in the way Hoffmann LJ put it in Walton v Walton (in which the mother’s “stock phrase” to her son, who had worked for low wages on her farm since he left school at fifteen, was “You can't have more money and a farm one day”). Hoffmann LJ stated at para 16:

“The promise must be unambiguous and must appear to have been intended to be taken seriously. Taken in its context, it must have been a promise which one might reasonably expect to be relied upon by the person to whom it was made.”

57.  Hoffmann LJ enlarged on this, at paras 19 to 21:

“But in many cases of promises made in a family or social context, there is no intention to create an immediately binding contract. There are several reasons why the law is reluctant to assume that there was. One which is relevant in this case is that such promises are often subject to unspoken and ill-defined qualifications. Take for example the promise in this case. When it was first made, Mrs Walton did not know what the future might hold. Anything might happen which could make it quite inappropriate for the farm to go to the plaintiff.

But a contract, subject to the narrow doctrine of frustration, must be performed come what may. This is why Mr Jackson, who appeared for the plaintiff, has always accepted that Mrs Walton’s promise could not have been intended to become a contract.

But none of this reasoning applies to equitable estoppel, because it does not look forward into the future and guess what might happen. It looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept.”

58.  Mr Simmonds submitted that the meaning of spoken words is, not less than the meaning of written words, a question of law. Attractively though he put this submission, I have to say that in the circumstances of this case I feel a degree of unreality about the distinction. The rule about construction of documents being a question of law was established for pragmatic reasons (see Carmichael v National Power Plc [1999] 1 WLR 2042, 2048-2049). The commercial, social or family background against which a document or spoken words have to be interpreted depends on findings of fact. When a judge, sitting alone, hears a case of this sort, his conclusion as to the meaning of spoken words will be inextricably entangled with his factual findings about the surrounding circumstances (and the same would have been true if Peter had written a note, “This is for my death duties”).

59.  In this case the context, or surrounding circumstances, must be regarded as quite unusual. The deputy judge heard a lot of evidence about two countrymen leading lives that it may be difficult for many city-dwellers to imagine—taciturn and undemonstrative men committed to a life of hard and unrelenting physical work, by day and sometimes by night, largely unrelieved by recreation or female company. The deputy judge seems to have listened carefully to this evidence and to have been sensitive to the unusual circumstances of the case.

60.  I respectfully consider that the Court of Appeal did not give sufficient weight to the advantage that the trial judge had in seeing and hearing the witnesses. They concentrated too much, I think, on the 1990 incident of the bonus notice. That was certainly an important part of the narrative. For David it marked the transition from hope to expectation. But it did not stand alone. The evidence showed a continuing pattern of conduct by Peter for the remaining 15 years of his life and it would not be helpful to try to break down that pattern into discrete elements (and then treat each as being, on its own, insignificant). To my mind the deputy judge did find, in paras. 94 and 98 of his judgment, that Peter’s assurances, objectively assessed, were intended to be taken seriously and to be relied on. In the end it is a short point; I do not think that there was sufficient reason for the Court of Appeal to reverse the trial judge’s careful findings and conclusion. I do not share the Court of Appeal’s apparent apprehension that floodgates might be opened, because cases like this are fairly rare, and trial judges realise the need to subject the evidence (whether as to assurances, as to reliance or as to detriment) to careful, and sometimes sceptical, scrutiny (Jones v Watkins is a good example of an exaggerated claim that was rightly dismissed by the Court of Appeal on the ground of no sufficient detriment).

The identity of the farm

61.  In my opinion it is a necessary element of proprietary estoppel that the assurances given to the claimant (expressly or impliedly, or, in standing-by cases, tacitly) should relate to identified property owned (or, perhaps, about to be owned) by the defendant. That is one of the main distinguishing features between the two varieties of equitable estoppel, that is promissory estoppel and proprietary estoppel. The former must be based on an existing legal relationship (usually a contract, but not necessarily a contract relating to land). The latter need not be based on an existing legal relationship, but it must relate to identified property (usually land) owned (or, perhaps, about to be owned) by the defendant. It is the relation to identified land of the defendant that has enabled proprietary estoppel to develop as a sword, and not merely a shield: see Lord Denning MR in Crabb v Arun DC [1976] Ch 179, 187.

62.  In this case the deputy judge made a clear finding of an assurance by Peter that David would become entitled to Steart Farm. The first, “watershed” assurance was made in 1990 at about the time that Peter made an advantageous sale of one field for development purposes, and used part (but not the whole) of the proceeds to buy more agricultural land, so increasing the farm to the maximum at about 582 acres (some merely tenanted by Peter) which Peter farmed in 1992. Both Peter and David knew that the extent of the farm was liable to fluctuate (as development opportunities arose, and tenancies came and went). There is no reason to doubt that their common understanding was that Peter’s assurance related to whatever the farm consisted of at Peter’s death (as it would have done, barring any restrictive language, under section 24 of the Wills Act 1837, had Peter made a specific devise of Steart Farm). This fits in with the retrospective aspect of proprietary estoppel noted in Walton v Walton.

63.  The situation is to my mind quite different from a case like Layton v Martin [1986] 2 FLR 227, in which the deceased made an unspecific promise of “financial security". It is also different (so far as concerns the award of the whole of the deceased’s residuary estate) from Re Basham [1986] 1 WLR 1498. Your Lordships do not need to decide whether Re Basham was correctly decided, so far as it extended to the residuary estate, and I would prefer to express no decided view. But on this point the deputy judge in Re Basham relied largely on authorities about mutual wills, which are arguably a special case.

64.  Mr Simmonds relied on some observations by my noble and learned friend Lord Scott of Foscote in Cobbe [2008] 1 WLR 1752, paras 18 to 21, pointing out that in Ramsden v Dyson (1866) LR 1 HL 129, 170, Lord Kingsdown referred to “a certain interest in land” (emphasis supplied). But, as Lord Scott noted, Lord Kingsdown immediately went on to refer to a case where there was uncertainty as to the terms of the contract (or, as it may be better to say, in the assurance) and to point out that relief would be available in that case also. All the “great judges” to whom Lord Kingsdown referred, at p 171, thought that even where there was some uncertainty an equity could arise and could be satisfied, either by an interest in land or in some other way.

65.  In any event, for the reasons already mentioned, I do not perceive any real uncertainty in the position here. It is possible to imagine all sorts of events which might have happened between 1990 and 2005. If Peter had decided to sell another field or two, whether because of an advantageous development opportunity or because the business was pressed for cash, David would have known of it, and would no doubt have accepted it without question (just as he made no claim to the savings account which held that part of the proceeds of the 1990 sale which Peter did not roll over into land). If Peter had decided in 2000 to sell half the farm in order to build himself a retirement home elsewhere (an unlikely hypothesis) David might well have accepted that too (as the claimant in Gillett v Holt might have accepted a reduction in his expectations, had he been asked to do so rather than being abruptly and humiliatingly dismissed: see [2001] Ch 210, 229). But it is unprofitable, in view of the retrospective nature of the assessment which the doctrine of proprietary estoppel requires, to speculate on what might have been.

66.  Apart from his principled attack based on uncertainty, Mr Simmonds, realistically, did not criticise the deputy judge’s decision to award David the whole farm and the whole of the farming assets. There is no ground on which to challenge the judge’s discretion in determining the remedy. I would allow the appeal and restore the judge’s order.

Postscript

67.  I wish to add a brief postscript as to Cobbe. It will be apparent from this opinion that I have some difficulty with Lord Scott’s observation (in para 14 of his opinion in that case) that proprietary estoppel is a sub-species of promissory estoppel. But the terminology and taxonomy of this part of the law are, I acknowledge, far from uniform. The index to the first (1923) edition of George Spencer Bower’s Law relating to Estoppel by Representation contains in its index the entry ‘"EQUITABLE ESTOPPEL", a meaningless expression', a view which is developed at length in the text, with Lord Selborne LC attracting particular criticism (at p.14) that “a jurist so nice and discriminating in his phraseology” should have used the expression in Citizen’s Bank of Louisiana v First National Bank of New Orleans (1873) LR 6 HL 352, 360. At the other extreme one of the leading 20th-century cases, Crabb v Arun DC, shows a “virtual equation of promissory estoppel and proprietary estoppel", as Oliver J noted in Taylors Fashions Ltd v Liverpool Victoria Trustees Co. Ltd [1982] 1 QB 133, 153. But this is not the place for any prolonged discussion of terminology or taxonomy.

LORD NEUBERGER OF ABBOTSBURY

My Lords,

68.  I have had the benefit of reading in draft the opinion of my noble and learned friend, Lord Walker of Gestingthorpe. For the reasons he gives, I too would allow this appeal. However, partly because the issues are of some importance, and partly out of deference to the excellent written and oral arguments presented on behalf of the respondents, I shall give my views in my own words.

The factual background

69.  The relevant findings of the Deputy Judge and of the Court of Appeal are fully set out in Lord Walker’s opinion, and I shall therefore only identify the core conclusions. At [2007] EWHC 2422 (Ch), para 94, the Deputy Judge said that, by handing over the Prudential Bonus Notice in 1990, and saying that it was for his death duties, “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". In para 98, the Deputy Judge said that “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.” The Deputy Judge also said that “it was reasonable for David to understand [such remarks by Peter] and rely on them in that way".

70.  In the Court of Appeal, Lloyd LJ (who gave the only reasoned judgment, with which Ward and Rimer LJJ agreed) referred at [2008] EWCA Civ 732, para 66 to the Deputy Judge’s finding that Peter was “a man of few words, who generally maintained his privacy about his personal financial affairs … and who hardly ever spoke in direct terms". He then said that there was, quite rightly, no challenge to any of the Deputy Judge’s findings of primary fact. He went on to say that, in relation to the statement made in 1990, the Deputy Judge’s “finding as to what Peter meant by what he said is one of inference", and that, given that it “was based on other evidence", it was “in effect, immune from challenge".

71.  However, at [2008] EWCA Civ 732, para 72, Lloyd LJ suggested that the Deputy Judge “did not in terms consider whether the implicit statement…. to the effect that Peter intended David to succeed to the farm on his death, was intended to be relied on". He then said that the Deputy Judge “was unable to find that the implicit statement was made for the purpose of persuading David not to pursue some other opportunity". Accordingly, Lloyd LJ concluded, “there was no material on the basis of which the Judge could have found …. that the implicit statement was intended to be relied on, or… was intended as a promise rather than, at most, a statement of present intention, which might well be maintained ..., but as to which there was no commitment.”

The issues in this appeal

72.  David’s contention that he is entitled to the freehold of Steart Farm is, and was at first instance and in the Court of Appeal, founded squarely on proprietary estoppel, whose main elements are often summarised as being, in brief, assurance, reliance and detriment, as Lord Walker more fully explains. The issues in the present case really focus on the quality or nature of the assurance required before a proprietary estoppel can be established.

73.  The respondents advanced two reasons why this appeal should fail, both of which involved contending that the estoppel found by the Deputy Judge could not be made good. First, that the appellant (“David”) could not establish that he had reasonably relied on any assurance made to him by Peter Thorner (“Peter”). This was on the basis that any statement made by Peter was insufficiently clear to found an estoppel - effectively the ground relied on by the Court of Appeal. Secondly, that, even if reasonable reliance could be established, the nature of the property referred to in any assurance relied on was too imprecise to found a proprietary estoppel. I shall consider these two arguments in turn.

Reasonable reliance.

74.  The conclusion reached by the Court of Appeal, and supported by the respondents, rests on the proposition that a statement by A that he will leave certain property on his death to B could have one of two meanings. It might constitute an assurance that this is what A is binding himself to do; in other words, it might be a commitment by A to leave the property to B. Or it might be no more than a statement of A’s current intention, which can be subject to change with the passage of time, with or without a change of circumstances. (In that connection, it seems to me, in agreement with both parties to this appeal, that there is nothing special, as a matter of principle, in relation to a statement about leaving property in a will as against any other statement about one’s future actions.) The Court of Appeal’s reasoning was that, as a statement must be a “clear and unambiguous” assurance to found an estoppel, a claim such as that raised in this case could only succeed if it could be established that the statement relied on was clearly expressed so as to have the former, not the latter, meaning.

75.  The Court of Appeal came to the conclusion at [2008] EWCA Civ 732, para 72 that the Deputy Judge had not found, and that he could not on the evidence have found, that the statements on which David had relied amounted to assurances which could found the estoppel claimed. The “implicit statements", to use Lloyd LJ’s formulation, could not reasonably have been relied on as “clear and unambiguous” promises that Peter would leave the farm to David; they could have meant that it was merely his present intention to do so. On that basis, which the respondents support, the estoppel claim was rejected by the Court of Appeal.

76.  I do not agree with the Court of Appeal’s view that the Deputy Judge failed to make the finding in question. As I have mentioned, at [2007] EWHC 2422 (Ch) the Deputy Judge expressly said that, by handing over the Bonus Notice and saying what he said in 1990, “Peter was intending to indicate to David that he would be Peter’s successor to Steart Farm” (para 94), and that this and other statements encouraged David to believe “that he would be Peter’s successor to Steart Farm” (para 98). Crucially, the Deputy Judge also said that it was “reasonable for David [so] to understand them and rely on them in that way” (para 98).

77.  In my judgment, those findings clearly indicate that the Deputy Judge was of the opinion, contrary to the view expressed by the Court of Appeal, that the statements he found to have been made by Peter were reasonably understood by David to indicate that Peter was committing himself to leaving the farm to David, and were reasonably relied on by David as having that effect. Such a reading is strongly supported by the Deputy Judge’s observations at [2007] EWHC 2422 (Ch), para 125, that, if it was necessary to make such a finding, he would have regarded Peter’s statement in 1990 as “tantamount to an assurance to David", and that he did “not accept” that it was “ambiguous".

78.  Although Lloyd LJ also expressed himself at [2008] EWCA Civ 732, para 72 by reference to what Peter intended when he made the statements in question, it seems to me, and I understood Mr Andrew Simmonds QC, who appeared for the respondents, to accept, that, if the statements were reasonably understood by David to have the effect which the Deputy Judge found, namely an assurance, and David reasonably acted on that understanding to his detriment, then what Peter intended is not really germane. That is supported by a consistent line of authority - see for instance per Lord Denning MR in Crabb v Arun District Council [1976] Ch 179, 187F and 188C (citing his earlier observations in Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225, 242. See also: Sidney Bolsom Investment Trust Ltd v E Karmios & Co (London) Ltd [1956] 1 QB 529, 540-541, quoted by Lord Walker at para 50 of his opinion), and per Oliver J in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd (Note) [1982] QB 133, 151H-152A. It may be that there could be exceptional cases where, even though a person reasonably relied on a statement, it might be wrong to conclude that the statement-maker was estopped, because he could not reasonably have expected the person so to rely. However, such cases would be rare, and, in the light of the facts found by the Deputy Judge, it has not been, and could not be, suggested that this was such a case.

79.  Furthermore, if (as I think) Lloyd LJ also held at [2008] EWCA Civ 732, para 72 that it was not open to the Deputy Judge to find that it was reasonable for David to have understood the statements as he did or to have relied on those statements as he did, I do not consider that those were conclusions which were properly open to the Court of Appeal. It is, at any rate at first sight, a little surprising that, having concluded at [2008] EWCA Civ 732, para 66, that it was not open to them to interfere with the Deputy Judge’s logically anterior findings, including his inferences as to the meaning of the statements, the Court of Appeal then concluded, at [2008] EWCA Civ 732, para 72, that it was open to them to interfere with the subsequent inferences the Deputy Judge had drawn. I accept that there is no necessary inconsistency between the two conclusions, but, particularly given the full and careful consideration given to all the issues by the Deputy Judge, and the very close connection between the issues involved, the contrast between the views expressed in those two paragraphs is striking.

80.  Perhaps more importantly, the meaning to be ascribed to words passing between parties will depend, often very much, on their factual context. This is particularly true in a case such as this, where a very taciturn farmer, given to indirect statements, made remarks obliquely referring to his intention with regard to his farm after his death. At trial, there was much evidence about the relationship between Peter and David, and about Peter’s character. Consequently, the Deputy Judge was far better able than any appellate tribunal (even with the benefit of transcripts of the evidence) to assess not only how the statements would have been intended by Peter and understood by David, but also whether any such understanding and any subsequent reliance by David were reasonable. His very full and careful judgment demonstrates that the Deputy Judge took full advantage of this ability, as the observations of Lloyd LJ at [2008] EWCA Civ 732, para 66 effectively acknowledge.

81.  That does not, of course, mean that the Court of Appeal had no power to reverse the first instance decision on the ground that David’s understanding of, or reliance on, Peter’s statements was unreasonable. However, particularly in a case such as this, where the facts are unusual and the first instance judge has made full and careful findings, an appellate court should be very slow indeed to intervene. It may well be that the Court of Appeal took the view, advanced before your Lordships, that the question of how Peter’s statements should reasonably have been understood was a matter of law, and was therefore an issue on which an appellate court was freer to intervene than on questions of primary fact (such as what was said by Peter or how it was understood by David) or of inferences from primary fact (such as what Peter, who could not of course give evidence, intended when making the statements).

 
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