The promised land

It will come as no surprise to many that the House of Lords in Thorner v Majors [2009] UKHL 18; Solicitors Journal 153/12, 31 March 2009, has overturned the decision of the Court of Appeal ([2008] EWCA Civ 732) and reinstated the first instance ruling of Mr John Randall QC ([2007] EWHC 2422). Two specific issues were before the House: (1) the quality of the assurance necessary to found a proprietary estoppel claim, and (2) the degree of certainty required in identifying the property forming the subject-matter of the estoppel claim.

At first instance, the deputy judge concluded that the claimant's expectation that he would inherit the deceased's farm was incremental and took place over many years. It was marked, in 1990, by the handing over of an insurance policy bonus notice to the claimant indicating that the deceased was intending that the claimant should succeed to the farm. Later, this expectation matured further into what the deputy judge described as an 'unspoken mutual understanding' between the parties. Therefore, he concluded that the deceased had encouraged the claimant to believe that he would inherit the farm and that the latter had acted in reliance upon this assurance. Moreover, the minimum equity to do justice to the claimant, and avoid an unconscionable result, was to award the claimant the land and buildings, live and dead stock and other chattels representing the deceased's farm.

The view taken by the Court of Appeal, on the other hand, was that the deceased's conduct and statements gave rise to no more than a current intention to leave the farm to the claimant (which could change with the passage of time) rather than a clear assurance that he would definitely inherit the farm. According to the Court of Appeal, therefore, what was required was proof of the deceased's subjective understanding of what effect his words and conduct would have on the claimant. In the absence of any explicit finding that the deceased had intended the claimant to rely on his acts and remarks, the claim was bound to fail.

No duty to search for ambiguity or uncertainty

Although the House of Lords concluded that the relevant assurance had to be clear and unambiguous, the relevant representations in the instant case had to be viewed within their factual context. Thus, it was apparent that 'what [the deceased] said should have been clear enough for [the claimant], whom he was addressing and who had years of experience in interpreting what he said and did, to form a reasonable view that [the deceased] was giving him an assurance that he was to inherit the farm' (Lord Rodger, at para.26).

Moreover, according to Lord Neuberger, the 'clear and unambiguous' test should not be applied too rigorously so as to impose on the court a duty to search for ambiguity or uncertainty. In his view, the court 'should assess the question of clarity and certainty practically and sensibly, as well as contextually' (para.85). In this connection, it was apparent that the deceased was 'a very taciturn farmer, given to indirect statements, [who] made remarks obliquely referring to his intention with regard to his farm after his death' (para.80).

On the issue of reliance, the House of Lords was unanimous in holding that the relevant question was what the claimant would reasonably have understood the deceased to mean by his words and acts '“ in other words, the fact that the deceased spoke in 'oblique and allusive terms' (see, Lord Hoffmann at para.3) did not matter so long as it was reasonable for the claimant to have understood him to mean that he would definitely leave the farm to him on his death. The test, therefore, was an entirely objective one. In the words of Lord Hoffmann (at para.5):

'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 [the claimant] did then rely upon it to his detriment, the necessary element of the estoppel is... established. It is not necessary that [the deceased] should have known or foreseen the particular act of reliance.'

According to the House of Lords, the findings of the deputy judge on this point were clear. The deceased's statements were reasonably understood by the claimant to indicate that the deceased was actually committing himself to leaving the farm to the claimant '“ moreover, they were reasonably relied on by the claimant to that effect.

As to the matter of the assurance, it was apparent that the object of the assurance was the deceased's farm as it existed from time to time. Accordingly, the nature of the interest to be awarded to the claimant was the farm as it was (in terms of extent and location) on the deceased's death. Like a floating charge, the property the subject of an estoppel equity could be 'conceptually identified' from the moment the equity came into existence, but its 'precise extent' could only be determined when the equity crystallised (per Lord Neuberger, at para.96). Changes in the character or extent of the property were relevant only in determining the nature of the relief to be granted in satisfaction of the estoppel equity. In this case, there was no question of uncertainty in relation to the identity of the farm. Although some parts of the farm had been sold and other land bought and added to it, there was no reason to interfere with the deputy judge's award entitling the claimant to the beneficial interest in the farm and the farming business as they stood at the time of the deceased's death.

Legitimate expectation

Much of what the House of Lords has said is not new. The need to undertake an objective assessment of the deceased's intentions in making his representations echoes the view expressed by Denning LJ in Sidney Bolsom Investment Trust Ltd v E. Karnion & Co (London) Ltd [1956] 1 QB 529, at 540-541, that 'a man must be taken to intend what a reasonable person would understand him to intend'. The subsequent decision in JT Developments Ltd v Quinn (1991) 62 P & CR 33 also highlights the importance of showing that the assurance given was, in the circumstances, such that would operate on the mind of a reasonable person. It was pointed out by Ralph Gibson LJ in that case that the claimant's subjective belief could not be treated as decisive '“ what was necessary to consider was the effect the assurance had on the claimant as a reasonable person. Conversely, as emphasised now in Thorner, it is immaterial that the representor did not realise the consequence of his words or acts as giving rise to a legitimate expectation of entitlement on the part of the claimant (see Preston and Henderson v St Helens Metropolitan Borough Council (1989) P & CR 500, at 503). In the landmark case of Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133, at 151-152, Oliver J concluded that the legal owner may act 'knowingly or unknowingly' in encouraging the claimant to act to his detriment. This approach is mirrored in Thorner where, for example, Lord Scott makes clear (at para.17) that:

'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.'

Interestingly, however, Lord Neuberger (at para.78) alluded to the possibility of exceptional cases where, even though a person reasonably relied on a statement, it might be wrong to conclude that the representor was estopped, because he could not reasonably have expected the person to rely on the assurance. In Thorner, however, the deceased's promises were unambiguous and, objectively assessed, intended to be taken seriously. Moreover, looking at the context, these were promises which the claimant might reasonably be expected to rely upon (see the identical formulation adopted by Hoffmann LJ (as he then was) in Walton v Walton, unreported, 14 April 1994, available on LexisNexis).

The notion that the subject matter of the estoppel only crystallises on the legal owner's death is also not novel in the testamentary promises cases. Indeed, it accurately reflects the idea that proprietary estoppel looks backwards in time to determine whether, in the circumstances which have actually happened, it would be unconscionable for the legal owner to go back on his assurance (Walton, at para.21). Thus, in Re Basham, dec'd [1986] 1 WLR 1498, the court held that the relevant assurance could extend to property as indefinite and fluctuating as the whole of a deceased's residuary estate. The argument that the claimant's belief must relate to some clearly identified and immutable property was firmly rejected.

Constructive trust

What is most interesting about Thorner, however, is Lord Scott's suggestion that proprietary estoppel and constructive trust may have different roles to play in providing remedies where representations about future property have been made and relied on.

In his view, the so-called 'inheritance cases' '“ where the assurance relates to future benefits and may be subject to qualification due to unforeseen future events '“ would sit 'more comfortably' as instances of the application of constructive trust doctrine (para.20). This is because the relevant assurance may be difficult to establish where the circumstances of the parties may bring about a change of intentions on the part of the representor during the passage of time. For this reason, in Lord Scott's view, proprietary estoppel would be better suited to more straightforward cases where the representation is unconditional and relates to immediate entitlement over existing assets. Again, the point is not entirely novel as the court in Re Basham also alluded to the possibility of treating the claimant's belief of future entitlement as giving rise to a species of constructive trust (ibid. at 1504). The difficulty, however, of using the constructive trust in this context is that the element of detriment is far stricter than in proprietary estoppel claims. Whereas mere personal disadvantage may support a claim in estoppel, this is not enough by itself to give rise to a common intention constructive trust, which usually requires evidence of (direct or indirect) financial contributions towards the acquisition of the property. In terms of remedies, proprietary estoppel is also far more flexible in allowing the court to satisfy the equity in a variety of different ways, rather than just awarding a beneficial interest in the property. It remains to be seen, therefore, whether the two-doctrine approach to testamentary promises favoured by Lord Scott finds favour in subsequent case law.