When is a promise legally binding? The law behind proprietary estoppel claims
“One day my son, all this will be yours" Spoken by a farmer to his son in his teens and repeated for many years thereafter”. These are the opening words of Lord Briggs' judgment in the Supreme Court last October. The case centred around the promise of a farmer to his son, a promise no doubt heard daily up and down the country by young farmers. A promise, a handshake, a wink – all well and good if the promisor follows through. But what happens when someone relies on that promise – to their detriment – and the promise is broken?
When can promises be broken?
As a child, we are told that promises are final and should never be broken. Perhaps our parents promised that we could go to the park if we ate all our vegetables or when we got older, promised that we could go to the party if we did our homework. Casually used in this way but still holds meaning, an inherent understanding that promises mean something. A whole body of caselaw centres around this idea.
The law of equity, as Lord Briggs explains, is to “put right injustice, to which the law is otherwise blind”. What he means by this is that if the strict rule of law is applied, then there would be no remedy for those let down by a promise. Lord Briggs explains - a promise is not enforceable unless it is made as part of a contract, and further, a person is free to change their Will until he dies. So on that basis, the father, in this case, has done nothing wrong (legally) by breaking his promise. The law of equity, therefore, steps in to provide a remedy – the remedy is called proprietary estoppel.
Relying on the promise of an inheritance from his father, the son, in this case, spent the best part of his life working on the family farm, expecting to succeed his father as the farm owner. Many years later, the father and son fell out, and the son had no choice but to seek work elsewhere. The father changed his Will and disinherited his son.
There is no contract, no paperwork, and no record, so to speak. So equity steps in and attempts to make good that promise.
Proprietary estoppel claims can be brought in respect of property or land when a promise has not been fulfilled or later reneged on. There are three elements that must be satisfied to successfully bring a claim:
- A clear assurance is made
- Reliance on that assurance is made
- Detriment is suffered as a result of reasonable reliance on the assurance
Lord Briggs considered alternative remedies when deciding this case – what would do justice in the circumstances? The case turns on a fine distinction between making good on the promise or rather compensating the promisee for the detriment suffered. So can you go to the park/party after all, or will there be a compromise?
In this case, the remedy was a choice between putting the farm into a trust for the children subject to the parents' life interest or making an immediate payment of compensation with a sufficient discount to reflect the early receipt.
The case highlights the court's wide discretion in providing remedies - and acts as a useful warning to us to be careful what promises we make – or break!