When will the court enforce a promise?
First published in The Royal Gazette, Legally Speaking, November 2022
As we all know, promises are made and broken all the time. What, if anything, can the law do to assist?
Bermuda law, like English law, is usually uninterested in the simple promise, or, more pertinently, the breaking of a simple promise. Without a contract, a trust, a claim under statute or a breach of duty, there is usually no recourse to the court.
However, on occasion, the court will look to equitable principles in order to give a promisee a claim against their promisor. The classic example of such a case is where a promise is made in relation to property – and a claim is made in proprietary estoppel.
The word proprietary reflects the fact that the remedy concerns promises with regards to interests in property, usually land. Estoppel encapsulates the notion that the wrong being threatened is the unconscionable repudiation of a promise.
The remedy therefore restrains, or “estops” the promisor from reneging. The remedy is an equitable one and therefore the court always has discretion in relation to the order to be made in respect of the broken promise.
To prove proprietary estoppel, there needs to be more than a simple promise. The promise to transfer the property must have been made and the promisee must, in reliance on that promise, have acted to his detriment.
Such a situation arose in the recent English Supreme Court case of Guest v Guest. Mr Guest Sr promised to his son, Mr Guest Jr, the inheritance of a sufficient part of the family farm to enable him to continue his own farming business after the death of his father. Relying on that promise, Mr Guest Jr spent more than 30 years of his working life on the farm for very low wages living in a small cottage on site.
Unfortunately, father and son fell out, with no hope of reconciliation. The son ceased working the land, moved with his family and cut ties with his parents. The father removed him from the will and the promise of a substantial inheritance, towards which the son had worked for nearly all of his life, fell away.
The traditional claims were not available to the son: there was no contract between father and son, there was no trust in the son’s favour, he could not look to a statutory remedy and there was no breach of duty.
This was therefore a matter for proprietary estoppel, which was made out in this case. The promise had been made by father to son. The son had relied on the promise to his detriment, indeed, he had shaped the course of his whole life around the inheritance he expected, giving all of his formative years and career to working on the farm he one day expected to inherit.
The court focused on the issue of what remedy should be provided to the son. Previous reported judgments approached the question in an inconsistent manner and this case presented the first occasion for England’s highest court – which shares judges with Bermuda’s highest court, the Privy Council – to consider the approach.
Ultimately, the question was whether the remedy should be damages to compensate for the detriment suffered by the promisee, or fulfilment of the promise made to them.
There are problems with both approaches. The detriment can be difficult to quantify. In Mr Guest’s case, his life had been shaped by the promise made to him and it was impossible to know what path he might have taken without it. One could compensate him for the reduction in his wages over the years and the loss of his cheap farm accommodation, but the value of that would pale in comparison with the value of what he was promised – a farm worth millions of pounds which would provide him and his family with an income source for the rest of their lives.
Equally, to order the fulfilment of the promise was problematic. Mr Guest was promised the farm on the death of his father, who had not yet died. He also had two siblings, both of whom expected an inheritance from the farm.
Ultimately the court decided, in a 3-2 split decision, that the remedy should be based on the fulfilment of the promise. It will ask itself the following questions:
- Is it unconscionable for the promisor to go back on his promise?
- Has the promisor satisfied the court that some remedy less than the complete fulfilment of the promise will remedy the unconscionability of going back on it?
- Is the remedy sufficient to do justice between the parties and remedy the unconscionability suffered by the promisee?
This approach is very case-by-case dependent and will make it challenging to value any potential claim in proprietary estoppel.
In Mr Guest’s case, the court ordered an interest in 40 per cent of the value of the farm. It was for his parents to choose whether he received that interest on their deaths or to choose to pay immediately an equivalent monetary award with a discount to reflect the early fulfilment of the promise.
Nonetheless it provides clarity about how the court should approach the exercise and confirms that in English and Bermuda law, the remedy should not be assessed by valuing the detriment suffered by the promisee.
