"One day all this will be yours" - Can a Verbal Promise Be Legally Enforced?
In certain circumstances, yes, and the consequences can be severe and unanticipated, as we discuss below.
One way such a promise may be binding is if the legal doctrine known as ‘proprietary estoppel’ arises. A court might find that an interest in land or property has been acquired if the following criteria have been met:
- a promise, assurance or representation has been made
- the promise has been relied upon
- a detriment has been suffered as a result
The court will then consider whether the failure to keep that promise results in an unconscionable outcome. If so, the final question for the court, and the topic of a recent appeal to the Supreme Court, is what is the appropriate level of any award?
The Guest Family
A multigenerational family of dairy farmers, the Guests, found themselves embroiled in such a dispute in recent years. The family's eldest son, Andrew, left school at the age of 16 and worked long hours on the farm for nearly 33 years, being paid a basic wage. Sadly, the relationship between Andrew and his parents, David and Josephine, deteriorated over the years and Andrew left the farm in 2015.
In 2017 Andrew brought a proprietary estoppel claim, arguing that he was entitled to receive a share of the farm as a result of assurances made by his parents that he would one day inherit a significant proportion of it. The court ordered his parents to make a payment to him amounting to 50% of the value of the farming business and 40% of the value of the farm itself. The inevitable consequence of that order was that the farm must be sold.
The case was heard by the Supreme Court in December 2021 after David and Josephine appealed. The main question being considered was how to approach granting relief to a successful claimant; should an award be based on the expectation, or based on the detriment suffered, which may be significantly less than the expectation held.
Tantalisingly the Supreme Court's judgement has not yet been shared and is eagerly anticipated.
Key Takeaways?
The Guest case demonstrates the difficulty, even for judges, in attaching a monetary value to successful claims. The case reminds us of some important lessons:
- Try to ensure that all agreements regarding the ownership of land are recorded in writing with the knowledge and agreement of all involved.
- Regularly review your Will to ensure any agreements about what will happen to your assets after your death are properly recorded. The Guest case is unusual as Andrew's claim was brought whilst his parents are still alive. It is common for these claims to be made after death, as it is often only then that the 'broken promise' is discovered.
If you find yourself in the position of either Andrew or his parents, take legal advice at an early stage. Proprietary estoppel is a notoriously complex area of law and the outcomes can be difficult to predict.