17 February 2015 | Comment | Article by Roman Kubiak TEP

Proprietary Estoppel – what value should be placed on detriment?

Roman discusses the recent decision in the case of Lothian v Dixon in which the High Court awarded the claimants the entire net residuary estate.

The recent case of Lothian v Dixon highlights the court’s discretion regarding the value of awards which it can make in claims for proprietary estoppel.

In the Lothian case, Helen MacArthur left a will dated 10 February 1983 in which she left her residuary estate to be split between her cousins, Mrs Helen Lothian and Mrs Patricia Webb. Mrs MacArthur’s estate was valued at over £1m.

Over time, Mrs MacArthur saw less of Mrs Webb and following her diagnosis of terminal cancer, in 2010 she asked Mrs Lothian to stay with her in her hotel in Scarborough.

Mrs MacArthur told Mrs Lothian and her husband that, in return for them looking after her and helping her to run her hotel, she would leave her entire estate to them.

Accordingly, in the two years preceding Mrs MacArthur’s death, Mrs Lothian spent some nine months of each year caring for Mrs MacArthur and running the hotel. Similarly, her husband would visit most weekends.

Following Mrs MacArthur’s death, however, it transpired that she had not updated her will to reflect her promises. Accordingly, Mr and Mrs Lothian brought a claim for proprietary estoppel on the basis that they had relied upon promises made by Mrs MacArthur which, in the event that they only received half of the net residuary estate under the 1983 will, they had done to their detriment.

Mrs Webb defended that claim on the basis that, in her view, an outright transfer of the net residuary estate to Mr and Mrs Lothian was excessive and not reflective of the detriment suffered. Mrs Webb’s defence was that Mr and Mrs Lothian should be awarded an additional £40,000 plus travel expenses to reimburse them for the two years of care and management of the hotel.

His Honour Judge Roger Kaye QC, sitting as a High Court judge, disagreed.

He said that “detriment is not a narrow or technical concept but must be judged in the round” and that it “need not be expenditure of money or other quantifiable financial detriment but it must be substantial”. To that end, he referred to the well known case of Gillett v Holt [2001] Ch 210 CA.

Having determined that, as well as the fact that there had been promises, reliance upon those promises and detriment suffered, it was then left to the judge to consider the amount of relief. He found that Mr and Mrs Lothian had suffered detriment of a substantial kind in that they had altered their entire lifestyle in the run up to the deceased’s death and, although they had free board and lodging whenever they were at the hotel, the judge held that this was not meaningful compensation in the circumstances. Further, Mrs MacArthur’s promise was “clear, certain and continued up to her demise”.

As such, there was clear expectation that Mr and Mrs Lothian would inherit the entire estate.

In the circumstances, the judge awarded the entire net residuary estate to Mr and Mrs Lothian.

The case demonstrates that, in considering what awards to make in claims for proprietary estoppel, much is at the court’s discretion and the court will consider all the factors “in the round” and there is no ‘one size fits all’.

Author bio

Roman Kubiak TEP

Partner

Roman Kubiak is a Partner and Head of the market leading Private Wealth Disputes team.

He advises across the whole spectrum of private wealth disputes, with a particular focus on high value, complex and cross-border disputes including: trust disputes, breach of trust claims and applications to remove trustees; will disputes, particularly those with an international element; claims under the Inheritance (Provision for Family and Dependants) Act 1975; and claims for equitable relief under proprietary estoppel, constructive trusts and resulting trusts.

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