This blog post was contributed by David Thomas, Teaching Fellow for Property law.
Before you read this blog, you may want to read Part 1 of this post: The Remedy in Proprietary Estoppel Part I.
Guest v Guest [2022] UKSC 27
Lord Briggs’ leading judgment in this case starts by considering first principles, apart from the caselaw. Against the argument that the remedy should be the detriment to the promissee, he says that incurring the detriment is not itself the harm that gives rise to the equity; the harm is the repudiation of the promise. He declared that the choice between expectation and detriment is misconceived; the true purpose of the remedy is dealing with the unconscionability constituted by the repudiation. Just as unconscionability is vital to the first stage of the establishment of the equity, so it is the governing principle of the remedy.
He then turned to a comprehensive review of the authorities, which forms the largest part of this long judgment. He concluded that the caselaw over the last 150 years had generally followed the expectation-based approach, and that the argument that the essential aim of the remedy was to compensate for the detriment had made no real headway in the cases (although it has some academic support).
He then set the applicable principles. He rejected the argument that compensation for the detriment is the aim as forming no part of the law. In principle, the court’s approach to the remedy ‘will normally start with the assumption (not presumption) that the simplest way to remedy the unconscionability constituted by the repudiation is to hold the promisor to his promise’ (para 76), or in other words to satisfy the expectation.
By contrast, the concept of proportionality between detriment and remedy was well established in the cases, but arguably he downgraded its importance; it was ‘no more or less than a useful cross-check for potential injustice’, and would only come into play if the promissor proved that the enforcement of the promise would be out of all proportion to the detriment. If that was proven, the court might be constrained to award a lesser remedy to satisfy the unconscionability (this would still not be to compensate for the detriment).
Lord Briggs endorsed Robert Walker LJ’s comments in Jennings v Rice [2003] 1 P&CR 8, and the existence of a spectrum between on the one hand a case where both the promise and the detriment are reasonably precisely defined by the time the promise is repudiated (where enforcing the promise is fairly straight forward), and on the other where either or both are much less certain (where there may be greater scope for departing from full enforcement).
Compensating for the repudiation of a promise where it would have been fulfilled in the future (as in this case) raises the need for an appropriate allowance or discount for accelerated receipt.
In the end the court will have to consider its provisional remedy in the round, against all the relevant circumstances, and ask itself whether it would do justice between the parties, and whether it would do injustice to third parties. The yardstick for that justice assessment will always be whether, if the promissor was to confer that proposed remedy upon the promissee, he would be acting unconscionably. ‘The minimum equity to do justice’ means no more than a remedy which will satisfy the unconscionability (Para 80).
The appeal was allowed in part as the judge had not sufficiently allowed for the accelerated receipt.
Comment
Lord Briggs has sought to answer the previous controversy over the appropriate remedy by firmly rejecting the idea that the principle underlying the remedy should be compensating for the detriment, or that the court should award the lower of the two calculations (detriment and expectation) as ‘the minimum equity to do justice’ (the argument made by the minority in this case). The starting point instead is to be the expectation, the enforcement of the promise made. Proportionality is allowed a smaller role than in some earlier cases (for example Henry v Henry [2010] 1 All ER 988), only coming into play where the expectation is ‘out of all proportion to the detriment.’ A great deal of guidance is given for future cases, but he gives full weight to the flexibility of the remedy; in the end the award should be sufficient to satisfy the unconscionability.
This judgment is clearly intended to decide the issue once and for all. Will it succeed? The best reason for doubting that is the strong dissent, by two judges out of five, set out in the judgment of Lord Leggatt (with whom Lord Stephens agrees). My own view, however, is that the Supreme Court is unlikely to revisit this area of law in the near future. Lord Briggs’ solution is strongly supported by the cases and seems likely to be found to be workable by the courts.