Broken promises and property ownership

As noted in our recent blog, property disputes in the Family Court, the Family Court’s ability to transfer assets between parties in financial remedy claims following divorce or dissolution of a civil partnership is very different from the court’s far more limited powers where there are third party property claims or disputes between cohabitants.

Legally, couples who have lived together and have not been married or in a civil partnership cannot pursue financial remedy claims against each other, except in very limited circumstances, regardless of how long they have lived together. When it comes to property ownership on relationship breakdown, they are in the same legal position as any other class of litigants, with very few rights.

The limited exceptions are the ability to pursue financial claims on behalf of any minor children and/or the potential to claim an entitlement to a property which is owned legally by the other partner, on the grounds that either there is a constructive trust or there is proprietary estoppel.

The case of Armstrong v Armstrong

The recent case of Armstrong v Armstrong and another involved a claim made by a son against the estate of his late father based on proprietary estoppel. This is a different factual scenario to cases involving cohabiting couples, in which members of our Family and Children team regularly advise, mediate, or arbitrate, but it is still a helpful reminder of the issues we need to address in these cases.

Richard Armstrong claimed that his father had made promises to him, over many years, that he would one day inherit one of his parents’ farms. He argued that he relied on those promises to his detriment by working in the farm in the way that he did and that it was unconscionable for his father to have executed a will shortly before his death which left the farms to someone else.

The evidence

The onus was on Richard to provide sufficient evidence to prove his case and the court noted the following:

Richard had to prove that the promises made by his father were unambiguous and that they were binding and irrevocable. This requires more than just a statement of current intention or encouragement. The court’s analysis of the weight to be given to any assurances will always be context-specific.

Richard must also prove that he personally suffered detriment as a direct result of his reasonable reliance on the promises. This is referred to as the “but for” test i.e. but for the promise, would Richard have done what he did? The detriment does not have to be financial (although it often is in practice) and the court does not conduct a forensic accounting analysis. It will stand back and look at the matter in the round when deciding if detriment has been suffered.

The court must also take into account any benefit which has arisen from reliance on the promise (e.g. if a partner has benefitted from living rent-free in a property during the relationship) and if that benefit outweighs the detriment which has been suffered. If it had, a claim for proprietary estoppel would fail.

These claims will require a detailed analysis of evidence produced by the claimant and those defending the claims, in order for the court to establish who said what; who did what; and what happened when. It's essential that cases are properly pleaded and evidenced in as much detail as possible, to persuade the court either way.

In practice, this means that property disputes can be expensive and, in cases where there is little documentary evidence and parties are relying on what each other said and did, there can be a real risk for both parties in terms of outcome. Clients should always consider all forms of non-court dispute resolution (which can include mediation and early neutral evaluation) in the hope of being able to reach an agreement and retain more control over the outcome and limit costs as much as possible.

The outcome

In this case, the court found that Richard’s father had made promises and that it was reasonable for Richard to have relied on them and that, in doing so, he acted to his substantial detriment. His father had reneged on his promises by re-writing his will and it was plainly wrong for him to have done so, in the circumstances of this case. Richard therefore succeeded in his proprietary estoppel claim.

The aim of the remedy in proprietary estoppel claims is to prevent unconscionable conduct. In practice, this means that the starting point will often be to fulfil the promise made. However, there will be many cases where the successful claimant receives less than they were promised because the court must take into account practical considerations and look at what is between the parties as well as fairness to third-party owners. This means that the non-legal owner may not end up with ownership of a property, as they were promised, but with a right to occupy or a lump sum payment instead.

Inheritance claims

In addition to his claim of proprietary estoppel, Richard Armstrong also applied to the court under the Inheritance (Provision for Family and Dependants) Act 1975. He contested his father’s Will and claimed a share of his father’s estate on the basis that the will made insufficient provision for him, in circumstances where he had been financially dependent upon his father. 

The judge also found in his favour on this separate claim, which meant the court would have the power to order a lump sum, periodical payments or the transfer or settlement of property out of the father’s estate. Inheritance Act claims can often be brought between cohabitants who, unlike spouses and civil partners, do not automatically inherit from their partner’s estate.

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