Equitable Principles

Proprietary Estoppel: Q v E Co

As written in one of our previous articles about the case of Rodda v Rodda, the courts can rely on equitable principles to compensate someone who suffers a detriment due to the unconscionable actions of others. 

The loss suffered does not necessarily have to be that of a financial loss. It can also include the detriment suffered in significantly changing the course of their life, in relying on the encouragement of another.

In the case of Q v E Co, this was one of the issues considered. 

This case begins in 2002, following a meeting, the three sons, A, B and C and their father, Q, established a family farming business. Two sons were working in retail jobs away from the farm. Soon after meeting, the off-farm sons would return to the farm and undertake new roles.

In 2013, Q made expressed his intention to sell the farm properties, terminate the farming businesses and disinherit his sons. He would make a new will, leaving his estate to a discretionary trust which his sons were the beneficiaries and his sister the trustee. 

The sons took Q to court under the equitable principle of proprietary estoppel. This is similar to the promissory estoppel in Rodda v Rodda but applies where the owner induces others to believe that they have an interest in the property, in this case, Q inducing his sons to believe they own the farm. 

The trial judge was satisfied that the sons had suffered detriment due to the life changing circumstances of quitting their current jobs and moving back to the farm. On appeal, it was challenged whether the detriment suffered was substantial when the countervailing benefits are accounted for. 

The father argued that these benefits included shares held in the family business, their wages, and the opportunity to “generate [their] own wealth”. Q valued these benefits to be $3.35 million between two of the brothers.

Despite this being a hefty figure, the judge on appeal affirmed that it is impossible to compare the determinant suffered nominally as we have no way of telling how much either of the brothers would have earnt if they had not returned to the family business. 

The Judge was unconvinced by Q’s arguments as B and C had sacrificed their own business opportunities outside the family business, suffering a substantial detriment due to the life changing decisions they undertook.