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Proprietary Estoppel – a farming phenomenon?

If you’ve had time to peruse the main farming magazines and press in the last few months, chances are you will have read about more than one case involving farming family disputes over land and property bequests in wills, unearthing sibling rivalries and family tensions. What these farming family fall-outs often have in common is proprietary estoppel. Caroline Cowley, part of Lodders Rural Sector Team, explains what this is, and explores the increase in the number of cases.

2018 has provided us with a variety of proprietary estoppel cases, each with the well-established starting point of a child claiming that they are entitled to the family farm or some property asset because of promises made by their respective parents as soon as they were old enough to start work.

What is proprietary estoppel?

Proprietary estoppel is a legal claim which can result in the claimant, usually the child being granted rights to use the property of the owner, usually the parent, and may even lead to transfer of the ownership of the property. Proprietary estoppel will arise if:

  • someone is given a clear assurance that they will acquire a right over property,
  • they reasonably rely on the assurance or promise, and,
  • as a result, they suffer a detriment.

So, the doctrine of proprietary estoppel is based on three main elements: a representation or assurance made to the claimant; reliance on it by the claimant; and detriment to the claimant in consequence of his (reasonable) reliance.

The Court will intervene to grant relief if it considers that to do otherwise would be unconscionable, immoral or unacceptable, and in these cases, the principle of proprietary estoppel would come into play.

The farming world seems to be rife with these claims, in part due to the way children get drawn into working on the family farm, but encouraged by high land values and a reluctance of many families to discuss these issues until it is too late.

Recent cases:

There are a number of examples below.

Son wins case to inherit family farm after falling out with mother

A recent case (Thompson v Thompson [2018] EWHC 1338 (Ch)) saw a son, Gilbert, awarded the entire family farm under proprietary estoppel.

Gilbert left school at 15 to work on his parents’ farm in County Durham.  He worked seven days a week, up to 18 hours a day, with few holidays.  He was paid up to a maximum of £70 a week, plus board and lodging.  From 1992, Gilbert and his parents each held a one-third share under a farm partnership agreement.  When his father died, his share passed to his mother.  His mother disputed Gilbert’s assertion that she should be free to dispose of her interest in the farm as she wished.

The Judge in this case was satisfied that the farm was promised to Gilbert on the death of the last of his parents, and this was a definite promise made over a long period of time, repeated to Gilbert and accepted by the family.   He worked for low wages with no financial independence and turned down other opportunities because of the promises made to him.  In spite of the breakdown in family relations in 2014, the Judge found that the relevant detriment had been established by this stage and later events did not affect it.

Son fails to win a claim to the family farm

In the case of James v James & others [2018] EWHC 43 (Ch) the deceased’s son’s claim to the family farm failed.  The Court found that, whilst he had started work on the farm at an early age, and that there were some occasions on which his father had told him that he would be farming the land one day, he did in fact receive benefit in the form of bonuses and he later took control of the family haulage business which produced a significant income.  He was also paid the going rate for farm work and had lived rent free.  The Court found therefore that he was not able to show that he suffered a sufficient detriment.

Daughter wins financial pay-out to compensate her for promises made

In the case of Habberfield v Habberfield [2018] EWHC, the claimant was able to show that her parents had promised her the dairy farm and that she had relied on this promise to her detriment.  Lucy’s parents (father dead, mother Jane still alive) had made consistent promises over the years.

The High Court held that Lucy’s case was proved. The court ordered Jane to pay Lucy a cash sum equivalent to the value of the farmland and farm buildings at Woodrow (excluding Mudford and the farmhouse) which was calculated to be£1,170,000.

Son wins the farming interests promised to him

In Gee v Gee and another [2018] EWHC 1393 (Ch), the High Court considered whether a son had an interest under proprietary estoppel, even though his father had changed his mind about who should succeed to the farm.  The son had worked with his father on the farm from a young age and for all his working life.

The father and son’s relationship deteriorated in 2014 and as a result, the father transferred his company shares and farmland interest to his other son, Robert, who had not previously worked on the farm.

The court held that over 20 years from the late 1980s, the father made it clear to his son that he would succeed him as the farmer and owner, with some provision for his other children. Initially, this was to encourage him to remain and farm the land. In reliance on the promises made, the claimant worked long hours for inadequate compensation and also gave up the chance to work elsewhere.  The relationship between father and son was never easy and as such the claimant had needed the promised inheritance as a reason to stay.  By transferring his interests to Robert, father had reneged on his promises to his oldest son.

This case shows that even though a promisor can change their mind, the equity (or legal fairness) may already have crystallised and in that case, a Court will find that it would be unconscionable to go back on the promises made.

Why are such claims on the rise?

Land in general, and in particular farming land, is increasing in value.  There are fewer but larger farming units and as a result, a family farm is invariably worth fighting over. The nature of a farming business, and the facilities, land and property on it, and the high percentage of farms that are owned and run by generations of one family, are all major contributors to why so many cases involving disputes and in turn proprietary estoppel, arise in the farming sector. That said, disputes and claims of this nature are not exclusive to farming and agricultural businesses.

More often than not, farming cases involve an interesting back story which involves a dispute about the land amongst siblings and family members.  The press seems to pounce on these cases with their soap opera storylines as they make interesting reading.  The publicity given to the headline cases then will inform potential litigants of the options open to them (and indeed it was reading about a previous proprietary estoppel case dubbed the “Cowshed Cinderella” case which prompted the claimant in Habberfield to bring her claim!).

What steps should farming families take to avoid a dispute?

The disputes often arise when succession has not been provided for and clearly communicated to all the family, or an event occurs which turns the expected course of events on its head.

There really is no substitute for farming families sitting down and talking about the future and understanding the needs and expectations of all those involved.   This is never going to be a once only exercise as circumstances do change but the key thing is to be clear at any moment how the assets of the farming business are to be applied. Questions to ask will include:

  • Be clear what the farming business owns.
  • Who owns what?
  • What of the assets are partnership property and which are owned by individuals?
  • Is there a written partnership agreement?
  • Are there current wills in place?
  • Do the two marry up?
  • Who expects to inherit what and when?

As someone who is dealing with these sort of claims regularly, I am afraid it all comes back to that thorny issue of succession planning and the challenge of open communication.

For more information, contact James Spreckley or a member of Lodders Rural Sector team.

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For more information, contact James Spreckley or a member of Lodders Rural Sector team.