A continued rise in farming family inheritance disputes, rooted in broken promises, produces varying outcomes.
Such claims are grounded in the legal principal known as ‘proprietary estoppel’, and are different to claims brought under the Inheritance (Provision for Family and Dependents) Act 1975, or challenges made against the validity of a will.
The courts have a wide discretion when it comes to making awards. Their aim is to achieve a fair and proportionate outcome by weighing up the claimant’s expectations and considering the minimum required to be done to avoid an unjust or unconscionable result for all parties involved. This sometimes results in the court being creative and may not always generate the result which a claimant or defendant had anticipated.
Whilst it is not always possible to avoid an inheritance dispute from occurring altogether, steps can be taken to minimise the risk. For instance, disputes can often be avoided if all family members communicate their wishes clearly and air and resolve any differences as soon as possible.
If you are a parent or adult child working in a farming family business, it is important to ensure that paperwork – such as a partnership agreement and will – is set up to protect your position.
If the paperwork doesn’t yet exist and, as an adult child, you are concerned about your future inheritance, you should discuss with your family and look for this to be taken account of in others’ wills. If that is resisted, you should seek legal advice about pursuing a claim to register an interest in land you have spent time working on. It is also important to keep detailed records of the promises made to you and the work you have done. You never know when you might need this.
Inheritance claims in farming family disputes, brought under the ground of proprietary estoppel, are essentially claims brought by someone claiming a right to another’s land based on promises made by the landowner.
The three key elements making up such claims are:
1. Assurance – someone is given a clear assurance that they will acquire a right over property
An assurance or promise is more than a mere hope. It can be made verbally, in writing or by conduct, and over a significant period. The person bringing the claim (known as the claimant) must show that they reasonably believed an assurance was being made, even if that was not the landowner’s intention.
2. Reliance – they reasonably relied on the assurance or representation
The claimant must have acted in a way that they would not otherwise have done, had the assurance not been made. If they had acted as they did, regardless of the assurance, then they cannot be said to have relied on it.
3. Detriment – as a result, they suffered a substantial detriment
The claimant must have suffered a sufficiently substantial detriment because of actions they carried out or did not carry out following the assurances made. The detriment suffered does not have to be financial; labour and time spent farming are valid forms of detriment.
There have been several cases in recent years that have set the bar for future claims using proprietary estoppel.
Most recently, the decision by the Supreme Court in the case of Guest v Guest  UKSC 27, represents a landmark moment, as it involved a farming inheritance dispute claim brought by the son during his parents’ lifetime.
David and Josephine Guest promised their eldest son, Andrew, that he would one day inherit the dairy farming business and land. Consequently, Andrew spent 33 years working on and developing the farm. Around 2008, their relationship began to deteriorate, and David and Josephine eventually dissolved the partnership, cut Andrew out of their wills, and evicted him from their land, forcing him and his family to find rented accommodation.
Andrew brought a claim on the grounds of proprietary estoppel – which, as indicated, is unusual as it was during this parents’ lifetime – and won.
The trial Judge found that words such as “one day my son, all this will be yours”, repeated over many years had encouraged an expectation in Andrew which was equivalent to an assurance. A “clean break” was necessary, given the family breakdown, and Andrew was awarded £1.3m to satisfy his expectation as to his future inheritance (subject to certain adjustments). This was made up of 50% of the value of the dairy farming business and 40% of the value of the freehold land and buildings at the farm. This meant that the farm would have to be sold and Andrew would receive his inheritance earlier than expected.
His parents appealed the decision, arguing the award was far greater than Andrew’s contribution to the farming business or the detriment he had suffered.
They said that (a) the trial judge should have awarded a remedy based on either Andrew’s contribution or the detriment he had suffered and not on his expectation, and (b) the remedy wrongly accelerated Andrew’s expectation. The Court of Appeal dismissed the appeal and so the parents appealed to the Supreme Court.
The Supreme Court allowed the appeal, in part. It upheld the position that the remedy should be based on expectation. However, in putting right the unconscionability (created because of David and Josephine going back on their promise) they held that Andrew could not be awarded more than he expected to receive, as doing so would create an unconscionable result itself.
Since Andrew had not expected to receive his inheritance until after his parents had passed away, the court decided that it would give his parents a choice in relation to the remedy. They could either sell the farm now and pay Andrew (but he would have to accept a reduced sum to account for the fact that he was receiving his inheritance early), or they could put the farm in trust for their children, so that Andrew would receive his inheritance after their deaths. If the parties cannot agree the amount to be paid to Andrew or the terms of the trust, the matter will have to be referred back to the High Court for determination.
This case shows that the courts will consider claims for proprietary estoppel (in the context of an inheritance dispute) during a landowner’s lifetime and will be creative with the remedy awarded. This may be good news for claimants, but what does it mean for testamentary freedom and a person’s right to choose (during their lifetime) how they wish to leave their estate, provided they are of sound mind?
It could be argued that this result gives rise to some form of binding contract on the back of promises made and expectations created, provided they resulted in detriment for the claimant. Whilst it seems only right that those making the assurances should be held to their word, in these circumstances, the result appears to create a situation whereby they can no longer deal with their assets as they wish during their lifetime. Ordinarily, a person would only be entitled (and arguably could only expect) to inherit promised assets on the death of the person making the assurance if those assets exist at the time of the promisor’s death. This result, however, means that an individual would receive their interest come what may, and the promisor must take steps during their lifetime to protect the promised asset from dissipating. For instance, David and Josephine no longer have the option to sell the farming business and use all the sale proceeds as they wish. Presumably, it also now means that their wills are invalid, and they will need to make new ones, taking account of the award made to Andrew.
This case is, however, unusual perhaps only because Andrew became aware that his parents had cut him out of their wills, before they died. Had he not known this fact, the chances are that he would not have bought his claim when he did and would have possibly only done so after their deaths (assuming their relationship had not improved by that time).
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