Lodders has a long history of looking after clients in the agricultural sector. A not uncommon feature of a farming family relationship is for parents to own the farm/the value of the land which is either attributed to them personally or credited to their capital account within a farming partnership, and for their children to work for often little/modest pay but in the expectation that the farm and/or land will become theirs at some point in the future.
But what if there is a ‘falling out’ and the promise and/or expectation is withdrawn and/or thwarted?
This concept of detrimental reliance on promises made is referred to as ‘proprietary estoppel’, which has been the focus of much attention and expensive litigation in the long-running case of the Guest family.
Essentially, the background to the Guest case centred around the claims made by Andrew Guest (eldest son of David). His claim can be summarised as follows: –
Andrew took his parents to court. The trial judge in the lower court determined that Andrew had detrimentally relied on his parents’ assurance by working on the farm for years for very little financial reward. Andrew was awarded 50% of the value of the dairy farming business and 40% of the value of the farmhouse and land, requiring his parents to pay capital sums to Andrew.
Court of Appeal
Andrew’s parents failed to persuade the Court of Appeal to interfere with the trial judge’s order and they successfully sought permission, from the Supreme Court, to appeal the decision.
The Supreme Court wrestled with the complication of the concept of proprietary estoppel and in the competing arguments of Andrew and his parents.
The judgment is 108 pages long, which in itself speaks to the complexity of the issues. The matters the Supreme Court had to consider in determining what (if anything) a court should provide by way of remedy included: –
Central to the complaint made by Andrew’s parents was the fact that any court remedy should not accelerate Andrew’s expectation before their deaths.
The five judges sitting in the Supreme Court allowed the parents’ appeal (for differing reasons), but did not agree on the correct approach to a remedy. By a majority of three to two, they determined that the correct approach was to assess the appropriate remedy according to Andrew’s expectation of an interest in the farm, but that any immediate monetary award should be discounted in order to reflect the fact that Andrew’s interest had been accelerated. It was the repudiation of the promised expectation which constituted the unconscionable wrong.
The Supreme Court substituted part of the trial judge’s award, giving Andrew – in addition to the 50% of the dairy farming business – a reversionary interest in 40% of the value of the farmhouse and land, with a life interest to Andrew’s parents. If the parents elected to pay a lump sum to Andrew now in satisfaction of such award so as to effect a ‘clean break’, the lump sum would be discounted to reflect acceleration of the payment before their death.
This case and the significant legal costs incurred by the litigants highlight not only the complexity of this area of law, but also the benefit of putting one’s affairs in order with a clear written succession plan, and ensuring that one’s legal advisors are fully apprised of all the family circumstances, to avoid ambiguity and conflict arising
This field of law impacts on much of the work the property dispute resolution, private client, family, and agricultural teams undertake at Lodders.
Carefully consider the planning that is necessary to avoid such conflict in your personal circumstances.
Lodders has a long history of looking after clients in the agricultural sector, and provides farmers, land owners and rural businesses with advice across a range of legal services.Contact us
Beverley is a partner and head up the Family team at Lodders.
She enjoys complicated financial situations where the objective must continue to be to resolve matters swiftly, amicably, and cost-effectively in furtherance of my client’s best interests.
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