Proprietary estoppel – bound by a promise – July 2019
The Court of Appeal recently upheld the Habberfield v Habberfield High Court decision from February 2018 awarding the youngest daughter of a Somerset farmer almost half of the value of the family farm in compensation for promises made by her late father. Lucy Habberfield had claimed an entitlement to the whole farm, worth some £2.5 million, by virtue of proprietary estoppel, saying she had devoted her working life to the farm because her father had assured her she would take over when he retired. Lucy worked on the farm from the early 1980s until 2013, when she left following an argument with one of her sisters.
In order to be successful in a claim for proprietary estoppel you must show that the claimant has relied on an assurance or representation (a promise) to his detriment. Once the court is satisfied these elements are present, they will decide whether it would be unconscionable, or unfair, for the promisor to go back on what was promised.
Lucy, the claimant in Habberfield v Habberfield, had worked on 220-acre Woodrow Farm near Yeovil, for 30 years. Lucy argued that this was on the basis of assurances from her father that she would take over the dairy unit when he retired and would inherit the whole farm when both her parents died. Lucy’s claim was defended by her mother, Jane, who had received the entirety of her late husband’s estate. Jane denied that any promises had been made to Lucy, or if they had been made by her husband, Frank, that she could not be bound by them. Jane further said that if any assurances were proven, that Lucy had not suffered any detriment and had exaggerated her work on the farm.
However, the judge hearing the case disagreed. He determined that Frank had made statements to Lucy with the intention of them being taken seriously, that they were sufficiently certain and also made with Jane’s authority. Lucy was found to have suffered detriment in her reliance on Frank’s assurances by working long hours, for low pay and taking few holidays. The judge further found that Lucy’s commitment to farming at Woodrow rather than building a successful dairy farm of her own elsewhere was relevant detriment.
The judge decided that Lucy’s expectation was that she would have a viable dairy farm at Woodrow. Taking into account a number of considerations it was concluded that to satisfy Lucy’s claim she should receive a cash payment of the value of some of the farmland and the farm buildings, being £1.17m. A cash payment was considered appropriate so as to avoid splitting the farmhouse from the rest of the holding and to allow Jane to remain in her home.
Jane appealed the decision on the grounds that it was unfair to her. She argued that the award was disproportionate to the detriment suffered and that it was inappropriate to order the payment of a cash sum during her lifetime. Jane further said that it was not unconscionable for Frank to resile from his assurances because in 2008 Lucy had refused to accept an offer to run the farm in partnership with her parents.
The Court of Appeal described the outcome as ‘hard’ for Jane and considered it a ‘sad tale of a farming family’ but found that the decision was within the judge’s discretion. Further, Lucy’s rejection of the partnership offer did not defeat her claim, it was simply a factor to consider in the award.
Reported cases of proprietary estoppel very commonly relate to farmland in a variety of circumstances. In comparison, Guest v Guest [2019] EWHC 869 is an interesting case where the claimant was successful in his claim for proprietary estoppel against his parents, the defendants, who are still alive.
Andrew Guest, the claimant, worked 60-hour weeks at Tump Farm between 1982 and 2015, for low pay. Andrew was unaware, his parents had made wills in 1981 leaving the farm property and business to Andrew and his brother. His brother worked full-time at the farm from 2005. The defendants set up farming partnerships in 2012, one with Andrew running Tump Farm and another with Andrew’s brother to run the neighbouring farm.
Following a fall out between Andrew and his father in 2014, the farming partnership was subsequently dissolved. The defendants executed new wills disinheriting Andrew, although gave him a right to occupy a farm cottage. In July 2017, the defendants gave Andrew notice to remove him from the cottage. Further, after Andrew issued his claim on 25 August 2017, Andrew’s father made a new will in 2018 disinheriting him completely and attempted to justify his decision on the basis that he had ‘lost all trust’ in Andrew after he left the farm.
In pursuing his claim, Andrew claimed reliance on assurances from his father and argued his father should not be able to renege. The High Court accepted Andrew’s evidence and held that Andrew’s father had consistently led Andrew to believe he would succeed to the farming business. It found that the assurances were “clear enough”, over many years and that Andrew’s reasonable reliance had led to his significant financial detriment. Despite his awareness from the late 1990s that his brother would also inherit, which reduced his expected entitlement, it was not fatal to his proprietary estoppel claim. Further, Andrew’s part in the fall out with his father and his ability to find alternative employment were found not to diminish the injustice of his father’s actions since 2014.
Although Andrew was only expected to inherit after his parents’ deaths, the court exercised its discretion in deciding the appropriate remedy in order to achieve a clean break between the parties. Andrew was awarded 50% (after tax) of the market value of the dairy farming business value and 40% (after tax) of the farm property. This was a huge defeat for the defendants and the court acknowledged that they would probably need to sell Tump Farm, or a substantial part of it, to satisfy this award.
Such cases highlight that these issues can arise during lifetime and not just on someone’s death. Farming disputes can be very sensitive particularly as individuals may give up significant time and money to assist with what is often a family business on the expectation to inherit later in life. Failure to document promises and agreements concerning future intentions for farmland or other property can result in lengthy and costly litigation. In turn this has the risk of causing irreparable damage to relationships within families.
Should you have concerns about the passing of farmland or other assets, please contact Emma Saunders who is a Senior Associate specialising in contentious probate matters including proprietary estoppel claims. To speak to her please call 0191 226 3293, or email her at emma.saunders@sintons.co.uk.
