Promises, Promises: Proprietary Estoppel
In the film Monty Python and the Holy Grail is this exchange between the king of the Swampland and his son:
King [standing by the castle window]: One day, lad, all this will be yours.
Prince: What, the curtains?
King: No. Not the curtains, lad. All that you can see, stretched out over the hills and valleys of this land…
Promising a child that they will inherit one day can create a warm glow. Unfulfilled promises of future inheritance can though be the source of bitter disappointment. Perhaps because of the value of the underlying asset, as well as the difficulty in splitting the asset without affecting the viability of the business, farms and farming families are particularly susceptible to inheritance disputes. A farm may be worth a big 7-figure sum but support only one working farmer, which means that it is well worth arguing about but cannot easily be split between 2 or more children. Several recent cases have highlighted the fiddly issues that can arise from promises which in the end remain unfulfilled.
Habberfield v Habberfield
“This is a sad tale of a farming family” is how the judgment of Lord Justice Lewison begins.
The case involved a dispute between a mother and a daughter. The daughter began working on the family farm full-time as soon as she left school, and she continued to do so for 30 years. It was the daughter’s passion for dairy farming that persuaded her father to convert the farm business to dairy.
Not long after the daughter finished her school studies, her father began making assurances to her that, if she continued to work with him on the farm, the farm and the farming business would be hers when he could no longer run it. The father made clear that provision would have to be made for the daughter’s mother and siblings, but both father and daughter had the same understanding: she would inherit the farm one day. The mother knew of these assurances and approved of them.
The daughter relied on the assurances that her father made. As a result, she worked long hours receiving only low pay. She missed out on holiday, as well as passing up on opportunities to farm on her own account elsewhere.
When the father’s health deteriorated, tensions mounted. Things came to a head in the milking parlour, where the daughter and her sister had an almighty row. The daughter left the farm.
Her father passed away a few months later.
The daughter made a claim against her father’s estate and was awarded a cash sum of approximately half the value of the farm. The decision went to appeal but was upheld.
At the heart of the Habberfield case was the equitable principle of proprietary estoppel. To establish an estoppel, the claimant has to show 3 things:
- Representation: an assurance made by the then owner, for example that the farm would be the claimant’s one day;
- Reliance: the claimant must have acted in reliance on the representation; and
- Detriment: doing so must have caused detriment to the claimant, for example working for no or low pay, or missed opportunities.
Proprietary estoppel is a remedy that will be awarded at the Court’s discretion. Evidence of what happened in the past is imperative, and the claimant’s specific recollections of conversations and their surrounding circumstances are crucial in convincing the court that it would be inequitable not to make an award in the claimant’s favour.
As well as acting on behalf of disappointed beneficiaries after a dispute has arisen, Battens can advise on succession planning to reduce the chances of a disagreement arising in the first place. For farming families, early and careful consideration of their business structure, of creating trusts, and of their land ownership are key to avoiding future disputes.
For more information, please contact Peter Livingstone (for Agricultural Disputes) at email@example.com or 01935 846235 or James Owen (for Agriculture and Rural Property) at firstname.lastname@example.org or 01935 325565