Proprietary Estoppel and the Family Farm

There has been a recent increase in proprietary estoppel claims in the context of the family farm. In this article, Partner Sam Dale, a dispute resolution specialist, looks at the common features of these claims.

What is Proprietary Estoppel?

Proprietary estoppel has three key elements:-

1. A representation, promise, assurance or other encouragement by the Defendant, giving rise to an expectation by the Claimant that it would have an interest in a property;
2. Reliance by the Claimant upon that expectation;
3. Detriment to the Claimant in consequence of its reasonable reliance.

Representation, promise or assurance

In the context of the family farm, promises may be made by parents to their children that they will inherit the farm as an encouragement to dedicate their working lives to the farm.  Such promises need not be clear or unequivocal; they need only be ‘clear enough’ to be relied upon (Thorner v Major [2009] 1 WLR 776 per Lord Walker at 86).

In Habberfield v Habberfield [2018] EWHC 317 (Ch), the Claimant was able to cite 10 different representations made by her father as to her succession to the farm.  These amounted to assurances that she would receive something in the future on the basis of what she was currently being asked to do – such as extensive work for limited remuneration, missing holidays and not pursuing other opportunities.

By contrast, the cases of Thompson v Thompson [2018] EWHC 1338 (Ch) and Gee v Gee [2018] EWHC 1393 (Ch) highlight that it is not always what has been said that it is important, but the context the representations were given in and the understanding of the parties.  In these cases, it was well recognised and accepted within the family that the respective Claimants would inherit the farm in return for their work.

Reliance and detriment

It must also be shown that the Claimant has relied on such promises to their detriment.  This would include working long hours for inadequate compensation, and giving up the opportunity to work elsewhere.

In James v James [2018] EWHC 43 (Ch), detriment could not be established where the Claimant received a wage at market rate and was allowed to live rent-free in one of his father’s properties.  Further, it could not be said that the Claimant had relied on assurances by his father as it appeared unlikely that he would have acted any differently had such assurances not been made.

Relief

Once a Claimant has established a representation or assurance, reliance and detriment they will have established an entitlement to an equity, or interest, in the property.

The remedy will be to provide the Claimant with an award which represents “the minimum equity to do justice between the parties” (Crabb v Arun District Council [1976] Ch 179).

The remedy may give effect to the Claimant’s expectations, but it must also be proportionate to the detriment suffered and the Court has a complete discretion as to the manner in which the equity is satisfied.

This was considered by the Court of Appeal in Moore v Moore [2018] EWCA Civ 2669.  In this case, the Claimant Stephen Moore had successfully pursued a proprietary estoppel claim against his father, Roger, who was suffering from dementia.  The High Court had ordered that the entire farming business was to be transferred from Roger to Stephen, with the only concessions being that Stephen would grant Roger and his wife Pamela a licence to continue to live on the farm, would pay them £200 a week from the business and would also pay their reasonable health and care costs.

Pamela appealed, on the basis that this was “disproportionate and far greater than the minimum necessary to do justice”.  The Court of Appeal agreed – the Judge’s solution for how the equity was to be satisfied forced the parties to remain financially dependent on each other, when a clean break would be preferable, and paid insufficient regard to any claim Pamela would have on her husband’s estate.  The case was duly referred back to the High Court, with the recommendation that Stephen pay Pamela a lump sum in order for her to rehouse herself.

 

While a proprietary estoppel claim can provide a remedy in these circumstances, it can be difficult to predict the outcome of such claims and it is important to seek legal advice from the outset.  For further advice on the issues raised in this article, contact Sam on 01270 762521 or email sdale@butcher-barlow.co.uk.

On a practical note, such disputes can be avoided altogether with proper succession planning.  Mike Bracegirdle, Head of the Agriculture department and succession planning specialist works alongside Sam at our Gadbrook Park office and can be contacted on 01606 334309 or email mbracegirdle@butcher-barlow.co.uk.