Can you rely on the promise of a lifetime?

Whilst previously proprietary estoppel cases were fairly rare, in the first half of 2018 seven claims went all the way to a High Court trial with some possibly going on to the Court of Appeal. Proprietary estoppel claims in the context of contentious probate typically involve claimants believing they have been promised an interest in the deceased’s property in reliance upon which the claimant has suffered some form of detriment.

Many of the 2018 cases revolve around farms. Often parties have invested time working on the farm and promises may have been made as to inheritance. This article looks at one case in particular, Habberfield v Habberfield, to highlight the difficulties claimants can face in relying on proprietary estoppel and the importance of a valid will.

Background

The claimant, Lucy, was one of four children whose mother, Jane, and father, Frank, owned a farm.  The farm and buildings, including the farm house, were worth over £2 million.

Frank, died in April 2014 and as he and Jane held the property as beneficial joint tenants it passed to Jane outside of the Will by survivorship. Frank’s Will, made in 1998, also left his entire estate to Jane.

Lucy’s claim, based on proprietary estoppel, was that she was entitled to the whole farm or a share in it because she had devoted her working life to the farm and her father had assured her that she would eventually take it over when he retired. Lucy had been working at the farm since leaving school in the early 1980s until 2013.  During that time she married and her husband also worked on the farm. Lucy’s wages were low and she took almost no holidays. In 2013 after a fight in the milking parlour with her sister, Lucy left the farm.

Her mother, Jane, denied that any assurance or promises were made by her or Frank, and that if Frank had made any to Lucy she was not aware of them and could not be bound by them.

A claim under the Inheritance (Provision for Family and Dependants) Act 1975 was also brought by Lucy but will not be considered here.

The issue to be decided

The doctrine of proprietary estoppel is based on three main elements:

1. A representation or assurance made to the claimant
2. Reliance on it by the claimant; and
3. Detriment to the claimant in consequence of their (reasonable) reliance

If all 3 elements are found the court must determine the appropriate relief to prevent an unconscionable result.

The judge found that representations had been made over an extended period of time to Lucy by her father with her mother’s authority and also by the mother herself. Frank had told Lucy she would take over the farm when he could not farm anymore, had said to her “they are your cows” and that it was her responsibility to replace a milking parlour when the time came. In this case there was also a letter from a surveyor in 2008 containing a proposal for a new limited partnership to run the business and that Lucy should end up being owner of the overall farm after her parents’ deaths. Only Frank and Jane were shown the letter. Whilst useful in this case, written evidence is usually rare.

The outcome

In this case the judge held that Lucy had made out her proprietary estoppel claim, finding that representations had been made to her by both of her parents to the effect she would inherit a viable dairy farm. The judge rejected the argument that the promise was insufficiently certain to be relied upon. On reliance of those representations Lucy had suffered detriment having worked long hours for low wages and having taken very few holidays over a period of 30 years.

The judge found that appropriate relief would be to order Jane to pay Lucy a cash lump sum equivalent to the value of the farmland and buildings excluding the farmhouse and a particular piece of land. Lucy was therefore awarded a lump sum of £1.17 million.

Lessons to take away

Family farming businesses can be difficult to split up for inheritance purposes particularly when not all the children have worked on the farm. To help avoid potential problems wills should be executed and regularly reviewed and families should consider succession planning.