The dispute was between a father (who the court abbreviated to JR on account of a shared Christian name rather than a reference to 1980s television) and one of his sons (JM), as to ownership of the family farm. JM, now in his sixties, was seeking to inherit the farm he claimed he had been promised over decades.
JM worked on the farm for a period of around 40 years. He claimed that his father had repeatedly assured him that he would inherit the lion’s share of the farm, and that he had relied upon those assurances to his detriment, effectively devoting his working life to the farm and working long hours for low wages. Contrary to those assurances, the father transferred the farm to one of his other sons, Robert in 2014, following a family feud between the three of them. JM claimed that the transfer of the farm to his brother was in breach of what had been agreed or understood between him and his father, JR.
JR denied outright that any promises or assurances had been made to his son about inheriting the farm, and that he was free to deal with the land and the shares in the family company however he pleased.
Having listened to all of the evidence, the court concluded that promises had indeed been made to JM about his inheriting the farm, which the son had relied upon to his detriment. In those circumstances, the principle of ‘estoppel’ prevented the father from going back on his promise.
An estoppel may arise where:
- a representation or an assurance has been made (the promise by the father to his son that he would inherit the lion’s share of the farm)
- there has been reliance upon the representation made (the son devoting his working life to working on the farm in return for a low wage)
- a loss of some kind is suffered as a result if the promise is broken (the son does not inherit the farm as promised and has effectively forgone the chance of some other opportunity whilst working in the family business).
Where an estoppel arises, as in this case, the court has a broad discretion to decide how the promise should be upheld. In effect they can award compensation according to what it considers to be fair and reasonable in all the circumstances. In this case, the court sought fit to uphold the promise by awarding JM a 52% share of the family company and a 46% share of the farm land.
This dispute could have been avoided if the family had taken legal advice and agreed an express trust to declare the extent of JM’s shares in the family business. It is, therefore, advisable for families to document formally their intentions for the business and have sufficient trust/succession documents in place.
If you would like to discuss the details of this case and how it may impacts upon your own circumstances please contact Laura Tanguay. Laura is an Associate solicitor in Birketts’ Property Litigation Team and specialises in estoppel cases. Law covered as at June 2018.