“Promises promises” – inheritance disputes – Birketts

Recent years have provided us with a variety of proprietary estoppel cases, each with the well-established starting point of a child claiming that they are entitled to the family farm or some other property asset because of promises made by their respective parents as soon as they were old enough to start work.

What is proprietary estoppel?

Proprietary estoppel is a legal claim which can result in the claimant, usually the child, being granted rights to use the property of the owner, usually the parent, and may even lead to transfer of the ownership of the property. In order to successfully advance a claim for proprietary estoppel the claimant must demonstrate all of the following: 

1. the making of an assurance or promise – “one day my son this will all be yours”
2. that the recipient relied on the assurance/promise to his detriment – son works seven days a week from the age of 16 on the Family Farm for less than a fair market wage; and 
3. where it would be unconscionable, or unfair, for the maker of the promise to go back on his assurance. 

If all three elements can be satisfied the Court will intervene to grant relief.

This is aptly demonstrated by the recent cases of Habberfield v Habberfield and Gee v Gee.

Habberfield v Habberfield [2019]

Habberfield v Habberfield centred on a farm with a value of approximately £2.5 million. In the Court of Appeal, the Defendant – Jane – appealed the decision of the judge to award her daughter – Lucy – £1.2 million. Lucy had spent 30 years working on the family farm. Lucy did so on the basis of her late father’s assurances that Lucy would take over the dairy business when he retired and, ultimately, when both parents had passed, would inherit the entire farm.

In 2008, Lucy refused an offer to run the farm in partnership with her parents. Some five years later, in 2013, after a family dispute, Lucy left the farm. Lucy’s father died in 2014 and left the farm to Jane who closed the dairy unit. The judge at first instance found that Lucy had established a claim based on proprietary estoppel. The elements of assurance, reliance and detriment were all there.

For the purposes of the appeal, the defendant argued that:

1. the claimant’s refusal to accept the partnership offer meant that it had not been unconscionable for her father to resile from his assurances
2. the award was disproportionate to the detriment
3. it was inappropriate to order the payment of a cash sum during the defendant’s lifetime.

The appeal was dismissed and the award of £1.2m upheld even though to satisfy it the farm would have to be sold. This was despite the fact that the sale would deprive the Defendant of her home; it was evidenced, though, that the Defendant had sufficient means to re-house herself and meet any shortfall in income. The Claimant was 51 years of age. An immediate award was necessary so that she could begin farming on her own account. In addition, the breakdown of the familial relationships made a clean break especially attractive.

Gee v Gee [2018]

The case concerned a farm in Oxfordshire known as ‘Denham Farm’. The first defendant, and original owner of the farm, was John Richard Gee (John Snr), who is now in his eighties. The second defendant was Robert Gee (Robert), one of JR’s three children. The claimant was John Michael Gee (John Jnr) , another of John Snr’s children.

John Jnr started working on the farm in the 1970s. He had worked there all of his working life, until 2016 when his employment was terminated for alleged gross misconduct. Initially he lived in a caravan on site, but a few years later John Snr arranged for a house, ‘Baxters’, to be built on the farm, where John Jnr has lived ever since.

In November 2014 John Snr transferred all of his property and holdings to Robert. At the same time John Snr’s wife, Pamela, transferred her minority shareholding (the remainder of the shares) to John Jnr. Predictably, there was then an almighty fall out.

John Jnr argued that, since when he was about 30 years old, John Snr repeatedly assured him that he would receive ‘the lion’s share’ of the farm. He said that he had relied on those representations to his detriment, essentially by spending his working life on the farm, working long hours for low wages.

The judge in this case held that John Snr did originally want John Jnr to inherit the farm, until he changed his mind having decided that John Jnr was an unfit farmer. The judge was not satisfied that John Jnr was in fact a substandard farmer, as had been alleged, and indeed concluded that for many years he had been the ‘backbone’ of the business. Conversely, Robert had undertaken very little work on the farm until he began assisting with administrative tasks in 2012. It was only in 2014, when he took over the farm, that he began undertaking actual farming work.

With that in mind, the judge held that John Jnr had relied on the assurances to his detriment and in the circumstances, it was unconscionable for John Snr to renege on them. John Jnr’s claim succeeded with the result being that he received 52% of the shares in the business along with 47% of the land.

These cases serve as a useful reminder that it is possible to avoid such disputes by including family members in decisions about succession planning, and by drafting a Will that clearly reflects those plans.

This article is from the spring / summer 2020 issue of Agricultural Brief, our newsletter for farmers, landowners and others involved in agriculture. To download the latest issue, please visit the newsletter section of our website. 

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