Proprietary estoppel – But you promised!
The High Court recently awarded the youngest daughter of a Somerset farmer almost half of the value of the family farm in compensation for promises made by her late father. Lucy Habberfield had claimed an entitlement to the whole farm by virtue of proprietary estoppel, saying she had devoted her working life to the farm because her father had assured her she would take over when he retired. Lucy worked on the farm from the early 1980s until 2013, when she left following an argument with one of her sisters.
A claim in proprietary estoppel is based on three main elements. Firstly, there must be an assurance or representation (the promise) made to the claimant. Secondly, there must be a reliance on this representation by the claimant. Finally, the claimant must suffer a detriment by their reasonable reliance. The courts will determine whether each of the three elements is present, before going onto conclude whether it would be unconscionable, or unfair, for the promisor to go back on what they said.
The court then has to determine what relief would be appropriate, in other words what the claimant should receive in satisfaction of the promise made to them. The court has a broad discretion as to what award to make. This can be complicated by the fact that some detriments (such as the receipt of low pay) can be quantified more easily than others (for example giving up the opportunity to farm elsewhere). Most, but not all, reported proprietary estoppel cases relate to farmland.
In Habberfield v Habberfield Lucy’s claim was defended by her mother, Jane, who had received the entirety of her late husband’s estate, the 220-acre Woodrow Farm, near Yeovil. Jane denied that any promises had been made to Lucy, or if they had been made by her husband, Frank, that she could not be bound by them. Jane further said that if any assurances were proven, that Lucy had not suffered any detriment and had exaggerated her work on the farm.
However, the judge hearing the case disagreed. He determined that Frank had made statements to Lucy with the intention of them being taken seriously, that they were sufficiently certain and also made with Jane’s authority. Lucy was found to have suffered detriment in her reliance on Frank’s assurances by working long hours, for low pay and taking few holidays. The judge further found that Lucy’s commitment to farming at Woodrow rather than building a successful dairy farm of her own elsewhere was relevant detriment.
The judge decided that Lucy’s expectation was that she would have a viable dairy farm at Woodrow. Taking into account a number of considerations it was concluded that to satisfy Lucy’s claim she should receive a cash payment of the value of some of the farmland and the farm buildings, being £1.17m. A cash payment was considered appropriate so as to avoid splitting the farmhouse from the rest of the holding and to allow Jane to remain in her home.
Lucy Habberfield’s success contrasts with that of Sam James, who similarly claimed that his late father had promised that the family farm would pass to him. On Charles James’ death his estate passed to his widow, Sandra, and his two daughters, Karen and Serena, to the exclusion of Sam.
In James v James the judge considered that Sam was unable to give evidence of any particular promise or act creating an expectation, intended to be relied upon, that his father leave any particular property to him. The judge went onto say that even if a representation had been found, that Sam would have failed in demonstrating any detriment. He considered that Sam had been paid the same as the other farmworkers, if not more. Further, in the past Sam had been made a partner in the family farming and haulage business and when this was dissolved he had received numerous assets and associated cash of £200,000.
Each proprietary estoppel case, as with any other type of claim, turns on the specific facts. In Habberfield there was independent documentary evidence suggesting an intention that Lucy would end up with ownership of the farming unit and stock. In contrast, in the James case there was evidence that Charles had taken advice in relation to succession issues and there was no reference in the supporting documentation to any promises made to Sam. The judge commented that he felt Sam’s eagerness to inherit the farm from his father has caused him to persuade himself that he was being promised something that he was not. Sam was ordered to pay the defendants’ costs of the proprietary estoppel claim (a different costs order being made in respect of an associated will challenge by Sam).
Such cases demonstrate the importance of documenting any promises or agreements as to future intentions for farmland, or any other property. Whilst you may have a will in place dealing with particular assets, if the terms of your will are inconsistent with any promises or agreements you have made in your lifetime, the will does not necessarily take precedence. A failure to document promises or agreements and to consider these in light of your will may result in lengthy and costly litigation and the division or sale of family farmland. It can also cause irreparable damage to relationships between those who find themselves on opposing sides of any dispute.
Newcastle law firm Sintons can assist with succession planning and have particular expertise in working with rural families on a wide range of issues. Sintons can also advise should a dispute arise regarding the passing of farmland or other assets.
Emma Saunders is a Senior Associate specialising in contentious probate matters, including proprietary estoppel claims. To speak to her please call 0191 226 3293, or email her at email@example.com.