Proprietary estoppel claim succeeds in farm inheritance dispute

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The High Court has ruled in favour of a farmer’s daughter who brought a proprietary estoppel claim against her mother. This case illustrates how useful the doctrine of proprietary estoppel can be where inheritance disputes arise, especially in  farming families.

We specialise in proprietary estoppel and equitable interest claims and deal with cases on a No Win, No Fee basis on a nationwide basis.

We operate a free legal helpline which you can call on 0808 139 1606 if you feel that you have a proprietary estoppel claim and would like a free legal assessment.

And if you would like to know more about the recent High Court case, which featured a family farm in Somerset, then here’s a brief(ish) summary.

The farm inheritance dispute

The claimant, Lucy Habberfield (“Lucy”), worked on her parents’ farm immediately after leaving school in the early 1980’s until a family dispute arose in 2013. Lucy’s case was based on the assertion that she had devoted her working life to the farm because her father, Frank Habberfield (“Frank”), had assured her that she would take the farm over when he retired. Lucy’s particular interest was in the dairy herd and she worked with Frank to reinstate dairy farming at the farm. Lucy moved to a house near the farm in 1999 when she met her partner and started a family. She continued to work at the family farm and was helped by her partner who had a full time job on another farm. In 2007 Lucy’s partner started working at the family farm full time. They both ceased working at the farm in 2013 following a fight with Lucy’s sister Sarah.

Lucy’s mother, Jane Habberfield (“Jane”), became the sole legal owner of the farm following Frank’s death in April 2014. She defended Lucy’s claim on the basis that no assurances or promises had been made to Lucy by her or Frank. She also said that even if Frank had made promises she was not aware of them and therefore could not be bound by them.

The components of a proprietary estoppel claim

A proprietary estoppel claim must have 3 key components:

  1. a promise or assurance made to the claimant;
  2. reliance upon that assurance by the claimant;
  3. detriment suffered by the claimant as a result of their reliance upon the assurance.

The promises and assurances

It is important that the promise or assurance made is sufficiently clear. There is also a question as to the extent to which someone can be bound by a promise made by another person. In this instance, the majority of the assurances relied upon by Lucy were made by Frank. The Court agreed with the judgement in Fielden v Christie-Miller [2015] which considered the extent to which representations made by one co-owner of land could bind the other co-owners. Jane and Frank owned the family farm as beneficial joint tenants. It was therefore held that for any estoppel to bind Jane it must have been made by her or with her authority.

Lucy relied on a number of assurances which she alleged had been made to her by both Jane and Frank. These included promises that she would take over the farm when Frank could no longer run it and that she would receive the farm and the farming business in the future because they (her parents) could not run it forever. She claimed her parents also made statements that she could not have the benefit of her work both now and in the future. Some of these assurances were said to be made by Lucy’s father, some by Jane and some by her father in Jane’s presence.

The Court accepted Lucy’s case that the assurances had been made. However this was subject to two qualifications:

First, it was important to establish how much of the farm property or business was being referred to. Lucy’s case was that it related to the whole of the farm and farming business. The Court found that this was not the case. The Court felt that Lucy would have been aware that her parents intended to make some provision for her siblings.

Second, there were the circumstances in which Lucy would receive the farm and/or business. Lucy understood that the business would come to her when Frank could no longer run it. However, the timings for the transfer of the land were not discussed. The Court did not accept that Lucy understood the assurances to mean that the farm, including the farmhouse in which her parents resided, would pass to her during her parents’ lifetimes.

The Court accepted that some of the assurances had been made by Jane, but that it did not happen frequently. However the court was convinced that Jane knew of the kind of statements Frank was making to Lucy and knew that Lucy was taking them seriously. It was therefore accepted that although Jane was not always present, the statements were made with her authority and she would therefore be bound by them.

Relying on the promises

The Court accepted that Lucy relied upon the assurances made by her parents when she decided to stay working on the family farm rather than moving elsewhere after learning her trade. She also relied upon the assurances in working long hours for low pay and in taking very few holidays throughout a period of almost thirty years.

Jane alleged that the hours worked by Lucy were common among dairy farming families. However the Court did not accept this. Jane also denied that Lucy’s pay was as low as suggested and stated that she received other benefits such as childcare. The Court concluded that the benefits received did not have sufficient value to account for such a low salary and did not therefore undermine her reliance upon her parents’ assurances.

Detriment suffered

The Court accepted that Lucy worked for below average wages and that she worked the long hours which go hand in hand with dairy farming. She had five weeks holiday in thirty years and time off when she had each of her children. It was noted by the Court that with her first two children she returned to working on the farm within a matter of weeks.

Ant expert accountant commented upon the remuneration Lucy could have expected to receive for the hours she worked. Even on Jane’s estimate of Lucy’s hours, which were lower than those given by Lucy herself, the outcome was that she was paid less than she could have expected to receive had she done the same work elsewhere.

Lucy’s work on the farm was therefore a relevant detriment for the purposes of her claim. Had she not been committed to the farm and the future benefit she was expecting to receive she would not have put in those long hours or accepted the pay and holiday she received.

Offer of partnership

In late 2007 Lucy and her partner attended a meeting with both her parents and their accountant. It was accepted that the purpose of the meeting was to discuss how the farm could be transferred to Lucy and the tax implications of doing so. In February 2008 a letter was sent to Jane and Frank recording a proposal to be put to Lucy, the terms of which were that a new limited partnership would be created to run the farm business and that Lucy would eventually end up being the owner of the farm after her parents’ deaths. The letter implied that Lucy’s partner would also be made a member of the farming partnership.

The offer actually made to Lucy was that she would be offered a place in the partnership and her partner would continue as an employee for a two year period, after which there would be a possibility of him joining the partnership. Lucy and her partner rejected the offer put to them. She had expected them both to be offered partnership and was unhappy about the position of her partner. The other reason for her rejection of the offer was that she would have been one of three partners and would have had no control over her siblings’ continued interference in the farm via their parents.

Lucy and her partner continued working on the farm after rejecting the offer. Between 2008 and Lucy leaving the farm in 2013 her sister Sarah and her partner became more involved as Frank became less able to work. The farm fell into some financial difficulty and made a loss in the year to March 2013. A fight between Sarah and Lucy broke out shortly after a meeting about the farm finances in October 2013. Lucy, her partner and their children left the farm as a result and have not returned since. Following Lucy’s departure dairy farming continued at the farm for a further two years before it was withdrawn.

The court’s decision

The Court took a number of factors into account when deciding what relief would be appropriate to do justice. It was found that Lucy’s expectation was to end up with a viable dairy farm on the family farmland. However, after she left the farm dairy farming had ceased, so it was considered that a lump sum might also be required to enable the dairy herd to be reintroduced.

The farm and its constituent parts were valued at £2,550,000. However, one part of the farm was held separately and alone would not form a viable diary farm. This plot was not included in the calculations. The value of the farm without this additional plot (but including the farm house) was £1,600,000. The Court found that this value was the most Lucy should receive.

The Court took into account the fact that the farmhouse was the home of Jane, Sarah and Sarah’s family. The refusal of the offer in 2008 was also taken into account. For this reason it was decided that the fair way to measure Lucy’s compensation was by reference to the value of the land and farm buildings only. On this basis Lucy was awarded a cash payment equal to the value of the farmland and farm buildings which, at the time of valuation in February 2017, was £1,170,000.

How we can assist with your proprietary estoppel claim

Although individual claims will always turn on their facts this case provides helpful guidance on proprietary estoppel claims will be dealt with by a court.

If you are involved in a farming inheritance dispute, or any other inheritance dispute where promises have been made about future entitlement, then please contact our Contentious Trusts and Probate Team on 0808 139 1606 for a free assessment or send us an email at [email protected]