Family Farming Disputes – How to Value a Promise to Gift Land
We specialise in dealing with family farming disputes across the country, and have a track record of success in handling claims based on promises of inheritance that have been broken. Contact us for a free consultation.
Following on from our article on family farming disputes we now consider how to value a promise to gift land.
For many years, valuing a claim involving a broken promise has been difficult for lawyers to assess because there are a range of options open to the judge.
The onus is on a judge to “satisfy the equity” which is the legal term for seeking to put the claimant back in the position they would have been if the promisor had not reneged upon their promise. Judges have a significant amount of discretion in how to value the loss caused to the claimant and decisions have ranged from compensating the claimant for the financial expenses they have incurred on maintaining or improving a farm, to forcing the promisor (the person who promised to gift the land) to transfer the land (or part of it) to the claimant because that was their expectation, and they had relied upon the promise to their detriment.
A relatively recent judgment in the highest court, the Supreme Court — Guest v Guest — has provided very welcome clarity for lawyers and clients alike in how the courts should approach valuing these claims going forward. As a result we are seeing an increase in the number of clients approaching us to pursue these claims.
In Guest v Guest the farming dispute arose between a son (Andrew) and his parents (David and Josephine) during their lifetime, regarding promises made for Andrew to inherit a substantial share of the family farm to enable him to continue with a viable farming business after David’s death. Andrew relied upon the promise by working on the farm for a low wage from when he left school for a total of 32 years.
The farming partnership was dissolved and Andrew was served with notice to quit the property after relations with his parents deteriorated, and David and Josephine had removed Andrew’s inheritance from their Wills. Andrew therefore issued court proceedings, seeking a declaration of his entitlement to a share of the farm (or its monetary equivalent) on the basis of the legal doctrine of proprietary estoppel.
At trial Andrew was awarded c.£1.3 million valued at 50% of the value of the dairy farming business, plus 40% of the value of the freehold land and buildings on the farm, representing Andrew’s expectation of what he would inherit. His parents appealed to the Court of Appeal and then the Supreme Court on the basis that it was wrong for the judge to value of the award on Andrew’s expected inheritance, and that it should instead be calculated by reference to his actual contribution to the value of the farm or loss of opportunity for other work, as well as the fact that the award was also wrongly benefitting Andrew early (prior to David’s death).
The Court of Appeal and Supreme Court dismissed the appeals, save for the final point appealed to the higher court. The Supreme Court therefore ordered that the judge was correct to adopt an approach based upon valuing the claim in relation to Andrew’s expected inheritance, but found that a discount should be applied in this case (as it was a lifetime estoppel claim) for the fact that Andrew was receiving the benefit of the promise (his inheritance) early. As such, the substituted award made for Andrew by the Supreme Court was to allow the parents to choose between:
(1) putting the farm into trust for the children subject to a life interest in the parents’ favour; or
(2) making an immediate payment of compensation to Andrew along the lines the original judge ordered, but with a discount to reflect early receipt (if the figure could not be agreed after valuing the farm it was to come back to the court to decide a figure).
So the Supreme Court judges have made it clear that in valuing a proprietary estoppel claim the aim of the remedy should be to achieve an undoing of the unconscionable (unfair) conduct and that more often than not this will be by looking at the expectation of the promisee. In other words, the expectation is the starting point or assumed to be the outcome unless it can be shown it is a case where this should be deviated from (e.g. if the farm has already been sold) with a discount for early receipt likely to play a part in the calculation of lifetime estoppel claims going forward.
The importance of instructing a specialist solicitor in this field cannot be overstated given the complexity of this area of law and the range of outcomes which can be achieved with such claims, requiring that the Guest framework is adopted in the most effective way possible to maximise the award to be achieved for clients going forward.
We work nationwide and offer a range of funding options for such claims, including No Win, No Fee, along with a free consultation.
So, if you are looking for solicitors who are experienced in dealing with family farming disputes and know how to value a promise to gift land, contact our specialist team today. Call us on 0333 888 0404 or send an email to [email protected]
