Keeping promises

What is proprietary estoppel?

Legal disputes on English land, typically relating to a farm and ownership, are known as proprietary estoppel. Many contested wills will feature valuable estates which include farms and/or land, and the combination of a the high value assets and grounds to contest the will is sufficient to launch a claim.

Proprietary estoppel claims are essentially founded on promises, so what happens when one party seeks to resile from a promise made to the other?

To bring a proprietary estoppel claim, it is necessary to show that:

1. A representation or assurance has been made to the claimant;
2. The claimant relied on it; and
3. The claimant has suffered a detriment as a result of that reliance.

Who is affected by these claims?

These disputes often arise between members of the same family and often in the context of promises made in relation to agricultural land and working farms.

There have been a number of cases recently and more historically where a child has been promised the family farm and in reliance on those promises has worked on the family farm for a minimal wage sacrificing other opportunities.

The family member, usually a parent, who made that promise has then changed their mind and left the farm or significant parts of it to another family member.

It is often difficult to produce the evidence necessary to prove the above and witness evidence from family members, friends of the family and professionals such as accountants who have advised on the family business can be invaluable to claimants wishing to rely on an estoppel.

In the recent case of Habberfield v Habberfield which was typical of the above circumstances, the daughter of the family worked on the family dairy farm for 30 years. She had been assured by her father during this time that she would one day inherit the family farm.

The daughter ultimately left he family farm after a dispute with her parents and her father died the following year leaving the farm not to his daughter but to his wife who closed down the dairy business.

The judge awarded the daughter £1.2million against a total value of the farm of £2.5 million which required the mother to sell the farm in order to meet the order.

This decision is surprising in that the court was prepared to make an order which required the mother to sell the family farm but reflects the wide discretion the courts have to make orders in claims of this kind.

These claims aren’t exclusive to farming businesses and there have been recent judgments in relation to assurances relating to investments in businesses and whether those promises are enforceable.

So, what can you do to avoid these kinds of claims?

Be clear in your intentions and open in communicating them to your family to avoid confusion and disappointment. And finally, speak to professional advisers to document your wishes and the reasons for them to minimise the risk of dispute further down the line.

For more information, help or advice, please contact Alex Blenkinsop on 0191 211 7997 or email [email protected].