Verbal promises, more than hot air? – advice for farming families on proprietary estoppel
Stephanie Whitchurch
Many farms in the UK have been passed down through generations, often relying on the acceptance of a verbal promise of future inheritance in exchange for rent free accommodation and little or no pay. But what happens when that verbal promise is not fulfilled, or is found to have been reneged on? Stephanie Whitchurch, a partner at Tallents Solicitors in Newark looks at a recent appeal on a case of proprietary estoppel and how the remedy was arrived at.
What is ‘proprietary estoppel’?
Proprietary estoppel is a legal claim, which is sometimes argued in farming family disputes in the following circumstances:
- A verbal promise or clear assurance was made to the Claimant that the farm would ultimately be theirs;
- The Claimant relied on that promise or assurance;
- The Claimant’s reliance meant that they suffered a detriment.
Usually, a proprietary estoppel claim occurs after the promisor’s death when the will does not deliver on the verbal promise. However, a recent claim arose during the lifetime of the promisors which has delivered an interesting remedy for the Claimant based on expectations vs. detriment.
GUEST v GUEST [2022]
In this case, David and Josephine Guest owned Tump Farm, and their eldest of three children, Andrew had lived and worked on the farm since he left school 33 years earlier. He had been consistently led to believe by his father that he would succeed to the farming business and inherit a substantial part of the farm in exchange for his many years of work.
However, in 2015, Andrew and his parents had a disagreement, leading Andrew and his family to leave Tump Farm and for him to seek alternative employment. The parents made new wills which excluded him entirely from inheriting any part of the farm. As a consequence, although his parents were still alive, Andrew made a proprietary estoppel claim to stop his parents reneging on their promise to him.
Andrew’s claim for proprietary estoppel was upheld by the High Court but as his parents were still alive (usually claims are settled out of the estate proceeds) and appealed the order, the case came to the Supreme Court for a judgement to be made regarding the remedy due to Andrew.
The judges had to decide whether the remedy should be made to meet Andrew’s expectations based on the promise made to him, or should it only compensate him for the detriment he had suffered for relying on that promise?
Although the Supreme Court judges were split 3:2, the majority agreed that Andrew’s expectations should be enforced. However, in an interesting twist, as the promise would only have been fulfilled on his parents’ deaths, the judges agreed that there had to be some adjustment to the remedy for Andrew receiving it while his parents were still alive.
Unusually, the judges also gave the parents two choices to make the remedy to Andrew. A non-financial remedy was the original promised share of the farm and the business held in a life interest trust until their deaths, at which point Andrew would receive what he was promised. The financial remedy was for the parents to sell the farm now to pay a lump sum, which would be discounted as Andrew was receiving it sooner than he otherwise would have done.
Commenting on the ruling, Stephanie noted that farming families should exercise extreme caution when making promises of this nature. It’s very important, especially as farmland is often very valuable, that families have frank and open discussions with their family members earlier rather than later about the proposed future of their farm, and to formally note any wishes and agreed arrangements clearly.
Advice for farming families on proprietary estoppel and succession planning
Disputes leading to litigation can be very expensive and time consuming and we would urge all farming families to speak to their solicitor about succession planning to try and avoid family disputes further down the line.
Tallents Solicitors can help prevent disputes as well as resolve them. Just call on 01636 671881 to arrange a confidential appointment.
— — —
This legal content of this article is correct at the date of publishing. We recommend you seek legal advice with regards to your personal circumstances before acting.
