For hundreds of years, farms have relied on generations of the same family to work together to ensure the ongoing success of the business.
Canny farming families ensure the succession of their farms with legally binding documents, such as partnerships or shareholder agreements, which clearly set out who inherits what and when.
However, in recent years, in circumstances where nothing has been formally put in writing and a dispute over the estate occurs, there have been a number of reported claims based on ‘proprietary estoppel’ in respect of verbal promises that have been made to members of the family.
Partner at Tallents Solicitors, Stephanie Whitchurch, looks at this type of dispute in more detail and offers advice to those in the farming community.
What is ‘proprietary estoppel’?
“Proprietary estoppel is a legal claim, which is sometimes argued in farming family disputes in the following circumstances:
- A promise was made to the Claimant that the farm would ultimately be theirs;
- The Claimant relied on that promise;
- The Claimant’s reliance was to their detriment, typically (but not always) by working on the farm during their lifetime for little or no pay, holding the belief that they would eventually inherit the farm; and
- Upon the death of the promisor, the farm is not left to the Claimant.
“Recently there have been a number of cases relying on ‘proprietary estoppel’, which highlight how disputes arise if the intentions of the parties are not documented clearly; the latest case being an estate challenge made by a daughter, Lucy Habberfield.”
HABBERFIELD v HABBERFIELD (2018)
Lucy Habberfield claimed that she had devoted her life to working on her parents’ farm based on assurances that she would receive a part of the farm in exchange for her work and commitment to the farm. However, when her father died in 2014, she was not left a share of the farm and instead the farm passed to her mother as sole owner.
Lucy’s proprietary estoppel claim relied on the fact that she and her husband Stuart, had worked on the farm for years to their detriment, and they did not receive a financial share of the estate when her father passed away.
Her claim was upheld by Mr Justice Birss who said that her father’s remarks “were made in a manner in which it was intended Lucy would take seriously – to continue her commitment to the farm, to continue to work hard and to accept the wages and hours she was working”. However, as she had not been promised the whole farm by her father, Lucy was awarded a lump sum of £1.17m from the estate instead.
“It is costly and time consuming to bring a claim against an estate, especially given the comparatively small cost of formally organising the farm’s business structure effectively with clear succession plans and full consideration of the farm’s assets.
“Farming family relationships can be complicated and as more of us live into old age, it’s even more important that these matters are tackled earlier and wishes are clearly recorded.”
“At Tallents Solicitors we are here to help prevent disputes as well as resolve them. We can help you ensure the clear succession of and future success of your farm, preventing family disputes further down the line. Just give us a call on 01636 671881 to arrange a confidential appointment.”