It is sometimes the case that family farming businesses can result in disputes between family members. This often arises where the children have worked on the farm for years, often with low or no pay, on the clear understanding that they will inherit the farm when their parents give up or pass away.
When disputes arise, the children can find themselves, well into their working lives, without the security of knowing the farm will pass to them.
The courts have recognised these claims, referred to as proprietary estoppel claims, and can make orders to enforce the promises made.
What is proprietary estoppel?
Broadly speaking, to pursue a claim under proprietary estoppel, there must be:
1. A promise, or an assurance,
2. reliance upon this assurance and
3. some detriment suffered as a result of the reliance.
What constitutes a “promise” or “assurance” in these cases is open to wide interpretation and it is not necessary to be able to evidence an actual promise made. Instead, the understanding can happen over time, sometimes with very little, or no, actual discussion about the property.
An assurance does not need to be a spoken promise or promises, and the Courts can infer from conduct that the parties intended to do a particular thing. However, a spoken promise/assurance, repeated in front of other witnesses, will make it easier to succeed in this sort of claim. Evidence is key.
It is necessary also to show that the other party relies upon this promise which results in them incurring a detriment in the belief that they will obtain an interest in the property. A detriment does not require an expenditure of money or a quantifiable financial detriment, it need only be something substantial.
Most recently, the Courts have brought together the last two limbs above into the concept of detrimental reliance and they are often inextricably linked. Reliance requires you to act upon the assurance and this conduct constitutes the detriment incurred.
The recent Winter v. Winter case
Proprietary estoppel formed the crux of the case of Winter v. Winter which was recently heard in the Court of Appeal. Here, three sons had been working on a family farm from an early age where they worked long hours and were paid minimum wage. They worked on the farm as their parents assured them that they would be left the business in equal amounts between them.
This was the case up until the relationship between the father and two sons deteriorated and resulted in the father executing a will that left the estate to his other son, including a partnership that had formed and was to be divided equally along with the company itself. On their father’s death, they each received £2 million from the assets yet one son received an additional £1.5 million.
The two sons who had not received this additional sum brought a claim in proprietary estoppel on the basis that they were each entitled to an equal third of the assets as they committed their lives to the business in the belief the shares of the business would be left to them equally.
The arguments in favour of a detriment being suffered included:
1. The brothers worked long hours on a low wage
2. They lost social enjoyment
3. They lost an alternative career and opportunity to lead a different life
Here the Court of First Instance found a substantial disadvantage, even though this was not quantifiable, as the commitment from the brothers throughout their working lives outweighed any financial benefit they received. Although this arguably ran counter to the father’s intentions, especially when there had been a relationship breakdown since the initial assurance, the court emphasised a willingness to remedy non-financial detriments and disadvantages resulting from a life changing choice.
As such, the Court of Appeal upheld the original judgment that reaffirmed the equal distribution of a one third share of the father’s interest in the partnership and company to each of the three brothers.
How we can help
These types of cases are highly fact sensitive so what may be seen as a substantial detriment in one case may not be the same for another – especially as the court emphasised here that a detriment will not automatically guarantee a successful claim. It is therefore crucial to seek legal advice for clarity of your position and navigate the facts surrounding your claim.
Our team of experts deal with these cases regularly and will be happy to assist you.
