Proprietary Estoppel and Family Farms

Proprietary estoppel involves the enforcement of a promise regarding the right to use land or property belonging to someone else.

When can you claim proprietary estoppel?

In order to bring a claim based on proprietary estoppel, there has to be:

• a promise that is unambiguous and certain;
• reliance on that promise;
• detriment caused to the party acting in reliance on the promise; and
• agreement by the court that it would be unethical not to keep the promise.

Proprietary estoppel allows the court to remedy behaviour that it considers is unfair, or unjust.

Family farms and proprietary estoppel

Family farms and farming families have been the subject of recent cases, where proprietary estoppel is claimed by the younger generation.  In two recent judgments about family farms, there have been marked differences in the approach taken by the court.

One day son, the farm will be yours

Proprietary estoppel was claimed by the son of a farmer in the 2019 case of Guest v Guest [2019] EWHC 869 (Ch).  The case saw a son arguing that he had worked on the family farm for 30 years for low pay in reliance on his father’s promise that he would inherit some of the farm.

The court found that there had been statements by the father that were clear enough to amount to an assurance that the son would inherit some of the farm. It referred in particular to the words “one day all this will be yours” stated a number of times over the course of several years by the father to the son. As to the son’s reliance on the assurance to his detriment, the court was satisfied that the son had reasonably relied upon his father’s assurance to his significant financial detriment, indicated by the fact that he had worked hard on the farm for many years for little financial reward and that he would not have done so, had the father not encouraged the idea of an inheritance.

The court also looked at the disinheritance of the son by the parents and the role the son had played in family discord, and decided that the son’s behaviour did not override the unfairness of the decision to disinherit him. The court ordered that a lump sum be paid to the son, owing to the ongoing family discord and the consequent need for a clean break between the parties. The court considered the interests of the parents in doing so, concluding that the monies liquidated from the sale of the farm would support the parents in their retirement.

The parents appealed against the order for a lump sum payment to their son, but the appeal was dismissed.

Mum said I would inherit the family farm

In the 2020 case of Horsford v Horsford [2020] EWHC 584 (Ch), the first three elements of proprietary estoppel were argued to be in place by the son. He said that his mother had promised him that he would inherit the family farm when she died. He relied on that promise and undertook much work on the farm as a result. The court found that his mother had not, in fact, made promises about him inheriting the farm and that she had only made statements of intention, which might be changed in future, depending on how the mother considered she could treat all of her children fairly and equally.

In regard to the son’s detriment argument, it was found that he had not suffered any significant net detriment in reliance on any assurance that he would inherit the farm. He had, conversely, benefited from his parents’ generosity. The court considered whether the mother could insist on her rights being enforced under an intervening partnership agreement signed by the mother and son, allowing him to opt to buy his mother’s share of the farm when she retired. It found that such rights were inconsistent with any rights he had acquired as a result of proprietary estoppel. As such, the rights under the partnership agreement had replaced any earlier rights and extinguished them. What is more, the mother had not acted unethically in retiring and then claiming the monies due under the agreement; the son had instructed a solicitor to negotiate the terms of the agreement over several months and had agreed the terms in full knowledge that his rights under it would be triggered when his mother retired, and that he would be required to pay her for her share.

In both of these cases about family farms, the behaviour of the parties and their net financial position were important considerations for the court in concluding what a fair outcome would look like for the parties. When the court considers that there has been a complete breakdown in relations between the parties, it is inclined to order that a clean break be effected, such as in Guest v Guest.

Here to Help

If you need advice on proprietary estoppel or any other dispute matter, please contact Lauren MacKenzie, Senior Solicitor specialising in Dispute Resolution and Mediation.

Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.