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Case law: Court orders parents to deliver on promise to leave farm and farming business to son

Property owners such as farmers should take care when making informal promises to a family member (or anyone else) that they will inherit land or any interest in the land or a family business, otherwise they may be liable to deliver on that promise because the person relied upon it to their detriment, as another farming dispute makes clear.

A father made a will splitting his farm equally between his two sons, with cash for their sister. However, relations between him and one of the sons deteriorated and he made a new will in 2018 disinheriting that son. The son brought a legal claim for ‘proprietary estoppel’ against his parents, arguing that he should inherit the farming business, the farm cottage in which he lived, and the rest of the land and buildings on the farm.

Proprietary estoppel stops someone from backing out of a promise they made to another to do something (such as give or leave you land, or an interest in it) if:

  • they made a representation or gave an assurance to you that they will do so (which can be oral – although this may cause problems when it comes to proving what was said);
  • you have reasonably relied on it;
  • you suffer a ‘detriment’ – which need not be financial, but must be substantial - as a result; and
  • it is unconscionable, in the circumstances, for the person making the promise to renege on it.

A court can then order the other person to deliver on their promise, or to compensate you for having broken it.

In this case, the son had worked long hours on the farm at a reduced wage, living in a farm cottage, since leaving school at 16 in 1982. He claimed he had done so on the basis that his parents had promised him that one day he would inherit the farm.

The court found that the father had in fact made many assurances to the son to that effect, which the son had relied upon when accepting long hours and reduced pay. It also ruled that the son could have found a better paid job if he had tried to do so, which would have allowed him to buy his own home.

His claim of proprietary estoppel therefore succeeded.

The court found it difficult to set an amount to award the son. The case is unusual in that it was brought before the father or mother had died, and after the son had effectively been forced off the farm and had to find other work. The son’s expectations of a remedy at this stage were therefore moderated by the fact his parents might live for many more years, and the bitterness of the dispute between them ruled out any prospect of them working together again in future.

The court ordered the parents to pay him a lump sum equal to half the market value of the farming business, and 40% of the market value of the freehold land and buildings on the farm – together worth about £2.7m. The most likely outcome is that the parents will have to sell the farm in order to pay the award.

Operative date

  • Now

Recommendation

  • Property owners such as farmers should take care when making informal promises to a family member (or anyone else) that they will inherit land or any interest in land or a family business, otherwise they may find they must deliver on that promise because the person relied on it to their detriment.

Case ref: Guest v Guest [2019] EWHC 869

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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