Proprietary Estoppel

In a further decision involving farms, families and firm assurances from father to son (or daughter), the High Court have awarded a son, whose father lost mental capacity, sole ownership of the family farming business after he proved it had previously been promised to him.

Background

Since 2008, Roger Moore and his son, Stephen Moore, had run the family farm as a partnership.

Stephen had worked on the farm since he was a child and became a salaried partner around 1998 and an equity partner around 2004.  Stephen also obtained his uncle's share in the partnership in April 2008 and paid £500,000 for it.  It was acknowledged that this payment was a significant discount on the market value, but enough to provide for Stephen's uncle's retirement and in line with Stephen's father's intentions that the farm would ultimately pass to Stephen.

From 2008 onwards, Roger played a lesser role in the farming business as his mental health began to decline due to the onset of Alzheimer's.  The family relationships started to worsen also.  Stephen's mother, Pamela, felt that the succession plan was unfair on her daughter as it only benefitted Stephen.  In 2009 family relationships completely broke down and Roger and Pamela changed their Wills; disinheriting Stephen.

Stephen claimed that Roger had been influenced by Pamela and that Roger had promised the farm to him, which he had relied upon to his detriment - as set out below.

Decision

The Judge held that:

• It was a clear and established fact that Stephen had been promised the farm and the business and that these statements were not mere indications of intention but constituted promises
• Stephen had relied on these promises as he had not actively sought other employment and devoted his life to the farming business
• Stephen had suffered detriment as a result of his reliance on those promises as he lived a modest life, did not take expensive holidays in order to work on the farm and he had not sought other employment which would have provided him with a better income and
• It would be unconscionable therefore for Roger to renege on his promise to Stephen that he would receive Roger's share of the farming business

The Judge found that the remedy and minimum equity to do justice to the failed assurance was to give Stephen an equitable interest in Roger's share of the farm, which included Roger's share in the assets and associated cash.  Furthermore, that the farming partnership should be dissolved on the grounds of Roger's diagnosis of Alzheimer's.

The Judge held that Roger and his wife should be allowed to continue to receive the income they were expecting until their deaths and remain in the farmhouse for as long as they needed.   Stephen was to be held responsible for the reasonable maintenance and healthcare costs of his parents; utilising funds from the farming business.

The Judge considered this to be a just and equitable outcome which was proportionate to the detriment suffered by Stephen.

Comments

Whilst this case does not alter the law on proprietary estoppel, it is a helpful illustration  of how the court will assess the  elements required to prove a proprietary estoppel  claim.  It also provides a useful summary of how a court considers the evidence and scope of cross-examination in such a claim (see paras 18-32).

Proprietary estoppel is a complex area of law and the outcome of these cases depend heavily on the individual facts.  If you require specialist advice in this area, please contact Michelle Rose by email or contact on 0117 314 5246