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The recent case of Moore v Moore & Till Contracting Ltd [2016] is a classic example of how these claims operate in practice.
Stephen Moore worked at his father's farm from a young age for minimal pay. Stephen's grandfather left the 650 acre farm in Wiltshire to Stephen's father (Roger) and Stephen's uncle (Geoffrey). From the mid-1960's, Roger and Geoffrey farmed in partnership, taking a modest income and reinvesting most of the profit back into the business. Stephen had a major role in the farming business, becoming a salaried partner in 1998 and a full equity partner in 2003.
When Geoffrey retired in 2008, he sold his share in the partnership to Stephen. Stephen and Roger continued to farm in partnership. They established a limited company, Till Contracting Ltd to run the business in a tax efficient manner.
Roger began to suffer with Alzheimer's disease and took a less active role in the business. He had several rows with Stephen which resulted in him making a new will in 2012 disinheriting Stephen. Subsequently, Stephen advanced a claim seeking a declaration of his interest in the farm during Roger's lifetime.
Stephen argued that Roger had promised him the farm, creating an expectation on his part that he would inherit it. Stephen also claimed that Roger's wife (his mother) was influencing Roger because she wanted their daughter to inherit a share of the business.
The Court held that promises were made by Roger and that Stephen had relied on those promises by devoting his entire working life to the farm and the business. The Court considered that Stephen had suffered detriment by relying on Roger's assurances, because he focused on the farm rather than on an alternative career. The Court ordered that the partnership be dissolved (this was not disputed given Roger's dementia), that Roger and his wife could live in the farmhouse at Stephen's expense and receive an income of £200 a week and that Stephen must pay all reasonable health and care costs for his parents from the partnership funds. In return, Stephen received Roger's share of the farming assets as well as all associated cash.
The Court satisfied Stephen's claim, while imposing an obligation upon him to meet his parents' financial and care needs during their lifetime, a potentially significant undertaking that might not be appropriate in all cases.
A decision of the Court of Appeal in Davies v Davies [2016] highlights the factors to consider when quantifying a claim for propriety estoppel and in particular how a claimant's expectation may not be proportionate.
The claim actually started as a possession claim brought by Mr and Mrs Davies. They sought to evict their daughter Eirian from Henllan Farmhouse, having terminated her employment contract and her licence to occupy the farmhouse. The possession proceedings were met with Eirian's defence and counterclaim asserting a beneficial interest in the farm under the doctrine of proprietary estoppel. Eirian was one of three daughters. When she left school she left with the intention of pursuing a career as a dairy farmer and worked in the family farming business. Her relationship with her parents was fragile at times, with little or no contact but reconciliation took place and she returned to live and work on the family farm.
The Court found that Eirian had been promised the dairy farming business and she had relied on those promises. Helpfully for Eirian the promises made by her parents were not just made to her in private but also in public. At the opening of a new milking parlour, her mother told guests that the farm was Eirian's future.
The Court acknowledged the promises made to Eirian and agreed that she had suffered detriment by working long hours on the farm for over 20 years without full payment for her work. Eirian claimed that she should be awarded the entire farm and farming business worth £4.4 million as a result. The Court had a choice. The Court could have awarded Eirian the entire farm, depriving her parents of the business they also had worked hard at building, but instead it decided to award her a monetary sum to represent the detriment she had suffered. Eirian was awarded £1.3 million.
This decision was overturned by the Court of Appeal and Eirian's award was reduced from £1.3 million to £500,000. The Court of Appeal held that the judge had not analysed the facts in sufficient detail and did not account for the clear break in Eirian's expectations. Eirian had fallen out with her parents several times over the years and had periods where she did not expect to inherit the farm. The Court of Appeal therefore held that a more modest remedy of £500,000 was justified.
Eirian Davies' and Stephen Moore's claims illustrate the fact that the Court will not only take into account financial detriment suffered by a claimant, but also significant life decisions made by a claimant in reliance upon promises made to them.
In Suggitt v. Suggitt [2012] the Court found that the claimant had "positioned his whole life" around the deceased's farm in the expectation that he would inherit both the farmland and somewhere to live when the deceased died. The claimant was awarded the farmland and a house worth £3.3million out of an estate worth around £4million.
Moving house to another part of the country, away from family, to provide companionship and care was held to be sufficient detriment in the case of Bradbury v. Taylor [2012]. Here, the claimants were awarded a large house set in 15 acres of land in Cornwall, representing the lion's share of the estate. Lothian v. Dixon [2014] was a similar case where the claimants moved from Scotland to Scarborough to support and care for a family member who later died. The fact that the claimants, their friends and family received free board at the deceased's hotel did not outweigh the detriment they suffered in reliance upon the deceased's promises. The claimants received almost all of the deceased's estate worth around £1million, which included 99% of the shares in a company that owned the hotel.
All of these cases demonstrate the fact that the Court will take into account a wide range of changes made by a claimant to their lives in reliance upon a promise or an assurance that they will receive property, even where it is unclear whether the claimant was disadvantaged by the change overall.
When considering a remedy for a proprietary estoppel claimant, the Court will look at the "minimum necessary to do justice" to the parties. However, as shown by the above cases, in recent years the Court has made generous awards to claimants. On many occasions the award made appears to be disproportionately high in comparison to the detriment suffered by the claimant. As a consequence the property owner or, if they have died, the beneficiaries of their estate, have lost out.
Eirian Davies' and Stephen Moore's cases are perhaps unusual because all the parties in both cases were still living. Where the party making the promise has died and their property passes to beneficiaries of their estate, it seems that the Court is more willing to make a generous award.
Whilst Stephen Moore and Eirian Davies were successful in their proprietary estoppel claims, this was at the expense of lengthy and costly legal proceedings. The case of Eirian's successful claim is a reminder that the Court places greater importance on proportionality, resulting in smaller awards being made.
Each of their stories could have been very different had the parties arranged their affairs using legally binding documents. Business succession planning, proper consideration of your assets, business structures and heirs is vital to avoid problems and claims further down the line. Succession issues are becoming exacerbated by an ageing population, complicated family arrangements and the rising value of property and land, so getting the right advice as soon as possible is key to avoiding proprietary estoppel claims.
Furthermore, if they had been able to resolve the dispute at an early stage, both parties are more likely to have ended up with a resolution they could all have been content with, rather than one party winning, the other losing and all parties being faced with large legal bills!
If you have any queries about proprietary estoppel claims, you would like to discuss representation or any of the issues mentioned above, please ead more about our specialist farming solicitors or contact me on +44 (0)1392 685275 or email [email protected]
