This week, the High Court awarded almost half of the value of a family farm in Oxfordshire to the eldest son in compensation for promises made by the father.
John Bolch joins us to explain the tricky world of Proprietary estoppel and its impact on families.
“What happens when someone promises you an interest in a property, you rely upon that promise to your detriment, and then the other person reneges on the promise?
Welcome to the murky world of ‘proprietary estoppel’, the legal name for the type of claim that the recipient of the promise can make to ‘enforce’ the promise.
That term will be well known to lawyers, but I suspect few non-lawyers will have ever come across it. I say ‘murky’ because proprietary estoppel (which in plain English means “stopping the owner from asserting their legal rights in respect of a property“) can involve complex legal arguments, and lawyers can find it difficult to even agree on a precise definition of the term, despite being experts on the subject.
The closest thing to an agreed definition is probably that mentioned by Mr Justice Birss, the judge who heard the case that this post is about, Gee v Gee & Another. He quoted an ‘academic authority’, who said that proprietary estoppel comprises three elements:
1. A representation or assurance made to the person claiming an interest in the property – i.e. a promise by the owner of the property that the claimant would have an interest in the property;
2. Reliance on that promise by the claimant; and
3. That the claimant suffered some form of detriment in consequence of his reasonable reliance upon the promise.
So to the facts of the case. It concerned a family farm, originally owned by the claimant’s father. The farm is now worth about £8 million, and the farm business is undertaken by a company. By the summer of 2014, the father owned the entire shareholding of the company, bar one share, together with a 7/18ths share of the land. The other share was held by his wife Pamela, who also owned a 7/18ths share of the land.
The claimant, who from now on I will refer to by his name ‘John’, started working on the farm in the 1970s (he is now sixty years old). He worked there all his working life until 2016 when he was excluded from the farming business in disputed circumstances.
In November 2014 the father transferred his interest in the land and all his shares in the company to his other son, Robert. His wife Pamela meanwhile transferred her single share in the company, together with her 7/18th share in the land, to John.
Mr Justice Birss summarised John’s case as follows (for the sake of simplicity I am leaving out some of the legal jargon):
“[John’s] case is that from when he was about 30 years old his father … had repeatedly assured him that he … would inherit the lion’s share of the farm and that he relied on those representations to his detriment, essentially by devoting his working life to the farm and working long hours for low wages.
The 2014 transfer to Robert was contrary to those assurances and unconscionable. Based on the doctrine of proprietary estoppel [John] contends that … he should receive the whole farm (land and shares in the company) or at least the company and the lion’s share of the land.”
The claim was denied by the father and Robert, who contended that no such assurances were ever given.
The case, of course, turned on the evidence, which was set out by Mr Justice Birss in considerable detail in his judgment. He found in favour of John. The father had made it clear to John that he would succeed him as the farmer and owner of the farm, and John had acted to his detriment in reliance on that promise. The father had broken the promise.
Accordingly, Mr Justice Birss ordered that the transfer from Pamela should be reversed (as John proposed, as Pamela made the transfers to him simply to mitigate the impact of the father going back on his promise to John), and that John should receive 52% of the shares and 46% of the land from the father and Robert.
At this point, you may be thinking that this case may have been interesting, but surely such claims are rare and it is really only of academic interest? Not so. It is actually not that unusual for such promises to be made, or at least for the ‘receiving party’ to believe that such a promise has been made, particularly in a family context.
Proprietary estoppel claims often, for example, arise in cohabitee cases, where one former cohabitant claims that the other promised them an interest in their property. For an example of this, see this post from 2012, which (as is often the case with these claims) also involved a farm. As that post made clear, the case to which it referred was, like most proprietary estoppel cases, extremely complex.
The message is clear: if you believe you may have a good claim based upon proprietary estoppel, then seek expert legal advice!
You can read the full report of Gee v Gee, all 170 paragraphs of it, here.”
Presumably a successful claim of this sort trumps the Family Provision Act? I would expect a claim under the 1975 Act only to bite on what is left. If anything!