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Frances Woods, civil litigation lawyer with QualitySolicitors Parkinson Wright in Worcester explains: ‘The rules of proprietary estoppel enable the court to interfere in the terms of the will to give effect to what has been pledged where it is right and proper to do this, taking account of the promise that has been made and the degree of reliance placed on it.’
Proprietary estoppel claims are frequently raised in farming families where an adult child has been promised that, if they stay on the farm and work hard, often for reduced or no pay, the business will eventually be passed to them. They are also common in other families where property has been pledged in return for providing care to an elderly or infirm relative.
What you need to prove to claim proprietary estoppel
To bring a claim for proprietary estoppel, you need to be able to show that:
- you have been given a clear and unambiguous assurance that you will at some point become entitled to land or property if you do certain things;
- you have relied on this assurance in organising your affairs and deciding the path you will take; and
- your interests have been detrimentally affected as a result of the decisions that you have made.
Factors the court will take into consideration
In deciding whether interference is warranted, regard will be had to the terms of the promise, the detriment suffered versus any benefits derived, and whether any change in circumstance may justify the promise not being honoured.
This is clearly illustrated in the 2019 case of Habberfield v Habberfield which concerned a claim brought by a daughter who had dedicated her life to working on the family farm on the strength of repeated assurances that it would one day be hers.
The claim arose when the daughter’s mother sought to renege on the promise when her father died, alleging that:
- while she had undoubtedly made sacrifices by choosing to stay on the farm rather than building a life for herself elsewhere, she had also derived a range of benefits including free childcare and heavily subsidised living costs;
- the plan was for her to help build up a viable dairy business, but all dairy activity on the farm had ceased by the time the claim was made as a result of her decision to resign from the business following a family argument;
- her parents had tried to make good on the promise some years earlier by offering to take her into partnership but she had declined to accept this; and
- she knew at the time the promise was made that it was subject to a number of conditions which meant that not all the property and land comprised within the farm would go to her and that, if her parents so elected, legal ownership of the farm would remain with them until they had both died.
What the court can order
Where the court deems it appropriate to intervene, there are a range of orders that can be made including:
- an order directing land or property to be transferred into your name;
- an order granting you the right to use and occupy land or property for the rest of your life;
- an order granting you some other form of land or property interest; or
- an order awarding you a sum of money by way of compensation.
In deciding what to do, the court will be concerned to ensure that the order made is proportionate to the detriment you have suffered so that what you end up with is fair.
This is unless your case can be categorized as a quasi-bargain which entitles the court to assume that (absent any reasons suggesting otherwise) an order giving full effect to what has been pledged is likely to be the most appropriate way to proceed.
A quasi-bargain will usually be found to exist where what the maker of the promise offered up and what you were asked to do to secure it were defined with reasonable clarity and you have delivered on your part of the deal, making it morally wrong for them to now not deliver on theirs.
Such an arrangement was found to exist in the Habberfield case and resulted in the court awarding the daughter £1.17 million to enable her to establish the viable dairy business she had expected to receive, albeit somewhere other than on the family farm.
Although not quite what the daughter had expected, it was as close to giving effect to the promise as the court could get, given that the decision needed to take account of the conditional nature of the promise that had been made and the adverse tax consequences that might flow from effecting a transfer of the farm while her mother was still alive.
It is notable that the sum awarded was far in excess of the financial damage she could fairly be said to have suffered as a result of choosing to stay on the farm rather than to work elsewhere – which was put at £220,000. This was considered justified by the court given the unquantifiable cost of the personal sacrifices she had made when making the life-changing decision to devote herself to the farm as she had been asked to do.
The fact that she had declined an offer to work in partnership with her parents was a relevant consideration but not something that should act as a bar to her claim, given that the terms of the offer put forward fell short of what had been pledged and in any event was not presented to her as a ‘take it, or leave it’ option.
To find out more about proprietary estoppel claims, which incidentally can be brought both after the promisor’s death and while they are still alive if the circumstances warrant it, please contact Frances Woods, or Mark Blake on 01905 721600.
We can also provide advice on claims under the Inheritance (Provision for Family and Dependants) Act 1975 which provides another means of challenging the terms of a Will made by a parent, spouse, partner or someone you were financially dependent on.