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27 March 2018 0 Comments
Posted in Opinion, Private Client

Current intention or a binding promise?

Posted by , Associate

Two recent disputes involving farming estates in the South West have looked at the issue of promises of inheritance made to children and what happens if those alleged promises appear to have been broken. Here we consider the relevant law further and look at what can be learnt from these cases.

The Law

The area of law which covers cases involving promises of land is known by the legal term of “Proprietary Estoppel”.

In order to succeed in a case a claimant will need to establish that:

  • there was a promise made in relation to receiving/inheriting land or property;
  • that person believed the promise to be genuine and relied upon it; and
  • in relying upon that promise, the person then acted in a way that was detrimental to themselves.

These cases commonly arise in relation to family farms, where, for example, a child may believe that a promise was made that they would inherit the farm on the death of their parents. That child may then work on the farm for many years, for little or no pay, but be willing to do this as they believe the promise will be fulfilled. If the promise is not then fulfilled, despite the hard work, the law may step in to prevent an unfair outcome.

James v James

Sam made a claim based on a few conversations he had with his father, which Sam believed made clear to him that he was to receive the family farm. However, the Judge took a different view and found that his father’s comments merely amounted to a statement of his intentions at the time of those conversations, not a binding promise. It was well known that Sam’s father was reluctant to commit himself to any decisions in relation to the transfer of the farmland and he had every right to change his mind in the future, despite his comments to Sam.

In any event, the Judge also rejected the argument that Sam had suffered any detriment. Sam received farmland from his father before his death and Sam had enjoyed rent-free accommodation at the farm and was paid a reasonable wage for his work.

Habberfield v Habberfield

The circumstances of this case were quite different. The claimant, Lucy, had worked on her parents’ farm since the age of 16, focusing on the dairy side of the business. Lucy claimed that she had been made numerous promises regarding the inheritance of the farm and had spent many years working long hours for little pay.

The Judge found that there was clear evidence, including notes from a meeting with the family accountant, that demonstrated that Lucy had been promised that, at the very least, she would one day inherit the dairy farm. It was also clear to the Judge that Lucy had relied on the promises made and stayed at the farm despite the difficult working conditions.

The Judge then carefully considered what award Lucy should receive. Whilst the Judge felt he needed to go some way towards fulfilling the promise made to Lucy, he did not feel she should receive the entire farm. The Judge concluded that, as Lucy was no longer living at the farm, it would be fair for her to receive a cash sum equivalent to the value of the dairy farm she was clearly promised. This had been valued at £1,170,000, which was just under half of the value of the overall farm.

Conclusion

These cases demonstrate that the outcome will depend upon the facts and evidence available. It is apparent, however, that having a clear promise of future inheritance is a key factor in these cases.

If you have any questions on the inheritance of estates, or in regards to 'Proprietary Estoppel' please contact our team on:

0800 923 2073     Email usenquiries@roydswithyking.com

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